BP has secured a drilling licence off the coast of Venezuela to develop the Loran gas field, two weeks after abandoning the North Sea.
The agreement with the South American nation grants the British energy giant access to approximately four trillion cubic feet of natural gas in the Atlantic Ocean. The deal comes a fortnight after BP put its UK North Sea business up for sale, bringing an end to 60 years of operation in British waters.
The agreement was officially signed in Caracas and broadcast on Venezuelan state television, marking a swift shift in investment focus from European offshore basins to South America.
Loran Gas Field Partnership
BP will explore and drill the second phase of the Loran gas field alongside two international joint venture partners: United Arab Emirates firm XRG and Qatari conglomerate UCC Holding.
Meg O'Neill, chief executive of BP, signed the deal and praised the international collaboration behind the project. "The award of the Loran Phase 2 licence is an important step forward. It builds on the strong collaboration we have established with the government of Venezuela and our partners and reflects the progress we have made together," O'Neill said.
"BP has a long-standing presence in the region and deep experience in developing major gas resources. Together, these agreements provide a strong foundation to progress Venezuela's offshore gas potential and unlock the next phase of development," she added.
The deal comes amid broader international momentum in Venezuela's energy sector. Global oil corporations have been expanding operations in the South American country following the arrest of former president Nicolas Maduro by United States forces in January.
UK Windfall Tax Controversy
BP's decision to exit the North Sea after six decades has intensified concerns that the UK government's windfall tax on oil and gas producers is crippling domestic energy production. O'Neill warned that the North Sea basin is no longer "competitive" and urged Greater Manchester mayor Andy Burnham to push for the abolition of the windfall tax.
Conservative shadow energy minister Andrew Bowie voiced sharp criticism of the government's fiscal stance, arguing that heavy taxation is driving major energy investors away from the UK.
Bowie said it was "not surprising" that BP was looking elsewhere to expand "because you've got a government that is completely anti their core business."
"The North Sea basin is now one of the most fiscally insecure basins in the world," Bowie warned. "It's incredibly disadvantageous and puts off investors."
"They have no idea what's coming down the tracks when it comes to taxation policy, and there is not a feeling of being welcomed here in the United Kingdom," Bowie added. "It's not surprising that BP are looking around the world at places to expand their business when they have got no hope of doing so in the UK because you've got a Government that is completely anti their core business."
Political Opposition and Industry Impact
Richard Tice, energy spokesman for Reform UK, also condemned the retreat of British energy companies from domestic waters in favor of foreign ventures.
"What a tragedy that BP is having to do drilling deals with authoritarian dictatorships instead of in the North Sea," Tice said. "This highlights the absolute absurdity of Labour's refusal to open up the North Sea."
The UK North Sea has produced oil and natural gas since the 1960s, forming a mainstay of the nation's industrial economy. However, ongoing tax changes and regulatory shifts have led major energy companies to reallocate capital to overseas gas projects in Latin America and the Middle East.
With the signing of the Loran Phase 2 licence completed in Caracas, BP and its consortium partners XRG and UCC Holding are expected to begin preparations for the next stage of offshore gas field development in the Atlantic.
