UK to Hold 26th Seaward Licensing Round in 2010

The UK Department of Energy and Climate (DECC) has set the launch for the next UK offshore licensing round in the first half of 2010. Although the schedule is not permanent, DECC expects a launch of the UK's 26th Seaward Licensing Round in January 2010, with applications due within 90 days.

After consulting with oil and gas companies, the governmental agency decided that the 26th Seaward Licensing Round should be held until next year. Although not having a licensing round in 2009 is a longer break between rounds than usual, DECC felt the need to push the auction back due to a number of factors.

The agency felt the market may be saturated, in that the UK has offered more then 300 production licenses in the last two rounds. Additionally, a weaker economy may result in companies not able to finance the acreage acquisition.

Although the agency does not reveal how many licenses will be offered, DECC does say that more acreage will be offered than in previous rounds.

Earlier this month, the chief executive of Oil & Gas UK Malcolm Webb spoke about the government's need to draw in companies and encourage development of reserves, noting that the country's current tax program on North Sea properties dampens potential exploration and production projects.

"To attract the capital to develop these reserves, UK oil and gas projects must remain competitive," Webb stated. "It is therefore very concerning that since 2004, costs have doubled and the rate of tax charged on new developments has risen to 50%."

With the fall of oil prices and present economic hardships, many governments are expected to lessen royalty and tax burdens to encourage exploration and development.