BP Plc (BP - Free Report) , along with other three oil giants Royal Dutch Shell Plc (RDS.A - Free Report) , ConocoPhillips (COP - Free Report) and Chevron Corp. (CVX - Free Report) , received the U.K. nod for the expansion of the Clair Ridge project as part of 5-year £10 billion ($15.7 billion) venture in the U.K. North Sea.
The four oil behemoths will invest £4.5 billion ($7.1 billion) in the Clair Ridge project, located west of the Shetland Islands. The companies have entered into the second phase of the project comprising design, construction and installation of a platform that has two jackets connected by a bridge with drilling and production facilities on one jacket and utilities and quarters on the other. The facilities are set to be installed in 2015 before coming on stream the following year and continue for 40 years. The Clair Ridge development is expected to deliver up to 120,000 barrels of oil per day at the peak level.
Apart from Clair Ridge project, the North Sea venture involves the development of Devenick gas field, the Schiehallion and Loyal fields as well as the Kinnoull field. BP’s net share in the North Sea venture will be around £4 billion, marking it the company’s highest level of annual investment in the region. The company has already produced 5 billion barrels of oil and gas equivalent till now and remains optimistic about 3 billion more barrels. Notably, the project will create about 3,000 jobs in U.K.
In another development, BP along with partner RWE AG, in the central North Sea, recently reached a landmark where its £500 million development project provided over a thousand design, engineering, construction and commissioning jobs at its peak level. The project is expected to contribute 3% of the country’s gas requirements following its commencement in 2012.
Again, earlier this year, BP announced plans for a £3 billion redevelopment of the Schiehallion and Loyal fields, west of Shetland as well as a £700 million development of the Kinnoull field in the central North Sea.
The company believes it has the potential to maintain North Sea production level at around 200,000–250,000 barrels of oil equivalent per day until 2030, after experiencing years of output shortfall.
The British oil giant remains focused on a string of upstream activities and we believe that its new strategy of active portfolio management, higher exploration activity with additional precautionary actions and refining and marketing repositioning will create value for shareholders. We maintain our long-term Neutral recommendation for the company considering the absence of any obvious catalyst in its business that would push the stock price higher.