A leading North Sea oil and gas independent has said the tragic events in Ukraine have underlined the value of the area’s reserves and called for firms to be given the encouragement required to maximise their potential.

Serica Energy said that with demand for oil and gas set to remain strong for many years, the UK needs to maximise the value of the North Sea’s reserves to help ensure the security of energy supplies.

The call comes as competition for supplies from overseas intensifies amid efforts by countries across Europe to reduce their reliance on Russian gas.

“The tragic events in Europe now taking place have underscored the importance of our own domestic resources,” said Serica’s chairman Tony Craven Walker.

“I am hopeful that, with the recent publication of the British Energy Security Strategy, government policy imbalances will now be corrected and that companies like Serica will be given the encouragement needed to continue the investment required to optimise the value and benefit of existing domestic resources whilst the development of new energy sources continues.”

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Mr Craven Walker’s comment refers to the energy security strategy published this month by the Westminster Government, in which Boris Johnson said the UK needed to give the energy fields of the North Sea a new lease of life.

It is thought the policy imbalances referred to include the relatively high levels of official support provided for renewable energy firms operating assets such as windfarms during a period in which the oil and gas industry had appeared to be less of a priority.

Serica Energy chief executive Mitch Flegg, right, on the Bruce production platform

The comments put the onus on the Government to take action quickly to ensure that the policy regime is as supportive as possible.

First Minister Nicola Sturgeon has been accused of jeopardising investment in the North Sea by calling for plans for the development of the Cambo oilfield to be rejected on environmental grounds.

However, Mr Craven Walker said the maximisation of the North Sea’s resources would generate major revenues for the UK with “the added benefit of a much lower environmental impact than most import alternatives”.

He made his comments in a results statement in which Serica provided further evidence of the scale of the boost that North Sea firms enjoyed following the surge in oil and gas prices last year. The surge was fuelled by the recovery from the pandemic. Prices rose further after Russia launched its attack on Ukraine in February.

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Serica made £135m profit before tax in 2021, up from £12.5m in 2020, during which lockdowns weighed heavily on demand for oil and gas. The company received an average $93 per barrel of oil equivalent for its output last year, against $20/boe in 2020.

Mr Craven Walker said Serica benefitted from its decision to continue investing in the North Sea amid the pandemic. The company started production from an additional well on the giant Rhum gas field off Shetland last year and brought the Columbus field onstream.

It has invested in assets acquired from bigger fish such as BP, which appeared to have lost interest in them.

Chief executive Mitch Flegg said Serica will continue with its investment-led strategy. The company aims to boost production from fields such as Rhum. It plans to drill a well on the North Eigg prospect close to Rhum.

Mr Flegg said Serica remains on the hunt for acquisitions.

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Industry leaders have said North Sea gas can be used to cut reliance on more carbon-intensive coal while the required renewables generating capacity is developed. Firms are trying to cut emissions associated with activity offshore.

Mr Flegg noted: “Since becoming operator of the Bruce, Keith and Rhum hub, Serica has made significant reductions in flaring, greenhouse gas emissions and waste to landfill.”