MOSCOW (MRC) -- BP anticipates higher fourth-quarter production from both its upstream business and LNG-focused "gas & low carbon" unit as it recovers from Hurricane Ida and eyes growth in US shale, reported S&P Global with reference to the company's statement Nov. 2.
The UK major reported a 6% year on year decline in its upstream output for the third quarter to 1.3 million b/d of oil equivalent, reflecting hurricane impacts, maintenance, US shale divestments and price impacts on volumes it is entitled to in some countries. Hurricane Ida and its aftermath dented output by 60,000 b/d in Q3.
However, BP's upstream output was up 5% from second-quarter levels as an industry-wide maintenance uptick eased. Also, production in the gas & low carbon unit was up 6% on the year at 889,000 boe/d, and BP's portion of output from its Rosneft stake was up 4% on the year at 1.1 million boe/d.
BP highlighted the startup in September of the oil-focused Thunder Horse South Expansion Phase 2 project in the Gulf of Mexico and the gas-focused Matapal project offshore Trinidad, although it reiterated upstream production for the year is likely to be lower than last year, reflecting shale divestments. CEO Bernard Looney noted expectations for a further boost in the Gulf of Mexico next year with the startup of Mad Dog Phase 2.
Chief Financial Officer Murray Auchincloss forecast a recovery in oil demand to pre-pandemic levels sometime in 2022, saying demand of 100 million b/d had already been reached, and describing the price outlook as "constructive."
Defending BP's long-term pivot to low-carbon energy, he said the plan was for a "focusing" of the hydrocarbons business, rather than to get out of oil. "We should not use emissions reduction as a proxy for no new investments into hydrocarbon projects, so you will continue to see this company invest in hydrocarbon projects, and sanction new ones including LNG projects, as we high-grade the portfolio," Looney said. "We will deliver on our targets of reducing production, but that doesn't mean that there won't be new investment, including in LNG."
Looney added that work was progressing on forming a joint venture in Angola with Italy's Eni, intended to bring about efficiency improvements, and said the deal should be completed early in 2022, with the authorities showing "strong support."
On the company's BPX shale unit in the US, production - which is weighted toward gas - was down 12% on the year at 322,000 boe/d, reflecting efforts to slim the business purchased from miner BHP in 2018, as well as spending cuts in 2020. The company reduced the average number of rigs it operates across its Haynesville, Eagle Ford and Permian acreage from eight in the second quarter to six in the third quarter.
However, chief financial office Murray Auchincloss noted shale production was up from second-quarter levels in the third quarter and said BPX was likely to increase capital investment next year to around USD1.5 billion, from USD1 billion this year, with spending to be focused on eliminating Permian emissions.
BP also gained a boost in the downstream, although limited by higher maintenance and energy costs. Throughput at refineries BP operates was up 2% at 1.6 million b/d, led by Europe.
Overall, the company reported a USD2.9 billion loss for the quarter, but an underlying profit of USD3.3 billion, noting a further reduction in net debt. "Our businesses are generating strong underlying earnings and cash flow while maintaining their focus on safe and reliable operations," Looney said.
As MRC wrote previously, in October, 2021, BP announced plans for a USD269 million investment in three projects at its Cherry Point Refinery in Washington state, aimed at improving the refinery’s efficiency, reducing its carbon dioxide (CO2) emissions and increasing its renewable diesel production capability. The investment is aligned with bp’s aims to be net zero across its operations by 2050 or sooner and to reduce the carbon intensity of the products it sells by 50% by 2050 or sooner.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.
BP is one of the world's largest oil and gas companies, serving millions of customers every day in around 80 countries, and employing around 85,000 people. BP’s business segments are Upstream (oil and gas exploration & production), and Downstream (refining & marketing). Through these activities, BP provides fuel for transportation; energy for heat and light; services for motorists; and petrochemicals products for plastics, textiles and food packaging. It has strong positions in many of the world's hydrocarbon basins and strong market positions in key economies.