(Reuters) -UK-focused NEO Energy, which has interests in assets across the North Sea, said on Monday it will slow investment in all projects it has under development, blaming fiscal and regulatory uncertainty in the British oil and gas sector.
Environmental statement assessments have been deferred as Britain prepares to consult on new environmental guidelines for oil and gas projects, while the Labour government in late July said it would increase its levy on energy profits from 35% to 38% starting Nov. 1.
“In recent weeks the government has announced a number of measures which have materially increased the level of uncertainty in relation to the UK’s oil and gas sector, and investment decisions in this context are extremely challenging,” NEO said in a statement.
Earlier on Monday, industry group Offshore Energies UK said the British government’s proposed plans to increase a windfall tax on North Sea oil and gas producers would lead to a 12 billion pound ($15.77 billion) drop in revenue to the state.
NEO, which operates and holds interests in several assets in the UK North Sea, said the tax increase and potential changes to the fiscal regime beyond March 2030 would have a negative impact on the overall viability on a project such as the Buchan Horst.
The company owns half of the Buchan Horst development project in the UK North Sea, with joint venture partners Serica Energy and Jersey Oil & Gas holding 30% and 20%, respectively.
Shares in Jersey Oil & Gas dropped 21%, while Serica had slipped 2% by 0747 GMT.
“Against this uncertain backdrop, NEO and its 100% owner HitecVision, have taken the decision to materially slow down investment activities across all development assets in its portfolio,” it said.
Neo said it was awaiting clarity on the UK regulatory and fiscal framework to assess the full impact on the Buchan Horst project, which would likely see a delay in its first oil timing beyond the previous forecast of late 2027.
The joint venture will seek a licence extension to continue technical evaluation, it said.
($1 = 0.7612 pounds)
(Reporting by Yamini Kalia and Yadarisa Shabong in Bengaluru; Editing by Varun H K, Mrigank Dhaniwala and Jan Harvey)
