Labour has been accused of stalling the development of one of Britain’s largest remaining North Sea oil and gas projects as industry leaders warn delays could jeopardise billions in investment and future tax revenues.
The Buchan area, estimated to contain around 100 million barrels of oil and gas reserves, was originally expected to begin production this year under plans developed by Jersey Oil and Gas and its partners.
Instead, the project has faced mounting uncertainty following Government intervention in the North Sea sector and ongoing consultations surrounding future tax and regulatory policy.
In a shareholder update, Jersey Oil and Gas said: “The last year has frustratingly seen momentum slowing as a result of the Government’s consultations on the future regulatory and fiscal direction of the UK North Sea.”
The Buchan redevelopment project is being advanced through a joint venture involving Jersey Oil and Gas, Serica Energy and Neo Energy.
The oil field is located around 80 miles north-east of Aberdeen in relatively shallow waters, with depths of approximately 120 metres and hydrocarbon deposits situated about 3,000 metres beneath the seabed.
Andrew Benitz, chief executive of Jersey Oil and Gas, welcomed the Government’s decision to replace the current windfall tax structure with a system linked more closely to market conditions.
However, Mr Benitz warned the proposed implementation date of 2030 risked arriving too late for many North Sea operators and projects currently awaiting investment decisions.
North Sea oil: Labour accused of delaying Buchan field as firm warns over investment threat
|
GETTY
He said: “The message is beginning to land; as long as demand persists, the UK cannot sustain a strategy that relies on importing oil and gas while discouraging domestic North Sea production.
“The agreement on a more rational fiscal mechanism for taxing North Sea oil and gas production during periods of exceptionally high prices is a welcome and important step forward.
“However, delaying its introduction to 2030 will come too late for many in the basin.”
The company believes bringing forward the new fiscal framework could help unlock major investment in the Buchan redevelopment and provide greater certainty for operators and investors.
Industry figures have also raised concerns over the impact the delays could have on future Treasury revenues generated through North Sea production
|
GETTY
Ashley Kelty, an analyst at investment bank Panmure Gordon, described Buchan as one of the most significant undeveloped projects remaining on the UK continental shelf.
He said: “The greater Buchan area is one of the largest undeveloped projects on the UK continental shelf.
“This would be a very lucrative project both for investors and the Government in terms of tax receipts.”
Mr Benitz and project partners had previously expected production to begin during 2026 before Labour’s intervention in the North Sea sector in 2024 forced development plans into suspension.
Labour’s measures included restrictions on new exploration activity alongside maintaining a 78 per cent levy on industry profits.
Industry leaders have also pointed to continued uncertainty surrounding scope three emissions regulations as a major barrier to progress across the sector.
Scope three emissions refer to greenhouse gases released when consumers burn fossil fuels in vehicles, aircraft and power stations rather than emissions directly produced during extraction.
The regulations have been under discussion for almost two years but remain unresolved, leaving several major North Sea developments awaiting further clarity from ministers.
The delays are also affecting larger projects including Adura’s Jackdaw gas field and the Rosebank oil field, with decisions from Government still pending.
A Department for Energy Security and Net Zero (DESNZ) spokesman said: “Oil and gas production will be with us for decades to come, and we will manage existing fields for the entirety of their lifespan”.