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Europe’s largest oil and gas supplier has said its plan to electrify extraction operations at the Rosebank oil and gasfield in the North Sea will be more “challenging” under UK Labour’s tax proposals.
Anders Opedal, chief executive of Equinor, which owns an 80 per cent stake in Rosebank, insisted the company was not considering changing its “ambition” to power operations with renewable electricity, which it expects to reduce emissions by more than 70 per cent.
The comments are the latest by oil and gas executives highlighting the risks to projects due to the windfall tax on the sector introduced by the previous Conservative government, which Labour has vowed to increase.
“The plan is to continue with electrification . . . but it has been more challenging now than it was before due to changes in the fiscal regime over time,” Opedal told the Financial Times.
“All large energy projects are big and long-term investments and predictability and stable fiscal regimes are important,” he added.
Since Russia launched its full-scale invasion of Ukraine in 2022, the Norwegian energy giant has become Europe’s biggest supplier of natural gas by volume.
Speaking on Wednesday, Opedal said it was important that “decision makers understand that changes introduce some new risk and we need to fully understand the risk before we’re able to say how we are progressing”.
The development of the Rosebank oilfield about 80 miles off the coast of Shetland is one of the biggest projects in the UK North Sea and is projected to account for about 8 per cent of UK oil production through 2030.
Equinor estimates the project will inject about £25bn into the UK economy over its approximately 25-year lifetime. It would also support 2,000 “full-time equivalent” jobs at its peak during the second quarter of 2025, it said.
But the development plans have faced opposition from environmental groups, with Uplift and Greenpeace late last year launching separate judicial reviews to challenge the North Sea Transition Authority’s decision to approve the project.
Equinor, which is partnered in the project by Ithaca Energy, has defended Rosebank as being crucial to ensuring the UK’s energy security, while pointing to its “long-term” ambition to fully electrify extraction operations.
Tessa Khan, executive director of Uplift, said any backtracking on the companies’ commitment to electrification would raise questions over the decision to approve the project.
“The emissions that would be created by extracting Rosebank’s reserves would be enormous . . . without electrification, they would bust the industry’s already weak climate targets,” she said.
Opedal added to industry calls for Labour to clarify its tax policy after the party pledged in the general election campaign to increase the windfall tax to 78 per cent from 75 per cent.
The party, which secured a landslide election win earlier this month, also vowed to stop issuing new licences for drilling in North Sea gas and oilfields.
Industry bosses have complained that the plan to remove the investment allowances that enable companies to offset investment spending against their tax bill would deter activity.
David Latin, chair of London-listed energy company Serica, last month likened navigating the North Sea to operating in a “war zone” and said his company would actively look for investment opportunities abroad.
“We have, of course, read the manifesto and we are now looking forward to clarification of the future fiscal regime,” Opedal said.
The government said: “We have set out our plans for tax in the manifesto, which includes extending, tightening and increasing the energy profits levy to ensure oil and gas companies contribute more to help fund vital public services.”
