Offshore Petroleum Licensing Round (Hansard, 18 July 1988)

§ Mr. Peter Morrison

I am now able to give further details of the arrangements for offshore petroleum production licences to be issued in 1989. A total of 212 blocks or part-blocks will be available for licensing, distributed as follows:

	Number
Northern North Sea	47
Faroes/Shetland Area	10
Orkney /Shetland Area	12
Hebridean Platform	7
Outer Moray Firth	17
Forth Approaches	2
Central North Sea	48
Irish Sea/Manx Basin	19
Southern North Sea	43
Cardigan Bay	2
English Channel	5

I have arranged for a full list of the blocks offered in the round to be placed in the Libraries of both Houses. As in the past, it has been necessary in the case of many of the blocks to specify additional conditions which the operator will be required to observe when undertaking activity on the licence. These are designed to take into account the concerns of defence, fishing, environmental and navigational interests.

I have laid before the House new regulations under which licences will be offered and awarded as a result of this licensing round. The regulations will come into force on 4 August and a formal notice inviting applications will be published in the London, Edinburgh and Belfast Gazettes on 5 August. Applications will be returnable on 7 or 8 February 1989.

Licence awards will be made at the discretion of the Secretary of State, on the basis of financial and technical competence, and the contribution the applicant is prepared to make towards expeditious, thorough and efficient exploration and development of the oil and gas resources of the United Kingdom continental shelf. All applicants will be interviewed on their plans for the acreage for which they are seeking a licence and the exploration work commitments they would be prepared to make if a licence is awarded to them. The safety record of applicants and their current arrangements in respect to safety will, as before, be factors taken into account in deciding the award of licences. Guidance on the format of applications, and the information required, will be available from my Department as soon as the Gazette notice has been published.

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Except in the case of a few blocks in deep water areas, licences will be issued on standard terms, which will provide for an initial period of six years, during which the licensee will be expected to complete any work programme agreed as a condition of the award. The applicant must then relinquish 50 per cent. of the licence area. Thereafter he may retain the remaining 50 per cent. for a period of up to 30 years. If, however, after 12 years of the 30-year term no field development has been approved the licensee will he required to surrender the licence, unless the Secretary of State decides otherwise.

Licences awarded in deep water areas will be similar in all respects except that the licence will last a total of 48 years. The initial term will be eight years, followed by a mandatory 50 per cent. relinquishment of the acreage. If after a further 16 years no development has been approved the licensee will be required to surrender the licence, unless the Secretary of State decides otherwise.

I have introduced the new provisions in order to take further steps towards ensuring that acreage is not left unworked for long periods, as has sometimes happened in the past. In other respects the model clauses incorporated into licences will be similar to those incorporated into licences issued as a result of the 10th offshore round. Licence rentals will remain unchanged from those set at the time of the 10th round.