The U.K.’s Labour party government is facing challenges in fulfilling its pledge to end all new North Sea oil and gas exploration licenses. The most recent round of licensing is still ongoing, involving costly bids by numerous companies. Cancelling these pending bids would likely result in legal action by the companies involved, potentially costing taxpayers millions of dollars.
The North Sea Transition Authority launched the latest round of licensing to carry out exploration work across 257 blocks in the U.K. sector of the North Sea, Irish Sea, and East Atlantic. Public records show that 76 oil and gas companies submitted 115 bids, with 35 drilling areas still awaiting a decision when the general election was called.
Bidding for oil and gas exploration is a complex and expensive process, often involving millions of dollars in fees for legal, administrative, surveying, and submission costs. Companies may also bid as a consortium, further increasing financial exposure. Any sudden move by the government to cancel pending bids could lead to legal disputes and further complications.
Reports surfaced alleging that Energy Secretary Ed Miliband had issued an executive order for an immediate ban on new oil and gas drilling in the U.K. continental shelf. The Department of Energy Security and Net Zero denied these claims, stating that existing licenses would not be revoked, and new licenses would not be issued. The NSTA confirmed that no such proposal had been made.
The Labour party’s proposed ban on new oil and gas drilling in the North Sea is unpopular with industry groups and labor unions. Secretary Miliband may allow the last remaining bids to proceed before announcing the ban in line with the party’s manifesto commitments. Making a sudden and misjudged political move would risk costly legal action and create controversy for the new government.
