What is an oil and gas licence?

Around 100 caller lipid and state licences for the North Sea are up for grabs, with the archetypal of the caller permits acceptable to beryllium awarded successful the autumn.

Prime Minister Rishi Sunak says the licences are portion of the UK's plans to bolster its vigor information and marque the UK little reliant connected different countries for supplies.

But critics reason that extracting lipid and state is not the close attack for the environment.

In precise elemental terms, an lipid and state licence is licence for a institution to research and perchance extract lipid and state from a defined country of onshore either onshore oregon offshore.

There are 2 types of licence:

In the existent round, each of the 100 disposable are for accumulation licences.

That mightiness dependable similar tons of lipid and state drilling happening. But the North Sea Transition Authority (NSTA) which is liable for issuing the licences, says that the bulk of accumulation permits issued "do not extremity up with accumulation really taking place".

Oil and state expert Nathan Piper says to beryllium awarded a licence, companies bid against each other.

But this is not astir companies throwing currency around. Companies who are bidding person to perpetrate to carrying retired a definite magnitude of enactment connected a tract for a definite magnitude of time, which tin typically beryllium betwixt 2 oregon 3 years.

During this period, firms volition research the country for lipid oregon state and transportation retired technological tests, earlier deciding whether it is worthy investing millions of pounds. They volition past use for a caller licence to drill and perchance make lipid wells to nutrient fuel.

First, a little spot of history. After being discovered successful the 1960s, lipid and state exploration successful the North Sea kicked disconnected successful the 1970s, astir the clip of the Iranian lipid crisis.

There person been 33 licensing rounds since, with the latest opening successful October 2022.

There is nary acceptable clip for erstwhile licensing rounds hap - it tin beryllium connected assorted factors specified arsenic existent permits ending oregon caller technological information.

In the 32nd licencing circular successful 2020, 113 permits were awarded portion truthful acold successful the latest round, 115 applications person been made. The NSTA is present considering those bids and volition manus retired licences to the winners successful the autumn.

North Sea lipid and state accumulation has been declining steadily since it peaked successful the precocious 1990s.

The authorities is present offering 100 oregon truthful caller licences successful a bid to curb that trend, arguing it volition "secure" the UK's home vigor supply.

If caller wells are opened, home accumulation could beryllium boosted, but it is simply a "risky" business, according to Mr Piper, particularly fixed the North Sea has already been extensively explored.

"The absorbing happening is however galore exploration wells volition beryllium committed connected the backmost of this exploration round," says Mr Piper.

In caller years, lipid and state firms person been taxed heavy connected their UK profits and determination has been concerns successful the manufacture that this mightiness enactment disconnected companies from investing successful areas specified arsenic the exploration of caller lipid and state wells.

The existent windfall taxation - utilized by the authorities to people firms benefiting from precocious vigor prices fuelled by the warfare successful Ukraine - is 75% compared to 40% previously.

The authorities announced past period that the higher taxation could beryllium scrapped if vigor prices autumn backmost to mean levels for a sustained period.

But nary last determination has been made yet.

Mr Sunak has said "even erstwhile we've reached nett zero successful 2050, a 4th of our vigor needs volition travel from lipid and gas".

He argues helium would alternatively person this travel from "supplies we person present astatine home", alternatively than "hostile states".

But biology campaigners person called the determination "wrongheaded".

Oxfam's clime alteration argumentation advisor Lyndsay Walsh says extracting much fossil fuels from the North Sea sends a "wrecking ball" done the UK's clime commitments.

Friends of the Earth says Rishi Sunak's determination is "pouring much substance connected the flames" of the unprecedented wildfires and heatwaves crossed the globe.