Hundreds of oil and gas licences to be issued, confirmed by the UK Prime Minister. As part of its efforts to achieve greater energy independence, the UK Government maintains its support for the North Sea oil and gas industry.

On Monday 31st July, the Government and the North Sea Transition Authority (NSTA) announced their joint commitment to conduct future licensing rounds, ensuring that each round will undergo a climate compatibility test.

Through the implementation of a more adaptable application process, licences may also be made available in close proximity to presently licensed regions, unlocking crucial reserves that can be brought online more swiftly, thanks to the existing infrastructure and previous pertinent assessments.

Ensuring a stable domestic energy supply

The Government is implementing measures to mitigate the rapid decline in domestic oil and gas production. The independent Climate Change Committee forecasts that approximately a quarter of the UK’s energy demand will still be fulfilled by oil and gas when the country achieves net zero in 2050. This strategy aims to ensure a stable domestic energy supply and reduce dependence on potentially hostile states.

What does this mean?

Implementing new oil and gas licenses will bolster the UK’s energy security and reduce dependence on higher-emission imports. These efforts will also safeguard more than 200,000 jobs in the crucial industry and contribute to the growth of the UK economy. During a visit to a significant energy infrastructure site in Aberdeenshire today, the Prime Minister will emphasise the region’s pivotal role in enhancing the country’s energy independence. He will then introduce the next generation of skilled apprentices who will drive these initiatives forward.

Currently, the NSTA, responsible for regulating the oil, gas, and carbon storage sectors, is conducting the 33rd offshore oil and gas licensing round.

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The authorities are expected to grant the first of the new licenses in the autumn, with over 100 licenses anticipated to be awarded in the total round.

These future licences will play a critical role in ensuring energy security, unlocking carbon capture usage and storage, and exploring hydrogen opportunities. They will facilitate the creation of fully integrated offshore energy hubs, making optimal use of established infrastructure.

Licences will help prevent a drastic fall

In light of recent analysis released by the NSTA, the carbon footprint of domestic gas production is approximately one-quarter of that associated with imported liquefied natural gas. Given the UK’s declining production of oil and gas, these new oil and gas licences will help prevent a drastic fall in UK supply, ensuring vital energy security while staying on course to achieve net zero by 2050, rather than increasing supply levels above the current standards.

UK Prime Minister Rishi Sunak said:

“We have all witnessed how Putin has manipulated and weaponised energy. Disrupting supply and stalling growth in countries around the world.”

“Now more than ever, it’s vital that we bolster our energy security and capitalise on that independence to deliver more affordable, clean energy to British homes and businesses.”

“Even when we’ve reached net zero in 2050, a quarter of our energy needs will come from oil and gas. But there are those who would rather that it come from hostile states than from the supplies we have here at home.”

“We’re choosing to power up Britain from Britain and invest in crucial industries such as carbon capture and storage, rather than depend on more carbon intensive gas imports from overseas. This will support thousands of skilled jobs, unlock further opportunities for green technologies and grow the economy.”

Driving Forward with licences

The UK’s oil and gas industry plays a crucial role in advancing and investing in clean technologies. This is essential to achieving our net zero target, such as carbon capture usage and storage (CCUS). Leveraging the sector’s existing supply chains, expertise, and key skills will be instrumental in protecting jobs, while driving the adoption of these green technologies.

Today, the Government has officially announced that the Acorn project in North East Scotland. The Viking project in the Humber has been chosen, as the fourth carbon capture usage and storage cluster in the UK.

In line with its commitment to deploy CCUS in two industrial clusters by the mid-2020s. The Government plans to establish an additional two clusters by 2030. Now confirmed as Acorn and Viking.

Collectively, these four clusters will lay the foundation for a thriving carbon capture usage and storage industry, capable of supporting up to 50,000 jobs in the UK by 2030.

The UK boasts one of Europe’s largest potential carbon dioxide storage capacities. Making the North Sea an attractive business environment for CCUS technology. To facilitate early deployment of CCUS, the Government has pledged up to £20 billion in funding. A move intended to unlock private investment opportunities and spur job creation in this transformative sector.

Working together

The Prime Minister has assigned the relevant Government departments and regulators the responsibility of working together in cooperation and providing a comprehensive report by year-end. The objective is to explore how we can optimally utilize our offshore resources in a fully integrated manner while unlocking opportunities for carbon capture usage and storage (CCUS) and hydrogen in the North Sea.

Additionally, the Government has initiated a call for evidence today. They are inviting opinions on the changing landscape of taxes in the oil and gas sector. The aim is to design a stable fiscal regime in the long term. Promoting predictability and certainty, encouraging investment, safeguarding jobs, and ensuring the nation’s energy security.

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