Page 14 - EurOil Week 41 2022

EurOil POLICY EurOil

UK restarts offshore oil and gas

licensing amid energy crisis

UK THE UK has launched its first offshore oil and industry is committed to net zero and also to
gas licensing round in three years – a move that helping build the low-carbon energy systems of
It is the first licensing the industry has hailed as a vital step for main- the future,” OEUK’s acting CEO Mike Tholen
round in three years. taining the country’s domestic oil and gas supply commented. “But this is a journey that will take
and safeguarding its energy security. decades, during which we will still need gas and
The UK imposed a de-facto temporary mora- oil.”
torium on licensing in 2019, when the North Sea The UK used 78bn cubic metres of gas in
Transition Authority (NSTA), then known as the 2021 but produced only 29 bcm, although out-
Oil and Gas Authority (OGA), said it needed to put surged 27% year on year in the first half of
carry out a review to assess whether its licens- this year thanks to the start-up of new projects
ing policies were in line with the UK’s net-zero and increased efficiency. Without more domes-
ambitions. But since then oil and gas prices have tic supply coming on stream, though, the OEUK
soared, while Russian cuts in gas flow to Europe warns that the UK will find itself importing four-
have exposed the country’s steadily increasing fifths of the gas it uses by 2030.
independence on energy imports. It was former UK Prime Minister Boris John-
In a statement, the NSTA invited bids from son that first announced plans to resume licens-
companies on October 7 for 898 blocks and part- ing rounds this autumn, and this commitment
blocks scattered across the North Sea, the East was kept by his successor Liz Truss. The move
Irish Sea and West of Shetland. This compares was roundly and unsurprisingly criticised by
with 768 blocks and part-blocks offered up in the Greenpeace and other environmental groups.
2019 contest, and 1,766 in the 2018 competition. The opposition Labour party largely did not
The NSTA’s CEO, Andy Samuel, a former comment on the licensing round, despite its
executive at BG Group, stressed that the UK leader Sir Keir Starmer last year calling for the
would continue needing gas during its transi- government to set a hard date for the end of oil
tion to a fully renewable power system, and that and gas exploration.
it was better from an emissions point of view that In contrast, Scotland’s first minister Nicola
the supply is produced domestically rather than Sturgeon spoke out, saying that she had not seen
imported. any evidence to justify the expansion in oil and
“This licensing round includes gas discover- gas activity on environmental or energy secu-
ies in the south North Sea which can be rapidly rity grounds. She also said the current system of
tied back to existing infrastructure,” Samuel said, climate compatibility checks before licences are
noting that all licensed developments would be issued was not robust enough, and stressed that
assessed according to their environmental and the transition to renewable energy needed to be
emissions impacts. fast-tracked.
“Security of supply and net zero should not “We need to make a careful, just transition
be in conflict,” Samuel said. “The industry has away from oil and gas, which my government is
committed to halving upstream emissions by focused on,” she said. “The route to lower energy
2030 and investing heavily in electricity, carbon costs and to energy security is renewable gas.” ™
storage and hydrogen. Signs are promising so
far – our first carbon storage round closed last
month with 26 applications from 19 companies
across all the areas we offered.”
The NSTA has identified four priority clus-
ter areas in the south North Sea located close to
known hydrocarbon deposits where it hopes
to fast-track development. Licences will be
granted for these sites ahead of others. Bids will
be accepted until January 12, 2023, and then the
first licences are due to be handed out in the sec-
ond quarter of 2023.
The launch of the licensing round was warmly
received by oil and gas industry association Off-
shore Energies UK (OEUK), which said the con-
test would “boost British gas supplies, sustain the
UK’s energy industry and strengthen plans for a
low-carbon future.”
“There is no conflict between issuing new
licences and reaching carbon neutrality. Our

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