A major North Sea player has decided to “materially slow down” investment across all of its development assets, warning measures by the Labour Government have increased uncertainty, with first oil from a key development “inevitably" delayed.

NEO Energy, which owns 50% of the Buchan Horst development and is the operator on this project, declared: “In recent weeks, the Government has announced a number of measures which have materially increased the level of uncertainty in relation to the UK’s oil and gas sector and investment decisions in this context are extremely challenging.”

READ MORE: Ian McConnell: PM shies away from what needs to be done, good news for Scotland

It added: “In relation to the Buchan Horst project, NEO awaits clarity regarding the UK regulatory and fiscal framework so that the full impact can be assessed. This will inevitably delay first oil timing in relation to the project which was previously forecast to be late 2027. The joint venture will seek a licence extension in order to continue technical evaluation in light of these changes to tax and environmental consents.”

READ MORE: Financial firm buys fellow Scottish group, hails £1bn-plus 'milestone'

Serica Energy and Jersey Oil & Gas are the joint venture partners in the Buchan project, owning 30% and 20% respectively.

Jersey Oil & Gas's chief executive officer, Andrew Benitz, declared the Buchan development “has the potential to produce some of the lowest emission barrels of any project globally”. And he declared “homegrown energy is the right solution”, underlining benefits in terms of  economic growth, jobs and tax receipts.

READ MORE: Ian McConnell: The bottom line on SNP's disappointing peak rail fares call

NEO, which is 100%-owned by HitecVision, highlighted major decisions taken by the UK Government on environmental guidance for oil and gas companies, and to increase the so-called windfall tax on North Sea profits.

READ MORE: 'Friendly' Scottish independent garage group resumes growth with new site

The company said: “On 29 August 2024, the Department of Energy Security and Net Zero (DESNZ) announced that, in light of the Finch Supreme Court ruling, it plans to begin a consultation with industry on new environmental guidance in relation to oil and gas projects.

"This consultation is not expected to conclude until spring 2025. Consequently, the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) has further announced that while the consultation is ongoing, they will be deferring assessment of all environmental statements, including ones already in progress, such as the Buchan Horst project.”

NEO added: “This follows the announcement on 29 July 2024 that the Government intends to increase the energy profits levy (EPL) to 38%, thereby increasing the marginal tax rate to 78%, to extend the EPL sunset date to 31 March 2030, to remove investment allowances and the intention to reduce capital allowances with the extent to be determined after industry consultation. In addition, the Government wishes to consult on changes to the fiscal regime beyond 31 March 2030. These changes clearly have a negative impact on the economics and overall viability of a project such as the Buchan Horst.

“Against this uncertain backdrop, NEO and its 100% owner, HitecVision, have taken the decision to materially slow down investment activities across all development assets in its portfolio.”

Mr Benitz: “Whilst demand for hydrocarbons continues during the energy transition, homegrown energy is the right solution. A project like Buchan has the potential to produce some of the lowest emission barrels of any project globally.

“Emissions arising from the combustion or use of those hydrocarbons will result in the same emissions as comparable barrels regardless of where they are produced. Homegrown energy should always trump imports, creating domestic economic growth, jobs and valuable UK tax receipts.”

Jersey Oil & Gas said it would issue its interim financial results for the six-month period ending June 30 on September 19. 

It added: "JOG’s cash position at the end of the first half of 2024 was approximately £13 million, and the company benefits from no financial exposure to Buchan project costs as a result of the farm-outs that have been completed with NEO and Serica Energy."