U.S. federal energy regulators on Monday ordered BP Plc to respond to allegations of natural gas market manipulation, threatening the energy company with fines near $29 million.
The Federal Energy Regulatory Commission's Office of Enforcement alleged BP manipulated the natural gas market at the Houston Ship Channel from mid-September 2008 through November of that year.
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The commission said BP has 30 days to file a reply to its so-called 'show cause' order.
FERC posted the original allegations in 2011. Monday's order marks the next stage in proceedings and indicates that the regulator believes there is a case to answer.
The regulator said its Office of Enforcement alleged BP's Texas-based Southeast Gas Trading desk bought and sold physical gas at the Houston Ship Channel in a way designed to increase the value of BP's financial paper position.
The total fines include a penalty of $28 million and $800,000 in profits, plus interest, from the alleged trading scheme.
FERC has been vigilant in pursuing banks and other energy companies for entering loss making trades in one market in a bid to make gains in another.
Since the U.S. Congress bolstered FERC's enforcement power in 2005 following the California energy crisis and the Enron scandal, the regulator has pursued several high profile market manipulation cases against power companies, banks and now oil companies.
FERC last month settled a power market manipulation case with JPMorgan Chase & Co (NYSE:JPM) for $410 million and is seeking $470 million from Barclays Plc over allegations of similar activities. Barclays has said it will fight the proposed fine.