Shell has made a final investment decision to redevelop its Penguins oil and gas field in the UK North Sea.

A FPSO vessel will be built, which would be the company’s first new installation in the northern part of North Sea in almost three decades.

Once operational, the FPSO is expected to hit a peak production of 45,000boe/d. Sevan 400 FPSO has been selected for the field.

The Penguins field lies in 165m  (541ft) of water and is around 150 miles north-east of the Shetland Islands.

It was discovered in 1974 but was developed in 2002. The field is a joint venture between Shell and ExxonMobil.

Shell owns 50% of the field and is also the operator, while ExxonMobil owns the other 50% stake.

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Shell upstream director Andy Brown said: “Penguins demonstrates the importance of Shell’s North Sea assets to the company’s upstream portfolio.

“It is another example of how we are unlocking development opportunities, with lower costs, in support of Shell’s transformation into a world-class investment case.”

Currently, the Penguins field uses four existing drill centres tied-back to the Brent Charlie platform.

Redevelopment of this field is essential when Brent Charlie stops production.

The Penguins field will see an additional eight wells being drilled, which will be linked back to the new FPSO vessel.

“We will continue to work with the UK Government, our partners, and the regulator to maximise the economic recovery in one of Shell’s heartlands.”

Natural gas extracted from this field will be transported through the tie-in of existing subsea facilities and additional pipeline.

Oil will be exported through tanker to refineries, while gas through FLAGS pipeline to the St Fergus gas terminal in north-east Scotland.

Shell UK and Ireland upstream vice-president Steve Phimister said: “Shell has had a strong presence in this part of the northern North Sea for more than 40 years.

“Having reshaped our portfolio over the last 12 months, we now plan to grow our North Sea production through our core production assets. In doing so, we will continue to work with the UK Government, our partners, and the regulator to maximise the economic recovery in one of Shell’s heartlands.”