KUALA LUMPUR (April 11): Dagang NeXchange Bhd (DNeX) said on Monday (April 11, 2022) that its 90%-owned subsidiary Ping Petroleum Ltd's final investment decision (FID) on Ping's proposed crude oil production within the Avalon oilfield in the North Sea is anticipated later this year after the UK's North Sea Transition Authority (NSTA) indicated it had "no objection" to Ping's planned development concept for the oilfield.

In a statement on Monday, DNeX said that with a total estimated recovery of 23 million barrels of oil, production from Ping's second oilfield asset Avalon is scheduled to begin between mid 2024 and mid 2025, subject to availability of key materials and equipment.

"DNeX via its 90%-owned subsidiary Ping, has passed a key milestone after receiving a letter of 'no objection' from the NSTA in relation to the company's proposed development concept for the Avalon discovery in the Central North Sea, UK.

"Ping last year announced the purchase of the remaining 50% interest in UK North Sea Block 21/6b, License P.2006, containing the Avalon Oil Development from Summit Exploration and Production Ltd, a wholly-owned subsidiary of Sumitomo Corp, bringing Ping's ownership in the licence to 100%.

"The company (Ping) will now finalise conceptual development planning and begin front-end engineering works in preparation to submit the Avalon field development plan, with FID anticipated later this year," DNeX said.

DNeX group managing director Tan Sri Syed Zainal Abidin Syed Mohamed Tahir said in the statement that the next step for Ping is to submit the company's field development plan for Avalon to the NSTA by the third quarter of 2022.

"Once approval is attained, the company will proceed with the full development programme," Syed Zainal Abidin said.

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

Syed Zainal Abidin said that receiving "no objection" to the proposed development concept from the NSTA 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 proposed development concept comprises tie-back of Avalon oil production wells to a reused floating production storage and offloading (FPSO) facility, which has spare ullage to provide an offtake route for nearby stranded oil discoveries.

According to him, discussions are ongoing with the UK regulator (NSTA) and supply chain to decarbonise the oilfield development through integration with floating offshore wind.

At the time of writing, DNeX's share price fell four sen or 3.64% to RM1.06, bringing the company's market capitalisation to about RM3.35 billion.

DNeX's latest reported number of issued shares stood at 3.16 billion, according to the company's Bursa filing on March 17, 2022.