BP To Divest Egyptian Oilfields, Eyes Natural Gas Reserves

BP p.l.c. BP, per Bloomberg, recently started the divestment process for its Egyptian mature oil fields. The move is expected to enable the company shift its focus toward the massive natural gas resources in the country.

Divestment

The British energy giant was planning to divest its Gulf of Suez assets — which employ thousands of locals — for a few months and generate around $1 billion from the oil assets. Total daily production from the assets includes 70,000 barrels of oil and 400 million cubic feet of gas. The sale is in line with the company's strategy to divest $2-$3 billion worth of assets through 2018, which is much lower than $4.3 billion the company received from divestment and other proceeds last year.

The sell-offs are helping the company reduce its overall debt burden that increased rapidly since 2009. Moreover, the oil spill incident of 2010 in the BP-operated Macondo Prospect has shaken the company to the core. Through the divestments, the company is still recovering from the oil spill.

Focus on Natural Gas

BP is following the global trend of increasing focus on cleaner energy, natural gas. The company projects demand for gas to increase 1.6% per annum in the 2016-2040 time frame, much higher than oil's 0.5%. This explains the company's intention to shift toward natural gas production. 

Last year, the company brought quite a few gas projects online that included the Zohr field of Egypt. Focusing on assets of natural gas in the country further ensures the potential of the gas reserves in Egypt. Additionally, along with its partners like Eni S.p.A. E and others, BP is responsible for 30% of Egypt's gas production.

The divestment is also expected to enable the company concentrate on deepwater gas fields off the country's Mediterranean coast.

About BP & Price Performance

London-based BP is among the leading integrated energy players in the world. The company has a strong portfolio of upstream projects that are expected to fetch significant cash flows.

Over the past year, BP has rallied 15.5%, outperforming the industry's 7.4% gain.

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