The UK Budget's fiscal forecasts assume the government will approve new North Sea drilling, including Rosebank and future discoveries. The Office for Budget Responsibility priced that output into its tax revenue estimates. If approvals fall short, the public finances could take a multibillion-pound hit.
John Healey's Budget assumes the government will approve North Sea drilling projects that produce in excess of a billion barrels of oil and gas. That is the clearest sign yet that ministers plan to approve a wave of new drilling after Jackdaw and Rosebank.
The OBR counts on new fields
In its scorecard for the Chancellor's first fiscal event, the Office for Budget Responsibility accounted for a boost in tax receipts from developing new fields. These include Rosebank and other future discoveries.
Its forecast relied on North Sea Transition Authority (NSTA) estimates that assume approval of all the North Sea's prospective resources, the regulator's best guess of untapped reserves in current licences. According to the NSTA's latest estimates, roughly 1.2bn barrels of oil and gas equivalent fall under that definition.
The OBR expects production to slow by roughly 10% a year between 2027 and 2031 if new fields are developed. Without production from licensed new fields, the annual decline could reach as much as 14%.
Jackdaw cleared, Rosebank pending
Energy secretary Miatta Fahnbulleh approved Jackdaw last week after a court battle that held up both projects for several years. The minister said the project would "support the country's energy security with homegrown gas".
A decision on Rosebank, which consists almost entirely of oil, has not been made even though the Treasury costed it in the Budget. A Treasury spokesperson said Rosebank has been included in government forecasts since at least 2019 and that the decision is separate from the Energy Secretary's independent decision.
Because the OBR priced in the extraction, the government could face a multibillion-pound hole in the public finances if it fails to approve new fields at the expected rate.
Source: Oilprice.com
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