The U.K. government said it had taken "the necessary steps" to allow BP PLC (BP) to restart production at its North Sea Rhum natural gas field, which is partly owned by a Tehran-controlled company.
The
U.K.
government said it had taken "the necessary steps" to allow BP PLC
(BP) to restart production at its North Sea Rhum natural gas field, which is
partly owned by a Tehran-controlled company.
BP's Rhum field is 50% owned by IOC
UK
, an
affiliate of
Iran
's
state oil company. BP closed the field in November 2010 amid tightening
U.S.
and
EU sanctions aimed at stopping
Iran
's
nuclear program.
The move comes as talks have revived between
Iran
and
world powers over its nuclear program after the
U.S.
and
its allies welcomed the election of a new Iranian president this year.
The restart of the field, which was producing around 4% of current
U.K.
gas
output, is also a boost for the
U.K.
government. It comes as political tensions in
Britain
have
ratcheted up over rising domestic energy bills ahead of the high demand winter
season. Declining
North Sea
gas production has led to
increased gas imports and higher gas prices.
A BP spokesman said it was "an important milestone" towards the
restart of Rhum. The
U.K.
government has told BP that the final authorization to restart the field should
come in the next few weeks, the spokesman added.
The
U.K.
government said in a statement late Tuesday it supports restarting production
at Rhum to avoid potential environmental damage and to prevent the possible
destruction of the value of the field.
BP has said that without the inclusion of gas from Rhum, it would be uneconomic
to carry on producing at the older adjoining Bruce gas field and they could
decide to bring forward the date it would close Bruce.
The
U.K.
government said the Iranian oil company's share of the revenue from the gas
sales at Rhum will be placed in a frozen account. The government said it will
work closely with BP and BP's contractors on the field to ensure that
production can resume.
Rhum was producing around 5.4 million cubic meters of gas a day before it was
shut down in 2010. That is about 4% of current
U.K.
output.
The joint venture was set up in 1973 when
Iran
was
still ruled by the shah.
Gas was discovered in the field in 1977, but because of the technically
challenging nature of the reservoir, it only started producing in 2005.
EU officials say it is the only Western-Iranian joint venture of its kind in
the bloc.
U.K.
and EU
officials have previously won an effective exemption to
U.S.
sanctions for the $40 billion BP-led Shah Deniz natural-gas project in the
Caspian
Sea
off the coast of
Azerbaijan
.
A unit of the National Iranian Oil Co. holds a 10% stake in that project.
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