2017 a pivotal year for BP: New projects, Deepwater Horizon penalties taper off

BP looking at developing shale prospects in Argentina

In an interview with Reuters, BP Chief Executive Bob Dudley said 2017 is a pivotal year for the global oil major as it starts up a number of new projects in what the company calls a “new oil price environment.”

Also in 2017, payments for penalties and compensations arising from the disastrous 2010 Deepwater Horizon rig explosion in the Gulf of Mexico begin to taper off.

The company beat analysts expectations for its second quarter results, despite a drop in profits of over half and a hefty price for an unsuccessful project in Angola.

In a press release, Bob Dudley, BP’s chief executive said “We delivered strong operational performance in the first half of 2017 and have considerable strategic momentum coming into the rest of the year and 2018, with rising production from our new Upstream projects and marketing growth in the Downstream.”

The British oil company’s profits were down from $1.5 billion reported in the first quarter and lower than second quarter 2016 profits of $720 million, but company shares rose by 3.6 per cent on Tuesday.

BP reported a 10 per cent increase in oil and gas production in the second quarter and the company says it intents to boost production by 800,000 barrels per day (b/d) by the end of the decade.

Dudley says BP will continue to rein in spending in order to make the company profitable at the “new normal” of $50/barrel oil.  BP is hoping to decrease its operating breakeven cost to $30/barrel.

According to Dudley, the company is not looking at any new opportunities in the US shale play.  While it does have some interest in the US shale industry, BP`s involvement is much smaller than Exxon, Shell and Chevron.

“We scan and screen ops all the time and people offer things to us. They just appear expensive,” Dudley told Reuters.

Not ruling out shale, BP is one of a number of major oil companies looking to develop shale gas prospects in the Vaca Muerta province in Argentina.

Finally, Dudley denied that BP is looking to divest itself of its entire North Sea business.

“That is absolutely incorrect, we are deeply committed to the North Sea, it is one of our heartlands,” he said.