Tax row

Deltic Energy quits North Sea over uncertainty

Anas-Sarwar-and-Keir Starmer
Anas Sarwar and Sir Keir Starmer face more difficulties over the North Sea (pic: Terry Murden)

An energy company has abandoned a project in the North Sea over “negative rhetoric”, confirming its earlier threat to withdraw from the region.

Deltic Energy’s chairman is Mark Lappin, 63, Labour’s election agent for West Aberdeenshire & Kincardine and the company’s decision is an embarrassment to the party’s pledge to continue supporting the sector.

He said that “deteriorating sentiment” towards the oil and gas industry meant that the company had failed to find an an investor willing to take on its share of the Pensacola project, or to secure any alternative financing.

Pensacola is one of the largest discoveries in the southern North Sea in at least a decade, estimated at 72.6 million barrels. It is a joint venture with Shell, which has a 65% stake, and One-Dyas, a Dutch exploration company, which has a 5% holding.

Deltic’s withdrawal comes a week after Jersey Oil & Gas, another London-listed company, said it was delaying a decision on a new development in the North Sea.

Significantly, both decisions follow Labour’s stated policy to raise the windfall tax on oil and gas companies from 75% to 78% and close loopholes.

Graham Swindells, the chief executive of Deltic Energy, has highlighted the problems associated with large-scale discoveries, such as the Cambo and Rosebank fields, sayting “damaging political rhetoric and fiscal instability continue to undermine the sector”.

Shares in Deltic Energy fell 2p, or 16.7%, to 10p.

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