Norwegian energy giant Equinor has suspended its efforts to sell a 20% stake in the Rosebank oil development project in the UK North Sea. The decision comes amidst fiscal uncertainty ahead of the upcoming UK general election on July 4.
According to sources close to the matter, Equinor halted the sale process in recent days due to much uncertainty over future taxation in the basin. This is driven by the opposition Labour party’s manifesto, which was published on Thursday.
The Labour party, which is currently leading in the polls, has pledged to halt new oil and gas exploration licenses and increase the existing windfall tax on energy companies by 3 percentage points. The current 35% windfall tax, set to run until 2029, already brings the total tax burden on producers to 75%, one of the highest in the world.
Labour has also vowed to scrap the investment allowance, which exempts most profits that are re-invested in oil and gas production.
“We’ll need a lot of clarity from the new government before the process can launch again,” said one source close to the Rosebank project.
Equinor currently holds an 80% stake in the $3.8 billion Rosebank project, which is the largest development in the aging UK North Sea basin in recent years. The remaining 20% is held by Ithaca Energy. The British government gave Equinor the go-ahead to develop Rosebank last September.
The Rosebank project has been a target for climate activists calling for a halt to fossil fuel production activity.