BP to go ahead with $500 million North Sea investment

By Sarah Young

LONDON (Reuters) - British Oil major BP is to proceed with a $500 million (330.4 million pounds)-plus investment plan in the remote Shetland Islands, another shot in the arm for North Sea oil.

Though North Sea production has fallen by about two thirds since 2000 and a surprise tax increase in 2011 led to dire predictions about the region's future, industry body Oil & Gas UK in February forecast a pick-up in production from 2014, fuelled by a surge in investment.

The new investment by BP could bring a huge add-on project at its Clair field and will be welcomed by a British government eager to slow the decline in North Sea production after dramatic falls in the past two years undermined attempts to kickstart growth.

BP said on Thursday that it will drill at least five appraisal wells in the giant Clair field off the west coast of the Shetland Islands, north of Scotland, to discover whether it is worth further development.

BP and its Clair partners, fellow oil majors Shell, ConocoPhillips and Chevron, in 2011 said they were investing 4.5 billion pounds in a second phase of development for the field, which first started pumping oil in 2005.

"If successful, the appraisal programme could pave the way for a third phase of development at Clair - this is now a real possibility," BP's North Sea regional president Trevor Garlick said in a statement.

Big oil companies have looked beyond the North Sea in recent years, favouring new oil provinces with more potential, but the rich geology of the areas around the Shetland Islands have kept them hooked.

BP's plan for Clair follows other recent new investments in the North Sea, including a $7 billion project announced by Norway's Statoil in December and a 1.6 billion pound investment by Canada's Talisman Energy two months earlier.

BP, which has the biggest stake in Clair at nearly 29 percent, said that it has already started drilling the first appraisal well and it could complete up to 12 wells over two years, depending on the results of the first wells.

(Editing by David Goodman)

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Government to pledge investment to aerospace industry

(Reuters) - The UK government is set to pledge ahead of Wednesday's budget, a significant investment into the country's aerospace industry as part of a long-term strategy to spur growth and keep the industry ahead of international competition.

Deputy Prime Minister Nick Clegg is expected to make the announcement on Monday as part of the Aerospace Growth Partnership-an existing government initiative to support the industry.

According to reports in the British press the investment is expected to be worth hundreds of millions of pounds and is expected to run for 10 years, beyond the life of the coalition government.

The plan will involve funding from money committed by companies such as Airbus, Bombardier and Rolls-Royce - being matched by the government, Sky News reported.

Faced with the risk of a third British recession since the 2008 financial crisis, the government is under growing pressure to act and is expected to announce some measures to help investment in infrastructure, possibly offset by spending cuts elsewhere.

(Reporting by Karen Rebelo in Bangalore; Editing by Bernard Orr)

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