BP Most-Exposed to OPEC-Russia Cuts

Big Oil may have to play a part in cutting supply after the landmark agreement between OPEC and non-OPEC producers last week.

BP Plc has the highest exposure in the 13 countries that have so far said they will cut output, according to Rystad Energy AS data. The likely participation by Russia, where BP holds a 20% stake in Rosneft PJSC, puts it ahead of rivals Total SA, Royal Dutch Shell Plc, Exxon Mobil Corp., Eni SpA and Chevron Corp., according to the data, Bloomberg reported.

The Organization of Petroleum Exporting Countries, which controls about 40% of the world’s oil, took it on itself to boost prices and revive the industry with the first production cuts in eight years.

Oil companies, which have seen profits smashed and projects delayed or canceled in the downturn, are headed for their best annual share performance since 2009. But even as the deal buoys their market value, the majors will have to bear some of the burden.

“If Russia should deliver on their production cut, we believe that the fields operated by Rosneft will be affected,” said Espen Erlingsen, vice-president for analysis at Rystad. “Also in Iraq, the government will need to reduce production from the large Basra fields. Here the BP-operated Rumaila is a likely candidate for cuts.”

Total follows BP with 670,000 barrels a day of output in the countries, according to Rystad. This includes 288,000 barrels a day in Angola and 240,000 barrels in the United Arab Emirates.

An OPEC cut of about 700,000 barrels a day -- more modest than the 1.2 million barrels ultimately agreed -- would reduce Total’s production by 2% to 3% in OPEC countries, Chief Executive Officer Patrick Pouyanne said on Nov. 25, before the deal was struck.

Shell has 586,000 barrels a day of production in the countries, Exxon 563,000 barrels, Eni 497,000 barrels and Chevron 194,000 barrels, according to Rystad.