"Sanctions that benefit" - BP restarts North Sea gas field that it owns with Iran.

"Sanctions that benefit" - BP restarts North Sea gas field that it owns with Iran. (Taz).

BP has recommenced production at one of the UK’s most important North Sea gasfields, nearly four years after the oil major was forced to halt output because of sanctions against Iran, the Financial Times reported Oct. 18.

‎The oil group confirmed on Friday that gas had begun to flow out of the Rhum field, 250 miles off Scotland’s northeast coast, which until its closure in November 2010 had been contributing around 4-5 per cent of Britain’s total gas output.

A thaw in diplomatic relations between western governments and Iran, which owns a 50 percent stake in the field, led to permission in October last year from the UK’s Department of Energy and Climate Change for production to begin once more at Rhum.

However technical difficulties and safety concerns have led to a delay of a year for output to resume.

Rhum is half owned and operated by BP, but the Iranian Oil Company has a 50 percent stake in the field, which was discovered in 1977, two years before the fall of the Shah amid the country’s Islamic populist revolution.

BP said it would take two to three days for gas flows from the field to feed though Rhum’s platform systems to allow for eventual delivery.

The oil company is expecting initial output at Rhum to be held at 50m cubic feet per day. The field’s peak output capacity had initially been expected to reach 300m cubic feet per day.

DECC said: “The government supports the resumption of production at Rhum, which is necessary to avoid potential environmental damage and will prevent the possible destruction of the value of the field and its important contribution to the UK’s annual gas production.”

Revenues owed to Iran from renewed production at Rhum will be held, for now, by the British government in a frozen account until a full resolution over sanctions emerges. Hmmm......Who needs Russian gas?


Flashback 2010.

The spokesman acknowledged that the sanctions would have an effect on British businesses.

"However," he added, "the potential cost to the U.K. of Iran continuing with its current nuclear program is far greater."

The joint venture to operate the Rhum natural-gas field was set up during the early 1970s, when Iran was still ruled by the Shah.

Gas was discovered in the field in 1977, two years before the Iranian revolution, but because of the technically challenging nature of the reservoir, it only started producing in 2006.

BP said Rhum's total resources, roughly equivalent to 135 million barrels of oil, amount to 800 million cubic feet—a tiny fraction of the U.K.'s proven reserves of 12 trillion cubic feet.

The loss of Rhum will have little bearing on Iran's oil and gas income.

Corporate filings made in April by the Iranian partner, Iranian Oil Co. UK, a subsidiary of state-controlled Naftiran Intertrade Co, showed it had revenue of £54.5 million ($85.78 million) from the field in 2009, and earned a profit after tax of £17.6 million, after posting a loss of £62.7 million in 2008.

The report suggested sanctions had already complicated IOC U.K.'s business, though they hadn't yet had a material impact.

"As a result of U.S. sanctions restricting trade with Iranian-controlled entities, the company will avoid using any equipment sourced from the U.S. or from U.S.-owned companies in its next projects and will replace all restricted equipment as soon as possible," the annual report said.