Are there any special requirements for or restrictions on participation in the upstream oil and gas industry by foreign oil and gas companies?
Oil & Gas
There are no restrictions on participation in the upstream oil and gas industry by foreign oil and gas companies. However, upstream hydrocarbons activities can only be performed by companies organised under Brazilian laws, with management and headquarters in Brazil.
Foreign oil and gas companies may participate in the upstream oil and gas industry under the same conditions and circumstances as domestic companies. However, the Ministry may decide to reject an investor seeking an oil or gas exploration or exploitation permit if the investor is owned by third countries or individuals from third countries (meaning non-EU countries) on the basis of national security concerns.
Ιn principle, Hydrocarbon Law does not impose any special requirements or restriction for the participation of foreign companies in oil and gas upstream activities. In fact Article 4 par. 1 provides that any individual or legal entity or joint venture may become a concessionaire, regardless of their origin from an EU or a third country. However, according to par.2 of the same law, the Greek State reserves the right to exclude, under certain circumstances a third country national for security reasons.
There are no specific limitations on the entry to the Italian market of foreign companies and capital.
Certain limits may apply in mergers and acquisitions and in participation in tender procedures, if adequate reciprocity guarantees do not exist between Italy and the foreign company’s country of origin.
No, there are no restrictions for foreign companies to participate in upstream activities in Mexico, provided however that to participate in the tender procedures called by CNH for the awarding of exploration and extraction of hydrocarbons contracts they have to comply with the requirements included in the bidding guidelines released for each tender.
Requirements included in the referred guidelines will vary depending the type of area / block to be tendered but same could include: (i) proven experience in exploration and extraction activities for the type of area being tendered; (ii) technical and financial capacities; (iii) proven experience in matters related to environmental, operational and industrial safety; (iv) human capacity.
If derived from a tender procedure a foreign company is awarded with an exploration and extraction contract by CNH, the basic requirement is for such foreign company to incorporate a Mexican entity having as corporate purpose the exploration and extraction of hydrocarbons.
Foreign entities must contemplate that special requirements to participate in the tender called by CNH could be included in the bidding guidelines.
There is no restriction on the nationality of shareholders of a company engaging in hydrocarbon exploration and exploitation activities Morocco. It is not necessary to have a majority of local managers or directors, and there is no particular balance required with respect to the nationality of the members of the board or managers. As there is no citizenship requirement, shareholders are free to have exclusively foreign directors and/or managers.
There is no specific requirement under the Hydrocarbon Law to set-up a branch or incorporate a company in Morocco to carry out contemplated oil & gas activities.
However, it is worth noting that foreign exchange transactions are regulated in Morocco by the Moroccan Foreign Exchange Office ("Office des Changes", hereinafter the "FEO") which provides that all outbound transfers of money from Morocco to a foreign country must be expressly set forth under the Moroccan Foreign Exchange Instruction dated 1 January 2019 (the "FX Regulations"), namely a cash transfer from Morocco to a foreign country cannot be completed if it does not comply with the FX Regulations: in this case, it must be approved by the FEO on a case by case basis.
In this respect, companies holding reconnaissance authorizations or exploration permits that are not incorporated under Moroccan law must provide for their foreign currency needs in full and foreigners holding an operating concession are required to repatriate to Morocco the foreign currency funds necessary to cover their local expenses and financial and tax obligations, in addition to the proceeds from their sales on the domestic market.
In addition, Article 55 of Hydrocarbon Law provides that foreigners holding an operating concession must periodically provide, in the forms provided for in the exchange regulations, a statement of their foreign assets resulting from their export sales of hydrocarbons and payments made using these assets for operations relating to their activity as holders of hydrocarbon exploitation concessions.
In order for foreign legal entities to be holders of the right to carry out petroleum operations, they must be registered in Mozambique and demonstrate that they have the technical capability and adequate financial resources for the effective conduction of petroleum operations.
Also, foreign legal entities which directly or indirectly hold or control legal entities that own rights under a concession contract, shall be established, registered and administered under a transparent jurisdiction. For this purpose the Government may, independently, verify the ownership, management and control, fiscal situation of a foreign legal person who wishes to participate or participates in petroleum operations. Foreign legal entities that associate with Mozambican legal entities shall take adavtange of the preference right in the granting of concession contracts.
In the context of the acquisition of goods or services by the petroleum operations right holders, single or collective foreign entities that provide services to the petroleum operations shall associate with single or collective Mozambican entities.
Certain procedures are prescribed and necessary for participation in the upstream oil and gas industry to the extent of one’s desired area of involvement. In acquiring an interest in a filed, a company/corporation must first obtain an Oil Exploration License (OEL) to explore the concession area. Upon the expiration of the OEL such a company may apply for the OEL to be converted to an Oil Prospecting Licence (OPL), this step is to enable the company go into exploration. In the event that the company discovers oil in large commercial volume, it immediately proceeds to meet the requirement of the Minister of Petroleum Resources. The next step the company will need to fulfil will be to convert the OPL to an oil mining lease. With an oil mining lease, a company can produce and dispose of any petroleum produce discovered.
A few restrictions exist in participation in the upstream oil and gas sector. The most of these restriction bothers on the assignment of licensees or leases without the prior consent of the Minister for Petroleum. A licensee or lessee cannot commence operations or exercise any rights of control in an area within its licence or lease area, if such area is held to be sacred, appropriated or dedicated to public purposes, unless the licensee or lessee obtains consent from the Minister.
Every Bulgarian or foreign entity may apply for an upstream licence provided it meets the applicable technical, financial, and managerial criteria. A general law of Bulgaria prohibits upstream oil and gas licences to be awarded to companies that are registered in or controlled from certain offshore (“tax haven”) jurisdictions.
A foreign oil and gas company is permitted under the Oil and Gas Law to hold PI in a PSC as a permanent establishment. Foreign oil and gas companies can also establish foreign investment companies to engage in upstream oil and gas activities in Indonesia. Under the current negative list, which stipulates those business fields that are closed or restricted to foreign investment, upstream oil and gas activities in Indonesia are open to 100% foreign ownership.
To apply for a licence, a company must satisfy the OGA that it has a place of business within the UK. This means at least one of the following: having a staffed presence in the UK; being registered at Companies House as a UK company; or having a UK branch of a foreign company registered at Companies House. The residence requirements become more stringent when a licence moves to the production phase, requiring the licensee to be registered at Companies House as a UK company; or to carry on business through a "fixed place of business" in the UK.
According to TPA 6491 s.22(1) foreign oil and gas companies, provided that they are equity companies according to the law applying to them, can be granted exploration and exploitation rights. However, when applying for petroleum rights, the applicant is required to declare an address in Turkey. Furthermore, according to the Regulation on Implementation of Petroleum Act s.6(2), foreign applicants need to hand over the documents and information confirming that they are registered in Turkey.
Prior to the implementation of the Natural Gas Framework in 2016 (the "Framework") (as further described in question 18), the biggest impediment to foreign companies' participation in Israel's upstream oil and gas industry was the deemed monopoly held by the few companies which dominated this industry in Israel. The Framework, mandated specific divestment and relinquishment of holdings by the primary leaseholders in order to encourage more foreign investment and diverse participation in the industry. Under the Framework, each of the Delek Group, an Israeli limited partnership publicly traded in Tel Aviv ("Delek") and Noble Energy, a Houston based energy company and publicly listed on the U.S. Stock Exchange ("Noble Energy"), were required to make certain divestments of their rights in the Tamar, Karish and Tanin fields. Noble Energy, sold their rights in Karish and Tanin to Delek, and Delek, in turn, sold all their rights in each of Karish and Tanin in December 2016 to Energean Oil & Gas, a Greek company. With respect to the Tamar field, Noble Energy is required to sell a portion of its rights and Delek all of its rights, by the end of 2021. Both have taken steps to meet these requirements, beginning as early as the summer of 2016 and continue to do so in a piecemeal manner, which has allowed new foreign players to enter the market in their place. The Israeli Ministry of Energy has held meetings with international energy companies in order to encourage international participation, with some minimal success. Currently, five companies (including Israeli and international companies) submitted proposals to explore for oil and gas in twelve new blocks out of nineteen which the Ministry of Energy has tendered.
Objective prequalification criteria applies for those entities wishing to become production licensees or operators for a production licence. A pre-qualification procedure has been established. Facilities licences and operators may be individually assessed dependent on the application for the facilities licence. Only Gassco AS may be the Operator of Gassled the export landing natural gas submarine pipeline system. Other pipelines operating under a facilities licence, including all liquids pipelines, will normally have one of the operators of a production licence making use of the pipeline, appointed as pipeline operator when such an individual pipeline or other facility is not part of Gassled.
The Committee on Foreign Investment in the United States (CFIUS) is primarily responsible for reviewing proposed foreign investment transactions and ensuring compliance with special federal requirements. The Foreign Investment and National Security Act of 2007 (FINSA) covers a broad range of energy and infrastructure transactions in the U.S. and intensifies the screening for foreign transactions.
Finally, the Mineral Leasing Act (MLA) prohibits foreign entities from owning leases, except through the ownership of stock in a domestic corporation. Foreign stockholders are required to come from countries that grant similar privileges to U.S. citizens. Foreign investment in OCS leases also has to be passed through U.S. corporations.