Energy Security Bill factsheet: OGA change of control powers prior to a change of control event
Updated 1 September 2023
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Strengthening the regulatory regime for petroleum and carbon storage licences will provide robust support for the North Sea as a foundation of our energy security.
Why are we legislating?
The right to search, bore for and get petroleum is exclusively the right of the Crown. Companies who wish to drill for and extract petroleum must do so under a Petroleum Licence granted by the North Sea Transition Authority (NSTA) to the Licensee under the Petroleum Act 1998. For carbon storage, licences with similar provisions are issued to give the right to store carbon dioxide in offshore geological formations.
Prior to issuing these licences, the NSTA satisfies itself that the prospective Licensee company and its parents, if any, are fit to hold the licence and will meet their obligations. At times during the life of a licence it is quite likely that the ownership and control of a Licensee should pass to a new parent company, most often by means of a share sale or merger. This is known as a ‘change of control’.
An undesirable change of control could undermine investor confidence in the commercial environment, making the United Kingdom Continental Shelf (UKCS) a less attractive place for investment.
The NSTA cannot currently prevent undesirable changes of ownership and control of petroleum and carbon storage Licensees before they happen. It can only examine the change of control and seek to remedy it after the event.
The Energy Security Bill will bring forward a measure to rectify this, to provide a less time consuming and more robust approach. It will ensure that the UKCS continues to attract investment whilst protecting the taxpayer from funding liabilities not met by potential undesirable investors.
How the Bill will achieve this
The Bill will allow the NSTA to identify and prevent a potentially undesirable change of control before it happens, rather than seek to remedy it after it has taken place. Undertaking a change of control without NSTA’s consent could result in the licence being revoked.
Where the NSTA are the licensing authority, this measure will amend certain clauses relating to change of control in all current and future Seaward Petroleum Production licences, Landward Petroleum Production Licenses and Carbon Storage Licences.
Further information
The following documents are relevant to the measures and can be read at the stated locations: