UK Budget Signals Wave of New North Sea Oil and Gas Drilling
The UK government's recent Budget assumes the approval of North Sea discovery projects producing over a billion barrels of oil and gas.
According to OilPrice, the UK government's recent fiscal forecasts assume the approval of North Sea discovery drilling projects that will produce in excess of a billion barrels of oil and gas. This fiscal planning signals that ministers intend to approve a wave of new drilling following the Jackdaw and Rosebank developments.
In its scorecard for the Chancellor's fiscal event, the Office for Budget Responsibility (OBR) accounted for tax receipt boosts from the development of new fields, including both the controversial Rosebank oil field and future discoveries. The fiscal watchdog utilized North Sea Transition Authority (NSTA) estimates that assume the greenlighting of prospective resources in current licenses.
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Fiscal Projections and Production Rates
The OBR anticipates UK oil and gas production to decline by approximately 10% annually through 2031 with the development of new fields. Without new field development, the annual pace of decline is projected to reach up to 14%. According to NSTA estimates, roughly 1.2 billion barrels of oil and gas equivalent fall under the definition of prospective resources.
While these potential approvals would not violate the 2024 manifesto promise to ban new drilling licenses, they indicate a significant softening of the government stance on domestic energy reserves. A Treasury spokesperson stated that the OBR makes assumptions independently and that Rosebank has been included in government forecasts since at least 2019.
Key facts
- The OBR assumed approval of North Sea discovery projects exceeding one billion barrels of oil and gas in the recent Budget.
- NSTA estimates indicate roughly 1.2 billion barrels of oil and gas equivalent in prospective resources.
- Oil and gas production is projected to decline by 10% annually through 2031 with new fields, compared to 14% without them.
- The Rosebank project remains unapproved despite being included in Treasury costings.
- Energy secretary Miatta Fahnbulleh greenlit the Jackdaw project last week.
Source: oilprice.com
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