UK: OGA offers offshore blocks to 65 firms as gov’t launches review into future licensing regime

The UK’s Oil and Gas Authority (OGA) has offered for award 113 licence areas over 259 blocks or part-blocks to 65 companies in the 32nd Offshore Licensing Round. Meanwhile, the government is launching a review into future offshore oil and gas licensing regime.

The aim of the review is to lead the way on tackling climate change and achieving net-zero emissions by 2050.

The 32nd Offshore Licensing Round was launched on 11 July 2019 and closed for applications on the 12 November 2019.

The OGA said on Thursday that the round offered blocks in mature, producing areas close to existing infrastructure, under the flexible terms of the Innovate Licence.

This enables applicants to define a licence duration and phasing that will allow them to execute the optimal work programme.

The awarded areas are located in the Northern, Central, and Southern North Sea as well as in the West of Shetland area.

The majority of the licences will enter the Initial Term (Phase A or Phase B exploration stage), and 16 of the awards are for licences that will proceed straight to Second Term, either for potential developments, or re-developments of fields where production had ceased and the acreage had been relinquished.

The licence areas were offered to 65 companies, including majors like Shell, BP, Total, Eni, Chrysaor, EnQuest, Neptune, Equinor, and many more. See the full list of winners here.

Following recent successful annual licensing rounds, the OGA is taking a temporary pause from annual licence round activity and will not run a licence round in what would have been the 2020/21 period.

As explained by the OGA, this will allow relinquishments to take place so more coherent areas may be reoffered in future, giving the industry time to deliver on work commitments in the existing portfolio of licences.

The industry is encouraged to use the pause to acquire data and carry out studies in preparation for the next round. The OGA will engage with industry on the timing and nature of the next offshore licensing round.

Government forecasts point to oil and gas remaining an important part of the country’s energy mix for the foreseeable future, as it moves towards net-zero, as the UK is still expected to be a net importer.

As such, managing the declining production and maximising the economic recovery from the UK remains vital to meet those energy demands as long as they exist, and to reduce reliance on hydrocarbon imports, the OGA explained.

The OGA is implementing a programme to integrate net-zero considerations into its core business, including refreshing its Strategy. Licenses awarded in this 32nd Offshore Licensing Round are expected to be stewarded under this new Strategy.

The UK government also on Thursday announced it will review its policy on the future UK offshore oil and gas licensing regime as part of the wider aim of achieving net-zero emissions by 2050.

The review will ensure the government has the information needed to plan for future oil and gas production in the UK, in a way that is aligned with tackling climate change. Initial findings and next steps will be published in the upcoming Energy White Paper.

The independent Committee on Climate Change has recognised the ongoing demand for oil and natural gas, including it in all scenarios it proposed for how the UK meets its target for achieving net-zero emissions by 2050.

The oil and gas sector supports 270,000 jobs across the UK and plays a key role in developing the infrastructure and capability for green technologies such as carbon capture and storage and hydrogen power. The oil and gas sector is also a major source of tax revenue for public services and has provided over £330 billion to the UK Government from production taxation alone in today’s prices.

Business and Energy Secretary, Alok Sharma, said: “While we have decarbonised our economy faster than any other major country over the past two decades, the oil and gas sector will continue to be needed for the foreseeable future as we move toward net-zero carbon emissions by 2050.

“Our review into future oil and gas licensing rounds will ensure we are able to meet our net-zero target, while protecting jobs across the country as part of our plan to build back better with a greener, cleaner economy”.

Alongside this, the upcoming North Sea Transition Deal will be published within this Parliament, and will also set out more details later this year of how Government plans to work with the sector and key stakeholders to achieve the aim of supporting a transition to low carbon energy sources, while getting the benefit from the limited reserves in the North Sea and protecting highly skilled jobs.