How are rights to explore and exploit oil and gas resources granted? Please provide a brief overview of the structure of the regulatory regime for upstream oil and gas. Is the regime the same for both onshore and offshore?
Oil & Gas
The Federal government owns oil deposits, natural gas and other fluid hydrocarbons located:
- in onshore sedimentary basins;
- in territorial waters;
- on the continental shelf; and
- in the exclusive economic zone.
The oil and gas ownership is transferred to concessionaires and contractors at the measurement points established by the Petroleum Agency.
The main authorities of the oil and gas sector are as follows:
- Petroleum Agency (Agência Nacional de Petróleo, Gás Natural e Biocombustíveis – ANP);
- Ministry of Mines and Energy (Ministério de Minas e Energia - MME); and
- National Council for Energy Policy (Conselho Nacional de Política Energética -CNPE).
The Federal government is represented in the production sharing agreements by Pré-sal Petróleo S.A. - PPSA, a state-owned company.
There are two main regimes for onshore and offshore oil and gas exploration and production in Brazil:
- the concession regime regulated by Law No. 9,478/97 (Petroleum Law); and
- the production sharing regime created by Law No. 12,351/10 (Pre-Salt Law).
There is also the onerous assignment regime regulated by Law No. 12,276/10, under which Petrobras is granted rights by the Federal government to explore and produce hydrocarbons up to 5 billion barrels of oil equivalent in the open acreage located in the Pre-Salt. The onerous assignment regime provides Petrobras with pre-emptive rights to act as operator in the consortia formed for exploration and production of blocks located in the Pre-Salt.
As a rule, there are no major differences between onshore and offshore activities in Brazil. However, it is important to highlight that, on September 21st, 2018, the ANP approved the reduction of the royalties from 10% to 5% to foster investments in mature and marginal fields.
Last but not least, the production sharing and onerous assignment regimes apply to offshore activities only.
The Act on the Exploration and Production of Hydrocarbons governs exploration and production of oil and gas resources in Croatia (the Hydrocarbons Act).
The exploration of hydrocarbons can be performed exclusively based on a Licence for the Exploration and Production of Hydrocarbons (the Licence) and an Agreement on the Exploration and Production of Hydrocarbons (the AEPH). The production of hydrocarbons can be performed based on an AEPH and a special Licence for Hydrocarbons Production, or based on an existing right to the production.
In general, the Licence is issued and AEPH is concluded based on a tendering procedure. Exceptionally, no tendering procedure is needed in case of issue of licences for the areas included in previous tendering procedures and for relinquished areas.
The tendering procedure for issuing of the Licences begins by adoption of the Government decision to tender, based on a proposal of the Hydrocarbon Agency received via the ministry competent for energy (the Ministry). A tender notice is published in the Official Gazette of the Republic of Croatia and the Official Journal of the European Union at least 90 days before the expiry of the deadline for the delivery of tenders. The tender notice contains information regarding the blocks available for the tendering procedure, an indicative date or deadline for issue of Licence, as well as criteria for the selection of tenderers.
The Hydrocarbon Agency carries out preparatory activities, drafts tender specifications and organizes presentations for investors. The tender specifications prescribe in detail the documents that need to be submitted to demonstrate financial, legal and technical capacity of the tenderers, payment of tendering security, grounds for excluding participants from the tendering procedure, etc.
Criteria for selection of the most favourable tenderer are:
– technical, financial and professional capacities of the tenderer or the consortium of tenderers,
– the manner in which the tenderer or the consortium plan to carry out the activities of production and exploration,
– overall quality of the submitted tender,
– financial conditions submitted by the tenderer,
– any lack of efficiency or responsibility in any form which has been displayed in other countries in previous activities.
The Commission opens, examines and evaluates the tenders and carries out all other relevant activities necessary for making a proposal to the Government for issuing of a Licence to selected tenderers. The Commission also negotiates with the selected tenderers on the terms of the AEPH.
In regard to offshore exploration and production, before issuance of a Licence, the Government may consult with the Coordinating Authority determined pursuant to the regulation governing the safety of offshore exploration and production of hydrocarbons. The Offshore Exploration and Production of Hydrocardbons Safety Act specifies additional criteria for determination of technical and financial capacity of tenderers, participation of interested public, safety measures, etc.
Selected tenderers are issued a Licence by the Government. A separate Licence is issued for each individual exploration block (onshore or offshore). The AEPH must be concluded within 6 months from issuance of the Licence.
The Licence is granted for a period of up to 30 years, which includes the exploration period and the production period. Upon fulfillment of certain conditions, investors that obtained a Licence and concluded an AEPH are automatically granted the Licence for Hydrocarbons Production by Government decision.
Greek oil and gas legal framework is mainly provided in Law 2289/1995 (Hydrocarbon Law) which has transposed Directive 94/22/EC. Law 2289/1995 establishes the basic rules for the exploitation of hydrocarbons in Greece and sets out the requirements for the licensing of the respective rights. In addition, Law 4001/2011 incorporates the provisions of Directive 2009/72/EC and provides for the establishment of a state-owned company, under the name « Hellenic Hydrocarbon Resources Management S.A.» (“HHRM”).
According to Article 2 of Law 2289/1995 the management of the exploration, production and exploitation rights that exist in the Greek Territory, both in onshore and offshore areas is exercised on behalf of the Greek State by ΗΗRM.
The rights for exploration and exploitation of hydrocarbons are granted by HHRM on behalf of the Greek State, according to the following alternatively applied procedures (Article 156, paragraph 17 L 4001/2011), which are the same for onshore and offshore activities:
a) An invitation to tender, initiated by the HHRM and approved by the Minister of Environment, Energy and Climate Change, is published in the Government’s Gazette and sent for publication in the Official Journal of the European Union.
b) Following an application by an interested party; in connection with this form of expression of interest, the HHRM can only decide whether to include the area specified by the applicant in a tender, in which case it issues a relevant invitation which, following its approval by the aforementioned Minister, is sent for publication in the Government’s Gazette and the Official Journal of the EU.
c) An open door invitation for the expression of interest, when the area under concession is available on a permanent basis or has been the subject of a previous procedure which has not resulted in the conclusion of a lease agreement or a production sharing agreement or has been abandoned by the previous concessionaire. With an invitation published in the Government’s Gazette and sent for publication in the Official Journal of the EU, the Minister of Energy specifies such areas as well as the minimum basic terms of their concession.
Within thirty (30) days from the end of the relevant semester, the Minister of Environment, Energy and Climate Change announces that a specific area is excluded from the areas made available for bidding , due to being subject to a concession process following the submission of offers provided during that semester. The offers are evaluated and among them is selected the one most advantageous to the State, following negotiations with the interested parties and based on the selection criteria set out in the open door invitation.
At present, the interest is focused on case (c) «open door», since the country disposes a considerable number of areas identified already and this procedure fits the need for informed decisions from all parties.
In general, the exploration rights on onshore areas are granted for seven years and on offshore areas for eight years.
Mineral rights are made up of prospection and exploration permits, production licences and sole concessions.
Exploration permits are exclusive permits, issued at the request of the oil company, which must submit the exploration programme which it intends to develop and the geological and geophysical studies underlying the choice of the area on the basis of the possible presence of liquid/gas hydrocarbons. Applications may be submitted in competition for the same area by other operators for three months from the publication of the first request in the Official Journal of the European Union.
Exploration permits are issued following a single procedure (lasting a maximum of 180 days) governed by article 1 paragraphs 77 and 79 of Law no. 239 of 23/08/2004, and subsequent amendments.
The project is selected by the MiSE, having obtained the opinion of a consultative organ, the CIRM, which is represented by the competent State administrations (MiSE, MATTM, Ministry of Instruction of University and Research, ISPRA and Avvocatura di Stato) as well as the representatives of the Regions. For offshore permits, the Ministry of Transport and Agricultural and Forestry Policies are involved.
Projects are subject to an environmental screening and/or Environmental Impact Assessment by the MATTM or the Region concerned. Onshore permits are issued by the Ministry in accordance with the Regions concerned.
The involvement of local communities is guaranteed by the role played within the context of the procedure by the Municipal and Provincial administrations concerned, which must express their opinion on the construction of the plants and carry out a check on the compliance of the works with planning regulations.
Production licences issued by the MiSE are exclusive ones. In general, the licence-holder, after a positive finding on its part, is granted the right to produce on the basis of a programme for the development of the deposit approved at the time of the granting of the licence.
The surface area of a licence is much smaller than that of an exploration permit, but is not, in general, strictly connected to the deposit found by exploration, as in such area, the licence-holder may also carry out further exploration (geophysical and drilling) to increase the production of the deposits already found.
Onshore and off shore production licences are granted by the MiSE in accordance with the Region concerned and once the environmental procedures have been completed.
The regime for offshore facilities is more stringent in relation to environmental impact assessment and Legislative Decree no. 145 of 18/08/ expressly provides that the licence-holder is financially responsible for the prevention and repair of the environmental damage caused by sea operations through hydrocarbon activities carried out by it or on its behalf.
Rights to explore and exploit / ownership.
Rights to explore and exploit oil and gas resources and ownership of such resources once extracted from the subsoil are granted as follows:
• To private companies:
a. By means of exploration and extraction contracts awarded by CNH through a tender procedure, which basically have been:
- License contracts.
- Production sharing contracts.
- Profit sharing contracts.
b. By means of partnerships with PEMEX for specific areas that were farmed out by such company and which partner was chosen by CNH through a tender procedure.
• To PEMEX:
a. By means of exploration and extraction contracts allocated by CNH in round zero (were PEMEX requested certain oil and gas fields that prior 2013 had been discovered or operated by PEMEX).
b. By means of exploration and extraction of hydrocarbons contracts awarded by means of the tender procedures called by CNH.
c. By means of partnerships with private companies for specific areas that were farmed out and which partner was chosen by CNH through a tender procedure.
As of December 2013, oil and gas resources were solely owned by the Mexican Government and hydrocarbon activities were exclusively reserved to PEMEX (including upstream and downstream activities).
However, on 2013 Mexican Congress amended the federal constitution allowing private participation in all hydrocarbon activities, including upstream activities. As of this year there is no restriction for private companies to participate in these activities.
Mexican Energy Ministry (“SENER”) along with CNH prepare (each five years) a master plan in which all areas to be tendered are detailed. This program includes specific data for each area, such as, location, extension, type of hydrocarbons, prospective resources and round in which they will be tendered.
Participation of private companies in exploration and extraction of hydrocarbons is now carried out by means of the above-referred exploration and extraction contracts which are awarded by CNH through tender procedures in which the areas and fields included in SENER's master program, are tendered.
Participation of PEMEX in exploration and extraction activities is made over areas where activities were carried out prior 2013. These areas where allocated to PEMEX by CNH in a round known as “round cero”. In addition, PEMEX has also been awarded by CNH with exploration and extraction contracts over areas that were tendered by such authority. Lastly, as per the Hydrocarbons Law, PEMEX has been able to partner with some private companies to jointly explore and exploit certain areas allocated by CNH.
Key legislation governing upstream activities in Mexico is the Hydrocarbons Law and its regulations, which were published in the Federal Official Gazette on August 11, 2014 and October 31, 2014 respectively. The referred law sets out, among other matters: (i) rules allowing private individuals and companies to participate in upstream activities; (ii) types of contracts to be awarded by CNH; (iii) environmental protection regulations and guidelines for environmental, industrial safety and operative safety applicable for upstream activities.
Upstream activities are regulated and supervised by CNH.
Regime is the same for onshore and offshore activities provided however that for onshore activities additional local and municipal regulations may apply which may vary depending the Mexican State and municipality where the project is to be carried out.
Hydrocarbon exploration and exploitation activities in Morocco are mainly governed by the provisions of the Law no. 21-90 relating to hydrocarbon exploration and exploitation, promulgated by the Dahir no. 1-91-118 dated 22 May 1991 (the "Hydrocarbon Law") and its implementing decree no. 2-93-786 dated 3 November 1993 (the "Hydrocarbon Decree").
The Hydrocarbon Law distinguishes between reconnaissance works, exploration and exploitation activities, either conducted onshore or offshore. The same Oil and Gas permitting regimes do apply to onshore and offshore activities.
(a) Reconnaissance works
Reconnaissance works refer to geological, geochemical, geophysical and airborne works or surveys to determine the nature of subsoil, with the exclusion of scientific works and production drilling activities.
There are subject to the award of a reconnaissance authorization by the Ministry of Energy further to filling a request and the provision of documents justifying legal and financial capabilities of the applicant. The awarding of the reconnaissance authorization is subject to the conclusion of a reconnaissance contract governing the rules applicable to the reconnaissance work program to be performed by the applicant.
(b) Exploration works
Exploration works refer to research operations to discover hydrocarbons in commercial quantities.
There are subject to (i) the conclusion of a petroleum agreement with the Moroccan state represented by the National Office of Hydrocarbons and Mines ("ONHYM"), under which the state holds a maximum 25% participating interest in any subsequent exploration permits and concessions and (ii) an exploration permit issued by the Ministry of Energy the purpose of which is to award exclusive exploration rights in relation to hydrocarbons within the area of interest covered by the relevant permit.
(c) Exploitation activities
Exploitation activities are subject to the award of a concession issued by Decree, authorizing the holder of an exploration permit who made a commercial discovery to develop and further exploit the discovery in view of its commercialization.
The holder of a concession is the owner of the available deposits and can freely dispose of recovered deposits during the term of the concession.
Rights to oil and gas are shared between the state and the holder of valid concession rights in proportion to their respective participating interests in any applicable concession (i.e. in practice 75% for the private partner and 25% for the State represented by ONHYM) . As a result, each partner in a licence can freely sell its share of the available reserves.
Please see further information on the main features of the reconnaissance authorization, exploration permit and concession in our response to question 3 below.
The Constitution of Mozambique provides that all-natural resources, whether located on land, underground, inner waters, territorial sea, and the continental platform or in the Mozambican exclusive economic area, are property of the State.
The oil and gas legislation regulate how private entities access the exploration of petroleum resources and states that any operation must be previously authorised by the State, through either an administrative authorisation or a licence. The Government reserves the right to be part of any project implemented to conduct petroleum operations, through State-owned company Empresa Nacional de Hidrocarbonetos, EP (“ENH”).
Therefore, rights for conducting petroleum operations in upstream interests are granted through concession contracts and are generally attributed by a public tender process. Such rights may also be attributed by simultaneous or direct negotiations in relation to areas that had already been declared available when (i) no concession was granted pursuant to previous public tender, (ii) rescission, relinquishment and abandonment or (iii) the need to join adjacent areas to a concession, where justified, due to technical and economic reasons.
Concession contracts are administrative contracts, subject to the authorisation of and supervision by the Administrative Court, the main clauses therein being subject to publication in the official gazette.
The following rights may be conferred under the following concession contracts (be it onshore or offshore, when applicable):
- Exploration and production (EPCC);
- Pipeline construction and operation; and
- Infrastructure construction and operation.
From the list referred above, the EPCC contract is the key contract applicable to upstream activities, as it grants an exclusive right to carry out petroleum exploration and production.
MIREME has approved an official template of an EPCC which is published in the INP website (http://www.inp.gov.mz/pt/Politicas-Regime-Legal/Modelo-de-Contratos-de-Pesquisa-e-Producao).
The Reconnaissance Concession confers a non-exclusive right to perform preliminary appraisal and evaluation of the contract area and is granted for a maximum period of two years, non-renewable, and allows drilling up to a 100-metre depth.
The Pipeline Construction and Operation Concession allows the concession holder to construct and explore oil or gas pipelines for transportation of crude oil and natural gas, should such operations not be covered under the EPCC Agreement. These agreements shall be detailed and include the specification of the oil or gas pipeline and provisions regarding the rights of use of land.
Lastly, the infrastructure construction concession agreement allows the concession holder to construct and operate oil production infrastructure, such as processing and conversion facilities that are not covered by an approved appraisal and production plan.
The right to explore and exploit oil and gas are mainly acquired by two major means - Bidding Rounds and the Grant on the application to the Minister of Petroleum.
The Minister of Petroleum Resources has discretion to grant oil exploration, prospecting and mining licence/lease to companies incorporated in Nigeria. The Petroleum (Drilling and Production) Regulations 1969 outlines the application process and requirements for the grant of the relevant licence/lease.
The application must be in writing and addressed to the Minister. The application must be accompanied by the following:
i. Evidence of the financial status and technical competence of the applicant;
ii. Details of the proposed work or proposed work programme of the operations;
iii. Details of the annual expenditure;
iv. The start date of the operations;
v. Scheme for recruiting and training Nigerians;
vi. Evidence of the licensee’s ability to market any petroleum produced;
vii. Annual reports in respect of the applicant's oil exploration and production activities;
viii. Any other information which the Minister may require.
Other procedure for acquiring the rights by grant include:
i. The Applicant pays a non-refundable fee of USD 10,000.00 (Ten Thousand US Dollars) per block
ii. The Applicant also pays the annual rent of USD 10.00 per sq. km, and provide the following documents:
a. Certificate of incorporation of the company
b. Evidence of financial standing to the tune of USD 10,000,000.00 (Ten Million US Dollars) or N 3,500,000,000.00 (Three Billion Five Hundred Million Naira)
c. Evidence of the Applicants’ technical knowledge in oil prospecting.
d. Evidence of detailed environmental policies referencing environmental impact assessment analyses
e. Evidence of payment of all necessary fees
iii. Where the minister is satisfied with the information provided, it will permit the Department of Petroleum resources to grant the permit.
iv. The grant of all licences/leases are published in the Federal Gazette with the name of the licensee or lessee and the situation of the relevant area.
Alternatively, the government also awards exploration and production rights through competitive bidding processes known as licensing rounds. The procedure includes:
i. The Department of Petroleum Resources (DPR) usually advertises available blocks for bidding in the National dailies and magazines, international publications approved by the government and dedicated websites for bidding rounds.
ii. Interested companies submit detailed bids which sets out:
a. Evidence of technical capacity;
b. Evidence of financial capacity that must not be less than the USD 10,000,000.00 (Ten Million Dollars)
iii. Interested companies pay the sum of USD 10,000.00 (Ten Thousand US Dollars) as bid processing fee
iv. The bidders will be required to provide details of their shareholding structure, names of directors, track record in the oil and gas sector, audited financial statements, partnership or collaborations with indigenous firms and financial resources to bid and pay for oil acreages
v. After this stage, investors will pay the USD 15,000.00 (Fifteen Thousand US Dollars) each for data mining fees to enable them to gain access to the relevant data on acreages that will be placed on the offers
vi. Investors will also avail information on the size of the fields, seismic surveys and past appraisals conducted among other information.
vii. The DPR will commence a technical evaluation on the bids submitted. Investors who fail to meet the criteria, would be dropped while investors who pass the technical evaluation process would be invited to submit their commercial bids in a process that will be opened to the public
viii. Finally, oil acreages will be given to the highest bidders who will be given a timeline to pay for the acreages.
Upon the grant of the Oil Prospecting License, there are certain obligations to be performed by the holder of the license, which includes: the holder upon grant is expected to start the geographical investigation within six months of the grant on the area leased; the holder of the OPL license is also required to train Nigerians on the act of drilling and production of crude oil; the holder also has financial obligations to pay rents and loyalties as stipulated by the Petroleum Profit Tax Act.
Onshore and offshore licences are granted under almost identical terms and procedures. Little differences may exist in timing and scrutiny.
An oil and gas prospecting and/or exploration licence (called permit) is granted following a public competitive procedure. An interested party may initiate the procedure. The term of the licence is for up to five years initially, with an option to extend up to five more. The licensee may register a geological or commercial discovery within the licence term. Registration of a commercial discovery gives rights to a direct award of a production licence without further competition or tender.
A production licence is granted under a concession agreement. The licence may be for a period of up to 35 years, with the right to extend for up 15 more years. If there is no party having a right of direct award pursuant to a commercial discovery, production concession for established reserves shall be awarded following a public competitive procedure.
Indonesia’s oil and gas sector is governed mainly by Law No. 22 of 2001 regarding Oil and Natural Gas (November 22, 2001) (the “Oil and Gas Law”) and Government Regulation No. 35 of 2004 regarding Upstream Oil and Gas Business Activities (as amended, “GR 35”). The State retains mineral rights throughout Indonesian territory and the Government holds the mining authority. The Minister of Energy and Mineral Resources (“MEMR”) determines upstream work areas for onshore and offshore operations based on consultations with and recommendations from the respective regional governments. Upstream activities include exploration and exploitation and are managed and supervised by the Special Task Force for Upstream Oil and Gas Business Activities (“SKK Migas”).
Private companies earn the right to explore and exploit oil and gas resources by entering into cooperation contracts, mainly based on a production sharing scheme, with the Government (through SKK Migas), thus acting as a Contractor to SKK Migas. One entity can hold participating interest (“PI”) in only one Production Sharing Contract (“PSC”), but several entities can hold PI in a single PSC.
The principal legislation governing the development of natural oil and gas reserves in the UK is the Petroleum Act 1998 (Petroleum Act). The Petroleum Act establishes a licensing regime, which applies onshore and offshore in the whole of the UK. The only exception is Northern Ireland, which has a separate regime for its onshore oil and gas resources. In addition, the administration and enforcement of the licensing regime as it applies onshore in Scotland and onshore in Wales has been devolved to the Scottish and Welsh Governments respectively. Offshore, the Petroleum Act applies to the territorial sea and the UKCS. Under the Petroleum Act, all rights to petroleum including the rights relating to "searching and boring for and getting petroleum" are vested in the Crown. The OGA, on behalf of the Crown, may grant licences "to search and bore for and get petroleum".
Licences are issued through competitive licensing rounds. Seaward licensing rounds take place on an annual basis, while landward licensing rounds are less frequent (reflecting the fact that there is only limited onshore oil and gas exploration and production in the UK). The most recent offshore licensing round, the 32nd offshore licensing round, was launched on 10 July 2019, with 768 blocks or part-blocks on offer across the main producing areas of the UKCS.
A party can apply for a licence over a particular area (either by itself or as part of a joint venture) during a licensing round. The EU Hydrocarbons Licensing Directive of 1994 sets out rules that EU Member States must follow when issuing petroleum licences, including the factors that may (and may not) be taken into account when deciding whether or not to issue a licence, and the minimum amount of public consultation required. The Directive is implemented in the UK by the Hydrocarbons Licensing Directive Regulations 1995. The Regulations require an invitation for applications to be published in the European Journal at least 90 days in advance, together with the criteria upon which applications are to be determined.
Oil and gas exploration and exploitation which includes searching for, recovery and bringing to the surface crude oil and gas amount to upstream oil and gas activities. Oil and natural gas are both in the scope of the definition of "petroleum" in the Turkish Petroleum Act numbered 6491 (“TPA 6491”) section 2. Therefore, the main pieces of legislation for upstream oil and natural gas activities is TPA 6491 and secondary legislation enacted based on TPA 6491. It should also be noted that Turkey is a contracting party to many conventions and international agreements with regards to the international oil and gas market including, inter alia, the International Convention on Readiness, Response and Cooperation With Regards to Oil Pollution and Its Annexes dated 27 November 1992 (London) and the International Agreement on Establishment of an International Fund Regarding the Indemnification of the Damages Caused by Oil Pollution dated 27 November 1992 (London).
GDMPA which is affiliated with the Ministry of Energy and Natural Resources (“MENR”) is the main regulatory authority for supervising the upstream oil and gas activities. GDMPA is responsible for setting the national policy for petroleum affairs, ensuring the utilisation of oil and gas fields and granting oil and gas exploration and exploitation licences.
According to TPA 6491, it is prohibited to engage in any kind of activity involving petroleum without having been granted with the relevant licences. Initially, TPA 6491 sets forth that a research permit shall be issued by GDMPA, which would allow its holder to conduct certain research activities. The exploration and/or operation licences issued for a part of the area for which a research permit is requested do not constitute an impediment for research permit issuance. There is no minimum or maximum term for research permits issued by GDPA. Apart from the research permit, there are two main types of licences required for exploration and operation activities.
Exploration Licences: An exploration licence entitles its holder with the rights to conduct activities such as exploring, searching, improving the areas in which petroleum is found and producing petroleum from the areas that the licence covers. To obtain an exploration licence, first an application must be made for an area that needs to be announced in the Official Gazette. Following this announcement, additional applications can be made before GDMPA. The business and investment plans of the applicants (including the first applicant) must be submitted to GDMPA within 90 days following the announcement. The applications shall be assessed by GDMPA in accordance with the criteria provided under the implementation regulation. The exploration licence shall be announced in the Official Gazette, and within 30 days following this announcement, the exploration licence holder shall deposit another guarantee, namely an investment guarantee, in the amount of 2% of the investment amount for onshore activities and 1% of the investment amount for offshore activities. In the case that the said guarantee amount is not duly deposited, the licence shall be cancelled by GDMPA. Exploration licences shall be initially issued for a period of five (5) years for onshore and eight years for offshore, with a possibility of extension up to nine years for onshore and fourteen (14) years for offshore exploration activities.
Operation Licences: In order to obtain an operation licence, an application must be made to GDMPA. If the application is accepted, the applicant shall further deposit a guarantee in the amount of 0.5% of the operation licence charge per hectare to GDMPA within 15 business days following notification of the decision. If the said amount is not deposited in due time, the applicant will be deemed to have withdrawn its application. Exploration and operation licences can also be issued by an auction by GDMPA. The relinquished areas can also be licensed with the auction method upon the consent of MENR. The maximum term of operation licences that can be granted by GDMPA is 20 years.
The petroleum sector in Israel is regulated by way of two primary laws: the Petroleum Law, 1952 (the "Petroleum Law") including the Petroleum Regulations, 1953 promulgated thereunder (the "Petroleum Regulations") and the Natural Gas Sector Law, 2002 (the "NG Law").
The Petroleum Law governs and regulates Israeli upstream activities (onshore and offshore) with respect to exploration and production of petroleum, broadly defined in the Petroleum Law as: petroleum fluid, whether liquid or gaseous and oil, natural gas, natural gasoline, condensates and related fluid hydrocarbons and also asphalt and other solid petroleum hydrocarbons when dissolved in and producible with petroleum fluid.
The NG Law governs the midstream and downstream activities and sets out a licensing
regime for Israeli natural gas infrastructure, including distribution, transmission, storage and LNG facilities. For more details see question 17.
All petroleum resources in Israel and its continental shelf belong to the state. The Petroleum Law provides that no person may explore for petroleum without a preliminary permit, license or lease, and no person may produce petroleum without a license or lease.
The Petroleum Law falls under the jurisdiction of the Minister of National Infrastructures, Energy and Water Resources (the "Energy Minister") who in turn is tasked with appointing a Petroleum Commissioner (the "Petroleum Commissioner") to be responsible for matters related to oil and gas exploration within the territory of Israel, in conjunction with the Petroleum Council that advises the Energy Minister and the Petroleum Commissioner (the "Petroleum Council"). The Petroleum Council is comprised of 15 members, with at least seven representing the public and is required to meet at least four times a year.
Norway exercises jurisdiction over significant petroleum resources located in the seabed of the Norwegian continental shelf (NCS). Exploration and production activities related to these resources are governed by the 1996 Petroleum Act, supplemented by regulations (Royal Decrees, Ministry or Directorate decisions outlining generally applicable rules) and a dedicated gradually developed concessionary regime that has been in place since 1965. The standardised production licence is the core petroleum rights documents awarded pursuant to public administrative law and is not a contract. The conditions for award and the procedure implemented for competitive bidding prior to an award of production licences are consistent with Norway's EEA obligations and compliant with EU internal market rules including the 1994 EU Hydrocarbons Licencing Directive. The production licence requires licensees to enter into mandatory standardised joint operating agreement and accounting agreement establishing an unincorporated joint venture for each production licence.
Petroleum resources in the subsoil of on mainland Norway and any associated activities are regulated by the 1973 Land Petroleum Act. As most of the Norwegian mainland is without sedimentary rocks no activities have to date been conducted on the Norwegian mainland. Any activities related to petroleum within the territory of Spitsbergen is regulated by Norwegian law and jurisdiction expressed primarily through a 1925 Royal Decree – Bergverksordningen, established pursuant to the 1920 Svalbard treaty (entry into force in 1925). Very strict environmental regulations apply for most economic activity due to the sensitive Arctic environment. Only limited exploration activities have been undertaken at Svalbard and no commercial production.
In the U.S., the onshore extraction of oil and gas is generally regulated by the individual states through statutes and common law. Federal and constitutional law may also apply in certain cases for the offshore production of oil and gas. Under U.S. law, private individuals, corporate entities, Native American tribes, and local, state and federal governments have surface rights and subsurface oil and gas rights on the land that they own.
Although there are minor variations among each state, the owner of a particular parcel of land will typically also own the oil, gas and minerals underneath the surface. There are two legal doctrines covering the private ownership of onshore oil and gas in the U.S.: (1) the law of capture and (2) the doctrine of correlative rights. On one hand, the law of capture provides that a person who has a well on its own land or leased land may produce and keep for itself all of the oil and gas produced from that well. On the other hand, under the doctrine of correlative rights, states will typically restrict the number of wells in a given area to the minimum number capable of efficiently producing the common source of supply, that is the reservoir. Each owner of oil or gas rights can then share proportionately from the production of the permitted wells drilled from the common supply. The legal doctrine that applies to a particular parcel of land will vary depending on state law.