SHARES in North Sea-focused minnow Jersey Oil & Gas have plunged 11 per cent after an industry giant appeared to pour cold water on its plan to revive a field that was shut down in 2017.

Jersey has generated excitement with its proposal to bring the Buchan field back into production as part of a major new hub in the Moray Firth, where regulators are trying to stoke activity.

Read more: North Sea minnow plans 120m barrel development after licence coup 

In July Jersey granted Norwegian major Equinor an option to acquire a half share in the blocks containing Buchan and an undeveloped discovery.

However, Jersey told investors yesterday that Equinor had decided not to exercise the option.

The company put a brave face on the setback noting an expert report found the Buchan field could still contain around 100 million barrels oil.

Chief executive Andrew Benitz said Equinor’a decision provided Jersey with greater flexibility, control and “the full value potential of this very exciting new area development project”.

Jersey reckons the Buchan development could be the largest new area hub in the UK Central North Sea since production started from the huge Golden Eagle field in 2014.

But the fall in the company’s share price yesterday suggested investors were taking a more cautious view of the implications of Equinor’s decision.

Jersey may face greater challenges in securing the funding needed to redevelop Buchan without having the backing of the deep-pocketed Equinor, formerly called Statoil.

Read more: Oil giant Equinor highlights North Sea opportunities after surge in profits

The outcome will likely be watched closely in the industry given the importance attached to the Greater Buchan area by the Oil and Gas Authority.

Jersey was awarded the Buchan acreage in July under a special licensing round the OGA launched to try to stimulate interest in the area.

This formed part of the authority’s campaign to help Maximise Economic Recovery (MER) of the North Sea’s reserves by making the most of existing finds and making further discoveries.

When the round was launched in January the OGA held out the prospect that around 300 million barrels could be recovered in the Greater Buchan area.

The OGA’s chief executive Andy Samuel said then there was much to play for, from exploration to field development authorities.

Read more: North Sea reserves could sustain UK oil production for decades

Jersey still sees lots of potential in Greater Buchan. The company said yesterday it may look to sell stakes in the Buchan area to other firms before submitting a development plan for regulatory approval in 2022.

The Aim-listed firm can take comfort from the fact that it has already played an important part in encouraging interest in Greater Buchan.

Jersey shot to prominence in October 2017 when it announced it had made a find in the Moray Firth that could contain up to 130 million barrels oil equivalent.

The company made the find, called Verbier, on acreage that it had persuaded Equinor to buy into.

Estimates of the size of the find were cut to the lower end of the 25-130m boe range after appraisal drilling but Jersey is still confident Verbier is commercial.

Jersey said yesterday that it expects to work closely with Equinor to mature opportunities on the Verbier licence, as part of the overall Greater Buchan Area plan.

It expects to include Verbier in the hub development.

Jersey’s work in the Buchan area highlights the role relatively small firms are playing in boosting activity in the North Sea.

Many big firms cut spending in the area in response to the sharp fall in the oil price from 2014.

Jersey developed out of Trap Oil, which built a North Sea portfolio helped by the £30m acquisition of Banchory- based Reach Oil & Gas in 2011 but suffered hefty losses after the crude price plunged.

Shares in Jersey Oil & Gas closed down25p at 200p. That left the firm with a stock market capitalisation of around £44m.