After section 4 of the Petroleum Act 1998 insert—

“4ZA Duty to invite applications for seaward area production licences

(1)

The OGA must, in each relevant year, decide whether the following
tests are met in relation to that year—

(a)

the carbon intensity test (see section 4ZB );

(b)

the net importer test (see section 4ZC ).

(2)

If the OGA decides that both tests are met it must, during the relevant
year, publish an application notice inviting applications for a seaward
area production licence in respect of at least one block.

(3)

In subsection (2) the following expressions have the meaning given
by the Petroleum Licensing (Applications) Regulations 2015 (S.I.
2015/766)—

“
application notice”;

“
block”;

“
seaward area production licence”.

(4)

The power to make regulations under section 4 includes power to
make consequential amendments of this section.

(5)

In this section “relevant year” means the period of 12 months beginning
with 1 October 2024 and each subsequent period of 12 months.

4ZB The carbon intensity test mentioned in s 4ZA

(1)

The carbon intensity test is met in relation to a relevant year if the
carbon intensity of domestic natural gas produced during the
assessment period is lower than the carbon intensity of liquefied
natural gas imported into the United Kingdom during that period.

(2)

The assessment period is the period of three calendar years ending
with the calendar year before that in which the relevant year begins.

(3)

In this section—

“
carbon intensity”, in relation to domestic natural gas or imported
liquefied natural gas, means the carbon dioxide emissions
attributable to its production, per barrel of oil equivalent of
natural gas;

“
domestic natural gas” means natural gas derived from strata in
the United Kingdom;

“
production”, in relation to imported liquefied natural gas,
includes liquefaction, importation and regasification;

“
relevant year” has the meaning given by section 4ZA(5);

“
United Kingdom” includes—

(a)

the area of the territorial sea adjacent to the United
Kingdom, and

(b)

any area designated under section 1(7) of the
Continental Shelf Act 1964.

(4)

The Secretary of State may by regulations made by statutory instrument
amend this section for the purpose of changing the definition of
“carbon intensity” to cover emissions of gases other than carbon
dioxide.

(5)

Regulations under subsection (4) may include—

(a)

incidental or supplemental provision (including provision
corresponding to section 93 of the Climate Change Act 2008
(measurement of emissions etc by reference to carbon dioxide
equivalent));

(b)

transitional provision.

(6)

A statutory instrument containing regulations under subsection (4)
may not be made unless a draft of the instrument has been laid before
and approved by a resolution of each House of Parliament.

4ZC The net importer test mentioned in s 4ZA

(1)

The net importer test is met in relation to a relevant year if—

(a)

the amount of domestic natural gas produced during each
calendar year of the assessment period is expected to be less
than the demand for natural gas in the United Kingdom during
that calendar year, and

(b)

the amount of domestic crude oil and domestic natural gas
liquids produced during each calendar year of the assessment
period is expected to be less than the demand for petroleum
products in the United Kingdom during that calendar year.

(2)

The assessment period is the period of 15 years beginning with the
calendar year after that in which the relevant year ends (for example,
in relation to the relevant year ending with 30 September 2025, the
15-year assessment period begins with 2026) .

(3)

For the purposes of this section, the amount of any substance produced,
or the demand for any substance, is to be assessed on the basis of its
energy-equivalence.

(4)

In this section—

“
domestic crude oil” means crude oil derived from strata in the
United Kingdom;

“
domestic natural gas” means natural gas derived from strata in
the United Kingdom;

“
domestic natural gas liquids” means natural gas liquids produced
from petroleum that is derived from strata in the United
Kingdom;

“
petroleum products” has the meaning given by section 21 of the
Energy Act 1976;

“
relevant year” has the meaning given by section 4ZA(5);

“
United Kingdom” includes—

(a)

the area of the territorial sea adjacent to the United
Kingdom, and

(b)

any area designated under section 1(7) of the
Continental Shelf Act 1964.”