4 hours ago
7
BP has made its largest oil and gas discovery of the past 25 years off the coast of Brazil as it continues to shift its focus back to fossil fuels.
The Santos basin oil and gas discovery, which is located in deep waters about 400km off the Brazilian coast, is the company’s 10th oil discovery of the year – but could be its largest since its discovery at the Shah Deniz gas field in Azerbaijan in 1999.
BP is carrying out further tests on the Santos discovery, which was made beneath about 2,400 metres of water, to gauge the potential of the oil and gas basin. It is likely to play a significant role in the company’s plan to increase its oil and gas production to between 2.3m to 2.5m barrels of oil equivalent a day.
BP has returned its focus to fossil fuels in recent years after abandoning its failed plan to cut its hydrocarbon production, which had favoured expanding in low-carbon energy alternatives, such as offshore wind.
Gordon Birrell, the head of BP’s oil and gas production business, said the discovery was “another success in what has been an exceptional year so far” which had underscored the company’s “commitment to growing our upstream” oil and gas production.
He added that Brazil was an important country for BP, which will explore the potential of establishing “a material and advantaged production hub in the country”.
The Santos basin is BP’s second discovery in Brazil this year. It has also announced oil and gas discoveries in Trinidad, Egypt, the Gulf of Mexico, Libya, Namibia and Angola in a marked retreat from its former green agenda.
The company’s plan to become a “net zero” energy company faced a string of unforeseen hurdles since it was put in motion in early 2020.
The Covid-19 pandemic triggered its worst financial result since it reported a $4.9bn loss aftrt the Deepwater Horizon oil spill, and a year later, in 2022, it was forced to take a $25bn hit after offloading its stake in the Russian oil company Roseneft after the Kremlin’s invasion of Ukraine.
While the company invested heavily in the offshore wind industry, which has suffered increasing costs in recent years, its rivals were able to take advantage of the surge in fossil fuel prices after the Russian invasion by pumping more oil and gas.
Amid BP’s floundering net zero strategy, its former chief executive Bernard Looney was sacked from the company for failing to disclose to the board relationships with his staff.
BP’s flagging share price has raised concerns that it could become prey for a larger rival intent on a takeover. Shell has been forced to deny its reported interest in buying BP.
after newsletter promotion
BP has also emerged as a target for the New York hedge fund Elliott Management. The activist investor amassed a 5% stake in the company and has been agitating for a strategy overhaul of the company, including sweeping changes to the board.
Last month BP appointed a successor to its embattled chair, Helge Lund. Albert Manifold, the former boss of the building material company CRH, will join the BP board on 1 September as a non-executive director and as chair-elect, before taking over on 1 October.
The announcement of BP’s major oil discovery took place a day after energy producers agreed to boost output again.
The Opec+ group agreed on Sunday to raise oil production by 547,000 barrels per day for September, the latest in a series of accelerated hikes designed to regain market share. The move means Opec+ has now fully reversed its largest tranche of output cuts, made as oil demand slumped after the Covid-19 pandemic.
That left the oil price little changed, with Brent crude up 0.25% at $69.83 per barrel.
