Prospecting [EU]

Prospection, exploration and production of hydrocarbons

A set of common rules is introduced in order to ensure non-discriminatory access to the activities of prospection, exploration and production of hydrocarbons. These objective and transparent rules help to reinforce the integration of the internal energy market, encourage greater competition within it and improve security of supply.

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.

Summary

The Member States have sovereign rights over hydrocarbon resources within their territories. Given their sovereignty, it is therefore up to each Member State 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.

With a view to reinforcing the integration of the internal energy market, encouraging greater competition within it and improving the security of supply, common rules should be established which guarantee non-discriminatory access to the activities of prospection, exploration and production of hydrocarbons.

The Directive stipulates that the limits of the geographical areas covered by an authorisation and the duration of that authorisation must be determined in proportion to what is justifed in terms of the best possible exercise of the activities from an economic and technical point of view.

The aim 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. The provisions which reserve for a single entity the right to obtain authorisations for a specific geographical area within the territory of a Member State were therefore abolished by the Member States concerned by 1 January 1997.

The procedures for granting authorisations must be introduced in a transparent manner based on objective, non-discriminatory criteria. They must therefore be open to all interested entities. Selection from among the various entities must be based on criteria relating to 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, if the authorisation is put up for sale, the price which the entity is prepared to pay in order to obtain the authorisation.

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.

The Member States 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.

Conditions are introduced for reciprocity with third countries. The Member States’ entities must therefore be able to receive treatment in third countries which is comparable to that which third countries’ entities receive in the Community.

The Member States are required to provide annually a report on the geographical areas which have been opened, the authorisations granted, the entities holding those authorisations and the reserves available in their territory.

Directive 94/22/EC complements the Directive on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors (initially Directive 90/531/EEC, which was repealed and replaced by Directive 93/38/EEC, which was itself then repealed and replaced by Directive 2004/17/EC).

Denmark is covered by a derogation in respect of activities in certain areas for which the concession expires on 8 July 2012.

References

Act	Entry into force – Date of expiry	Deadline for transposition in the Member States	Official Journal
Directive 94/22/EC	30.6.1994	01.07.1995	OJ L 164 of 30.6.1994

RELATED ACTS

Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating theprocurement procedures of entities operating in the water, energy, transport and postal services sectors[Official Journal L 134 of 30.4.2004].

Report from the Commission to the Council of 29 July 1998 on Directive 94/22/EC on the conditions for granting and using authorisations for the prospection, exploration and production of hydrocarbons [COM(1998) 447 final – Not published in the Official Journal].

The Commission gives details of the Directive’s implementation in the Member States and complies with the requirement under Directive 94/22/EC that it must present to the Council a report on the question of reciprocity, i.e. non-discriminatory access for Community firms to the activities of prospection, exploration and production in third countries. The conclusions are as follows:

• all the Member States (except for Luxembourg and Finland, which are exempt from transposition because they do not have any potential hydrocarbon resources) have transposed Directive 94/22/EC into national law;
• no reciprocity problems have been reported, as is borne out by the increased opening-up of exploration and production activity worldwide.