The Press and Journal (Aberdeen and Aberdeenshire)
Australians express uncertainty on North Sea project, citing Labour’s windfall tax proposals
North Sea operator Hartshead Resources (ASX: HHR) has warned of uncertainty and possible delays to a new UK gas project due to Labour announcements on the windfall tax.
In a stock market update, the Australian company said there was uncertainty in the UK gas sector due to changes in the Energy Profits Levy (EPL) proposed by the Labour Party.
Hartshead holds a 40% stake in a series of North Sea fields, including the Anning and Somerville developments in the Southern Gas Basin.
At the start of this year, the company announced a deal for an $A800 million (£414m) “financing backstop” to progress the first phase of Anning and Somerville – expected to achieve first gas as early as Q4 2024. However, Hartshead said the timeline is now under review.
Hartshead said “given that the Labour Party are currently significantly ahead in polling”, the company is “assessing project economics”.
“Additionally, UK NBP gas prices (`60p/therm) and gas futures have softened from their 12month high of 136.7p/ therm in Oct’23, due to an unusually mild winter in Europe leading to near record predicted European gas storage inventories at the exit of the winter season,” Hartshead said.
“The timeline is under review, however the likely delay in awarding of key contracts associated with the long lead items for development would result in a delay to first gas.”
Hartshead chief executive Chris Lewis said the Labour announcements were “disappointing”, and introduced uncertainty over the development project, which “before then had been moving forward with momentum”.
“The danger is that these proposals will cause a flight of capital to other jurisdictions, devastate the skills and supply chain required for the UK to lead the energy transition and result in the loss of tens, if not hundreds of thousands of jobs.”