Latest asset sale announced by oil giant
December 15, 2010 at 10:41 am
BP have announced that they have now sold 20 billion US dollars (the equivalent of £12.8 million) worth of assets to help their bid to pay for the devastating Gulf of Mexico oil disaster. The oil giant announced the figure after it agreed the sale of its majority stake in an Argentina-based company, with the deal due for completion early next year.
After previously selling interests in locations as diverse as Egypt and Vietnam, BP are now thought to have sold their 60% stake in Pan American Energy (PAE), with Bridas Corporation the recipients of this majority interest in the oil and gas firm.
Although the figure raised by the sale of this latest asset is significant and the 20 billion US dollar mark certainly a significant one, it still leaves BP some way off their intended target of 30 billion US dollars. It is thought that the oil giant will need to raise this figure by the end of next year in order to, in the words of BP group chief executive Bob Dudley, “meet … significant financial commitments” by paying the compensation bill for the oil spill that ended up being the largest offshore oil spill ever seen anywhere in the world.
The spill was triggered by a rig explosion back in April which killed 11 workers and allowed over 170 million gallons of oil to flood into the Gulf of Mexico. Although the well leaking the oil was finally sealed a few months ago, BP’s global reputation received a massive blow. The oil giant will surely be hopeful that by taking full financial responsibility for the incident, it will be taking one small step along the long road to recovery.
Centrica to shelve gas strorage plans
December 6, 2010 at 2:12 pm
The coalition government’s plans to improve the country’s gas security have received a significant blow after Centrica announced it would probably have to give up on its plan to construct a pair of gas storage facilities, with the current economic climate having a severe impact upon the scheme.
Centrica, which owns both British Gas and Scottish Gas, had intended to build one gas storage facility in the North Sea, with another constructed in the Irish Sea, with both facilities expected to cost around £1.5 billion.
The first unit would have been capable of holding a significant total of 1.7 billion cubic metres of gas, whilst the one in the Irish sea would have been able to hold 570 million cubic metres.
With the government looking to ease the worries that over-reliance upon imported gas brings over the next ten years or so, and Centrica’s proposal potentially able to increase Britain’s gas storage capacity by approximately a third, officials at the company have announced that they’re unwilling to begin construction unless the coalition government can subsidise the entire proposal.
Whilst a final investment decision is not due to be made until the start of the New Year, the noises emerging from the Centrica camp won’t be music to the ears of the government, with the company’s decision likely to be used by the opposition to highlight a failure of the coalition to deal with a problem that could endanger the old and vulnerable in the UK if supplies run too low in the future.
The last thing that Britain needs is to be held to ransom by gas suppliers over gas prices, as happened in the Ukraine back in early 2006, but if the government and Centrica fail to cut a deal, that is precisely what we may be left facing in the not so distant future.
Energy bills to rise to meet investment needs
December 6, 2010 at 2:10 pm
There was yet more bad news for energy customers recently as Ofgem warned that energy bills could double over the next ten years to raise the £32 billion needed to upgrade Britain’s energy network.
Much of the network was constructed in the 1950s and 1960s and is becoming unsuitable to deal with the way that consumers are using energy, as we shift to a low-carbon economy. By upgrading the pipes and wires in the network, the UK will be able to guarantee its energy supplies in the future.
Alistair Buchanan, the chief executive of Ofgem, said on the BBC Radio 4 Today programme that bills could add £6 a year over the following ten years.
However, comparison websites and consumer groups have been quick to heap further misery on energy customers by revealing that we could be facing much larger hikes of between 50% and 100%. They claim that Ofgem is only referring to the price rises which will be required to transport the energy, whereas as gas becomes scarcer over the coming years this will also lead to further price increases.
This would see the average bill come to over £2,000 over ten years, a shocking thought for the majority of energy customers.
The warnings follow on from the news that energy companies have recently witnessed a rise in wholesale prices. Wholesale prices are predicted to rise by 13% by the time spring arrives. If the full price increases are passed on to customers then this could see the average annual gas bill rise by £81.
