LONDON--BP PLC (BP.LN) may decide to shut down the Bruce natural
gas field in the U.K. North Sea earlier than planned unless a way
is found to restart production at the adjoining Rhum field, which
is shut down because of sanctions against Iran.
Without the inclusion of gas from Rhum, which could more than
double the combined output of the fields, BP said it does not make
commercial sense to keep running the older Bruce field, a BP
spokesman said Tuesday. BP shut down production at Rhum in November
2010 due to Western sanctions that prohibit financial transactions
with one of the field's joint owners, which is a unit of the
National Iranian Oil Company.
Early decommissioning of any North Sea field would be a blow to
the U.K. government, which has recently implemented a raft of tax
breaks in an effort to bolster the country's energy security by
keeping aging offshore oil and gas facilities operating. BP's
warning comes just days after U.K. gas prices surged due to
unseasonably cold weather, and unexpected production and pipeline
outages.
A spokesman for the U.K. Department of Energy and Climate Change
declined to comment on whether the government was doing anything to
resolve the sanctions issue.
Referring to the possibility that BP and its partners may decide
to bring forward decommissioning of Bruce, the spokesman said:
"That's a commercial matter for BP and those involved."
The U.K.'s Foreign and Commonwealth Office declined to
comment.
"The long-term future of the Bruce facilities is very closely
tied to the ability to produce from Rhum. Given the uncertainties,
we are considering what a decommissioning project would entail and
how long it would take to execute," a BP spokesman said, without
giving any further details.
Bruce, which started producing in 1993, is currently scheduled
for decommissioning in the early 2020s, BP said. It produces 20,000
barrels of oil equivalent a day, two-thirds of which is gas.
Production started in 2005 at Rhum, which is connected to the
Bruce platform via a sub-sea pipeline. Rhum was producing around
30,000 barrels of oil equivalent a day of natural gas when it was
shuttered, BP said.
Finding a solution to the sanctions problem would not be without
precedent. Last year, U.K. and European Union officials convinced
some U.S. lawmakers to ensure that any new sanctions against Iran
should exempt the $20 billion BP-led natural gas project, Shah
Deniz, in the Caspian Sea off the coast of Azerbaijan. Another unit
of the National Iranian Oil Company has a 10% stake in the
project.
Europe sees Shah Deniz as vital to diversifying gas supplies so
the region is not too dependent on Russian imports.
France's Total SA (TOT), Australia's BHP Billiton Ltd. (BHP) and
Japanese trading house Marubeni are also shareholders in Bruce.
Bruce is located about 340 kilometers northeast of Aberdeen.
Write to Selina Williams at selina.williams@wsj.com; Twitter:
@selinawilliams3
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