UK windfall tax stalling Cambo oil field development in North Sea, Ithaca reports

(Bloomberg) – Ithaca Energy Plc is awaiting the outcome of a fiscal review in the UK before committing to the development of the Cambo oil field in the North Sea.

“We would like to move ahead if the environment is supportive,” Ithaca Chairman Gilad Myerson said in an interview. “More than anything we need stability, and we need conviction that the fiscal environment will be a long-term one, and that it will last for at least the lifecycle of a project.”

His comments come after Ithaca and Equinor ASA last week received government approval to develop the Rosebank oil and gas field, also located west of Scotland’s Shetland Islands. Rosebank and Cambo have become flashpoints for environmentalists, politicians and North Sea developers battling over the importance of net-zero and energy security policies.

UK-focused oil and gas producers were hit last year by the Energy Profits Levy, which added an extra 35% tax on profits from output of fossil fuels. The government is now reviewing a mechanism that allows the levy to be phased out if oil and gas prices fall below certain thresholds for a sustained period.

Ithaca originally expected to develop Cambo in parallel to Rosebank when it acquired its owner Siccar Point Energy Ltd. in 2022. But the windfall tax has pushed the company to develop them sequentially, said Myerson.

Ithaca fully owns the Cambo field, having acquired Shell’s 30% stake earlier this month. It is looking for a new partner but wants to retain operatorship, Myerson said.

Ithaca isn’t the only company concerned about the ability to invest in the UK North Sea. EnQuest Plc CEO Amjad Bseisu said earlier this month that the windfall tax is curbing spending in the region, which will result in production declines. And Jacques Tohme, who co-founded the now-sold Tailwind Energy, is refocusing his new venture on assets in emerging markets, saying the UK Treasury is “unstable and lacks engagement.”

“The rules of the game need to be clear to everyone and they shouldn’t change in the middle of the game,” Myerson said.

Lead photo by Zukiman Mohamad