BP revisits 1970s petrol station — but wants to step on the gas

North Sea oil has long inspired feelings of national pride. And nationalist passion. So, news that BP has resumed production at a £4.4bn project off the Shetlands — as part of a plan to double UK output — is sure to rekindle both.

Back in 1975, Foreign Office memos since released by The National Archive show how officials waxed patriotic about the North Sea delivering “freedom from Arab pressure” (they also waxed tragi-poetic about tax revenues as a “rainbow spanning the sombre horizon” of Harold Wilson’s economic policy . . . do civil servants still write like that today?). At the same time, though, the would-be Romantic mandarins warned that an independent Scotland would have a legitimate claim to 80 per cent of the oil reserves — in a “threat to the survival of the UK”. Fast forward to 2014, and a Scottish Government White Paper waxed optimistic about £7.9bn of North Sea revenues delivering, well, “Freeeeeedom!”

In Brexit Britain, then, BP’s announcement would seem to further fuel the arguments of all those seeking to take back control by taking us back to the 1970s. Mark Thomas, the oil company’s North Sea regional president, spoke of further “exciting opportunities” — not least the Clair Ridge project, coming online next year.

BP is not alone in recharting old waters. Hurricane Energy, a small UK explorer, has made several discoveries west of Shetland in a formation described by one analyst as the “most important” to be drilled this century.

Before investors, or voters, become too carried away, however, some historical and geological perspective.

Hurricane’s shares may be up 213 per cent in a year on estimates of finding 1bn barrels of oil, but those assets are still down in the seabed, with their scale and recoverability uncertain.

And BP’s shares may be up 32 per cent in a year, but their rise seems more to do with the oil price — and gas investments. Of seven major projects announced for 2017, six are for gas, with a combined peak production estimate of 920,000 barrels of oil equivalent per day. Chief executive Bob Dudley even spoke of “supporting that shift to gas in the portfolio” at his shareholder meeting last week.

By contrast, BP’s Shetland project will only lift its North Sea production to 200,000 boe/d. Back in 2000, it was producing 819,000 boe/d from UK fields — it even had one in Dorset.

If anything, then, Monday’s news is more of a last hurrah for BP in the North Sea, and for the UK Continental Shelf more broadly. With the strongest capital flows — and investor buzz — focused on unconventional US resources, traditional offshore oil can seem as fashionable as a set of free “crystal” tumblers from a 1970s petrol station. With a big shield logo.

HSS’s machine learning

Bosses of Britain’s industrial groups look more and more like interchangeable cogs in the corporate machinery, writes Kate Burgess. HSS, the shrinking equipment hire business that is likely to fall out of the FTSE All-Share index, has hired Steve Ashmore as chief executive. Mr Ashmore was UK managing director of Brammer, Europe’s largest supplier of ball bearings. Before that he was at Wolseley, the builders’ merchant.

HSS’s recent history has not been pretty but Brammer won the doubtful accolade of being the UK’s worst performer in the aftermath of the Brexit vote. By November, it had admitted a turnround would be too difficult as a public company, and flogged itself to private equity.

The board of HSS must hope that Mr Ashmore won’t repeat the mistakes of former bosses of either Brammer or HSS. But they should bank on him having learned the lesson that all new bosses learn: shove as many nasties into the accounts in the first year and roll your eyes at the mis-steps of previous management.

Exponents of this art include David Lockwood, who in December jumped ship from Laird, the engineer whose biggest customer is Apple, to Cobham, best known for its in-flight refuelling equipment. Within months, he had ditched the dividend, told investors to forget the forecast profit range and launched a rights issue. His successor at Laird, meanwhile, lopped the dividend, warned on profits and also held a rights issue, leaving investors to tut about the previous management.

British industry, it would seem, remains a pioneer of standardised industrial processes to this day.

Barclays’ mail fail

Barclays has tightened its email security after chief executive Jes Staley replied to messages from a hoaxer. But the bank need only have added a feature found on the FT email system, allowing messages to be cancelled some time after clicking “send”. The only trouble is, the maximum cancellation period seems to be 30 seconds. History suggests Barclays CEOs might need a bit longer. About 2 years, perhaps.

matthew.vincent@ft.com

HSS: kate.burgess@ft.com