Home' Trinidad and Tobago Guardian : February 13th 2014 Contents FEBRUARY 2014 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
BP Plc, Europe s second-largest oil company, said
fourth-quarter profit fell from a year earlier as output
declined and refining margins weakened.
Profit adjusted for one-time items and inventory
changes dropped to US$2.8 billion from US$3.9 billion
a year earlier, the London-based company said in a
statement. That matched the average estimate of 12
analysts surveyed by Bloomberg.
BP follows Royal Dutch Shell Plc and Exxon Mobil
Corp, the two biggest oil companies by market value,
in reporting lower earnings as the cost of drilling rises,
refining profits slump and prices stagnate. Chief executive
officer Bob Dudley has sold less profitable fields in the
wake of the 2010 Gulf of Mexico spill and focused on
profit margins rather than volume targets.
Shell and BG Group Plc both issued profit warnings
for the fourth quarter. BG on February 5 reported the
first loss since 2000 on output disruptions from Egypt
and higher exploration costs. Shell said last week it will
accelerate asset sales to offset investment after capital
spending reached a record in 2013.
BP s production in the quarter fell 1.9 per cent to
2.25 million barrels of oil equivalent a day. The figure
excludes Russia, where BP completed the sale of its 50
per cent in TNK-BP last year and acquired 20 per cent
of OAO Rosneft. Adjusting for disposals, underlying
output rose 3.7 per cent.
BP expects underlying output to rise this year, though
reported production will drop because of divestments
and the loss of about 140,000 barrels a day from the
expiration of its concession in Abu Dhabi.
Dudley has promised to focus on BP s most profitable
fields to raise the company s cash flow to a level 50 per
cent higher this year than in 2011. The company said
it s on track to hit a target of at least US$30 billion this
year in net cash from operations, compared with US$21.1
billion in 2013.
New project startups give BP "a good clear line of
sight to get to the $30 billion in 2014," Dudley said in
a Bloomberg Television interview on February 5. "You
have to select your projects very carefully and execute
them really well, and pace them out so there s cash in
excess, so there s distributions to shareholders. There s
still a lot of growth out there for us."
Adjusted profit in the refining and marketing arm of
the company plunged to US$70 million from US$1.4
billion a year earlier in the fourth quarter. Narrower
margins, a "weak result" from the trading business,
startup charges at the Whiting refinery after moderni-
sation and the disposal of the Texas City and Carson
plants all hurt the bottom line, BP said.
Brent crude prices averaged $109.35 a barrel in the
fourth quarter, 0.7 per cent lower than a year earlier,
while BP s refining marker margin, a generic measure
of the profitability of processing oil, dropped to US$11
a barrel from US$18.17 in the last three months of 2012.
BP gained 4.8 per cent through to February 5 since
October 29, when it announced third-quarter results
that beat analyst estimates and unexpectedly raised the
dividend. It completed a US$38 billion asset-sale program
ahead of schedule to shore up the balance sheet after
the 2010 Gulf of Mexico oil spill.
The company will sell a further US$10 billion of assets
by the end of 2015 and give most of the proceeds to
shareholders, favouring buybacks, it said in October. BP
has bought back about US$6.8 billion of shares in the
US$8 billion programme funded by a deal in which it
sold its half of Russian venture TNK-BP and took a 20
per cent stake in OAO Rosneft, the country s biggest
BP still faces billions of dollars in fines from the Gulf
spill under the US Clean Water Act. (Bloomberg)
Construction of bpTT s Juniper offshore
platform should begin in the final quarter
of 2014 once the project receives official
sanction from the company s management.
This was confirmed by bpTT in a response
to questions from the Business Guardian.
According to country s largest natural gas
producer, the project was still undergoing
the internal approval process, but as long
as there is a final decision, the platform will
be fabricated at La Brea and fabrication will
begin in the final quarter.
The e-mail response read, "Juniper is
currently still in the stages of the internal
BP approval process. We prefer to fully com-
plete this exercise prior to sharing any details
of the project. We do expect, however, that
where approval is granted, construction
should begin at Trinidad Offshore Fabricators
Unlimited (TOFCO) in and about Q4 2014."
Should the platform be constructed it
should be a major boost for the La Brea
economy as the TOFCO yard has been rel-
atively idle for some years.
BPTT moved away constructing its off-
shore platform in Louisiana and initiated
the local fabrication industry with the Can-
nonball platform brought into production
in 2006. Since then, three other bpTT plat-
forms have been built locally. The last was
Serrette, which was completed in 2011.
BPTT has been trying for more than a
year to get approval to develop the more
than one trillion cubic feet of natural gas
in the Juniper field. However, the company s
global team has postponed approval because
it was felt the economics did not meet their
return on investment.
However, with the new fiscal incentives
that were approved in the 2013/2014 budget,
it has now made the project more compet-
itive to meet the company s internal hurdles.
Only last year BP PLC s chief executive offi-
cer Bob Dudley told the Business Guardian
the new measures had made the project
more competitive, but he did not want to
commit to its approval.
In a presentation at the Energy Chamber s
annual Energy Conference, Andre Celestain,
bpTT s vice president (operations), said a
major objective for 2014 is to gain approval
of the Juniper development project and to
begin fabrication work.
If approved Juniper will involve develop-
ment of the Corallita and Lantana fields via
five new wells, drilled and completed by a
fourth generation semi-submersible rig, and
tied back to a new normally unmanned plat-
form. The project will include minor brown-
field communications and controls upgrades
to Mahogany B and Savonette.
Celestain told the conference, "In 2013,
we progressed engineering design work on
Juniper, moving the project closer to
Celestain also talked about plans for what
the company calls the Galeota redevelopment
He said the objectives are to select and
implement a long-term solution to maintain
the existing Galeota terminal fit for service
and fit for purpose for a further 20 years
by making operational improvements.
Celestain explained: "The Galeota terminal
facility is over 40 years old, and so the busi-
ness has been engaged with the question
of how to ensure that we can continue oper-
ations safely and reliably over the long-
He said two major needs identified were
improving condensate handling and the pro-
vision of a new produced water treatment
"Following a review of options, it was
decided to pursue a redevelopment of the
existing facility rather than replace with a
new greenfield site. This decision was taken
in 2013. Since then, work has focused on
progressing the project to concept definition
BPTT produces 435,000 barrels of oil
equivalent and is responsible for 17 per cent
of BP s global production.
BPTT mulls building Juniper
platform at TOFCO in Q4
BP Q4 profit
drops as disposals
hurt oil output
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