Overview
The Petroleum Act 1998 vests all rights to the nation’s petroleum resources in the Crown, but the North Sea Transition Authority can grant licences that confer exclusive rights to ‘search and bore for and get’ petroleum.
Licences fall into several categories. The principal distinctions are between onshore and offshore licences, and between exploration licences (which cover exploration alone) and production licences (which cover both exploration and production). The NSTA has discretion in the granting of licences to help ensure the economic recovery of the UK’s oil and gas resources, while supporting the drive to net zero carbon by 2050.
Visit the Energy Portal to apply online for onshore and offshore petroleum licences and to request changes to licences eg, assignments and relinquishments (login required).
Licences can be held by a single company or by several working together, but in legal terms there is only ever a single licensee however many companies it may comprise. All companies on a licence share joint and several liability for obligations and liabilities that arise under it. Each licence takes the form of a deed, which binds the licensee to obey the licence conditions regardless of whether or not it is using the licence at any given moment.
Legislative context
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Petroleum Act 1998
The Petroleum Act 1998 (the "Act") vests all rights to petroleum in the Crown, including the rights to search for, bore for and get it. It empowers the NSTA to grant licences to search for and bore for and get petroleum to such persons as they see fit. The Act also deals with submarine pipelines and the abandonment of offshore installations.
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Model clauses
The Act requires model clauses to be laid in secondary legislation, which are then incorporated into new licences (except in particular cases). Existing licences are not affected by the issue of subsequent sets of model clauses (except through specifically retrospective measures such as were present in the Act). It is the responsibility of every licensee to be aware of all regulatory controls, including the model clauses, and to comply with them.
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Hydrocarbon Licensing Directive
Requirements relating to the licensing aspects are implemented through the Hydrocarbon Licensing Directive Regulations 1995
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Offshore Safety Directive
Requirements relating to licensing aspects are implemented through the Offshore Petroleum Licensing (Offshore Safety Directive) Regulations 2015 (The "Regulations")
For the purposes of the Regulations, the NSTA is the Licensing Authority, and BEIS and HSE together constitute the Competent Authority.
For further information on the Competent Authority role please visit Offshore Safety Directive Regulator (OSDR) page for further information.
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Other Regulations
Geography
The NSTA’s licensing system covers oil and gas within Great Britain, its territorial sea and on the UK Continental Shelf (UKCS).
The designated area of the UKCS has been refined over the years by a series of designations under the Continental Shelf Act 1964 following the conclusion of boundary agreements with neighbouring states. This includes the Scottish Adjacent Waters Boundaries Order 1999 (No. 1126), which implements an agreement reached with the Faroe Islands.
View further guidance on offshore co-ordinates.
View further guidance on onshore co-ordinates.
Northern Ireland
Northern Ireland’s offshore waters are subject to the same licensing system as the rest of the UKCS. Northern Ireland issues its own licences to cover its onshore area independently of the NSTA.
Isle of Man
The Department of Economic Development issues licences for its own onshore area and territorial waters.
The Crown Estate Agreements including leases, licences, agreements for lease and search areas is designed to assist petroleum licence holders to identify any area conflicts.