Malaysia’s Dagang NeXchange Berhad (DNeX), via its 90 per cent-owned subsidiary Ping Petroleum, informed last week it had passed a key milestone after receiving a letter of “no objection” from the North Sea Transition Authority (NSTA) in relation to the company’s proposed development concept for the Avalon discovery in the Central North Sea off the United Kingdom.

The Avalon prospect was drilled in 2014 where oil was discovered from high-quality Tertiary sands. In 2017, an appraisal well was drilled on the prospect which confirmed reserves and fluid characteristics. The operatorship of the asset was transferred to Ping Petroleum UK in April 2018.

In September last year, Ping purchased the remaining 50 per cent interest in UK North Sea Block 21/6b, License P.2006, containing the Avalon Oil Development, from Summit Exploration and Production, bringing Ping’s ownership in the licence to 100 per cent. It is worth reminding here that Summit E&P has recently been sold by its owner Sumitomo Corporation to Ithaca Energy for a headline consideration is $224 million.

Now that the NSTA has approved the proposed development concept, Ping will work to finalise conceptual development planning and begin Front End Engineering works in preparation to submit the Avalon Field Development Plan, with Final Investment Decision (FID) anticipated later this year.

With a total estimated recovery of 23 million barrels of oil, production from Ping’s second oilfield asset is scheduled to begin between mid-2024 and mid-2025, subject to the availability of key materials and equipment.

Tan Sri Syed Zainal Abidin Syed Mohamed Tahir, Group Managing Director of DNeX, said that receiving “no objection” to the proposed development concept represents a material opportunity to expand and diversify Ping’s portfolio of oil assets in full accordance with the UK’s production and emissions-reduction targets.

He said the concept comprises a tie-back of Avalon production wells to a re-used floating production storage and offloading (FPSO) vessel, which has spare ullage to provide an offtake route for nearby stranded discoveries. The company has not revealed which FPSO vessel will be re-used for this development. He added that discussions are ongoing with the UK regulator and supply chain to decarbonise the development through integration with floating offshore wind.

“The next step for Ping is to submit the company’s field development plan for Avalon to NSTA by the next quarter. Once approval is attained, the company will proceed with the full development programme,” said Syed Zainal Abidin Syed Mohamed Tahir.

He also said the North Sea field is planned to produce at initial rates of 20, 000 barrels of oil per day, providing a material increase in production and diversifying the asset base.