BP Declines to Bid on New Gulf Drilling Leases
British Petroleum (BP PLC) has opted not to bid on new drilling leases which were made available in the Gulf of Mexico today. The company needs to clear up contract suspensions, imposed by the E.P.A before it begins bidding on new areas. The company’s reaction this week reflects a lack of confidence in clearing up these suspensions within the time it takes the Interior Department to review bids and formally award new leases.
The short term effects of contract suspensions on the company will unlikely have an adverse impact since BP is still allowed to drill at existing wells. However, if the suspension is extended, dozens of companies which work in conjunction with BP will be affected. BP will be unable to obtain any new government contracts during their suspension but that does not seem to be a huge concern since they already hold major contracts such as supplying oil to the U.S. military. I find it unlikely that these contract suspensions will be placed on the company for a lengthy period.