BP invests £3bn in oil fields west of Shetland

OIL giant BP has announced plans for the £3 billion redevelopment of its Schiehallion oil field in the Atlantic frontier, west of Shetland, in a major boost for Britain's offshore industry.

The massive investment - the largest to be announced by a North Sea company since the Chancellor's controversial oil tax grab in the April Budget - will involve the replacement of the floating storage and production facility being used to extract oil from Schiehallion and the neighbouring Loyal field, 110 miles west of Shetland.

The current vessel has been operating in hostile waters since production came on stream in July 1998. Its replacement will be much larger - 270m long and 52m wide - and able to process and export up to 130,000 barrels of oil a day, and store in excess of one million barrels.

The two fields have already produced nearly 400 million barrels of oil and an estimated 450m are still to be recovered.

Bob Dudley, BP's group chief executive, said: "This decision is another example of BP's strategy to deliver long-term value growth through investing in the large fields and in key basins where it has extensive knowledge.

"BP has over 40 years experience in the North Sea, during which time it has developed a strong set of assets. We are committed to growing and maintaining a material, high-quality business there for the long term."

He went on: "We are pursuing a number of additional growth opportunities to support this strategy. For us, a key to this strategy is the need to maintain the integrity of our existing infrastructure, to look after our reservoirs and maximise recovery, and to deploy and develop the necessary capability."

Mike Tholen, economics director of Oil & Gas UK, welcomed the news. He said: "It reflects the major's commitment to the UK and demonstrates the significant remaining potential of the UK Continental Shelf."