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chancellor Rachel Reeves is being urged to investigate a deal that brings together energy giants shell and majority shareholder in Rosebank Oil Field.
Shell and norwegian adamant equinox – which has an 80% majority stake in Rosebank, west of Shetland – announced plans to build Edura last year.
The new firm will be based in Aberdeen and will be the North Sea’s largest oil and gas producer when operational.
Environmentalists opposed to the Rosebank development have now joined with other campaign groups to urge Ms Reeves to investigate.
Stop Rosebank, Global Witness, Tax Justice UK, Taxwatch and the End Fuel Poverty Coalition have jointly written to the Chancellor, alleging that the deal “raises serious questions about the real motivations of the companies”.
The letter claimed that the creation of Edura “will allow Shell to forgive significant tax liabilities on its projects against losses and allowances retained by Equinor”.
The energy firm strongly rejects that claim, but the letter says the deal gives Equinor “the benefit of gaining access to income from Shell’s operations as it struggles to get major projects – such as the controversial Rosebank oil field – off the ground”.
The development of Rosebank, Britain’s largest untapped oil field containing 300 million barrels of oil, was given the green light by the previous Conservative government – although it was thrown into doubt after a Supreme Court ruling ruled that emissions from burning fossil fuels must be considered when granting permission.
Last month, Norwegian state-owned Equinor confirmed it had submitted a new assessment for the site that complied with the ruling.
Lauren Macdonald, lead campaigner for Stop Rosebank, said the Adura deal “shows how our biggest polluters game the system to make it work for them”.
He added: “As Equinor struggles to get its Rosebank project off the ground, this deal gives both companies what they want – a smaller tax bill for Shell and more profits for Equinor.
“pre Fall BudgetThe Treasury should see this merger for what it is: a shameless attempt by two extremely wealthy mega-polluters to avoid paying their fair share of the UK economy.
The letter to Ms Reeves calls on the Treasury to “fully investigate the construction of Adura by Shell and Equinor” to assess the “legality” of the deal, with campaigners raising concerns Shell could use it to “forgive significant tax liabilities on its projects against the losses and allowances made by Equinor”.
Shell clarified that it rejects the campaigners’ “flawed analysis” regarding the construction of Adura.
A spokesperson for the energy firm said: “Shell will pay $1.45 billion in UK corporate income taxes in 2023.
“In the North Sea, which is a significant part of our UK business, tax on oil and gas is currently set at 78%.
“We have invested billions over the last decade to produce oil and gas, which helps power British homes and businesses.
“Adura is being set up to maintain domestic production and, as the largest operator in the North Sea, is also expected to be a major contributor of tax to the UK Government over its lifetime.”
Faiza Shaheen, chief executive of Tax Justice UK, accused both companies of “creating complex financial structures to avoid billions in taxes while they move us closer and closer to climate change tipping points”.
He added: “This merger is a profit-making venture for corporations that have already made money from the climate crisis.
“The Chancellor must make it clear in the Autumn Budget that those who pollute the most will have to pay for the harm they are responsible for.”
The Treasury said it did not comment on the tax matters of individual companies.