The Labour government is confronting a significant legal challenge regarding its commitment to impose an immediate ban on new North Sea oil and gas exploration licences amidst an ongoing licensing round.
Having secured power with a decisive election victory last week, Labour’s promise to halt new North Sea exploration licences is now in jeopardy due to the current licensing process managed by the North Sea Transition Authority (NSTA). The government must decide whether to cancel this process, risking potential legal battles with companies that have invested millions in their bids.
Labour’s manifesto pledge included a “phased and responsible” transition away from North Sea drilling, highlighting the importance of the offshore industry and its workforce. However, the cancellation of the licensing round could provoke legal actions from affected companies, which could argue they were unfairly treated after substantial financial outlays.
The government is expected to seek legal advice to navigate this complex issue without inciting litigation from the oil and gas sector. Tessa Khan, executive director of Uplift, criticised any potential retreat from the manifesto promise, emphasising the public’s demand for a shift away from the existing energy system that disproportionately benefits oil and gas companies at the expense of consumers and the environment.
Labour’s energy policy aims to transform the UK into a clean energy leader by ending new oil and gas licences while significantly expanding renewable energy sources, including onshore wind, solar, and offshore wind capacities.
The Labour administration has reiterated that it will not issue new exploration licences or revoke existing ones, ensuring the management of current fields until the end of their operational life. Reports suggesting Energy Secretary Ed Miliband had overruled officials to enforce an immediate ban were dismissed as fabrications.
The ongoing licensing round, initiated in autumn 2023, attracted bids from 76 companies for 257 exploration blocks across the North Sea, Irish Sea, and east Atlantic. A few applications remained undecided when the snap election was called by then-Prime Minister Rishi Sunak in May.
The NSTA has remained non-committal regarding the remaining applications, stating only that it adheres to the government’s policy direction.
