BP Contemplates Sale Of Minority Stake In Forties Pipeline

Oil giant BP plc (LON:BP) (NYSE:BP) is reportedly contemplating the sale of a minority stake in the Forties pipeline.

BP is the sole owner of the Forties pipeline, which is among the key oil infrastructure in the U.K. North Sea. Though BP has initiated discussions with potential buyers, a formal sale process is yet to commence. The company did not disclose any details with respect to this matter.

In 2016, BP intends to divest assets worth $3 billion to $5 billion to lower its debt, maintain dividends as well as to pay for the 2010 Gulf of Mexico spill.

The Forties pipeline system is capable of carrying and processing about 1 million barrels of oil per day, including liquids extracted from natural gas, from more than 50 North Sea fields. The oil transported through the system is vital in setting the price of Dated Brent – an international crude benchmark.

Initially, the pipeline was constructed to transfer oil from the Forties field to the Grangemouth refinery near Edinburgh. Over the decades, additional discoveries – such as the nation’s largest field, Buzzard – were linked to the system. The Forties field was sold to Apache Corp. (NYSE:APA) and the refinery to Ineos Group AG in the last decade by BP. The company, however, retained control of the pipeline system.

In 2015, BP farmed out a portion in the Central Area Transmission Systems, or CATS, natural-gas transportation system in the U.K. North Sea for 324 million pounds ($473 million). The free fall in oil prices has posed major obstacles for companies that intend to sell oil fields, though demand for infrastructure related to the deposits remains high.

The decline in commodity prices has forced other oil majors like Total SA (TO:TOT) to sell gas pipelines and a terminal in the U.K. for 585 million pounds. The asset was sold by Total to North Sea Midstream Partners in Aug 2015.

According to reports, Royal Dutch Shell (LON:RDSa) plc RDS.A is also in talks with potential buyers regarding the divestment of its assets, mostly fields it got in 2016 as part of the record $54 billion acquisition of BG Group (LON:BG) plc.

Currently, BP carries a Zacks Rank #3 (Hold).