Norwegian energy group Equinor yesterday dismissed as "speculation" a claim that it has threatened to abandon a £4.5billion field development off Shetland because of the UK Government's controversial move to impose a windfall tax on oil and gas producers.
But the denial over plans for Rosebank will have done little to calm the nerves of the offshore industry which fears long-term damage from the new energy-profits levy (EPL).
Industry body Offshore Energies UK (OEUK) said yesterday that, while the extra tax may not affect projects already under way, it is likely to deter investments under consideration for which funds have yet to be committed.
Rosebank is one of the largest untapped reserves in British waters, and is thought to be capable of producing 300million barrels of oil.
The Telegraph reported at the weekend that Equinor had privately told industry contacts it was reconsidering its plan to develop the find.
Sources told the newspaper that Equinor wants the Government to change the terms of the EPL before committing to the investment.
Cambo project 'less likely'
The Telegraph also said that Shell has separately told analysts it is also less likely to develop the £2billion Cambo project in the North Sea after the tax hike.
But another report in today's Times suggested Equinor would not abandon the Rosebank project, and might only be planning a postponement or a slower stepping up in work.
An Equinor spokesman said of the Telegraph story: "This is speculation. We stand behind OEUK's position on the energy profits levy and have no other comment.
"As for the Rosebank project, we were recently granted a licence extension and continue to work with our partners and stakeholders to ensure we progress and deliver the Rosebank project to strengthen UK energy security, create local value through highly skilled jobs and enable the UK to reach net zero targets in line with the North Sea Transition Deal."
He added that a final investment decision is planned for next year.
Last week, Hurricane Energy was the latest company to raise concerns about the impact of the windfall tax.
Cash raid
The cash raid is being imposed to partly fund support to help Britons with the rising cost of living.
It was the end of May when the Government made its announcement on the EPL.
Hurricane said: "As the full details and related legislation of the EPL have not yet been published, it is not yet possible to determine the full impact this will have on the company.
"As the EPL includes an investment allowance, should the company decide to invest in further development on its existing assets or development on assets following an acquisition, such investment would partially offset the EPL charge."
Hurricane chief executive Antony Maris pointed out that the oil and gas industry works within a framework of long investment cycles and highly-volatile commodity markets.
He added: "Fiscal stability is key in supporting the investment decision making to meet the UK's energy transition targets and the introduction of the EPL is unhelpful in that regard. However, as a potential investor in future UK oil and gas assets, we also stand to benefit from investment incentives/relief."
Earlier this month, the boss of the largest UK listed independent oil and gas company called on the Chancellor to limit the potential length of the new tax.
Less capital available
Linda Cook, chief executive of Harbour Energy, has warned the levy will result in less capital being available for companies to invest in the basin - and create a more fiscally unstable environment.
The Government has said the new tax will remain in place until oil and gas prices return to historically more normal levels or the activation of a "sunset clause" in 2025.
This has led to fears that, unless the prices of hydocarbons fall sharply, it could turn into a multi-year levy which could cost the offshore industry up to £17.5billion.
Ms Cook has written to Chancellor Rishi Sunak setting out, in detail, Harbour Energy's concerns over the EPL.
She added: "I have argued that the EPL, as currently proposed, disproportionately impacts the independent oil and gas companies which have recently invested the most to help ensure UK domestic-energy supply."