Will Rosebank improve the UK’s energy security?
UK regulators yesterday gave the green light to start drilling for oil and gas at Rosebank – the largest untapped fossil fuel field in the North Sea.
Rosebank, provided it survives a pending legal challenge from climate campaigners, will produce up to 500m barrels of oil and gas equivalent over its operational lifetime. The project is expected to begin production in 2026/27.
While climate groups have slammed the decision as a death knell for the country’s net zero ambitions, others have jumped to its defence arguing the project is crucial for boosting the UK’s energy security.
Claire Coutinho, the country’s new secretary for energy security and net zero, argued that it is important to increase domestic oil and gas production to reduce Europe’s reliance on Russian oil and gas and ensure the UK’s supply security.
Following news of the decision, Prime Minister Rishi Sunak said: “This is the right long-term decision for the UK’s energy security.”
Is this true?
Approximately 80 per cent of oil and gas produced in the North Sea is sold to European refineries, while the remaining 20 per cent is purchased by refineries here in the UK.
Most of the oil and gas refined in Europe is likely to stay in Europe, although UK companies could theoretically bid for those refined products.
However, there would be more supplies on the international market, which would reduce the strain that Russia’s invasion of Ukriane has brought on Western energy markets.
Arne Gürtner, senior vice president for the UK and Ireland at Equinor, which has an 80 per cent stake in Rosebank, said: “If the UK needs the Rosebank oil, it will get it – and that is pertaining to the open global market system.”
He argued Rosebank was part of a wider £10bn investment pledge, which could lead to the creation of 5,000 jobs in the country.
Gilad Myerson, executive chairman at Ithaca, told City PM it was too soon to say how much will be exported to European refineries.
Instead, he argued that the project would help reduce Europe’s reliance on Saudi Arabia and Russia, which would in turn help the UK.
“The products from these European refineries will in turn boost energy security for the UK re-importing oil products from Europe. European oil companies operate a network of refineries, specialising in different products. It means countries export and import crude and refined oils according to what they produce or need,” he said.
In his view, the critics needed to “step back and look at the bigger picture.”
“Focusing on where production is exported to is a siloed way of looking at a very complex argument. The benefits of developing UK fields goes significant beyond security of supply – providing jobs, tax revenues and supporting the broader UK supply chain and doing so with a lower emissions footprint,” he said.
The Climate Change Committee’s latest environmental report published in June recognised the need for fossil fuels to meet the UK’s energy needs, but it didn’t call for any new oil and gas projects.
However, with 80 per cent of the UK’s energy demand still met by fossil fuels – this is an optimistic outlook for the UK’s energy needs.
Climate activists are not going to let this one slide, and the government and oil companies involved are going to be repeatedly forced to justify Rosebank.
However, the wider question around what supply security means is a fair one.
If Rosebank can rejuvenate the UK’s economy with thousands of jobs, bolster supply chains and lower pressure on the UK and it allies to meet supply demand – there is a reasonable justification for it.
Expect debate about this project to continue.