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Further delay to start-up of North Sea development

Further delay to start-up of  North Sea development
Canadian energy group Nexen yesterday announced a further delay to first output from the Ettrick field development in the North Sea.

Canadian energy group Nexen yesterday announced a further delay to first output from the Ettrick field development in the North Sea.

Nexen said a leased floating production, storage and offloading (FPSO) vessel would not now be delivered until December following previous delays because of third-party labour shortages at a construction yard in Singapore.

Nexen said the latest hitch was the result of commissioning delays for the FPSO, whose late arrival means production from Ettrick has been postponed until “early 2009”.

Details came in third-quarter results from Nexen, which also confirmed that chief executive Charlie Fischer would retire at the end of this year.

Mr Fischer joined Nexen in 1994 as senior vice-president and has been at the helm for seven years. He will be replaced by Marvin Romanow, the firm’s chief financial officer, at the start of 2009.

Mr Fischer also said yesterday that Nexen was not for sale, after one newspaper claimed the company may be a target for larger rivals.

Announcing net income of £441million for the three months to September 30, compared with £200.6million a year earlier, Nexen said production volume from Ettrick next year was likely to average 15,000-20,000 barrels of oil equivalent per day.

The FPSO vessel is designed to handle 30,000 barrels of oil and 35million cubic feet of gas per day, and has capacity for nearby discoveries, such as Blackbird.

Nexen said it saw additional prospects near its Pink discovery and was now assessing these, while further appraisal was planned with a view to tieing Blackbird back to Ettrick.

The group reported record third-quarter operational cash flow of £839.3million, taking the total for the nine months to September 30 to £1.83billion. Net income over the period was £944.7million, compared with £444.4million a year earlier.

Nexen said it was slowing capital expenditure to build cash reserves during “this period of global financial uncertainty”, with Mr Fischer adding: “In this marketplace cash is king and we have substantial liquidity.”

The Buzzard field operator also said a recently completed internal reorganisation and financing of its assets in the North Sea left it well positioned to move forward with development and production plans.

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