Bloomberg News

Total Plunges on Third Day of North Sea Gas Leak: Paris Mover

March 27, 2012

Total SA (FP) slumped the most in more than three years as Europe’s third-largest oil company battles to contain a gas leak in the U.K. North Sea.

Total shares slid 6 percent to 38.56 euros in Paris, the steepest decline since December 2008.

“The situation is worrying,” Alexandre Andlauer, an analyst at Alphavalue SAS, said by telephone. “There is precedent after what happened with BP.”

Total evacuated the Elgin platform and production was halted after a “well control problem” caused a leak on March 25. The French producer, the most heavily weighted stock on the benchmark CAC 40 index, has flown in outside experts and drilling a relief well to stem the leak could take six months.

“From initial reports, the situation doesn’t seem as worrying as BP’s Macondo because Elgin isn’t as deep,” Andlauer said. “If a relief well is what is needed, six months is a long time to wait. The best thing is to avoid the stock.”

BP was the operator of the doomed Macondo well whose blowout destroyed the Deepwater Horizon rig and killed 11 workers in April 2010.

As well as gas, about 23 metric tons of condensate, a type of light oil, has been released from the leak above the water on the platform, Brian O’Neill, a Total spokesman in Aberdeen, said today by telephone.

Total said the well causing the leak remained plugged and gas was coming from a smaller reservoir nearer to the surface. The leak may exhaust itself naturally, said David Hainsworth, a health, safety and environment manager for the company.

“At this stage, the leak has not been located and a timeframe to stop it remains unclear,” Bernstein Research analysts including Oswald Clint wrote in a note. “A best case is that the leak stops naturally within a number of days or weeks. A worst case is that Total is forced to drill a relief well.”

To contact the reporters on this story: Tara Patel in Paris at tpatel2@bloomberg.net; Ben Farey in London at bfarey@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus