NEO Energy has announced that it has entered a deal to pick up 100% equity in the Western Isles FPSO with Dana Petroleum.
The two firms have signed a Sale and Purchase Agreement for the vessel that was reported to be facing decommissioning earlier in the year.
NEO says it intends to redeploy the FPSO at the Greater Buchan Area redevelopment.
The FPSO will continue to be operated by Dana Petroleum until completion of the contract.
Dana Petroleum owned a 77% stake in the vessel prior to the sale to NEO Energy.
The FPSO operated on the North Sea project sharing its name which operator Dana Petroleum confirmed was shutting down eight years earlier than scheduled when plans were greenlit by regulator OPRED.
When the Western Isles project started up in 2017, Dana said it expected 15+ years of production.
However, under plans submitted to OPRED and confirmed by Dana, the project is expected to shut down “on or around” March 31, 2024.
At the time of the news Dana Petroleum told Energy Voice that the reason for decommissioning Western Isles was forecasts showed the project would become “uneconomic next year.”
Aberdeen-based NEO Energy, which holds a 23.08% stake said it has taken a $77.3m impairment on the project “driven primarily by a reduction to the expected life of the field”.
However, the Western Isles FPSO was said to be “suitable for reuse” if it could find work elsewhere.
A statement from Dana Petroleum and NEO indicated that it “intends to redeploy the FPSO at the Buchan field redevelopment.”
FEED work for the project began earlier this year.
NEO, as the field operator, plans for a “relatively modest” work programme to be undertaken in order to prepare the FPSO for redeployment on Buchan, according to joint project partner Jersey Oil & Gas (AIM:JOG).
Designed by Sevan SSP, the Western Isles FPSO was constructed by COSCO Shipyard in China with production brought online in 2017.
Featuring a 70m hull and storage capacity for up to 400,000 barrels of oil, it produced from the Harris and Barra fields in the around 100 miles east of Shetland in the northern North Sea.
Dana Petroleum added: “The transaction remains subject to the satisfaction of certain conditions including final investment decision and regulatory approval of the Buchan redevelopment.”
Chief executive of Jersey Oil & Gas, Andrew Benitz commented: “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 [Greater Buchan Area] 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 FDP [Field Development Plan] approval for the Buchan redevelopment next year.”