Aberdeen-based oil and gas firm Dana Petroleum is selling its 77% stake in a “radical” North Sea asset to co-owner Neo Energy.
The Western Isles floating production storage and offloading (FPSO) vessel is currently working on the Harris and Barra oilfields around 100 miles east of Shetland in the northern North Sea.
Following its 100% acquisition by Neo, the FPSO will undergo a “relatively modest work programme” to prepare it for redeployment on the Greater Buchan Area (GBA) redevelopment.
Ownership is to be shared with Buchan field partner Jersey Oil and Gas.
Dana-Neo deal value undisclosed
Financial terms of the deal with South Korean-owned Dana, which is subject to the satisfaction of conditions including a final investment decision (FID) and regulatory approval for the GBA redevelopment, were undisclosed.
The works to be carried out on the FPSO will include preparation of the vessel for future electrification.
Modifications are expected to be completed by early 2026, in time for her to be deployed to the GBA and hooked up ready for the anticipated start-up of production in late 2026.
Jersey Oil and Gas chief executive Andrew Benitz said: “Finalising the terms for the joint venture partners to acquire the FPSO, which is less than eight years old and requires relatively modest adaptation for our planned GBA redevelopment, is a tremendous milestone for the project.
“Re-using existing high-quality infrastructure and modifying it to be electrification-ready is exactly in line with our stated low-carbon strategy and the net-zero related objectives of the industry.
“The vessel is the cornerstone to completing the engineering work required to facilitate field development plan approval for the Buchan redevelopment next year.”
The Western Isles FPSO is thought to be the first in the UK constructed entirely in China.
The £250 million-plus structure is round, a radical departure from the FPSOs traditionally used in the North Sea.
It was not be the first round FPSO to be used in UK waters at start-up but it was the largest, with a storage capacity of up to 400,000 barrels of oil and handling capability for up to 40,000 barrels per day.
End of the road for Harris and Barra
Dana and Neo Energy agreed earlier this year to end production on the Harris and Barra fields “on or around” March 31 2024.
This will mean a permanent shutdown less than seven years after start-up.
More to come from GBA
Front end engineering and design work for the GBA redevelopment, 120 miles north-east of Aberdeen, started earlier this year.
It is one of the largest pre-FID oil and gas projects in the UK North Sea, with an estimated 162 million barrels of oil equivalent targeted.
Subsequent phases, following start-up, are expected to involve the tie-back of the Verbier and J2 discoveries that lie within the GBA licence area.
There is also the potential for third-party discoveries to be tied back to the FPSO.