Invitation to apply for petroleum production licences

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The Royal Ministry of Petroleum and Energy (the Ministry) hereby announces the invitation to apply for petroleum production licences on the Norwegian continental shelf in accordance with Act No. 72 of 29 November 1996 relating to petroleum activities, and Regulation No. 653 of 27 June 1997 to the Act relating to petroleum activities, hereinafter referred to as the Petroleum Act and the Petroleum Regulations.

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Production licences will only be awarded to limited companies registered in Norway or in another country that is a party to the Agreement on the European Economic Area (EEA Agreement), or to a physical person residing in an EEA state.

Companies that are not licensees on the Norwegian continental shelf can be awarded a production licence if they are pre-qualified as a licensee on the Norwegian shelf.

Individual applicants and applicants applying as a group will be treated on equal terms by the Ministry. Parties who submit an individual application, or parties in a group that is submitting a joint application together with others, are considered production licence applicants. The Ministry can, on the basis of submitted group applications and individual applications, compose licensee groups that will be awarded a production licence, including removing applicants that are part of a group application and adding individual applicants, as well as appointing the operator for such groups.

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Awards of production licences will follow the previously established practice for awards on the Norwegian continental shelf. This entails that the production licence’s geographic scope, location, duration, work commitment and block-specific terms will be determined at the time of award.

Companies can apply for ownership interests in production licences for the following blocks or parts of blocks:

6203/1,2,3,4,5,6
6204/1,2,3,4,5
7017/1,2,3,4,5,6,7,8,9
7018/1,2
7116/1,2,3,4,5
7117/6,7,8,9,10,11,12
7118/4,5,6,7,8,9,10,11,12
7126/6
7127/4,5,6
7128/4,5,6
7215/12
7216/8,10,11,12
7217/10
7315/1,2,3,5,6,8,9
7316/10,11
7322/1,2
7323/2,3
7324/1,2,3,4
7325/1
7326/3,6
7327/1,2,3,4,5,6
7328/1,2,3,4,5,6
7329/1,2,3,4,5,6,7,8,9
7330/1,2,3,4,5,6,7,8,9
7332/7,8,9
7333/7,8,9
7422/12
7423/10,11,12
7424/7,8,9,10,11,12
7425/7,8,10,11,12
7428/9
7429/7,8,9
7430/7,8,9
7431/7,8

Each production licence can cover one or more blocks or parts of blocks.

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Terms and conditions of award

a) Between the licensees awarded ownership interests in the same production licence, there will be a requirement to enter into an agreement relating to petroleum activities, including a joint operating agreement and an accounting agreement. If the production licence is stratigraphically split over or under another production licence, there will also be a requirement to enter into a stratigraphic joint operating agreement.

Upon entering into the agreement, the parties will form a partnership where the parties’ ownership interests in the agreements shall always be identical with the parties’ ownership interests in the production licence.

The wording in the licence documents will generally be based on the relevant documents from APA 2020 and the 24th licensing round. The aim is to communicate potential adaptations in the framework to the industry before the application deadline expires.

b) A more detailed clarification of environmental, HSE and fishery terms and conditions follows from the appendix regarding environmental, HSE and fishery terms and conditions. There are special environmental and fishery requirements associated with some of the blocks.

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Negotiation areas

The Ministry reserves the right to negotiate with the applicant(s) regarding the following:

a) Production licence acreage

b) Content, scope and schedule for the work commitment.

c) Duration of the production licence’s initial period and duration of the licence period after the initial period expires.

For production licences awarded in the 25th licensing round, the stipulation of the initial period, cf. Section 3-9 of the Petroleum Act, will be adapted to block-specific conditions.

The work commitments in the production licences will generally include requirements for a progress plan for the activities within the framework of the initial period. The work commitments could consist of a series of decision points with associated activities that must be completed within set deadlines. The alternative to completing the entire work commitment is that the production licence is relinquished or lapses.

The Ministry must, with a copy to the Norwegian Petroleum Directorate, be informed about the

The work commitments may be designed so that the licensees will first have a specific period to carry out a seismic commitment before they decide whether they want to carry out a mandatory drilling commitment or relinquish the acreage of the production licence in its entirety.

As a main rule, the work obligation will also include a requirement to submit a plan for development of the deposit concerned to the Ministry for approval, within the initial period.

Upon expiry of the initial period, the acreage covered by the production licence that is not included in the submitted plan for development, shall, as a main rule, be relinquished.

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Award criteria

To promote good resource management through efficient exploration for and recovery of petroleum on the Norwegian continental shelf, the following criteria will be used as a basis when awarding ownership interests in production licences, in the composition of licensee groups and when appointing the operator:

a) Applicant(s)’s understanding of the geology in the relevant geographical area and how the licensee plans to conduct an efficient exploration operation for petroleum there.

b) Applicant(s)’s relevant technical expertise, as well as how this can actively contribute to a cost-efficient exploration for, and potential utilisation of, petroleum from the affected geographical area.

c) Applicant(s)’s experience on the Norwegian continental shelf or equivalent relevant experience from other areas.

d) That the applicant(s) has/have satisfactory financial capacity to carry out exploration for, and potential utilisation of, petroleum from the relevant geographical area.

e) If the applicant is or has been a licensee in a production licence, the Ministry can take into consideration any form of deficient efficiency or a lack of responsibility exhibited by the applicant as a licensee. Emphasis can also be placed on national security considerations if the Ministry finds that such considerations apply.

f) Production licences will generally be awarded to a partnership where at least one licensee has drilled at least one well on the Norwegian continental shelf as an operator or has equivalent relevant operational experience outside the Norwegian continental shelf.

g) Production licences will generally be awarded to two or more licensees, of which at least one has experience as mentioned under f).

h) The company-appointed operator for production licences in the Barents Sea, must have drilled at least one well on the Norwegian continental shelf as an operator itself, or have equivalent relevant operational experience outside the Norwegian continental shelf.

i) For production licences at significant water depths, both the party appointed as operator and at least one other licensee must have drilled at least one well themselves on the Norwegian continental shelf as an operator, or have equivalent operational experience outside the Norwegian continental shelf. The production licence must include a licensee that has drilled at significant water depths as an operator.

j) For production licences expected to entail drilling of wells with high pressure and/or temperature (HPHT), both the party appointed as operator and at least one other licensee must have drilled at least one well themselves on the Norwegian continental shelf as an operator or have equivalent relevant operational experience outside the Norwegian continental shelf. The production licence must include a licensee that has drilled an HPHT well itself as an operator.

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State participation

When awarding production licences, state participation can be stipulated in each production licence. Petoro AS is the licensee for the state’s participating ownership interest (State Direct Financial Interest – SDFI).

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Application letter

Each company that applies for awards in the 25th licensing round, individually or as a participant in a group application(s), must submit a formal application letter along with the application(s) within the deadline. If the company does not submit any of the applications it is participating in itself, the letter must be sent to the Ministry of Petroleum and Energy with a copy to the Norwegian Petroleum Directorate. The application letter must be in line with the guideline on the Norwegian Petroleum Directorate’s website with information about the 25th round

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Information about the company

Each company that applies for awards in the 25th licensing round, individually or as a participant in a group application(s), must submit information about the company to the authorities within the deadline. Reporting of financial and company information must be in line with the guideline on the Norwegian Petroleum Directorate’s website with information about the 25th round

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Application

Each application for award must contain the following information in the following order:

a) Application summary

b) Data basis and regional geology

c) Geological evaluation of blocks

d) Exploration strategy and work program

e) Technical reservoir conditions

f) Development technology and expertise

g) Profitability calculations

h) Other matters

The above-mentioned matters must be adapted to the block-specific characteristics with the aim of contributing to the greatest possible value creation in the affected geographic area.

There are less stringent content requirements for applications for additional acreage for existing production licences.

A guide for preparing production licence applications, forms to complete and block coordinates for the announced blocks can be found on the Norwegian Petroleum Directorate’s website:
Norwegian version: www.npd.no/25.-konsesjonsrunde
English version: www.npd.no/25th-round

The authorities can demand additional information.

Information of a commercial nature provided in the application, including appendices, will be exempt from public disclosure by the authorities without consideration for the deadline set in Section 85 of the Petroleum Regulations.

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Fee

A fee must be paid for the processing of each production licence application, before the application is submitted. If the fee is not paid, the application is not considered to have been received.

The fee is NOK 123,000 for each production licence application, cf. Section 9 of the Petroleum Regulations. If multiple companies join together to apply for a production licence, this is considered one application. In such cases, one of the group members will provide the joint payment of the application fee.

The payment must be to the state, through the Norwegian Petroleum Directorate, account no.: 7694.05.00326. The payment must be marked “25th round (block no.)”. A copy of the receipt for the paid fee must be enclosed with the application letter from the company.

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The King in Council is not required to award production licences on the basis of received applications, cf. Section 3-5 (3) of the Petroleum Act.

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Each application must be submitted to both the Ministry of Petroleum and Energy and the Norwegian Petroleum Directorate.

The application shall be sent to the Ministry of Petroleum and Energy (MPE) in any electronic format. L2S Authority Communication is one possible solution to submit applications.

The application and application letter shall be submitted to the NPD in electronic format via L2S Authority.

When sending via L2S Authority Communication, both the Ministry of Petroleum and Energy and the Norwegian Petroleum Directorate can be added as recipients in the same submission.

The applications must be submitted by 23 February 2021 at 12:00. All applications that have been received by the mentioned time are considered to have been delivered at the same time.

The application must be in Norwegian or English.

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Award of production licences in the 25th licensing round on the Norwegian continental shelf is scheduled to take place in the 2nd quarter of 2021.