Approval of the Rosebank oilfield is a “ray of light” for projecy partner Ithaca Energy, an analyst has said, after the firm was forced to take write downs of £58m linked to the windfall tax.
Ithaca, a 20% partner in the West of Shetland field, saw shares jump 9% on Wednesday following the announcement to 178.20 pence.
Head of money and markets at Hargreaves Lansdown, Susannah Streeter, said investors “cheered at the news”.
“Ithaca Energy has been on a rollercoaster ride since its launch onto the London market, weighed down partly by the windfall tax.
“It said the energy profits levy forced it to write down its assets by £58 million. So, the approval marks a ray of light for the company, and it is ploughing on with its plans.”
For Ithaca, the news comes after it warned last month that the Energy Profits Levy had “severely dampened” North Sea investment, warning that its production will drop next year as projects are cancelled or delayed.
It has, meanwhile, become sole owner of the Cambo oilfield – the UK’s second-largest untapped discovery after Rosebank – after Shell exited the project.
Ithaca is now hunting a fresh partner on the project.
Ms Streeter added: “The (Rosebank) decision will undoubtably allay some energy security concerns, given that the partnership estimates that 245 million barrels of oil could be produced in phase 1 on the project, but it pushes the UK down a notch in terms of its net zero leadership.
“Even though the regulator has said that these considerations have been taken into account, and the companies have stressed that electrification of operations will reduce emissions, it muddies the playing field again when it comes to government support for the green transition.
“The decision, coming so swiftly after the Sunak administration pushed back the ban on sales of new petrol and diesel cars to 2035, leads to more uncertainty for companies and investors focused on cleaner energy solutions.”