UK prime minister Rishi Sunak today committed to granting "hundreds of new oil and gas licences" as part of a drive that his government said would make the country more energy independent. Separately, the North Sea Transition Authority (NSTA) released research that it claims shows domestic gas production has roughly one-quarter of the carbon intensity of the country's LNG imports.
The NSTA — the UK's oil and gas industry regulator — is currently running the 33rd offshore oil and gas licensing round that the government confirmed today would see 100 licences awarded this autumn. The round attracted 115 bids from 76 companies, for 258 blocks and part-blocks of the 931 offered, the regulator reported in January.
Future licences "will be critical" to providing energy security options, including "unlocking carbon capture usage and storage, and hydrogen opportunities," the government said. Noting that the UK's Climate Change Committee projects that around a quarter of the UK's energy demand will still be met by oil and gas in 2050, the government said it needed to take steps "to slow the rapid decline in domestic production of oil and gas", reducing the country's "reliance on hostile states".
While the UK government stated that future licensing rounds will continue to be subject to a climate compatibility test, it hinted at the adoption of "a more flexible application process", with licences being offered near already-licensed areas. This would unlock "vital reserves which can be brought online fast due to existing infrastructure and previous relevant assessments", it added.
Also today, the government launched a call for evidence that will seek views "on the evolving context for taxes for the oil and gas sector", with the aim of helping it design a long-term fiscal regime that "delivers predictability and certainty" to support investment and protect jobs and the country's energy security. The controversial Energy Profits Levy on oil and gas profits, introduced in summer 2022 in the wake of the high energy prices caused by Russia's war in Ukraine and later increased from 25pc to 35pc, already had a price-floor mechanism applied to it in June. Although this mechanism was welcomed by the industry at the time, the UK's oil and gas sector said further steps would need to be taken to restore confidence.
Commenting on the announcement today, Sunak said: "Even when we've reached net zero in 2050, a quarter of our energy needs will come from oil and gas. But there are those who would rather that it come from hostile states than from the supplies we have here at home."
But environmental group Friends of the Earth criticised Sunak's planned drive to award hundreds of new North Sea oil and gas licences. "Rishi Sunak's energy security drive should focus on energy efficiency and the UK's vast home-grown renewable resources, rather than championing more costly and dirty fossil fuels," its head of policy Mike Childs said.
In its analysis of the carbon intensity of the UK's gas supply published today, the NSTA noted that the average intensity of LNG imports is 79kg CO2/bl of oil equivalent compared with UK-produced gas having a carbon intensity of just 21kg CO2/boe. The lowest carbon intensity of all LNG imported into the UK was Norwegian at 33kg CO2/boe, while Peruvian LNG was the highest at 90kg CO2/boe.
