Maersk receives UK authorities' approval for development of gas field in North Sea

Development of the biggest gas field discovered in the North Sea in the past decade would start, after energy authorities approved a £3-billion investment that could produce enough gas to meet 5 per cent of the UK's needs.

The Danish energy company Maersk plans to develop the Culzean field that it discovered in 2008, after receiving the approval of UK Oil and Gas Authority yesterday.

The gas resources of the field have been pegged at the equivalent of 250-300 million barrels of oil. The plan to develop the field was expected to create over 400 jobs and support an estimated 6,000 more in the UK.

The announcement comes as viability of North Sea production declines and fears grow of British job losses.

The development would take advantage of tax breaks announced in the budget this year. Welcoming the move, UK Chancellor of the Exchequer George Osborne, termed it ''a clear signal that the North Sea is open for business''.

The UK was committed to step up gas-fired electricity generation, and the Maersk-operated ''high pressure, high temperature'' (HPHT) Culzean development is expected to start production in 2019. Production from the field would extend over at least 13 years, peaking at the equivalent of 60,000-90,000 barrels of oil a day.

Maersk is leading a £3-billion investment in the field, along with BP and JX Nippon.

The field was discovered in 2008 but according to  Maersk the project had been made possible by major North Sea incentives announced by  the chancellor in the 2015 Budget.

In March, the Obsborne lowered tax rates on production and introduced a generous investment allowance to spur the industry, and stop the job losses which rose to the thousands.

"The allowance supports the development of high pressure, high temperature projects - which typically have considerably higher capital costs - and encourages exploration and appraisal activity in the surrounding area" Maersk said.

AP Moeller-Maersk chief executive Nils Smedegaard Andersen said in August that the company was actively looking for acquisitions in the North Sea as the current drop in energy prices made takeovers a better option than exploration.( See: AP Moeller-Maersk looking for acquisitions in North Sea).