The approval process for the North Sea’s largest undeveloped oil and gas field could drag on into the second half of the year, with the energy firm at the centre locked in talks with the government.
Ithaca Energy is still engaged in talks with the government over the project amid concerns about the UK’s investment climate.
The energy firm no longer expects the project to be approved by the end of this month, removing the prediction from its first quarter results announcement last week after consistently including that expectation in its trading updates.
Ithaca announced a nine per cent hike in profits over the first three months of trading this year – driven by increased production.
It posted adjusted earnings £418.3m, up from £380.6m in the same period last year.
Ithaca has 28 producing oilfields in the UK Continental Shelf, but is looking for assurances from Whitehall before committing to the Rosebank field.
The energy firm has been holding back and forth talks with the government over the project for nearly three months, concerned over the effects of the 75 per cent windfall tax on investment on the financial viability of the project.
Equinor, the majority owner of Rosebank with an 80 per cent stake, remains highly keen on the project, which has the potential to produce 300-500m barrels of oil – roughly equivalent to eight per cent of the UK’s entire oil output between 2026 and 2030.
They have raised concerns with the government with the toughened windfall tax which is set to remain in place until 2028, even though gas and oil prices have dropped significantly and are close to conventional trading levels.
The energy firm has called for a price floor to be introduced when oil prices dip to a level there are no longer windfall profits, where the levy would no longer be in place.
City A.M. understands the government could combine a final decision on Rosebank with a potential announcement in the price floor.
This is being considered by the government – with the idea even trailed to the media before the underwhelming ‘Green Day’ two months ago – although no exact figure for a price floor has been decided.
The project is currently going through the approval process, with Ithaca chief executive Alan Bruce confirming to industry publication Energy Voice that OPRED are still assessing the project.
It will also need the North Sea Transition Authority to sign off on the field from an environmental standpoint, before it finds its way to energy security secretary Grant Shapps’ desk – who is widely expected to rubber stamp the project if it reaches that stage.
Oil and gas both remain included in the government’s energy security strategy, including new development and exploration.
The project has faced sustained criticism for its potential environmental impact, with Labour’s climate change secretary Ed Miliband publicly criticising the project.
Meanwhile climate activists such as Greenpeace and energy transition pressure groups including Uplift have publicly opposed the project – warning it would prevent the UK reaching its net zero and Paris Agreement climate goals.
There have also been sustained protests from Just Stop Oil, which has succeeded in bringing London’s traffic to a standstill on multiple occasions in recent weeks and disrupted events including the Premiership rugby final in a bid to amplify their calls for no new fossil fuel projects in the North Sea.
Domestic oil and gas is considerably less carbon intensive than LNG supplies, with 75 per cent of the UK’s energy needs still being meet by oil and gas, with 85 per cent of the country’s housing stock still dependent on gas for heating.
Ithaca and the NSTA have both been approached for comment.
When approached for comment, an energy security and net zero department spokesperson said: “No decision has yet been made regarding the proposed Rosebank field and proposals for oil fields under existing licences are a matter for the regulators – the NSTA and OPRED – following their standard regulatory processes.
The Treasury declined to comment.