Rosebank project under pressure: Equinor sees challenges due to Labour's tax plans

Europe's largest oil and gas supplier, Equinor, faces significant challenges in electrifying its production operations at the Rosebank oil field in the North Sea. The reason for this is the new tax plans of the British Labour Party. Nevertheless, Equinor CEO Anders Opedal remains committed to the ambitious goal of operating the production with renewable energy, thereby reducing emissions by over 70 percent. Opedal's recent comments once again highlight the industry's concerns regarding the special tax for the sector, which was introduced by the previous conservative government and is planned to be further increased by Labour. "The plan is to continue with electrification; however, it will become more difficult in light of the changes in tax law," Opedal told the Financial Times. Especially in times of major energy projects that require long-term investments, predictability and stable tax laws are paramount, the CEO further emphasized. Since the large-scale invasion of Ukraine by Russia in 2022, the Norwegian company has become Europe's largest natural gas supplier. Opedal also stated that decision-makers needed to understand that changes introduce new risks, and these risks need to be fully comprehended before further progress can be made. The Rosebank oil field, about 130 kilometers off the coast of Shetland, is one of the largest projects in the British North Sea and is expected to account for around eight percent of UK's oil production by 2030. According to Equinor, the project could contribute an estimated £25 billion to the UK economy and create around 2,000 full-time jobs at its peak in the second quarter of 2025. However, the project also faces criticism from environmental groups. Uplift and Greenpeace last year initiated separate judicial reviews to challenge the North Sea Transition Authority's approval of the project. Opedal called on the Labour Party to clarify its tax policy after it promised during the election campaign to increase the special tax to 78 percent and halt the issuance of new drilling licenses. Industry representatives argue that the abolition of investment allowances, which enable companies to offset capital expenditures against their tax liabilities, would slow down activity in the sector. David Latin, chairman of the London-listed energy company Serica, last month drew parallels between operations in the North Sea and a "war zone" and announced plans to seek investment opportunities abroad. Opedal concluded by saying, "We have read the manifesto and now look forward to the clarification of the future tax system." The government stated, "We have outlined our tax plans in the manifesto, including the expansion, tightening, and increase of the energy profits levy to ensure that oil and gas companies contribute more to funding essential public services.