BP is considering a restructuring of its oil, gas, and petroleum product business in the U.S. that would involve the spin-off of some of the company’s pipelines there, media report. The restructuring will see BP’s pipeline operations in the Midwest and the Gulf Coast become a master limited partnership, to be controlled by BP.
Although the company’s management has not made a final decision yet, the restructuring will improve the growth potential of the pipeline operations and also enhance shareholder returns, BP said.
Master limited partnerships, Houston Chronicle notes, are a corporate structure that’s unique to the United States. With it, companies can avoid paying taxes by giving most of their profits to investors, much like dividends. MLPs, Chron adds, are especially popular with pipeline companies, but so far only one other Big Oil player has gone there: Shell, with its Shell Midstream Partners, which was set up three years ago.
BP operates almost 3,500 miles of oil, gas, and product pipelines in the lower 48 states. If the company decides to go through with the MLP, BP Midstream Partners should come into being and be listed by the end of the year.
The announcement comes on the heels of another move aimed at boosting the efficiency of BP’s operations in a difficult price environment and the sizeable burden of Deepwater Horizon payments made and pending. BP plans to invest millions in expanding its data storage capacity five times over the next three years as a means of leveraging the advantages of big data to boost efficiency and cut costs further.
The plan also includes tapping the potential of machine learning and artificial intelligence, according to BP’s head of technology in the company’s exploration and production division. Ahmed Hashmi noted, as quoted by the FT, that the biggest efficiency gains in oil and gas are yet to come.