LONDON (Alliance News) - The UK Chancellor of the Exchequer George Osborne welcomed news Monday that three multinational companies, including BP PLC, will invest billions of pounds into the UK North Sea after making the largest new discovery in the region for a decade.
The operator, Maersk Oil, alongside its partners BP and JX Nippon, were given the green light by the UK offshore regulator over the weekend to develop the Culzean gas field which was discovered in 2008, which will lead to the trio investing around GBP3.0 billion into the North Sea and its supply chain.
The new high pressure, high temperature field is significant as it will be developed at a time when production from the North Sea is dwindling and getting more expensive, which has seen companies slash jobs, cut costs and defer investment in areas which are particularly expensive to develop and drill, such as offshore the UK.
That is all a result of falling oil prices, which have dropped from over USD115 per barrel in the middle of 2014 to only around USD53 a barrel on Tuesday.
Even more importantly, the Culzean field is thought to be able to produce enough gas to meet 5% of total UK demand at peak production sometime between 2020 and 2021, said HM Treasury.
Although costly, the companies are benefiting from the high pressure, high temperature cluster allowance introduced by the UK government as part of the package of measures to support the oil and gas industry earlier this year.
That allowance allows fields like Culzean to be developed for less money despite them being more technical and challenging to develop.
"Already the UK?s oil and gas industry supports hundreds of thousands of jobs across the country and this GBP3.0 billion investment comes on the back of massive government support for the sector," said Osborne in Aberdeen.
"The investors in the project, Maersk Oil and its co-venturers, JX Nippon and BP, are committing 50% of the multi-billion pound capital investment to the UK industry and supply chain and they anticipate that over the projected life of the field, a further GBP2.0 billion will be spent in the UK domestic market," he added.
Osborne also used the news to make it clear that an independent Scotland would not have been able to offer the support the UK government has offered, including numerous tax cuts announced earlier in 2015.
"Despite its claims, the Scottish government would have struggled to deliver such support alone ? its own numbers showed that due to the current oil price an independent Scotland would have faced a GBP20.0 billion black hole in its public finances over the first three years," he said in a statement.
BP shares were down 1.5% to 355.15 pence per share on Tuesday afternoon.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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