Oil & Gas News

Sunak to Announce New System To Award Oil and Gas Licenses

Oil, Gas, Sunak, UK

By: The Guardian – Rishi Sunak will this week announce legislation for a new annual system for awarding oil and gas licences as part of a highly political king’s speech which the Conservatives hope will open up clear dividing lines with Labour.

The government said the plans would protect thousands of jobs and bolster energy security, reducing the UK’s reliance on imports from hostile foreign regimes such as Russia, even though the UK has committed to move away from fossil fuels.

The prime minister said the move would help Britain reach its climate commitment of net zero carbon emissions by 2050 in a “proportionate and realistic” way, with the new licenses contingent on specific tests he said would support the transition to net zero.

Sunak has already watered down the government’s climate targets, pushing back the deadline for selling new petrol and diesel cars and the phasing out of gas boilers, prompting furious condemnation from the automobile and energy industries.

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The proposed new legislation could set a political trap for Labour, which has said it would block new domestic exploration licenses if it wins power, proposing instead to invest heavily in renewable sources such as wind and nuclear power.

Ed Miliband, the shadow climate secretary, said the plan to mandate annual oil and gas licensing was unnecessary, suggesting the government was more focused on creating dividing lines over the green agenda ahead of the next election.

“This proposed bill is a stunt that does nothing to lower bills or deliver energy security. We already have regular North Sea oil and gas licensing in Britain, and it is precisely our dependence on fossil fuels that has led to the worst cost of living crisis in generations.

“All this stunt of a bill tells you is that this is a government that is bankrupt of any ideas, and Rishi Sunak is continuing with his retreat from net zero as part of a desperate political strategy.

“No wonder we see consternation from so many leading businesses, and even figures in his own party, who know he is undermining our energy security, damaging our economy, and risking jobs.”

Mineral RightsUnder the plans, the North Sea Transition Authority (NSTA) will invite applications for new production licenses on an annual basis, which the government said would provide certainty and confidence to investors and industry.

Each yearly licensing round would only take place if key tests are met that support the transition to net zero. The first test is that the UK must be projected to import more oil and gas from other countries than it produces at home.

The second is that the carbon emissions associated with the production of UK gas are lower than the equivalent emissions from imported liquefied natural gas. If both these tests are met, the NSTA will be required to invite applications for new licenses.

“Domestic oil and gas will play a crucial role in the transition to net zero, supporting jobs and economic growth, while also protecting us from the volatility of international markets and diversifying our energy sources,” Sunak said.

“The clarity and certainty that our new legislation will provide will help get the country on the right path for the future.”

Government sources suggested there were unlikely to be any major surprises in the king’s speech with many of the measures already in the public domain such as a phased smoking ban and a new regulator for English football, while several other bills would be carried over.

It is also expected to include criminal justice measures such as restricting the use of tents by homeless people on the streets of Britain – with growing numbers of rough sleepers and what the government considers a rise in antisocial behavior.

Among the previously announced measures are plans to give judges in England and Wales more powers to force criminals to attend their sentencing hearings, an expansion of the circumstances in which judges have to hand down a whole-life order for murder, and mandatory jail terms for certain other offenses, including shoplifting.

Tory insiders said that No 10 wanted to concentrate on winning back voters who had turned against the party since the last election, with party strategists believing the king’s speech, the autumn statement, and a cabinet reshuffle create an opportunity for a reset.

“They want to try to do stuff that is going to appeal to voters that backed the party in 2019 but are now in the ‘don’t know’ category,” one said. “They think they’ve got a chance to get some of those people back if they concentrate on ‘red meat’ policies.”

The policy agenda set out on Tuesday would be aimed at “people who want to see a common-sense approach”, one government source said, in a nod to wedge issues such as climate change, migration, and gender identity which the Tories plan to weaponize ahead of the election.

Labour will try to set the narrative following the king’s speech when the opposition can pick some issues for debate, with housing, the NHS, schools, and crime all expected to feature. “They’re deliberately doing a divisive king’s speech that’s all about the politics and not about legislation at all,” one senior Labour figure said.

MPs will also get the chance on Thursday to debate Labour’s plans for an energy independence act which would set up a publicly owned energy generation company and establish a national wealth fund to invest in the renewables industry in the UK.

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