Offshore Petroleum Licensing Bill 2023-24: Second Reading
The Offshore Petroleum Licensing Bill 2023-24 was introduced in the House of Commons on 8 November 2023. The Bill passed its Third Reading in the Commons unamended on 20 February 2024. It had its First Reading in the House of Lords on 21 February 2024 and the date of the Second Reading is yet to be scheduled.
The Offshore Petroleum Licensing Bill 2023-24 was introduced to the House of Commons on Wednesday 8 November 2023. It would place the regulator, the North Sea Transition Authority (NSTA), under a new duty to run annual applications for new offshore oil and gas licences.
Currently licensing rounds are run when NSTA decides it is necessary. These have been held on a broadly annual basis up to the 32nd licensing round that opened in 2019. The latest (33rd) licensing round was launched in October 2022 following the introduction of a Climate Compatibility Checkpoint in September 2022. In October 2023, 27 new licences were awarded as part of this licensing round.
The government has stated that the Bill aims to achieve the following:
- Make the UK more energy independent and safeguard domestic energy supplies by increasing investor and industry confidence.
- Enhance the UK’s energy security and reduce dependence on higher emission imports from overseas.
- Protect the domestic oil and gas industry that supports more than 200,000 jobs.
- Realise the UK’s net zero target in a pragmatic, proportionate and realistic way; without unduly burdening families and businesses.[1]
The obligation on NSTA to run an annual application round would only apply if two tests are met: a carbon intensity test, which would be met if the carbon intensity of domestic gas is lower than imported Liquefied Natural Gas (LNG); and a net importer test, which would be met if the UK is projected to be a net importer of both oil and gas over a 15-year assessment period.[2]
The provisions will apply to all parts of the UK. There are no direct financial implications arising from the bill. The government considers that the bill is compatible with the European Convention on Human Rights (ECHR) and the Environment Act 2021.
Both Labour and the SNP have criticised the proposals in the bill on the grounds that it will not lower consumers bills, improve security of supply or be compatible with the UK’s net zero ambitions. Labour have also announced that they would honour any existing licences but would not issue any new oil or gas licences. The bill has been supported by the oil and gas industries but opposed by NGOs and academic groups in the UK.
The Second Reading in the commons took place on Monday 22 January 2024. The committee stage was taken in a Committee of the whole House on 20 February 2024. There were no amendments and it passed its Third Reading in the Commons on the same day, 20 February 2024.
For further details of the proceedings of the Commons Second Reading, Committee of the whole House and Third Reading, please see the House of Lords Briefing Offshore Petroleum Licensing Bill: HL Bill 49 of 2023–24 (29 February 2024).
The Bill had its First Reading in the House of Lords on 21 February 2024 and the date of the Second Reading is yet to be scheduled.
[1] HM Government, The King's Speech 2023: background briefing notes, 7 November 2023, pp 15-17
[2] Offshore Petroleum Licensing Bill 2023-24, HC Bill 9 2023-24, Explanatory Notes (PDF)