A complete ban on new North Sea exploration licensing will be a “very unlikely" outcome of the UK government’s ongoing policy review into oil and gas permitting, according to a Whitehall source.
The source’s comments follow media reports at the weekend that ministers have been considering a ban in a move away from fossil fuels in the run up to November's United Nations COP26 international climate change conference in Glasgow.
“It is very unlikely that the place we are going to end up at is a complete ban. I don’t think that’s a very likely possibility,” the source told Upstream.
Upstream understands a number of meetings have taken place between government and a range of stakeholders in recent months as part of the ongoing consultation into the future of the North Sea licensing regime that kicked off in September.
This includes one between industry and government officials in the last fortnight.
Industry sources told Upstream the government officials presented a “matrix” of future licensing scenarios and timeframes.
One senior industry figure told Upstream the options that have been presented ranged from “stopping tomorrow” at one extreme to “carrying on forever” at the other.
Another industry source said it would be a surprise if government is seriously considering an outright ban given the “positive engagement” that has taken place so far on the licensing review and the soon-to-be-announced North Sea Transition Deal.
In December, the government published its long-awaited Energy White Paper setting out legislative proposals for how the UK will deliver on legally binging targets to decarbonise its economy by 2050.
A spokesperson the Department of Business Energy & Industrial Strategy said: "Our review into the future of the oil and gas licensing regime seeks to ensure it remains compatible with our target to reach net zero emissions by 2050. This commitment also forms part of the Energy White Paper published in December.
“We will agree a transformational North Sea Transition Deal with industry in the coming months to create jobs, retain skills and deliver new business and trade opportunities to support the sector’s transition to a lower carbon future.”
OGUK set for key report launch
The story has risked overshadowing the launch on Tuesday of trade association Oil & Gas UK’s (OGUK) flagship annual business outlook report.
OGUK sustainability director Mike Tholen said “any curtailment of activity by licensing constraints” would “risk impeding the UK’s ability to deliver a net-zero future, damaging our domestic supply chain and increasing energy imports whilst exporting the jobs and skills”.
Tholen said: “Our industry is leading the way on green technologies including the switch to hydrogen and long-term storage of carbon dioxide. Achieving this through UK companies will require significant investment and we continue to work constructively with government to show this industry has the essential expertise and commitment to ensure delivery."
Citing industry sources, UK newspaper The Telegraph reported at the weekend that options being consulted on are understood to include an end to issuing licences in 2040, and an immediate temporary pause in licensing.
No change to the licensing regime is also a possibility, the newspaper said.