In Vote of Confidence, Oil Firms Mop Up New North Sea Blocks

The UK Oil and Gas Authority (OGA) on Wednesday awarded 123 licences to 61 companies to explore for and develop new fields in the North Sea, in the latest sign of confidence in the ageing basin that has enjoyed a revival in recent years.

Companies ranging from Royal Dutch Shell (RYDAF), BP and Norway's Equinor, to smaller independents including Siccar Point, Chrysaor and Premier Oil (PMOIF) were awarded 229 blocks covering a total area of 26,659 square km, the OGA said in a statement.

"The OGA expects this round to lead very quickly to activity, providing a welcome boost to exploration," it said.

Fourteen of those licences are expected to progress straight to field development planning, it said.

The round could unlock about a dozen undeveloped discoveries containing an estimated 320 million barrels of oil equivalent (boe), it added.

The North Sea was one of the world’s first offshore basins, and has produced oil for more than four decades.

Although output in the basin has sharply declined since peaking in the late 1990s, it has seen a revival in recent years after large projects such as the BP-operated, 130,000-barrels-per-day Quad 204 in the western Shetlands came on line.

The OGA estimates the North Sea holds reserves of 1.5 billion boe.

"The OGA's first mature licencing round, following the Norwegian model, appears to have been a great success," Wood Mackenzie analyst Kevin Swann said in a note.

"The UK is in desperate need of new projects to fill a development pipeline that is all but empty beyond the early 2020s," Swann said.

"The eight firm exploration wells among the awards, with big companies like Shell, BP, Equinor and ConocoPhillips (COP) among those set to drill, is a big vote of confidence in the UK. It shows the big players are not ready to leave UK waters yet."

Reporting by Ron Bousso