Rishi Sunak to unveil annual oil and gas licensing round

New legislation that allows fresh oil and gas drilling in the North Sea every year is set to be introduced in the King's Speech on Tuesday.

The government insists that it will protect the 200,000 workers in the North Sea and provide a boost to the UK's energy security by reducing its reliability on volatile imports.

The new law, which makes it a legal obligation for the North Sea Transition Authority (NSTA) to open a new round of licensing each year, comes in the wake of prices soaring due to Russia's invasion of Ukraine, and amid fears that prices may rise again due to ongoing conflict in the Middle East.

The move widens the divide between the Conservatives and Labour on environmental policies ahead of the upcoming general election.

Sir Keir Starmer has said no to any new oil and gas exploration, though his party would have to bring forward legislation themselves to overturn the latest changes.

Rishi Sunak said: "Domestic energy will play a crucial role in the transition to net zero, supporting jobs and economic growth, while also protecting us from the volatility of international markets and diversifying our energy sources.

"The clarity and certainty that our new legislation will provide will help get the country on the right path for the future."

Welcomed by industry

The announcement is being welcomed by industry, with the hope that new licenses will halt the decline in North Sea production.

Ryan Crighton, Policy Director at Aberdeen & Grampian Chamber of Commerce, said: "This is a welcome step from the UK Government, as it is an irrefutable fact that we will still need oil and gas in our energy mix all the way out to 2050 and beyond, albeit in decreasing amounts.

"So, part of the net zero and energy transition debate needs to be about where we get that oil and gas from. For the UK, that needs to be the North Sea.

"Where the alternative is importing oil or gas at a greater carbon cost, then we must favour domestic production.

"We believe that this line is pragmatic, as it commits us to sourcing the fossil fuels we need in a manner which minimises emissions and secures tens of thousands of Scottish jobs."

David Whitehouse, the chief executive of Offshore Energies UK, which represents the industry, said: "We should prioritise our production to support our energy security, our economy, our jobs, and our world-class supply chain that will be the foundation of our low carbon future."

The new plans apply to the area of the North Sea over which the UK has jurisdiction and will be subject to net zero tests that must be met before a new round is launched each year.

One of the tests is that the UK must be projected to import more energy from abroad than it produces at home.

UK gas must also produce fewer carbon emissions than from imported liquefied natural gas.

Government 'bankrupt' of ideas

The move has been criticised by Labour and a number of environmentalist groups.

"This proposed bill is a stunt which does nothing to lower bills or deliver energy security," claimed Shadow Climate Secretary Ed Miliband.

"We already have regular North Sea oil and gas licensing in Britain, and it is precisely our dependence on fossil fuels that has led to the worst cost of living crisis in generations.

"All this stunt of a bill tells you is that this is a government that is bankrupt of any ideas, and Rishi Sunak is continuing with his retreat from net zero as part of a desperate political strategy.

Energy secretary Claire Coutinho said: "As the independent climate change committee acknowledges, we will need oil and gas even as we reach net zero.

"It’s common sense to make the most of homegrown advantages and use oil, gas, wind and hydrogen on our doorstep in the North Sea."

Ms Coutinho also wrote in the Telegraph: "The Labour Party’s short-term approach of turning off the taps without a plan to replace them would only deepen our dependency on high-emission imports and jeopardise our ability to create growth here in the UK."

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