Proposed North Sea oil project makes progress but UK urged to mend its fiscal ways

September 4, 2025, by Melisa Cavcic

Given the need to secure future investments in domestic energy, the UK is being asked to change its current fiscal and regulatory regime related to its oil and gas policy, as Aberdeen-based full-cycle energy business NEO NEXT Energy and its partners, Serica Energy and Jersey Oil & Gas (JOG), take steps to move forward with a proposed oil redevelopment project in the North Sea.

Months after Dana Petroleum terminated an agreement related to the proposed sale of the FPSO Western Isles, which NEO Energy hand-picked for the Buchan Horst (Buchan) development project, the firm’s partner, Jersey Oil & Gas, has emphasized that work is underway to prepare the necessary addendum to the project’s environmental impact assessment in response to the revised guidance issued by the Offshore Petroleum Regulator for the Environment and Decommissioning regarding the inclusion of Scope 3 emissions.

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The company elaborated on the continued progress related to pre-sanction technical and commercial workstreams, which encompass subsurface modelling studies, the specification of the optimal drilling completion plan for the requisite production wells, and the agreement of commercial terms for the utilization of gas export infrastructure.

Jersey also pointed out the possibility of re-contracting the FPSO Western Isles at an appropriate time, as NEO NEXT Energy remains a 23% owner of the vessel. As the second term of the Buchan P2498 license has been extended by 24 months to the end of February 2027, the firm underlines that this extension provides joint venture partners with the time required to finalize the Buchan field development plan.

UK’s fiscal and regulatory hurdles pull the plug on FPSO buy as North Sea oil project awaits policy reset

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The company also claims that significant engagement has been undertaken with the UK government and industry bodies concerning the regulatory and fiscal consultations that will impact the long-term direction of the UK North Sea oil and gas industry.

Andrew Benitz, CEO of Jersey Oil & Gas, commented: “Against a challenging backdrop where the North Sea oil and gas industry has been unnecessarily damaged by the 78% EPL tax rate, we have positioned the Company to withstand the on-going fiscal and regulatory uncertainty by halving the cost base and maintaining a strong cash position.

“We hold an interest in a potentially incredible prize in the form of our carried interest to first oil on the Buchan redevelopment project. This has the potential to unlock significant UK investment, create over 1,000 well paid jobs and ultimately realise hundreds of millions in future tax payments to the exchequer.”

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The Greater Buchan Area (GBA) is made up of the licenses P2498 – covering blocks 20/5a, 20/5e, and 21/1a – and P2170 – encapsulating blocks 20/5b and 21/1d – in the UK Central North Sea. While the first contains the Buchan Horst oil field and J2 oil discovery, the second license contains the Verbier oil discovery.

The first phase of the planned GBA work program envisions the redevelopment of the Buchan field. Other phases will include the tie-back of the Verbier and J2 discoveries within the GBA license area, alongside the potential for regional third-party discoveries to be tied back to an FPSO.

The ongoing fiscal and regulatory policy issues within the UK oil and gas ecosystem have the potential to postpone the first oil from the Buchan project, previously anticipated in late 2027, after being delayed for a year from the original timeline set for late 2026.

Benitz highlighted: “We urge the government to complete its consultation process on the future fiscal regime and remove the EPL in order to establish a playing field that facilitates future investments.

“Homegrown energy should be prioritised over more carbon intensive energy imports and with Buchan, we have a great opportunity to be at the forefront of championing a fully integrated production hub that aligns with the industry’s decarbonisation strategy.”