March 23, 2017 / 12:03 AM / in 8 months

Britain awards 25 oil exploration licences in frontier tender

LONDON, March 23 (Reuters) - Britain has awarded 25 licences for oil and gas exploration in previously untapped waters and announced a new licensing round for mature areas to be held in late May or June, the Oil and Gas Authority (OGA) said on Thursday.

Seventeen companies received exploration licences in a tender that closed in October. The tender attracted the lowest interest in 14 years as appetite for finding new oil in the North Sea has waned amid high costs and weak oil prices.

In a bid to boost interest the OGA had cut rental fees by up to 90 percent.

The upcoming licensing round for mature areas will be the “most significant” in decades, the OGA said, because companies will be able to bid for licences relinquished since the previous tender for the area in 2014. It will be the 30th licensing round offering acreage in those areas and other mature parts of the basin.

Despite being an old basin, Britain’s North Sea is estimated to have billions of barrels of oil left for extraction, worth around 200 billion pounds ($250 billion) to British government coffers.

However, drilling activity in Britain’s North Sea has been at a record low for two years due to high costs and the fall in oil prices, which forced companies to focus on producing assets. This year, Britain’s oil lobby group expects 16 exploration wells to be drilled, a slight uptick from 14 last year.

Analysts at Wood Mackenzie expect exploration costs to fall another 10 percent this year because of oversupply in equipment, which could help make exploration work more economic. ($1 = 0.8016 pounds) (Reporting by Karolin Schaps; Editing by Susan Fenton)

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