The development of a second major North Sea project could be delayed after its operator admitted the project was not worth the current cost.

But the biggest stakeholder in the project insists that the Rosebank field remains an important part of their plans after spending more than $2billion to increase their stake in it this year.

Final investment plans for the giant $10billion Rosebank field, 80km north west of Shetland, were originally due to be submitted next year.

This morning, operator Chevron warned the project, which is set to create more than 300 jobs in Aberdeen alone, does not ‘justify proceeding with an investment of this magnitude’.

But OMV chairman Gerhardt Roiss told Energy Voice in Vienna today that this was a situation where it was deemed sensible to sit down and review the engineering approach to the $10billion development to improve project economics.

The Austrian oil firm increased their stake in the Rosebank field to 50% earlier this year as part of a $2.65billion deal with Statoil, buying out the Norwegian giant’s stake to become the largest stakeholder in the field.

Roiss told energy editor Jeremy Cresswell the approach was about being sensible, and that the issues lie with the so-called FEED (front-end engineering and design) stage.

He appeared unruffled and added that the government had helped recently on the tax allowances front that “assisted the project”.

It was not clear how much slippage will result from the review and therefore when government approval is sought for the huge project.

Together with Schiehallion, he said the North Sea, including West of Shetland had become very important to OMV as the Austrian group seeks to better balance its international portfolio and reduce geo-political risk.

The news comes just days after Statoil decided to shelve the multi-billion pound Bressay development in the East Shetland Basin as it looks for other ways to develop the field, a sister to the $7billion Mariner project.

Jaap Huijskes, OMV’s board member responsible for exploration and production including in the North Sea said in Vienna: “We don’t know if the FID will drift.”

Likewise the review: “How long it will take I don’t know, but it has to be done”, he said, emphasising the engineering aspect.

“We want the operator to look at a number of things, (for example) Rosebank South is not a part of the development plan; we think it should be. But we don’t think there is a need for further appraisal (drilling).”

Huijskes added that Chevron has been driving Rosebank from Houston and hinted that this was a mistake; Europe is where the work should have been done.

He said too that Chevron was after frying bigger project fish elsewhere in the world and this had not helped Rosebank either.

Chevron said it was continuing to work with partners OMV and Dong on the project, but that the current economics posed problems.

“The Rosebank joint venture participants continue to work the front end engineering and design work and are focusing their efforts on developing an optimum development solution for Rosebank,” the company said in a statement.

“Rosebank represents a large, undeveloped resource base in the UKCS, requiring significant investment to unlock its potential. The Rosebank team is working diligently to ensure that this investment fully optimizes the value of Rosebank for all stakeholders.

“The Rosebank project is still in the front end engineering and design phase. The JV’s focus continues to be about making the right decisions that are not driven by schedules and timelines.

“At this time, a final investment decision is currently planned for 2014.

“Chevron’s view is that the project does not currently offer an economic value proposition that justifies proceeding with an investment of this magnitude.

“Chevron will continue to work with all joint venture participants to further improve the project value.”

A number of major contracts have already been awarded. However, all are are contingent on the field development plan (FID) being approved by DECC and the boards of partners Chevron, OMV and DONG.

The subsea equipment vendor contract went to OneSubsea UK (formerly Cameron). The contract package includes the engineering, supply, and manufacturing of subsea manifolds, subsea trees and subsea control systems.

Equipment manufacturing will take place at various locations in the UK, including at the company’s forging facility in Leeds.

The Rosebank FPSO contract worth $1.9billion went to Hyundai of South Korea in April

The $1billion development drilling contract has gone to Norwegian company Dolphin Drilling, which is building the new rig Bolista Dolphin on the back of the five-year deal.

Oil and gas industry trade association the Energy Industries Council said it was monitoring the situation with regards to possible impact on the supply chain, with hundreds of jobs across the UK potentially being impacted.

“At this stage, I think it’s a case of wait and see before worrying about the impact on the UK supply chain,” said Neil Golding, the EIC’s head of oil & gas.

“With regard to Bressay, Statoil has announced that it still plans to go ahead with the project but will evaluate alternative development solutions. Based on this, there may just be a delay in awards filtering down to the supply chain while the operator assesses other development options.”

The rig is to drill 14 wells, seven of which are designated producers while the rest will be used for water injection to sustain reservoir pressure.

A new gas export pipeline from the field location in is due to be installed between the second and third quarters of 2015.

Subsea equipment installation is supposed to happen in two stages over the period 2015-16 and the production ship was diaried for installation on Rosebank in 2017.

All will probably slip.

Politicians at Holyrood have expressed confidence in the economic viability of North Sea oil fields following the announcement from Chevron.

Energy Minister Fergus Ewing said: “We value the commitment Chevron continues to make in the North Sea – which operates the Alba, Captain, Erskine and Strathspey fields and is a joint operator of Britannia.

“Overall investment in the North Sea continues to be exceptional, with investment is forecast to be £13.5billion in 2013, a record in cash terms, whilst there is also £100billion of future investment in companies plans.

“The huge investments continuing to being made in the North Sea – such as the £4billion Kraken field expected to support 20,000 jobs; and the investment by ConocoPhillips leading to new production in the Jasmine field – are great examples of the industry’s confidence in the long-term viability of the North Sea.”

Shetland Liberal Democrat MSP Tavish Scott said he had spoken to the company about its plans.

“These decisions reflect the overheated oil and gas economy and therefore the prices that are being quoted by suppliers to develop these important west of Shetland assets will come down,” he said.

“As with many other field oil companies will return to them when the market is more favourable.

“I have no doubt that Rosebank will be developed. For me it is not a question of Yes or No, it is a question of when. The Clair field took 30 years to develop.”

Scottish Conservative energy spokesman Murdo Fraser said the oil and gas industry in the North Sea is “vibrant and well-supported by the UK Government’s tax incentives”.

He added: “That is shown in the large levels of investment in the North Sea.

“It’s disappointing we’ve had this announcement from Chevron, which puts into question the future of this particular development.

“But that does buck the trend elsewhere, and I’m sure there will be many other opportunities continuing to emerge in the North Sea.”