The 'promote' license will cut rental fees for the first two years by 90%, giving smaller newcomers the opportunity to find oil and gas. Rental fees for promote licenses are £15 per sq.km compared to £150 of traditional license fees.

The UK government said the new licence will give the holder time to assess the license area for oil and gas before 'promoting' their asset to investors to finance the cost of drilling and undertaking a commitment to do further work.

While arrangements for traditional licenses remain unchanged, a promote license will lapse after two years unless a substantive work program - normally the drilling of a well - is agreed.

The new promote license does not apply to onshore exploration and development.