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New North Sea oil field Rosebank to deliver billions for the Treasury

A view of Equinor's oil platform in Johan Sverdrup oilfield in the North Sea
Drilling at Rosebank could start as early as 2026 - Nerijus Adomaitis/Reuters

The development of Britain’s largest untapped oil field in the North Sea will generate billions of pounds in tax and boost the UK’s energy security for decades, ministers have said.

The North Sea Transition Authority (NSTA) on Wednesday approved the development of the Rosebank oil field 80 miles off the coast of Shetland. The field, which holds up to 500m barrels of oil, will be drilled by Norwegian state energy company Equinor and London-listed Ithaca Energy.

Drilling could start as soon as 2026, creating up to 1,200 jobs. Rosebank, which will be in production until 2050, is expected to generate tens of billions in tax income for the Exchequer over its lifespan.

Exact estimates are difficult to pin down given volatility in oil prices and the uncertainty around future profitability and tax rates. However, past estimates have suggested Rosebank could yield as much as £30bn for the Treasury over its lifetime.

Claire Coutinho, energy security secretary, said Rosebank would “make us more secure against tyrants” like Vladimir Putin and contribute billions of pounds to the economy.

Rosebank is expected to generate £8.1bn of investment, Ithaca said, while UK-based companies are expected to see a £6.3bn boost in new business, according to a study by Wood Mackenzie and Voar Energy.

Energy security secretary Claire Coutinho
Energy security secretary Claire Coutinho said oil and gas are still needed as Britain transitions to its net zero future - Dan Dennison/ DESNZ

However, the project’s approval sparked an immediate backlash from climate campaigners who argue new oil projects are incompatible with Britain’s climate goals.

Green Party MP Caroline Lucas said the decision amounted to a “climate crime” and was “morally obscene”.

Environmental pressure group Uplift has already vowed to take legal action in a bid to halt the development. It said it had written to the Government over concerns the approval was unlawful.

Conservative Peer Lord Goldsmith said that there was “no way” he could vote for the party following the decision to greenlight the development.

Speaking on Radio 4’s PM programme, the former environment minister said of Rosebank: “It just trashes the UK’s reputation as a reliable, grown up member of the global community, it’s done us immeasurable harm.”

At its peak, the field will produce 69,000 barrels of oil and 44 million cubic feet of gas per day.

Rosebank will produce about 225 million tonnes of carbon dioxide over its two to three decades of operation, which is around half the emissions produced by the whole UK in a year.

The Government said approval had been scrutinised by regulators, including a detailed environmental impact assessment process and a public consultation prior to approval.

It said Rosebank also complied with the UK’s climate checkpoints, brought in last year, which say that all new oil and gas developments must fit within the country’s carbon budgets.

The project’s emissions will largely be offset by the shutting of other North Sea oil projects as they come to the end of their lifecycle.

Ms Coutinho said: “We are investing in our world-leading renewable energy but, as the independent Climate Change Committee recognise, we will need oil and gas as part of that mix on the path to net zero and so it makes sense to use our own supplies from North Sea fields such as Rosebank.

“We will continue to back the UK’s oil and gas industry to underpin our energy security, grow our economy and help us deliver the transition to cheaper, cleaner energy.”

Equinor’s decision to go ahead with Rosebank comes despite the UK government’s windfall levy, which raised oil and gas production taxes from 40pc to 75pc. The extra tax is in place until 2028, with most of Rosebank’s production happening after that date.

In a separate boost to Britain’s energy security, National Grid said there was a “much, much lower” risk of blackouts this winter.

The National Grid’s Winter Outlook said the risk of the lights going out had fallen and was almost back to the pre-energy crisis normal.

National Grid’s Electricity System Operator (ESO) said the period when demand might outstrip supply is forecast to be only around 0.1 hours, or six minutes, between the end of October and the end of March. That compares to 0.2 hours last winter.

Craig Dyke, the ESO’s head of national control, said: “It’s not benign, but compared to last year it is almost going back to around where it was before last winter.”

Meanwhile, National Gas, which runs the gas grid, said it expects gas consumption to be broadly stable this year. Homes will use more gas, but less will be burnt to produce electricity, it said.

Britain will likely need gas imported from the European Union during cold spells to keep heating homes. Otherwise it will largely rely on gas imported by ship – so called liquid natural gas (LNG) – or through pipelines from Norway.

Ian Radley, system operations director at National Gas, said: “Whilst the outlook is generally more favourable than last winter, we remain alert to the risks that are present and will continue to monitor this international market.”

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