Jersey Oil & Gas next in line to be Canned?

 

Following the UK Government's rejection to approve the Cambo development in the West of Shetlands, leading to Shell's exit from the field, and the scrapping of the Rosebank development by Equinor, it is clear that the UK Government is increasingly turning its focus away from North Sea Oil & Gas. The UK Government is laser focused on the Energy Transition and is supporting the renewable energy development, hydrogen and carbon capture.

Against this backdrop, it is highly possible that the political (and public) support for Jersey Oil & Gas to develop its North Sea portfolio will not be there. And even Jersey Oil & Gas' attempt to "greenify" its developments through electrification will not be enough to keep the project alive against the country's accelerating green agenda.

Beyond this, the company faces two other key issues:

• Attempts to find a farm-in partner to share risk has failed - an extensive search process was run last year with no success. No-one is looking to participate in such a large, billion dollar development with the political uncertainty that lies ahead
• Financing is becoming increasingly difficult - the original plan involved seeking bank financing for the development, but this will be challenging as more banks back away from the sector

The chances of a revival for Buchan and Verbier are viewed as very slim.

Disclaimer: this is an opinion piece by OGInsights