BP to sell more than £12bn assets to pay for Gulf oil spill


BP will today unveil plans to double the amount of assets up for sale from £6bn to more than £12bn in a bid to pay for escalating claims from the Gulf oil spill.

Fields in the North Sea – considered to be the company’s family silver – and Alaska could be plundered as the oil company tries to find more cash.

BP will make the announcement alongside a new figure for liabilities, its half-year financial results and the departure of its current chief executive, Tony Hayward. It will unveil an operating profit of £5bn for the second quarter but which will translate into one of the biggest losses in corporate history as provisions of around £18bn are made for its Gulf spill liabilities.

The company has already announced plans to sell £4bn worth of drilling opportunities in the US and further afield to Apache Corporation.

BP is also negotiating with potential buyers to sell off producing assets in Vietnam, Pakistan and Argentina.

But, buoyed by the strong price it has obtained from Apache, and driven by the necessity of paying for spill claims which could hit $30bn or more, it has decided to widen the net.

However, the company realises as it changes leadership to Bob Dudley that it should be more adventurous about the kind of sales.

The company is unwilling to put sell home-grown North Sea properties up for sale if it does not have to because it would be seen as symbolic of the extent of its failure.

But it knows that rivals, such as Total of France, are keen to expand in this region and it would be a relatively uncomplicated transaction.

Fadel Gheit, oil analyst with Oppenheimer brokerage in New York, believes it makes sense. “I think BP could raise $5bn to $10bn from North Sea sales and still have something left here in the portfolio,” he said.

The company has already discussed selling the Prudhoe Bay producing fields in Alaska with Apache but discussions foundered. With Apache now taken up with other assets, there are expectations that BP could reopen talks with Occidental Petroleum or another cash-rich operator.

Prudhoe Bay has both good and bad memories for BP because it has been an important revenue generator but it was also a scene of an earlier environmental accident.

The company is still facing legal suits from Edinburgh and Merseyside pension funds for the loss of value that emanated from an Alaskan pipeline spill in 2006

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
Cooper Law Firm

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