Only a third of North Sea blocks get bids from oil and gas drillers

LESS than a third of new North Sea prospects have attracted bids from oil and gas drillers, amid warnings from the industry about the impact of the windfall tax.

Licensing officials have received bids covering 258 blocks and part-blocks, out of 931 offered in the latest North Sea licensing round – the first since 2019.

A spokesman for the North Sea Transition Authority (NSTA) said this was a similar level to 2019, when they had bids for 245 blocks out of 768 offered, and was expected for a mature basin such as the North Sea.

However, it comes at an uncertain time for the industry, with the Government using higher taxes to try and claw back record earnings from high oil and gas prices, and amid efforts to shift away from fossil fuels.

Tony Hayward, the former boss of BP, warned in The Daily Telegraph yesterday that the fossil fuel industry had been “demonised” and investment was too low to meet demand for the product. Oil and gas still supplies about 75pc of the UK’S energy.

The NSTA launched the 33rd licensing round in October amid efforts to boost oil and gas production amid growing concern over supplies in the wake of Russia’s invasion of Ukraine.

It has singled out priority areas where it believes production could start within 18 months, compared with the usual five-year timeframe from discovery to production. The licensing round is for exploration licences.

Seventy-six companies applied for the blocks on offer, although industry sources cautioned this was a “low risk, low cost” move which did not necessarily mean that the areas would ultimately be developed.

The NSTA said the bids will now be “carefully studied, with a view to awarding licences quickly and supporting licensees to go into production as soon as appropriate”.

Drillers are now subject to tougher climate checks on new projects, as regulators try to bring down the industry’s carbon footprint before the product is used by consumers.

However, Greenpeace said if the licences were issued it would be a “huge backwards step both economically and environmentally for the UK, and perhaps the world”.