PRESS RELEASE : New annual oil and gas licensing rounds to boost UK economy, energy independence and transition to net zero [November 2023]

The UK government has introduced the Offshore Petroleum Licensing Bill to Parliament today (Wednesday 8 November) to boost the UK economy, energy security and transition to net zero.

The legislation will require annual oil and gas licensing rounds subject to stringent new emissions and imports tests.

The domestic oil and gas industry is vital to the UK’s energy security and economy. The introduction of regular licensing for exploration will increase certainty, investor confidence and make the UK more energy independent. This new regime will be subject to 2 key tests being met: that the UK is projected to remain a net importer of both oil and gas; and that the carbon emissions associated with the production of UK gas must be lower than the average of equivalent emissions from imported liquefied natural gas.

Supporting continued production in the UK will also reduce reliance on higher-emission imports – with domestic gas production having around one-quarter of the carbon footprint of imported liquefied natural gas.

The oil and gas industry supports around 200,000 jobs in the UK and adds £16 billion annually to the economy – with fossil fuel producers expected to pay around £50 billion in tax over the next 5 years.

The sector is also playing an important role in helping the UK reach the net zero target by drawing on existing supply chains, expertise and key skills – needed for low-carbon industries such as tidal power, offshore wind, and carbon capture and storage.

Supporting continued domestic production will therefore help deliver on the Prime Minister’s priorities to grow the economy while realising the UK’s net zero target in a pragmatic and proportionate way.

Secretary of State for Energy Security and Net Zero Claire Coutinho said:

The UK has cut its emissions faster than any of its peers. But as the independent Climate Change Committee acknowledges we will need oil and gas even after we reach net zero in 2050.

As energy markets become more unstable it’s just common sense to make the most of our own homegrown advantages and use the oil, gas, wind and hydrogen on our doorstep in the North Sea. Rather than importing dirtier fuels from abroad, we want to give industry the certainty to invest in jobs here and unlock billions of pounds for our own transition to clean energy.

While the government is scaling up domestic clean energy sources such as offshore wind and nuclear, the UK still relies on oil and gas for its energy needs. This will continue to be the case over the coming decades, and even after 2050, as data published by the independent Climate Change Committee shows.

The new Bill will bolster domestic energy supplies by requiring the North Sea Transition Authority (NSTA), the independent regulator for oil and gas, to run annual oil and gas licensing rounds, inviting applications for new production licences in the UK’s offshore waters.