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Licensing Of The Right To Use Subsurface Resources In Order To Develop Oil And Gas Fields On The Continental Shelf Of Norway: Experience Of Legal Regulation
 
PIIS231243500021940-2-1
DOI10.18572/2410-4396-2018-1-70-75
Publication type Article
Status Published
Authors
Elena A. Gavrilina 
Affiliation: MGIMO University
Address: Russian Federation, Moscow
Journal nameEnergy law forum
EditionIssue 1
Pages70-75
Abstract

Against the background of depletion of onshore fields, the Russian shelf is justified as a strategic reserve of hydrocarbons and it is it where large and unique fields may be discovered. In fact, in the absence of special laws regulating oil and gas activities and establishing the legal status of oil and gas producing companies in the Russian continental shelf area, and due to inconsistency of the existing ones, legal model of the Norwegian licensing system, where all oil and gas fields are located on the continental shelf of the country, is of considerable interest for Russia in several aspects. First, the investment regime in the oil and gas industry is of great interest: on the one hand, all necessary conditions are provided to attract investments, and, on the other hand, the active participation of the state in order to protect national interests and ensure significant budget revenues can be traced at all stages of the project. Moreover, the Norwegian continental shelf is located in a similar climate and geographic conditions, and the legal model of exploration and production in the shelf area takes into account this factor too, reflecting it in environmental laws. Second, both legal systems take the licensing model as a basis to some extent. The author examines the licensing system for the development of offshore fields under the laws of Norway, the right of investor to access to the development of offshore hydrocarbon fields, and an agreement on oil and gas activities concluded by several oil companies in order to jointly develop the hydrocarbon field.

Keywordsenergy law; continental shelf; offshore hydrocarbon fields; exploration and development of hydrocarbons; licensing; right to use subsurface resources
Received06.02.2018
Publication date30.03.2018
Number of characters18670
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1 More than half of the income of Norway ranked fourth in the world as per GDP per capita [1] is currently formed by a specifically built licensing system of use subsur- face resources [2, s. 99]. This system is built in such a way that the state directly participate in li- censes, and also guarantees maximum efficiency in the activities of licensee companies.
2 The principal normative legal act gov- erning development of oil and gas fields on the continental shelf of Norway is the Act on Petroleum Activities adopted in 1996 [3] (Lov om petroleumsvirksomhet; hereinafter re- ferred to as the LoP), provisions of which are detailed in Resolution No. 653 dd. June 27, 1997 “To the Act on Oil and Gas Activities dd. November 29, 1996” [4].
3 Moreover, it should be notedthatthe European Directive 94/22/ On the Conditions for Granting and Using Authorisations for the Prospection, Exploration and Production of Hydrocarbons (Licensing Directive 94/22/EC) is also applicable to Norway which is an associate member of the European Economic Area (EEA) [5].
4 Pursuant to § 1-1 of the LoP, “the Norwegian state has the right of ownership to all offshore oil and gas fields, and also has an exclusive right to manage these resources”. Therefore, the oil and gas activities in Norway are regulated by a num- ber of government agencies and institutions — in licensing, the Ministry of Petroleum and Energy as well as the Petroleum Directorate and the Oil Safety Authority play a key role.
5 According to § 3-2 of the LoP, the continen- tal shelf of Norway is subject to division into plots (the so-called “blocks”) 15 minutes of longitude wide and 20 minutes of latitude long. This di- vision applies to the entire continental shelf of the country, in addition to the cases when the Norwegian continental shelf section is bordered by the continental shelf of other states and other conditions significantly altering the legal or geo- logical setting of the site occur.
6 Before any of these “blocks” is “open for oil and gas activities”, a comprehensive assessment must be conducted in its regard in accordance with § 3-1 of the LoP, which will predict possible consequences of the introduction of the block in- to economic circulation for the economic, envi- ronmental situation and social sphere.
7 The text of the article itself says only that the procedure of “opening” must precede the issue of production licenses, but based on the text of § 2-1 of the LoP, it can be concluded that this proce- dure is also necessary before a license for explo- ration in a certain section is issued.
8 In addition, this integrated assessment proce- dure involves conducting public hearings, which allows taking into account opinions of all parties concerned (including the local population and non-state companies). It should be noted that a similar assessment procedure is also applied at the subsequent stages of licensing.
9 Access to oil and gas activity at the “blocks” opened following the results of the above proce- dure, is granted to companies by issuing licens- es. There are two types of independent licenses in Norway: a license for exploration (unders kels- estillatelse, governed by § 2-1 of the LoP) and a license for development (utvinningstillatelse, governed by Chapter 3 of the LoP). Moreover, a number of analysts identify a third type of li- cense — a special license for installation and op- eration of oil and gas equipment (s rskilt tilla- telse til anlegg og drift av innretninger, governed by § 4-3 of the LoP). However, it seems that this type of license is not independent but it is subject to on the licensee’s license to production as it is directed to obtaining by the company of a sepa- rate permit for installation and management of oil and gas equipment that was not received un- der the Equipment Installation and Management Plan approved upon extension of the production license (see below for details).
10 Final decision on issue of both types of independent licenses is made by the Ministry of Petroleum and Energy (herewith, the production license is formally certified by a signature of the monarch on the part of the state).
11 Pursuant to § 2-1 of the LoP, the license for exploration may be issued to any legal entity (re- gardless of the country of incorporation) as well as to any individual permanently residing within the EEA (the latter provision, however, has never been implemented in practice). The scope of the rights acquired by the licensee under this license includes study of geological, geophysical, geo- chemical, geotechnical, and other characteristics of the relevant block. The standard term for this type of license is 3 years. It is noteworthy that ob- taining a license for exploration does not give the licensee the advantage upon obtaining a license for development at the same block.
12 According to the provisions of Chapter 3 of the LoP, the production license may be issued on- ly to a legal entity established under Norwegian law and registered in the Norwegian Business Register as well as to other persons if this is provided for by international treaties of Norway (it also applies to individuals permanently resid- ing within the EEA). The procedure for obtaining and operating this license is much more compli- cated as it is carried out in several stages, at each of which the scope of the licensee’s rights to oil and gas activities at the section under consider- ation may be changed.

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