The UK’s latest offshore licensing round resulted in 134 licenses being issued for the North Sea this week, with the government calling it “one of the biggest rounds ever”. But the UK’s oil and gas trade body expressed concern that only a handful of the licenses included wells, and called for regulatory reform and a more favourable tax regime to stimulate steadily declining production.

On Thursday (6 November) the UK Department of Energy and Climate Change announced that 134 licences covering 252 blocks on the UK Continental Shelf (UKCS) had been offered in the 28th offshore licensing round. It said a further group of applications was pending.

“This successful licensing round, which is on track to be one of biggest rounds ever in five decades, is a boost for the UK economy and shows that our long term economic plan is working,” said business and energy minister, Matthew Hancock, adding: “Industry are scrambling over themselves to invest in the UK and explore for energy.”

But trade body Oil & Gas UK (OGUK) had a different interpretation, pointing out that only a small number of firm or contingent wells – six and four, respectively – were included in the work programmes companies had committed to.

Most of the licences have been awarded on the basis of obtaining or reprocessing 2D and 3D seismic data.

“The disappointingly low number of wells highlights the need to stimulate new plays through detailed technical work which requires measures to encourage more investment in the UKCS,” said OGUK’s operations director, Oonagh Werngren.

OGUK has warned that the industry is facing a number of major challenges, including historically low levels of exploration and rising costs.

“It is extremely important to ensure the award of these licenses translates into the drilling of more successful wells on the UKCS, and we need to ensure the pipeline of new developments continues to flow from the basin,” Werngren said.

She added: “Full implementation of Sir Ian Wood’s recommendations for regulatory reform, and far-sighted changes to the fiscal regime, are needed to step up momentum.”

This week OGUK warned that investment in the UKCS would fall by 50% by 2017 if urgent tax reform was not undertaken.

On a more positive note, Werngren said, “it is encouraging to see companies beginning to look seriously at frontier areas, stepping away from the known basins and into deeper water.”

“We also note licenses for 94 Blocks in the licensing round are in, or close to, areas under special protection and conservation,” she said. “We would encourage the Government to carry out environmental assessments urgently so that these additional areas (with all measures implemented to protect the environment) can contribute to boosting activity in the basin.”

OGUK said it was also looking forward to working with Andy Samuel, the first chief executive of the UK’s new oil and gas regulator, the Oil and Gas Authority. His appointment was also announced on Thursday.