BP says gas output rises 7% on year in Q2, sees ongoing high energy prices

BP on Aug. 2 reported a Q2 jump in gas production and underscored its expectation that high energy prices and refinery margins would continue into the autumn.

In a Q2 results statement, the UK major reported a 4% year-on-year increase in overall output to 2.2 million b/d of oil equivalent, comprising a 7% increase in gas production to 1.15 million boe/d, while oil output remained flat at 1.05 million b/d. Its oil output increased in the North Sea and the US, including shale, while declining elsewhere.

"BP expects oil prices to remain elevated in the third quarter due to ongoing disruption to Russian supply, reduced levels of spare capacity and with inventory levels significantly below the five year average," the company said in its earnings statement. "BP expects gas prices to remain elevated and volatile during the third quarter due to a lack of supply to Europe with the outlook heavily dependent on Russian pipeline flows or other supply disruptions. In the third quarter of 2022, BP expects industry refining margins to remain elevated due to ongoing supply disruptions."

Despite the forecast of ongoing high price, the company said its production would be flat in the third quarter compared with the second quarter, with maintenance in high-margin regions offsetting improved "base" performance, while for the full-year it reiterated expectations of flat production, despite no longer including its shares in Rosneft and other Russian ventures.

The company retains its 19.75% stake in Rosneft as a results of Russian restrictions on selling assets, despite its intention to exit the country, while ascribing zero value to the assets.

Upstream plans

In oil and gas, BP announced the completion with Italy's Eni of the creation of a new 50:50 joint venture combining their upstream operations in Angola, which the UK major said should increase its production from 200,000 b/d of oil equivalent at present to 250,000 boe/d over the next five years.

In terms of production further in the future, the company noted its acquisition of a 35% stake in the proposed Bay du Nord oil project offshore Canada, operated by Norway's Equinor, in an asset swap with Cenovus Energy, as well as recent exploration progress offshore Brazil and Indonesia.

It said it expected oil and gas prices to remain "elevated" through the current quarter, with gas prices remaining volatile due to uncertainty over Russian supply.

On its energy transition plans, BP highlighted recent deals to develop 'green' hydrogen production in Australia, as part of the AREH project, and in Spain, Portugal and the UK alongside Spain's Iberdrola, as well as expansion of the company's EV charging operations in China, Portugal and Spain.