French oil major Total SA has come under investigation by two separate US agencies tied to allegedly manipulative trades in the US gas markets and is fully cooperating, it said on Wednesday.
News that Totals trades are being probed by the Commodity Futures Trading Commission, which regulates the trading of commodity-based financial securities, came a day after the Federal Energy Regulatory Commission accused a Houston-based Total subsidiary of manipulating the price of natural gas in the southwest US between June 2009 and June 2012.
The FERC, which oversees physical gas and power products markets, said that the scheme was conducted by traders on the Total Gas & Power North America West Desk, led by supervisors Therese Nguyen and Aaron Hall. It involved making “largely uneconomic trades for physical natural gas during bidweek” that were intended to move prices in a way that benefited other related positions.
The regulator didnt reveal what benefit the French company generated from the supposed scheme, what fine it would seek, or whether consumer bills were affected. The oil major dismissed the accusations, saying that an internal inquiry found no wrongdoing, and added that it was settling similar allegations with the CFTC “for a few million dollars.”
The probes come as the oil company announced a further cut in capital and operating expenses, while pledging to cover the dividend fully paid in cash. It said on Wednesday it would cut capital expenditure to $20-$21 billion in 2016 and to $17-$19 billion thereafter, compared with $23-$24 billion in 2015 and a peak of $28 billion in 2013. There will also be an adjustment in the redistribution of overall capital, with the downstream business, which includes refining and marketing, now getting 25% of total capex, up by 5%, on the back of a reduction in the upstream operations’ proportion.
Total also raised its target of operating expenses reductions to $3 billion by 2017, up from a previous aim of $2 billion. This is the latest in a series of spending cutbacks in the oil industry and by other commodity producers that have been heavily hit by declining prices of raw materials, pressured by oversupply and sluggish demand.
“We wanted to dramatically reduce capex again next year so that we can reach the very important target of covering the dividend at $60 per barrel in 2017,” Chief Financial Officer Patrick de la Chevardière said. “This is the cornerstone of everything we are doing.”
Total SA traded 0.76% lower at €40.32 per share at 09:37 GMT in Paris, expanding a year-on-year drop to 19.64%. The oil major is valued at €97.50 billion.
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