The licensing system

12/13/2010

Norway’s offshore licensing system regulates petroleum operations and is rooted in the Petroleum Activities Act. The Ministry of Petroleum and Energy is responsible for awarding licences.

Exploration licences are non-exclusive and do not confer the right to drill. They are awarded for a specific area, covering about 500 square kilometres.

Production licences are awarded to companies which respond to an invitation to apply, and relate either to “immature” areas in a licensing round or to awards in [mature] predefined areas (APA).

A key criterion when awarding a licence is the work programme an applicant undertakes to implement. Another is the geological understanding it can document.

A production licence confers the right to prospect, drill and produce in the specified area. Applicants must document technical expertise and the financial strength to implement the work programme and possible subsequent activities.

These licences are usually awarded to groups of companies, either put together by the ministry or formed for the purpose of filing an application.

They usually run for six years, with the right to extend them for 30 years over 50 per cent of the original area – providing the work programme has been fulfilled.

The Storting has opened most of the NCS in the North and Norwegian Seas and in Barents Sea South to petroleum operations.

Instituted in 2003, the APA scheme covers all the mature areas of the NCS and its awards are made on a fixed annual cycle.

The areas regarded as immature today are primarily large parts of the Barents Sea, the deepwater areas and the northernmost regions of the Norwegian Sea.

Acreage in these regions is awarded through licensing rounds held in practice every other year, although the government is under no obligation to make awards at that interval.

The rules for the industry and for production licences are specified in the Petroleum Activities Act no 72 of 29 November 1996, regulations issued under its authority and licence terms.

Read more about the government’s exploration policy at the Ministry of Petroleum and Energy’s website.