Government Announces Annual Renewal Mandate for North Sea Oil and Gas Licenses

Claire Coutinho said that the government was planning on using ‘common sense’ in its approach to energy, with industry experts approving the move from Sunak.
Government Announces Annual Renewal Mandate for North Sea Oil and Gas Licenses
The BP Eastern Trough Area Project oil platform in the North Sea, 100 miles east of Aberdeen, Scotland, on Feb. 24, 2014. (Andy Buchanan/AFP/Getty Images)
Joseph Robertson
11/6/2023
Updated:
11/6/2023
0:00

The UK Government has unveiled plans to mandate annual renewal for oil and gas licensing in the North Sea, emphasising the need for energy security and job protection within the £16 billion industry.

Prime Minister Rishi Sunak emphasised the significance of domestic energy in the transition to net zero, saying, “Domestic energy will play a crucial role in the transition to net zero, supporting jobs and economic growth, while also protecting us from the volatility of international markets and diversifying our energy sources.”

Offshore Energies UK, a trade body, reports that there are nearly 300 active oil and gas fields in the North Sea, with over half of them expected to cease production by 2030.

The current licensing round began in October last year, and the government recently granted the first set of 27 licences.

The North Sea Transition Authority, an independent regulator, assesses applications for exploring oil and gas fields.

Secretary of state for energy security and net zero, Claire Coutinho, clarified the government’s intention behind the proposed oil and gas licences.

Legislation To ‘Raise Money’

She said the move, “wouldn’t necessarily bring energy bills down, that’s not what we’re saying, but it would ... raise a significant amount of money that would help us... fund transition into different forms of energy, for example, things like offshore wind and solar energy which ... could help bring bills down.”

Ms. Coutinho stressed the importance of utilising domestic resources, stating, “It’s common sense to make the most of homegrown advantages and use oil, gas, wind and hydrogen on our doorstep in the North Sea.”

She also highlighted the need to invest in homegrown production to support energy security, the economy, jobs, and the country’s supply chain, essential for the low-carbon future.

Despite the aim to achieve net zero carbon emissions by 2050, the government maintains that the UK will still require oil and gas to meet its energy needs.

Renewables produced a record 48.1 percent of electricity in the first quarter of this year.

The Government stated that this latest shift aims to, “bolster energy security, reducing reliance on imports from hostile foreign regimes such as Russia” and leave the country, “less exposed to unpredictable international forces.”

Industry Approval

Industry leaders also expressed their support for the government’s initiative. Offshore Energies UK chief executive David Whitehouse emphasised the necessity of a predictable licensing process.

Mr. Whitehouse said, “A predictable licensing process with transparent checks will support the highly skilled people working in the sector, while ensuring the granting of new licences is compatible with energy security and net zero.”

Jon Butterworth, chief executive of National Gas, highlighted the vital role of gas in the nation’s energy system, stating, “Gas is the backbone of our nation’s energy system–and it is vital we make the most of the abundant resources we have...

“By backing gas and embracing hydrogen we can create jobs, secure energy independence, deliver net zero, and keep costs down for households and businesses.”

Ed Miliband, Labour’s shadow energy security secretary, criticised the government’s proposals, labelling them a “desperate political strategy” that would have no impact on reducing energy bills or ensuring energy security.

He said, “We already have regular North Sea oil and gas licensing in Britain, and it is precisely our dependence on fossil fuels that has led to the worst cost of living crisis in a generation.”

This latest move underscores the government’s approach to ensure energy security as it seeks to keep both sides of the net zero debate in the loop ahead of the general election.

The legislation will be outlined tomorrow in the King’s Speech, where the monarch presents the government’s legislative agenda for the year.

Joseph Robertson is a UK-based journalist covering a wide range of national stories, with a particular interest in coverage of political affairs, net zero and free speech issues.
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