There are many reasons why Labour’s proposed ban on new North Sea oil and gas development, but one of the most powerful is the loss of potential tax revenue.
According to the OBR, North Sea revenues will top £43 billion during the next five years:
These revenues will inevitably fall away as production declines, but new developments will at least keep the money flowing into the Treasury’s coffers for a few years longer.
The biggest potential lies in the giant Rosebank field, near the Shetlands, which could supply 70,000 bpd, 8% of current North Sea output. It is estimated that it would generate £24 billion Gross Value Added over its lifetime of maybe 20 years.
Rosebank is due to for a decision on it licence this summer, but this could be overthrown by an incoming Labour government. There are mixed messages from labour at the moment, with the Scottish Labour lease vowing to let the field go ahead. On the other hand, Ed Miliband has made his position crystal clear in recent times, as being totally opposed to all new exploration.
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