The Labour government faces a major legal challenge over its commitment to an immediate ban on new oil and gas exploration licences in the North Sea amid an ongoing licensing round.
After Labour secured power with a decisive election victory last week, its promise to halt new exploration licences in the North Sea is now in jeopardy because of the current licensing process run by the North Sea Transition Authority. The government must decide whether to scrap the process, opening it up to potential legal battles with companies that have invested millions in its bids.
Labour’s election manifesto pledge included a “gradual and responsible transition” away from drilling in the North Sea, highlighting the importance of the offshore oil and gas industry and its workforce. However, cancelling the licensing round could lead to lawsuits from affected companies, who could claim they have been unfairly treated after spending significant amounts of money.
The government is expected to seek legal advice to address the complex issue without triggering litigation from the oil and gas sector. Tessa Khan, chief executive of Uplift, criticised any potential backtracking on the manifesto promise, saying the public was demanding a shift away from the current 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 licensing while significantly expanding renewable energy sources, including onshore wind, solar and offshore wind.
The Labour administration has insisted it will not issue new exploration licences or cancel existing ones, ensuring that existing fields are managed until the end of their working lives. It has dismissed as “slander” reports that Energy Secretary Ed Miliband had refused orders from officials to impose an immediate ban.
The ongoing licensing round, which began in the autumn of 2023, attracted bids from 76 companies for 257 exploration blocks across the North Sea, Irish Sea and East Atlantic. A handful of applications remained unresolved when then-Prime Minister Rishi Sunak called a snap election in May.
The National Teachers’ Association remained non-committal on the remaining demands, stating only that it was adhering to government policy guidance.
