New UK legislation introduced for annual oil and gas licensing rounds
10 November 2023
The UK government introduced the Offshore Petroleum Licensing Bill to Parliament on 8 November which will require annual oil and gas licensing rounds subject to stringent new emissions and imports tests.
The Government said the introduction of regular licensing for exploration will increase certainty, investor confidence and make the UK more energy independent. This new regime will be subject to two key tests being met: that the UK is projected to remain a net importer of both oil and gas; and that the carbon emissions associated with the production of UK gas must be lower than the average of equivalent emissions from imported liquefied natural gas.
Supporting continued production in the UK will also reduce reliance on higher-emission imports – with domestic gas production having around one-quarter of the carbon footprint of imported liquefied natural gas, the Government said in a statement.
Secretary of State for Energy Security and Net Zero Claire Coutinho said: “The UK has cut its emissions faster than any of its peers. But as the independent Climate Change Committee acknowledges we will need oil and gas even after we reach net zero in 2050.
“As energy markets become more unstable it’s just common sense to make the most of our own homegrown advantages and use the oil, gas, wind and hydrogen on our doorstep in the North Sea. Rather than importing dirtier fuels from abroad, we want to give industry the certainty to invest in jobs here and unlock billions of pounds for our own transition to clean energy.”
While the government is scaling up domestic clean energy sources such as offshore wind and nuclear, the UK still relies on oil and gas for its energy needs. This will continue to be the case over the coming decades, and even after 2050, as data published by the independent Climate Change Committee shows.
The new Bill will bolster domestic energy supplies by requiring the North Sea Transition Authority (NSTA) to run annual oil and gas licensing rounds, inviting applications for new production licences in the UK’s offshore waters.