For the “first time” ever, the industry regulator has partially revoked a North Sea licence after a partner failed to “meet regulatory requirements”.
The North Sea Transition Authority (NSTA) officially withdrew three permits, covering the Greater Brae Area (GBA), from Fujairah Oil and Gas UK12 on Friday.
Fujairah, referred to as UK12 by the NSTA, hit the headlines in 2021 after Energy Voice revealed it was defaulting on its share of the costs of decommissioning the North Sea fields.
Just months earlier the company, controlled by the namesake emirate of the UAE, had bought stakes in the TAQA-operated licence for just 75 pence.
In a set of financials published in September, TAQA revealed the NSTA had recently rubber stamped the transfer of Fujairah’s GBA decom liabilities to the remaining joint venture partners, with legal completion to follow.
As a result, the Abu Dhabi headquartered company’s bill for retiring the fields increased by over $350 million, though government measures mean it is able to recoup some of that.
A first for the regulator
Notices were served to Fujairah by the NSTA in January, and as “no further change of control was arranged”, it “used its powers to partially revoke the licences”.
In a statement the regulator said: “The NSTA revoked offshore petroleum licences P.108, P.313 and P.340 insofar as they relate to Fujairah Oil and Gas UK 12 Limited (UK12) on Friday 12 May 2023. Consequently, UK12 is no longer a party to any of these licences. The licences remain in force as they relate to the other licensees.
“The NSTA has, for the first time, used its power to partially revoke a licence; this action has been taken because UK12 did not meet regulatory requirements. The NSTA is committed to supporting UK energy security of supply and works to ensure that the right assets are in the right hands to maximise production and support the drive to net zero.
“The NSTA has the power to review a change of control and can, in certain circumstances, serve notices proposing to revoke a licence unless a further change of control takes place within a three-month period.”
Court documents published around two years ago put the overall bill for decommissioning the GBA at $1.8 billion.
A messy situation
In December 2020, Fujairah bought the stakes of Viaro Energy in the set of North Sea fields, giving it a 40% stake.
Viaro had acquired the interest a few months prior when it bought Andrew Austin’s RockRose Energy in a £250 million deal.
Fujairah held the second-largest stake, 40%, in Brae after operator TAQA, which owns 45.7%.
The remainder is split between Spirit Energy, with 8%, and private-equity backed NEO Energy, with 6.3%.
News broke recently that TAQA and Spirit are taking Viaro Energy to court to recover costs linked to decommissioning Brae.
It comes after the UK decommissioning boss at TAQA said that the matter with Fujairah “has been resolved” and a “line has been drawn under it”.