BP withdraws from the Bay du Nord Project off the coast of Canada.

BP PLC announced on Monday that it has reached an agreement to sell its interest in the Bay du Nord oil project in Canada's Flemish Pass Basin to operator Equinor ASA.

This transaction aligns with BP's strategy of simplifying its portfolio and exercising disciplined capital management, according to the British energy company’s statement.

The project, situated approximately 500 kilometers (310.69 miles) off the coast of Newfoundland and Labrador, includes 10 licenses where BP holds a 37.21 percent average stake.

Equinor, which is predominantly state-owned in Norway, stated separately that this deal would grant it full ownership of the project and that it aims to make a final investment decision by 2027.

On March 3, the Newfoundland and Labrador government announced it had reached a deal with Equinor to move forward with the previously delayed project, allowing the province to acquire up to a 10 percent stake.

With initial estimated reserves exceeding 400 million barrels, Bay du Nord is described by Equinor as a generational opportunity for Canada's offshore sector, potentially establishing a new deepwater basin and influencing the province’s energy landscape for years to come.

Discovered in 2013, the Bay du Nord project has been on hold since 2023 due to "changing market conditions and subsequent high-cost inflation," Equinor reported.

According to the agreement announced in March by the province's Mines and Energy Department, project approval is projected for 2027, with first oil expected in 2031. The 2018 "framework agreement" had initially targeted production to begin in 2025.

The department highlighted that Bay du Nord is the province's first independent offshore hydrocarbon project since Hebron and its first deepwater initiative.

Equinor indicated on Monday that the project has progressed to front-end engineering and design phases, with ongoing efforts aimed at enhancing capital efficiency, planning, and overall project strength following BP's exit.

BP confirmed it will retain 100 percent interest in two exploration licenses off the coast of Newfoundland and Labrador (EL 1166 and 1170).

The company noted that any related accounting effects will be reflected in BP's second-quarter financial results.

On July 1, BP implemented a reorganization, consolidating its operations from three segments down to two: upstream and downstream.

This structural change is part of BP’s ongoing efforts to simplify its portfolio, cut costs, enforce strict capital expenditure discipline, and enhance its balance sheet to provide better value and returns for shareholders.

Meg O'Neill, who has been CEO since April, remarked that concentrating BP into two distinct segments is a significant move towards improving efficiency and execution.

Under its "reset" strategy announced on February 26, BP aims for $20 billion in divestments by 2027.

This plan also includes "structural cost reductions," which were initially projected at $5.5-6.5 billion by 2027 but have since been raised to $6.5-7.5 billion following the divestiture of its refinery and related assets in Gelsenkirchen, Germany, to Klesch Group.