BP Gears Up to Shut UK North Sea Field on Iran Sanctions


UK North Sea - Rhum Field
(Click to Enlarge)

LONDON (Dow Jones Newswires), Nov. 11, 2010

BP said it was taking steps to shut a U.K. North Sea natural-gas field it jointly owns with Iran, confirming a warning last month that new European sanctions could interrupt the operation.

Last month, the European Union approved new sanctions, including a ban on joint energy investments by Iranian and Western companies, in a bid to bring Iran to the negotiating table over its nuclear program.

A spokesman for BP said "preparations are under way" for the shut down of the Rhum field, adding it would take "several days" to suspend the operations.

"We are still seeking clarification" from the U.K. government on how the sanctions apply to the field, he said.

The Rhum field produces the equivalent of 15,000 barrels of oil a day, and accounts for just 5% of BP's U.K. North Sea oil and gas production, according to the company.

Since June, the United Nations, the European Union and the U.S. have been stepping up measures aimed at deterring Tehran's nuclear program. Iran says its nuclear ambitions are peaceful, but the U.S. and others say they are directed toward weapons production.

Turkey's Prime Minister Recep Tayyip Erdogan said earlier Wednesday that Iran has proposed two dates for fresh nuclear talks with the major powers, Nov. 23 and Dec. 5.

But BP's move underscores how tightening sanctions have already started to take a toll on Iran's energy sector.

In recent months, a number of big oil companies and oil-trading firms have stopped supplying gasoline to Iran, while a clutch of big refiners have halted imports of Iranian crude. Several major energy companies such as Repsol of Spain have pulled out of contracts to develop the Islamic Republic's vast gas reserves.

Copyright (c) 2010 Dow Jones & Company, Inc.

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