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Equinor to ‘reconsider UK oil investments’ if taxes rise claims executive
Norwegian oil company Equinor may reconsider investments in the UK including the Rosebank oilfield off Scotland if Labour follows through on plans to increase taxes on the sector, an executive has said.
Philippe Francois Mathieu, who leads oil exploration and production for Equinor outside its home country, said that it may not be attractive to invest in the UK if taxes increase. He was speaking to Reuters in an interview on the sidelines of an oil fair in Stavanger, Norway.
Labour’s manifesto said that “oil and gas production in the North Sea will be with us for decades to come”, but that also that it will fund new energy investments by closing “loopholes in the windfall tax on oil and gas companies”.
Equinor and Ithaca Energy, a smaller North Sea oil company, said in September that they would invest $3.8bn (£2.9bn) in developing Rosebank, 130km northwest of the Shetland Islands. It followed approval from the UK government.
However, the decision to grant the licence has proved deeply controversial. It contradicts the advice of the government’s own Climate Change Committee. The International Energy Agency has said that no no new oil and gas exploration should take place if the world is to limit global heating to 1.5C above preindustrial temperatures.
Mathieu on Wednesday said:
We need to look at our appetite to invest further in the UK based on the fiscal regime … it could be that the economics are really, really hard impacted.
And in that case, we need to look into what we want to do further with the Rosebank project.
Key events
It is fair to say that the GMB union is not happy with the UK water industry’s claim that bills need to go up to prevent sewage leaks.
“Absolute balderdash” is the reaction this morning to the comments by Water UK boss David Henderson.
Gary Carter, GMB national officer, said:
Water companies have had the money, failed to invest in plugging leaks and preventing sewage spills and now want more money to do what they failed to do. It’s absolute balderdash and Ofwat must say enough is enough.
If they want investment, water companies must be fundamentally reformed. They have failed bill payers and their employees who have faced increased assaults and abuse because of the tarnished reputations of their employers.
It’s time the shareholders paid for the investment the water companies promised but haven’t delivered.
Electric carmaker Polestar replaces chief executive
More electric vehicle news: Polestar has replaced its chief executive Thomas Ingenlath with the former boss of Opel. Michael Lohscheller will take over from Ingenlath from 1 October.
Polestar was spun out of Sweden’s Volvo, but it is owned by China’s Geely, which manufactures many of its vehicles.
Polestar has been one of the few new electric vehicle brands based in Europe to make it to mass sale, but its share price has slumped more than 90% from the peak of the coronavirus pandemic mania for electric vehicle stocks.
The softly spoken Ingenlath was one of a clutch of automotive chief executives who made the switch from previous design roles (cf. Henrik Fisker). Polestar managed to produce well reviewed cars, but it has struggled with model delays. Volvo, which is listed but part-owned by Geely as well, in February said it would no longer fund Polestar because of losses.
Ingenlath said:
I am very proud of what we’ve achieved together in the last seven years. We had the vision of an electric premium brand which puts performance and design at its core. And we made it, the dream became reality: Polestar is the only true global premium electric brand, we just launched the Polestar 3 and 4, we are producing on two continents – thank you to everybody who contributed so far on this journey.
It was a lifetime experience to build up this brand with you all. I wish Michael and the team the best for the next chapter of Polestar.
Lohscheller has previously served as chief executive of Opel – the European name for Stellantis’s Vauxhall brand – Vietnamese startup VinFast and Nikola, an electric lorry company that has struggled to launch products.
For the other side of the coin to Hyundai’s decision to shift emphasis more to hybrids, take a look at China’s Xpeng: it has revealed a new electric car priced at only 119,800 yuan (£12,700).
The Mona MO3 electric car will be one of the cheapest on the market from a well-established brand.
The release underlines the threat to traditional carmakers in Europe, the US, and Asia (including Hyundai) who are trying to balance profitability with investments in electric cars. Yet while they waver, Chinese carmakers are racing to produce electric cars far more cheaply than older manufacturers can manage.
Xpeng has previously focused on more premium cars, but it bought the programme developing the Mona from ride-hailing company Didi at a discount after the latter came under pressure from China’s government during a crackdown on tech companies. The purchase allowed Xpeng to save on development costs, according to the Financial Times.
At the more expensive 155,000 yuan the Xpeng car will be given autonomous driving abilities – still a rarity towards the lower end of the electric car market.
UK housebuilding targets ‘will be missed’ if no water bills hike, industry claims
Helena Horton
Labour’s housebuilding targets will not be met if water companies are not allowed to hike bills, the leader of an industry lobby group has said.
When asked why the water industry is asking for bills to rise £26 a year rather than the £19 a year proposed by regulator Ofwat, David Henderson, the chief executive of Water UK, threatened that Labour’s housebuilding targets will not be met and sewage will still be dumped into the seas if water companies are not allowed to raise bills.
He told BBC Radio 4:
Unless we get that full investment amount we are not going to be able to secure economic growth, we are not going to be able to build the £1.5m homes that we desperately need and we are not going to be able to end the sewage flowing into our seas.
Henderson added that discussing the billions paid to shareholders in dividends, which could have instead been invested into the water system over the years to build sewers and reservoirs is “neither here nor there”. He admitted “all of it [2.5bn dividends paid out recently] could have been used for investment. But if you want investors to put their money into the UK you need to see a return”. He added:
We are not allowing our system and economy to grow as it should because of a lack of water. Arguing about dividends is not going to solve the problems we have for the future.
Investors are threatening to pull out of water companies unless water bills are allowed to rise more sharply, Henderson said:
Investors are telling us, they have choices, and if we want them to put their money into the UK, into the water system so it can be expanded and upgraded, then they need to see a modest return. And the return being proposed by Ofwat is simply not enough to allow the improvements to occur. Returns are very modest, five companies made a loss last year and this is not an industry awash with profit.
No rational investor at the moment under current arrangements would entertain the proposal that Ofwat is putting forward.
He also argued the problem is not with privatisation, as the Seine in Paris was polluted during the Olympic Games and France’s system is state-run. Henderson said: “People are right to be angry but it is not confined to this country. We saw in Paris, in a state-owned system, that the triathlon had to be postponed because of pollution in their river.”
Hyundai expects a burst of hybrid sales in North America in particular, as tightening emissions regulations come up against public charger networks that can be poor in some places.
The company said it will make hybrid vehicles at its new Georgia, US, factory along with EVs.
Jaehoon Chang, chief executive at Hyundai Motor, said (via Reuters):
Recently, the speed of conversion to electric vehicles has been slowing. As a result, demand for hybrids is increasing, and hybrids are becoming a basic option rather than an alternative to internal combustion engines.
Hyundai to double number of hybrids amid softening demand for electric
Hyundai has said it will double the number of hybrid cars it sells, in the latest response by a major carmaker to the softening in demand for battery electric vehicles.
The South Korean manufacturer said it will expand its range of hybrids, which combine a smaller battery with a fossil fuel engine, from seven to 14, including in its Genesis luxury brand.
However, the company did not downgrade its target to sell 2m electric vehicles by 2030. It said it will try to increase total sales – including the new hybrids – by 30%.
The world’s third-largest carmaker by sales unveiled the shift in strategy at an investor day on Wednesday. Its share price increased by 4.6% as shareholders welcomed a larger-than-expected share buyback worth 4tn Korean won (£2.3bn).
Hyundai is only the latest traditional carmaker to try to increase hybrid sales in response to a slowdown in demand from consumers for electric cars. Traditional carmakers have been keen to sell cars with petrol engines for as long as possible because they have been cheaper to make and are therefore more profitable.
Ford, Porsche, Mercedes-Benz and Bentley have all slowed the pace of electrification in recent months, as they try to protect their profits. Some of them announced more ambitious plans for electric cars during the coronavirus pandemic, when loose monetary policy helped spur demand for batter cars that were more expensive.
The carmakers argue that hybrids help to reduce overall emissions while addressing “range anxiety”, although their fossil fuel engines still produce much more carbon over their lifetime than battery cars, and cost more to run on average.
Caroline Flint, the chair of the Committee on Fuel Poverty, has said that “the dial hasn’t shifted” on cutting fuel poverty over the last five years, as she called for more support for household bills this winter.
There are 13.1m English households in fuel poverty, including 900,000 families with children. That is basically unchanged compared with last year.
Fuel poverty fell by 40% under the coalition and Conservative governments between 2010 and 2019. However, in the last five years from 2019 to 2024 fuel poverty did not fall to any meaningful extent.
Flint, a former Labour minister, said she hoped the energy summit today between bosses and government could start to move towards solutions to help vulnerable households, after the withdrawal of the winter fuel allowance from many pensioners.
She said she agreed with the principle of targeting winter fuel allowance so that the wealthiest did not receive it. However, she said that above the threshold for pension credit, the new eligibility criterion, “there are also significant numbers of pension households that will need that support”.
It would also do nothing for many households with children who could struggle this winter.
Energy debt in Great Britain at record levels – industry boss
Energy debt levels across Great Britain’s households are at their worst level since the start of the crisis prompted by Russia’s full-scale invasion of Ukraine, according to the head of the energy industry’s lobby group.
Emma Pinchbeck, chief executive of Energy UK, said she was concerned about how households would fare over winter.
While energy prices have fallen from their peaks, debt has built up over the two years since. She told BBC Radio 4:
We’ve been very worried. We’ve got record levels of debt. It’s if anything worse than at any other time in the crisis.
She said Labour should “move a portion of the policy costs off electricity bills into general taxation to rebalance some of the costs between electricity and gas”. At the moment electricity prices are set in line with gas markets, and “policy costs” which are aimed at stimulating green energy investments are the same across both types of energy use.
Labour should also double the warm homes discount, Pinchbeck said. The benefit is now a one-off £150 discount from electricity bills for those who receive pension credit or those on low incomes with high energy costs.
The Labour government needs a plan for “enduring support” for energy bills, according to the head of a lobby group for the industry.
Emma Pinchbeck, chief executive of Energy UK, told BBC Radio 4 that she backed Labour plans to increase the proportion of renewables powering Britain, which the government hopes will cut bills, but added that consumers will need support before those hoped-for benefits feed through.
She also defended the retail energy sector against accusations that it is making big profits while consumers struggle.
I completely understand why people would think that way given the reports of big profits elsewhere in the sector particularly in oil and gas production. But it’s important that people understand that the retail sector doesn’t make huge profits.
She said that some companies do make “small profits”, but that depends on them running efficient businesses.
In most of the time I’ve been doing this job they’ve been losing money. That’s because they’re exposed to the high gas prices that everyone else is, and they buy gas to sell to customers. Under the price cap they are limited in the profits they make.
The FTSE 100 has edged up by 0.1% in the first few minutes of trading.
There are very few big movers. B&Q owner Kingfisher is down by 1.8% after Citi downgraded its expectations for its shares.
Here are the opening snaps from across Europe, via Reuters:
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EUROPE’S STOXX 600 UP 0.2%
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BRITAIN’S FTSE 100 UP 0.2%; GERMANY’S DAX UP 0.3%
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FRANCE’S CAC 40 UP 0.3%; SPAIN’S IBEX UP 0.2%
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EURO STOXX INDEX UP 0.3%; EURO ZONE BLUE CHIPS UP 0.3%
Energy bosses to meet minister over fuel debts; regulator concerned over life insurance
Good morning, and welcome to our live, rolling coverage of business, economics and financial markets.
UK energy bosses are due to meet the minister whose brief includes fuel poverty and energy consumer issues, amid scrutiny on the government and industry ahead of a winter during which support for some pensioners has been withdrawn.
Miatta Fahnbulleh was elected MP for Peckham in July. She was formerly the chief executive of the New Economics Foundation, a left-wing thinktank, but now she has the ministerial brief of looking after energy consumers, including fuel poverty.
That role has been thrust into the spotlight early in the Labour government’s term, after chancellor Rachel Reeves limited the winter fuel allowance to those eligible for pension credit. The benefit was previously applied universally, but some Labour MPs have said they are worried about pensioners just above the threshold.
Executives from Centrica, EDF, E.On, Octopus Energy, Scottish Power, Good Energy, Rebel Energy, Ovo, So Energy, Ecotricity and Utility Warehouse are expected at the roundtable event with Fahnbulleh. Industry body Energy UK, the regulator Ofgem, and Citizens Advice will also attend.
Financial regulator to look at life insurance market
The UK’s City regulator has launched an investigation into insurers over concerns that the market for life insurance and income protection is not working well.
The Financial Conduct Authority (FCA) said that it would look at “pure protection” products, which pay out if the policyholder dies or is incapacitated due to illness or injury.
The regulator will look at “potential conflicts of interest in the structure of commission”. It will look specifically at four products: term assurance, critical illness cover, income protection insurance and whole of life insurance, including policies for over 50s that offer guaranteed acceptance.
Sheldon Mills, executive director of consumers and competition at the FCA, said:
Pure protection can offer peace of mind and financial security, often when people are at their most vulnerable. Consumers should be able to buy products which meet their needs and provide fair value.
We have seen indications that this may not be the case across the pure protection market and we will act if we find that the market is not working well.
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