A consortium including oil giants BP and Shell is to invest £10 billion in North Sea oil projects, after the UK government granted the group permission to develop the Clair oil field, 40 miles west of Shetland.
BP’s total investment, across four separate projects in the region, will be £4 billion.
“Although it began over forty years ago, the story of the North Sea oil industry has a long way yet to run,” Bob Dudley, BP’s group chief executive, said in a statement. “BP has produced some five billion barrels of oil and gas equivalent so far from the region and we believe we have the potential for over three billion more.
“After some years of decline, we now see the potential to maintain our production from the North Sea at around 200,000-250,000 barrels of oil equivalent a day until 2030. And we are working on projects that will take production from some of our largest fields out towards 2050.”
“This investment is great news for Aberdeen and the country and provides a massive boost for jobs and growth,” Prime Minister David Cameron said in a statement. “It shows the confidence that there is to invest in the North Sea - we have cutting edge technology, world class skills and expertise and a UK Government that is committed to do what we can to secure future investment.”
BP claims that the investment, as well as other UK centred projects in the pipeline, will secure 3,500 jobs and create 3,000 more.
The oil company, which has had a torrid few years following the Gulf of Mexico oil spill, which prompted the exit of its then CEO, Tony Hayward, and the acrimonious collapse of a major deal in Russia.
The US Department of the Interior filed formal notice over the safety violations that led to the explosion of the Deepwater Horizon platform in April 2010. BP and its partners face up to £45 million in fines, adding to the tens of billions of dollars the company has already paid to the clean up operations.
The company is under pressure to find new sources of production, as it loses out to state-backed competitors, according to Teymur Huseynov, global head of energy consulting at Exclusive Analysis.
"International oil companies (IOCs) will need to adopt a more aggressive and risk-taking strategy in terms of their reserve replacement work -- i.e. exploration -- due to loss of significant ground to state-run oil companies in developing and major oil producing regions of Middle East, Russia and the CIS and Latin America," Huseynov said. "BP is the most hard pressed among the IOCs due to its loss in the US Gulf and the consequent damage that has been done to its share price. It tried to move into Russia's Arctic (much bigger reserves) together with Russian state-run Rosneft, though that did not work due to legal dispute as you would remember. The situation in the Middle East and North Africa region is in flux, so investments into traditional geographies of operations -- such as the North Sea -- has been one of the few available options in the short-to-medium term."