LONDON: BP is reviewing its biggest new oil project in the Gulf of Mexico, due to rising development costs across the industry, and could delay the $10bn scheme.
British oil major BP said yesterday that rising costs made the current plan, under which construction would start this year, difficult to justify, becoming the latest company to reconsider the economics of a major project.
“The current development plan for Mad Dog Phase 2 is not as attractive as previously modelled, due largely to market conditions and industry inflation,” it said in a statement. The company wants to get its core Gulf of Mexico business, which accounts for around a fifth of its global output, back on track after the disastrous 2010 Macondo oil spill, which is still the subject of a court case in New Orleans.
It classes Mad Dog 2 as a “mega project”, meaning it requires gross investment of more than $10bn. Construction of Mad Dog 2, set to become BP’s biggest new oil development in the Gulf for a decade, had been scheduled to start by the end of this year and the company has said oil should start pumping by the end of the decade.
“BP fully intends to develop the resources at Mad Dog Phase 2 and is committed to moving forward with the right plan,” it said. “It is too early to speculate when the details of the final plan will be approved by BP and its co-owners.”
Reuters
