Norwegian energy company Equinor is contemplating the future of its investments in the UK oil and gas sector in light of potential changes to the industry’s tax regime, reported Reuters.
The company’s head of international operations, Philippe Francois Mathieu, expressed concerns about the attractiveness of investing in Britain if taxation on oil companies is altered as anticipated.
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In an interview, Mathieu said: “We need to look at our appetite to invest further in the UK based on the fiscal regime… it could be that the economics are really, really hard impacted.
“And in that case, we need to look into what we want to do further with the Rosebank project,” the executive added.
Equinor and its partner Ithaca Energy have committed $3.8bn to the first phase of the Rosebank project, a key oilfield off the Shetland Islands.
The project represents the largest offshore oil development in Britain in recent years.
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By GlobalDataWith plans for a second phase and additional investments, the future of Rosebank could hinge on the fiscal environment.
Mathieu stated that: “As of today, we are continuing Rosebank. What we need to understand before we communicate, or even to strategise, and decide internally what the future for us in the UK looks like, is to understand the fiscal regime by the new Labour Government.”
The Labour Government, which came to power in July, has proposed a halt to new oil and gas exploration licences and an increase in the windfall tax on oil companies of three percentage points.
This tax was first introduced in 2022 after energy prices surged due to Russia’s invasion of Ukraine.
The current 35% windfall tax, set to last until 2029, raises the total tax burden on producers to 75%, one of the highest rates globally.
Prime Minister Keir Starmer’s government is expected to unveil its first budget in October.
Equinor holds an 80% stake in the Rosebank field. Its operations in UK also include the Mariner field in the North Sea, which produces between 25,000 and 30,000 barrels per day.
Earlier in the week, Equinor announced its intention to invest between Nkr60bn and Nkr70bn ($5.7bn–6.7bn) annually in offshore oil and gas operations in Norway until 2035 to cater to continued strong demand for fossil fuels.
