First oil from North Sea project gets bumped to late 2027 with hopes placed on UK elections to bring fiscal clarity

While hoping to see greater fiscal clarity in the aftermath of the upcoming general elections, the UK-headquartered Jersey Oil & Gas (JOG) has disclosed the change in the timeline for the first oil from the HitecVision-backed NEO Energy’s redevelopment project, which is said to be the third largest pre-development field on the UK Continental Shelf (UKCS).

With the UK’s general elections coming earlier than expected and only a month away, the Buchan joint venture partners, consisting of NEO Energy (50%, operator), Serica Energy (30%), and JOG (20%), have taken the time to assess the implications of the upcoming elections and their plan for progressing the Buchan redevelopment project in the Greater Buchan Area (GBA) toward the development phase.

According to Jersey Oil & Gas, activities are going ahead to make the project ready for a field development plan (FDP) approval by the end of this year, however, the exact timing for achieving this and enabling project sanction is said to be linked to securing fiscal clarity from the next government and ensuring that the project remains financially attractive.

With NEO Energy advancing the work program required to enable project sanction, the completion of necessary engineering work is believed to be on track. While the first offshore survey, which was finished in May, obtained the geophysical data used for the subsea and drilling rig contract tendering process, a second survey to get geotechnical data, is scheduled to start this month. 

Andrew Benitz, Jersey Oil & Gas’ Chief Executive Officer, 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.”

Furthermore, Jersey has confirmed that work is moving forward on the other two remaining workstreams, which entail the subsurface studies required to finalize the drilling program and operational verification and preparation for the handover of the FPSO Western Isles to the Buchan joint venture. 

The UK firm highlights that engagement on the Buchan FDP and associated regulatory consents is also progressing with the North Sea Transition Authority (NSTA) and the Offshore Petroleum Regulator for the Environment and Decommissioning. Previously, the first production from the project was slated for late 2026 with peak production rates of around 35,000 barrels per day.

Moreover, the major contract awards and capital commitments are now anticipated in 2025, following the receipt of fiscal clarity and subject to FDP approval, pushing Buchan’s first production to be targeted for late 2027. Under the current fiscal policy, JOG’s valuation of the project does not materially change due to the later date for the first oil production.

Aside from the Buchan project being fully carried to FDP with a further $20 million payment due following approval by the NSTA of the Buchan FDP and receipt of the associated regulatory and legal consents, Jersey also has a full carry to first oil for its 20% equity interest in the development costs, which are to be approved in the FDP.

The Buchan field will be developed in the North Sea through up to five subsea production wells, supported by two water injection wells tied back to the FPSO Western Isles, which will be modified to be electrification-ready before redeployment to the field. The gross development costs for the project are estimated at £850-950 million.