Drill, maybe, drill?

Good afternoon. This is your midday market update from City AM.

Amid all the swirling speculation around this month’s Budget, the schizophrenic news cycle in the Middle East, and - most disconcertingly for this sickly journalist - rumours of a pneumonic plague outbreak afoot in Russia, it’s easy to forget that a rather pivotal London by-election is taking place tomorrow.

As a died-in-the-wool financial journalist, I’ll spare you any hamfisted rune-reading over what the Holborn & St Pancras poll might mean for the UK’s body politic.

But if rumours emanating from the energy industry are to be believed, the vote pitting Green leader Zak Polanski against Labour’s Sagal Abdi-Wali could pave the way for a decision firmly in this newsletter’s purview: whether the Jackdaw and Rosebank oil and gas fields will be greenlit by the Burnham government.

A growing contingent of execs in the uncompromising - and unloved - world of North Sea drilling believe ministers have held out from approving the two projects until after the seat’s left-leaning constituents have left the polling booths.

Their logic is easy enough to follow. Just days after entering Downing Street this summer, Burnham told journalists he would take a “pragmatic” approach to Britain’s domestic hydrocarbon reserves. Those words alone marked a sharp departure from the obstinate tack taken by the Starmer-Miliband axis of old. But they have since been followed by a sequence of overtures from the new energy secretary - once an inveterate net-zero ideologue - and the PM himself.

Over the same period, reports have suggested that Burnham’s pragmatism is likely to comprise a move to rubber stamp Rosebank and Jackdaw, two major drilling projects that have been held in a regulatory purgatory for nearly two years, but not lift the Starmer-era ban on new licences.

Now, with the baking hot summer weather behind us (a politically dicey period to sanction the drilling of up to a billion barrels of oil equivalent) and a Green by-election boost vanquished, will we, finally, drill, maybe, drill?

“I think they were worried about the political blowback when the byelection was called but are less concerned now,” one industry figure told me. “Labour’s win should - and will - give them the confidence to say when it comes to pragmatic use of hydrocarbons, we can’t be holier than though.”

If, privately, oil and gas execs are feeling hopeful, then publicly, their remarks betray little complacency. Just this morning, Anders Opedal, who runs Norway’s Equinor, weighed in with an almighty intervention, warning UK lawmakers his energy colossus may shelve its UK investment plans if the two projects fail to be rubber stamped.

"The question will be: is the UK investable in the future? I hope it will not come to that," Opedal, whose Equinor is a part owner of the sites, told the BBC.

Those remarks follow similar pressure from British Gas owner Centrica, Octopus’s Greg Jackson and, most recently, EDF chief Simone Ross, who branded the decision a “no brainer”.

My understanding is that, after a months-long consultation process, the North Sea regulator’s recommendation over Jackdaw - seen as the less controversial of the two - is now on the energy secretary’s desk. Rosebank will follow suit soon.

With such overwhelming industry support, a rejection - or more prevarication - on the projects would risk an almighty backlash. Will Burnham yield? One thing’s for certain: we won’t find out until Holborn and St Pancras - as it is expected to do - votes Labour.

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