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UK ministers may ban new North Sea exploration

Maersk oil field

North Sea oil could see a licensing ban

A ban on further oil exploration licences in the North Sea is being considered by UK ministers in a move away from fossil fuel.

The move comes as the UK prepares to host the COP26 — the UN Climate Summit — in November.

According to the Telegraph, options on the table include ending permits by 2040 and an immediate temporary pause in licensing, or the current licensing regime could be maintained and allowed to reach a natural end date.

The prospect of early termination could be a serious blow to the Scottish economy. Approximately, 39% of the 270,000 jobs in the oil sector are in Scotland.

Some production from the region also make up the global benchmark for the Brent crude pricing.

Speculation around licensing comes as the trade body for the UK oil and gas industry, OGUK, prepares to publish its outlook for the UK’s offshore oil and gas industry this week.

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It follows a difficult year which saw oil prices fall and the sector navigate the operational impacts of the coronavirus pandemic.

Britain became the first G7 country last year, to set in law a net zero emissions target by 2050, so it is legally bound to deliver on that and has been looking to renewables to provide alternative sources of energy.

In December last year, during the United Nations Climate summit, the UK submitted a new national climate plan — or nationally determined contribution (NDC) — which confirms its pledge to cut greenhouse gas pollution by at least 68% by 2030 from 1990 levels.

Industry figures show that last year, over 30% of Britain’s electricity was generated by gas-fired power plants, while the offshore industry met about 45% of its overall energy needs in 2019.

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Denmark’s government announced in December last year that it will end all new oil and gas exploration and extraction in the North Sea by 2050.

The Nordic country also agreed to cancel its latest licensing round, which allows companies to search for and produce oil and gas. The move meant that eight planned licensing rounds and future tenders were cancelled.

Oil and gas production in Denmark has become an issue of political debate, after it agreed in 2019 on one of the world’s most ambitious climate targets of reducing emissions by 70% by 2030 and being climate neutral in 2050.

Denmark is the EU’s biggest producer of oil and gas, which excludes Norway and the UK — which are both bigger producers. The country is estimated to produce 83,000 barrels of crude oil and another 21,000 barrels of oil equivalent in 2020.



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