Labor is facing a legal dilemma over the proposed ban on North Sea permits

The Labor government is facing a significant legal challenge over its commitment to impose an immediate ban on new oil and gas exploration permits in the North Sea, amid an ongoing licensing round.

After securing power with a decisive election victory last week, Labour’s pledge to halt new North Sea exploration permits is now in jeopardy due to the current permitting process managed by the North Sea Transition Authority (NSTA). The government must decide whether to cancel this process, risking potential legal battles with companies that have invested millions in their bids.

Labor’s pledge included a “phased and responsible” transition from North Sea drilling, highlighting the importance of the offshore industry and its workforce. However, the cancellation of the licensing round could trigger legal action from affected companies, which could claim they have been treated unfairly after significant financial outlay.

The government is expected to seek legal advice to deal with this complex issue without triggering legal action from the oil and gas sector. Tessa Khan, executive director of Uplift, criticized any potential retreat from the manifesto’s promise and highlighted the public’s demand for a shift away from the existing energy system, from which oil and gas companies disproportionately benefit at the expense of consumers and the environment .

Labour’s energy policy aims to transform Britain into a clean energy leader by ending new oil and gas licensing while significantly expanding renewable energy sources, including onshore wind, solar and solar capacity and offshore wind energy.

The Labor administration has reiterated that it will not issue new exploration permits or revoke existing permits, ensuring the management of current fields until the end of their operational life. Reports suggesting that Energy Minister Ed Miliband had overruled officials to enforce an immediate ban were dismissed as fabrications.

The ongoing licensing round, which launched in autumn 2023, attracted bids from 76 companies for 257 exploration blocks in the North Sea, Irish Sea and Eastern Atlantic Ocean. A few applications remained undecided when then Prime Minister Rishi Sunak called early elections in May.

The NSTA has remained non-binding on the remaining applications and has only stated that it adheres to the government’s policy direction.