What the UK Government's Rosebank decision means for the future of North Sea oil

The UK government has said it will not challenge judicial reviews brought against developments for the Rosebank and Jackdaw offshore oil and gas fields in the North Sea to “save the taxpayer money”.

The move has been welcomed by climate action groups, despite the licences for drilling at the sites not being withdrawn. It follows a jointly brought judicial review brought by campaign groups Greenpeace and Uplift to stop the development of the Rosebank and Jackdaw fields.

Rosebank, off Shetland, is the largest untapped reserve in the North Sea, containing up to 500 million barrels of petroleum. It is owned by Norwegian energy giant Equinor and British firm Ithaca Energy, with consent granted in September last year for drilling at the location.

If the judicial review backs the environmental groups, operators would need to resubmit environmental assessments, adding costs to the projects. However, while the government has dropped its legal defence, this does not mean the projects are no longer happening, and has no bearing on licences.

Why have they dropped the opposition?

The landmark Finch ruling requires regulators to consider the impact of burning oil and gas in the Environmental Impact Assessment for new projects.

This Supreme Court ruling has implications for the assessment of development contracts, but not for licensing. The body responsible for reviewing applications to develop oil and gas, the North Sea Transition Authority (NSTA), granted consent for Equinor and Ithaca Energy to begin developing Rosebank, and at the time said it was “taking net-zero considerations into account throughout the project’s lifecycle”.

Net zero, as defined by the government, only includes the emissions generated by the machinery used to extract the oil, not those from when it is burnt after being sold.

What this means is the UK government has decided not to challenge a judicial review, believing the defence of the previous administration is now out of date, on legal grounds.

Does this impact new licenses?

No, this isn’t about licensing, and won’t impact the latest round of North Sea oil and gas licences. The Supreme Court ruling has implications for the assessment of development consents, not for licences. 

What is the UK government saying?

They insist this decision will save the taxpayer money, and stress that it does not mean the licences for Jackdaw and Rosebank have been withdrawn. The government will now consult later this year on the implementation of its manifesto position not to issue new oil and gas licences to explore new fields.

Energy Minister Michael Shanks said: “This government is committed to making Britain a clean energy superpower, helping to meet our first mission to kick-start economic growth. “While we make that transition, the oil and gas industry will play an important role in the economy for decades to come.

“As we support the North Sea’s clean energy future, this government is committed to protecting current and future generations of good jobs as we do so.”

How has industry responded?

An Offshore Energies UK spokesperson warned that regulatory uncertainty continues to impact investor confidence, and urged the government to” proceed at pace with updates to the relevant guidelines in light of the Finch ruling”.

They added: "Labour made significant manifesto commitments not to revoke existing licences and to manage existing fields for the entirety of their lifespan. Licensing is a complex process and OEUK will continue to work with members to input into the government’s consultation later this year.

A Shell spokesperson said: “Jackdaw was approved in 2022 and we are carefully considering the implications of today’s announcement by the government. We believe the Jackdaw field remains an important development for the UK, providing fuel to heat 1.4 million homes and supporting energy security, as other older gas fields reach the end of production.”

How have the Tories responded?

Not well. Claire Coutinho, the shadow energy secretary, described the decision as a “final blow” for the North Sea. She said: “No other major economy is shutting down its domestic energy supply as the UK now is. We get roughly half of our gas from the North Sea, but we will now be more reliant on imports with higher carbon emissions.”

Scottish Tory MP Andrew Bowie told The Scotsman: “With one move, Labour have sent out the signal that the North Sea is closed for business. A shiver has now gone down the spine of anyone involved in UK oil and gas. This government wants to see the end of your industry. And for the North East of Scotland, it's a very worrying time indeed.”

However, there is a belief in Labour this is a decision the Tories would also have made if they had won the election, because it is about following the law, rather than being a political decision.

A Labour spokesperson said: “We will take no lessons from a Conservative Party that wrecked Britain's energy security. As Claire Coutinho well knows, any government would have had to take account of the Finch judgment in the manner that we have. We are acting decisively to provide certainty and stability for the North Sea as we build its clean energy future.”

Are environmental campaigners happy?

Yes, even if they view the decision as the bare minimum. Mel Evans, UK climate team leader at Greenpeace, said: “These permits should never have been granted without being properly assessed for their impact on the climate, and following the Supreme Court ruling earlier this year, conceding these cases is the logical course of action.

“The two new fields combined would generate a vast amount of emissions while doing nothing to lower energy bills.

“The only real winners from giving them the green light would be multibillion-pound oil giants. Shell and Equinor should respect the Supreme Court’s decision and the government’s position that their permits are illegal, and not waste time and money in greedy tactical legal battles.”

Tessa Khan, executive director of Uplift, said: “This government is right not to waste time and money trying to defend the indefensible. It’s now up to the Scottish courts to decide if Rosebank’s approval was unlawful.”

Green MP Carla Denyer said: "The government's decision to drop its legal defence of new oil drilling in Rosebank is an entirely sensible one. We know that green-lighting new oil and gas developments would be at complete odds with the government's climate ambitions. 

"But deciding not to fight this legal battle is the bare minimum. Now the government must revoke the new licences for oil and gas exploration in the North Sea to ensure that this act of environmental vandalism does not go ahead.

"And we need to see greater investment in other aspects of decarbonising our economy including home heating and transport, to bring down bills, improve our energy security, and tackle the climate crisis."