Rosebank go-ahead: oil and gas in the UK mix

“You don’t reach net zero by wishing it,” Rishi Sunak declared today, as he welcomed the decision to develop the UK’s largest untapped oil field. 

Now that Rosebank has gained regulatory approval from the North Sea Transition Authority, the field – located 80 miles west of Shetland – is expected to start producing oil from 2026 – and 300 million barrels in total. While oil is the main product, the site will produce some gas too. 

The decision has sparked an outcry from environmentalists who say a new fossil fuel development is the last thing Britain needs as it struggles to meet its legally binding net zero targets. 

The government, meanwhile, maintains that even with the UK planning to reach net zero by 2050, “a quarter of our domestic energy needs will still come from oil and gas” – meaning, if Rosebank wasn’t developed, we’d be using the same amount of oil but simply importing it from elsewhere. 

And greater energy independence, insists Claire Coutinho, the new energy security and net zero secretary, makes us “more secure against tyrants like Putin” – a point that resonates after the Kremlin’s weaponisation of gas saw Britain’s – and much of the world’s – energy bills skyrocket. 

Yet questions remain about how much of what is extracted from Rosebank will actually be used domestically. 

While gas extracted will be used in the UK, oil from Rosebank will not be processed on Shetland but rather offloaded by tanker and sold on the international market. 

A spokesman for Equinor – the Norwegian state oil company which is the majority owner of Rosebank – was unable to confirm today how much of the oil will, once processed, make its way back to Britain. Though Equinor has confirmed that, if Britain needs Rosebank oil, “it will go to the UK through open market mechanisms.”

Critics say that the fact it will be sold to the UK at global market prices means it will make little difference to domestic energy bills. Yet those in favour argue that even oil sold abroad will ultimately benefit Britain: it will help to keep wholesale prices down and countries buying it may in the long run sell us back cheaper electricity. 

The Rosebank development is expected to create around 1,600 jobs and lead to over $8 billion of total direct investment, of which 78 per cent is likely to be invested in UK-based businesses.

As far as Reaction’s energy specialist Giga Watt is concerned, the granting of the license isn’t the most salient point here. Rather, “it’s that fact that major international oil companies think it’s worth the $8bn dollars of investment over a multi-year horizon.

“The commercial case for developing this field has been met which tells you what they think of the UK’s (and everyone else’s) commitment to Net Zero.”

In other words, they feel confident that oil and gas are set to remain a substantial part of the UK’s energy mix for quite some time. 

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