The UK government will mandate annual licensing rounds for oil and gas exploration in the country’s North Sea, as Prime Minister Rishi Sunak doubles down on his strategy to push for maintaining domestic output after recently approving Equinor’s Rosebank project.
The North Sea Transition Authority (NSTA), the UK offshore regulator, will be required to “invite applications for new production licences on an annual basis”, the government said on Monday morning.
The move, it added, seeks to “bolster the UK’s energy security and reduce dependence on imports from overseas”.
The licensing round will be dependent on the projects meeting certain criteria to ensure domestically produced energy would have a lower emissions footprint than imported cargoes.
“Domestic energy will play a crucial role in the transition to net zero, supporting jobs and economic growth, while also protecting us from the volatility of international markets and diversifying our energy sources,” Sunak said.
Earlier this year, Sunak said the government would grant more than 100 new oil and gas licences in the North Sea.
And in September, Equinor took a final investment decision on the controversial Rosebank project in the UK North Sea, the largest undeveloped oilfield in the area.
The development of Rosebank had been strongly criticised by climate activism groups and opposition politicians such as the Green Party, with member of parliament Caroline Lucas calling the decision “morally obscene”.
Opponents said new oilfields such as Rosebank would not support energy security in the UK, as locally produced oil and gas would be sold on global markets — just like it was during the energy crisis of last year — and would not shield UK consumers from soaring energy bills.
The Rosebank field contains a recoverable resource of an estimated 300 million barrels of oil and would also produce over 21 million cubic feet per day of gas.
Lucas said in parliament previously that emissions caused by oil and gas consumed from Rosebank “would blow the UK carbon budget”.
In July last year, a UK high court ruled that the government’s Net Zero Strategy was in breach of the Climate Change Act, as it did not contain sufficiently detailed policies showing how the UK’s legally binding carbon budgets would be met.
This summer, the UK independent adviser on climate change lashed out at the government for its “hesitant” approach towards the transition and ambiguity over fossil fuel policy.
“Government has been too slow to embrace cleaner, cheaper alternatives and too keen to support new production of coal, oil and gas,” John Gummer, chairman of the Climate Change Committee, said in its report at the time.
But the government insisted that investment has to support the energy security needs of today, which in the UK are covered by 75% through fossil fuels.
David Whitehouse, chief executive of industry trade group Offshore Energies UK, said on Monday that the UK “needs the churn of new licences to manage production decline in line with our maturing basin”.
At the recently held Energy Transition Forum 2023 in central London, Equinor UK country manager Alex Grant said new production equivalent to 150 Rosebanks was needed every year to keep oil output stable, making up for the natural decline.
The sector employs about 200,000 people in the UK. There remain open questions over future employment opportunities for oil and gas workers, in a world where fossil fuels have to be rapidly reduced to meet climate-change targets.
“A predictable licensing process with transparent checks will support the highly skilled people working in the sector,” Whitehouse said.
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