Analysts say BP likely to approve fields in Mauritania, Angola and India.  The company says it will only approve projects that make money even if oil prices drop. 

BP increasing production by drilling new wells at existing offshore oil fields

BP says it will not change its capital spending plans and will only approve projects in 2018 that can make money even if oil drops below $40/barrel.

Irishman Looney, head of BP’s oil and gas division, told Reuters that even though oil prices have risen 50 per cent since mid-2017, “discipline has to remain the word and we shouldn’t be seduced by the oil price.”

BP, along with its rivals, is set to see a strong increase in revenue after oil prices recovered to around $70, but the company plans to maintain an annual capital expenditure of $15-17 billion until 2021.

“We’re not going to say that now that the oil prices are back up, let’s do more, let’s spend more,” Looney said.  Irishman Looney is seen by many as the likeliest candidate to replace current BP Chief Executive Bob Dudley, 62, when he retires.

Looney told Reuters that any projects the company invests in this year will generate profits at oil prices far lower than current levels.

“You’ll see us continue to invest, but we will always do that when the project meets our threshold and we believe it is the best it can be,” he added. “It has to be resilient in what is a different world and it has got to be built to make money at less than $40 a barrel for sure.”

Looney offered no specifics on the number of projects or where they are located, however, Reuters reports that analysts at Macquarie say BP is likely to approve new fields in Mauritania, Angola and India.

According to Looney, BP will increase its production by drilling new wells at existing offshore fields.  This will cost much less as infrastructure is already in place.  “Drilling an infill well has enormous value,” he told Reuters.  Looney added that the process makes the wells competitive even with fast-cycle US shale.

BP says that together with the start up of seven oil and gas fields in 2017 and five in 2018, it will boost its production to 800,000 barrels per day (b/d) by 2020.  In 2017, BP produced 3.5 million b/d.

BP is still facing billions in penalties following the 2010 Deepwater Horizon spill.