November 2, 2023 [Hellenic Shipping News]- BP on Oct. 31 pointed to strong Q3 production in its “oil production & operations” unit as it reiterated plans for a big increase in the US share of its production, to 1 million b/d of oil equivalent by the end of the decade.
Production in the “oil production & operations” unit rose 5% on the year in the third quarter to 1.38 million b/d of oil equivalent thanks to reduced maintenance, higher shale output and project ramp ups, BP said, reiterating expectations of increased 2023 output.
BP highlighted 96% plant reliability in the upstream business in the quarter, and signaled rising output at the Mad Dog Phase 2 project in the Gulf of Mexico, which came onstream in April. It also noted the startup of the second of two new centralized processing facilities in its Permian shale business, which doubled the company’s Permian processing capacity.
BP’s overall hydrocarbon production was also up year-on-year, by a more modest 1%, at 2.33 million b/d, reflecting a 4% on the year drop in its “gas and low-carbon” unit — which focuses on LNG and gas projects as well as renewables, but also produces some oil. The gas and low-carbon unit was impacted by higher maintenance and “base decline,” it said.
Further out, BP is “hopeful” of achieving startup in Q1 2024 at the Greater Tortue Ahmeyim Project offshore Mauritania and Senegal — a floating LNG project with significant condensate output — Interim CEO Murrach Auchincloss told investors in a call.
“This has been a solid quarter supported by strong underlying operational performance demonstrating our continued focus on delivery,” Auchincloss said.
Auchincloss reiterated plans to increase the US share of its upstream output from around 600,000 boe/d in 2022 to 1 million boe/d by the end of the decade, a 7% annual growth rate.
It said it had begun concept selection for the Tiber oil development in the Gulf of Mexico, one of a number of major projects it has been planning in the frontier paleogene formation in the Gulf, alongside the proposed Kaskida project.
There was no immediate update on a replacement for former CEO Bernard Looney, who stood down abruptly in September following allegations over a lack of transparency about his personal relationships within the UK major.
Excess refining capacity
Amid a 60% drop in underlying profit, BP defended its earnings against criticism from investors, saying a weak result in gas trading reflected high storage levels, particularly in Europe, while the company performed well in oil trading, but retail generally was oversupplied.
In retail, “whether it be on diesel or gasoline we see the market as over-supplied as we entered September-October, but as we all know that can change quickly. There is not much excess capacity inside refining around the world. Any weather event or any outage will create a change in the margins and a change in volatility. It does feel like a more volatile world,” Auchincloss said.
On the outlook for the current quarter, in oil, BP “expects oil prices to be supported by OPEC+ production restrictions and the continued demand rebound,” it said.
In gas, European prices and Asian LNG prices “will be driven by weather, demand recovery in Europe and China and ongoing geopolitical tension”, while in the US, “weather is also a risk factor, but higher than normal storage levels and higher production should help to dampen volatility,” it said.
“BP expects industry refining margins to be significantly lower than the third quarter,” it added.
Platts, part of S&P Global Commodity Insights, assessed the Dated Brent benchmark at $89/b on Oct. 30, down 23 cents on the day.
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