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area demarcated during exploratory drilling The plan includes a 40% cut to BP’s oil and
operations. gas production over the next decade, along with
In June 2020, BP Oman chairman Yousef bin a tenfold increase in clean energy investments.
Mohammed Al-Ojaili said that production of BP intends to grow its renewable energy
gas from Khazzan had reached 1 bcf per day. He capacity from 2.5 GW to 20 GW by 2025, and
added that 126 wells had been drilled at Khazzan 50 GW by 2030, primarily by focusing on off-
and Ghazeer, out of a planned 300 wells over 15 shore wind. This compares impressively with the
years. world’s current largest wind developer Iberdola,
BP’s trading subsidiary buys roughly 10% of which has a capacity of around 18 GW.
the gas produced from Block 61, which is sup- BP’s share price closed in London at
plied in the form of LNG by Oman LNG. This GBP2.324 ($2.95) on September 24, its lowest
deal runs until 2025. level since October 1995. While weaker oil prices
and fears of a second coronavirus (COVID-19)
PTTEP expansion wave were contributing factors, the decline indi-
PTTEP made its entry into the Middle East in cates that Looney’s pitch was unsuccessful.
early 2019, when Abu Dhabi’s Supreme Petro- Shareholder concerns were not unwarranted.
leum Council approved the award of the Off- Offshore wind is an expensive proposition: the
shore 1 and Offshore 2 blocks to a consortium of company announced on September 10 a $1.1bn
the Thai firm and Italy’s Eni. investment in two offshore wind projects under
Later that year, it acquired 100% of Portu- development by Norway’s Equinor. Their gener-
gal-based Partex Holding from the Calouste Gul- ation is due to reach 0.7 GW within five years,
benkian Foundation for around $622mn, giving it of which BP will net 0.35 GW. This means the
a 2% stake in Muscat-backed Petroleum Develop- UK major is effectively paying $3.1bn per GW,
ment Oman (PDO) and a 1% share of the country’s suggesting that BP’s 2025 target may cost over
Mukahizna project in Block 53, which is operated $60bn to achieve.
by Occidental Petroleum (Oxy). However, the knee-jerk reaction was some-
This added around 16,000 bpd of crude sales what unsurprising given the major upheaval
as well as 2P reserves of around 65mn barrels of the move to transform the company, and inves-
oil equivalent (boe) to PTTEP’s books, with the tors clearly needed time to decide on BP’s new
majority of these located in Oman. Partex also strategy.
operates Brazil’s Potiguar field (50%) and holds This has largely proved accurate, as the com-
stakes in Kazakhstan’s Dunga field (20%) and pany’s share price rose 0.1% on the Block 61
Angola’s Block 17/06 (2.5%). divestment news to GBP2.72 ($3.72) on Febru-
Meanwhile, the Thai company also added ary 1 and is now up 6.6% in 2021.
2% stakes in both Oman LNG and ADNOC Gas While BP is likely set for a long and bumpy
Processing. journey, the growing investor appetite for
clean energy stock suggests there may be
BP’s plans light at the end of the tunnel, while success-
Looney announced BP’s strategy for transform- ful divestments that balance ongoing sources
ing itself into a clean energy giant in September, of production with debt reduction may be
leaving investors unconvinced, and the compa- enough to keep investors onside long enough
ny’s share price slumped to a 25-year low. for other efforts to bear fruit.™

Week 05 04•February•2021 www. NEWSBASE .com P7