Licensing regime

The Petroleum Act 1998 vests all rights to the nation’s petroleum resources in the Crown, but the Oil and Gas Authority can grant licences that confer exclusive rights to ‘search and bore for and get’ petroleum.

Licences fall into several categories. The principal distinctions are between onshore and offshore licences, and between exploration licences (which cover exploration alone) and production licences (which cover both exploration and production). The OGA has discretion in the granting of licences to help maximise the economic recovery of the UK’s oil and gas resources.

Licences can be held by a single company or by several working together, but in legal terms there is only ever a single licensee however many companies it may comprise. All companies on a licence share joint and several liability for obligations and liabilities that arise under it. Each licence takes the form of a deed, which binds the licensee to obey the licence conditions regardless of whether or not it is using the licence at any given moment.