BP has appointed a Glasgow-born veteran of the oil and gas industry to run its North Sea business as it grapples with the plunge in commodity prices triggered by the coronavirus.
The oil giant said Emeka Emembolu will become senior vice president for the North Sea on July 1 after working for the firm around the world.
Mr Emembolu will replace Ariel Flores who has spent two years running the North Sea operations.
The changeover has been announced weeks after BP underlined the scale of the challenge facing the North Sea business following the slump in oil and gas prices this year.
Read more: BP slashes valuation of North Sea portfolio as it plunges into red
BP revealed last month that it had slashed the valuation of its North Sea portfolio by around $440 million (£355m) in the first quarter, during which it fell deep into the red.
However, Mr Flores made clear yesterday that he still sees potential in the North Sea business.
“I will be moving on from the North Sea at an unprecedented time, one which will test the resolve of every corner of our industry,” said Mr Flores.
“But if ever there was an oil and gas region equipped to adapt to the challenges of today and come out stronger in the future, it is this one.”
Mr Flores’ comments suggest he is confident the North Sea business is in a strong position after being reshaped in response to the challenges posed by the oil price slump from 2014 to 2016.
BP sold off interests in a range of mature North Sea fields and shed hundreds of jobs in the area.
Read more: BP expects production at giant Shetland oil field to last for decades
The rationalisation left the company focused on a smaller number of big fields. These include bumper developments completed West of Shetland in recent years such as Clair Ridge, which were approved before the last downturn.
Mr Flores presided over the development of the Alligin field West of Shetland which came onstream in February.
He made clear then that BP saw lots of growth potential in the West of Shetland area. By linking finds in the area with infrastructure it has already installed BP could develop them relatively quickly and cheaply.
The company’s priorities may have changed following the slump in oil and gas prices since March. This was triggered by the dramatic fall in demand for oil and gas which followed the imposition of coronavirus lockdowns around the world.
The Brent crude price has rallied this month following signs that demand has started to recover in countries where restrictions have been eased. Record production cuts agreed by the Opec + alliance of exporters kicked in on May 1.However Brent is still selling for around half what it fetched in January.
Read more: North Sea heavyweight tries to cut price of bumper acquisition
BP is facing complications with its plan to sell stakes in a range of mature North Sea assets to Premier Oil, which could raise significant amounts for investment in the area.
Earlier this month Premier revealed it was trying to cut the price it will have to pay BP for stakes in the Andrew area cluster of fields and the Shearwater development. It agreed in January to pay $625m for them.
BP’s North Sea business will have to compete for investment with other operations around the world.
The new chief executive of BP Bernard Looney plans to increase investment in areas such as renewable energy. After succeeding Bob Dudley as chief executive, in February, Mr Looney said BP aimed to be a net-zero company by 2050.
Read more: Have big oil firms really got the message on climate change?
In April BP announced plans to cut investment in new assets by $4 billion, in what Mr Looney said was a brutal environment for oil and gas firms.
The company said it expected to achieve around $2.5 billion of cash savings on operating costs annually by the end of 2021, compared with 2019.
Mr Emembolu joined BP in 1999 after studying biochemical engineering at Sheffield university.
He has worked in the North Sea business and operations in Africa. Most recently the father of four was head of reservoir development for the Gulf of Mexico & Canada business.
Mr Flores will take on the leadership of BP’s global subsurface engineering effort. He will be based at BP’s Sunbury campus. Brent crude hit an 18-year-low of $15.98 in April. It sold for $36.07/bbl yesterday against around $70/bbl in January.
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