In a significant move, the UK has granted approval for one of its largest oil and gas projects in recent years, Equinor’s North Sea Rosebank field.
This decision, made despite opposition from environmentalists, underscores the government’s commitment to energy security.
Energy Security Minister Claire Coutinho emphasized that Rosebank would be less emissions-intensive compared to older oil and gas developments.
She stated, “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.”
The key strategy to reduce emissions at Rosebank is to electrify the extraction process.
Equinor, the Norwegian energy group overseeing the project, indicated that electrification would likely occur by 2030, with production scheduled to commence around 2026/27.
Environmental activists had called for a halt to Rosebank’s development, arguing that it conflicted with the nation’s goal of achieving net-zero emissions.
However, Prime Minister Rishi Sunak has previously expressed support for the North Sea’s role in bolstering energy security and acknowledged that oil and gas would remain part of the energy mix even by 2050.
The Rosebank field, though relatively modest in the global context, is expected to yield approximately 300 million barrels of oil during its operational lifespan.
Critics, such as Green Party lawmaker Caroline Lucas, have vehemently opposed the government’s decision. Lucas described approving the oil field as “morally obscene.”
The main opposition Labour Party, while advocating for clean energy, has pledged to honor any licenses granted prior to the next election, including for Rosebank.
Concerns have also been raised about the extent to which Britain will benefit from Rosebank, as much of the oil is expected to be processed abroad.
However, Equinor has stated that the type of oil found in Rosebank can be used in various refineries, including those in Britain, and can be obtained through the open market.
Despite a significant decline in North Sea oil and gas output over the past two decades, the industry remains a substantial contributor to the UK economy, supporting 200,000 jobs and projected to generate £50 billion in tax revenues over the next five years.
Equinor, holding a majority stake in Rosebank, plans to invest $3.8 billion in collaboration with its partner, Ithaca Energy, for the initial phase of development.
The total investment over the field’s operational life until 2051 is estimated to be around $9.8 billion, with a substantial portion benefiting British firms.
While the approval is a positive step for the oil and gas industry, producers have also voiced concerns about a windfall tax imposed by the British government following the 2022 energy price shock.
This tax includes an investment incentive allowing companies to offset a significant portion of their tax bill against new production expenditures.