A company’s plans to drill for natural gas off the Manx coast which it says could have brought billions of pounds to the economy had come to a shuddering halt.

Crogga Ltd estimated sales of 660 billion cubic feet of natural gas from the Crogga field off the coast of Maughold over the 19-year life of the field.

It says this could have generated £2.8bn in revenues and royalties for the Treasury and create net income of £2.5bn for shareholders.

But the company, which has been pressing the Department of Infrastructure (DOI) for up to date oil and gas regulations for almost seven years, has finally withdrawn its proposals.

Middle MHK Stu Peters had tabled an urgent question on Crogga in the House of Keys next week as Crogga’s operating licence expired on Friday night.

MHKs had earlier rejected a call for an urgent debate on plans by Crogga to drill for gas in Manx waters.

In a statement Crogga’s Board of Directors said: ‘With regret, the board announces that it will be unable to take forward the project to extract gas from the Crogga field off the coast of the Isle of Man.

‘The board has, for several months, been engaged in detailed discussions with the DOI regarding an extension and variation to the licence to allow the gas project to proceed.

‘However, it has become clear that it will not be possible to agree workable terms and the licence has expired.’

Under the licence, Crogga was required to undertake certain work, including a 3D seismic survey of the area covered by the licence and then drill a test well. However, the proposals relied on the government introducing new legislation.

The statement continued: ‘Notwithstanding that the licence was granted in 2018, the Isle of Man government has, to date, not put in place the necessary legislative framework or the regulatory authority necessary to allow the drilling of a test well to go ahead.’

‘The view of the board is that, in order to allow Crogga to work alongside Orsted's Moor Vannin offshore wind farm project, such legislation would need to have been in place by the end of 2025. However, the Government has been unable to provide any certainty or contractual assurances that this timeline will be met.’

Conducting the 3D survey would have cost Crogga £12m which it was loathe to do without the legislation in place.

The statement said: ‘Ultimately, the board believes they have been placed in an unreasonable commercial position and that no responsible gas exploration company should take on the significant timing and financial risks that Crogga is being asked to.

‘Regrettably, this means that Crogga will not be able to proceed with its Manx gas project. Expiry of the Isle of Man's only gas production licence, is therefore, a sad day for the Isle of Man as well as for Crogga.’

But the government says it had already granted Crogga a number of extensions to the deadline.

In a statement, it said: ‘Despite the best efforts of the Isle of Man Government, Crogga has determined that it is not able to agree to revised terms that would have enabled the Government to extend the company’s licence to explore for oil and gas in Manx waters.

‘The revised terms would have covered arrangements around compensation for other parties interested in utilising the Manx seabed.

‘Crogga has requested an extension to this (3D survey) deadline on five occasions, all of which have been granted. Despite this, in the six years since the licence commenced, Crogga has not undertaken the required 3D seismic survey.

‘Throughout the process, the Isle of Man Government has worked positively with Crogga, engaging with the company at every stage, while also being sure to protect the interests of the Manx people and taxpayers.’