Investigation looking into whether oil and gas firm failed to meet North Sea license obligations

Investigation looking into whether oil & gas firm failed to meet North Sea license obligations

UK regulator North Sea Transition Authority (NSTA) has launched an investigation into whether an oil and gas company possibly failed to meet license obligations, including seismic survey and work program commitments, designed to stimulate activity.

Illustration; Source: North Sea Transition Authority (NSTA)

The investigation will look into whether the company being investigated was obliged under the terms of a license it was awarded in a prior round to shoot a seismic survey which would help inform its decision on whether to drill an exploration well.

In addition, NSTA aims to investigate if the licensee did not provide a satisfactory alternative work program to ensure progress on the acreage continued.

This will determine whether a sanction should be imposed on the company. Such a sanction could include a financial penalty of up to £1 million.

“The NSTA works closely with industry to drive forward exploration and production activities to help the UK meet as much energy demand as possible from its domestic oil and gas reserves,” said Jacob Blatch, NSTA Interim Head of Disputes and Sanctions.

“However, as opening this investigation demonstrates, we will scrutinise incidents where licensees potentially sit on licences and make no real progress on fulfilling obligations.”

The NSTA emphasized that it expects companies with valuable licenses to progress exploration and production as quickly as possible, in line with their license commitments and the NSTA strategy.

This is the second investigation opened recently into a company suspected of failing to meet its license commitments, such as shooting 3D seismic, within agreed timescales. 

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The announcement also comes after the ongoing 33rd Licensing Round attracted 115 bids from 76 companies.

The licensing process opened on 7 October 2022 and offered acreage across the North Sea – the West of Shetland, Northern North Sea, Central North Sea, Southern North Sea, and East Irish Sea – including four priority areas, which have known hydrocarbons.