BP's Forties Crude Oil Output May Fall in January

By Alexander Kwiatkowski

Oct. 8 (Bloomberg) -- BP Plc said production of North Sea Forties oil, part of the benchmark used to price two-thirds of the world's crude, will probably rise 4 percent in December before falling in January.

BP, the operator of the Forties Pipeline System, forecasts December production at 700,000 barrels a day, compared with 673,000 barrels a day in November, according to an update on its Web site. January output is scheduled to decline 2.7 percent to 681,000 barrels a day, it said. October production is forecast at 649,000 barrels a day.

Forties, a blend of oil from more than 70 fields in the North Sea, is one of the four North Sea crude types that determine the price of Dated Brent. The others are Royal Dutch Shell Plc's Brent blend, StatoilHydro ASA's Oseberg and ConocoPhillips's Ekofisk.

BP said the share of Buzzard crude in the blend, which affects its quality and value, remained above forecast for the 13th consecutive week after Nexen Inc. further delayed maintenance at the field.

The proportion of Buzzard, a so-called medium-sour crude oil, fell to 29 percent in the week ended Oct. 5, from 30 percent the previous week, according to BP. BP forecasts that Buzzard's share will average 26 percent in September and 25 percent in October.

Sulfur Content

Buzzard's share affects the quality and price of Forties because it contains a larger amount of sulfur than other grades in the blend. High sulfur content cuts the amount of valuable low-sulfur products such as gasoline that can be extracted.

Buzzard production was scheduled to decline in August during planned maintenance at the field. Operator Nexen yesterday said unsuitable weather continued to delay the works which were yet to begin.

Forties crude rose to the highest in two months relative to Dated Brent after Vitol Group bought a cargo from Total S.A.

Forties cargoes loading in 10 to 21 days cost 30 cents less than Dated Brent, compared with a discount of 40 cents yesterday, according to data compiled by Bloomberg. That is the smallest discount since Aug. 4.

The trader bought a cargo from Total loading between Oct. 24 and Oct. 26 at a discount of 30 cents to Dated Brent, the company said.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net