UK Government Hails 'Strong' North Sea Oil and Gas Applications Despite Dwindling Production

The Department of Energy & Climate Change has revealed that it received 173 applications from industry for around 370 blocks in its latest offshore oil and gas licensing round in the North Sea despite crude production plunging in recent years.

The DECC said in a statement that it will scrutinise the "strong response" of applications over the coming months and aims to start awarding the units in the autumn.

"It has been 50 years since North Sea licensing began and there remains an extraordinary level of interest which is excellent news for industry and for the UK economy," said Energy Minister Michael Fallon.

"We have committed to implementing all of Sir Ian Wood's recommendations to help maximise recovery of North Sea oil and gas, and the Chancellor is reviewing the tax regime. Making the most of Britain's home grown energy is crucial to keep job and business opportunities, get the best deal for customers and reduce our reliance on foreign imports."

The UK's oil and gas sector directly and indirectly it supports around 450,000 jobs across the country and provides almost half of the country's energy.

In the UK around 42 billion barrels of oil equivalent have been produced so far with potentially around 20 billion or so remaining. The licensing process plays a key part in this by allowing companies to appraise and explore new areas with the aim of discovering and developing new UK oil and gas fields.

However, the DECC recently revealed that that Britain has become dependent on oil imports for the first time in 30 years as crude production from the North Sea has sharply dropped and refineries have closed.

DECC figures show that the UK has become a net importer of petroleum products for the first time since 1984 as North Sea crude production - the financial jewel in an independent Scotland's crown - has plunged and existing refineries cannot keep up with the demand.

"The closure of the Coryton refinery in July 2012 was a contributory factor towards lower production in 2013. Refinery production was also weakened by increasing competition from imports," said the DECC.

"This is the first time the UK had been a net importer since 1984 when demand for petroleum products increased as a result of industrial action in the coal industry. Crude oil import dependence has been on an increasing trend as the production from the UK Continental Shelf continues to decline.

"The decline in 2013 is a continuation of a long-term trend. Production was also affected by maintenance and unplanned outages at several oil and NGL fields in 2013, including the Buzzard field which is a key source of oil."

The Organisation of Petroleum Exporting Countries also said over the last few months that the average oil output in 2013 from the North Sea registered its lowest level since 1977.