The Cygnus installation at Greater Cygnus Area offshore UK. Credit: Spirit Energy Limited.

Spirit Energy has agreed to partner with Neptune Energy to develop the Pegasus West gas discovery in the UK southern North Sea.

Neptune Energy has acquired Spirit Energy’s 38.75% equity interest in the Pegasus West discovery and surrounding acreage including P1724, P1727, P4257 and P2128.

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Spirit Energy holds the remaining 61.25% stake and serves as operator.

Neptune Energy UK managing director Alexandra Thomas said: “The alignment of interests with Spirit Energy in the Pegasus West development offers material benefits of faster development, lower costs and lower carbon intensities as well as optimisation of production operations through our existing world-class gas production asset, Cygnus.

“Cygnus is strategically important for domestic gas supply to the UK, and has one of the lowest carbon intensities on the UKCS, at less than 2kg per boe.”

Neptune Energy said the parties intend to develop the Pegasus West discovery as a subsea tieback to the existing Cygnus field, which is operated by Neptune Energy with a 38.75% stake.

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Spirit Energy owns the remaining 61.25% stake in the Cygnus field.

As per the agreement, the Cygnus field will become the host platform for the Pegasus development. It is subject to UK Oil and Gas Authority (OGA) approval.

Neptune expects the Pegasus West development to open up development opportunities for other possible gas resources in the Greater Cygnus Area.

Neptune said it will now work with Spirit Energy on front end engineering and design (FEED) studies on the Pegasus West discovery with a plan to reach a final investment decision by the end of this year.

Spirit Energy estimates the Pegasus West field to hold 83 billion cubic feet of recoverable gas.