After a busy end of 2023, during which the market witnessed significant movements and acquisitions, Petroleum Economist carried out an interview with our CEO. In this exclusive discussion, Francesco Mazzagatti sheds light on the current landscape and future prospects of gas production in the North Sea. The conversation digs into regulatory hurdles, the investment climate, and the evolving political stance surrounding oil and gas development.

Mr. Mazzagatti highlighted the untapped potential for gas production in the North Sea, emphasising the significant reserves that can be leveraged with the right regulatory support.

Despite differing opinions on the potential of the North Sea, recent estimates indicate that the UKCS North Sea holds an impressive 15 billion barrels of oil and gas in unmapped areas, in addition to the 9 billion already explored.

Regardless of the challenges posed by the UK windfall tax and departures of major companies from the basin, he acknowledged the great opportunity for increased gas production. But, regulatory institutions should work on creating an environment that supports energy security during the energy transition.

Investment and Political Environment

The interview also addressed the investment and political environment surrounding the North Sea. Mr. Mazzagatti acknowledged the current challenging political climate, with a prevailing stance against granting new North Sea licences. He discussed the volatility in the investment landscape, attributing it to geopolitical conflicts, fluctuating oil and gas prices, and heightened risk aversion among capital providers. Despite these challenges, he highlighted a positive uptick in M&A activity in the first half of 2023, tempered by a subsequent decline in Q3.

Fiscal and Economic Environment in the UK:

Comparing the present scenario to a few years ago, Viaro’s CEO noted a decline in the UK’s support for hydrocarbon development. The windfall tax’s negative impact and a lack of backing for new licences have affected Viaro’s operations. The CEO acknowledged the effectiveness of radical measures in pushing oil and gas producers towards meaningful contributions to the energy transition, albeit with potential long-term sustainability concerns.

Viaro Energy’s Portfolio, Sustainability, and Future Ventures

The CEO also explained Viaro Energy’s strategic approach, addressing the importance of recognising opportunities in both mature, producing assets and exploration prospects. Mazzagatti discussed Viaro Energy’s diversified portfolio, primarily consisting of natural gas, and its strategic investments in oil opportunities, such as the recent acquisition of a stake in the Bressay oil field. Additionally, he shed light on the company’s commitment to sustainability and ESG initiatives, actively engaging in emissions abatement and carbon capture and storage projects.

Looking ahead, Mazzagatti outlined Viaro Energy’s plans for continued growth in the North Sea’s exploration and production sector, emphasising the lower investment risks Viaro faces as an independent company and highlighted its  commitment to contributing directly to the ongoing energy transition.

 The key statements shared in the interview:

• The North Sea still has significant growth potential for gas production.
• The UKCS North Sea alone is estimated to hold 15 billion barrels of oil and gas in unmapped areas.
• The political environment is currently challenging, with a dominant stance against granting new North Sea licences.
• The UK is perceived as a less supportive fiscal and economic environment for hydrocarbon development compared to a few years ago.
• The primary challenge is ensuring energy security for the country and sources of investment in an unsupportive political environment.
• Viaro’s strategy involves balancing investments in mature producing assets and exploration opportunities.
• Viaro’s portfolio consists mostly of natural gas (over 70%).
• Viaro is actively working on sustainability, engaging in GHG emissions abatement initiatives and repurposing depleted gas fields for carbon capture and storage.
• Viaro plans to continue growing its presence in the North Sea’s exploration and production sector.

For a more in-depth exploration of Viaro Energy’s CEO Francesco Mazzagatti’s insights on the North Sea’s potential, challenges, and the company’s strategic initiatives, read the full interview on the Petroleum Economist website.