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BP cuts Brazil staff amid drilling lull

RODRIGO ORIHUELA, NIDAA BAKHSH and PETER MILLARD

LONDON (Bloomberg) -- BP Plc is cutting its Brazilian workforce three years after entering the South American country’s exploration and production industry.

“We anticipate a significant reduction in operated activity and headcount, and we are informing employees and contractors,” BP said in an emailed response to questions. The cutbacks follow the sale of the Polvo field last year, the conclusion of a drilling campaign and as the company prepares to wait two or three years to beginning drilling in blocks acquired last year, according to the statement.

The reductions, including dismissals and relocations, will represent at least half the workforce in Brazil, according to two people with knowledge of the plans, who asked not to be identified because details haven’t been made public. BP declined to elaborate on the number of cutbacks.

BP entered exploration and production in Brazil with the March 2010 acquisition of 10 concessions from Devon Energy Corp., with a target of producing at least 100,000 bpd by the end of the decade. The London-based producer subsequently bought stakes in offshore blocks operated by Petroleo Brasileiro SA in the so-called Equatorial Margin in northern Brazil. In May, it acquired more stakes in the region in an auction and still has to do seismic studies.

BP’s only operating asset in Brazil was a 60% stake in the Polvo offshore field, which it sold in May to HRT Participacoes em Petroleo SA for $135 million. The company now has has stakes in 19 concessions and is waiting for regulatory approval for five more.

BP said it remains committed to Brazil and attributed the operational gap to the “lumpy” nature of the business.

03/31/2014

 

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