OREANDA-NEWS. The Federal Energy Regulatory Commission (FERC) has approved a $20.2mn penalty against BP for allegedly manipulating natural gas prices following Hurricane Ike's landfall in Texas in September 2008.

FERC made public its accusations that BP manipulated gas prices in 2013, but spent nearly two years in administrative proceedings before approving the penalty late yesterday. FERC in its order said the alleged gas price manipulation undermined the stability of deregulated natural gas markets.

"We find the violations here to have been very serious," FERC said. "BP manipulated the market to profit from a natural disaster, and it did not stop after a trader or two but rather kept the scheme going for nearly three months."

BP did not respond to a request for comment, but in administrative proceedings has repeatedly denied the allegations and said its traders did not engage in any market manipulation. BP also argues that FERC does not have jurisdiction over the gas trades because they occurred entirely within Texas, rather than within interstate gas markets.

FERC's investigation centers on gas trades BP allegedly made in the two months after Hurricane Ike, when a disruption in industrial activity caused gas prices in Texas to drop. FERC has alleged that BP traders wanted those gas prices to stay low to increase the value of a financial spread position it held, leading the traders to sell large volumes of physical gas at a loss at the Houston Ship Channel.