UK Seeks To Mandate Annual Oil And Gas Licensing Rounds In The North Sea

The UK government is working on legislation that would make annual oil and gas licensing rounds for the North Sea mandatory. Under the plans, a licensing round would take place if the country was set to import more oil and gas from abroad than it produces.

Per Prime Minister Rishi Sunak, this would give the energy industry certainty during the transition to low-carbon energy, Reuters reports.

"Domestic energy will play a crucial role in the transition to net zero," Sunak said, echoing earlier remarks that local production of oil and gas was a better option than having to import these commodities from often unfriendly jurisdictions.

Also, the Prime Minister noted that the government would ensure that this local production has a lower carbon footprint than imported alternatives.

The proposal is to be presented tomorrow, with the King’s Speech, which the monarch traditionally outlines the legislative agenda for the new session of parliament, Reuters also said in its report.

Earlier this year, Sunak said his government would issue hundreds of new oil and gas licenses for the North Sea “as the UK Government continues to back the North Sea oil and gas industry as part of a drive to make Britain more energy independent.”

Unsurprisingly, the decision was attacked in court by environmentalist groups that claimed the cabinet failed to properly check “the damage it will do to the climate.”

Justice David Holgate of the High Court dismissed the environmentalists’ claims for judicial review, writing in the ruling that the government’s decision not to take the emissions from burning the end products into account was lawful and not irrational.  

Following these developments, last month the North Sea Transition Authority, formerly the Oil and Gas Authority, issued 27 new oil and gas licenses, picking the blocks that could see production start earlier than others.

“It’s common sense to reduce our reliance on foreign imports and use our own supply – it’s better for our economy, the environment and our energy security,” Energy Security Secretary Claire Coutinho said, commenting on the awards.

By Irina Slav for Oilprice.com

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