What a Smaller BP Will Look Like
BP execs announced this week big, sweeping changes to the company in the wake of the Gulf oil spill -- notably the ousting of its CEO Tony Hayward and tripling its planned asset sale to $30 billion. BP may be a smaller and more focused company when it's all over, but will it be different? In short: Nope.
Sure, there will be some changes. BP will be a little less complicated and it's getting Bob Dudley as a CEO -- the first American to ever head the oil and gas producer -- who has promised to accelerate improvements in safety. The exploration and production projects that define BP -- think hard-to-reach oil and gas in deep water -- will not.
What will change: BP will focus on selling its stakes in various oil and gas joint venture projects; or assets with flat to declining production.
- Sell $30 billion of exploration and production assets over the next 18 months;
- Assets for sale could include BP's stake in the $1.3 billion Nam Con Son gas project offshore Vietnam, and possibly in Pakistan, where it has a substantial presence. BP produces about 250 million cubic feet of gas a day and 14,000 barrels a day of crude oil in Pakistan, notes the WSJ.
- Other assets up for grabs includes BP's 60 percent stake in Pan American Energy in Argentina. There's been some speculation that BP will sell its 26 percent stake in Prudhoe Bay, the largest oilfield in North America.
- Develop new business opportunities in Azerbaijan, Egypt, China and Indonesia, according to BP.
What will stay the same: If it's in the deep water and hard to reach, expect BP to stick with it.
- Lest we forget, BP agreed in March to buy $7 billion of offshore oil and gas assets from Devon Energy Corp. in the Gulf of Mexico, Brazil and Azerbaijan.
- Dudley, the new BP CEO, is just as committed to offshore oil and gas production in the Gulf of Mexico as his predecessor -- even if BP faces resistant from the feds. In case there's any doubt, consider what Dudley told NPR in an interview Wednesday. "There are people along the Gulf Coast that think that because we capped the well, then we're going to pack up and leave -- that's just not the case. We'll be there for years. We'll have offices across the Gulf Coast."
- Oil sands isn't going anywhere. BP sold half of its Kirby oil sands project to Devon as part of a larger $7 billion deal in March. But this sale will actually speed up BP's plans to develop the Canadian oil sands project.
Gross negligence would mean a much bigger tab and would certainly put federal contracts in jeopardy. BP would likely be forced to sell more assets and further delay the reinstatement of its dividend as a result. BP's plan to seek a $10 billion tax credit from the U.S. due to the oil spill also would be put at risk.
Photo of BP's Marlin semi-sub platform in the Gulf of Mexico from BP
For complete coverage, see All Things BNET on BP's Gulf of Mexico Spill
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