Healey’s Budget prices in wave of fresh North Sea drilling
John Healey’s Budget has assumed the government will approve North Sea discovery drilling projects that produce in excess of a billion barrels of oil and gas, in the clearest sign yet that ministers plan to rubber stamp a wave of new drilling after Jackdaw and Rosebank. In its scorecard for the Chancellor’s maiden fiscal event, [...]
John Healey's Budget has signaled the government's intention to greenlight a wave of new North Sea drilling projects, potentially extracting over a billion barrels of oil and gas. The Office for Budget Responsibility (OBR) integrated a boost in tax receipts from "development of new fields" in its assessment, which includes the Rosebank oil field and other potential discoveries.
The NSTA estimates the government will approve extraction of all North Sea "prospective resources," suggesting a significant departure from the ban on new drilling licenses outlined in the 2024 manifesto. Jackdaw, a less contentious project, has already received approval, while Rosebank, a more contentious field, is now under consideration.
Similar approval hurdles would apply to other companies seeking to drill new discoveries in the North Sea. The OBR projects a 10% annual decline in oil and gas production between 2027 and 2031 if new fields are developed, but warns the rate could drop to 14% if no production occurs from new licensed fields. This expectation could result in a significant financial shortfall for the government, with the Treasury acknowledging the OBR's assumptions while emphasizing that Rosebank's approval remains an independent decision subject to a quasi-judicial process.
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