UK offers new cut-price offshore oil and gas licenses to boost exploration interest
27 July 2016
On July 25, the UK Government launched its latest tender for oil and gas licenses on the UK Continental Shelf (UKCS) at a significant discount to past prices in a bid to stimulate exploration. The Oil and Gas Authority (OGA) will reduce license rental fees in some cases by up to 90% per square kilometre and allow explorers more flexible development programmes.
29th Licensing Round map - Image: OGA
Exploration for new oil and gas fields in the UKCS is expected to fall to the lowest level in 45 years this year as energy companies have scaled back exploration budgets due to weak oil prices.
Despite being an old basin, Britain's North Sea is estimated to have billions of barrels left for extraction, worth around £200 billion ($262.56 billion) to British government coffers.
The latest licensing round, the 29th, offers access to new areas in the Rockall Trough, the Mid-North Sea High and East Shetland, which were subject to a government-funded seismic testing campaign earlier this year.
The Round closes for applications at 14:00 on the 26th October 2016 and a total of 1261 blocks, some in ‘frontier areas’, are on offer.
"We recognise that market conditions are currently very difficult but nevertheless we have a shared goal of making the basin as attractive as possible for exploration," Andy Samuel, chief executive of the OGA, said.
“The combination of, for the first time, freely available seismic data and the flexible ‘Innovate Licence’ is a compelling package and the result of many months of collaboration between the OGA and industry to stimulate further drilling and maximise economic recovery of the UK’s oil and gas resources.”