Latest Licensing Round Shows Support For UK Oil And Gas Sector

NSTA receiving 115 bids for new oil and gas exploration licenses shows how offshore energy operators are supporting UK's energy future, OEUK said.


The North Sea Transition Authority’s announcement that it has received 115 bids for new oil and gas exploration licenses shows how UK offshore energy operators are doing their best to support the nation’s energy future, Offshore Energies UK (OEUK) said.

The 33rd offshore oil and gas licensing round closed on January 12, 2023. The 115 bids were spread across 258 blocks and part-blocks and were submitted by 76 companies, according to NSTA data.

This compares with the NSTA’s 32nd licensing round in 2019 which received 104 applications covering 245 blocks and part-blocks. In 2019 a total of 768 blocks and part-blocks were offered, compared with 932 this year. The latest round included four priority areas with known oil and gas reserves, but many others are less certain.

OEUK said in a statement that it was important to note that, although the headline number of applications was positive, many details remained unclear – mainly what the license applications were for. This is because licenses can be issued for exploration, production, or other purposes.

The NSTA will spend the next three months analyzing the applications and announce the awarding of licenses from April when more details will become clear.

OEUK added that oil and gas were essential to the UK’s energy security. Its Economic Report 2022 described how the UK gets about 75 percent of its total energy from these fuels and is already partially reliant on imports. In 2021, for example, the UK had to import just over 60 percent of its gas. Also, about 23 million UK homes – around 85 percent of the total – rely on gas boilers for heat.

The UK also relies on gas for its power supplies with gas-fired power stations producing 42 percent of the nation’s electricity. Similarly, oil powers most of the UK’s transport with 32 million vehicles running on petrol and diesel. Another massive factor is that the offshore industry also supports 200,000 jobs across the UK.

“These license applications could potentially help the nation safeguard its supplies of oil and gas and support the UK during its transition to low-carbon energy. These applications reflect long-term thinking by companies which will invest many millions of pounds in the North Sea to search for new reserves, with no guarantee of success.”

“The aim of issuing these new licenses is simply to support the UK while it builds the infrastructure needed for a low-carbon future. As some of our older reserves are becoming depleted new finds will help us replace lost production of oil and gas and positively contribute to UK’s energy transition and energy security. This is why new licenses are so important.”

“All new developments will have lower emissions than older fields, helping the industry meet its target of halving emissions by 2030 and net zero emissions by 2050. Our industry has already reduced the emissions from UK oil and gas production by 20 percent since 2018. New developments will be subject to checks by the industry regulators to ensure that the production is consistent with our binding commitments on climate change,” Mark Wilson, director of HSE and operations at OEUK, said.

OEUK further stated that 1.5 million more homes rely on heating oil, that the UK consumed 76 bcm of gas in 2021 – equivalent to 1,100 cubic meters per person, and that about 32 bcm came from Norway and 29 bcm were from the UK Continental Shelf. Most of the rest was imported as LNG from a mix of countries.

Oil is the second largest UK energy source at 32% of total energy. UK’s production of both oil and gas fell sharply in 2021 when oil production was 45 million tons and gas production was 29 bcm of gas. These figures represented a 17 percent decline on 2020 and a 20 percent decline on 2019.

At the same time, imports surged in 2021 when the UK’s net imports were the equivalent of 62 percent of its gas and 18 percent of its oil. According to OEUK, imports will keep rising and by 2030, without additional investment, the UK will have to import around 80 percent of its gas and 70 percent of its oil.

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