Crogga has announced that it will be unable to take forward the project to extract gas from the field off the coast of the Isle of Man.
It says that “it has become clear that it will not be possible to agree workable terms” with the Department of Infrastructure.
Crogga believes it has been placed in an “unreasonable commercial position”.
It added that “no responsible gas exploration company should take on the significant timing and financial risks” that Crogga is being asked to bear.
Crogga Out
The full statement from Crogga is below:
The Crogga Limited board of directors has met today. With regret, the board announces that it will be unable to take forward the project to extract gas from the Crogga field off the coast of the Isle of Man.
The board has, for several months, been engaged in detailed discussions with the Manx Department of Infrastructure regarding an extension and variation to the licence to allow the gas project to proceed. However, it has become clear that it will not be possible to agree workable terms and the licence will therefore expire today.
Under the licence, Crogga was required to undertake certain work obligations before it could proceed with fully developing the project. It had to first shoot a 3D seismic survey of the area covered by the licence and then drill a test well.
Notwithstanding that the licence was granted in 2018, the Isle of Man government has, to date, not put in place the necessary legislative framework or the regulatory authority necessary to allow the drilling of a test well to go ahead. The view of the Crogga Limited board is that, in order to allow Crogga to work alongside Orsted’s Moor Vannin offshore wind farm project, as it was being required to do by the Department of Infrastructure as a condition to the licence variation, such legislation would need to have been in place by the end of 2025. However, the Government has been unable to provide any certainty or contractual assurances that this timeline will be met.
As such, given external time constraints, Crogga would have been in a position where it needed to conduct the 3D seismic survey at a cost of approximately £12 million without any certainty that the necessary legislative framework or regulatory authority would be put in place within the relevant timescales to allow it to progress its project alongside Orsted’s project.
Ultimately, Crogga Limited’s board believe that they have been placed in an unreasonable commercial position and that no responsible gas exploration company should take on the significant timing and financial risks that Crogga is being asked to bear.
Regrettably, this means that Crogga will not be able to proceed with its Manx gas project. As the Attorney General’s Chambers have themselves noted, the Tynwald motion of 20th July 2022 “requires that “no new licences should be issued for the extraction of hydrocarbon in Manx territorial waters””. Expiry of the Isle of Man’s only gas production licence, is therefore, a sad day for the Isle of Man as well as for Crogga.
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