BP backs plan to reverse Panama crude oil pipeline

NEW YORK (Reuters) - Oil major BP (BP.L) announced on Tuesday it would back a project by privately held NIC Holding Group to reverse and reactivate a mothballed crude oil pipeline in Panama to make Atlantic basin crudes more competitive with other imports on the U.S. West Coast.

Under the agreement, NIC unit Petroterminales de Panama SA (PTP) plans to reverse the 81-mile long pipeline by 2010, allowing crude oil from the Atlantic to be pumped to the Pacific side of the isthmus

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The reversal could shave 30 days off the time it takes to move a crude oil cargo from West Africa to a refinery on the U.S. West Coast, BP said.

BP said it had agreed to acquire 5 million barrels of storage from PTP and to ship 65,000 barrels per day of crude oil on the pipeline for seven years once the reversal is completed.

Terms of the shipping agreement or the cost of the reversal were not disclosed.

The PTP pipeline was built in 1982 for the purpose of allowing Alaska North Slope crude oil to be shipped to refineries on the U.S. Gulf Coast.

The 800,000-barrel-per-day pipeline was mothballed in 1996 as falling Alaskan oil production made ANS crude noncompetitive on the Gulf Coast.

Venezuela has previously expressed interest in using the PTP pipeline to facilitate shipping its crude oil to China as it seeks to diversify its oil exports away from the United States.

(Reporting by Robert Campbell; Editing by Christian Wiessner)