UK Launches New Licensing Round for Offshore Oil and Gas

Undated file photo showing jack-up rigs used by North Sea drillers. (Steve Parsons/PA Media)

A new licensing round for oil and gas exploration in the North Sea will be launched at 6 p.m. on Friday, the UK’s oil and gas regulator said.

The plan was initially announced in April as part of the government’s energy security strategy amid high prices and Russia’s invasion of Ukraine.

Business and Energy Secretary Jacob Rees-Mogg said the new licensing round will boost jobs, energy security, and the British economy.

He also said domestic production of gas “has a lower carbon footprint than importing from abroad.”

More than 100 licenses may be awarded for the exploration and potential development of 898 blocks and part-blocks in the North Sea, the North Sea Transition Authority (NSTA) said.

But in a bid to encourage the production of new oil and gas supplies as quickly as possible, the NSTA has identified four “priority cluster areas” in the southern North Sea.

These areas (pdf)—located off Norfolk, Lincolnshire, and Yorkshire—are known to contain hydrocarbons and are close to existing infrastructure, giving them the potential to be developed quickly.

Applicants have until 2 p.m. on Jan. 12, 2023 to bid for the blocks. The NSTA said it expects to award the first licenses in the second quarter of 2023.

The regulator also said this analysis shows the average time between discovery and first production is “close to five years and falling.”

The licensing of oil and gas explorations was paused last year as the government committed to a “Climate Compatibility Checkpoint” before each licensing round to “ensure licences awarded are aligned with wider climate objectives, including net-zero emissions by 2050, and the UK’s diverse energy supply.”

In the checkpoint design (pdf) published on Sept. 22, the Department for Business, Energy, and Industrial Strategy said another licensing round “would not materially impact” the ability of the UK to “meet the international commitments it has made to combat global warming.”

Speaking to “BBC Breakfast,” climate minister Graham Stuart said a new licensing round for oil and gas exploration in the North Sea is “good for the environment because when we burn our own gas it’s got lower emissions around its production than foreign gas … as well as supporting British jobs.”

Scotland’s First Minister Nicola Sturgeon accused the UK government of taking a “haphazard approach to it which is undermining energy security.”

“Any consent for new [oil and gas] exploration should not happen without the most stringent climate compatibility checks,” she told the BBC’s ”Today” programme, adding it would not happen in an independent Scotland “without stringent compatibility checks. Not with Jacob Rees-Mogg waking up in the morning and deciding it’s the right thing to do.”

Sturgeon said renewable energy is the route to energy security.

Prime Minister Liz Truss defended the government’s energy policy. In a string of Twitter posts, Truss said the government is accelerating domestic energy production to “secure our long-term energy supply and reduce reliance on authoritarian regimes,” including oil, gas, hydrogen, solar, wind, and nuclear energy.

PA Media contributed to this report.