Rosebank

[albie]

Approval given for the exploitation of the oil field.

The effect of this is shown here:
https://nitter.net/pic/orig/media%2FF7A9ovlXcAA5Bfk.png

Tories approve it, and Labour refuse to revoke permission if elected.
Sponsors of both parties content with that!

[Ldr]

Yes

[danumdon]

1, As a country we use oil, we import oil for our use, we pay the price on the world spot markets

2, With Rosebank we produce oil that will be used worldwide as well as in this country, we will pay the same sorld spot market prices but we will also gain tax revenues from the sale of the extraction licenses.

Why would we not seek to gain monetary value from the extracted oil?

The rest of the oil producing nations will still be producing and gaining revenues from oil, why should we not?

Why would we beggar ourselves to rush to Net Zero when the worlds main culprits sit back and laugh at us. In the bigger scheme of things we need to be competitive on the world stage.Have other oil producing nations decided to leave the resource in the ground?

We should be worrying about net zero targets when all the big hitters are on board.

[albie]

DD,

It is difficult to know what the net UK Treasury revenues may be from Rosebank oil, as the terms are not available in detail.

What is known is that Equinor, the company backed by the Norwegian state, will make use of the tax concessions in the UK to fund the development of the production facility.
With the rebates offered in the windfall tax, this will certainly be a very significant subsidy.

It is claimed that £3.75 billion will be available.
This is money diverted from the tax take due from the oil industry.

In effect, the UK taxpayer is funding the development cost of the project, to produce a product that will go to the international markets.
This is not for the benefit of UK consumers.

So the question is whether this subsidy could be better spent on other priorities in the energy sector, to meet agreed climate objectives and combat fuel poverty.

It will, of course, be tested in the courts, as it may be unlawful.

[danumdon]

DD,

It is difficult to know what the net UK Treasury revenues may be from Rosebank oil, as the terms are not available in detail.

What is known is that Equinor, the company backed by the Norwegian state, will make use of the tax concessions in the UK to fund the development of the production facility.
With the rebates offered in the windfall tax, this will certainly be a very significant subsidy.

It is claimed that £3.75 billion will be available.
This is money diverted from the tax take due from the oil industry.

In effect, the UK taxpayer is funding the development cost of the project, to produce a product that will go to the international markets.
This is not for the benefit of UK consumers.

So the question is whether this subsidy could be better spent on other priorities in the energy sector, to meet agreed climate objectives and combat fuel poverty.

It will, of course, be tested in the courts, as it may be unlawful.

A quick google of this reveals that the Field will be operated by Equinor alongside British company Ithaca so even though oil will be sold of the world market some will find its way into Uk consumption.

Also states that the development is expected to lead to over £8billion in total direct investment of which 78% is likely to be invested in UK based businesses, so this would mean jobs and tax revenues for the UK economy, is this not of overall benefit to the country?

[albie]

DD,

It is important to understand the difference between the production and the utilisation of the oil.
The UK have no retained rights over the resale process or value.

The involvement of a UK registered company as a junior partner has nothing to do with where that oil will be sold and used.
It will only come back to the UK (after processing abroad) if the UK offers the highest market price.

Income to the UK Treasury direct from the oil recovered will depend on the price of oil going forwards, in US dollars.
So you need to know the exchange rate between UK and US currencies across the lifetime of the oil field.
No-one can say what the investment drawn in will be, or that it will be focused on UK companies...it is a known unknown.

The fact remains that UK consumers are subsiding the construction costs to a large extent, funded by the tax breaks given to the oil and gas industries.
Why should energy consumers be footing the bill for infrastructure costs for the oil industry?

[danumdon]

DD,

It is important to understand the difference between the production and the utilisation of the oil.
The UK have no retained rights over the resale process or value.

The involvement of a UK registered company as a junior partner has nothing to do with where that oil will be sold and used.
It will only come back to the UK (after processing abroad) if the UK offers the highest market price.

Income to the UK Treasury direct from the oil recovered will depend on the price of oil going forwards, in US dollars.
So you need to know the exchange rate between UK and US currencies across the lifetime of the oil field.
No-one can say what the investment drawn in will be, or that it will be focused on UK companies...it is a known unknown.

The fact remains that UK consumers are subsiding the construction costs to a large extent, funded by the tax breaks given to the oil and gas industries.
Why should energy consumers be footing the bill for infrastructure costs for the oil industry?

Might your last sentence have something to do with my last paragraph?

You seemed to totally ignore it in your response.

[River Don]

How do they come up with these names? Rose bank sounds like it might be a retirement complex, not an oil field. Brent crude... Brent is an area of West London , what does that have to do with oil production?

[albie]

DD,

If you mean "the development is expected to lead to over £8 billion in total direct investment of which 78% is likely to be invested in UK based businesses, so this would mean jobs and tax revenues for the UK economy", then this claim needs to be verified.

It cannot be proven because there is no supporting evidence, it is just the sort of PR spin that always gets pushed with these announcements.
There is no reputable basis for such a claim at this stage, and grandstanding from the industry should be disregarded....it is always off beam.

The figures are plucked out of the air.
£8 billion is based on what, direct investment by who, and in what?
78% is cited without knowing any contractual arrangements, which is just idle speculation.

Given that oil demand is on a downward trend, adding more capacity to existing supply is likely to depress wholesale prices over time.
In that scenario, the highest cost supplier is vulnerable.
OPEC producers can squeeze UK margins at will, because their volume means that they can manufacture and survive a price war.

I still don't see why you think a private sector industry should be subsidised to expand by UK fuel consumers.....some of whom are paying a high proportion of their income in to meet falsely inflated energy supply costs.

It seems a very strange way to approach fuel poverty and energy insecurity.

[Sprotyrover]

Albie, I doubt your comments would go down well in an Aberdeen pub!

By the way some of us have oil fired central heating and are being advised to change to new systems like warm Air central heating, a bargain at £15k a pop! As Oil fired Boilers will be banned in 2026!

I have been looking at systems today and you are having a Larf!!! Some Green twit advocated the Change but suddenly there is a huge bear on the horizon! The National grid will be supplying the lecky, however somebody has correctly worked out that 1.6 million Oil fired central heating users changing to warm air, or Electric central heating will inflict a massive over capacity on the national Grid.which will fail us all, I reckon the 2026  target date will have to be re scheduled to 2035!

[albie]

Sproty,

Not sure what you mean by "warm air central heating", or why it would cost £15k.

You could look at a heat pump, starting from £500 with Octopus and British Gas;
https://nitter.net/pic/orig/media%2FF6s-3v6XAAADBBd.jpg
https://nitter.net/pic/orig/media%2FF6s-3_cW4AAvxlm.jpg

You would need to add the costs of rads and water tank, if needed.

The National Grid is not in danger of incapacity, or an inability to meet demand.
The idea that there will be a supply shortage is simply not true.

[Sprotyrover]

Cheers Albue I will look at those links!

[danumdon]

DD,

If you mean "the development is expected to lead to over £8 billion in total direct investment of which 78% is likely to be invested in UK based businesses, so this would mean jobs and tax revenues for the UK economy", then this claim needs to be verified.

It cannot be proven because there is no supporting evidence, it is just the sort of PR spin that always gets pushed with these announcements.
There is no reputable basis for such a claim at this stage, and grandstanding from the industry should be disregarded....it is always off beam.

The figures are plucked out of the air.
£8 billion is based on what, direct investment by who, and in what?
78% is cited without knowing any contractual arrangements, which is just idle speculation.

Given that oil demand is on a downward trend, adding more capacity to existing supply is likely to depress wholesale prices over time.
In that scenario, the highest cost supplier is vulnerable.
OPEC producers can squeeze UK margins at will, because their volume means that they can manufacture and survive a price war.

I still don't see why you think a private sector industry should be subsidised to expand by UK fuel consumers.....some of whom are paying a high proportion of their income in to meet falsely inflated energy supply costs.

It seems a very strange way to approach fuel poverty and energy insecurity.

Albie, ok, so you don't believe the sales pitch from the developers.

So in effect you don't think that this development will provide and increase job opportunities in this country, which in itself will provide tax revenues to the exchequer

So it will be developed with tax money from the uk but have no knock on effect in the local economy with investment and an increase in job opportunities?

[ravenrover]

I wonder how many properties in the UK are unsuitable for conversion to heat pumps and other alternative greener energy methods

[albie]

DD,

Of course injecting £3.75 billion of energy consumers money will have knock on effects.
What is not true is that you can predict which companies will direct that spending to the UK supply chain, and in what proportions.

A much better question is whether that same amount would generate a greater return if invested in growing clean technology, rather than propping up a dying sector.
About 45% of oil produced goes into transport, via petrol/diesel. Plan forward for the reduction in demand implied by the EV rollout.

Other industries are also moving in the same direction.

Why is this £3.75 billion not better spent on reducing energy bills, on insulation support, and on helping people transfer to modern heating tech?

Raven,

Case by case clearly, but there is a solution for the great majority of UK housing types.
Great potential for blocks of flats to have a system that supplies all units in the block, for an example.

There are always exceptions. Take those with oil heating who cannot connect to the mains gas network.
Very expensive compared to the mainstream system, but any tech which allows these consumers to save money long term is surely a good thing!

[Sprotyrover]

Case by case clearly, but there is a solution for the great majority of UK housing types.
Great potential for blocks of flats to have a system that supplies all units in the block, for an example.
Coal house used to supply all of Balby bridge Tower block estate’ the Police statio and the court’s building

[ravenrover]

Dale Vince announces he is stopping funding Just Stop Oil, protest and disruption is not the way forward!