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Energy / Rosebank: ‘not desirable’ to order companies to allocate oil and gas for domestic use

CONFIRMATION from the UK Government that oil from the Rosebank development will not be reserved for domestic use does not come as a surprise, according to local Green councillor Alex Armitage.

In a written response to a parliamentary question, the government said “it is not desirable to force private companies to ‘allocate’ oil and gas produced in the North Sea for domestic use”.

It comes after it was announced this week that Lerwick Port Authority would act as a support hub for the development of Rosebank, which lies to the north west of the isles.

Government regulators gave the go-ahead to the Equinor/Ithaca Energy development last year, and first production is expected in 2026/27.

Rosebank is the largest undeveloped oil field in the region and it has the potential to produce hundreds of million barrels of oil.

It would be developed with a Floating Production Storage and Offloading vessel (FPSO) tied to a subsea production system.

Oil would be transported to refineries by shuttle tankers, with Equinor saying this would “support Europe’s energy security”.

Gas would be exported through a pipeline system which connects to Shetland.

While environmental campaigners do not want it to proceed, Equinor – a Norwegian state owned company – said at the time of approval that Rosebank would “bring much needed energy security and investment in the UK while supporting the UK’s net zero target”.

Prime minister Rishi Sunak also told the BBC last year that “I don’t want our young children to grow up and be dependent on foreign dictators like Putin for our energy”.

But under secretary of state for energy security and net zero Amanda Solloway MP said in a response to a parliamentary question that “due to UK refinery specifications and global market conditions, around 80% of the oil produced in the UK is refined overseas into the products demanded by the UK market”.

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She was responding to a question from Labour MP Lloyd Russell-Moyle on whether the government expects that new gas and oil produced in the North Sea will be “allocated for domestic use”.

Solloway said it is not desirable for this to be forced on private companies.

Shetland Green councillor Alex Armitage said the answer did not come as a surprise, adding that he felt it showed that the motive behind development is about profits rather than energy security or helping the cost of people’s bills.

Meanwhile the GMB Union said domestic reservation policies have a “proven track record of bringing down costs” in areas like Western Australia.

A spokesperson for the Department for Energy Security and Net Zero said: “As a net importer, it makes sense to use home-grown British resources to manage the decline in domestic oil and gas production in a way that reduces our vulnerability to hostile states. UK gas production is four times cleaner than shipping Liquefied Natural Gas to the UK.

“We will continue to back the UK’s oil and gas industry, which underpins our energy security, supports up to 200,000 jobs, and will provide billions in tax revenue over the next five years – helping fund our transition to net zero.”

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