THE scale of interest in the West of Shetland area in the oil and gas industry has been underlined by the revelation that Chevron has had an approach regarding its interest in the giant Rosebank field.
The US major confirmed yesterday it has received an expression of interest for its 40 per cent share in Rosebank, which is reckoned to be the biggest undeveloped field in UK waters.
Chevron declined to elaborate noting: “It is company policy not to comment on commercial or confidential discussions.”
However, news of the approach provides the latest indication oil and gas firms see big potential in West of Shetland assets. They may be set to invest billions in developing fields in spite of the challenges posed by the harsh conditions firms can face in the area.
Rosebank lies about 80 miles north west of Shetland and is estimated to contain around 300 million barrels oil.
Chevron shelved plans to develop the field in 2013 months before the oil price plunged saying it was not then economically attractive but is considering a revised scheme.
In July the company put its portfolio of assets in the Central North Sea off eastern Scotland up for sale.
“Any buyer for Chevron's stake in Rosebank will need to have very deep pockets to fund the capital cost of development, which we estimate at more than US$6 billion in total,” said North Sea specialist Ross Cassidy at Wood Mackenzie.
He noted Rosebank is located in water depths of more than 1,000 metres, in an area of high winds and waves.
However, Mr Cassidy said bidders for Chevron’s stake could include large players that may be looking to increase exposure to West of Shetland or one of the private equity-backed companies that have come on to the scene in recent years.
BP, Shell and Total have invested heavily in developing fields West of Shetland.
On Monday Total announced it had made a significant gas find in the area.
Chemicals giant Ineos bought a 10% stake in Rosebank with a West of Shetland portfolio acquired from Denmark’s Dong Energy last year. This includes a stake in the giant Laggan Tormore field which Total brought onstream in 2016.
Siccar Point Energy acquired a 20% interest in Rosebank when it bought OMV’s West of Shetland assets in 2016 with backing from international financier but is reported to want to reduce its exposure to the project.
Chevron is investing heavily in developing shale assets in the USA.
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