In the most recent round of exploration licenses, Korean, Malaysian and Norwegian companies were granted permission to drill in the North Sea for oil and natural gas.
The North Sea Transition Authority (NSTA), which is responsible for the licensing of drilling in the UK’s North Sea, said that 74 areas of the North Sea and Atlantic waters will be open to new drilling. Most of these new licences will go to foreign operators.
The NSTA granted 24 licenses, covering several blocks of seabed. Shell and BP won a license each, but the majority went to foreign firms, including Equinor the Norwegian state oil firm, Malaysian Ping Petroleum and Dana Petroleum a subsidiary of Korea National Oil Corporation.
Four of the seventeen licences were awarded to Neo Energy (Zex), a Norwegian private investor controlled by HitecVision.
Profits made by foreign investors will be distributed to them. Taxes collected from those profits and any jobs created directly or through the supply chain will be of the greatest benefit to the UK.
The announcement comes after Rishi Sunak pledged to increase exploration for oil in UK waters in order to “support nation’s energy safety”.
Graham Stuart, Minister for Energy Security and Net Zero, said that: “We’ll continue to need oil in the future, so it makes sense to maximize our resources. Domestically produced gas is almost four times cleaner compared to importing Liquefied Natural Gas.”
According to the latest data from the government, 75pc or UK energy is still derived from oil and gas. The UK consumes 60m tonnes of crude oil and 75bn cubic meters of gas each year. The UK relies on oil and gas to heat 25 million homes and 32 million vehicles. It also gets 38% of its electricity through gas-fired power plants.
The NSTA spokesperson stated: “These licenses have the potential of making a significant contribution in the UK to energy production and economic benefit.”
The move was met with immediate opposition from environmental groups. Tessa Khan of Uplift said that the government was selling us a dream. These new licenses will have a negligible impact on the UK’s energy supply and won’t lower energy costs. It is a fact that the UK has used up most of its natural gas. “Most of the oil in the North Sea that’s left is what we export.”
It is unlikely that the licenses issued yesterday will produce large quantities of gas. The licences issued yesterday are all in waters near northern Scotland, the central and north North Sea, and the Atlantic west Shetland.
The reserves in these areas consist mainly of heavy crude oil with little gas. As the UK’s capacity to refine such oil is limited, any discoveries made will be used mostly for exports.
The NSTA has said that it plans to release a second tranche of licenses in the latter part of this year, for areas along the eastern Irish Sea and southern North Sea. These are known to have a higher gas content.
A Labour spokesperson said last night that these new licenses would be the final ever issued if the party wins the upcoming general elections.
They said: “This Government’s disastrous move away from net zero sent a terrible message to investors. It has damaged prospects for a clean energy transformation that could create hundreds and thousands of jobs in Britain.
“Labour will guarantee a balanced change in the North Sea.”