Prospection, exploration and production of hydrocarbons

SUMMARY OF:

Directive 94/22/EC — conditions for granting and using authorisations for the prospection, exploration and production of hydrocarbons

WHAT IS THE AIM OF THE DIRECTIVE?

It sets out EU-wide rules to guarantee the non-discriminatory access to the activities of prospection, exploration and production of hydrocarbons.

These rules seek to:

further integrate the EU’s internal energy market;
encourage greater competition within it; and
improve the security of supply.

KEY POINTS

The directive concerns authorisations for the rights to prospect or explore for or produce hydrocarbons.

It states that the geographical limits of an authorisation and the time limit of that authorisation must be determined according to the best possible way to carry out these activities from an economic and technical point of view. The aim of this is to prevent a single entity from having exclusive rights for an area whose prospection, exploration and production can be carried out more effectively by several entities.

Laws which reserved for a single entity the right to obtain authorisations for a specific geographical area within the territory of an EU country had to be abolished by the countries concerned by 1 January 1997.

Procedures for granting authorisations must be transparent and based on objective, non-discriminatory criteria. They must therefore be open to all interested entities.

The selection from among the various entities must be based on:

their technical and financial capabilities;
the way in which they propose to prospect, explore and/or bring into production the geographical area in question; and
the price which the entity is prepared to pay in order to obtain the authorisation (in the event that the authorisation is put up for sale).

All the information relating to the authorisation (type of authorisation, geographical area which may be applied for as a whole or in part, deadline envisaged for granting the authorisation, selection criteria, etc.) is published in the Official Journal of the European Union at least 90 days before the deadline for the submission of applications.

EU countries nevertheless retain the right to make access to these activities and their exercise subject to considerations of:

national security;
public safety;
public health;
security of transport;
protection of the environment;
protection of biological resources;
the planned management of hydrocarbon resources or to the payment of a financial contribution or a contribution in hydrocarbons.

Procedures are introduced for mutual agreement with non-EU countries, so that EU countries’ entities must be able to receive treatment in non-EU countries which is comparable to that which non-EU countries’ entities receive in the EU.

Directive 94/22/EC complements Directive 2014/25/EU — public purchasing — rules for water, energy, transport and postal services sectors.

FROM WHEN DOES THE DIRECTIVE APPLY?

It has applied since 30 June 1994 and had to become law in the EU countries by 1 July 1995.

BACKGROUND

EU countries have sovereign rights over hydrocarbon resources within their territories, therefore it is up to each country to determine the geographical areas in which the rights to prospect, explore for and produce hydrocarbons may be exercised and to authorise entities to exercise those rights.

For more information, see:

Oil and gas licensing (European Commission).

MAIN DOCUMENT

Directive 94/22/EC of the European Parliament and of the Council of 30 May 1994 on the conditions for granting and using authorisations for the prospection, exploration and production of hydrocarbons (OJ L 164, 30.6.1994, pp. 3-8)