Britain cuts cost of new oil and gas licences amid exploration drought

Despite being an old basin, Britain’s North Sea is estimated to have billions of barrels left for extraction. EPA

Britain has cut rental fees by up to 90 per cent in its latest tender for oil and gas licences in the North Sea launched on Wednesday. It is trying attract companies to find new fields in the mature basin.

Companies will now be able to apply for cheaper and more flexible licences to gain access to 1,261 blocks by October 26, followed by licence awards to be issued by the Oil and Gas Authority (OGA) at a later date.

The hunt for new oil and gasfields in the British part of the North Sea is expected to fall to the lowest in 45 years this year as energy companies have scaled back exploration budgets because of weak oil prices.

Despite being an old basin, Britain’s North Sea is estimated to have billions of barrels left for extraction, worth about £200 billion (Dh964bn) to British government coffers.

The latest licensing round, the 29th, offers access to new areas in the Rockall Trough, the mid-North Sea High and East Shetland, which were subject to a government-funded seismic testing campaign earlier this year.

“We recognise that market conditions are very difficult, but nevertheless we have a shared goal of making the basin as attractive as possible for exploration,” said Andy Samuel, the chief executive of the OGA.

The authority’s contract changes will reduce licence rental fees in some cases by up to 90 per cent per square kilometre and allow explorers more flexibility in terms of when they can carry out certain work programmes.

Companies that obtained licences in last year’s bumper 28th licensing round, Britain’s biggest ever, included Shell and Eni.

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