FAROE Petroleum has made a gas discovery in the Norwegian North Sea which it said was promising although smaller than predicted, writes Mark Williamson.

The Aberdeen-based oil and gas firm said the Skirne East exploration well encountered a gas column that initial estimates suggest could hold up to 10 million barrels oil equivalent. Chief executive Graham Stewart said: "We are pleased to announce the result of the Skirne East well which, although smaller than predicted, is a promising discovery particularly in light of the nearby Atla field which was recently developed with reserves within the resource range of the Skirne East discovery." The well is the first of four that Faroe plans to drill this year off Norway, where firms benefit from generous tax breaks for exploration. The company said last month that Budget tax changes would make it more likely to invest in the North Sea and highlighted its appetite for acquisitions. Mr Stewart noted thenthat potentially on attractive asset opportunities may become available following the plunge in the oil price since June. Faroe has a 20 per cent stake in the Skirne East well. Total has 40 per cent while Centrica and Norway's Det norske oljeselskap have 20 per cent each.