Government Approves 24 New Oil and Gas Exploration Licences in North Sea

A view of the Johan Sverdrup oilfield in the North Sea, on Jan. 7, 2020. Carina Johansen/NTB Scanpix/via Reuters

The government has approved 24 new licenses for oil and gas exploration in the North Sea to “ensure job security” and provide “benefits” to the UK economy.

The decision has been met with criticism from environmental campaigners, who have argued that the UK economy will suffer from reliance on fossil fuels.

The North Sea Transition Authority (NSTA), an independent regulator that assesses applications for exploring oil and gas fields, announced the new awards on Wednesday.

Shell, Equinor, bp, Total and NEO were among the recipients of the 24 licenses awarded in the second tranche of the 33^rd oil and gas licensing round. The NTSA opened the round in Oct. 2022 and made more than 900 Blocks available for bidding.

The regulator reported that 76 companies made 115 bids, which showed an “appetite within the industry to explore the UK Continental Shelf.”

The new batch of licenses brings the total to 51, after 27 licences were offered in the first allocation last year.

“These licences have the potential to make a significant contribution to the UK in energy production and economic benefits, and the NSTA will work alongside the licensees to help bring them into production as quickly as possible,” an NTSA spokesperson said.

Political Debate

The decision is part of the ongoing political debate about the importance of domestic energy production and adherence to Britain’s net zero strategy.

The strategy aims to decarbonise all sectors of the UK economy to meet the net zero target by 2050. According to Prime Minister Rishi Sunak, domestic energy “will play a crucial role in the transition to net zero.”

The Conservative leader said last year that reliance on domestic production will protect the UK economy from the international market volatility. In the past two years, energy security concerns have been exacerbated by the war in Ukraine and the industry reliance on Russia.

“We will continue to need oil and gas over the coming decades, so it is common sense to make the most of our own resources—with domestically produced gas almost four times cleaner than importing liquefied natural gas from abroad,” said Minister for Energy Security and Net Zero Graham Stuart.

The government’s backing of the oil and gas sector will protect 200,000 British jobs and boost the economy, Mr. Stuart added.

On the other side of the political spectrum, the Labour Party has argued against new North Sea oil and gas exploration. The party leader, Sir Keir Starmer has pledged to create jobs in the sector by focussing on the opportunities in nuclear and renewable energy.

Scotland is thought to be the largest producer of oil and the second largest producer of gas in Europe, with most oil and gas activity in Scottish waters taking place offshore, beyond 12 nautical miles from the coastline.

Labour has vowed to support up to 50,000 jobs in Scotland via the £2.5 billion British Jobs Bonus scheme. Labour also said that a new publicly-owned company GB energy, which will invest in clean homegrown power, will be headquartered in Scotland.

‘Outdated Energy System’

Industry experts have warned that it would be a “historic mistake” to wait until UK oil and gas runs out. Stopping licenses and oil development will starve the UK of energy and make it dependent on energy from abroad, said Gilad Myerson, executive chairman of oil and gas operator Ithaca Energy.

Ithaca Energy has stakes in six of the ten largest oil and gas fields in the North Sea, where the Labour leadership plans to end new exploration.

Environmental campaigners have criticised the NSTA’s decision to award new licenses, which they said will “only further fuel the climate emergency.”

“New gas and oil licences will do nothing to help people struggling with the cost-of-living crisis or boost energy security. But it will keep our economy locked into an outdated energy system dangerously reliant on fossil fuels,” said Friends of the Earth climate co-ordinator, Jamie Peters.

Lawmakers should prioritise developing Britain’s “huge renewable potential” and investing in a green economy, Mr. Peters added.

Under the NSTA’s latest offshore licensing round, 74 blocks or part blocks have been offered in the West of Shetlands, Northern North Sea and Central North Sea.

The regulator will offer the remaining blocks after the Offshore Petroleum Regulator for Environment and Decommissioning finalises the environmental evaluations.