Serica Energy has secured consent from the North Sea regulator to develop a field east of Aberdeen, and called on the UK Government to pursue tax and licensing policies that would support further domestic projects to reduce reliance on energy imports.
The company, which is one of the UK’s top ten oil and gas producers, has received final approval from the North Sea Transition Authority (NSTA) to press ahead with its plans for the Belinda prospect. The field, which is 100% owned and operated by Serica, is estimated to hold proven and probable reserves of more than five million barrels of oil equivalent (80% oil).
Serica said the field will be tied back to the Triton floating production and storage offloading (FPSO) vessel following the drilling of the development well, which is scheduled to take place in the first half of 2025. Production is scheduled to start in the first quarter of 2026.
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The Belinda well is the fifth well in the company’s Triton Area drilling campaign, which began in April using the COSLInnovator drilling rig. Serica said all of the wells are designed to enhance production via the Triton FPSO.
The approval for Belinda came as oil and gas producers continue to voice disquiet about the energy profits levy, or windfall tax, introduced in May 2022. The levy was brought in by Prime Minister Rishi Sunak in response to the extraordinary profits energy companies began to make as energy prices soared in the wake of Russia’s full-scale invasion of Ukraine. Energy companies have said the windfall tax is discouraging investment in the UK and increasing the country's reliance on more expensive imports of energy, although tax incentives were brought in alongside the levy to encourage firms to continue investing in the North Sea.
David Latin, chairman and interim chief executive of Serica, said: “We are delighted to have received approval to develop Belinda. This will build on our strong track record of delivering growth and adding value through investment in our assets.
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“We have further potential projects in our portfolio which we continue to assess, including the possible re-development of the Kyle field, which could, like Belinda, be another low emissions tie-back candidate to the Triton FPSO. We look to the UK Government to implement tax and licensing arrangements that support investments like Belinda, thereby creating UK jobs, earnings and tax receipts instead of increasing reliance on energy imports.”
The approval for Belinda comes after Serica announced the appointment of a new chief executive on Thursday. Chris Cox, who has more than 40 years of oil and gas industry experience, was named as permanent successor to Mitch Flegg following his departure earlier this year.
Mr Cox has held a wide range of roles over the course of his career, with experience of both private equity and publicly listed companies. He has served as chief executive of Spirit Energy, interim boss of Capricorn Energy, and chairman of Kallas Midstream.
Mr Cox said: “I am honoured to be given the opportunity to lead the team at Serica at this very important time. In the last several years, Serica has established itself as one of the leading producing companies in the UK North Sea. I will do my utmost to continue the company's reputation for safe high quality operational performance, to realise the significant potential for growth within the existing portfolio and to add further value for shareholders through M&A (mergers and acquisitions).”
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Meanwhile, a survey by PensionBee, the online pension provider, has found nearly 60% of respondents would vote in favour of Shell committing to cut greenhouse gas emissions further by 2030. It came on the eve of Shell’s 2024 annual meeting, due to be held today, ahead of which shareholders have tabled a resolution calling for the company to bring its emissions reductions targets in line with the Paris Climate Agreement.
Shell has set itself a target to become a net-zero emissions business by 2050. Shareholders will be asked to vote on a resolution calling for approval of its 2024 energy transition strategy at its annual meeting today (May 20).
The Paris Climate Agreement aims to substantially reduce global greenhouse gas emissions to limit global warming to well below 2 degrees Celsius above pre-industrial levels and pursue efforts to limit to 1.5 degrees Celsius above pre-industrial levels.
Clare Reilly, chief engagement officer at PensionBee, said: “Pension savers are long-term investors with a vested interest in ensuring that companies like Shell are not reducing their chances of a healthy and safe retirement.
“The overwhelming response from our survey shows pension savers want to see the big polluters commit to more aggressive greenhouse gas reduction targets by 2030. Savers foresee that a chaotic climate transition will be a costly climate transition, impacting their pots as much as their air quality.”
Shares in Serica closed up 1.9p, or 1.04%, at 183.8p.
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