A UK oil company has been given the green light to forge ahead with a £4 billion North Sea investment which could support 20,000 jobs in the construction phase.
Aberdeen-based EnQuest said it will generate billions in taxpayer revenues and support thousands of jobs with its development of the Kraken oilfield east of the Shetland Islands.
The plans approved by the Department of Energy and Climate Change are said to represent the largest UK North Sea investment announced this year.
The development covers two separate “heavy” oil fields which will each benefit from Government oil allowances enabling companies to claim tax relief on up to £800 million of their profits.
EnQuest chief executive Amjad Bseisu said: “Kraken is a transformational project for EnQuest and we are delighted to be able to proceed with it, working with the Government and our partners to maximise the extraction of approximately 140 million barrels of oil in this field, over its 25-year-long life.
“It is only by combining our skills and expertise with fiscal incentives, such as heavy oil allowances, that really substantial projects like Kraken are possible.”
The company said the development will support 20,000 UK jobs during construction and an average of around 1,000 jobs in the UK for each year of Kraken’s life.
Gross peak oil production is expected to be more than 50,000 barrels of oil per day, with production likely to begin in 2017.
Chancellor George Osborne said: “This is a big investment that will create jobs and boost the British economic plan. It is also evidence that our efforts to create a competitive tax regime that gets the most oil and gas out of the North Sea are working.”
Fergus Ewing, Scotland minister for energy and enterprise, said the announcement and other recent investments are “unequivocal evidence” of the oil and gas industry’s faith in the North Sea’s future.
“This is also clear evidence that new opportunities still exist in the sector,” he said.
“With up to 24 billion recoverable barrels with a potential wholesale value of £1.5 trillion, more than half of the resources in the North Sea, by value, still to be extracted, it is clear that the industry will make an important contribution to the Scottish economy for decades to come.”