BP expects tight winter gas market
BP expects global gas markets to "remain tight" during the peak winter demand period, but forecasts an increase in its upstream production from the summer.
The firm expects its global fourth-quarter upstream production of gas and oil to strengthen from the third quarter, reflecting the ramp-up of major projects, mainly in gas regions.
BP's gas output in Europe already rose to 8.55mn m³/d in the third quarter from 7.5mn m³/d a year earlier and 7.02mn m³/d in the first half of summer.
BP holds stakes in several UK North Sea fields, including a 32pc share in Culzean, which was commissioned in June 2019, and a 27.5pc stake in Shearwater.
Excluding inventory effects and one-off items, BP's underlying profit of $3.3bn in the third quarter — up from just $86mn a year earlier — was partly thanks to "a stronger gas marketing and trading result", the firm said.
But the company's bottom line was hit by over $6bn of adverse fair value accounting effects related to soaring gas prices and hedges linked to LNG contracts. The company expects the mismatch between the market value of the hedges used to risk-manage its forward LNG contracts and the LNG contracts themselves to unwind "if prices decline and as the cargoes are delivered".
Related news posts
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more