NSTA Says Oil and Gas Company is Under Investigation

The North Sea Transition Authority (NSTA) has announced that an unnamed oil and gas company is under investigation “for possibly failing to meet license commitments designed to stimulate activity, in support of the UK’s energy security”.

According to the NSTA, the investigation will consider whether the company was obliged under the terms of a license it was awarded, in a prior licensing round, to shoot a seismic survey, which would help inform its decision on whether to drill an exploration well. It will also consider whether if the licensee did not provide a satisfactory alternative work program to ensure progress on the acreage continued.

The investigation will determine whether a sanction should be imposed on the company, the NSTA said. Such a sanction could include a financial penalty of up to GBP 1 million ($1.22 million), the organization warned, adding that this is the second investigation opened in recent months into a company suspected of failing to meet its license commitments within agreed timescales.  

In October 2022, the NSTA revealed that an investigation had been opened into whether a company, which it said was awarded a license in the 28th Licensing Round in 2014, had failed to comply with several obligations, including drilling an exploration well and shooting a 3D seismic survey. 

In an announcement posted on its website at the time, the NSTA warned the industry that it will not hesitate to take action against companies that fail to meet their license obligations. 

The NSTA noted in its latest update that it is focused on supporting the UK’s security of supply, including through the ongoing 33rd Licensing Round, which it highlighted attracted 115 bids from 76 companies. The round attracted similar interest to the 32nd Licensing Round in 2019, the NSTA noted in a statement made in January this year, adding that that round received 104 applications from 245 blocks and part-blocks. In 2019 a total of 768 blocks and part-blocks were offered, compared with 931 this year, that statement noted.

In its most recent update, the NSTA also stated that it expects companies with valuable licenses to progress exploration and production as quickly as possible, in line with their license commitments “and our strategy”. Licensees are obliged to pursue economic recovery, while assisting the government in the drive to reach net zero, the NSTA stated.

“The NSTA works closely with industry to drive forward exploration and production activities to help the UK meet as much energy demand as possible from its domestic oil and gas reserves,” Jacob Blatch, NSTA Interim Head of Disputes and Sanctions, said in an organization statement.

“However, as opening this investigation demonstrates, we will scrutinize incidents where licensees potentially sit on licenses and make no real progress on fulfilling obligations,” he added in the statement.

Rigzone asked industry body Offshore Energies UK (OEUK) for comment on the NSTA’s latest investigation update. OEUK told Rigzone that it wouldn’t comment on this “as it forms part of an investigation which is ongoing and led by NSTA”.

To contact the author, email andreas.exarheas@rigzone.com

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