EurOil: North Sea oil regulator slaps largest ever fine on operator

The North Sea Transition Authority (NSTA) has issued its highest-ever fine of GBP350,000 ($443,000) to Spain’s Repsol North Sea Ltd (RNS) for actions that led to a five-day production shutdown at the Flyndre field and obstructed economic recovery of petroleum resources.

The penalty, announced on November 25, was in response to a failure by RNS to meet its obligations under the UK’s MER Strategy, now the Central Obligation of the North Sea Transition Authority Strategy, which mandates operators to maximise the value of economically recoverable oil and gas resources.

The Fulmar facility, located in the Central North Sea and operated by RNS, ceased production in 2018 but remained a hub for transporting oil and gas from the Flyndre, Auk and Clyde fields. Flyndre, initially operated by TotalEnergies, was later acquired by NEO Energy in July 2020.

Disputes arose when RNS sought to increase transportation charges for using Fulmar. TotalEnergies questioned the rate hike but was met with a termination notice from RNS, effectively ending the agreement on August 6, 2020. RNS refused further negotiations and failed to provide essential information, leading to the prolonged closure of Fulmar, which was under maintenance at the time.

The Flyndre field remained shut from August 6 until August 14, when a temporary agreement allowed operations to resume. However, a long-term resolution was only achieved when RNS took ownership of Flyndre in November 2021.

The NSTA’s investigation concluded that RNS had applied undue pressure on TotalEnergies and NEO during negotiations, setting unreasonable timelines, withholding crucial details and failing to justify its proposed fee increases. These actions, the regulator said, undermined collaboration and the required behaviours under the MER Strategy.

Jane de Lozey, director of regulation at the NSTA, stressed the importance of co-operation among North Sea operators to ensure the sector’s contribution to energy transition and security.

"The North Sea must play a central role in advancing the energy transition and ensuring energy security in the UK. Operators have a responsibility to adhere to the Strategy and foster collaboration. The NSTA will not hesitate to act against those who fail to meet the required standards," de Lozey said.

Last month, the NSTA issued guidance urging companies to prioritise cooperation in North Sea transactions to prevent delays, which can increase costs, prolong uncertainty and hinder operational and strategic decisions.

In a separate case, ONE-Dyas was fined GBP75,000 for failing to comply with an offshore licence condition. The company had plugged and abandoned a well but only sought the NSTA's consent two days after the work was completed.

The NSTA emphasised the importance of prior consent to ensure work meets regulatory standards and to explore alternative uses for offshore infrastructure, such as carbon storage.

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