x Abu Dhabi, UAESaturday 23 September 2017

BP still stained by Gulf of Mexico oil spill

BP, still pulling itself out of the wreckage of the Deepwater Horizon disaster, may need to redefine its strategy as it posts disappointing earnings.

Eleven workers were killed when the Deepwater Horizon oil rig exploded on February 20 last year, triggering a months-long gush of crude into the Gulf of Mexico.
Eleven workers were killed when the Deepwater Horizon oil rig exploded on February 20 last year, triggering a months-long gush of crude into the Gulf of Mexico.

BP is still seeking a way out of the Gulf of Mexico disaster a year after capping a well that spilled millions of barrels of oil into the sea.

Tomorrow, the British energy giant is expected by most analysts to report a net profit of US$6 billion (Dh22.03bn) for the second quarter of the year, a stark contrast to the $17bn net loss from the same period last year.

Competitors ExxonMobil and Royal Dutch Shell are predicted to report even more impressive results, however, as the price of crude remained above an average of $100 during the quarter.

BP had less of a chance to reap the rewards of high oil prices, however, after selling stakes in oilfields to raise cash to pay claims from the Deepwater Horizon disaster in the Gulf of Mexico.

Eleven workers were killed when the oil rig exploded on February 20 last year, triggering a months-long gush of crude into the sea.

Bob Dudley, who succeeded Tony Hayward as chief executive after the spill, is expected to face intense scrutiny as the results are revealed. In March, Mr Dudley outlined a vision for the company's future centred on a $16bn share-swap and Arctic exploration deal with Russia's Rosneft. But the deal collapsed because of opposition from BP's Russian partner TNK-BP.

Analysts suggest BP should shed TNK-BP, wall off its lagging North Sea and US assets in separate companies and focus on riskier but growing areas such as Angola, Brazil and Asia.

"Bob Dudley should go the whole hog and hive off the US ('Amoco') and N Sea ('Britoil') businesses to renew BP - no longer 'Beyond Petroleum' but as 'BRIC-ish Petroleum' - a higher growth global player," the London bank Investectold investors in a note last month.

BP made headway in one emerging market on Friday when the government of India approved the company's proposed $7.2bn investment in an oil and gas venture there.

"This transaction is part of BP's strategy of creating long-term value through alliances with strong national partners, taking material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets," Mr Dudley said on Friday.

But the damage from the spill drags on. BP's bill for the disaster is expected to total $41.3bn, and this springthe company and its contractors on the Gulf of Mexico well filed $120bn of legal claims against each other.

ayee@thenational.ae