It turns out the reason why the blowout preventer on BP’s Macondo well failed to close was because a section of drill pipe had buckled inside the well during the accident and blocked efforts to seal it off. This is according to Det Norske Veritas, a consultancy hired by the US interior department to investigate why the blowout preventer failed.
Cameron International, the maker of the blowout preventer, responded:
The BOP was designed and tested to industry standards and customer specifications. We continue to work with the industry to ensure safe operations.
George Osborne, the UK chancellor, has just announced his tax measures for the next year, and the biggest surprise came with a cut to fuel duty, to be funded by extra charges on North Sea oil producers if the oil price remains over a certain price somewhere around $75 a barrel. The supplementary charge for such companies will now go from 20 per cent to 32 per cent.
So the North Sea’s big oil and gas producers must be suffering, right? Well, no.
For the big companies this means little – the North Sea is a declining asset, which will not mean much in the long term, and the £2bn raised altogether from this tax is nothing compared to their incomes (for comparison, Shell’s pre-tax net income last year was $35.3bn, about £21.7bn). That’s why their share price hasn’t budged in reaction.
BP’s partnership with Rosneft was remarkable for a number of reasons, not least that it was done against the wishes of BP’s partners in TNK-BP and was the first equity partnership between a private international and a public national oil company. It is also a partnership not limited to developing Russian assets only: the two parties have a 50/50 ownership of Ruhr Oel, a German refining joint venture.
Ian Smale, BP’s group head of strategy and policy, told an audience in London on Monday that the two companies would be looking at further JVs outside Russia, and described the arrangement as an example of how IOCs and NOCs could form closer partnerships in future.
A newsflash from Reuters has reported that a UK court has issued an injunction on the BP-Rosneft deal, which is now on hold.
This won’t come as a surprise to BP. Bob Dudley told reporters on Tuesday morning:
There is a relatively low hurdle in the UK for granting an injunction. That may well happen today.
This came after a case brought by AAR, BP’s partners in TNK-BP, who have been far from happy about the Rosneft deal.
But Dudley will not be overly concerned by such a move. Earlier, he insisted that an injunction would be merely a “time-out” in the discussions.
UPDATE – Rosneft is echoing BP’s confidence. A spokesman has said:
All the risks were expected and the London court decision should not affect the essence of the deal.
Shareholders apparently agree. BP remains about 0.5 per cent up on the day, having moved largely on its results.