NORTH Sea-focused Independent Oil & Gas (IOG) has passed another milestone in the development of a project that has won backing from US billionaire Warren Buffett.

Independent said it has appointed oil services giant Petrofac to manage work on the wells that will be drilled on its core North Sea development.

House broker finnCap said the well award kept Independent on track to start production from the project in the second half of next year.

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This will involve developing a cluster of North Sea gas fields that were left idle by other firms.

A firm owned by Mr Buffett’s Berkshire Hathaway bought in to the project in July last year. CalEnergy Resources paid £40 million for a 50 per cent stake in the project and agreed to cover up to £125m of IOG’s costs.

The outlook for the market has worsened dramatically since then amid the fallout from the coronavirus.

Demand for oil and gas plunged after governments around the world imposed lockdowns to slow the spread of the virus.

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However, Independent is still confident the project will be a commercial success.

Analyst Jonathan Wright at finnCap noted gas prices on futures markets indicate that traders expect conditions to have improved by the time production is due to start.

Independent won regulatory clearance for the Southern North Sea project last month.

The well management award will provide a boost for Petrofac as firms in the North Sea supply chain brace for a deep downturn.

Companies that operate oil and gas fields are slashing spending on new developments and on running costs.

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Petrofac has said it aims to cut running costs by $125m this year, under an initiative that it is thought to have put around 200 jobs in Scotland under threat. “We are thrilled to be supporting IOG’s prestigious SNS gas development project,” said Petrofac yesterday.