By Cassie Werber
LONDON--A drop in volumes from the U.K.'s largest North Sea oil
field, which has led to the delay of some crude-oil cargoes, is
unrelated to operational issues at the Kinneil terminal, according
to a person with knowledge of the situation.
The Buzzard field produces around 200,000 barrels of oil a day
at capacity, but production is now running at around 80,000 barrels
a day, according to a London-based oil trader.
The importance of the field to the U.K. economy was apparent in
January's fourth-quarter gross domestic product data, which showed
that Buzzard's prolonged total closure in late 2012 contributed to
the economy shrinking more than expected in the final three months
of the year.
The current fall in production has been linked to an operational
issue at Kinneil, a terminal operated by BP PLC (BP) that is at the
end of the Forties Pipeline System, the main conduit for North Sea
oil to be transferred to land.
However, the person told Dow Jones Newswires that the Buzzard
shortfall isn't linked to the operational issue at Kinneil.
Nexen Inc. (NXN), which operates Buzzard, hadn't responded to
requests for comment at the time of publication.
The Kinneil Terminal is capable of processing 1.15 million
barrels a day of crude oil, according to BP's website. The most
recent data from the U.K. Department of Energy and Climate Change
shows the U.K.'s maximum monthly crude-oil production at 5 million
barrels in 2012.
Oil traders, meanwhile, said that seven cargoes of Forties crude
had been delayed until later in the month because of the lower
volumes of oil leaving Buzzard, although there was as yet no
obvious impact on oil prices.
Cargoes FO219, FO302, FO304, FO306, FO307 and FO309 and have all
been delayed for between one and four days. Cargo FO303, originally
due to begin loading March 5, has been deferred to March 15.
Traders said that the lower volumes could have the effect of
pushing up prices.
"[The] Buzzard shortage is bullish yes, but [we are] not seeing
that in the price yet," a trader said.
Other factors were weighing more heavily on the Brent price, the
trader said, with the low price of Mediterranean crude forcing the
price of North Sea grades down as well.
"With Urals so cheap, [it] has dragged down the Forties market
to cheaper levels," the trader said.
Maintenance is scheduled for mid-March at Buzzard, which traders
said will likely have a further effect on volumes.
Write to Cassie Werber at cassie.werber@dowjones.com
