Award of oil and gas licences under the 33rd licensing round

May 3, 2024
Brook Dambacher
Clare Rothwell-Hemsted
Anna Carthy

Today the oil and gas regulator, the North Sea Transition Authority, has announced the offer of 31 oil and gas licences under the 33rd oil and gas licensing round. The round was opened in October 2022 under Liz Truss’s government as part of its ‘dash for gas’. 

New licences add virtually nothing to the UK’s energy supply and do nothing to lower energy bills.

What is the 33rd licensing round? 

When the licensing round opened in October 2022 the regulator made over 900 blocks of the North Sea available for company bids. In January 2023 it was announced that bids were received from 76 companies covering 258 of these blocks. 

The regulator has been awarding licences in tranches. The first tranche was awarded in October 2023, with 27 new licences offered. The second was in January 2024, with 24 new licences offered and the promise of more to follow in the coming months. The third tranche of licences issued today include those which were subject to further environmental assessments under the Habitats Regulations. The regulator has also mentioned today that “a few more licences may be offered at a later date”, suggesting a fourth announcement from this one licensing round may be on the cards. 

Uplift and Greenpeace are currently seeking permission to appeal to the Court of Appeal in a legal challenge to the 33rd oil and gas licensing round and the decisions that underpin it. 

Will these licences lead to new oil and gas? 

These licences are likely to result in very little oil and gas reaching the UK. In the past decade, despite 100s of licences being issued across five licensing rounds, new licences have delivered just 16 days’ worth of gas. In the same period, the number of jobs supported by the oil and gas sector has halved

The vast majority of licences issued in any round are subsequently relinquished. Of the blocks issued in the 29th, 30th and 31st licensing rounds, 93%, 80% and 87% have been relinquished respectively. So far over half (56%) of the blocks awarded in the 32nd licensing round have also been relinquished, with more expected to follow. 

It will also take many years before most of the licences that do proceed to start producing any oil or gas. Despite the regulator’s view that these licences present opportunities to move more quickly, the sorts of timelines they point to are rare at best and tend to be smaller fields. Of the 29 new licences announced today, 23 of the awards are for data analysis (meaning they have many stages to pass through before drilling can begin), two are for confirmed exploration wells only, and four are for early stage development planning.

The regulator has published estimates of oil and gas that may be “added” from this licensing round. It is unclear how much of this refers to the UK reserves as opposed to expected production. These figures are highly speculative and will be significantly larger than the resulting production as they include reserves likely to be uncommercial to extract.

Will these licences impact the marine environment? 

21 of the licences issued today, and over a third of the blocks on offer in the 33rd licensing round overlap with Marine Protected Areas, covering a wide range of protected features and Vulnerable Marine Ecosystems. An assessment of the impacts on the marine environment is required where oil and gas licences are likely to have a significant effect on certain types of Marine Protected Areas, known as Special Areas of Conservation (SAC) or Special Protection Areas (SPA). This assessment - called an Appropriate Assessment - considers whether licensing will have a negative effect and if so, whether there is an alternative solution. The licences announced today are those which have been subject to Appropriate Assessment due to their potential impacts on Marine Protected Areas.

Will these licences impact offshore wind developments? 

Some of the licences just issued overlap with offshore wind leases, and today’s announcement includes a new “mechanism” designed to resolve issues caused by any overlap.  How this mechanism functions will be important as there is a risk that oil and gas licences will hinder offshore wind developments. Reporting of the announcement has also speculated that neighbouring wind energy might be used to power these oil and gas fields, in place of diesel, however, there is no suggestion in the regulator’s announcement that this will be the case.