Transition Risks Description Risk Mitigation Resilience Policy and Legal Increase in carbon tax and regulatory reporting will directly increase the cost of operating oil & gas production facilities • Norway introduced a national carbon tax in 1991, making it one of the first countries in the world to price CO2 emissions through taxation. Norway has participated in the European Union Emissions Trading System (“EU ETS”) since 2008. Norway uses a dual system for oil and gas companies whereby they pay both ETS + CO2 tax, making it one of the most heavily carbon‑priced sectors in the world. This results in higher financial impact of the operations in Norway, but at the same time a more climate conscious oil market compared to other countries with no restrictions or climate tax. The increase of the carbon tax is under political discussion and uncertain at the moment. • As the Corporate Sustainability Reporting Directive (“CSRD”) implementation timeline has been deferred, LPA in Norway’s potential reporting obligations may be postponed, subject to meeting the “large company” reporting thresholds. • Affected by the EU ETS under European Economic Area (“EEA”), the cost for CO2 quotas is expected to increase in the coming years with estimated average cost of €65/ton of CO2e in 2025/2026. • Carbon taxes have not been proposed by the Oman government. • In 2024, Singapore’s carbon tax increased from S$5/tCO2e to S$25/ tCO2e, and this is planned to further increase to S$45/tCO2e in 2026 and eventually to between S$50 and S$80/tCO2e by 2030. • There is a potential increase in electricity costs for Rex’s Singapore office, but likely insignificant to the Group. Financial impact: Higher cost associated with energy usage Value Chain and Impact Region(s): Oil & Gas segment, Corporate segment Likelihood and Time period: • Certain • Long In 2024, the Norwegian Ministry of Energy awarded LPA and partners OMV Norge AS and Vår Energi ASA, the EXL009 Iroko CO2 storage licence. The Iroko Base Case proposes injecting 7.5 million tonnes per annum (“Mtpa”) over 30 years, providing an aggregated storage volume of 213 Mt. Emissions could be offset and consequently, the Group’s carbon tax exposure could be mitigated. LPA’s participation in the EXL009 Iroko carbon capture and storage (“CCS”), licence would enhance its resilience by diversifying its approach to emissions management. By proactively engaging in CCS, the company can better manage future operational costs associated with carbon emissions. This positions LPA to adapt more flexibly to market shifts, such as fluctuations in carbon emission cost in future. Additionally, the CCS initiative strengthens the Company’s long-term sustainability strategy by having an asset capable of mitigating emissions. Moreover, through its collaborative efforts, LPA will build a strong foundation for innovation and partnerships, which can be leveraged to explore further sustainable projects and improve operational efficiencies. Rex International Holding Limited 75
RkJQdWJsaXNoZXIy NTM2MDQ5