UK Budget assumes 1.2bn boe from new North Sea fields

By Daniel Okafor

North Sea prospective resources amount to roughly 1.2 billion barrels of oil and gas equivalent, according to North Sea Transition Authority (NSTA) estimates used in the UK Budget. The regulator calls them its best estimate of untapped reserves available under current licences. Their inclusion points to a large development pipeline. The estimate does not approve a single project.

What does the Budget assume?

Chancellor John Healey’s maiden fiscal event carries an Office for Budget Responsibility scorecard that assumes higher North Sea tax receipts from “development of new fields.” Those fields include Rosebank and “future discoveries.”

The OBR used the NSTA’s latest estimates, which assume the government green-lights extraction of all the North Sea’s so-called “prospective resources.” That assumption places the full prospective inventory inside the fiscal forecast. At 1.2 billion boe, it implies a major acceleration in drilling within the forecast.

City AM called the treatment the clearest signal yet that ministers planned to approve a wave of new drilling, following Jackdaw and any Rosebank sanction. None of these assumptions grants consent. A forecast is not a permit, and the scorecard does not announce an approval path.

Takeaway: The forecast has moved ahead of the approvals. Public money assumes decisions ministers have not yet issued.

Which projects have approval?

Jackdaw has cleared ministerial approval. Energy Secretary Miatta Fahnbulleh approved the less controversial field last week after a court battle lasting several years. She said the project would “support the country’s energy security with homegrown gas.”

Rosebank is the larger project, consists almost entirely of oil, and remains unapproved. It has drawn more contention and now awaits a decision from Fahnbulleh. Treasury costing in the Budget does not settle that file.

Both fields underwent lengthy consultations. Fahnbulleh and Andy Burnham described the process as “quasi-judicial.” Adura owns both projects. City AM reported that companies seeking to drill new discoveries would have to clear similar government and regulatory hurdles.

The government’s 2024 manifesto promised to ban new North Sea drilling licences. City AM said approvals for the projects would not breach that pledge, while describing the move as a major softening of the government’s stance on UK energy reserves.

Takeaway: Jackdaw has a decision. Rosebank has a forecast and a pending ministerial file.

How much production difference is at stake?

The OBR expects UK oil and gas production to decline at roughly 10% per year between 2027 and 2031, assuming development of new fields. Without production from licensed new fields, the annual rate of decline could reach 14%.

That four-percentage-point gap carries a large fiscal consequence. City AM said failure to approve new fields at the rate the watchdog expects could expose the government to a multibillion-pound hole in public finances.

The forecast therefore links five years of permitting, production and tax receipts. The tax gain arrives only if projects clear approval and reach output.

Takeaway: A four-point annual decline difference can become a multibillion-pound fiscal gap.

Why has Rosebank not been approved?

A Treasury spokesperson said: “The OBR makes assumptions about future North Sea production when forecasting tax revenues, and Rosebank has been included in government forecasts since at least 2019. This is entirely separate from the Energy Secretary’s independent decision on the project, which will be made through the quasi-judicial process, taking into account all relevant factors in the case.”

Rosebank can therefore remain inside government forecasts for years without becoming an approved project. The distinction explains why the Budget mentions the field while a ministerial decision remains pending.

Future discovery drillers would face similar government and regulator approval hurdles, including the quasi-judicial process applied to Rosebank and Jackdaw.

Takeaway: Rosebank remains in the forecast but without approval. Watch item: Fahnbulleh’s decision, and whether new-field approvals arrive fast enough to support the OBR’s 10% annual production-decline assumption through 2031.