British Petroleum is currently taking a new look at its oil project in the Gulf of Mexico. The strategic review is due to the increasing development costs across the oil industry and can result in the delay of the opening of the US$10 billion project.
The British oil firm announced last Friday that the rising expenses under the current plan, mainly construction that is dated to commence this year, would be hard to justify. This latest development is just another company reconsidering the economics and finances of a specific project. Mad Dog 2 is considered as a 'mega project' and it has over US$10 billion in capital outlay.
In a statement from BP, it said, "The current development plan for Mad Dog Phase 2 is not as attractive as previously modelled, due largely to market conditions and industry inflation."
The company is seeking its Gulf of Mexico operations back online after the 2010 Macondo oil spill. The whole project accounts for nearly one tenth of its global production.
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