BP reached a US$160mn sales agreement with fellow British oil company Perenco in February 2003 and had hoped to finalize the sale by the end of last year. "We spent 13 months trying to get the approvals for the sale, but we didn't manage to get them so therefore decided to let the agreement lapse in March ," Nicholas said.
"Although we think the approval submission process was complete from our point of view, why approval was refused should probably be asked of PDVSA," Nicholas said.
BP recorded a US$186mn impairment charge in the first quarter of 2004 for its stakes in the fields, BP said in its Q1 earnings statement. The impairment charge consists of a US$123mn non-operating charge and accelerated acquisition amortization of US$63mn, the latter of which stems from the difference between the current book value of the assets and the value of the assets when they were acquired from US oil company Arco in 2000, Nicholas said.
BP had previously written off a loss on disposal of US$217mn in respect of these assets, "which has now been reversed," the statement said. BP will retain its 60% stake in the Boqueron field in eastern Venezuela and 100% stake in the DZO field in the west of the country "for the immediate future," Nicholas said.
The company has no plans to either try selling them again or make new investments in the fields. BP currently operates both fields. German oil company Preussag owns the remaining 40% stake in Boqueron.
BP's share of production from these fields averaged 21,000 barrels of oil a day in 2003. "Unit lifting costs are above industry averages, but they are in full production and haven't been impacted by the recent political turmoil," Nicholas said. Some 192 staff on the fields will remain employed by BP, he added.
BP's other upstream assets in Venezuela consist of two non-operated fields: Jusepin, operated by France's Total and located near Boqueron, and the Cerro Negro heavy oil project, operated by US company ExxonMobil and PDVSA.
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