Energy Minister Michael Fallon recently announced the offers of a further 52 Licences to explore for hydrocarbons in the UK sector of the North Sea after thorough consideration of the final applications made in the 27th offshore oil and gas licensing round. Previously, 167 offers had been made covering 330 blocks, bringing the total number of offers of awards made in the 27th licensing round up to 219- beating last years record of 190. Initial applications for the 27th licensing round were to be made by 1st May 2012. A later deadline was allowed for further applications after a screening assessment of the blocks applied for in the round revealed 61 blocks were in, or close to, Special Areas of Conservation (SACs) and Special Protection Areas (SPAs). Such areas required further assessment under the EU Habitats and Birds Directives and the relevant UK implementing Regulations. The assessments concluded that oil and gas activities would not have an adverse effect, meaning further applications could be made.
Of the 52 new offers made, 21 were to smaller independents that are new to the market. This is three times the number of offers made to new small independents in the 26th licensing round. Michael Fallon confirmed that the coalition is working “closely” with the industry to incentivise smaller independent companies to embark on exploration activities in the UKCS. He also noted “The level of interest in this round demonstrates the continuing attractiveness of the UK’s oil and resources and licensing system,”
DECC intends to publish a Notice in the Official Journal of the European
Union inviting applications under the 28th Seaward Licensing Round in January 2014. The Government also intend to launch the 14th onshore licensing round next year, which Fallon expects to have “considerable interest” from developers. To further encourage onshore unconventional oil and gas exploration, Fallon announced that the Government is consulting on a proposed tax regime for shale gas and is introducing a new shale gas ‘pad’ allowance which will reduce the tax on a portion of a company’s production income from 62% to 30% at current rates.
Details of the licences awarded can be found here