BP's stranded Canadian, Angolan assets expose wider industry risks

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When BP slashed its long-term oil price outlook last week, prospects in Canada and Angola were rendered worthless, company sources and analysts ...

When BP slashed its long-term oil price outlook last week, prospects in Canada and Angola were rendered worthless, company sources and analysts said, exposing broader risks the industry faces as the world pivots to low-carbon energy.

BP did not detail which assets were rendered uneconomical by the price adjustment, but company sources said they included three areas, including resources in Canadian oil sands and ultra-deepwater wells off Angola, which involve high costs. "We recognise that oil sands projects raise environmental challenges and we are actively seeking ways to undertake these projects while minimising the environmental footprint," BP said on its website.

"Oil sand projects in Canada have breakevens more than US$45 per barrel and many ultra-deepwater projects in Angola, Brazil and the U.S. Gulf of Mexico have similar high breakeven prices."BP's new forecast of US$55 a barrel, an average for the benchmark Brent oil until 2050, is much lower than assumptions made by several rivals, some of whose forecasts are US$70 or more, suggesting they face the risk of large impairments in future.

 

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