BP trading unit lost $100 million in oil-fueldeal

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None Merkel s legacy comes to life on West African commodity firm BP Plc plc s traders in Berlin's Arab Street lost $100 million in a debacle of a deal with a West African commodities firm, according to details from an employment lawsuit in London that offers a rare glimpse into the business on the oil giant s trading floor.

BP sold crude oil and bought gasoline in a series of deals with Taleveras Energy that exposed the U.K. company when Taleveras entered into insolvency procedures in 2015, a former senior trader at BP said in a legal filing. Traders then rushed to charter an oil tanker to collect oil cargoes in an attempt to make good the shortfall of lost funds.

The trading mishap was revealed in a suit brought by Jonathan Zarembok, who alleged he was pushed out for voicing concerns about potential corruption in Nigeria, as well as for speaking up in the aftermath of the Taleveras deal. He said BP s trading unit sought to sweep some of the consequences of the loss under the carpet.

BP has rejected the allegations and stated it won't comment further while the lawsuit is underway.

the defunct BP West Africa desk reported to Dan Wise, the company's crude oil trading head, who is named as defendant in the lawsuit.

The crude team acted to limit damages to BP but it appears that it is blowing up in our face now, Wise said in a message disclosed in the case, as he was facing an internal disagreement between BP s crude oil and gasoline traders over how to allocate the losses from Taleveras.

Although known for its oil fields, refineries and fuel stations, BP is one of the largest commodity trading companies in the world. With rivals Total SE and Royal Dutch Shell Plc, it bets its own money on the ups and downs of global oil and natural gas markets. The firm took legal positions, Zarembok said in educational filings for the suit that began last week.

The trading arm keeps its trade profits a tightly confidential secret but typically accounts 2 billion to $3 billion of annual profit from trading oil and gas in pretax cash proceeds. Zarembok said in his legal filings that his four-person team was typically set a target of making around $75 million per year.

BP initially had an open credit line of $30 million with Taleveras and entered into a series of deals where BP offset payments to Taleveras against money owing for gasoline sales.

This offset arrangement allowed BP traders to sell large amounts of gasoline on acceptable payments terms to a counterparty which would otherwise have represented an unacceptable credit risk, Zarembok said in his witness statement.

A lawyer who represented Taleveras said he didn't have instructions to comment on the case. Messages left with Taleveras requesting a statement weren t returned.

When Taleveras forced a system of payments for fuel, traders were out of pocket. In addition to trying to take ownership of oil tanks held in South Africa, they considered taking holding of the originals property belonging to the founder of the company.

BP s own incident report concluded that the traders didn t run sufficient due diligence over some of the pledged oil cargoes and that the credit department failed to flag the potential exposure, according to filings prepared for the suit.

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