Fuel pumps at a Shell petrol station in London yesterday.
LONDON: Oil companies will face the full force of the law if they manipulated prices, Britain’s energy minister said yesterday as the European Commission’s demanded more firms provide information as part of its probe into oil pricing.
Eni said it was asked by the Commission to provide information. The Italian company’s statement came a day after the offices of Shell, BP and Statoil were raided by investigators over suspected oil price manipulation.
The surprise searches of major oil companies, but not their competitors the powerful privately-owned trading companies, were one of the biggest cross-border probes since the Libor scandal and sent shock waves through the secretive industry.
Authorities have sharpened scrutiny of financial benchmarks around the world since slapping large fines on some of the world’s biggest banks for rigging interest rate benchmarks.
“If it turns out to be the case that hard-pressed motorists and consumers have been hit in the pocket by manipulation in the market, the full force of the law should be down upon them. There is no doubt about that,” Britain’s Energy Secretary Ed Davey told parliament.
A spokesman for Britain’s Prime Minister David Cameron said he expected companies to fully comply with the investigation.
London is home to some of the biggest trading desks in the oil business. The Commission has said it had concerns that companies may have colluded in reporting distorted prices to a price reporting agency to manipulate prices for oil and biofuel products.
It also said companies may have prevented others from participating in the price assessment process of a pricing agency, which it did not name.
Platts, the world’s largest pricing agency and a unit of US McGraw Hill, is cooperating with the probe. Antoine Colombani, the Commission’s spokesman on competition policy, said yesterday only one pricing agency was involved in the probe.
“Even small distortions of assessed prices can have an impact on final prices, potentially harming consumers,” he said.
“We received a simple request for information from the EU Commission and we will cooperate. We are not under investigation and our offices have not been the object of any search,” an Eni spokeswoman said yesterday. Sources and officials at major trading houses Glencore, Vitol, Trafigura, Gunvor and Mercuria said they have not been asked so far to cooperate with the probe.
French oil major Total also said there had been no inspections at its offices.
Last year it wrote to regulators to question the way oil prices were determined, bringing into the spotlight pricing mechanisms of price reporting agencies.
The methodology designed by Platts for daily assessments on the physical oil markets is used to close deals worth at least $2,500bn a year.
Critics say the system is only a snapshot of the market and excludes most deals, making it vulnerable to manipulations.
Supporters say it is the best mechanism so far devised to assess huge but often opaque markets. Olivier Jakob from energy consultancy Petromatrix said he believed the current pricing system was far from perfect but Platts still remained the main reference for the entire market.Reuters
