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ROGTEC Magazine - Russian Oil & Gas Technologies - News, Reviews & Articles

BP Reports Second Quarter 2014 Results

Tuesday, July 29th, 2014

BP today announced its financial results for the second quarter of 2014. Underlying replacement cost profits for the quarter of 2014 was $3.6 billion, 34% higher than the $2.7 billion reported for the same period in 2013 and 13% higher than the $3.2 billion result for the first quarter of 2014.

The company also announced a quarterly dividend of 9.75 cents per ordinary share, the same level as the previous quarter but 8.3% higher than a year earlier. As previously announced, BP’s board will review the level of the dividend with the first and third quarter results each year.

“This was another successful quarter, delivering both operational progress and robust cash flow. We are continuing to ramp up the major new projects that drive delivery of cash flow and are also now seeing benefits from our focus on operating with greater reliability and efficiency,” said Bob Dudley, BP group chief executive.

“This operational momentum keeps us well on track to meet our 2014 targets and underpins our longer-term commitment to grow distributions to our shareholders.”

Rising oil and gas production from new and recently-started higher-margin upstream projects and increased processing of heavy crude oil by the newly-modernised Whiting refinery contributed to operating cash flow of $7.9 billion in the quarter. Total operating cash flow for the first half of 2014 was $16.1 billion.

Divestments with a cumulative value of $3.4 billion have now been agreed towards BP’s expected total of $10 billion divestments agreed by the end of 2015.  Most recently BP agreed the sale of its Hugoton gas assets in Texas for $390 million.

BP plans to use the post-tax proceeds from these divestments predominantly for shareholder distributions, with a bias to share buybacks. In mid-July BP completed the $8 billion share buyback programme introduced following the sale of its interest in TNK-BP, and the divestment programme is now supporting a continuation of buybacks.

In the second quarter, BP’s Upstream segment reported $4.7 billion underlying pre-tax replacement cost profit, compared with $4.3 billion a year earlier and $4.4 billion in the first quarter of 2014.

Compared to a year earlier, the Upstream result reflected the benefits of higher production in key regions and higher oil and gas realisations. This was partly offset by the impact of divestments and higher non-cash costs.

Increasing output from the key regions, primarily the Gulf of Mexico, drove overall underlying production2 of oil and gas, excluding Russia, up by over 3% compared to a year earlier.

The end of the Abu Dhabi concession in January 2014 together with divestment impacts, however, meant that reported Upstream production, at 2.1 million barrels of oil equivalent a day (mmboed), was 6% lower. Reported production in the third quarter is expected to be lower due primarily to turnaround and seasonal maintenance activities.

Including Russia, reported group oil and gas production averaged 3.1 mmboed.

Reported underlying net income from Rosneft for the quarter was $1.0 billion. BP received a dividend payment of approximately $700 million earlier in July.

The Downstream reported underlying pre-tax replacement cost profit of $0.7 billion, compared with $1.0 billion in the previous quarter and $1.2 billion for the second quarter of 2013. Both a significantly weaker refining environment and a weaker contribution from supply and trading negatively impacted the result compared to a year earlier, although this was partially offset by benefits from increasing heavy crude runs at the Whiting refinery. During the quarter, throughput of heavy oil at Whiting reached a high of 270,000 barrels a day.

Five new major upstream projects in BP’s key regions have started production so far in 2014 – most recently, the CLOV project in Angola achieved first oil on 12 June. Three of these five projects are in the deepwater Gulf of Mexico. Two further projects are expected on-stream in 2014.

Greater operating efficiency is being demonstrated in the Upstream, with average plant reliability for the first half higher than a year earlier, drilling performance continuing to improve and seven of the turnarounds planned for 2014 complete or underway. In the Downstream, refining availability was again maintained above 95% for the quarter.

In exploration, BP has participated in 10 completed wells to date in 2014 which have so far resulted in two significant discoveries – Notus in Egypt and Orca in Angola. 15-17 wells are expected to be completed over the whole year.

In the quarter the provision for litigation related to the Gulf of Mexico oil spill was increased by $260 million. The total cumulative pre-tax charge for the incident to date is now $43.0 billion. The provision does not include any amounts for business economic loss claims that are yet to be received, processed and paid.

At the end of the quarter, the aggregate remaining cash balance in the $20 billion Trust and qualified settlement funds remained at $6.3 billion. The unallocated headroom in the Trust remained at around $700 million.

Source



Rosneft and BP Signed a Long-Term Contract for the Delivery of Oil Products on a Pre-Paid Basis

Friday, June 27th, 2014

Rosneft and BP Oil International Limited signed a set of agreements designed to organize long-term deliveries of oil products and oil on a pre-paid basis. The terms of transaction provide for export deliveries of oil products with possible substitution with oil of up to 12 million tons within 5 years in bulk on a pre-paid basis in an amount of not less than 1.5 billion dollars. A number of world’s leading financial institutions participated in the organization of advanced payment. The price will be calculated by the formula similar to the one used by the Company when selling oil and oil products under regular annual tenders. Contractual deliveries may start as early as July 2014.

Period of validity of agreements meets interests of Rosneft in conclusion of long-term transactions with heavy consumers, and allows to effectively carry out long-term planning of the deliveries.

Commenting on the signing of the document President, Chairman of the Management Board Igor Sechin said: «Rosneft extends and strengthens its mutually beneficial cooperation with BP. This transaction opens up new opportunities for both companies: it provides BP with stable supply chain and guaranteed quality of oil products and allows Rosneft to support high profitability of its sales activities and acquire additional financial resources in accordance with the referential nature of such deals».

Source



Rosneft and BP Sign Agreement on Development of Domanik Formations

Monday, May 26th, 2014

Rosneft and BP Exploration Operating Company Limited signed a Heads of Agreement on Domanik formations. The document was signed today within the framework of the St. Petersburg International Economic Forum by Rosneft President and Chairman of the Management Board Igor Sechin and BP Russia President David Campbell.

The signature ceremony was led by President of the Russian Federation Vladimir Putin.

The Heads of Agreement provides for implementation of a joint pilot project by Rosneft and BP relating to the Domanik formations and, in the event of success, the possible development of unconventional Domanik resources in the Volga-Urals region. The joint venture company (Rosneft 51%, BP 49%) will be incorporated in Russia.

BP will compensate part of the historical costs to Rosneft for exploration of the Domanik formations and will provide carry financing of up to 300 million USD for the pilot programme, which will be conducted in two phases at licence blocks in the Orenburg Region.



Expro Group: Wins Shah Deniz Subsea Contract

Wednesday, April 23rd, 2014

Leading international oilfield services company, Expro, has secured a milestone subsea contract with BP for the Shah Deniz Stage 2 project in the South Caspian Sea, one of Expro’s largest Europe CIS contracts to date.

The 5-year contract, worth almost $100m, will see Expro provide completion landing string equipment and services for the installation and completion of Shah Deniz Stage 2 subsea wells, covering 24 new subsea completions.

As a result of the contract, Expro is set to invest in its subsea onshore support base and infrastructure in order to support BP locally in Baku, Azerbaijan.

Expro will supply its Landing String Assembly – High Pressure (ESLA-HP) 15k valves in conjunction with its EXPRESS electro hydraulic control systems thus ensuring a fast Emergency Shut Down during the clean-up of high pressure/high rate gas wells.

The ELSA-HP has been developed to service the high pressure horizontal tree completion and intervention market. With systems designed and qualified up to 15,000 psi, 250 degF and 10,000ft water depth, this landing string assembly provides clients with the safety and reliability to develop fields with challenging conditions.

Keith Palmer, Region Director for Europe CIS at Expro, comments:

“This contract further strengthens Expro’s relationship with BP through the provision of our ELSA landing string technologies.

“Expro have been a leading provider of subsea equipment and services to BP in Azerbaijan since 2009, performing to a high standard of safety and service.

“Our specialist subsea teams have deployed more than 1500 completions / 2000 exploration operations to date, clearly demonstrating that Expro is the first choice global subsea landing string provider for reliability in deepwater.

“This additional contract allows Expro to establish further infrastructure and personnel in Baku, to enhance our local presence. This in turn will also allow Expro to promote and provide other products and services to our client base in this area.”



BP Russia: David Campbell Appointed President

Tuesday, April 1st, 2014

BP announced the appointment of David Campbell as President of BP Russia, reporting directly to Bob Dudley, BP Group Chief Executive.

Campbell, who is currently Head of the Group Chief Executive’s Office in London, will be based in Moscow. He has 30 years’ experience in BP, in commercial, technical and operational leadership roles. He has worked across a wide range of onshore and offshore upstream operations in international locations including the Alaskan arctic, the North Sea, Mexico, and as chief operating officer of BP’s operations in Iraq. He has also held senior roles in trading and in the company’s corporate centre. Between 2003 and 2007, Campbell was based in Russia as a senior member of TNK-BP’s upstream leadership team.

Campbell’s appointment consolidates several leadership positions presently managing BP’s business and interests in Russia under one senior executive based in Moscow.

Welcoming Campbell’s appointment Bob Dudley said: “I have worked closely with David and know that he has a huge breadth of experience and a deep understanding of the global energy industry. He has significant experience of working in Russia and will play a central role in shaping BP’s future and activities in one of the world’s most important oil and gas regions.”

Campbell takes up his new role with immediate effect.



BP Reaches Administrative Agreement with EPA Resolving Suspension and Debarment

Friday, March 14th, 2014

Agreement Clears the Way for BP to Enter Into New Contracts With the Federal Government

BP today announced that it has entered into an administrative agreement with the United States Environmental Protection Agency (EPA), on behalf of the federal government, resolving all matters related to the suspension, debarment and statutory disqualification of BP following the Deepwater Horizon accident and oil spill. As a result of this agreement, BP is once again eligible to enter into new contracts with the US government, including new deepwater leases in the Gulf of Mexico.

The administrative agreement applies to all of the suspended and debarred BP entities, including BP Exploration & Production Inc., BP p.l.c. and certain affiliated companies.

“After a lengthy negotiation, BP is pleased to have reached this resolution, which we believe to be fair and reasonable,” said John Mingé, Chairman and President of BP America, Inc. “Today’s agreement will allow America’s largest energy investor to compete again for federal contracts and leases.”

Under the terms and conditions of the administrative agreement, which will apply for five years, BP has agreed to a set of safety and operations, ethics and compliance, and corporate governance requirements, including those contained in the remedial order stemming from BP’s 2012 Plea Agreement with the US Department of Justice and Final Judgment Order with the US Securities and Exchange Commission.

As part of the administrative agreement, BP will dismiss the lawsuit it filed against the EPA in federal court in Texas for improper statutory disqualification and suspension.



BP: Production Begins at West Chirag in the Caspian Sea

Wednesday, January 29th, 2014

The Azerbaijan International Operating Company (AIOC), operated by BP, today announced the start-up of oil production from the West Chirag platform as part of the Azeri-Chirag-Gunashli (ACG) field development in the Azerbaijan sector of the Caspian Sea. Start-up of the West Chirag platform completes the Chirag Oil Project (COP) sanctioned in 2010.

West Chirag production began from one of the pre-drilled wells – J05, on 28 January. The oil will first pass through the newly installed processing facilities on the platform and then will be exported to the Sangachal Terminal via a new in-field pipeline linked to an existing 30” subsea export pipeline. Production will increase through 2014 as the other pre-drilled wells are brought on line.

Gordon Birrell, BP’s Regional President for Azerbaijan, Georgia and Turkey, said: “The start-up of COP marks a major milestone in the development of the super- giant ACG field. West Chirag is the eighth world-class offshore platform that we have built and operated in a safe and efficient manner in the Caspian. To date the ACG field has produced over 2.3 billion barrels of oil and with future continual major investments in new technologies and facilities, like the one we have today started up, it will continue to produce as a world-class reservoir for many decades. BP as the operator of the ACG field and our partners are committed to continuing the efforts that are expected to take us step by step towards optimization of production and maximization of the field recovery. We believe COP represents a big step forward towards stabilizing ACG’s production and increasing recovery by drilling more wells from the new West Chirag facility.

“I would like to take this opportunity to thank the thousands of people, mostly from Azerbaijan, who built and installed the subsea pipelines, jacket and topsides unit of the new platform, for their dedication and outstanding performance over the past four years. I would also like to congratulate the government, our partners, employees, all the contractors, suppliers, and everyone else involved on this tremendous achievement. I would like to specifically highlight the outstanding performance of ACG’s project, drilling, and operations teams in safely achieving First Oil. This demonstrates our ability to continue the impressive track record of planning, construction, and operations delivery in the Caspian Sea”.

The West Chirag platform has been installed at a water depth of about 170 metres between the existing Chirag and Deepwater Gunashli platforms. The design oil capacity of the new platform is 183 thousand barrels per day. The gas export capacity is 285 million standard cubic feet per day.

ACG participating interests are: BP (operator – 35.8%), SOCAR (11.6%), Chevron (11.3%), INPEX (11%), Statoil (8.6%), ExxonMobil (8%), TPAO (6.8%), ITOCHU (4.3%), ONGC Videsh Limited (OVL) (2.7%).



AMEC Tekfen Azfen Consortium Awarded $974 million Contract by BP for the Shah Deniz 2 Offshore Platforms, Azerbaijan

Tuesday, January 28th, 2014

The AMEC Tekfen Azfen (ATA) consortium has been awarded a contract totalling $974 million for BP-operated Stage 2 development of the Shah Deniz gas field in the Caspian Sea. AMEC will contribute its project and construction management expertise to the consortium.

The contract covers the fabrication, load out and offshore hook-up and commissioning of the topsides units of the two Stage 2 platforms including the Production and Risers platform and Quarters and Utilities platform. Both topsides units will be built at the ATA fabrication yard in Bibi-Heybat near Baku. The construction works under this contract are planned to commence in January 2014, with the completion expected in 2018.

AMEC Chief Executive Samir Brikho said: “Winning this excellent contract supports our growth strategy and comes as a result of our successful and safe delivery of projects in this region for BP-operated projects. I am proud of our commitment to the region and the contribution we have made to the growth of Azerbaijan’s national oil industry.”

Richard Rippon-Swaine, Oil & Gas Director for AMEC’s Growth Regions, added: “This latest award reinforces our successful long-standing relationship with BP and with our partners Tekfen and Azfen. We have developed a strong track record in Azerbaijan, applying our global skills locally to deliver projects and engineering services safely and effectively.”

AMEC has worked for BP-operated projects in Azerbaijan for 16 years and, as part of the ATA consortium, has successfully completed three major platform topsides as well as providing offshore asset support services in the Caspian. Most recently ATA successfully completed the 19,000-tonne COP-WC project which was recently installed offshore.



Shah Deniz Final Investment Decision Paves Way for Southern Corridor Gas Link with Europe

Tuesday, December 17th, 2013

The Shah Deniz consortium today announced the final investment decision (FID) for the Stage 2 development of the Shah Deniz gas field in the Caspian Sea, offshore Azerbaijan. This decision triggers plans to expand the South Caucasus Pipeline through Azerbaijan and Georgia, to construct the Trans Anatolian Gas Pipeline (TANAP) across Turkey and to construct the Trans Adriatic Pipeline (TAP) across Greece, Albania and into Italy. Together these projects, as well as gas transmission infrastructure to Bulgaria, will create a new Southern Gas Corridor to Europe.

The Shah Deniz project entails several elements: offshore it includes drilling and completion of 26 subsea wells and construction of two bridge-linked platforms; onshore there will be new processing and compression facilities at Sangachal.

The total cost of the Shah Deniz Stage 2 and South Caucasus Pipeline (SCP) expansion projects will be around $28bn. 16 billion cubic metres per year (bcma) of gas produced from the giant Shah Deniz field will be carried some 3,500 kilometres to provide energy for millions of consumers in Georgia, Turkey, Greece, Bulgaria and Italy. First gas is targeted for late 2018, with sales to Georgia and Turkey; first deliveries to Europe will follow approximately a year later.

Condensate production from the Shah Deniz field is expected increase to 120,000 barrels per day, from current levels of about 55,000 barrels per day.

In the shorter term, the Shah Deniz partners have agreed terms with SOCAR for expanding production through the existing facilities by 1.4bcma. The production increase is already in progress and is expected to be complete by the end of 2014.

SOCAR and the Shah Deniz partners have also agreed terms for extending the Shah Deniz Production Sharing Agreement up to 2048. The Shah Deniz partners have agreed to undertake exploration and appraisal work on prospects within the PSA area.

The official signing of the Shah Deniz Stage 2 FID took place today in a ceremony at the Heydar Aliyev Centre in Baku. It was witnessed by H.E. President Ilham Aliyev of the Republic of Azerbaijan who was joined by leaders from nations along the Southern Corridor, as well as from the European Commission and other countries.

Rovnag Abdullayev, President of SOCAR, said: “This is a truly historic day for Azerbaijan. This is the first time that our country and this region has embarked upon such an ambitious gas project. This project paves the way for Azerbaijan’s future and the region’s future. Firstly, it enables us to unlock Azerbaijan’s giant gas resources for the benefit of our nation. Secondly, it establishes Azerbaijan as an important energy supplier to Europe, fulfilling a vision we have had for so many years. Thirdly, it brings benefits to countries stretching from the Caspian Sea to the heart of Europe through creating a direct transportation link between the Caspian and the European gas markets.”

Bob Dudley, Group Chief Executive of BP, the operator of the Shah Deniz Stage 2 and SCP expansion project, said: “Very few projects have the ability to change the energy map of an entire region. Shah Deniz 2 and the Southern Corridor pipelines will not only change the energy map, but will give customers in Europe direct access to the gas resources of Azerbaijan for the first time. The final investment decision today would not have been possible without years of cooperation between many companies and many countries. I am proud that BP can be part of this historic moment, and grateful for the efforts of so many people in making this possible. As well as creating tens of thousands of jobs along the route of the pipelines in Azerbaijan, Georgia, Turkey and Europe, this project represents the largest ever foreign investment to Azerbaijan.”

“I am particularly pleased that we have agreed terms for extending the Shah Deniz Production Sharing Agreement up to 2048. This enables BP and our partners to work in partnership with Azerbaijan in appraising future stages of Shah Deniz. BP’s discovery of the new Shah Deniz Deep field in 2007 demonstrates the potential in this area beyond Shah Deniz Stage 2,” he added.

Today’s decision means that gas sales contracts with nine European companies will now come into effect. As a result some 10 bcma of Shah Deniz gas are expected to be delivered for 25 years to customers in Italy, Greece and Bulgaria. In addition, some 6 bcma of Shah Deniz Stage 2 gas will be delivered to consumers in Turkey. All gas sales and transportation contracts will be managed by the Azerbaijan Gas Supply Company established by Shah Deniz co-ventures under the operatorship of SOCAR. The Shah Deniz Stage 2 development and Southern Corridor pipeline projects  together represent one of the largest and most complex endeavours yet undertaken by the global oil and gas industry.

The Shah Deniz field was discovered in 1999. Azerbaijan has been exporting gas to Georgia and Turkey since 2006 from the Shah Deniz stage 1 development.

Coincident with the FID, SOCAR purchased 6.7 per cent equity in Shah Deniz and the South Caucasus Pipeline from Statoil, and BP purchased 3.3 per cent equity in Shah Deniz and the South Caucasus Pipeline from Statoil. Both of these transactions are subject to conditions that are expected to be satisfied in 2014.



BP: Wins Macondo Claims Payout Appeal

Thursday, October 3rd, 2013

BP is extremely pleased with today’s ruling by the U.S. Court of Appeals for the Fifth Circuit setting aside the claims administrator’s interpretation of the business economic loss framework in the settlement agreement BP reached with the Plaintiffs’ Steering Committee last year. Today’s ruling affirms what BP has been saying since the beginning: claimants should not be paid for fictitious or wholly non-existent losses. We are gratified that the systematic payment of such claims by the claims administrator must now come to an end.

As part of today’s decision, the Fifth Circuit has also reversed the District Court’s denial of BP’s motion for a preliminary injunction staying the payment of business economic loss claims under the agreement. The Fifth Circuit has ordered the District Court to “expeditiously craft” an injunction that stays payments to people who did not suffer “actual injury traceable to loss from the Deepwater Horizon accident” until the matter is “fully heard and decided through the judicial process.”

The Fifth Circuit has remanded the matter for further proceedings in the District Court.

BP is assessing the further implications of the Fifth Circuit’s decision and will issue an additional statement in due course







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