Financial Times: BP to sell Ormen Lange gas stake: “Questions were raised about BP's optimism in booking oil and gas reserves earlier this year when the company stuck with guidance that it expected to extract 80 per cent of its share of reserves from Ormen Lange. This compared with figures of 20 per cent from Shell, which revised its estimates down sharply in the wake of its overbooking scandal.” (ShellNews.net)
By James Boxell
Published: October 20 2004
BP is to sell its stake in Ormen Lange, the Norwegian gas field that has become a byword for the lack of consistency in how oil companies book their energy reserves.
The British oil and gas group is midway through the disposal process and is understood to be confident of selling the stake for about $700m (£388m).
The sale will include BP's 10 per cent stake in the gas field and its 10 per cent of the Langeled pipeline, which will be used to export gas from the field to UK and European markets.
The other partners in the field are Norway's Norsk Hydro, Royal Dutch/Shell, Petoro, Statoil and ExxonMobil. Norsk Hydro, which is leading the development and operation of the field and owns an 18 per cent stake, said yesterday it was interested in acquiring BP's share, but BP will also consider bids from parties not already involved in the project.
Only Petoro, the state-owned Norwegian group which controls 36.5 per cent of Ormen Lange, has the right to pre-empt the sale and acquire the stake itself.
Questions were raised about BP's optimism in booking oil and gas reserves earlier this year when the company stuck with guidance that it expected to extract 80 per cent of its share of reserves from Ormen Lange.
This compared with figures of 20 per cent from Shell, which revised its estimates down sharply in the wake of its overbooking scandal. ExxonMobil has booked 35 per cent of reserves from the field, Statoil 25 per cent and Norsk Hydro, which was originally in line with BP, 49 per cent.
It is understood BP decided on the sale of its stake as part of a new strategy where it only concentrates resources on fields where it is operator.
The company was reluctant to spend a further $1bn on taking the Ormen Lange field through development and into production.
However, analysts were surprised by BP's decision because they consider Ormen Lange to be an important gas hub for the provision of gas supplies into the UK and continental Europe.
JP Morgan is advising BP.