UK Promote Licence Round

21st licensing round prompts strong interest and confirms the untapped potential of North Sea Energy Minister Stephen Timms today offered 88 new licences to companies who are ready to reap the significant rewards still available in the North Sea.

The licences are being offered to 62 companies as a result of the 21st Offshore Licensing Round, and prove the continued value of the UK Continental Shelf with a record 27 companies new entrants to the area.

The awards underline the success of the new "Promote" licences, which have been designed to encourage new, smaller independent players to invest in the North Sea. Of the 88 licences awarded, 53 are "Promote" licences.

Stephen Timms said:

"Today's offers are fantastic news for the UK oil and gas industry and I am particularly pleased with the number of newcomers to the North Sea who have taken advantage of the new Promote Licence.

"The Promote Licence has attracted fresh and energetic new players from both home and overseas. We are determined to build the momentum of exploration and this outcome, in addition to PILOT's Fallow Field Initiative and the Government consultation on exploration, continues to improve the climate for exploration in the UKCS and ensure development in the North Sea for many years to come.

"We have always maintained and promoted the North Sea as a developing area and today's offers which are the largest since the late 1980's, are proof positive that this approach is the right one.

"It is clear confirmation that our policies in the North Sea are working and that the UKCS still offers plenty of opportunities for investment and exploration."

The offer comprises 35 "Traditional" Offshore Production Licences and 53 of the new Promote Licences covering 137 blocks. Successful applicants will have a fixed period in which to decide whether or not to accept the offers.

Notes to Editors

1. The 21st Offshore licensing round opened for applications on 5 February 2003 and closed on the 8th May 2003.

2. The new 'Promote' Licence offers the licensee the opportunity to assess and promote the prospectivity of the licensed acreage for an initial two-year period without the stringent financial, technical and environmental entry checks to be passed for a traditional licence. However, Promote Licensees will not be approved as Operator (and therefore will not be permitted to carry out exploration activity, such as the drilling of wells) until they have passed those checks and also made a Firm Commitment to complete an agreed Initial Term Work Programme. For the period of this assessment the licence rental fee will be 10% of the rental fee for the traditional licence (i.e. it will be £15 per sq kilometre).

3. A full breakdown of successful applicants is available at : www.og.dti.gov.uk. The list is not suitable for for electronic transmission with this release.

P/2003/71

5 February 2003

WILSON ANNOUNCES NEW APPROACH TO OIL AND GAS EXPLORATION IN THE UK

21st offshore and 11th onshore licensing rounds published in Official Journal

A new type of licence designed to increase the amount of oil and gas activity in the North Sea was announced today by Energy Minister Brian Wilson.

The 'promote' licence is being launched, along with the traditional production licence, as part of the 21st offshore licensing round.

Under the 'promote' licence the rental fee will be cut by 90% for the first two years compared to the rate for a traditional exploration and development licence, giving smaller newcomers the opportunity to find oil and gas.

'Promote' will give the holder time to assess the licence area for oil and gas before 'promoting' their asset to investors to finance the cost of drilling and undertaking a commitment to do further work.

Speaking from the Sanderstolen Energy Conference in Norway, Energy Minister Brian Wilson said:

"Making the most of our North Sea resources remains a high priority and the UK Continental Shelf still has much to offer. The promote licence will bring down barriers to exploration and ensure that the UK's valuable hydrocarbons are exploited to their maximum potential.

"From the interest shown from the industry and the geoscientific community during the 'promote' consultation, I am confident the 21st licensing round will be a clear success."

The format for the promote licence was developed following an industry-wide consultation in late 2002, to which over 60 companies and organisations responded.

While arrangements for traditional licences remain unchanged, a promote licence will lapse after 2 years unless a substantive work programme - normally the drilling of a well - is agreed.

The new promote licence does not apply to onshore exploration and development.

Notes to editors:

1. Full details of the acreage on offer under the 21st seaward round and the 11th onshore round, including a map and guidance notes for applicants, are available at http://www.og.dti.gov.uk.

2. The acreage on offer is substantial, to include areas covered by Strategic Environmental Assessment (SEA) region 2, SEA 2 extension, and SEA 3.

3. Brian Wilson launched a consultation on a promote licence for the UKCS on September 29 2002. The consultation document, available on the DTI Oil and Gas website and sent to all major stakeholders, invited comments on a number of issues. The consultation sought to explore what flexibility could be added to the licensing system to enable a company to work up a prospect which it would promote or sell to others who would then pursue an agreed substantive work programme up to the end of the four year licence term. Rental rates for promote licences will be reduced by 90% for the first 2 years only.

4. PILOT (UK), the successor body to the Oil and Gas Industry Task Force (OGITF), was established in January 2000 to secure the long-term future of the oil and gas industry in the UK. PILOT is made up of twenty-three key Government representatives and recognised leaders from the industry and meets on a quarterly basis.

5. The Traditional Seaward Production licence has an initial term of 4 years (for exploration), 4 more years (to draw up and submit a Field Development Plan), and a production period of 18 years, which can be extended. After the first term the licensee will be required to relinquish at least 50% of the licensed area with a further relinquishment of all acreage not covered by a Field Development Plan at the end of the second term. The Traditional licence requires necessary finances to carry out the agreed work programme be in place before a licence is given. This allows drilling operation to commence almost immediately, pending necessary consents. The promote licence defers this financial check until a later point to allow for the potential to be promoted to organisations able to assist in financing of the cost of drilling.

6. Rental fees for promote licences are £15 per square kilometre, a 90% reduction on the traditional licence fee of £150.

Public Enquiries: 020-7215 5000
Textphone (for people with hearing impairments): 020-7215 6740
http://www.dti.gov.uk
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1 Victoria Street
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Back | Title | Table of Contents
Appendix 1 | Appendix 2 | Appendix 3 | Appendix 4 | Appendix 5 | Appendix 6 | Appendix 7 | Appendix 8 | Appendix 9
Appendix 10 | Appendix 11 | Appendix 12 | Appendix 13 | Appendix 14 | Appendix 15 | Appendix 16 | Appendix 17
Index Map | Plate 1 | Plate 2W | Plate 2E | Plate 3W | Plate 3E | Plate 4W | Plate 4E | Plate 5 | Plate 6
Plate 7 | Plate 8W | Plate 8E | Plate 9W | Plate 9E | Plate 10W | Plate 10E | Plate 11 | Plate 12 | Legend