UNITED STATES OF AMERICA 


Before the 


COMMODITY FUTURES TRADING COMMISSION 


) 

In the Matter of: 

Statoil ASA, 

Respondent. 

) 

) 

) 

) CFTC Docket No. 18 - 04 · 

) 

) 

~~~~~~~~~-) 

ORDER INSTITUTING PROCEEDINGS PURSUANT TO 


SECTION 6(c) AND 6(d) OF THE COMMODITY EXCHANGE ACT, 

MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS 


I. 

The Commodity Futures Trading Commission ("Commission") has reason to believe that 

Statoil ASA ("Statoil" or "Respondent") violated Section 9(a)(2) ofthe Commodity Exchange 

Act (the "Act"), 7 U.S.C. § 13(a)(2) (2012), from at least October through November 2011. 

Therefore, the Commission deems it appropriate and in the public interest that public 

administrative proceedings be, and hereby are, instituted to determine whether Respondent 

engaged in the violations set forth herein and to determine whether any order should be issued 

· imposing remedial sanctions. 

II.

In anticipation ofthe institution of an administrative proceeding, Respondent has 

submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. 

Without admitting or denying any ofthe findings or conclusions herein, Respondent consents to

the entry ofthis Order Instituting Proceedings Pursuant to Sections 6( c) and 6( d) ofthe 

Commodity Exchange Act, Making Findings and Imposing Remedial Sanctions ("Order") and 

acknowledges service ofthis Order. 1 

Respondent consents to the use ofthese findings and conclusions in this Order in this 

proceeding and in any other proceeding brought by the Commission or to which the Commission 

is a party or claimant, and agrees that they shall be taken as true and correct and be given 

preclusive effect therein, without further proof. Respondent does not consent, however, to the 

use ofthis Order, or the findings or conclusions herein, as the sole basis for any other proceeding 

brought by the Commission or to which the Commission is a party, other than a statutory 

disqualification proceeding; proceeding in bankruptcy, or receivership; or proceeding to enforce 

the terms ofthis Order. Also, Respondent does not consent to the use ofthe Offer or this Order, 

or the findings or conclusions in this Order, by any other party in any other proceeding. 
III. 

The Commission finds the following: 

A. SUMMARY 

From as early as October 2011 through November 2011, Statoil attempted to manipulate 

prices in the Far East propane markets in order to benefit Statoil's financial and physical propane 

positions in the Far East, including Statoil's NYMEX-cleared swaps, which settled to those 

prices. Statoil's attempted manipulation violated Section 9(a)(2) ofthe Act, 7 U.S.C. § 13(a)(2) 

(2012). 

B. RESPONDENT 

Statoil ASA is an international energy company, headquartered in Stavanger, Norway, 

With activities in more than thirty countries around the world, including the United States. As 

part ofits business activities, Statoil participates in physical and financial energy markets. 

C. FACTS 

From as early as October 2011 through November 2011, Statoil, by and through its 


traders, attempted to manipulate the price ofthe Argus Far East Index ("Argus FEI")2 knowing 


that a portion of Statoil's financial positions in the Far East consisted ofNYMEX-cleared over­


the-counter swaps that settled to the Argus FEI. Specifically, Statoil traders executed physical 


propane purchases in the Far East with the intent to increase the Argus FEI in order to benefit 


Statoil's financial and physical propane positions in the Far East, including Statoil's NYMEX-


cleared 

1 

swaps directly priced to the Argus FEI. 


This conduct followed on the heels of major losses in Statoil' s gas liquids unit throughout 

2011. After incurring these losses, Statoil refocused on its winter plan in the Far East propane 

market in an effort to achieve profitability. In anticipation of seasonal market forces, Statoil 

established physical and financial positions in the Far East that would benefit from a rising 

Argus FEI. However, Argus FEI propane market conditions did not materialize as expected by 

Statoil, leading to the risk of additional substantial losses in the gas liquids unit. 

In an effort to avoid these losses and meet December customer obligations, efforts were 

fuade to prop up the Argus FEI by purchasing propane cargoes during the November Argus FEI ! 

2 Argus Far East Index ("FEI") is a published index ofpropane prices in the Far East region. 

Argus is an independent media organization that regularly publishes price assessments for global 

propane regions. The Argus FEI is used for U.S. futures contract and swap pricing in the 

propane industry, and several futures contracts traded on U.S. commodity exchanges settle 

~gainst the Argus FEI. 

2 

propane price-setting window.3 By purchasing all ofthe cargoes in the November price-setting 

window, which would remove propane supply from the market, Statoil was hoping to signal that 

demand was high and put "upwards pressure" on the November Argus FEI propane price. 

Statoil's intent was described repeatedly in contemporaneous communications. As one trader 

put it, "[w]e are delivering 13.5 cargoes in December, giving us a strong position and good 

insight in to [sic] the direction ofthe November quote in Argus." In another communication, a 

Statoil trader wrote: "Ifwe are buying 17 cargoes there are only a few days when we will not be 

able to have a good impact on the Argus quote .... We are actually likely to move it quite a bit 

up as we keep buying ..." Although contemplated by some ofthe traders, Statoil did not 

purchase more cargoes than needed to meet its physical delivery obligations. 

These propane cargo purchases in the November Argus FEI price-setting window were 

characterized as "bullets" in achieving price movement. Moreover, it was clear that these 

"bullets" were being used to benefit Statoil's financial and physical propane positions in the Far 

East tied to the Argus FEI, which included its NYMEX-cleared swaps: "[Statoil's] plan to cover 

December sales obligations by purchasing 14-16 cargoes in November. When these purchases 

are taking place during a limited time the prices [sic] is expected to rise causing the paper 

position bought [which settled to the Argus FEI] to increase in value." (Emphasis added). 

However, Statoil's plan to profit by creating an artificial settlement price for Statoil's 

financial and physical propane positions did not materialize as hoped. It had not foreseen that 

there would be such a large volume ofpropane available to be purchased in the November 2011 

Far East market. As one Statoil trader noted: 

The LPG market is long. Period. It is longer than we had anticipated with quite a 

few extra FOB cargoes being sold ... Also, quite a few of the players in the 

market have a vested interested in holding the [Argus] FEI down and they have 

been willing to sell cargoes . . . at discounted prices . . . Statoil have bought 5 

cargoes over the last week but this has not been enough to keep the [price] up. 

Because there was such a large volume of propane available to purchase, even Statoil' s 

purchases ofpropane cargoes in the Argus FEI price-setting window did not move the market as 

expected. 

3 In order to set the FEI, Argus collects information from market participants during the Argus 

daily open window assessment period (the "Argus window''), a 30-minute window, including but 

not limited to information concerning market participants' bids, offers, and transactions in 

propane for the Far East. For the Far East, the Argus window closes at 5:00 p.m. Singapore 

time. Transactions outside the Argus window are not factored into the daily price assessment. 

3 

IV. 


LEGAL DISCUSSION 


A. Statoil Attempted to Manipulate 

1. Legal Standard 

Section 9(a)(2) ofthe Act makes it unlawful for "[a]ny person to manipulate or attempt to 

manipulate the price of any commodity in interstate commerce, or for future delivery on or 

subject to the rules of any registered entity, or of any swap." 7 U.S.C. § 13(a)(2) (2012). 

Attempted manipulation under the Act requires: ( 1) an intent to affect market price and (2) some 

overt act in furtherance ofthat intent. See CFTC v. Parnon Energy, Inc., 875 F. Supp. 2d 233, 

250 (S.D.N.Y. 2012); In re Hohenberg Bros. Co., CFTC No. 75-4, 1977 WL 13562, at *7 (Feb. 

18, 1977). 

Under the first prong, intent to affect market price is satisfied where the respondent 

"acted (or failed to act) with the purpose or conscious object of causing or effecting a price or 

price trend in the market that did not reflect the legitimate forces ofsupply and demand." In re 

Ind Farm Bureau Coop. Ass'n, CFTC No. 75-14, 1982 WL 30249, at *7 (Dec. 17, 1982). 

"Since proof ofintent will most often be circumstantial in nature, manipulative intent must 

normally be shown inferentially from the conduct ofthe accused." Id.; see also In re Hohenberg 

Bros., 1977 WL 13562, at *7. Further, "while knowledge ofrelevant market conditions is 

probative ofintent, it is not necessary to prove that the accused knew to any particular degree of 

certainty that his actions would create an artificial price. It is enough to present evidence from 

which it may reasonably be inferred that the accused 'consciously desire[ d] that result, whatever 

the likelihood ofthat result happening from his conduct."' Ind Farm Bureau, 1982 WL 30249, 

at *7 (quoting U.S. v. U.S. Gypsum Co., 438 U.S. 422, 445 (1978)). A profit motive may also be 

evidence ofintent, although profit motive is not a necessary element ofan attempted 

manipulation. See In re DiP/acido, CFTC No. 01-23, 2008 WL 4831204, at *29 (Nov. 5, 2008) 

(citing In re Hohenberg Bros., 1977 WL 13562, at *7), aff'd, 364 Fed. Appx. 657 (2d Cir. 2009). 

Under the second prong, an attempted manipulation is completed where there is any overt 

act in furtherance ofmanipulative intent. It is not necessary that there be an actual effect on 

price. See CFTC v. Amaranth Advisors, L.L.C., 554 F. Supp. 2d 523, 535 (S.D.N.Y. 2008). 

2. Statoil Attempted to Manipulate Through Its Physical Purchases

As evidenced by the communications among Statoil traders and by Statoil' s actual 

trading conduct, Statoil, by and through its traders, specifically intended to manipulate the Argus 

FEI in order to benefit, among other things, Statoil' s NYMEX-cleared over-the-counter swaps 

that were directly priced to the Argus FEI. In furtherance ofthat intent, Statoil, among other 

things, planned and executed physical propane purchases in the Far East market during the 

November price-setting window, in order to place upwards pressure on the November Argus FEI 

and, consequently, the value of its NYMEX-cleared swaps. 

4 

Statoil's purchases ofpropane cargoes during the November Argus FEI propane pricesetting window as well as the traders' communications planning and executing its trading 

conduct, among other things, constituted overt acts in furtherance of Statoil' s intent to 

manipulate, as described above. Statoil thereby engaged in acts of attempted manipulation in 

violation of Section 9(a)(2) ofthe Act, 7 U.S.C. § 13(a)(2) (2012). 

B. 	 Statoil is Liable for the Acts of its Agents 

Pursuant to Section 2(a)(l)(B) of the Act and Commission Regulation 1.2, principals are 

strictly liable for "[t]he act, omission, or failure of any official, agent, or other person acting [on 

their behalf] within the scope of his employment or office." 7 U.S.C. § 2(a)(l)(B) (2012); 17 

C.F.R. § 1.2 (2017); see also, e.g., Rosenthal & Co. v. CFTC, 802 F.2d 963, 966 (7th Cir. 1986); 

CFTC v. Byrnes, 58 F. Supp. 3d 319, 324 (S.D.N.Y. 2014). Accordingly, Statoil is liable for the 

acts, omissions, and failures of any traders, managers, or other employees who acted as their 

employees and/or agents in the conduct described above. 

v. 

FINDINGS OF VIOLATION 

Based on the foregoing, the Commission finds that Statoil violated Section 9(a)(2) ofthe 

Act, 7 U.S.C. § 13(a)(2) (2012). ' 

VI. 

OFFER OF SETTLEMENT 

Statoil has submitted an Offer in which it, without admitting or denying the findings and 

conclusions herein: 

A. 	 Acknowledges receipt of service ofthis Order; 

B. 	 Admits the jurisdiction ofthe Commission with respect to this Order only and for any 

action or proceeding brought or authorized by the Commission based on a violation ofor 

enforcement ofthis Order; provided, with respect to any action or proceeding brought or 

authorized by the Commission based on a violation of or enforcement of the cease and 

desist provision set forth in Section VII.A ofthe Order or any future violation ofthe Act 

or Regulations, Statoil does not waive any jurisdictional defenses it may have, including 

defenses under the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1602-11 (2012) 

("FSIA"); 

C. 	 Waives: 

1. The filing and service of a complaint and notice of hearing; 

2. A hearing; 

3. All post-hearing procedures; 

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4. Judicial review by any court; 

5. 	 Any and all objections to the participation by any member ofthe Commission's 

staff in the Commission's consideration ofthe Offer; 

6. 	 Any and all claims that it may possess under the Equal Access to Justice Act, 5 

U.S.C. § 504 (2012) and 28 U.S.C. § 2412 (2012), and/or the rules promulgated by 

the Commission in conformity therewith, Part 148 ofthe Commission's 

Regulations, 17 C.F .R. § § pt.148 (2017), relating to, or arising from, this 

proceeding; 

7. 	 Any and all claims that it may possess under the Small Business Regulatory 

Enforcement Fairness Act of 1996, Pub. L. No. 104-121, §§ 201-253, 110 Stat. 

847, 857-74 (codified as amended in scattered sections of 5 U.S.C. and 15 U.S.C.), 

relating to, or arising from, this proceeding; and 

8. 	 Any claims of Double Jeopardy based on the institution ofthis proceeding or the 

entry in this proceeding of any order imposing a civil monetary penalty or any 

other relief; 

D. 	 Stipulates that the record basis on which this Order is entered shall consist solely ofthe 

findings contained in this Order to which Respondent has consented in the Offer; 

E. 	 Consents, solely on the basis ofthe Offer, to the Commission's entry ofthis Order that: 

1. 	 Makes findings by the Commission that Statoil violated Section 9(a)(2) ofthe Act, 

7 U.S.C. § 13(a)(2) (2012); 

2. 	 Orders Statoil to cease and desist from violating Section 9(a)(2) ofthe Act, 7 

U.S.C. § 13(a)(2) (2012); 

3. 	 Orders Statoil to pay a civil monetary penalty in the amount of four million dollars 

($4,000,000), plus post-judgment interest; 

4. 	 Orders Statoil and its successors and assigns to comply with the conditions and 

undertakings consented to in the Offer and as set forth in Part VII ofthis Order. 

Upon consideration, the Commission has determined to accept the Offer. 

VII. 

ORDER 

Accordingly, IT IS HEREBY ORDERED THAT: 

A. 	 Statoil shall cease and desist from violating Section 9(a)(2) ofthe Act, 7 U.S.C. 

§ 13(a)(2) (2012). 

6 

B. 	 Civil Monetary Penalty. 

1. 	 Statoil shall pay a civil monetary penalty in the amount offour million dollars 

($4,000,000) ("CMP Obligation"), plus post-judgment interest. Post-judgment 

interest shall accrue on the CMP Obligation beginning on the date of entry ofthis 

Order and shall be determined by using the Treasury Bill rate prevailing on the date 

of entry ofthis Order pursuant to 28 U.S.C. § 1961 (2012). 

2. 	 Statoil shall pay the CMP Obligation by electronic funds transfer, U.S. postal money 

order, certified check, bank cashier's check, or bank money order. Ifpayment is to be 

made other than by electronic funds transfer, then the payment shall be made payable 

to the Commodity Futures Trading Commission and sent to the address below: 

Commodity Futures Trading Commission 

Division ofEnforcement 

AT1N: Accounts Receivables 

DOT/F AA/MMAC/ AMZ-341 

CFTC/CPSC/SEC 

6500 S. MacArthur Blvd. 

Oklahoma City, OK 73169 

(405) 954-7262 office 

(405) 954-1620 fax 


nikki.gibson@faa.gov 


Ifpayment is to be made by electronic funds transfer, Respondent shall contact Nikki 

Gibson or her successor at the above address to receive payment instructions and 

shall fully comply with those instructions. Respondent shall accompany payment of 

the CMP Obligation with a cover letter that identifies the paying Respondent and the 

name and docket number ofthis proceeding. The paying Respondent shall 

simultaneously transmit copies ofthe cover letter and the form ofpayment to the 

ChiefFinancial Officer, Commodity Futures Trading Commission, Three Lafayette 

Centre, 1155 21st Street, NW, Washington, D.C. 20581. 

C. 	 Statoil and its successors and assigns shall comply with the following conditions and 

undertakings set forth in the Offer: 

1. 	 Public Statements: Respondent agrees that neither it nor any ofits successors and 

assigns, agents or employees under its authority or control shall take any action or 

make any public statement denying, directly or indirectly, any findings or 

conclusions in this Order or creating, or tending to create, the impression that this 

Order is without a factual basis; provided, however, that nothing in this provision 

shall affect Respondent's: (i) testimonial obligations; or (ii) right to take legal 

positions in other proceedings to which the Commission is not a party. 

Respondent and its successors and assigns shall comply with this agreement, and 

shall undertake all steps necessary to ensure that all ofits agents and/or 

employees under its authority or control understand and comply with this 

agreement. 

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2. 	 Partial Satisfaction: Respondent understands and agrees that any acceptance by 

the Commission of any partial payment of Respondent's CMP Obligation shall 

not be deemed a waiver of its obligation to make further payments pursuant to this 

Order, or a waiver ofthe Commission's right to seek to compel payment of any 

remaining balance. 

The provisions of this Order shall be effective as of this date. 

By the Commission. 

Robert N. Sidman 

Deputy Secretary of the Commission 

Commodity Futures Trading Commission 

Dated: November 14, 20 17 

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