North Sea safe from massive sell-off, insists BP

Published on Tuesday 27 July 2010 20:15

BP has insisted the company's lucrative North Sea operations will be largely spared from the £19.3 billion sell-off announced in an attempt to bolster its balance sheet in the wake of record losses.

It said its oil and gas drilling operations in the North Sea, which support 3,000 jobs, remained part of its "core" business and, as such, were not part of plans to sell about 10 per cent of its production assets over the next 18 months.

"As we have previously indicated, BP intends to retain a significant business in the North Sea," a spokesman said. "The business has contributed significantly to BP's strong underlying performance in the first half of 2010 and remains a very important contributor to the group's cash flows."

The company plans to invest more than 1bn a year for the next five years in the North Sea.

"In the North Sea, BP has a significant investment programme over the next few years, including developing six major projects in the UK and Norway," the spokesman said.

The North Sea produces about 300,000 barrels a day of oil and gas for BP, which operates some 45 fields off the British coast.

The group's assets that are in line to be sold off include oil and gas fields in the United States, Canada and Egypt.

In the US, BP reached an agreement earlier this month to sell 7.8 million barrels of crude oil storage in Cushing, Oklahoma, as well as petroleum pipelines.

Other assets under consideration include a gas project in Vietnam, while BP plans to sell its upstream assets in Pakistan, which comprise a number of producing fields and exploration "blocks".

Meanwhile, the company is reported to be in talks with potential buyers for its 26 per cent stake in the Prudhoe Bay field in Alaska, the largest in North America. In Africa, it intends to sell its marketing businesses in Namibia, Malawi, Tanzania and Botswana, and focus on South Africa and Mozambique.

One of Scotland's leading experts on the oil industry suggested that the Gulf of Mexico disaster could, in fact, have some economic spin-offs for the Scottish economy.

Alex Kemp, professor of petroleum economics at Aberdeen University, suggested that there might be an increasing demand for North Sea safety expertise, developed in the wake of the Cullen inquiry into the Piper Alpha explosion.

The difficulties experienced in the Gulf could also encourage companies to invest more in the North Sea, in order to free up untapped resources, he said. Professor Kemp added: "This could have a little bit of a positive effect, in that there could be more drilling here as well as off the coasts of West Africa and Brazil."

But Prof Kemp also said that, in the short term, the moratorium on drilling in the Gulf of Mexico could see Scotland's oil and gas industry losing out, because it is involved in projects on the other side of the Atlantic.

The Obama administration has imposed a six-month moratorium on deep-sea exploration in the Gulf of Mexico as a result of the Deepwater Horizon spill, the US's worst ecological disaster.