LONDON — BP says it has signed a deal to sell its interest in the Bay du Nord project offshore Newfoundland and Labrador to Equinor, the project’s Norwegian operator, as the London-based energy giant looks to simplify its global portfolio.
Financial terms of the deal were not immediately available.
“We’re proud of our partnership with Equinor and the work we’ve done together to develop the Bay du Nord project,” said Gordon Birrell, executive vice-president of upstream at BP.
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“However, BP is exercising strict capital discipline, allocating it to the opportunities that create the most value for BP.”
Bay du Nord is in the Flemish Pass Basin, about 500 kilometres east of St. John’s at a water depth of up to 1,170 metres.
BP holds interests across 10 licences associated with the project, with an average working interest of 37.2 per cent. The sale is subject to customary conditions and approvals.
BP will continue to hold a 100 per cent interest in two exploration licences offshore Newfoundland and Labrador.
Equinor, two-thirds owned by the Norwegian government, aims to make a final investment decision on the project early next year, subject to market conditions and regulatory and internal approvals.
“Over the past few years, we have strengthened Bay du Nord by improving the business case and reducing key risks. This transaction reflects our confidence in the project as we continue maturing it towards a final investment decision,” said Philippe Mathieu, executive vice-president for international exploration and production at Equinor.
“We will seek opportunities to bring in partners as part of the project’s further development.”
Equinor estimates recoverable resources of more than 400 million barrels of oil in the project’s first phase, which is expected to cost $14 billion. First oil is targeted for 2031.
In Newfoundland and Labrador, there are high hopes among government and the oil industry that Equinor will proceed with Bay du Nord. The provincial government is considering purchasing a stake in the project and it is expected to make a decision later this year.
Premier Tony Wakeham interpreted Monday’s news as a “positive step forward” for Bay du Nord and the province’s offshore energy industry.
Equinor is clearly committed to the project and is now taking on its full ownership, Wakeham said in a news release.
“That is a strong vote of confidence in Bay du Nord, in our province, and in the long-term potential of our offshore,” he said.
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The province has said Bay du Nord would deliver about $6.4 billion in royalties, taxes and a 10 per cent equity stake in the project’s first 25-year phase. Without the equity stake, the province would bring in about $5 billion, officials have said.
Meanwhile, The Sierra Club said BP’s exit signalled the project was not worthy of public investment.
“That BP has now exited shows this project is not viable and we need a rapid, community-focused build-out of transmission infrastructure for renewables, like offshore wind, for (Newfoundland and Labrador) instead,” the environmental group said in a news release Monday.
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Source: BNN Bloomberg
