Is BP About to Wipe Its Hands Clean?
After some public fallout, British Petroleum (NYSE:BP) and Azerbaijan’s state-run oil company SOCAR have agreed on a plan to stabilize production at the Azeri-Chirag-Guneshli oil field.
Tensions temporarily flared when President Ilham Aliyev publicly criticized BP for not delivering on production promises from the field. Production averaged 684,000 barrels per day for the first half of the year, well below the 1 million barrels per day that BP had projected. This shortfall in production cost Azerbaijan as much as $8.1 billion dollars, according to President Aliyev.
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BP has invested over $28 billion into the field so far, leading a consortium of oil companies that include Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), and Statoil ASA (NYSE:STO). BP has consistently said that it is committed to Azerbaijan and the Azeri fields, from which the company pulls more than 3 percent of its global production.
BP looks to be rapidly stabilizing its global position. With notions of unrest in Azerbaijan evaporating, the ongoing sale of its 50-percent stake in TNK-BP to Russian state-run oil company Rosneft pushes forward. BP could walk away with between $15 and $20 billion in cash, as well as a 10 to 20 percent stake in Rosneft.
Rosneft, for its part, is also looking to buy the remainder of TNK-BP from the group of billionaires who own it. If the buyout goes through, Rosneft would become one of the largest oil companies in the world.
Back in the United States, BP takes another step toward wiping its hands clean of the Deepwater Horizon disaster. The company has asked a federal judge to ignore a small number of objections involved in a claim settlement that affects more than 100,000 people. The company estimates that it will pay $7.8 billion to settle the claims, and accuses the remaining plaintiffs of seeking unnecessarily generous compensation. The agreement could be approved at a fairness hearing as early as November 8.