BP is a London-based oil company with operations in more than 80 countries. The company is one of the biggest in the world, measured by 2011 revenues, and operates in all areas of the oil and gas sectors. In January 2013, a US judge accepted an agreement by BP to plead guilty for its role in the Deepwater Horizon disaster in which 11 workers died and pay a record US$4 billion in criminal penalties for the worst offshore oil spill in US history.
EU oil pricing probe spurs lawsuit against BP, others
Prime International Trading has filed a proposed class-action lawsuit against BP, Royal Dutch Shell and Statoil
Reuters in New York and Chicago
A Chicago-based commodities trading firm has filed suit against three of the world’s largest oil companies, accusing them of colluding to fix oil prices after European authorities opened an investigation last week.
Prime International Trading, which trades crude oil and other commodities, filed the proposed class-action lawsuit against BP, Royal Dutch Shell and Statoil this week, accusing the firms of misreporting trades in North Sea Brent, the oil benchmark which sets the price of about 70 per cent of the world’s crude.
The lawsuit is seeking civil damages on the heels of a European Commission probe into the reporting of false prices to price-setting agency Platts, a unit of McGraw-Hill.
Platts’ information is used to price oil contracts, including Brent.
None of the oil companies responded to phone calls and emails seeking comment on the lawsuit.
No charges have yet been brought by European authorities, and the oil companies have said they are cooperating with the investigation. Statoil said last week the suspected violations may have been ongoing since 2002.
“If it is found there was wrongdoing by the oil companies, the class-action suit would almost certainly significantly drive up the cost of any settlement,” said Craig Pirrong, a University of Houston professor of finance and a commodities expert.
Authorities last week raided the London bureau of Platts and the offices of the three oil majors named in the lawsuit.
The lawsuit accused the oil companies of reporting “inaccurate, misleading and false information” about Brent crude to Platts, and said it plans to include up to 50 other defendants who have not been named, but may also have participated in the alleged oil price manipulation.
Phone calls and emails to the oil companies named in the suit were not immediately returned on Thursday.
At Prime’s office in Chicago, located on the 13th floor of an office building next door to the Chicago Board of Trade building, a CBOT floor clerk said that no one was available to discuss the case.
Vincent Briganti, who works for Lowey Dannenberg Cohen & Hart which is representing the plaintiffs, declined to comment on the particulars of the case. The law firm was one of the companies that helped secure a $101 million settlement in a class-action suit related to the manipulation of US natural gas price indexes a decade ago in the wake of the Enron scandal.
Earlier this week, US Senator Ron Wyden, who chairs the Senate’s energy committee, asked the Justice Department to join the probe into potential oil market manipulation, by investigating whether it had boosted fuel prices for US consumers.
“Efforts to manipulate European oil indices, if proven, may have already impacted US consumers and businesses, because of the interrelationships among world oil markets and hedging practices,” Wyden wrote in a letter to US Attorney General Eric Holder.