United Kingdom Government notice concerning European Parliament and Council Directive 94/22/EEC of 30 May 1994 on the conditions for granting and using authorisations for the prospection, exploration and production of hydrocarbons

(2003/C 27/03)

(Text with EEA relevance)

ANNOUNCEMENT OF UNITED KINGDOM ONSHORE AND OFFSHORE OIL AND GAS LICENSING ROUND

DEPARTMENT OF TRADE AND INDUSTRY

OFFSHORE (SEAWARD)

THE PETROLEUM (PRODUCTION) (SEAWARD AREAS) REGULATIONS 1988

1. The Secretary of State for Trade and Industry invites interested persons, in accordance with the Petroleum (Production) (Seaward Areas) Regulations 1988 (SI 1988 No 1213), as amended (the 1988 Regulations), and the Hydrocarbons Licensing Directive Regulations 1995 (SI 1995 No 1434), to apply for Seaward Production Licences (referred to below as Traditional Licences) and Promotional Seaward Production Licences (referred to below as Promote Licences) in respect of those blocks and parts of blocks that are not subject to an existing petroleum production licence on the date of this Notice in the areas shown on maps deposited at the Department of Trade and Industry Library, where they can be viewed by prior appointment (see below for contact details) between 9.15 and 16.45, Monday to Friday, until 8 May 2003. They are also available on the DTI's oil and gas website (www.og.dti.gov.uk). This is the United Kingdom Continental Shelf (UKCS) 21st round of licensing.

2. Licences issued pursuant to this invitation will incorporate clauses based substantially, subject to certain modifications and additional provisions, on the model clauses set out in Schedule 4 to the Petroleum (Production) (Seaward Areas) Regulations 1988 (as amended, except that the amendments to model clauses set out in paragraphs (a)(ii) and (c) to (h) of Regulation 8 of the Petroleum (Production) (Seaward Areas) (Amendment) Regulations 1996 (SI 1996 No 2946) will not apply). With effect from 1 January 2003 royalty consideration is abolished and the clauses will be amended as appropriate.

3. The DTI has conducted a Strategic Environmental Assessment of the areas available to the standard required in Directive 2001/42/EC on the Assessment of the Effects of Certain Plans and Programmes on the Environment. The conclusion of the Assessment was that there are no overriding reasons why this area should not be considered for oil and gas licensing. Details of the Assessment, and instructions for obtaining copies, may be obtained from the website http://www.habitats-directive.org/ sea2/index.cgi

APPLICATIONS FOR LICENCES

4. Applications must be made on the Application Form for Seaward Production Licences, which is available on the DTI's oil and gas website or from the Licensing and Consents Unit Licence Administration (see below for contact details). There will be two options for each applicant: a traditional application or a promoter's application. The traditional application is aimed at companies who have the necessary resources to commit to a significant work programme from the commencement of the licence. Those applicants wishing to bid a firm or contingent well should apply for a traditional licence. The promoter's option is aimed at companies that at present lack the organisational or financial resources to carry out the kind of work traditionally associated with an initial Term Work Programme but have the skills to develop viable drilling prospects and who propose to attract the interest of other companies or assurance of resources during the initial term. The DTI will consider a promoter's capability and plans to attract such interest as well as purely technical aspects of the Work Programme.

5. All applications, both traditional and promoter, must be delivered to the Department of Trade and Industry at 1 Victoria Street, London SW1H 0ET, United Kingdom, together with a fee of GBP 2820 per application for the traditional application(s) and a fee of GBP 2820 per application for applications under promoter terms up to the limits set out in point 7. Applications will be received between 9.30 and 13.00 on 7 of May 2003 for Traditional Licence applications and between 9.30 and 13.00 on 8 May 2003 for promoter applications. No applications will be accepted after 13.00 on these dates.

6. All applications will be judged against the background of the continuing need for expeditious, thorough, efficient and safe exploration to identify oil and gas resources of the United Kingdom Continental Shelf, with due regard to environmental considerations.

7. When applying for more than one block, applicants should indicate an order of preference for their applications under traditional terms and for applications under promoter terms. Under promoter terms companies will be limited to a maximum of five contiguous blocks or part-blocks for any given play concept, up to a maximum of 10 blocks in total for any one company.

8. Further guidance on the material with which applicants may support their applications is given in "Notes for Applicants", available from the Licence Administration and on the DTI's oil and gas website (see below for contact details).

Traditional applications

9. Applications will be judged on the basis of the following criteria:

(a) the financial capability of the applicant to carry out the agreed Initial Term Work Programme;

(b) the technical capability of the applicant to carry out the agreed Initial Term Work Programme, and as appropriate any other activities permitted under the Licence (taking into account the quality of geotechnical analysis and degree of innovation);

(c) any lack of activity, efficiency or responsibility displayed by the applicant under any other licence of any description issued under the Petroleum Act 1998 or previous legislation having similar effect.

10. The proposed operator within each applicant group (including any company that is the sole applicant) must submit a statement of its general environmental policy for the conduct of licensed activities in seaward areas.

Promote applications

11. Applications will be judged on the basis of the following criteria:

(a) the technical and innovative capability of the applicant to carry out the agreed Work Programme to establish a viable drilling prospect during the first two years of the licence, and where relevant, any other activities permitted under the Licence (taking into account the quality of geotechnical analysis and degree of innovation);

(b) the quality of the applicant's approach to securing the additional financial and technical resources that would be needed to complete the substantive work programme contemplated in the second two years of the Initial Term;

(c) any lack of activity, efficiency or responsibility displayed by the applicant under any other licence of any description issued under the Petroleum Act 1998 or previous legislation having similar effect.

12. Following consideration of all applications, the Secretary of State will notify all applicants in writing of his decisions. In all cases where the Secretary of State is prepared to award a licence, DTI will prepare a draft licence and send it to the successful applicant, who will then have the option of accepting it by returning it to DTI signed by all members of the applicant group. An unsuccessful applicant will be notified of the reasons for the Secretary of State's decision if he submits a written request for this information to be provided.

13. The Government accepts no liability for any costs incurred by the applicant in considering or making its application.

LICENCE TERM AND PAYMENTS

14. Subject as below, both a traditional and a promote licence will have an initial term of four years, with options to extend for a four-year second term and an 18-year third term.

15. The promoter option will offer the licensee the opportunity to assess and promote the prospectivity of the licensed acreage. However, in order to continue beyond the first two years of the initial term, the licensee will be required to submit a report, to the Department at any point within the first two years. This report will outline the research and analysis undertaken and include a request to retain the licence into the third and fourth year with a commitment that will include the drilling of at least one well, or the conduct of an equivalent agreed substantive activity, by the end of the initial term (i.e. by the end of year four). The ability of the licensee to secure financial resources and the environmental and technical expertise to carry out the agreed commitment will need to be demonstrated to the DTI's satisfaction at the point of this request. In the event of failure of the licensee to convince the DTI of these requirements, the licence will lapse. Alternatively the licensee can request the termination of the licence at any point during the first two years on the basis that the licensee sees little or no prospectivity on the acreage. Moreover if no report is received by the Department from the licensee to either effect by the end of the two year period, the licence will automatically expire.

16. The Licensee (both traditional and promoter) can exercise the option to continue the licence into the second term provided that he gives notice to that effect not less than three months before the initial term expires, and provided that he has first completed the agreed Work Programme and surrendered part of the licensed area. The maximum area that may be retained is:

(a) not more than half the original number of sections covered by the licence if the licence originally covered 60 or more sections; or

(b) 30 sections if the licence originally covered more than 30 but fewer than 60 sections.

17. The retained area must comply with Model Clause 8 in Schedule 4 to the 1988 Regulations as it stood prior to the amendments made to it by the Petroleum (Production) (Seaward Areas) (Amendment) Regulations 1996 and must be described in the said notice.

A "section" is part of a block comprising an area bounded by lines of longitude and latitude one minute apart respectively.

18. The Licensee (both traditional and promoter) can exercise the option to continue the licence into the third term provided that he gives notice to that effect not less than three months before the second term expires, and only in respect of acreage that is the subject of an approved Development Plan at that time.

19. Any licence granted as a result of this invitation will be subject to payment of consideration according to provisions set out in the model clauses and in schedules to the Licence, in summary:

- Traditional licences

(a) four annual payments, beginning at the commencement of the Licence, of GBP 150 for each square kilometre that it covers at the anniversary of its coming into force;

(b) a subsequent annual payment of GBP 300 for each square kilometre covered, rising by annual increments of GBP 900 to a maximum of GBP 7500 per square kilometre (this payment is subject to biennial review in line with movements in the Index of the Price of Crude Oil acquired by Refineries, published in the Digest of UK Energy Statistics); and

- Promote licences

(c) as for traditional applications, except that payments will be reduced by 90 % for the first two years of the licence only.

ONSHORE (LANDWARD)

THE PETROLEUM (PRODUCTION) (LANDWARD AREAS) REGULATIONS 1995

20. The Secretary of State for Trade and Industry invites interested persons, in accordance with the Petroleum (Production) (Landward Areas) Regulations 1995 (SI 1995 No 1436 ) and the Hydrocarbons Licensing Directive Regulations 1995 (SI 1995 No 1434), to apply for Petroleum Exploration and Development Licences in respect of the blocks coloured yellow on maps deposited at the Library at the Department of Trade and Industry, 1 Victoria Street, London, SW1H 0ET. These maps, may be inspected by prior appointment (Tel. (44-207) 215 50 06, fax (44-207) 215 56 65) between 9.15 a.m. and 16.45. Monday to Friday until 7 May 2003. The maps are also available on the DTI's oil and gas website, http://www.og.dti.gov.uk. This is the 11th round of landward licensing.

APPLICATIONS FOR LICENCES

21. In respect of all blocks referred to in paragraph 20 above:

(a) applications should be made on a standard application form available from the Department of Trade and Industry; copies of the application form and all other documents referred to in the text of this notice as being available from the Department of Trade and Industry may be obtained from the Licensing, Exploration and Development Branch, Oil and Gas Directorate, Department of Trade and Industry, 1 Victoria Street, London, SW1H 0ET (Tel. (44-207) 215 51 11 or (44-207) 215 50 32, fax (44-207) 215 51 42); This documentation is also available on the DTI's oil and gas web site, http://www.og.dti.gov.uk;

(b) applications should be delivered to the Oil and Gas Directorate of the Department of Trade and Industry at 1 Victoria Street, London, SW1H 0ET between 9.30 and 13.00 on 7 May 2003 together with a fee of GBP 1000 per application. No applications will be accepted after 13.00 on 7 May 2003,

(c) applicants are requested to indicate where possible any preferences they have as between the blocks they have applied for, and should indicate if any of the blocks applied for are alternatives;

(d) applicants are required to provide details of the work programme for the initial term which they intend to carry out if awarded a licence.

(e) further guidance on the material with which applicants may support their applications is given in Notes for Applicants, available from the Department of Trade and Industry or from the DTI's oil and gas web site, http://www.og.dti.gov.uk

22. Applications will be judged against the background of the continuing need for expeditious, thorough, efficient and safe exploration to identify oil and gas resources within the mainland of Great Britain. Applications will be judged on the basis of the following criteria:

(a) the financial capability of the applicant to carry out the activities that would be permitted under the licence during the initial term including the work programme submitted for evaluating the full potential of the area within the block or blocks applied for;

(b) the technical capability of the applicant to carry out activities that would be permitted under the licence during the initial term including the identification of hydrocarbon prospects within the block or blocks applied for. The technical capabilities will be assessed in part upon the quality of geological analysis related to the block or blocks applied for, (including taking into account whether the technical work already done or proposed is innovative);

(c) the way in which the applicant proposes to carry out the activities that would be permitted under the licence including the quality of the work programme submitted for evaluating the full potential of the area applied for;

(d) where the applicant holds or has held a licence granted under or treated as having been granted under the Petroleum Act 1998, any lack of efficiency and responsibility displayed by the applicant in operations under that licence.

23. Following examination of all applications in respect of the blocks referred to in point 20, the Secretary of State will select the applicants to whom he is prepared to award licences. Applicants to whom the Secretary of State is prepared to award licences will be notified within a period of six months commencing on 7 May 2003.

24. Unsuccessful applicants will be notified in writing. An applicant will be notified of the reasons for the Secretary of State's decision if he submits a written request for this information to be provided.

25. In all cases where the Secretary of State is prepared to award a licence, it will be offered on the condition that, within 28 days of the date on which the Secretary of State makes the offer, the applicant:

(a) confirms in writing his acceptance of all the terms of the licence and a work programme proposed by the Secretary of State following discussion with the applicant; and

(b) remits to the Secretary of State the appropriate consideration referred to in point 27(a) below for the licence.

LICENCE TERM AND CONSIDERATION PAYABLE

26. Licences issued in respect of the blocks referred to in point 20 will incorporate clauses based on the model clauses set out in Schedule 3 to the Petroleum (Production) (Landward Areas) Regulations 1995. Licences will have an initial term of six years and a second term of five years. A licence may be extended after the expiry of the second term for a further period of 20 years.

27. The consideration required in respect of petroleum exploration and development licences granted as a result of this invitation will be:

(a) an initial payment, at the time the offer of a licence is accepted, of GBP 25 for each square kilometre comprised in the licensed area;

(b) on the first, second, third, fourth and fifth anniversaries of the date of commencement of the licence term, the sum of GBP 25 will be payable for each square kilometre in the area to which the licence then relates;

(c) on the sixth and subsequent anniversaries of the date of commencement of the licence term, payments calculated by reference to the number of square kilometres in the area to which the licence then relates and subject to biennial review in line with movements in the Index of the Price of Crude Oil Acquired by Refineries (published in the Digest of UK Energy Statistics) if the Secretary of State so determines. Further details concerning the payments due are available from the Department of Trade and Industry.

GENERAL

CONFIDENTIALITY

28. Material supplied in support of applications will be treated in accordance with the Code of Practice on Access to Government Information.

EXCEPTIONS

29. The terms, provisions, payments and other details relating to each licence will normally be as set out above, but the Secretary of State reserves the right to amend them in some cases to fit particular circumstances (e.g. licences that cover decommissioned fields).

APPLICATION DATES

Seaward Production Licences ("Traditional Licences"). Between 9.30 and 13.00 on 7 May 2003.

Landward Petroleum Exploration and Development Licences. Between 9.30. and 13.00 on 7 May 2003.

Promotional Seaward Production Licences ("Promote Licences"). Between 9.30 and 13.00 on 8 May 2003.

CONTACT DETAILS

Licence Administration: Oil and Gas Directorate, Department of Trade and Industry, 1 Victoria Street, London SW1H 0ET (Tel. (44-207) 215 51 11, fax (44-207) 215 50 70).

Department of Trade and Industry Library: 1 Victoria Street, London SW1H 0ET ( Tel. (44-207) 215 50 06/7, fax (44-207) 215 56 65 )

Oil & Gas Directorate's website: www.og.dti.gov.uk