Last year, Equinor and Shell announced that they would join forces under a new venture, ‘Adura’, to become the biggest oil and gas producer in the British North Sea.

However, the structure of the deal is raising questions about the firms’ motivations as it will allow Shell to avoid paying at least £1.3 billion in UK tax, which the company would otherwise owe.

The deal has sparked outrage among campaign groups, including Global Witness, Tax Justice UK, Tax Watch, End Fuel Poverty Coalition, Stop Rosebank and Greenpeace UK, who claim that Shell is trying to avoid paying its fair share of tax. 

Adura will help Norway’s state oil giant, Equinor, obtain income from Shell’s UK operations as it struggles to get its controversial Rosebank oil field off the ground, the biggest undeveloped oil field in the UK. Read more about the Rosebank oil field here. 

The Rosebank oil field, whose 2023 approval was this year overturned by the Scottish courts, could pose a net tax loss of £250 million to the UK Treasury if developed, while simultaneously sending billions towards Norway’s wealthy state oil fund.

Adura’s ownership structure is set to be split evenly, with Shell and Equinor each owning 50 percent. Shell’s UK licences will bring substantial volumes of oil and gas production to Adura. Conversely, Equinor’s licences - which are small and decreasing - will provide much less. However, Equinor will provide Adura with a UK ‘tax shelter’ - or credits that can be used against paying future UK taxes.

In its 2024 annual report, Equinor lists $1.717 billion (£1.3 billion) in ‘tax assets for sale’ - and it only plans to sell one asset: its UK upstream operations, including the Rosebank project.‍

The campaign groups have asked the UK tax authority to ascertain whether Adura violates tax prohibitions around ‘loss-buying’ - and to bar them from inheriting these assets if this is the case.

Approached for comment, 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.

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Jon Noronha-Gant, Senior Campaigner at Global Witness said:

“While families across the UK have been hammered by rising bills, Shell has been raking in billions in profit and trying to skirt taxes.

“It’s clear that big polluters like Shell, who are doubling down on dirty fossil fuel investment in the middle of a climate emergency, could not care less about our health or our pockets.

“The government must now act - ordinary families shouldn’t be hit in the pocket because of Shell’s outrageous tax dodging. We need to see oil giants paying their fair share into our economy rather than costing us billions.”

Clare Aston, CTA, Tax Expert and Former Director at TaxWatch commented:

“Given the magnitude of the tax risk the Adura deal represents to the UK Exchequer, HM Treasury and HMRC need to strengthen loss buying anti avoidance provisions to ensure the fiscal regime isn’t greasing the wheels of this mega merger.”

Lauren MacDonald, Lead Campaigner at Stop Rosebank said:

“Adura shows how our biggest polluters game the system to make it work for them, raking in enormous profits while driving millions into fuel poverty and pushing us beyond safe climate limits.

“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. All at a time when the Chancellor is desperately trying to increase tax revenue in the UK.

“Ahead of the autumn budget, the Treasury must see this merger for what it is: a shameless attempt by two immensely wealthy megapolluters to avoid paying their fair share into the UK economy.”

Faiza Shaheen, CEO at Tax Justice UK commented:

“This deal exposes just how rigged our tax system is in favour of the biggest polluters. While families across the UK face record energy bills and crumbling public services - and extreme weather events like Hurricane Melissa take hold across the globe - Shell and Equinor are busy creating complex financial structures to dodge billions in tax while they drive us closer and closer towards climate tipping points.

“This merger is a profit seeking venture for corporations that have already made a fortune from the climate crisis. The Chancellor must make it clear in the Autumn Budget that those who pollute the most must pay for the damage they are responsible for.”

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Robin Wells, Director at Fossil Free London said:

“Dodging tax is part of the Shell and Equinor playbook and the companies’ cycle of dodging responsibility must be broken. Adura is a dangerous new breed of fossil fuel company. We call on the government to tax it and restrict it from new drilling; to bring Adura to heel, before it bites.”

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Join the Stop Rosebank campaign. 

The #StopRosebank campaign is made up of individuals, grassroots groups and organisations across Scotland, the rest of the UK and the world. The campaign is dedicated to ending all new oil and gas extraction - including the controversial Rosebank oil field and phasing out existing production within safe climate limits. Read more and get involved at www.stoprosebank.org