BP keen to take long view on oil and gas after troubles in US and Russia

By ANDREW CALLUS
Published on 03/12/2012 00:00

OIL giant BP will outline growth plans for its oil and gas production arm today in its first strategy update since striking a series of deals aimed at getting its Russian and US operations back on track.

In the United States, and particularly the Gulf of Mexico, the UK-based industry number four by value became a pariah after its 2010 oil spill there. Although BP’s US offshore operations are back to pre-spill levels, last month it pleaded guilty to criminal misconduct and added a $4.5 billion (£2.8bn) penalty to the $23bn the disaster has cost it.

Investors expect the settlement will allow the company to move on, but last week the US government used BP’s criminal status to ban it from new federal contracts over its “lack of business integrity”.

Also last week, BP avoided bidding for Gulf of Mexico leases, raising a new question mark over its plans for a province where it is the main deep-water leaseholder, and which accounted for much of its output growth plans in past strategy announcements.

In Russia, where BP is more heavily invested than rivals, BP has had disagreements with its 50-50 partner in TNK-BP, privately-owned AAR. BP has also pursued new Russian projects with the increasingly dominant state sector in the form of deals with government-owned
Rosneft.

In October and November, it finally struck a series of deals that allows it to exit TNK-BP, acquire a stake in Rosneft, and begin talks about such projects.

Today’s update follows a
reorganisation last month of its oil and gas production management.