Dry holes: BP walks away from Sakhalin 4.
BP walks away from Sakhalin 4
BP has abandoned the Sakhalin 4 oil exploration area in Russia after wells drilled there came up dry, marking a further disappointment in what had previously been seen as one of its most promising regions.
The news comes as BP delivers its annual strategy tomorrow for analysts and investors, facing questions about how it can sustain investment for future growth if oil stays at $45 a barrel.
BP confirmed today that its joint venture with Rosneft, Russia’s biggest oil company, had walked away from a licence to explore the West Schmidt block in the Sakhalin 4 region off the far eastern coast of Russia, according to a Reuters report.
BP and Rosneft launched the venture in 2006 with a plan to invest $700m in the Sakhalin 4 and 5 areas. One estimate suggested that West Schmidt alone could hold 3 billion barrels of oil and 255 billion cubic metres of gas.
Sakhalin 1 and 2 have been important projects for ExxonMobil and Shell, respectively.
However, a year ago it emerged that BP and Rosneft had suspended drilling in the area indefinitely.
Although the joint venture has retained its interest in the Sakhalin 5 region, where four wells have been drilled and three discoveries made, no further wells are planned, and BP is still analysing seismic data.