UK Offshore oil and gas licensing round begins

Michael Fallon announced the new licensing round. Picture: PA
Michael Fallon announced the new licensing round. Picture: PA
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THE UK government has launched the latest licensing round for drilling for offshore oil and gas amid what it described as “high interest” from companies in exploring.

Ministers said around 20 billion barrels of oil could still be buried in the seabed and that applications by explorers under the round will help unlock its economic potential.

A record number of licences were awarded in the previous round, including 21 new entrants, taking the total number of companies working in the North Sea to 50.

Energy minister Michael Fallon said: “This new round of drilling for offshore oil and gas will help boost growth, energy security and jobs in the UK. The licensing of new areas forms an essential part of our long term economic plan by enabling the exploration necessary to ensure we fully realise our remaining reserves.”

Last year, 36 offshore projects were approved under the previous round. Applications for the 28th licensing round have to be submitted by 25 April.

The government said after reviewing the conclusions of an environmental report, a number of blocks in the deepest waters off the south-west of England are currently not being offered as part of the round because of lack of data over the marine environment there

A number of blocks excluded from earlier licensing rounds, including ones in the Moray Firth, have again been omitted for environmental reasons.

UK oil and gas output has been in steady decline since production peaked around the turn of the century and the government is speeding up its planning regime to help oil and gas companies extract resources left below the seabed.

Announcing the licensing round, the government highlighted the contribution of oil and gas industry to the economy.

The offshore projects approved last year generated around £6.5 billion in tax revenue and another £5bn through taxes on the wider supply chain, the government said.

The sector also employs roughly 350,000 people, of which 45 per cent are in Scotland. Current forecasts for the next five years show a need for an additional 15,000 employees.

But WWF Scotland director Lang Banks said: “Given all the tax breaks provided for decommissioning old rigs and encouraging exploration in once-unviable areas, it’s hardly surprising that there’s so much interest by companies in even more oil and gas drilling in the North Sea.

“However, given the urgent need to reduce our climate emissions, we urgently need to see ministers set out a clear plan to move us away from fossil fuels.”

The government is also counting on vast onshore shale gas resources to help stem the UK’s growing dependence on energy imports and boost government coffers.

The UK’s next onshore licensing round, which includes shale gas, is expected to be launched in early summer.