Who are the key regulators for the upstream oil and gas industry?
Oil & Gas
The key regulator for the upstream oil and gas activities is the ANP.
The key regulators of the oil and gas industry are the Government, the Ministry, the Hydrocarbons Agency and the Croatian Energy Regulatory Agency.
Besides its political influence on the oil and gas sector and its regulation, the Government issues licences for the exploration and exploitation of oil and gas. The Government can also directly proscribe procedures, fees and market tariffs by issuing executive orders.
The Ministry drafts and gives suggestions of laws and other regulation in the oil and gas sector, as well as decisions on the approvals and selection of the most favourable tenderer for exploration and exploitation projects, enters into contracts for the exploitation of hydrocarbons with investors (in the Government's name), and keeps records of various data relevant for this sector, inspects ongoing projects and undertakes other activities as required by the law.
The Hydrocarbons Agency monitors investors' compliance with the terms of their exploration and exploitation contracts and contributes to the overall advancement of the hydrocarbons sector by implementing best practices, reporting to the European Commission and advises the Ministry in any issues related to the regulation of hydrocarbons.
The Croatian Energy Regulatory Agency is an independent market regulator whose main purpose is to oversee all energy subjects on the Croatian market, from the point of their inception all through their operation and market presence, while also providing its input about energy regulatory matters to the Government and the Ministry and preparing an overall energy market annual report to the Croatian Parliament.
Law 4001/2011 updated the legal framework and created a new state authority to coordinate and promote hydrocarbon activities, known as the Hellenic Hydrocarbon Resources Management (HHRM), which operates under the supervision of the Energy Ministry. HHRM is a state-owned company with the Hellenic State being the sole stakeholder (100%), however it operates independently as a private-sector economic entity. Hence, until today HHRM is the sole state-owned management body, which is the reference point between the State and the contractors with respect to hydrocarbons. On the other hand, the competent authority to legislate in hydrocarbon matters is the Ministry of Environment, Energy and Climate Change.
The main key regulators are the Ministry of Economy and Finance (MEF); the Ministry for Economic Development (MISE); the Ministry for the Environment and the Protection of Land and the Sea (MATTM); the Italian Regulatory Authority for Energy, Networks and Environment (ARERA) which carries out regulatory and supervisory activities in the sectors of electricity, natural gas, water services, waste cycle and district heating.
Furthermore, the Italian Institute for Environmental Protection and Research (ISPRA) is part of a network known as National System for Environmental Protection, made up of 21 Territorial Environmental Protection Agencies (ARPA).
The Regions too (i.e. the main Italian administrative districts) are increasingly using their role and involvement in regulatory and in particular procedural rules.
Hydrocarbon activities, such as oil and gas, are regulated by the:
- Energy Ministry (“SENER”).
- Energy Regulatory Commission (“CRE”).
- National Agency of Industrial Safety and Environmental Protection of the Hydrocarbons Sector (“ASEA”).
- National Centre of Natural Gas Control (“CENAGAS”).
Oil and gas / energy public policies.
SENER is the direct government authority in charge of determining the energy policies applicable for Mexico. For instance, prior the new government regime which took office on December 2019, the public policy from SENER was to encourage participation of private companies in the oil and gas industry by means of awarding exploration and extraction of hydrocarbons contracts through CNH.
As of December 2019 the energy public policy has been to strengthen PEMEX as the State-Owned government company for such company to increase its activities and production.
Supervision of upstream activities.
CNH is responsible for supervising and regulating upstream activities by, among other things:
- Organising tender procedures to award contracts for the exploration and extraction of hydrocarbons (oil and gas).
- Managing and supervising contracts that have been awarded.
- Supervising and authorizing development plans filed by awarded companies for the blocks and fields that were awarded to them.
Supervision of health, safety and environmental protection derived from hydrocarbon activities, included those related to upstream activities, is the responsibility of the ASEA. ASEA is a governmental body of the Environmental and Natural Resources Ministry (Secretaría de Medio Ambiente y Recursos Naturales) (“SEMARNAT”).
In 2014, ASEA was created as a result of constitutional amendments approved in 2013. It was created, in particular, to:
- Monitor and ensure that all hydrocarbon activities are carried out under sustainability principles.
- Respond to and resolve an accident or emergency in the industry.
Natural gas activities are supervised and regulated by the CRE and CENAGAS.
CRE is the regulatory government body that issues all permits related to oil products (i.e. gasolines and diesel) and gas (mainly in connection with downstream activities). Additionally, it supervises and inspects compliance with laws, regulations, and Mexican official standards.
CENAGAS was created to manage, administer, and operate the National Natural Gas Transportation and Storage System and to ensure continuity and safety in the provision of natural gas throughout Mexico.
The main authorities acting in the oil and gas sector are (i) the Ministry of Energy, Mines, Water and Environment (the "Ministry") which regulates hydrocarbon exploration and exploitation and (ii) ONHYM which conducts reconnaissance, exploration and exploitation of hydrocarbon deposits.
ONHYM acts under the supervision of the Ministry, which supervises its activities to ensure that they are consistent with the provisions of the Hydrocarbon Law and the Hydrocarbon Decree.
Under Article 71 of the Hydrocarbon Law, ONHYM can, on behalf of the State:
- Enter into petroleum agreements with oil companies.
- Hold participating interests in exploration licences or concessions.
- Exercise pre-emption rights on behalf of the state in case of the assignment of participating interests in a specific oil and gas licence.
The ONHYM's internal department the Oil Agreements Negotiation Division (Division Négociations des Accords Pétroliers) attached to the Directorate for Partnership and Cooperation (Direction Partenariat et Coopération) is the key contact for operators carrying out exploration works in Morocco. This department is in charge of the preparation and submission of all applications to be filed with the Ministry of Energy, and generally ensures the daily follow-up of applicable administrative procedures on behalf of its partners in the various licences. Therefore, operators should develop close working relationships with this team to ensure the efficient management of their licence portfolio in Morocco.
The Ministry of Finance is also involved in the monitoring of oil and gas exploration and exploitation activities. Under Article 34 of Hydrocarbon Law and Article 60 of Hydrocarbon Decree, petroleum agreements must be approved by a joint order (arrêté conjoint) of the Ministry of Energy and the Ministry of Finance.
According to the legislation in force, several public entities have control over the oil and gas industry, as follows below:
The Council of Ministers is the highest governmental body with competence to approve primary sector legislation and grant concessions, including the approval of the respective contracts.
The Ministry of Mineral Resources and Energy (“MIREME”) is the governmental body that, in accordance with the principles and objectives set by the Government, steers and monitors the implementation of Government policy in the geological investigation and exploitation of minerals and energy resources, including coal and hydrocarbons, and the development and expansion of electricity supply infrastructure, natural gas and petroleum products. It performs day-to-day governance and develops and implements oil and gas sector policies, in addition to being responsible for the supervision of the National Institute of Petroleum ("INP").
The INP was created through Decree no. 25/2004, of 20 August 2004, and with head office in Maputo, manages and oversees Mozambique’s petroleum resources in its role as a national agency, and is the regulatory entity responsible for the administration, promotion and supervision of petroleum activities, under the tutelage of the MIREME. More specifically, it is responsible for the guidelines for the participation of the public and private sectors in the prospecting and exploration of petroleum products and their derivatives, and for the regulation and control of operations and tender procedures, while guaranteeing the preservation of public interest and the protection of the environment, by ensuring compliance with the applicable requirements set out in the law.
Alongside the entities mentioned above, a new entity was created, as indicated in the Petroleum Law (approved by Law no. 21/2014, of 18 August 2014), which is the High Authority for the Extraction Industry (“AAIE”), whose role is to supervise petroleum activities in Mozambique. However, this entity has not yet become operational, given that its composition, status, powers and organisational structure have not been defined by the Council of Ministers.
The Government is the key regulator in the upstream oil and gas industry. The Constitution of the Federal Republic of Nigeria vests control of all minerals, mineral oils and natural gas in, under or upon any land in Nigeria, in the government of the Federation which is to be managed in the manner prescribed by the National Assembly. The Petroleum Act which is the principal statute, governs petroleum operations, including exploration, production and use. It vests ownership and control of all petroleum exclusively in the government and the exercise of the powers consequent on this title in the Minister of Petroleum Resources, who is the head of the Ministry of Petroleum Resources. The Minister acts primarily through the Department of Petroleum Resources, which carries out routine oversight and compliance monitoring functions.
Other bodies involved in the regulation of oil and gas include:
i. Federal Ministry of Environment;
ii. National Environmental Standards and Regulations Enforcement Agency (NESREA), a parastatal of the Ministry of Environment;
iii. National Oil Spill Detection and Response Agency (NOSDRA);
iv. Federal Inland Revenue Service (FIRS); and
v. Nigerian Content Development and Monitoring Board who guide, monitor, coordinate and implement the country’s involvement in the oil and gas industry.
The regulatory body for extracting oil and gas is the Department of Petroleum Resources (DPR). The DPR is an arm of the Ministry of Petroleum Resources. Among other things, the DPR:
i. Monitors the operations of oil companies.
ii. Sets and enforces environmental standards.
iii. Collects royalty and rents.
iv. Supervises and ensures compliance with oil industry regulations.
v. Issues licences and permits.
vi. Ensures the protection of all oil and gas investments.
Currently the Minister of Energy, and its administration, is the central authority regulating upstream oil and gas. Licences are granted by the Council of Ministers pursuant to a recommendation and a procedure organised and led by the Minister of Energy. The contracts are signed by the Minister of Energy as representative of the State, and are controlled by Ministry’s administration. Other competences of the Minister of Energy include: contractual and administrative control on the performance of the licences; collection of exploration fees and royalties; operation of contract guarantees; approval of work programmes and plans, acceptance of performance reports; approval and registration of discoveries; maintenance of the geological fund etc.
Environmental matters are within the authority of the Ministry of Environment and Water, including environmental impact assessment (EIA) procedures.
The Ministry of Energy and Mineral Resources stipulates regulations and oversees the oil and gas industry, while SKK Migas manages and supervises the upstream sector.
Until recently, the Department for Business, Energy and Industrial Strategy (BEIS), and its predecessor departments, was responsible for administering and enforcing the licensing regime under the Petroleum Act. However, a new independent regulator for the upstream oil and gas industry – the OGA – was established in 2015 as part of a general review (the Wood Review) of the UK upstream industry, designed to revive the industry. The OGA is tasked with delivering the new "Maximising Economic Recovery of UK petroleum" (MER UK) strategy, which imposes an obligation the OGA, as well as licensees, to "take the steps necessary to secure that the maximum value of economically recoverable petroleum is recovered from the strata beneath relevant UK waters".
The OGA has taken over from BEIS nearly all regulatory functions relating to the upstream oil and gas industry. However, BEIS has retained responsibility for enforcing the decommissioning regime under the Petroleum Act (see question 11 below) and the environmental legislation applying to offshore oil and gas activities (see question 8 below). BEIS carries out this function through a departmental unit called the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED).
The Health and Safety Executive (HSE) is responsible for overseeing and enforcing the health and safety legal regime applying to upstream oil and gas development (see question 8 below). The Maritime and Coastguard Agency (MCA) also performs a more limited but important function, particularly in the context of emergency response to any offshore accidents.
Moreover, the HSE and OPRED work together in partnership as the Offshore Safety Directive Regulator (OSDR) – a body which acts as the Competent Authority for the purposes of the EU Offshore Safety Directive.
Regulation of upstream oil and gas industry is vested to the Ministry of Energy and Natural Resources and its General Directorate of Petroleum and Mining Affairs. The General Directorate handles the exploration and exploitation licenses and, generally speaking, monitors the activities of those who operate in the upstream oil & gas market.
The Petroleum Commissioner, in conjunction with the Petroleum Council, has primary responsibility for regulating all upstream oil and gas activities. Other regulatory bodies, including the Ministry of Environmental Protection, the Natural Gas Authority and the Public Utilities Authority – Electricity, are responsible for the regulation of environmental matters and various aspects of the midstream and downstream activities.
The Ministry of Petroleum and Energy (MPE) headed by a Cabinet Minister is the central upstream operations regulator in charge of petroleum resource management and upstream facilities operations. Its responsibility comprises resources, facilities and operations on the Norwegian Con¬tinental Shelf (NCS) and on the Norwegian mainland. It also includes activities outside the NCS when consistent with public international law, such as in relation transboundary fields subject to treaties and the gas and liquids trunk export pipelines to the UK and the European continent. The MPE is not in charge of Svalbard activities. The MPE is the appeal body for any appeals lodged against decisions taken by the Norm Price Board stipulation of Norm Prices applied to the specific petroleum fiscal regime.
Onshore oil and gas development in the U.S. is regulated by the individual state in which the oil and gas resources are located. Each state has its own regulatory agency or agencies that protect the rights of landowners; regulates impact of drilling, production and plugging and abandonment; and control health and safety issues. Additional regulations by the Federal Government, relating to hydrocarbon resources subject to federal jurisdiction, are present in federal law, constitutional law and regulatory bodies. Some examples of these regulatory bodies include: (1) the Federal Energy Regulatory Commission (FERC), which regulates interstate natural gas and petroleum product pipelines; (2) the Department of Energy (DOE), which is responsible for instituting and implementing energy policies and authorizing entities to import/export natural gas to/from the U.S.; (3) the Environmental Protection Agency (EPA), which is responsible for developing and enforcing regulations implementing U.S. environmental laws; and (4) the Department of Transportation (DOT), which is responsible for establishing national policy and setting and enforcing standards for the transportation of energy.
Offshore oil and gas development in the Outer Continental Shelf (OCS) is independently regulated by U.S. federal law and regulatory bodies. Some examples of these regulatory bodies include: (1) the Department of the Interior (DOI), which regulates the extraction of oil and gas from federal lands; (2) the Bureau of Ocean Energy Management (BOEM), which manages federal OCS leasing programs, conducts resource assessments, and licenses seismic surveys; (3) The Bureau of Safety and Environmental Enforcement (BSEE), which regulates all OCS oil and gas drilling, production and plugging and abandonment; and (4) the Office of Natural Resources Revenue, which collects and disburses rents and royalties owed to the government for offshore production.