Mid-tier oil and gas exploration stocks rose on Thursday, led by gains in Tullow Oil PLC (LSE:TLW) and Enquest PLC (AIM:ENQ), following signals that the UK government will move to unlock new drilling in the North Sea.
Labour’s Ed Miliband is preparing to lift legal barriers that had blocked major fossil fuel projects, reversing a January court decision that halted the Rosebank and Jackdaw fields.
The Scottish court had ruled the projects unlawful due to emissions regulations.
Miliband now plans to amend the law on greenhouse gas emissions, enabling the development of these fields and potentially reviving the UK’s North Sea oil sector.
Ministers are expected to restart the approval process for Rosebank and Jackdaw later today, with Energy Minister Michael Shanks in Scotland to confirm the outcome of a consultation on the matter.
Shell and Equinor, which have invested heavily in the projects, have expressed frustration over delays.
In early afternoon trading, Tullow and Equinor shares were up 5% and 4% respectively.
The biggest boost came for Jersey Oil and Gas PLC (AIM:JOG, OTC:JYOGF), which gushed 14% higher on the news.
JOG is developing the Buchan field, 93 miles north-east of Aberdeen, and one of the largest development projects in the North Sea.
It is estimated to contain gross discovered resources of around 70 million barrels, 95% of which is oil.
The UK's windfall tax was also in the news on Thursday, as it was reported that Chancellor Rachel Reeves had told a fossil fuel company that the industry was receiving a "quid pro quo" in return for the higher taxes on profits.
Reeves told Norwegian state energy company Equinor last August that the government’s carbon capture, usage and storage (CCUS) subsidies were a payoff for oil firms being hit with a higher tax rate, according to a Guardian report, quoting minutes of the meeting obtained by campaign group DeSmog.
The Chancellor said that raising the windfall tax from 35% to 38% was a “manifesto commitment”, but stated that “Equinor should recognise the quid pro quo – the funds raised enable government investment in CCUS etc”.