UK regulator launches probe to check if North Sea operator failed to meet licence obligations

Probe launched to see if North Sea operator failed to meet licence obligations

UK’s regulator North Sea Transition Authority (NSTA) has initiated an investigation to find out whether an oil and gas company has failed to comply with North Sea licence commitments. In addition, a warning has been issued to remind operators that they are required to meet licence obligations to ensure a level playing field for all.

North Sea Transition Authority (NSTA)

While announcing the probe on Friday, the NSTA explained that the investigation would determine if a company, which was awarded a licence in the 28th licensing round in 2014, failed to comply with several obligations, including drilling an exploration well and shooting a 3D seismic survey. 

This investigation will examine the situation surrounding the licence, which had been previously extended, in light of changes to company ownership, and depending on the findings, a fine of up to £1 million (around $1.2 million) could be levied if the company is found to have failed to meet its obligations. 

While oil and gas licences are routinely awarded, conditions are attached, which require the licensee to undertake certain actions within agreed timescales. To assist the companies in meeting licence and regulatory requirements, the NSTA has produced “a wide range of guidance” and ongoing stewardship provides additional support. 

The UK regulator underscores that it is committed to supporting the UK’s drive for energy security and expects companies awarded “valuable North Sea licences to progress exploration and, where appropriate, production as quickly as possible.” The North Sea Transition Authority also warns the industry that it will not hesitate to take action against companies, which have failed to meet their licence obligations.

Commenting on this, Jane de Lozey, NSTA Interim Director of Regulation, remarked: “Ensuring the UK’s energy supply is vital, so it is important that companies meet their licence obligations and progress projects as quickly as practicable. The NSTA is committed to ensuring the growth of the UK’s energy supply and will not hesitate to take action in cases where companies fail to meet their obligations.” 

This warning comes ahead of bids for the 33rd licensing round, which was launched earlier this month to offer 898 blocks and part-blocks in an effort to boost the country’s energy security amid the current energy crisis.

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This licencing round could result in over 100 licences being awarded and the NSTA has identified four priority cluster areas in the Southern North Sea, which have the potential to be developed quickly.