French oil giant embroiled in legal battle over plan to shut North Sea terminal

Plans to shut down a vital terminal in the North Sea have sparked a bitter legal row over claims it will damage the UK’s oil and gas production.

The proposal by French energy giant TotalEnergies to decommission the Gryphon terminal, which serves four offshore oil and gas fields, has triggered a claim from a rival operator.

Nobel Upstream, which operates two of the fields reliant on the Gryphon, has launched a judicial review in a last-ditch attempt to halt the process.

However, rather than suing TotalEnergies, Nobel Upstream has issued its claim against the North Sea Transition Authority (NSTA), which has signed off on the closure.

It has warned that if TotalEnergies is allowed to shut the Gryphon then it will not only be forced to abandon its two fields but it will also quit the North Sea entirely.

TotalEnergies is seeking to decommission the Gryphon amid declining production levels.

However, Nobel Upstream has claimed that the closure has been made prematurely and is in breach of NSTA rules requiring shared installation to remain open.

It has also alleged that the decision will mean hundreds of millions of pounds worth of oil and gas will be left untapped in subsea fields.

Nobel Upstream said it has launched a legal challenge against the NSTA’s “unlawful” decision to scale back Britain’s oil production prematurely.

It accused the NSTA of failing to act in compliance with the law, which calls for it to “maximise economic recovery of hydrocarbons from the UK”.

The decision to decommission the Gryphon, which awaits final sign-off by the Department for Energy Security and Net Zero, is likely to set a precedent for many North Sea producers. That is because the vast majority rely on shared infrastructure to remain in business.

Perhaps the largest shared terminal is the Forties Pipeline System, owned by Ineos, which takes the output from up to 80 separate fields across the North Sea.

When it shut down for repairs two years ago, so did the fields that relied on it – fuelling a sharp drop in the UK’s oil and gas production.

Meanwhile, the Gryphon is anchored 200 miles north-east of Aberdeen over the Gryphon oil and gas field, although it also receives output from three other fields, including the Tullich, Maclure and Ballindalloch. The gas is exported directly to the UK mainland where it enters the national gas grid to support power stations and heat millions of homes.

In total, the Gryphon supplies around 1pc of the UK’s total gas production.

Ashley Kelty, a senior analyst at Panmure Liberum investment bank, said the NSTA had been set up to regulate the oil and gas production from the UK’s surrounding seas – with an obligation to ensure “maximum economic recovery”.

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He said: “The NSTA’s job was simple when it was set up: to ensure efficient oil and gas production. But that aim is now in opposition to the UK’s net zero ambitions and that means the NSTA is increasingly conflicted.

“The big risk is that as this vital infrastructure is lost it will cause a cascade of other shutdowns and bring forward the decommissioning of many more offshore fields. The UK will be leaving so much oil and gas in the ground, only to import it instead.”

The UK annually consumes about 60m tonnes of oil – just under a tonne per person – mostly in the form of petrol and diesel for vehicles.

It also consumes about 75bn cubic metres of gas, with much of it used to heat the 25m homes equipped with gas boilers.

Total Energies did not reply to requests for comment but its plans to decommission the Gryphon were set out in a recent submission sent to the NSTA.

Commenting on the decision to challenge the NSTA, Nobel Upstream chief Larry Bates said: “Taking this course of action is an option of last resort. Nobel Upstream has engaged in good faith with the UK oil and gas regulator [NSTA], and the operator of the fields in which we have invested. However, our open engagement over the past 18 months has not been reciprocated.”

Nobel is backed by the Association of British Independent Exploration Companies (Brindex), which warned that the punitive windfall taxes introduced by the last government and the additional taxes threatened by Labour were driving energy giants like TotalEnergies out of the North Sea.

Robin Allan, Chairman of Brindex said: “Maximising economic recovery of UK oil and gas in the national interest, is a statutory duty of the NSTA. UK oil and gas production means UK jobs, UK tax revenue and UK energy security.

“The Government’s proposed changes to the tax regime puts new development at risk and a manifesto commitment was made to ‘manage existing fields for the entirety of their lifespan’, meaning any threat to existing production should be taken very seriously.”

The NSTA and Energy Department declined to comment.

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