COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(92) 110 final - SYN 412 
Brussels, 11 May 1992 
Proposal for a 
COUNCIL DIRECTIVE 
on the conditions for granting and using authorizations for 
the prospection, exploration and extraction of hydrocarbons 
(presented by the Commission) 
IK 
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EXPLANATORY MEMORANDUM 
Introduct ion 
With the publication of the White Paper on completing the internal 
market in June 1985(D followed by the adoption of the Single 
European Act in December 1985, completion of the internal market 
by the end of 1992 became one of the Community's fundamental 
object ives. 
The Single European Act added to the Treaty a new Article 8a which 
defines the internal market as "an area without internal frontiers 
in which the free movement of goods, persons and capital is 
ensured". This definition applies equally to the energy market. 
Energy is such a vital component of all economic activity in the 
Community that completion of the internal market is inconceivable 
without an integrated energy market. The Community energy policy 
objectives adopted by the Council in 1986 explicitly emphasized 
the need for "greater integration, free from barriers to trade, of 
the internal energy market with a view to improving security of 
supply, reducing costs and improving economic 
compet i t i veness" S^ 
Substantial progress has been, and still is being, made towards 
establishment of an internal energy market. Following the first 
stage marked, notably, by the adoption of the Council Directives 
on the transit of electricity(3), the transit of natural gas^4^ 
and the transparency of gas and electricity prices^5), the 
Commission has sent the Council two proposals for Directives 
laying down common rules for the internal market in electricity 
and gas. (6) In the case of gas, the common rules proposed do 
not apply to the production side of the industry. Consequently, 
for the gas industry, this proposal is complementary to the 
second phase already in progress. At the same time it is 
designed to remove the last remaining major obstacles to 
completion of the internal market in oil, where few restrictions 
to competition in the downstream activities are left. 
(1) COM(85) 310 final, 14.6.1985. 
(2) OJ No C 241, 25.9.1986. 
(3) OJ No L 313, 13.11.1990, p. 30. 
(4) OJ No L 147, 12.6.1991, p. 37. 
(5) OJ No L 185, 17.7.1990, p. 16. 
(6) COM (91) 548 final, SYN 384-385, 21.2.1992 
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3. In practice, exploration for and extraction of oil and natural gas 
are part of one and the same activity which are subject to similar 
physical, technical and legal conditions and must therefore be 
covered by a common framework separate from the arrangements for 
downstream activities and electricity generation. Within this 
framework, these activities remain subject to restrictions, 
greater in some Member States than in others. Although these can 
be explained by the importance of hydrocarbons to economic 
activity and the traditional mining regulations, they are 
nevertheless incompatible with completion of the internal market, 
which, in particular, calls for harmonisation of the conditiofis 
for access to and exercise of this activity, while respecting the 
Member States' rights and responsibilities concerning 
administration of their oil and gas resources. 
General context 
Their wide range of end-uses (as fuels for electricity generation, 
heating or transport and as raw materials for the chemical and 
petrochemicals industries) make hydrocarbons a fundamental 
component of economic activity. The limited resources in the 
Community lend them added importance. More specifically, the 
Community produces only 24% of the oil which it consumes and 62% 
of the gas. 
In most Member States, oil and gas resources are owned by the 
State. In any event, they are administered by the public 
authorities which usually perform this task with broader 
objectives than efficient exploitation of individual production 
si tes a lone , e.g.: 
a) planned management of all available resources; 
b) national security of supply; 
c) revenue for the State budget; 
d) development of the national economy, notably: 
the upstream industries (contractors, equipment suppIiers 
and providers of services); 
- national producers, particularly public undertakings; and 
the downstream industries (petrochemicals, gas 
distribution, etc.). 
6. To attain these objectives, the public authorities in the 
Member States sometimes place restrictions of varying degrees on 
access to and exercise of oil and gas exploitation activities, the 
biggest restrictions being: 
partial reservation of exploitation for national undertakings, 
either by granting direct concessions for certain zones, or by 
requiring their participation in groups of undertakings 
applying for authorisation, 
- exemption of public undertakings from some of the conditions 
imposed on private companies, 
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restriction of the undertakings' freedom of choice of 
suppliers, customers, staff or means of transport. 
7. Consequently, the control exerted by the public authorities over 
oil and gas production covers not only compliance with, for 
example, safety, environmental and land use standards, as for any 
other activity, but also: 
the nationality and legal status (private or public) of the 
undertak ings; 
the way in which they proceed or plan to proceed with 
exploi tat ion; 
the end-use of the products. 
These restrictions can be imposed formally by law. Even when they 
are not, however, the public authorities' discretionary powers to 
grant authorisations enable them to demand a commitment to the 
same effect from the undertakings applying. At least some of the 
restrictions of this type are contrary to the Treaty, 
particularly its rules on free movement of goods and right of 
establishment. 
8. Finally, oil and gas exploitation activities have two other 
important characteristics: 
the investments are a risk. Often the presence, and quantity, 
of hydrocarbons in a concession are not known until the 
completion of extremely costly work, particularly in the North 
Sea; 
access to the activities is limited by the availability of oil 
and gas. What is more, even at sites where resources are 
found a proliferation of installations and operators is not 
always either physically or economically feasible or 
desirable. 
These features are good reason to reserve for entities exclusive 
rights over the areas which they are authorised to exploit, 
accompanied by a guarantee that they will be able to exercise 
these rights long enough to secure an adequate return on their 
r isk capi taI . 
Current situation in the Community 
10. Three factors shape the general situation today in the individual 
Member States: 
(i) A trend towards liberalization of the sector. Over the last 
decade or so a number of Member States have considerably 
relaxed their rules de Jure or de facto. 
(ii) The maturity of the sector. As mentioned earlier, the 
Community's resources are limited. Most of these are 
probably in the areas for which concessions have already been 
granted. No major finds should be expected in the areas yet 
to be allocated. Nevertheless, substantial reserves remain. 
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Not all the areas for which concessions have been granted are 
yet in production and new technologies can be expected to 
allow exploitation of marginal fields which cannot yet be 
worked profitably. In turn, the relinquishment process, i.e. 
the obligation for authorisation holders to give up any parts 
of their concessions not exploited by the agreed dates, opens 
up the further possibility of new authorisations. 
(iii) Past agreements. Competition in this sector remains under 
the shadow of conditions laid down in the past, given the 
extremely long term of the concessions, some of the richest 
of which are exempt from the abovementioned relinquishment 
requ i rement. 
11. At Community level, under Directive 90/531/EEC of 17 September 
1990, all supplies and works contracts concluded by undertakings in 
this sector will have to be fully open to competition from 
1 January 1993 on in most Member States (a little later in Spain, 
Portugal and Greece). On 6 November 1991 the Commission adopted a 
proposal to bring service contracts under this Directive. In this 
context, the same Directive includes alternative arrangements for 
oil, gas and solid fuel production. The principal condition is 
that authorisations must be granted on a non-discriminatory, 
transparent basis. 
Finally, on .... the Commission adopted a communication to the 
Council on the approach, progress and guiding principles of the 
work on technical harmonisation and standardisation in the energy 
field. 
12. Object ives 
1. The establishment of a single market without internal frontiers 
implies equal access for undertakings to exploit oil and gas 
resources and free movement of such products between the 
Member States. 
2. Despite the progress made in a number of Member States, all too 
often access to and exercise of oil and gas prospecting, 
exploration and extraction activities are subject to 
discrimination, restrictions or conditions incompatible with 
attainment of these objectives. 
3. To remedy this situation, common rules must be established to 
ensure that the authorisation procedures are non-discriminatory and 
transparent and impose no conditions on access to or exercise of 
these activities which are not technically and economically 
warranted by the objective of optimum exploitation. 
4. In order fully to attain the stated objective, these rules must 
also limit any restrictive effects of authorisations granted in 
the past. To this end, undertakings should be released from any 
obligations which will no longer be allowed, while at the same 
time steps must be taken, within reasonable limits, to give other 
undertakings access to areas reserved for a single undertaking 
under discriminatory conditions in the past. 
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Attainment of these objectives will create a more competitive 
environment in this industry. It will contribute towards cutting 
costs, stimulating exploration and production activities and, as a 
result, making the Community more self-sufficient in oi I and gas 
and generally improving its security of energy supplies. This 
will facilitate the free movement of oil and gas in the Community 
and thus complement the action taken by the Commission to 
liberalise the transmission and distribution stages of the gas 
market. 
General principles 
13. The proposal from the Commission is based on four general 
pr inc iples: 
1. Member States retain sovereignty over their oil and gas resources. 
In this respect, the proposal in no way prejudices the rights of 
the Member States concerning long-term management of these 
resources, the revenue derived therefrom and short-term 
administration thereof. 
2. In line with the principle of subsidiarity, the Member States 
remain free to choose or maintain the rules most appropriate to 
natural operating conditions and to the long-term policy for 
management of these resources. 
3. Consequently, the aim of the proposal is not to establish detailed 
regulations but to lay down a framework for the general principles 
to which those rules must conform. 
4. The approach taken to this end is based on the specific conditions 
for exploitation of such resources. Consequently, it is different 
from the approach in the proposal for a Directive concerning 
common rules for the internal electricity market and is based on 
the line followed in the Directives concerning public procurement 
contracts. 
Means 
14. All entities (possessing the requisite capabilities) must be 
ensured non-discriminatory access to and rights to exercise 
prospecting, exploration and extraction activities. To this end, 
the following provisions are proposed: 
a) Henceforth exclusive rights to prospect, explore and extract 
hydrocarbons will be granted solely on the basis of 
non-discriminatory procedures open to all entities. 
b) The authorisation procedures will be made more transparent and 
non-discr iminatory: 
- by using procedures open to all undertakings concerned and 
giving them the requisite publicity; 
- by laying down and publishing objective criteria on which 
the decisions will be based; 
- by informing all parties concerned of the conditions to be 
applied for granting authorisations. 
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c) The conditions and obligations imposed on undertakings for 
granting or using authorizations must be based exclusively on: 
- the need to ensure proper exploitation; 
- reasons in the public interest such as compliance with the 
standards applicable to the environment, security and 
public health, national defence or the resource management 
poIi cy; and 
- the royalties levied by the Member States on hydrocarbon 
product ion; 
and entities on which unjustified conditions and obligations 
were imposed by authorisations granted in the past should be 
released therefrom. 
d) Where authorisations were granted in the past under a 
procedure closed to competition, other entities must be 
granted access to the as yet unexploited parts of the area 
covered by the concession. 
COMMENTS ON THE PROPOSAL 
Subject matter and persons covered 
15. In essence, the Directive applies to the national legal frameworks 
for exercising oil and gas prospecting, exploration and extraction 
activities, i.e. to the authorisations defined in Article 1(3), 
which determines the subject matter covered by the Directive. 
This in turn determines the persons covered, namely the entities 
(Article 1(2)) which apply for or hold an authorisation and the 
competent authorities (Article 1(4)), i.e. the public authorities 
(Article 1(1)) which grant the authorisations. The important 
points to note are that: 
(i) the definition of author isat ions does not cover: 
- contracts whereby the public authorities or an entity 
entrust an(other) entity with performance of the 
activities, in return for payment, in which case the 
contract is covered by the Directives on public 
proceurement contracts; 
- authorisations which do not confer an exclusive right, as 
is generally the case with prospecting licences; 
(ii) with respect to the ent i t ies. no distinction is drawn between 
public or private undertakings. 
Territory covered 
16. The Directive applies to the territory of the Member States and to 
the other areas over which they exercise sovereignty under the 
conditions laid down in the Treaty. 
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Timescale covered 
17. Article 14 requires the Member States to comply with this 
Directive by 1 January 1993. The Directive applies only to 
authorisations granted after this date. However, it could be 
applied in advance to authorisation procedures started before this 
date. This can be justified by the need to prevent new 
authorisations for the limited number of geographical areas still 
unexploited being granted under conditions incompatible with the 
Directive between the date of adoption and of entry into force 
thereof. 
18. The Directive also applies to authorisations granted before its 
application into force in two specific cases: 
if the authorisations impose on the entities conditions, 
obligations and requirements other than those authorised by 
Art icle 7; 
in the case provided for by Article 8 (see paragraph 26). 
In both these cases, the Directive in no way calls into question 
the granting of these authorisations but simply limits certain 
effects to ensure that the Directive has a balanced, beneficial 
impact on the individual Member States. It is provided that the 
limitation of rights in these cases shall give rise to 
compensation by the Member States concerned, according to their 
leg is I at ion. 
Objective of the Directive 
19. The objective of the Directive is to ensure non-discriminatory 
access to and exercise of the activities concerned (Article 2). 
In another connection, Member States shall retain the right to 
forbid any activity in certain parts of their territory for 
reasons of public interest or to subject the exercise of such 
activity to conditions connnected with the observance of such 
reasons (Article 3). Articles 4 to 8 lay down the rules designed 
to attain this objective. 
Rules for the granting of authorizations (Articles 4, 5, 6, 7 and 
8) 
Basic pr inciple 
20. Authorisations must be granted solely under the conditions laid 
down in the Directive, i.e. by procedures open to all entities and 
transparent and imposing on them only clearly defined conditions. 
Opening of procedures (Article 4) 
21. The procedures must be open to everyone and must be given the 
necessary publicity (Article 4(1) and (2)). The Member States use 
two types of procedure: 
rounds opened at the initiative of the public authorities, 
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when there are a relatively large number of authorisations to 
grant, as is generally the case with the North Sea fields; 
and 
procedures opened following submission of an application by an 
ent ity. 
This shall not apply to applications for authorisation formulated 
so as to take account of changes in the control of entities but 
which do not affect the rights and obligations established by the 
initial authorisation (paragraph 3). Where there is a transfer to 
another entity of all or some of the rights which an entity enjoys 
by virtue of an existing authorisation, it shall be for the Member 
States to decide whether such a transfer requires the granting of 
a new authorisation and consequently the application of the 
procedures provided in Article 4(1) and (2). 
Duration and scope of authorisations (Article 5) 
22. Equal access for entities to activities implies that the scope of 
authorisations and their duration should be limited in a manner 
compatible with the economic and technical conditions for 
efficient exploitation, so as not to reserve for one entity, for 
an excessive length of time, the exploitation of a zone in which 
other operators could also exercise their activity. 
Transparency of procedures (Article 6) 
23. To keep the procedures transparent, they must satisfy three 
condit ions: 
the decisions must be based on objective, pre-established 
criteria published in advance; 
all the general conditions and obligations imposed on the 
undertakings must be established and made available to the 
entities before submission of applications; 
the criteria, conditions and obligations must be applied 
without discrimination. 
Conditions for granting and using authorisations (Article 7) 
24. Steps must be taken to avoid placing on the granting and use of 
authorisations, conditions or obligations which are not directly 
linked to optimum exploitation of the concession, such as those 
which would impose on undertakings the choice of their partners, 
of their employees, of their suppliers, of their customers or of 
means of transporting oil or gas. 
Only conditions compatible with this objective may be imposed on 
undertakings. The same applies to conditions and obligations 
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imposed for reasons in the public interest as mentioned in 
Article 3 and to the financial obligations vis-a-vis the 
Member States. 
25. In the light of the above, Member States shall not be able to 
impose the participation in an entity's capital or revenues of a 
national undertaking which would otherwise itself exercise the 
activities covered by the Directive. In addition, this enterprise 
must behave as a "sleeping partner". 
Existing authorisations (Article 8) 
26. As mentioned in paragraph 18, the Directive applies fully only to 
authorisations granted after its date of application. This raises 
the question of authorisations granting entities the exclusive 
right to exploit geographical areas after a procedure closed to 
other entities. Exclusive rights of this type conflict with the 
principle of equal access to resources. 
To remedy this situation, Article 8 provides for the return of 
subareas not yet exploited to the Member States concerned so that 
they can grant new authorisations for the subareas in question. 
In practice, this is a specific application of the relinquishment 
method already in use, particularly in the North Sea. 
Other provisions (Art icles 9. 10. 11. 13) 
27. Relations with third countries. Liberalisation of the sector will 
bring benefits for all entities established in the Community, 
including branches of non-Community companies. Companies from the 
Community must enjoy equivalent advantages in non-Community 
countries. Article 9 establishes a procedure for evaluating the 
situation and initiating negotiations with third countries as the 
need ar ises. 
28. Directive 90/531/EEC on the procurement procedures of entities 
operating in the excluded sectors. 
Article 3 of this Directive establishes alternative arrangements 
for entities exercising oil and gas exploration and extraction 
activities. These are more flexible than the general arrangements 
provided for by the Directive. The application of these 
alternative arrangements shaI I be subject to two conditions : that 
the granting of authorisations on the one hand, and procurement on 
the other, shall be made under non-discriminatory, transparent 
conditions. In order to apply them, the Member State concerned 
must send an application to the Commission, which will check that 
these conditions are met. 
Member States requesting the application of the alternative 
arrangements shall no longer be required to demonstrate that they 
fulfil the first of these conditions from the date on which they 
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shall have satisfied the requirements of this Directive. It 
should be noted that the general rules of Directive 90/531/EEC 
shall become applicable to them should they subsequently fail to 
meet their obligations under this Directive. Consequently, 
Directive 90/531/EEC Article 13 requires to be amended. 
It should be recalled that the Directive [on remedies in the 
excluded sectors] also applies. 
29. Finally, the Directive places on the Member States an obligation 
to publish an annual report on the authorisations granted (Article 
10) and to notify the Commission of the competent authorities with 
a view to publication in the Official Journal (Article 11). No 
comments need be made on these Articles. 
Legal basis 
30. A Directive based on Articles 57(2), 66, 100A and 113 of the 
Treaty is the most appropriate means of harmonising the Member 
States' authorisation procedures. In addition, the Commission 
reserves the right to use all its powers under the Treaty against 
any national laws, regulations or administrative provisions 
directly conflicting with the provisions of the Treaty. 
CONCLUSION 
Consequently, the Commission proposes a Directive introducing common 
rules on the conditions for granting and using authorisations for the 
prospecting, exploration and extraction of hydrocarbons, based on 
Articles 57(2), 66, 100a and 113 of the Treaty. 
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Proposal for a 
COUNCIL DIRECTIVE 
on the conditions for granting and using authorizations for 
the prospection, exploration and extraction of hydrocarbons 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, 
and in particular Articles 57(2), 66, 100a and 113 thereof, 
Having regard to the proposal from the Commission^), 
In cooperation with the European Parliament(2), 
Having regard to the opinion of the Economic and Social Committee(^), 
Whereas measures must be adopted with the aim of progressively establishing 
the internal market over a period expiring on 31 December 1992; 
whereas the internal market consists of an area without internal frontiers 
in which the free movement of goods, services, persons and capital is 
ensured; 
Whereas in its Resolution of 16 September 1986(*) the Council identified 
as an objective of the energy policy of the Community and the Member States 
the greater integration, free from barriers to trade, of the internal 
energy market with a view to improving security of supply, reducing costs 
and improving economic competitiveness; 
Whereas the Community depends on imports for its hydrocarbon supply; 
whereas it is consequently advisable to encourage the best possible 
exploitation of the resources located in the Community; 
(1) OJ 
(2) OJ 
(3) OJ 
(4) OJ No C 241, 25.9.1986, p. 1. 
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Whereas steps must be taken to ensure the access to and pursuit of 
activities relating to the prospection, exploration, and extraction of 
hydrocarbons under conditions which encourage greater competition in this 
sector and thereby to favour the best exploitation of Community resources 
and to reinforce the integration of the internal energy market; 
Whereas, for this purpose, it is necessary to set up common rules for 
ensuring that the procedures for granting authorizations for the 
prospection, exploration and extraction of hydrocarbons must be open to all 
entities possessing the necessary capabilities; whereas authorizations must 
be granted on the basis of objective, published criteria; whereas the 
conditions under which authorizations are granted must likewise be known in 
advance by all entities taking part in the procedure; 
Whereas Member States must retain the option to limit the access to and the 
exercise of these activities for reasons justified by public interest and 
to subject the payment of a financial contribution or a contribution in 
hydrocarbons, the modalities of the said contribution having to be fixed in 
such a way as not to interfere in the management of entities; whereas this 
option must be used in a non-discriminatory way; whereas, with the 
exception of the obligations related to the use of this option, steps must 
be taken to avoid imposing on entities conditions and obligations which are 
not justified by the need to perform this activity properly; whereas the 
activities of entities must be monitored only to the extent necessary to 
ensure their compliance with these obligations and conditions; 
Whereas the extent of the areas covered by an authorization and the 
duration of the authorization must be limited with a view to preventing the 
reservation to a single entity of an exclusive right over an area which can 
be exploited more efficiently by several entities; 
Whereas the grant of an exclusive right to exploit an area and exercise of 
this right for the time specified in the authorization is fair compensation 
for the risks taken by an entity; whereas this compensation surpasses the 
risks taken if an entity holds exclusive rights for a very long or even an 
indefinite period over a geographical area without having given other 
entities the possibility of access to exploit the area, either at the time 
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of granting or at a later stage; whereas with a view to ensuring the 
effectiveness of this Directive, conditions must be established to remedy 
this situation to the extent that the area is not entirely exploited; 
whereas it is nevertheless necessary to take into account legally-protected 
situations and to provide for entities to be compensated, if the need 
arises, in accordance with the applicable national law; 
Whereas Member States' entities should enjoy in third countries a treatment 
comparable to that enjoyed by third countries' entities in the Community by 
virtue of this Directive; whereas it is necessary to lay down a procedure 
to this end; 
Whereas this Directive should apply to authorizations issued after the date 
on which Member States apply it; whereas, however, entities holding 
authorizations granted before that date should be released from any 
conditions and obligations which may no longer be imposed thereafter; 
whereas it is nevertheless necessary to take into account legally-protected 
situations and to provide that, if the need arises, entities and other 
parties concerned be compensated in accordance with the applicable national 
law; 
Whereas Council Directives 90/531/EEC<5) and (6) apply to the 
entities in the sector as regards their procurement of supplies, of works 
[and of services]; whereas the application of the alternative arrangements 
provided for under Article 3 of Directive 90/531/EEC is subject in 
particular to the condition that, in the Member State requesting the 
application of these arrangements, authorizations be granted in a non­
discriminatory and transparent manner; whereas a Member State fulfils this 
condition from the moment when and for as long as it complies with the 
requirements of this Directive; whereas it is consequently necessary to 
amend Directive 90/531/EEC, 
HAS ADOPTED THIS DIRECTIVE: 
Article 1 
For the purposes of this Directive, 
(5) OJ No L 297, 29.10.1990. 
(6) OJ 
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1. "public authorities" mean the public authorities defined in Article 
1(1) of Directive 90/531/EEC; 
2. "entity" means any legal or natural person or any group of such 
persons which applies for or holds an authorization; 
3. "authorization" means any law, regulation, administrative or 
contractual provision by which the competent authorities of a 
Member State entitle an entity to exercise, on its own behalf and at 
its own risk, the exclusive right to exploit a geographical area with 
the objective of prospecting or exploring for and/or extracting 
hydrocarbons; 
4. "competent authorities" means the public authorities which are 
responsible for granting authorization and monitoring use thereof. 
Article 2 
1. Member States shall ensure non-discriminatory access by entities to 
activities relating to the prospecting and exploration for or 
extraction of hydrocarbons and non-discriminatory exercise of these 
activities. 
2. Member States may, for reasons related to the defence of the 
territory, refuse the access to and the exercise of the activities 
referred to in paragraph 1 in border areas to any entity which is 
effectively controlled by a third country and/or nationals of third 
countries. 
3. The option provided for in paragraph 2 shall be subject to prior 
authorization by the Commission which shall ensure especially that its 
use does not give rise to discrimination between entities other that 
those referred to in paragraph 2. 
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Article 3 
1. Member States shall retain the option to prohibit exercise of the 
activities set out in Article 2(1) to the extent justified by the 
defence of the territory, public security, public health, security of 
transport, protection of the environment, safety of installations and 
of workers or the planned management of hydrocarbon resources. For 
the same reasons, they shall also retain the option of imposing 
conditions on the exercise of those activities. 
2. Member States shall ensure that the use of the options provided for in 
paragraph 1 does not give rise to discrimination between entities. 
Article 4 
1. Member States shall take the necessary measures to ensure that 
authorizations are granted under a procedure in which all interested 
entities may submit applications. 
2. These procedures shall be initiated: 
(a) either at the initiative of the competent authorities by means of 
a notice published in the Official Journal of the European 
Communities at least 90 days before the closing date for 
applications; 
(b) or following submission of an application by an entity. This 
application shall be published by means of a notice in the 
Official Journal of the European Communities. Other interested 
entities shall have a period of at least 90 days after the date 
of publication in which to submit an application. 
Notices shall specify the type of authorization, the geographical area 
or areas in respect of which an application has been or may be made 
and the planned date for granting authorization. 
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3. The grant of an authorization solely by reason of a change of name or 
ownership of an entity holding an existing authorization or from a 
change in the composition of such an entity shall not be considered as 
the grant of an authorization within the meaning of paragraph 1. 
Article 5 
Member States shall take the necessary measures to ensure that: 
(a) If the geographical areas are not delimited on the basis of a prior 
geometric division of the territory, the extent of each area is 
determined so as to ensure the best possible exploitation of the areas 
from the technical and economic points of view. Objective criteria 
shall be established to this end and shall be made available to the 
entities prior to the submission of applications; 
(b) the duration of an authorization does not exceed the period necessary 
to carry out the activities for which the authorization is granted. 
However, the competent authority may prolong the authorization where 
the exploitation has been subject to delays due to unforeseen 
circumstances such as particular difficulties linked to the geological 
structure of the specific area or where an unexpected discovery of 
hydrocarbons is to be developed and the stipulated duration is 
insufficient to appraise and exploit such a discovery; 
(c) entities surrender as soon as possible to the competent authorities 
the whole or part of the geographical area concerned which is not to 
be exploited by those entities. 
Article 6 
Member States shall take the necessary measures to ensure that: 
1. authorizations are granted on the basis of the technical and 
financial capability of the entities and of one or more other criteria 
concerning: 
-is-
ta) the way in which the entities propose to exploit the geographical 
area in question, 
(b) the efficiency and responsibility displayed by the applicants in 
operations under other authorizations, 
(c) if the authorization is put up for sale, the price which the 
entity is prepared to pay in order to obtain the authorization; 
these criteria shall be drawn up and published in the official 
journals of the Member States in question and in the notice referred 
to in Article 4(2) before the start of the period for submission of 
applications; 
2. all conditions and requirements concerning the exercise or termination 
of the activity which apply to authorizations of the same type by 
virtue of the laws, regulations and administrative provisions in force 
at the time of submission of the applications, whether contained in 
the authorization or being one of the conditions to be accepted prior 
to the grant of such authorization are established and made available 
to interested entities at the start of the period allowed for 
submission of applications for authorization; 
3. all changes made to these conditions and requirements in the course of 
the procedure are notified to all interested entities; 
4. the criteria, conditions and requirements referred to in this Article 
are applied in a non-discriminatory manner; 
5. any entity whose application for an authorization is unsuccessful is, 
if the entity so wishes, informed of the reasons for the decision. 
Article 7 
1. Member States shall ensure that the conditions and requirements 
referred to in Article 6(2) and the detailed obligations for use of a 
specific authorization are justified exclusively by the need to ensure 
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proper exploitation of the geographical area for which an 
authorization is requested, by the application of Article 3 and by the 
payment of a financial contribution or a contribution in hydrocarbons. 
The rules for payment of such contributions shall be fixed by Member 
States in such a way as to ensure that the independence of management 
of entities is maintained. 
2. Member States shall ensure that the monitoring of the activities in 
the framework of an authorization is limited to the extent necessary 
to ensure the compliance with the conditions, requirements and 
obligations referred to in paragraph 1. In particular, they shall 
take the measures necessary to ensure that no entity is compelled, by 
any law, regulation or administrative requirement, or by any agreement 
or undertaking, to provide information on its intended or actual 
sources of procurement, except at the request of the competent 
authorities and exclusively with a view to the objectives set out in 
Article 36 of the Treaty. 
Article 8 
1. If, on 1 January 1993, an entity holds one authorization granted under 
conditions which precluded submission or consideration of applications 
from other entities, the Member State concerned shall take the 
necessary measures to grant new authorizations in respect of the parts 
of this geographical area which are not yet exploited on the 
abovementioned date. 
2. For the purposes of paragraph 1, the following shall be considered as 
not yet exploited: the parts of the abovementioned geographical area 
which have not been explored or for which the agreement of the 
competent authorities to proceed to extraction has not been requested 
or, where such agreement is not required, in which extraction has not 
begun: 
within the period fixed by the authorization, or failing that, 
within the period fixed by any legislation which may apply to 
other authorizations, or, where no such period is stated, 
within a period of five years after the granting of the 
authorization. 
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3. The Member State concerned shall ensure that applications for the new 
authorizations referred to in paragraph 1 may be submitted from 
1 January 1993. 
4. Member States shall ensure that entities, whose rights have been 
limited under paragraph 1, receive compensation of the same nature as 
that provided for under national legislation for similar limitations 
of rights for reasons of public interest. 
Article 9 
1. Member States shall inform the Commission of any general difficulty 
encountered, in law or in practice by entities in access to or 
exercise of the activities of prospecting, exploring for and producing 
hydrocarbons in third countries. 
2 The Commission shall report to the Council before 31 December 1993 and 
periodically thereafter, on the situation of these entities in third 
countries and on the state of possible negotiations undertaken under 
paragraph 3 with those countries or in the framework of international 
organizations. 
3. Whenever the Commission establishes, either on the basis of the report 
referred to in paragraph 2, or on the basis of other information, that 
a third country does not grant to Community entities, as regards 
access to and exercise of the activities referred to in paragraph 1, 
treatment comparable to that granted by the Community to entities from 
that country, the Commission shall initiate negotiations in order to 
remedy the situation. The case may be, it shall make an appropriate 
proposal to the Council. 
4. In the circumstances described in paragraph 3, the Commission, 
following a reasoned request by a Member State, may at any time and in 
addition to initiating negotiations, allow that Member State to refuse 
an authorization to an entity which is effectively controlled by the 
third country concerned and/or by nationals of that third country. The 
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Commission authorization is deemed to be granted if the Commission has 
not issued an unfavourable opinion within three months following the 
notification of the request by this Member State. 
5. Measures taken pursuant to this Article Bhall comply with the 
Community's obligations under any international agreement governing 
the access to and the exercise of prospection, exploration and 
extraction of hydrocarbons. 
Article 10 
Each Member State shall publish and communicate to the Commission an annual 
report which shall include information on the geographical areas which have 
been opened to exploitation, the authorizations granted, the entities 
holding authorizations and the composition thereof and the estimated 
reserves contained in its territory. 
Article 11 
Member States shall notify the Commission, no later than 1 November 1992, 
of the competent authorities. They shall notify the Commission without 
delay of any subsequent changes. The Commission shall publish the list of 
competent authorities and any changes thereto in the Official Journal of 
the European Communities. 
Article 12 
This Directive shall apply to authorizations granted from 1 January 1993. 
Article 7 shall also apply to authorizations granted before that date. 
Member States shall ensure that the entities and other parties concerned 
whose rights are limited under this paragraph are compensated in the manner 
laid down in national law for similar limitations of rights for reasons of 
public interest. 
Article 13 
The following is hereby added to Article 3 of Directive 90/531/EEC: 
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As regards the exploitation of geographical areas for the purpose of 
exploring for or extracting oil or gas, paragraphs 1 to 4 shall apply 
as follows from the date from which the Member State concerned has 
complied into the provisions of Council Directive ... [of on the 
conditions for granting and using authorizations for the prospection, 
exploration and extraction of hydrocarbons^*)]: 
(a) the conditions laid down in paragraph 1 shall be considered to be 
satisfied with effect from that date without prejudice to 
paragraph 3; 
(b) with effect from that date, the Member State referred to in 
paragraph 4 shall be required to communicate only the provisions 
relating to compliance with the conditions referred to in 
paragraphs 2 and 3. 
(*>OJ No L 
Article 14 
Member States shall bring into force the laws, regulations and 
administrative provisions necessary to comply with this Directive on 
1 January 1993. They shall forthwith inform the Commission thereof. 
When Member States adopt these provisions these shall contain a reference 
to this Directive or shall be accompanied by such reference at the time of 
their official publication. The procedure for such reference shall be 
adopted by Member States. 
Article 15 
This Directive is addressed to the Member States. 
Done at Brussels, For the Council 
The President 
ISSN 0254-1475 
COM (92) 110 final 
DOCUMENTS 
EN 12 
Catalogue number: CB-CO-92-181-EN-C 
ISBN 92-77-43592-5 
Office for Official Publications of the European Communities 
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