We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
The latest North Sea licensing round for oil and gas was
launched on 1 February 2012 by the Secretary of State for Energy
and Climate Change and closed for applications on 1 May 2012. The
27th Licensing Round has broken all previous records for the number
of applications received by the Government with 224 applications
submitted covering the 418 blocks of the United Kingdom Continental
Shelf. This is the largest number since offshore licensing began in
1964 with 37 more applications than the previous highest total in
2011.
This illustrates an increasing interest in the exploration,
development and production opportunities in North Sea oil and gas.
One reason for the interest may be the Ł3 billion field
allowance introduced by the Government in the Budget Statement in
March, designed to stimulate investment in the North Sea.
Combined with this is the sustained high oil price which makes the
development of smaller, more marginal fields potentially
economic.
More specifically the 2012 application round has seen an
increase in traditional licence applications, by 39 to a total of
192, and frontier licence applications, by 4 to 7. In particular,
the rise in frontier licences could be linked to the Government
introducing, in 2010, an extended nine year exploration term. It
was hoped that the extension would encourage development for new
discoveries made in the West of Shetland region and the increase in
frontier licence applications appears to show a strengthening
interest in tapping the potential of this region.
Despite there being a general rise in licence applications,
there has been a decrease in promote licence applications, by 6 to
a total of 25. One reason for this could be that fewer smaller
companies are seeking investment opportunities in the North Sea due
to the uncertainty in the economy over the next two
years.
So, what will happen in the future? There is an estimate that
over 20 billion boe of oil is left in UK waters so there is still
potential for further development in the oil and gas sector in the
North Sea. Despite declines in recent years, domestic production of
oil and gas from the North Sea continues to account for nearly 50%
of the country's oil and gas consumption and further
development will slow the growing reliance on imports. However,
this will require continued confidence in the fiscal and regulatory
regime. The budget changes this year were positive and it is hoped
that by the time of the next licensing round, the industry will
also be benefitting from greater clarity as to the guarantee of
decommissioning tax relief on which the Government announced its
plans to consult in the 2012 budget. This could encourage
further investment, particularly if the oil price remains
high.
The official announcement of licence applications for the North
Sea can be found here.
This article was written for Law-Now, CMS Cameron
McKenna's free online information service. To register for
Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance
only. The information and opinions expressed in all Law-Now
articles are not necessarily comprehensive and do not purport to
give professional or legal advice. All Law-Now information relates
to circumstances prevailing at the date of its original publication
and may not have been updated to reflect subsequent
developments.
The original publication date for this article was
29/05/2012.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
In our last Alert, we assessed the philosophy of the NEC Engineering and Construction Contract against the FIDIC Conditions of Contract for EPC/Turnkey Projects.
The CRC Energy Efficiency Scheme Order 2013 will soon replace in its entirety the 2010 Order for the operation of the now much criticised CRC Energy Efficiency Scheme.
The CRC Energy Efficiency Scheme Order 2013 will soon replace in its entirety the 2010 Order for the operation of the now much criticised CRC Energy Efficiency Scheme.
Unlike most traded commodity markets, the market for trading carbon credits or emissions allowances in the EU is not one based on its utility, usage or consumption.
The Scotland Act 2012, amongst other things, devolved to the Scottish Parliament powers to determine the tax regime for disposals to landfill.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
