Australian oil and gas company Santos has made the final investment decision (FID) to develop the $2.6bn first phase of the Pikka oil project on Alaska’s North Slope.

Planned to start production in 2026, Pikka Phase 1 is expected have a production capacity of 80,000 barrels of gross oil per day.

Located in the Nanushuk oil formation on state leases, Pikka Phase 1 is estimated to have 768 million barrels of recoverable oil.

Santos owns a 51% stake in the project while the remaining 49% stake is held by Repsol.

The first phase of the Pikka project is expected to create 2,600 jobs during the construction period, and over 500 jobs after it enters the production phase.

Santos managing director and CEO Kevin Gallagher said: “Low-carbon oil projects like Pikka Phase I respond to new demand for OECD supply and are critical for global and US energy security that has been highlighted since the Russian invasion of Ukraine.

“Santos has emission reduction plans to achieve scope one and two net-zero emissions by 2040 and in-line with that commitment, Pikka will be a net-zero project. The project will add further diversification to our portfolio and reduces geographic concentration risk.”

The latest move comes after Santos failed to divest its stake in the Pikka project, reported Reuters.

Gallagher was cited by the news agency as saying “What’s changed since February is we don’t have to sell anything at this point in time. We’re in a very strong place.”