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Labour faces legal dilemma over plan for immediate ban on new North Sea licences | Oil

The Labour government is grappling with a legal dilemma over its plan to impose an immediate ban on new North Sea oil and gas exploration before the industry’s latest licensing round closes.

The party swept to power last week with the pledge to end new North Sea exploration licences but its plans have been cast into doubt by the timing of an ongoing licensing round.

The new government will need to decide whether or not to cancel the process, which could end up granting a small number of new North Sea licences in breach of its pledge to end new oil and gas exploration.

But cancelling the mechanism, which is run by the industry regulator, the North Sea Transition Authority (NSTA), could leave the new government vulnerable to a volley of legal actions from the companies, which may have spent millions preparing their bids.

The government is expected to take legal advice on how to implement its North Sea policy without risking a legal challenge from oil and gas companies, before taking a final decision on the live licensing round.

A government spokesman said: “As previously stated, we will not issue new licences to explore new fields. We will also not revoke existing oil and gas licences and will manage existing fields for the entirety of their lifespan.”

The government was forced to deny reports that the energy secretary, Ed Miliband, had defied his own officials by ordering an immediate ban on new licences, including those still being considered by the regulator.

The spokesman said the report, published in the Daily Telegraph, was a “complete fabrication” which “invents meetings and decisions that have not taken place”.

“We are working with the North Sea Transition Authority to ensure a fair and balanced transition in the North Sea,” the spokesman added.

The latest licensing round, which launched in the autumn of 2023, involved 76 oil and gas companies submitting 115 bids to carry out exploration work across 257 “blocks” of the North Sea, Irish Sea and east Atlantic.

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However, bids for a small number of fields were still awaiting a decision from the NSTA when Rishi Sunak called the snap election.

In May, the industry regulator said: “Further consideration is being given to a small number of remaining applications and a few more may be offered at a later date.”

A spokesman for the NSTA said on Thursday: “We follow the policy direction set by the government of the day.”

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