Cambo fate will be decided in months as Ithaca weighs tax uncertainty

A decision on whether the controversial Cambo field will be sanctioned or delayed is set to be decided in months as bosses weight the impact of North Sea tax policy.

Ithaca (ITH.L) chairman Gilad Myerson said the firm is “waiting mode” as it determines how current and proposed government policy on tax and incentives will affect its outlook on production and investment.

It comes as Ithaca is on track to be the biggest independent producer of oil and gas in the UKCS.

© Supplied by Hes Corp.

Last month, the London-listed firm agreed a £754million deal to buy North Sea assets from Italian energy giant, Eni.

Speaking on a podcast with investment analyst Peel Hunt, Myerson said the Cambo field is a “critical” project for UK energy security and for North Sea jobs.

In particular he blamed the Labour Party for delays. The party has proposed extending the Energy Profits Levy (EPL) as well as removing incentives.

The opposition party is ahead of the incumbent Conservatives but there is yet no confirmed date for a general election.

“The next few months we will make the decision, do we go ahead with Cambo or do we put it on hold until we have more clarity from the government?” he said.

He added a recent licence extension meant the firm had two years to decide to sanction the project.

Heavy Labour

Pointing a finger at Sir Keir Starmer’s party, he said: “The big unknown is Labour policy.

“If Labour come out and suggest very severe restrictions on investment allowances and change the fiscal regime, it wouldn’t be wise for us to go ahead and develop the assets we currently have.

“We may then look to grow in other jurisdictions.”

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He add this meant the Aberdeen-based Ithaca was an “waiting mode” is it integrates assets it is taking in from Eni. This includes the assets of Neptune Energy which Eni acquired in a $4.9billion deal earlier this year.

Tax slows pace

He said since the imposition of the EPL the firm’s “pace of investment has slowed considerably” including project sanctions across its portfolio.

“We have also see a reduction of investment including deferred or cancelled projects at some of our hubs for instance our Greater Stella Area, Elgin Franklin and Monarch

“It is also impacting our scheduled production outlook in line with many of our peers.

“Ultimately the unstable fiscal and political environment has slowed us down and slowed down the development.”

Hope on the horizon

However, Myerson added discussions with both political parties were taking a more pragmatic view than has been publicised due to the UK’s current heavy reliance on oil and gas.

“I can share that behind closed doors both the government and the opposition seem to be a lot more supportive than what may come across in the newspapers,” he said.

“Ultimately the UK currently uses oil and gas for 70% of its energy.

“Why wouldn’t you produce your own local energy if you’re hitting yourself in terms of jobs, taxes, energy security and global emissions?”