UK government offers North Sea oil and gas licences despite climate concerns

UK regulators on Friday began the 33rd round of offshore licences to enable companies to explore for oil and gas, prioritising four areas in the southern part of the North Sea, where gas has already been discovered.

The process, which will run until the end of June, is the first since 2019-2020, when the government promised to design a “climate compatibility check” to ensure that the award of new permits was “consistent with the UK’s wider climate objectives”.

At the time, the check was criticised because it is only advisory and does not restrict authorities from granting a licence, as they have now announced. 

In a policy U-turn, the NSTA has confirmed nearly 900 locations are being offered for exploration, with as many as 100 licences set to be awarded in the most recent round, with the goal of bolstering Britain’s energy independence following Russia’s invasion of Ukraine. 

Business and Energy Secretary Jacob Rees-Mogg has defended the controversial decision, stating that the licences would boost “both [the UK’s] energy security and our economy”.

“Putin’s illegal invasion of Ukraine means it is now more important than ever that we make the most of sovereign energy resources, strengthening our energy security now and into the future,” he said. 

“Ensuring our energy independence means exploiting the full potential of our North Sea assets to boost domestic production – recognising that producing gas in the UK has a lower carbon footprint than importing from abroad.”

Rees-Mogg has insisted that the new exploration is compatible with the government’s legal commitment to reach net-zero greenhouse gas emissions by 2050, stating that the domestic fuel will replace imported fuel and so have a lower carbon footprint in production and transportation.

Mike Tholen, acting chief executive for industry body Offshore Energies UK, said: “The UK gets 75 per cent of its total energy from gas and oil so producing our own reduces our vulnerability to global shortages of the kind caused by the Ukraine conflict.”

He added: “There is no conflict between issuing new licences and reaching carbon neutrality.”

Companies are being urged to apply for licences covering areas to the west of Shetland, in the northern North Sea, the central North Sea, the southern North Sea and east Irish Sea.

However, climate scientists and expert organisations have criticised the government’s move, claiming the round will do little to lower bills or improve security in the near term, while also counteracting efforts to curb global warming.

The Intergovernmental Panel on Climate Change, the global body for climate science, and the International Energy Agency (IEA) have supported moves away from fossil fuels, considered as the only possible way forward in light of the Paris Agreements, which aim to keep global temperature rises under 1.5°C.

Earlier this year, the government’s own climate change advisers also stated that the best way to ease consumers’ pain from high energy prices was to stop using fossil fuels rather than drill for more of them. 

As a result, environmental group Greenpeace has claimed the new licensing round would not lower energy bills for struggling families, nor provide energy security in the medium term, and would only undermine the country’s efforts to reach net-zero by 2050. 

“New licences – and more importantly more fossil fuels – solve neither of those problems but will make the climate crisis even worse,” said Philip Evans, energy transition campaigner for Greenpeace UK. “They are possibly unlawful and we will be carefully examining opportunities to take action.”

When asked about the potential for legal challenges last week, Andy Samuel, the NSTA’s outgoing chief executive, said: “We make sure that everything we do within the NSTA is done to a very high standard.”

Samuel said last week that given the “unusual” situation facing western Europe after Russia in August cut off gas exports via the Nord Stream 1 pipeline, it was right to do “anything we can do to bolster domestic production”, and stressed that the security of supply should “not be in conflict with net zero” ahead of a new round of licensing in the North Sea.

Samuel also admitted new licensing rounds would not change Britain’s overall dependence on imports.

On average, any oil and gas discovery could take five years to reach production, according to the NSTA, although it hopes the fast-tracked licences could yield results in as little as 12 to 18 months from the time of their award.

Prime Minister Liz Truss’ government has been taking action to attempt to ease the pressure on households caused by rising energy bills, amid warnings the UK could face blackouts this winter. As part of this effort, she presented a package that includes freezing energy bills at £2,500 a year average. Moreover, in September, Rees-Mogg announced the end of the moratorium on fracking, but faced an immediate political backlash from all parties, including prominent Tory MPs.

Last year, oil and gas accounted for only 39 per cent of the UK’s overall supply mix, according to a government assessment, with pipeline imports from Norway, the Netherlands and Belgium accounting for 44 per cent of the mix. 

Speaking to BBC Breakfast, Nicola Sturgeon said there has to be a transition away from oil and gas and accused the UK government of “haphazard planning” over energy.

Earlier this month, the IEA published a report stating that Europe faces “unprecedented risks” to its natural gas supplies this winter, with the market tightness expected to continue well into 2023. 

Before Russia’s invasion of Ukraine, the former had supplied 27 per cent of the EU’s imported oil and 40 per cent of its gas, with the bloc paying around €400bn (£341bn) a year in return, the equivalent to around 2.4 million barrels per day.