Windfall worries

North Sea oil project delayed amid tax uncertainty

Buchan has been delayed by the general election (pic: Jersey Oil and Gas)

Three companies involved in a North Sea project have pushed back the production of first oil until they have clarity on the new government’s tax plans.

The £900 million Buchan project, one of the largest developments in the region, was due to produce its first oil in 2026, and turn out about 35,000 barrels of oil equivalent per day at its peak.

It will now come on stream in late 2027 following the call for a UK general election.

Labour has said it would raise the energy profits levy, or windfall tax, from 75% to 78% and “end loopholes”. The party is expected to raise its profile in the Aberdeen area ahead of the General Election as it attempts to head off claims that its energy plans will decimate jobs.

Earlier this year Serica completed its farm-in deal on the Buchan project, securing a 30% non-operated interest in the Greater Buchan Area from Jersey Oil and Gas.

NEO Energy, operator of Buchan, owns a 50% stake while Jersey accounts for the remaining 20%.

In an update, Jersey said: “Following the announcement of an earlier than expected UK General Election in July 2024, the Buchan joint venture partners have assessed the implications and their plan for progressing the project. ”

The aim remains to have a field development plan approved by the end of this year but it said that ” exact timing for achieving this key milestone and enabling project sanction” will be linked to “fiscal clarity from the next government”.

Jersey chief executive, Andrew Benitz, commented: “With a UK General Election now announced, we are hopeful that fiscal clarity will be forthcoming in short order so that the industry can continue to do what it does best, namely investing in major capital projects that deliver vital low carbon homegrown energy and highly skilled jobs.

“In the case of the Buchan field, we have a project that will deliver a meaningful contribution to the energy transition process through our electrification strategy, which helps facilitate investment in cutting-edge floating offshore wind.”

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