INTERVIEW: Ithaca chief defends UK oil projects, sees upstream consolidation

Two controversial UK oil projects, Rosebank and Cambo, will eventually both contribute to the country's energy security amid signs of the government taking a pragmatic approach in favor of the UK upstream sector, Ithaca Energy Executive Chairman Yaniv Friedman has told Platts.

Ithaca has fallen foul of environmental opposition to the two flagship oil developments, both located in the deepwater Atlantic, west of the Shetland Islands.

The company's main shareholders are Israel's Delek Group and Italy's Eni. It currently holds a 20% stake in Rosebank -- which is under development, but faces unexpected legal hurdles -- and 100% of the dormant Cambo project, which Shell exited in 2021 amid environmental opposition from Scottish authorities, and campaigners.

Rosebank, with 350 million barrels of oil equivalent in reserves, faces obstacles even after being approved by the government for development in 2023, as a court has ruled regulators unlawfully failed to consider the climate impact of emissions stemming from combustion of the hydrocarbons to be produced. The government is reviewing the regulatory process.

Friedman said he sympathized with companies looking to diversify away from or leave the UK amid punitive taxes, a moratorium on new licenses, and uncertain regulation, but said he saw "value" in the sector and a consolidation trend.

By contrast, TotalEnergies CEO Patrick Pouyanne has said he sees "little future" in the UK upstream. Ithaca is a partner of TotalEnergies in the Elgin-Franklin cluster of oil and gas fields, with the second-largest stake.

Ithaca's resilience has been improved by recent deals including its merger with the UK upstream arm of Eni in 2024, and its March 2025 purchase of an additional stake in the BP-operated Seagull field from Japan Petroleum Exploration, Friedman said.

"It's not an inexpensive basin to operate in, and with all the regulatory headwinds, when you look around over the last six months you're seeing [a broader] consolidation play," he said in a recent interview with Platts.

Ithaca's dealmaking has given it not only extra production, but tax losses relating to past project spending, which can be used to offset liabilities under the 2022 Energy Profits Levy. The controversial tax measure raised headline taxation to 78%, and is set to expire in 2030.

Meanwhile, Shell and Norway's Equinor are undertaking a merger of their UK upstream businesses, independents Serica and EnQuest have been discussing a merger, and Norwegian-owned Neo Energy has agreed to buy the late-life UK assets of Spain's Repsol.

The likely outcome is "creating probably at the end three or four larger entities in one shape or form that will operate in the North Sea -- have the expertise," Friedman said.

Tax hurdle

The industry's prospects rest in large party on what happens to the tax regime after the planned 2030 cut-off of the EPL, Friedman said. If clarity is achieved on the post-2030 regime, the Cambo project, thought to encompass hundreds of millions of barrels, could be quickly revived, he suggested. The government is holding another consultation on the post-EPL tax regime and says it wants to provide certainty on how taxation will respond in the event of commodity price spikes.

In the meantime, Friedman insisted Cambo is not on the back-burner, and Ithaca is working on optimizing the design of the project, while seeking an investment partner. "We keep progressing the project and spending money on derisking it technically," he said.

He pointed to recent comments by Chancellor of the Exchequer Rachel Reeves stressing the long-term need for North Sea oil and gas, and Rosebank in particular, as suggesting a softening in the government's stance. Prime Minister Keir Starmer has also reiterated support for oil and gas as part of the energy mix.

West of Shetland

Friedman insisted on the continuing importance of the less-exploited UK West of Shetland region that is associated with deep water, less infrastructure than the North Sea, and higher costs.

In addition to its Cambo and Rosebank assets, Ithaca has an 11.8% stake in BP's Schiehallion oil field in the West of Shetland area, and hopes to develop a gas discovery known as Tornado nearby.

"When you look out at UK energy security supply-demand into the future, looking at our organic growth projects -- from Rosebank to Cambo -- West of Shetland's importance to the UK is clear," Friedman said.

Ithaca "has significant organic investment [options], including the Cambo development. ... Obviously, it needs the right conditions -- everything has to do with what the fiscal regime looks like post-2030."

"To take a Final Investment Decision on a project the magnitude of Cambo you need to have clarity on what the fiscal regime looks like post-first oil," he added.

As for Rosebank, Friedman said the startup is on track for late 2026 or early 2027 despite regulatory hurdles. The government has held another consultation on changes to the environmental approvals process following the successful legal challenge against the approval of Rosebank and Shell's Jackdaw field, and new guidance is expected shortly.

Ultimately, the UK needs to reverse its moratorium on new license issuance to ensure the industry's evolution, Friedman said, stressing Ithaca has plenty of work to do on its existing licenses.

The licensing ban "is a mistake obviously. ... You need a resource like the North Sea to keep developing and reinventing itself and exploration is a key part of it," he said. "Exploration is a bucket that any Exploration & Production company should have -- this is how you create value longer term."