FX.co ★ UK plans to hold oil and gas licensing round in North Sea

The Financial Times has reported that the UK's Oil and Gas Authority, the industry watchdog, plans to hold an oil and gas licensing round for the North Sea this year, noting it would be the first licensing round since 2020.

The news came weeks after reports that the UK government was considering a ban on new drilling permits in the North Sea.

In this context, the decision to launch a new licensing round is bound to cause controversy amid the UK's drive to move away from fossil fuels and into a fully renewable energy. It was this push that put an end to new oil and gas licensing rounds two years ago.

Now, however, with the tense geopolitical situation in Ukraine causing oil and gas prices soaring, it has increased costs for UK households.

The cost-of-living crisis resulting from the energy price rally has forced the UK government to look for quick fixes to the situation.

In search of more oil, after the government banned Russian imports, Prime Minister Boris Johnson recently visited Saudi Arabia and the United Arab Emirates. The Wall Street Journal reported that he was left empty-handed by his hosts per comments from local officials.

Meanwhile, the renewable energy push at home remains strong. This week, the Oil and Gas Authority will change its name to the North Sea Transition Authority, while the government drafts so-called "climate compatibility checkpoints" for all future oil and gas licensing rounds.

However, the Financial Times noted that these checkpoints had been hastily revised recently to include stipulations allowing regulators to overlook environmental considerations if there were national security concerns.

According to head of the Oil and Gas Authority Andy Samuel, the team is preparing some license packages that are already ready to be enforced.