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* Disclosure levels at oil majors lag those of secretivetraders
* Risk appetite bigger than at top Wall Street banks
* Pressure for stricter oversight rises both in US, EU
By Dmitry Zhdannikov and Claire Milhench
LONDON, May 22 (Reuters) - Europe's energy pricemanipulation probe has turned regulatory attention to secretivetrading units at oil companies with huge turnover andmillionaire staff with risk appetite higher than at WallStreet's biggest banks.
Regulators have scrutinised banks, trading houses andcommodities markets more closely following the Libor benchmarkrigging scandal but trading desks at oil majors have largelyescaped attention.
Although banks and trading houses have expanded rapidly inenergy over the past decades, oil companies still often dwarfthem in size, geographical reach, profits and sometimes themagnitude of scandals surrounding their operations.
An EU investigation into the suspected manipulation of theprice of crude oil, refined products and ethanol has thrown theminto the spotlight.
"Political pressure for regulatory action and stricteroversight of both traders and price reporting agencies will rampup," said Roderick Bruce, energy analyst at IHS think-tank.
EU investigators raided offices of BP, Shell and Statoil, trading house Argos Energy and pricingagency Platts last week as part of the case. It was the biggestcross-border action by the regulators since the Libor scandal.
Despite massive disclosure obligations by publicly-listedoil firms, simple metrics such as revenue and profit at theirtrading divisions are not public. Some investors say moredisclosure is required.
"This is not structural so it should be reportedseparately," said Charles Whall, who helps co-manage $1.08billion at Investec Global Energy Fund, including shares inShell. "There's not enough of that."
The world's biggest trading houses including Glencore, Vitol, Gunvor, Trafigura and Mercuria, long perceivedas the most secretive firms in oil trading, have all startedreleasing detailed financial data in recent years to tap bondand equity markets.
By contrast, oil majors like BP, Shell, Statoil, Total and Eni disclose very little.
For example, BP, one of the biggest and most powerfultrading desks in the industry, last disclosed figures fortrading in 2005 when it earned $2.97 billion, or over a tenth ofthe group's overall net profit.
RISK APPETITE
Since 2005, BP has only disclosed whether trading had"stronger" or "weaker" contributions in a given quarter.Disclosure levels at Shell, Total, Eni are similar.
"Our trading activities are accounted for underInternational Financial Reporting Standards. The disclosures weprovide in the annual financial statements are also determinedby those standards," a BP spokesman said.
He added that when trading has a notable impact on quarterlyperformance the firm would always spell this out. Statoil saidit believes it has well-balanced disclosures. Shell, Eni andTotal declined to comment.
Insiders say BP's annual trading profits have fluctuatedsince 2005 between $1-$3 billion compared to $1.7-$2.3 billionat the world's largest oil trading house Vitol.
Oil majors say trading facilitates cooperation between theirproducing, refining and distribution units.
"It is not speculative and it doesn't take large positionsor exposures," Shell's chief financial officer Simon Henry tolda shareholders meeting this week while saying the company oftenmakes more money in volatile trading conditions.
Statoil said its trading is primarily related to physicalactivities and hedging: "Proprietary trading is limited".
Investec's Whall view of how trading operates is quitedifferent.
"We invest in these companies because this is one of theways they make money. They have a physical position and run aspeculative book on the back of it. I'm quite comfortable withthat if it's well controlled," he said.
One metric shows that risk appetite at oil majors' tradingdivisions is large.
Value-at-risk, which measures how much a company is preparedto lose in one day on trading, averaged $34 million at BP in2012, down from as high as $45 million in 2009. It was stable inthe past few years at around $30 million at Shell.
Only Glencore, the world's top trader, has comparablefigures at $40 million with Gunvor's VaR averaging only $12million.
The biggest Wall Street banks active in commodities tradinghave almost halved their VaR levels to $15-$20 million a day inrecent years as they cut down on proprietary trading - tradingwith a firm's own money to make money for itself rather than fora customer. It can lead to more risky trading and more volatileprofits.
"I find it quite extraordinary that during a globalclampdown on proprietary trading, especially at banks,publicly-listed oil majors are still allowed to effectivelymaintain large prop operations," an industry veteran, who hasworked at both banks and majors, said.
PRESSURE ON BOTH CONTINENTS
The United States has stricter oversight of financial andcommodities markets and has had several successful high-profileprosecutions of oil companies for market manipulation.
In 2007, BP paid a record $303 million in a settlement withU.S. authorities for manipulating propane prices. "BP engaged ina massive manipulation..." U.S. Commodities Futures TradingCommission (CFTC) said at the time.
After that, the U.S. Department of Justice installed amonitor, who oversaw BP's trading activities for several years.
Insiders say BP has made significant changes to its tradingdivision since then, including by cutting back on remunerationto reduce risk taking.
Other oil majors as well as traders such as Arcadia havealso been charged by U.S. officials with market manipulationover the past decades.
The European Union has tightened oversight of thecommodities market to be closer to rules in the United States.The EU pricing probe, which a key U.S. senator has urged theU.S. Justice Department to join, may signal that the regulatoris getting more aggressive.
