1. Does your jurisdiction have an established upstream oil and gas industry? What are the current production levels and what are the oil and gas reserve levels?
The UK has a well-established upstream oil and gas industry, with commercial production from the UK Continental Shelf (UKCS) since the 1960s. By the end of 2024, all-time cumulative production of oil and gas from the UKCS reached 47.7 billion barrels of oil equivalent (boe).
Although UK production has been in gradual decline since its peak in 1999 (for crude) / 2000 (for natural gas), the UK’s independent regulator, the North Sea Transition Authority (NSTA), estimates proven and probable (2P) UK reserves as at the end of 2024 to be 2.9 billion boe. This is 0.4 billion boe lower than as at the end of 2023 due to production during 2024 not being offset by approval of incremental projects in producing fields. However, prospective resources (undiscovered potentially recoverable resources) are up by 31% from the end of 2023 due to the most recent offshore licensing round in 2022. On the basis of current production models, the NSTA’s datasets project that remaining reserves could sustain production from the UKCS until 2050, albeit on a steeply declining trajectory.
2. How are rights to explore and exploit oil and gas resources granted? Please provide a brief overview of the structure of the regulatory regime for upstream oil and gas. Is the regime the same for both onshore and offshore?
The primary legislation relating to the exploration and development of hydrocarbon resources is the Petroleum Act 1998 (Petroleum Act). The Petroleum Act governs all offshore licensing. It also governs onshore licensing, except as follows:
- onshore licensing in Northern Ireland is subject to a separate regime; and
- onshore licensing in Scotland and Wales has been devolved to those governments under the Scotland Act 2016 and the Wales Act 2017.
The Petroleum Act vests all rights to “search for, bore and get” crude oil and natural gas resources in the Crown. Regulatory responsibility on behalf of the Crown lies with the Department for Energy Security and Net Zero (DESNZ), but much of its authority is exercised by the NSTA. Under the Energy Act 2016, the NSTA was formally granted various functions and powers relating to the administration and enforcement of licences. A Framework Document governs the relationship between DESNZ and the NSTA.
Licences are awarded by the NSTA through competitive licensing rounds that are held almost annually in respect of offshore licences, and less frequently in respect of onshore licences. The most recent offshore licensing round (the 33rd) was held in October 2022 (with licence awards made in October 2023, January 2024 and May 2024) and the most recent onshore licensing round (the 14th) was held in 2014. On occasion, there are separate “out of round” offers and awards of licences.
