Rosebank's owner Equinor is joining forces with Shell on a new North Sea venture ‘Adura’ that could see Shell dodge £1.3 billion in UK tax. Adura will be the biggest oil and gas producer in the North Sea. Shell brings production, Equinor brings tax credits – a setup that lets Shell cut its UK tax bill and boosts Equinor’s income as Rosebank faces mounting legal and public opposition. The UK cannot build a fair or liveable future while oil companies drain the public purse and fuel the climate crisis.
Read our letter to the Treasury below:
Dear Chancellor,
We are writing to call for an investigation into the Shell and Equinor merger to create a massive new joint venture oil producer Adura, dodging at least £1.3 billion in UK tax revenues that UK public services desperately need. We also call for reforms to the UK’s tax laws that would prevent deals that produce such tax advantages.
In December 2024, Shell, the largest UK oil major, and Equinor, Norway’s state oil giant, announced that they would join forces to become the North Sea’s biggest oil and gas producer.
However, the apparent structure of the deal raises serious questions around the firms’ real motivations. It will allow Shell to write off significant tax liabilities on its projects against losses and allowances built up by Equinor. For its part, Equinor gains access to income from Shell’s operations as it struggles to get major projects - such as the controversial Rosebank oil field - off the ground.
Shell has a long history of exploiting the UK’s generous tax system to minimise its tax payments, a practice that appears to be continuing with its Adura joint venture. The company paid zero tax on North Sea drilling last year, receiving £12.4 million back from the government in the form of tax relief for decommissioning and developing new oil and gas fields. The company now aims to place half of a hugely profitable but increasingly mature business that could be exposed to the marginal rate of UK upstream tax, currently 78%, into the joint venture with Equinor.
In contrast to Shell, Equinor’s oil and gas production in the North Sea is small and declining rapidly. The company is the majority owner of the Rosebank project - the UK’s largest untapped oil field and the company’s most significant project in the North Sea. But Rosebank’s 2023 approval was this year overturned by the Scottish Court of Session. Equinor has reapplied to the UK government to develop the project, which if developed could pose a net tax loss of £250 million to the UK Treasury.
Yet while Equinor’s production prospects appear troubled, the company does own something of significant value: tax losses. According to Equinor’s 2024 annual report it has set aside $1.717 billion (£1.343 billion) of saleable ‘tax assets’ that can be transferred to Adura and used to offset or write off the company’s profits.
The Adura vehicle thus appears to offer benefits to both Shell and Equinor: it helps the Norwegian company gain vital cashflow while helping the British company dodge taxes on its profits. By joining forces, the new business can monetise tax reliefs available within the UK’s dysfunctional fiscal regime to crystallise losses by a decade or more.
We approached Equinor and Shell for their reaction to our allegations. Equinor said it rejected this analysis and that its reasons for creating Adura were outlined in its 2024 deal announcement, which stated that the new company would be ‘more agile, focused, cost-competitive and strategically well positioned to maximise the value of its combined portfolios on the UK Continental Shelf.’ Shell declined to comment.
Ahead of the Autumn Budget, as the Treasury seeks to raise tax revenues and reform the way profits from oil and gas are taxed, it must recognise the Adura merger as a vehicle for mega polluter Shell to avoid paying its fair share of tax in the coming years whilst benefiting from using British resources.
The Treasury must fully investigate the creation of Adura by Shell and Equinor to assess the legality of a deal that appears to conveniently dodge anti-avoidance provisions against ‘loss buying.'
If it is found that current loss-buying restrictions should apply, Adura should be prevented from inheriting Equinor’s tax reliefs.
Whether or not such restrictions do apply, we implore the UK Government to immediately strengthen and retroactively apply tax dodging protections to prevent such deals.
Details on the merger and possible grounds for an investigation are outlined here.
We look forward to hearing from you.
Yours sincerely,
Global Witness
Stop Rosebank
Tax Justice UK
TaxWatch
End Fuel Poverty Coalition
Greenpeace UK