Publishe Date: 11:45 PM - 5/22/2018 | Print

BP halts cooperation with Iran due to reintroduction of sanctions

Economy - British Petroleum (BP) has suspended work on one of its North Sea gas fields due to the reintroduction of US sanctions on Iran in the wake of Donald Trump’s decision to withdraw the US from the Iran nuclear deal.

BP owns 50 percent of the Rhum gas field, while the National Iranian Oil Company (NIOC) holds the other half. The company said, “BP has decided to defer some planned work on the Rhum gas field in the North Sea while we seek clarity on the potential impact of recent US government's decisions regarding Iran. Rhum is co-owned by an Iranian company. BP always complies with applicable sanctions,” Independent reported.

BP is currently in the process of selling its holding to Serica Energy, a UK oil and gas company based in the North Sea, and said both firms were “now in discussion with the UK and US authorities to better understand the situation and steps that may be required to ensure continued operation of Rhum.”

Serica said on Tuesday that it remains committed to the deal, as does BP, and expects it to complete in the third quarter of this year.

However, Serica added that as NIOC owns 50 percent of the field, operations are affected by US sanctions, and “in particular, the new sanctions regime announced by the US government on 8 May”.

Serica said certain services supporting the Rhum field are provided under the authorization of the US Office of Foreign Assets Control (OFAC).

The current OFAC licenses, issued to BP, which allow the provisions of goods, services and support by “certain US persons”, expire on 30 September. Both BP and Serica have applied to OFAC to renew the licenses, but the resumption of sanctions is “expected to result in a change of US policy in respect of the granting of OFAC licenses”, Serica said.

Mitch Flegg, Serica’s chief executive, said, “We will be working with our partners and the UK government to identify measures, acceptable to the US authorities, to protect safe and efficient Rhum operations and ensure maximum economic recovery of reserves from this valuable UK resource. We are receiving full support from all the relevant UK authorities in these efforts.

“All aspects of completing the transaction remain on track: an Aberdeen office has been identified; key staff are being recruited by Serica; and the transition process of moving operational staff and contracts from BP to Serica is well advanced. All parties are working to see a successful completion.”

Oil prices were boosted by the renewed tension between the US and Iran, rising above $80 (£60) a barrel late last week. Although Brent crude has dropped back somewhat, the price was up 0.7 percent mid-morning on Tuesday at $79.78.

Tags: Economy -
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