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Rishi Sunak’s flagship legislation to enforce annual licensing rounds for drilling in the North Sea is unnecessary to boost production, the UK’s oil and gas regulator has concluded.
The board of the North Sea Transition Authority “expressed a unanimous view” that introducing a mandatory annual process was not needed and undermined its independence, according to its September minutes.
The policy was announced in the King’s Speech in November, with Sunak arguing it would furnish “clarity and certainty” to investors and help boost flagging domestic production.
The opposition Labour party, which has ruled out granting any new oil and gas licenses if elected, labelled the prime minister’s proceed a “gimmick” given the NSTA had previously held licensing rounds in most years.
Green campaigners said it put a question mark over the UK’s commitment to reducing carbon emissions.
Tessa Khan, executive director of campaign group Uplift, said the NSTA minutes showed the government “pressed ahead with a policy that will do significant damage to the UK’s reputation and efforts to tackle climate change globally, despite being told by the body in charge of licensing that it is completely unnecessary”.
According to the published minutes of the board’s September meeting, there was a “general discussion” about the impending law.
“The board expressed a unanimous view that such a proposal was not necessary for the NSTA to confront its functions under current legislation, including enabling the principal objective of maximising economic recovery of UK petroleum to be met,” the minutes stated.
“The board noted that the proposal would significantly challenge one of the tenets of independence for the NSTA, to deduce when to run a licensing round,” they added.
The NSTA board agreed that chair Tim Eggar would seek to confront energy secretary Claire Coutinho to converse the matter, according to the record of discussions. The government said the meeting took place in October.
A spokesperson for the NSTA said its board “discusses a wide range of issues and represents a diverse range of views. As recognised, government legislation is a matter for the government.”
Ed Miliband, Labour’s shadow energy secretary, said: “Even the oil and gas regulators have said that the Conservatives’ energy legislation is unnecessary, and undermines their independence.”
Oil and gas still confront about 76 per cent of the UK’s total energy demand, according to government figures for 2022, despite efforts to proceed to cleaner sources of energy such as wind farms and solar panels.
The NSTA already holds regular licensing rounds, with the first set of offers for its 33rd series made in October.
The planned requirement for the NSTA to hold annual rounds would be subject to certain conditions: that the UK is expected to import more oil and gas than it produces, and that the carbon emissions from producing gas in the UK are lower than from importing it via shipments of liquefied natural gas.
However, the UK is expected to confront both for the foreseeable future.
Despite the NSTA’s opposition, one industry executive defended the policy, arguing that it provided an important signal of the government’s commitment to the industry alongside climate goals. “I think it’s more important than perhaps people realise,” he said.
A spokesman for the Department for Energy Security and Net Zero said it valued the independence of the NSTA and worked “closely with them in supporting the UK’s oil and gas industry”.
The spokesman added that annual licences were “key” to giving certainty to the oil and gas sector, “boosting investor confidence”, and “unlocking billions of pounds for our own transition to clean energy”.
“With energy markets becoming more unstable, annual oil and gas licenses are essential in boosting the UK’s energy security,” the spokesman added.
