Following BP’s announcement of the asset swap with ConocoPhillips, Luke Parker, vice president, corporate analysis, at global natural resources consultancy Wood Mackenzie, said: "Clair is a key growth project for BP, with Clair Ridge due on stream later this year, and Clair South (300 million barrels of oil equivalent) progressing towards sanction.
"We expect that to FID in 2021, with first production in 2025, at a capital cost of £2.2 billion (gross) (approximately US$2.9 billion). Kuparuk, in contrast, is a mature project, squarely in the harvest bracket, with a flat-ish production, capex and cash flow outlook.
"BP clearly believes in Clair‘s long-term potential. We expect production to rise until 2027, with scope for upside through increased recovery and recent exploration success. The swap takes its stake in Clair to 45.1%, which is probably as much as it would like at this stage, given the risk profile. This is the second deal on a West of Shetland asset this year - Shell farmed into Cambo - underlining the majors' commitment to the area."
He added: "ConocoPhillips has other priorities closer to home – namely US tight oil and its recent Alaska discoveries. The net capex reduction also supports the company's focus on increasing shareholder distributions.
"A complete withdrawal from the UK seems likely to follow. The residual 7.5% stake in Clair would be the big prize in any asset package on offer: that stake is worth as much, by our estimates, as the other 50+ assets that ConocoPhillips still holds in the UK."