The UK’s 28th offshore licensing round was one the biggest handouts in 50 years.
However, one analyst has urged the industry to move beyond the awards and convert the licences into exploration.
KPMG’s head of tax Martin Findlay said the sector’s bumper round was just the first step to recovery.
Findlay went on to say the Oil and Gas Authority (OGA) would need to play a critical role in facilitating the industry’s needs with the governments abilities.
“I think it’s a very positive message that there’s life left in the UK continental shelf. I think a lot of the negative news could be tempered by this this good news story,” Findlay said.
“Initially what will be interesting will be how the Oil and Gas Authority (OGA) act going forward to ensure that those licences can be actively explored and delivered and not just sat on effectively because that’s key to our recovery.”
Ensuring a streamlined cost base and attractive fiscal regime would be the regulator’s top priority, according Findlay.
He said: “That’s really difficult to do at $50 oil but it’s an essential part.
“The oil and gas industry must make efficiencies in the supply chain to make the most of a market with a steady medium term equilibrium price”
The government must then support company measures to cutback with an accommodating tax regime if the sector is to leverage this latest licensing round, Findlay added.
“There needs to be a bit of carrot and stick,” he said.
“It’s still early days for OGA and we’re in a new North Sea frontier. We will need to see how effective the new OGA is in not just the licensing, but crucially, in the environment we’re in, how they can help companies exploit, explore and produce.
“That is the challenge which I’m sure OGA is up to.”
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