BP is understood to have agreed to pay $303 million (£148 million) to settle charges that it deliberately manipulated the American propane market three years ago, causing more embarrassment to the British oil giant after it announced a fall in profits yesterday.

Last year, BP was accused by the Commodity Futures Trading Commission (CFTC) of pumping up the price of propane, which is used by millions of Americans to heat their homes and cook food, particularly in rural or poor communities where there is no access to an ordinary gas supply.

It is thought that while BP has settled the civil charges made against it, it has also agreed to make certain operational changes to defer any criminal proceedings, which include being overseen by a government-appointed regulatory monitor for between three and five years.

It is expected that the US Justice Department and the CFTC will announce the settlement this week. BP declined to comment.

The decision to settle the charges comes as part of a fresh approach by Tony Hayward, BP’s new chief executive, to draw to a close a miserable few years. Separately, BP is also under investigation for abusing its size to manipulate the price of crude oil. In August, American regulators broadened the scope of their inquiry into the alleged price-fixing by demanding documents from as far back as 1999. Initially, regulators had been examining the behaviour of the oil group dating back to 2002.

The regulators are seeking to ascertain whether BP sought to control the over-the-counter crude oil price and is investigating its trading behaviour and storage activities during the period.

In 2003, BP was fined after an inquiry by the New York Mercantile Exchange (Nymex) into claims that it was manipulating its Light Sweet Crude futures contract. BP settled the $2.5 million fine without admitting liability.

In November 2006, the CFTC told BP that it would take enforcement action against the company over the way in which it traded gasoline futures contracts in 2002. The gasoline case relates to BP’s position in New York Harbour, the delivery point for the Nymex gasoline contract.

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