While First Minister Humza Yousaf has angered a North Sea giant by opposing plans for the Rosebank field off Shetland as he courts the green vote, oil and gas firms have underlined their interest in another potential mega development.

Any fears that heavyweights are cooling on the area eased when fast-growing Viaro Energy said it was ready to invest more than £100 million in a plan to bring one of the North Sea’s biggest undeveloped finds, Bressay, into production.

Mr Yousaf’s views on Rosebank were in focus last week when it emerged that he had been in a spat with Ithaca Energy after it won approval from the UK Government to develop the 300 million-barrel field with Equinor.

Ithaca wrote to Mr Yousaf expressing disappointment about his decision to take a stance on Rosebank that appeared to conflict with encouraging noises he had made to the company.

The Israeli-owned firm took issue with Mr Yousaf’s claim that approval for Rosebank suggested the Government was supporting unlimited extraction of oil and gas off the UK.

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In the letter, then chief executive Alan Bruce said the Scottish Government could have wide-reaching influence on sector developments although the UK administration has the say on whether fields go ahead.

As Ithaca is also trying to recruit partners to help it develop the giant Cambo oil field West of Shetland, the last thing it wants is for ministers to spook potential investors.

Mr Yousaf is probably happy to appear to be squaring up to Big Oil as the SNP aims to sound the right notes on environmental matters ahead of the general election that is expected to be held in the second half of the year.

His predecessor Nicola Sturgeon came out against Cambo after being accused by environmentalists of sitting on the fence.

Campaigning alongside then first minister Alex Salmond, Ms Sturgeon based the case for independence in the 2014 referendum on the claim that Scotland could thrive thanks to its North Sea oil and gas reserves.

Last week Mr Yousaf rehearsed the replacement line - that the offshore wind industry will bring huge benefits to Scotland and create “thousands of high quality, green jobs”. The industry has so far failed to have anything like the impact on Scotland’s economy that sector champions expected.

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News earlier this month that Mr Bruce had left Ithaca suggested all was not well at the firm, which hopes to be in a position this year to give the go ahead to Cambo.

Oil and gas industry leaders say the windfall tax imposed in 2022 may deter firms from investing in projects off the UK, although the Government also introduced a generous investment allowance.

Critics include the Viaro Energy business, which is led by Italy’s Francesco Mazzagatti. He has described the levy as reactionary and warned it could hit smaller firms harder than large ones.

But last month Viaro said it would commit around £140m to a plan to develop the Bressay find East of Shetland. 

Bressay has been estimated to contain up to 1 billions barrels, with 200 million barrels reckoned to be recoverable currently.

London-based Viaro bought a 15 per cent interest in Bressay and a production vessel from EnQuest for £46m, with £35m payable up font. The company said its share of the £600m development that is under consideration would be £90m.

EnQuest retained an 85% stake in Bressay.

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The deal is notable for several reasons.

Bressay contains heavy oil and has lain undeveloped since it was found in 1976. Heavy oil fields are considered to be hard to develop because of the relatively high cost of extracting reserves and refining the output concerned.

The deal allows Viaro to move into the East of Shetland area. Shetland was long seen as a frontier for the industry. Majors such as BP, Shell and Total Energies have completed big developments off Shetland in recent decades.

The Bressay move is the latest in a series of acquisitions that Viaro has completed in the North Sea in quick succession. Viaro decided to move into the exploration and production business in the area after making its name in the international oil and gas trading business.

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The deals will allow Viaro to capitalise on the surge in oil and gas prices fuelled by Russia’s war on Ukraine, which has helped North Sea firms to generate bumper profits.

With prices expected to remain high by historic standards, the economics of heavy oil projects may have improved. Technological advances have also helped.

Describing Bressay as an important addition to Viaro’s portfolio, Mr Mazzagatti declared of the acquisition: “It not only confirms our serious commitment to support the development of North Sea assets to their fullest potential, but also fits into our strategy to continuously reinvest into new assets and development opportunities.”

Mr Mazzagatti indicated that Viaro’s confidence in Bressay was supported by the fact that EnQuest had already completed a successful heavy oil field development East of Shetland.

EnQuest started production from the Kraken field with Edinburgh-based Cairn Energy in 2017. With the project coming in under budget, the regulator said then that Kraken could open up other heavy oil opportunities in the Northern North Sea.

 “Considering EnQuest’s successful track record with the surrounding developments in the area, we are confident they are the right partner to ensure that the extraction will be aligned with the highest industry standards,” said Mr Mazzagatti.

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The partners may be able to utilise the pipeline infrastructure installed for Kraken to cut the cost of developing Bressay.

The planned development could help the firms to realise another big prize. There may be potential to use the cash flows from Kraken and Bressay and to harness related assets to support the development of the massive Bentley heavy oil field nearby.

Bentley was found in 1977, since when firms have spent millions working on development plans which have not reached fruition.

EnQuest acquired Bentley in 2021 from Whalsay Energy in a low cost deal. Whalsay bought Bentley for just a dollar in 2016 during the downturn triggered by the plunge in oil and gas prices from 2014.

The previous operator, Xcite Energy, was put into liquidation in 2016. It had highlighted estimates that Bentley could contain 900 million barrels of oil.

EnQuest became a major force in the North Sea after making acquisitions during the downturn. It bought the giant Magnus field in 2018 from BP and took control of the Sullom Voe oil terminal on Shetland.

EnQuest acquired control of Bressay from Equinor in 2020 for an initial £2m. 

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In September the company said it generated $140m (£110m) cash in the first half helped by a strong operational performance, in spite of the impact of the windfall tax.

However, EnQuest boss Amjad Bseisu last week expressed concern that a Labour Government could cause problems for North Sea firms.

Describing the party’s plans for a ban on North Sea drilling as economically senseless, Mr Bseisu said such a move could result in the early shut down of fields like Kraken and trigger hefty job losses.

Whether a ban on all drilling will be included in Labour’s general election manifesto remains to be seen.

The party’s £28bn green investment plan is coming under increasingly close scrutiny amid concerns about whether it can be squared with Labour leader Keir Starmer’s commitment to show restraint on the borrowing front.