* UK gives green-light to new development
* Project to add 40,000 boepd to UK production from 2015
By Sarah Young
LONDON, Dec 17 South Korean-owned Dana Petroleum
said it will invest $1.6 billion in a new oil project off the
coast of Britain, another step towards reviving flagging North
Sea oil production.
Britain's oil and gas production, once a boon for now
stretched public finances, peaked in 1999 and slumped 18 percent
last year, appearing to fulfil gloomy predictions of an
accelerated decline after a shock tax hike the same year.
More recently the government, under pressure to stimulate
growth, has been back-pedalling and introduced a series of tax
breaks to revive the industry.
Dana, a London-listed company until late 2010 when it was
taken over by Korea National Oil Company in a $2.9
billion deal, said on Monday the government's small field
allowance scheme had helped it decide to proceed with its $1.6
billion Western Isles development project.
This follows Canada's Talisman Energy announcing in
October that it will invest $2.55 billion in a North Sea
project, in direct response to Britain launching a tax allowance
for older fields a month before.
Older fields, smaller fields and heavy oil fields, a type of
oil which is more costly to develop, are among the projects
which have been helped by this year's tax breaks.
Dana's new project, which was given the green light by
British authorities on Monday, will develop the Harris and Barra
oil fields and will add 40,000 barrels of oil equivalent (boepd)
to Britain's output when it comes onstream in 2015, Dana said.
Cieco, partly owned by Japanese trading company Itochu Corp
, is Dana's partner in the Western Isles project.
A study published in December forecast that British oil
output from the North Sea would rise in the next few years,
reflecting the impact of more investment, high prices and the
new tax breaks.
An increase in oil production could provide a boost for a
British government struggling to revive its economy. The
dramatic fall in output in 2011 shaved at least half a
percentage point off UK growth.
Recent merger and acquisition activity has been another
positive area for the region, as oil companies such as China's
top refiner Sinopec Corp, Kuwait's state oil firm
and Japanese trading company Mitsui bought stakes in
North Sea projects.
(Reporting by Sarah Young; Editing by Elaine Hardcastle)