Risk & Compliance

Total SA Faces U.S. Probes of Commodity Trading

The FERC said that Total traders made money-losing gas purchases designed to benefit other trading positions during 2009 to 2012.
Matthew HellerSeptember 25, 2015
Total SA Faces U.S. Probes of Commodity Trading

U.S. regulators have accused a subsidiary of Total SA of manipulating the price of natural gas in the southwestern United States, but the French oil company has denied any wrongdoing.

On Tuesday, the Federal Energy Regulatory Commission disclosed it had preliminarily  determined that traders with Total Gas & Power North America made money-losing gas purchases intended to move prices in a way that helped it make profits on other trading positions on at least 38 occasions from 2009 to 2012.

The Wall Street Journal reported Wednesday that the Commodity Futures Trading Commission was also investigating Total’s market trades in the United States. The company, which is among the world’s largest oil producers, also buys and sells everything from crude oil to refined products and petrochemicals.

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“The allegations are the latest in a series of crackdowns by FERC against manipulation in the gas and power markets, the WSJ said, noting that in recent years, the regulator has pursued high-profile cases against JP Morgan Chase, Barclays, and Deutsche Bank.

The CFTC regulates the trading of financial securities tied to commodities while FERC oversees the marketplace of physical gas and power products.

Asked about the FERC probe, Total Chief Executive Patrick Pouyanné dismissed the allegations. “There was no wrongdoing,” he told the Journal.

As for the CFTC’s allegations, Pouyanné said Total was in talks to settle the matter “for a few million dollars,” adding that the company was also ready to discuss a settlement with FERC. “Either we can settle for the right level of settlement and if not we can go to court,” he said.

Last week, the European Court of Justice upheld a 125 million euro ($139.8 million) fine on Total for participating, between 1992 and 2005, with eight other oil companies in a cartel to fix the price of paraffin waxes, which are made from crude oil and used in a wide range of products from candles to tires.

Pouyanné said Total had conducted its own inquiry into the Total Gas & Power trades and found that “nothing happened.”