Unique UK’s licensing policy favours the state than the industry: Contradicting conventional wisdom

Abstract

The world petroleum industry is globally interdependent. International oil companies tend to compare investment opportunities worldwide and pursue global strategies: investment opportunities compete with each other and fashion tends to possess world’s oil companies.1 Under such circumstances the role of the state acting as the regulator is of paramount importance especially where the oil and gas industry is a countries key industry.2 In the United Kingdom the government has proprietary rights to the petroleum reserves but they lack capacity to carry out technical tasks as drilling wells and laying pipelines.3 Consequently, the Governments is compelled to turn to private companies who hold most of the fi nancial and technical means needed for the exploration and exploitation of petroleum resources.4 In the United Kingdom, this symbiotic relationship is given effect through the petroleum licensing mechanism. This paper brings to light the various features of the UK licensing regime consequently bringing to light how this regime is favourable to the state than the industries, by laying emphasis on the proprietary rights to the petroleum revenue which vest in the UK through its governing legislations.