The UK has awarded 25 oil exploration licenses for under-explored areas of the North Sea

 
Courtney Goldsmith
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(FILES) File picture taken in 1995 shows
The number of new licences is down from last year (Source: Getty)

The UK has awarded 25 licences for oil and gas exploration across frontier areas of the North Sea.

Licences were issued to 17 companies, and for the first time in 20 years they all focused on under-explored regions of the UK Continental Shelf (UKCS), the Oil and Gas Authority (OGA) said.

Although the OGA said the tender was "highly encouraging", it attracted the lowest interest in 14 years and was down from 175 licences issued in the last licencing round in 2014/2015.

Andy Samuel, chief executive of the OGA, blamed the downturn on high costs and low oil prices.

Samuel said: "While exploration activity has undoubtedly suffered as a result of the difficult market conditions, we are now seeing highly encouraging success rates and finding costs on the UKCS.

"This is testament to the value of a robust and focused exploration strategy with commitment from industry, government and the OGA."

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To boost interest, the OGA cut rental fees by up to 90 per cent and released new data on the region.

Samuel said: "The £20m investment in new seismic for the Rockall and Mid-North Sea High areas, subsequent release of 40,000 kilometres of new and reprocessed data combined with the work of the MER UK exploration task force in developing the innovate licence, and a stable and competitive fiscal regime has resulted in a number of quality applications in this frontier licencing round."

Oil majors Royal Dutch Shell and Statoil, mainly in partnership with BP, received the most licences. However, many newcomers, including Chrysaor and Simwell Resources, were also successful in bagging new licences.

Samuel added OGA is particularly pleased to see firm well commitments and a number of first-time entrants to the basin.

The OGA also revealed its next offshore licencing round will focus solely on mature areas and said it's expected to be the most significant offshore round in recent decades.

This round is expected to take place in the latter half of the second quarter of 2017.

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