The UK government’s Budget has revealed a shift in its North Sea oil and gas licensing policy, permitting some oil and gas production on or near existing fields and infrastructure.

This decision on North Sea oil and gas licensing comes as the government maintains its windfall tax regime on the sector, disappointing producers hoping for early relief.

The Department for Energy Security and Net Zero (DESNZ) stated on Wednesday that new oil and gas licences can now be issued if they do not require new exploration and are connected to current fields or infrastructure.

This policy change marks a partial easing of the previous stance, especially in light of the Labour government’s campaign pledge to halt new oil and gas licensing in pursuit of net zero targets.

Despite this adjustment, the government confirmed in its latest budget that there will be no changes to the existing tax framework for oil and gas producers. The current regime includes a 38% windfall levy when prices exceed government-set thresholds, resulting in a total tax burden of up to 78% for operators in such circumstances. This Energy Profits Levy (EPL) is scheduled to expire in March 2030.

Under the government’s new North Sea Future Plan, Transitional Energy Certificates will be introduced to enable companies to continue to drill for oil and gas at existing fields. The plan emphasises that this drilling should not involve new exploration.

Additionally, the government has committed £20m to establish a North Sea Jobs Service to support workers and local communities.

For more information visit EICDataStream https://eicdatastream.the-eic.com/search/project/15278/Blythe-Gas-Field-Southern-North-Sea-Gas-Hub-

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