27th Sep 2023 14:04
(Alliance News) - Ithaca Energy PLC on Wednesday announced that, alongside operator Equinor UK Ltd, it will invest USD3.8 billion in the development of Rosebank on the UK continental shelf.
The oil field was approved by the UK government's regulator, the North Sea Transition Authority. The UK government expects billions of pounds to be added into the economy from the project, which has been lambasted by environmentalist groups.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the approval marks a "ray of light" for the company after a "rollercoaster ride" since its launch onto the London stock market.
Streeter explained that Ithaca had been weighed down in part by the windfall tax in the UK, saying that the energy profits levy had forced the company to write down its assets by GBP58 million.
"So, the approval marks a ray of light for the company, and it is ploughing on with its plans," Streeter said.
The Rosebank field is located around 130 kilometres north-west of Shetland. Ithaca expects between 300 millions of barrels of oil from phase 1 and 2, with phase 1 targeting around 245 million barrels.
"The Rosebank field will produce in excess of 21 million square cubic feet of natural gas every day, the equivalent to the daily use of Aberdeen city," Ithaca said.
First production is anticipated between 2026 and 2027.
Peel Hunt analyst Werner Riding noted that Rosebank is the UK's largest undeveloped oil field and will help in creating "several thousand local jobs" while also being "important" from a "UK energy security perspective".
Hargreaves Lansdown's Streeter said that while the decision will "undoubtedly" allay some energy security concerns but noted that the approval also pushes the UK down a notch in terms of its net zero commitments.
"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," Streeter said.
"The decision, coming so swiftly after the [UK Prime Minister Rishi] 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."
Shares in Ithaca jumped 8.8% to 177.60 pence on Wednesday afternoon in London, making it the top performing stock in the FTSE 250.
By Heather Rydings, Alliance News senior economics reporter
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