BP to Maintain Investment in Mature North Sea Oil Fields

…Finished?
BP will be in the North Sea “until it is finished” and expects to maintain the scale of its business there for years, according to the head of exploration and production at the oil and gas giant.

Tony Hayward, reckoned to be one of two contenders to take charge of BP in 2008, said the company wanted to maintain its market share in the mature North Sea.

“Our absolute objective is to maintain the scale and materiality of our North Sea business.”

Industry watchers have predicted that BP would effectively withdraw from the North Sea to pursue more lucrative prospects outside of the UK, leaving the area to smaller firms.

However, while defending the controversial decision to invest heavily in Russia, Hayward said such moves did not signal BP’s intention to turn its back on the North Sea.

Speaking following the official inauguration of the giant Clair oil field yesterday, around 30 years after it was discovered, Hayward said BP still had many activities in the North Sea.

The company has a total estimated resource of around four billion barrels, as much as one third of which is in deposits that still require recovery work.

There was a lot of the Clair oil field in BP’s portfolio, said Hayward, noting it has also been working on bringing the North Sea’s biggest undeveloped gas company, Rhum, into production.

BP has said it expects to invest pounds-4bn during the next four years in the North Sea and the focus will be on building up what it already has, Hayward said.

BP would remain in the exploration game, he added.

The North Sea could still contain more huge discoveries, of the order of the huge Buzzard find made by Edinburgh Oil & Gas and its partners.

Ifexploration activity unearthed potential finds that might not offer the right balance of risk and reward to win investment ahead of other assets in BP’s big global portfolio, the company would give other firms a chance to help take them on.

For example, the Farragon oil discovery made by BP in the Central North Sea is being brought into production by a consortium of which BP is a member.

Hayward ruled out any more giant disposals like the sale of the Forties oilfield to US independent Apache in 2003.

That deal was a one-off exercise resulting from a thorough review of assets acquired through takeovers by BP.

Hayward said the company had no plans to hit the acquisition trail by bidding for a company like Cairn Energy as oil and gas companies currently command sky-high valuations driven by soaring petroleum prices.

Hayward denied that BP’s need to keep replenishing its vast reserves would expose the company to too much political risk through operating in volatile areas such as Russia.