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BP Suspends Work On Gas Field Shared With Iran

offshore rig

BP has stopped work on the Rhum gas field in the North Sea, which it has a 50-percent stake in, sharing it with the National Iranian Oil Company. The company cited the reintroduction of U.S. sanctions against Tehran as reason for the suspension.

The company, which agreed to sell its stake in Rhum to another UK-based company, Serica Energy, said, as quoted by The Independent, "BP has decided to defer some planned work on the Rhum gas field in the North Sea while we seek clarity on the potential impact on the field of recent US government decisions regarding Iran; Rhum is co-owned by an Iranian company. BP always complies with applicable sanctions."

Both BP and Serica are in talks with UK and U.S. authorities to make sure they are not in breach of the sanctions announced on May 8th as President Trump pulled the Untied States out of the Joint Comprehensive Plan of Action, commonly referred to as the Iran nuclear deal.

Bp discovered the Rhum field back in the 1970s. Production was suspended in the early 2000s as the U.S. and several European countries imposed sanctions on Iran for its nuclear program. BP, whose chief executive Robert Dudley is an American citizen, struck a deal with smaller Serica to sell its 50 percent in the field for US$400 million.

Related: Trade War Truce With China Boosts Oil Prices

At the moment, BP operates the field under a license granted it by the Office of Foreign Asset Control—the Treasury Department’s sanction-enforcement division—which was renewed last September and will expire and the end of September this year.

In the meantime, the BP/Serica deal is going according to plan, seen to wrap in the third quarter of the year. A condition for the successful completion of the acquisition was Serica getting its own license from the OFAC. Reuters reported earlier today the company is still awaiting one.

By Irina Slav for Oilprice.com

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