What does the Tories' 'raid' on North Sea oil and gas mean for Scotland?

The UK Government’s Offshore Petroleum Licensing Bill (OPL bill) is set for its second reading in the House of Commons on Monday January 8, making it a legal requirement for regulators to hold annual licensing rounds for the North Sea.

The plans have been condemned by climate campaigners, while the SNP accused UK ministers of exploiting “Scotland’s natural resources”.

But what does the legislation say and what does this mean for Scotland and the North Sea?

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What does the bill do?

The three-page OPL bill requires the North Sea Transition Authority (NSTA), the oil and gas regulator, to invite companies to apply for at least one licensing block each year, essentially running an annual licensing round.

The NSTA already has the power to issue licenses when it chooses, with annual licensing rounds for most of the past decade, so it is unlikely to prompt any significant change to how the process works.

The legislation also includes two tests relating to emissions and imports which must be passed before the NSTA can offer licences, tests that Uplift say will be “impossible to fail”.

The carbon intensity test requires the production of emissions of UK gas to be lower than liquified natural gas (LNG) imported to the UK. While the net importer test requires the amount of oil and gas produced in the UK to be less than the demand.

Why have the Tories introduced the bill?

The legislation is supposedly part of plans to reduce the UK’s dependency on “hostile foreign regimes” and help with the transition to net zero in 2050. First touted in the King’s Speech, the bill was introduced on November 8 to the Commons amid claims from the Tories it would help safeguard thousands of jobs and provide a boost to the UK economy.

Energy Secretary Claire Coutinho admitted just days before it was laid that it would not help lower energy bills for UK consumers.

Coutinho lodged the legislation, backed by Prime Minister Rishi Sunak, Scottish Secretary Alister Jack, Climate Minister Graham Stuart, Chancellor Jeremy Hunt, and Business Secretary Kemi Badenoch, among others.

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What do critics say?

Climate concerns aside - as scientists and the United Nations have urged countries to stop further production of oil and gas to limit global warming - the new licensing round requirements will only have a “minimal” impact on supplies of oil and gas.

According to campaign group Uplift between now and 2050 new licenses will only provide four days worth of gas a year on average.

They argue the plans also won’t boost tax revenues or prevent the decline of jobs in the oil and gas sector. And, it weakens UK climate targets while offering support to the oil and gas industry without putting in place any assistance to help households pay their energy bills.

On the carbon intensity test, Uplift said that it was “disingenuous” as LNG imports are not the main source of gas imports and it does not consider the carbon intensity of oil, which makes up the majority of remaining North Sea reserves, around 70%.

And, not to mention that 80% of UK oil reserves are shipped overseas. Earlier this week the UK Government admitted that oil produced by Rosebank, a controversial development off the coast of Shetland that was given the green light in a previous licensing round, will be sold on the international market rather than to UK consumers.

We previously told how climate activists condemned the move and said it was a “desperate attempt” by the Tories to speed up oil and gas licensing.

What does it mean for Scotland?

The legislation is likely to have a knock-on effect not only on climate targets but on the shift to renewables.

An analysis last year found the UK has become a less attractive place to invest in renewables due to the “diminishing of green policies” from the Tories.

The bill gives a clear signal to the oil and gas industry that they can continue to drill for fossil fuels, which is likely to lead to less investment from firms in the renewables sector.

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It also won’t have any impact on household bills, or protect the thousands of jobs in the oil and gas sector. Despite issuing around 400 new drilling licences through five separate rounds since 2013, the number of jobs supported by the sector fell from 441,000 to 213,000.

And, as the SNP previously pointed out, Westminster has already “raked in” more than £400 billion off the back of Scotland’s natural resources.

With Labour's Keir Starmer confirming he would honour the Rosebank decision, he could likely keep the Tories OPL bill in place too, leaving Scotland yet again without control over its own resources or energy future for the foreseeable.