BP Plc said production at its North Sea Rhum natural-gas field will halt next week to ensure compliance with European Union sanctions against Iran.
“Pending clarification from the government and to ensure we comply with the required notification period in the regulations, preparations to suspend production are underway,” Matt Taylor, a spokesman for BP based in Aberdeen, Scotland, said in an e-mailed statement. “From the middle of next week there will be no production from Rhum.”
The Rhum field, 240 miles (370 kilometers) off Scotland’s northern coast, is a 50:50 venture with Iranian Oil Co. U.K. Ltd., a unit of Tehran-based Naftiran Intertrade Co.
The EU published regulations on Oct. 27 intended to restrict Iranian business activities and prevent European technology from helping its nuclear program. BP will review the closure when it’s received government clarification on the rules, Taylor said.
“Any reduction in gas supply is bad news,” Graham Freedman, a senior analyst at Wood Mackenzie Consultants Ltd. in London, said today by telephone. “It will tighten the market.”
Freedman said Rhum meets about 2 percent of gas demand on an average U.K. winter’s day. A current gas glut means the impact of Rhum’s closure will be “limited,” he said.
Iranian Oil will discuss the sale of its stake in Rhum at a board meeting in Lausanne, Switzerland, next week or the week after, Hojat Heidari, the company’s executive director, said by telephone from Aberdeen today.
“I don’t think the board is interested in selling to BP,” he said.
U.K. North Sea gas production is declining at a rate of about 10 percent a year, data from the Department of Energy and Climate Change show. Britain, Europe’s biggest gas user, is increasingly turning to tanker-borne imports of liquefied gas to meet demand.
Rhum was discovered in 1977 and production from the high-pressure-high-temperature field began in 2005. The unmanned deposit pumps as much as 6 million cubic meters of gas a day, along with some liquids, and cost 350 million pounds ($566 million) to develop, according to BP’s website.
Gas from the field passes through the Bruce platform, about 30 miles away, and is transported via Total SA’s Frigg pipeline on to the St. Fergus terminal in Northern Scotland. Output from Bruce wouldn’t be affected by the closure of Rhum.