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Norwegian oil and gas major Equinor is nearing a deal to buy the UK North Sea assets of Canada’s Suncor Energy for around $1 billion, Reuters reported on Wednesday, citing sources with knowledge of the matter.
Suncor Energy has a 40% stake in the Rosebank field, operated by Equinor, off the Shetland Islands. Equinor and partners are expected to make a final investment decision on the field’s development this year amid increased tax rates for operators in the UK North Sea and strong opposition from environmentalists to the development of Rosebank and other major oil and gas fields in the North Sea such as Cambo.
Suncor, Canada’s third-largest energy company, also holds 29.9% in the huge Buzzard field in the UK North Sea. Buzzard is the biggest supplier to Forties, one of the crude grades in the Brent crude benchmark.
Equinor could incur tax losses from the possible acquisition of Suncor’s assets that could be used to offset future investments in the UK North Sea, according to Reuters’ sources.
Suncor has already sold its upstream assets offshore Norway. Sval Energi bought Suncor Energy’s 17.5% ownership in the Fenja field, 30% ownership in the Oda field, and 8 additional licenses in the Norwegian Continental Shelf in August last year.
An Equinor-Suncor deal would come at a difficult time for operators in the UK North Sea, which have seen their tax rates hiked last year after the UK government introduced – and then increased – a windfall tax on operators offshore the UK.
Earlier this week, the new head of trade body Offshore Energies UK (OEUK) warned that the windfall tax, officially known as the energy Profit Levy (EPL), is hitting all companies operating on the UK Continental Shelf, with firms already announcing lower investments and deferring drilling plans.
Commenting on calls for more taxes after Big Oil’s record profits for 2022, Mike Tholen, OEUK’s director of sustainability, said last month, “That rate of UK tax is already so high it risks driving companies out of UK waters. All parties have acknowledged that we will need oil and gas for decades to come. So why risk damaging our own secure supplies from the North Sea?”
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com