- Offshore Petroleum Licensing Bill to safeguard homegrown
energy supply
- Legislation will require annual oil and gas licensing rounds
to support UK production
- Bill will provide certainty and investor confidence for oil
and gas industry, supporting 200,000 jobs across the UK and
adding £16 billion to the economy each year
The UK Government has introduced the Offshore Petroleum Licensing
Bill to Parliament today (Wednesday 8 November) to boost the UK
economy, energy security and transition to net zero.
The legislation will require annual oil and gas licensing rounds
subject to stringent new emissions and imports tests.
The domestic oil and gas industry is vital to the UK’s energy
security and economy. The introduction of regular licensing for
exploration will increase certainty, investor confidence and make
the UK more energy independent. This new regime will be subject
to two key tests being met: that the UK is projected to remain a
net importer of both oil and gas; and that the carbon emissions
associated with the production of UK gas must be lower than the
average of equivalent emissions from imported liquefied natural
gas.
Supporting continued production in the UK will also reduce
reliance on higher-emission imports – with domestic gas
production having around one-quarter of the carbon footprint of
imported liquified natural gas.
The oil and gas industry supports around 200,000 jobs in the UK
and adds £16 billion annually to the economy – with fossil fuel
producers expected to pay around £50 billion in tax over the next
five years.
The sector is also playing an important role in helping the UK
reach the net zero target by drawing on existing supply chains,
expertise and key skills – needed for low-carbon industries such
as tidal power, offshore wind, and carbon capture and storage.
Supporting continued domestic production will therefore help
deliver on the Prime Minister’s priorities to grow the economy
while realising the UK’s Net Zero target in a pragmatic and
proportionate way.
Secretary of State for Energy Security and Net Zero said:
"The UK has cut its emissions faster than any of its peers. But
as the independent Climate Change Committee acknowledges we will
need oil and gas even after we reach net zero in 2050.
"As energy markets become more unstable it’s just common sense to
make the most of our own homegrown advantages and use the oil,
gas, wind and hydrogen on our doorstep in the North Sea. Rather
than importing dirtier fuels from abroad, we want to give
industry the certainty to invest in jobs here and unlock billions
of pounds for our own transition to clean energy."
While the Government is scaling up domestic clean energy sources
such as offshore wind and nuclear, the UK still relies on oil and
gas for its energy needs. This will continue to be the case over
the coming decades, and even after 2050, as data published by the
independent Climate Change Committee shows.
The new Bill will bolster domestic energy supplies by requiring
the North Sea Transition Authority (NSTA), the independent
regulator for oil and gas, to run annual oil and gas licensing
rounds, inviting applications for new production licences in the
UK’s offshore waters.
Offshore Petroleum Licensing
Bill
Explanatory Notes
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