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Our energy strategy shows that oil and gas are vital to Scotland, accounting for around 90% of the country’s total primary energy in 2015. We see the sector a key component of our economy and remains integral to a sustainable, secure and inclusive energy transition. As part of the September 2019 Programme for Government the Scottish Government confirmed that support for oil and gas exploration and production in the North Sea will now be conditional on the oil and gas sector’s actions to help ensure a sustainable energy transition.
We are also concluding our policymaking process on the future of unconventional oil and gas development in Scotland.
We are supporting the oil and gas sector by:
- commissioning research and working with partners to develop carbon capture, utilisation and storage in Scotland
- supporting a number of demonstration projects to develop hydrogen and hydrogen fuel cells
- supporting initiatives to build oil and gas skills through the Transition Training Fund
- enhancing our oil and gas decommissioning capacity and capabilities through the Decommissioning Challenge Fund
- Restructuring the Oil and Gas Industry Leadership Group (ILG) to the Oil and Gas and Energy Transition Strategic Leadership Group
We are also
- concluding our policymaking process on the future of unconventional oil and gas development in Scotland
The UK Government is responsible for the fiscal regime and regulation of the oil and gas industry.
It is also responsible for the health and safety of the offshore oil and gas industry operating on the UK Continental Shelf, which is overseen by independent regulator the Health and Safety Executive.
We are responsible for the skills and training policy for Scotland's oil and gas industry.
The Oil and Gas Authority (OGA), created in 2015, acts as the oil and gas sector's independent regulator. Its role is to regulate, influence and promote the oil and gas industry, in order to maximise the economic recovery of the UK's oil and gas resources. The OGA regulates the licensing of exploration and development of the UK's offshore and onshore oil and gas resources, gas storage and unloading activities.
The Petroleum Act 1998 confers all rights to the UK's petroleum resources to the Crown, but the OGA can grant licences that confer exclusive rights to search and bore for and get petroleum, over a limited area for a limited time. Find further licensing and consents information on the OGA website.
Scotland Act 2016: onshore oil and gas licensing
Onshore oil and gas licensing powers were devolved on 9 February 2018. Commencement of sections 47 to 49 of the Scotland Act 2016 transferred powers to:
- legislate for the granting and regulation of onshore licences
- determine the terms and conditions of licences
- regulate the licensing process, including administration of existing onshore licences
The consideration payable for such licences remains a reserved matter. The regulation, including setting, of the consideration payable for a licence is therefore reserved. In addition, the UK Government has powers to revoke a licence on the basis of failure to make payments due under the licence.
The OGA is responsible for administering these issues on behalf of the UK Government.
A memorandum of understanding has been signed with the UK Government and the OGA setting out arrangements in respect of the reserved matters.
The terms of the 3 onshore oil and gas licences currently held in Scotland are set out in legislation. There have been a number of changes made to the terms over the past 10 years. Since devolution of onshore licensing powers to Scottish Ministers on 9 February 2018, changes to the licences have been made by means of:
Regulation 7 and Schedule 3 of the Scotland Act 2016 and Onshore Petroleum (Consequential, Transitional and Saving Provisions and Model Clauses) Regulations 2018, as amended by the Scotland Act 2016, Wales Act 2017 and Onshore Petroleum (Consequential, Transitional and Saving Provisions and Model Clauses) Regulations 2018.
The Coal Authority remains responsible for all coal exploration licences on behalf of the UK Government.
An interactive map has been developed to provide access to information about the licences currently held in Scotland (information about licences previously held in Scotland is available from the OGA).
The map and all available metadata is available through the Marine Scotland website.
Benefits to the economy
The oil and gas sector is vital to both the UK and Scottish economies. Oil and gas extraction alone was worth an estimated £8.8 billion in GVA to Scotland’s economy in 2019, representing 5% of total Scottish GDP.
More than 44 billion barrels of oil equivalent (boe) have been extracted from the UK Continental Shelf since the 1970s, and industry regulator the Oil and Gas Authority estimates that up to 20 billion boe can still be recovered.
The oil and gas sector is also a major source of tax revenues and has provided over £330 billion in revenues (2019 prices) to the UK Government from production taxation alone.
The sector is also a major employer, estimated to support around 100,000 jobs in Scotland in 2018 through direct, indirect and induced impacts.
Bills and legislation
The Scotland Act 2016 devolved onshore oil and gas licensing powers to Scotland.
All other oil and gas legislation is reserved to the UK Government.
Oil and gas (general enquiries)
Oil and gas team
Onshore oil and gas licensing
Onshore and Subsurface Systems Policy Unit