ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(80)260
Vol.1980/0100

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(80)260 final
Brussels ,21st May 1980
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REPORT BYTHE COMMISSION TOTHE EUROPEAN PARLIAMENT AND TOTHE COUNCIL
ONTHE APPLICATION OFCOUNCIL REGULATION (EEC )No.3056 /73
OF9NOVEMBER 1973 ,ONTHE SUPPORT OF
COMMUNITY PROJECTS INTHE HYDROCARBONS SECTOR
(Pursuant toArt .10oftheaforesaid Regulation )
COM (80)260 final

EXPLANATORY MEMORANDUM
FollowingitsinitialsuccesstheEuropeanonshoreoiIandgas
exploration becameincreasingly unsuccessful between1955
and1960;consequently ,theoilindustrybegantolookfornew
geophysical techniques andnewexploration areasoffshorein
theContinental Shelf.Asintheonshoresector,offshorethe
problemsincreasedwith.therockdepthsexplored,distancefrom
theshorelines andwaterdepthofthereservoirs tobeexplored
thuscallingforthenewtechnological developments involving un­
predictably highcostsandrisk.~
On9November1973theCounciloftheEuropeanCommunities
adoptedRegulation (EEC)No.3056/73onthesupportofCommunity
projectsinthehydrocarbons sector...TJieloans ^grantedunderthe
termsofthisRegulation,whicharerepayable 'in.:theeventof
commercial success,areintendedtopromotetechnological dev­
elopments .directlyconnectedwithhydrocarbon exploration,pro­
duction,storageortransportwhichwillimprovethesecurityof
theCommunity'soilandnaturalgassupplies..
Byvirtueof-thedecisionsitadoptedin1974^.^976,1977and
1978theCouncilprovided163millionl)Ainfinancialsupport
fortheimplementation of144'.projects.Inaccordance
..'r*■
■withthisdecisiontheCommission wasresponsiblefornegotiating
concluding andmonitoring theimplementation of-supportcontracts
withthebeneficiary firms. ,
ConsistentwithArticle10oftheRegul,?t,ion whi,phprovidesthat.
theParliament andCouncilbeinformed .ofitsimplementation ,a
firstreportwaspresentedinDecember1976and.coincidedwith

2.
thehalf-waypointofthe1st_roundofprojects.Asymposium
whichreportedontheprogressofthe1stand2ndroundsof
projects/washeldinLuxembourg inApril1979.Theproceed­
ingsofthesymposium havebeenpublishedintwovolumes
(EUR6299).Thepresentreportcoverstheadvancement of
workonthefirstfourroundsofprojectsuptoJune30th1979.

3.
I.INTRODUCTION
1.In1973 the Community ,inlaunching itsprogramme ofsupport
'*./ "forthedevelopment ofnewpetroleum technologies ,endeavoured
toprovide anincentive tofurther exploration andexploitation
ofoiIand gas resources inorder toimprove thesecurity of_
itspetroleum supplies .
2.Since theadoption ofthe Council Regulation 3056 /73,about
250projects from 150companies ,have been received andexamined
bytheCommission ,344have been selected involving investments
ofthe order of400 million EUA .The financial contribution bf
theCommunity totheir implementation hasaveraged 35% ofinvest­
;ment .orsome 163miIlion EUA. :
3.The 144approved projects have been supported infour rounds :
21in1974 ,34in1976 ,40in1977 and49in1978 .
Thefield ofapplication ofthese projects extends throughout
thespectrum ofadvanced oiland gastechnologies :from geophysics
■.to.drill ships ,from deep-sea production toenhanced recovery and
from underwater pipelines ,tostorage reservoirs .
4.Theresults oftheCommunity supported ,projects thus farhave
'been significant and the response oftheindustry hasbeen most
appreciative .Inmany fields important technological progress
hasbeen accomplished :indeep-sea production anddrilling tech­
niques ,ingeophysics ,inunderwater long-di stance oiIand gas
A'
t-ransport aswell asinthefield ofenhanced recovery .

r
4*
5..Today,31projectshavebeencompleted:13haveproved
*commerciallyexploitable whilefor18thecommercialexploit­
ation!hasnotyetstarted.Manylicenceshavebeengranted
andaconsiderable numberofpatentsfiled.Insomecases
therepaymentofthesubsidyhasalreadystarted.
.. ·
6.WithoutCommunitysupport,therealisation ofalargenumber -
-oftheseprojectswouldnothaveoccurredorwouldhavebeen
delayed,astheirdevelopment involvedtechnicalandabove
allfinancialriskswhichwouldnothavebeenbornbysmall
andaverage-sized firmsontheirown.
7.Thefollowingchaptersdealwiththestatusof,theprojects
undertakenineachspecificround,themainresultsobtained
andexpenditure upuntilJune1979..

5.
II.BREAKDOWN OFFINANCIAL SUPPORTONASECTORALBASIS
1.SincetheadoptionofRegulation 3056/73anduptillJune30,
1979,150.735.622 EUAhavebeenallocatedtotheimplement-
CD' ■" ■' .ationof121projects (seetable1). '
2.Thissumhasbeendividedamongtheselectedprojectsaccord­
ingtothefollowingprincipalcriteriai
-Communitysupportmayconsituteonlyaminorityshareof
thefinancingoftheproject,
-thesumwhichmaybegrantedtoaprojectshalldependon
expectedresultsandtherelevanceof"'suchprojectstothe
Community,inparticulartothesecurityofitspetroleum .
supply.
3.Inapplyingthesecriteria,theCommissionhasactedasfollows:
-maximumsupport(40%)hasbeengiven'foprojectswhose
expectedresultswouldleadtoaninlcreaseintheavailabilityof
hydrocarbons and/oracceleratetherecoveryofexisting
Communityresources; . ;
-anintermediate levelofsupport(35%)hasbeengiventoprojects
concerninggeophysics; :'^ .
' :' V ;'I--' :
-projectsdealingwithtransportation andstorageofhydrocarbons
havereceivedaminimumlevelofsupport(30%)aswellasprojects
aimedatperfectingserviceactivities ,.However,whenthistype
ofprojectledtotheelimination ofamajorbottleneckitwas
assignedahigherrateofsupport.
' • •. .> .i
4.Theapplication oftheseprincipleshaveshownthefollowingresults
■'(Table1):
(1)23ofthe144selectedprojectshavebeenabandonedbytheirpromotors.

6.
-abouttwothirdsof;thetotalsupporthasbeendevotedto
projectsconcerningproductiontechnology whoseexpected
resultsshouldopennewoilfieldstoproductionorshould
improvetheoilrecoveryinexistingones.Onthetotal
numberofsupportedprojects,64concernproductionactivities
and15dealwiththeimprovement of,enhancedrecovery
techniques;
-21projectsconcernsophisticating petroleumexploration
techniques,thatis15%ofthetotal,with5.4millionEUA
forgeophysicsand17.3millionEUAfordeep-seadrilling
techniques;
-16%ofthetotalsuppor.thasbeendevotedtodevelopment
•t
ofpetroleumtransporttechniques.Theaimoftheseprojects
Γ·
istodeveloptechniquesoflayingandrepairingtrunklines
atgreatwaterdepth;
-5oiJLandgasstorageprojectshaveobtainedonly2%ofthe
totalsupportgranted.Thereasonforthisrelativelysmall
percentageisthattheintermediate storageofcrudeoilis
generallycoveredbyprojectsdevelopingproductionsystems.
t"H
Alltheseprojectsseektoproduceanoptimumsolutiontoeach
stepofthehydrocarbonexploitation processintheCommunity,
takingintoaccountthepresentdaysituationandexisting
technicalandfinancialconstraints.Theimprovement ofoperat­
ingsafetyandequipmentmaintenanceisalsoanimportant '
featureoftheseprojects. ■':i

7.7.7.
III.-FINANCIAL SITUATION OFTHEFOURPROJECT ROUNDS
^ ,' • -
1.Thefinancialsituationwithregardtothealreadysupported
fourprojectroundsisoutlinedinTables2and3which
follow . - -.
Commitments
2.Allallocations providedinthebudgetuntilnowhavebeen
utilised withtheexceptionof543.644UAin1976;
followingtheanticipated termination of2contracts.Table
2howevershowstheexistenceof.remainingallocations for
commitments attheendofeachfinanBialyear.Thisisdueto
thefactthatCouncildecisions onthegrantingofsupport
werenormallytakenattheendoftheyearandalsotothefact
thatittakes6monthsontheaveragetonegqtiateandconclude
contracts withbeneficiaries .
., . 9
Payments
3.vTable3givesthesituationwithregjardtopaymentson '
June30th,1979:
-thefirstroundofprojectsisnowalmostcompletewith
only1.842/938£UA""of"atotalsupportof36,577,152 EUA
remainingtobepaid. n •,,
-inthesecondroundofprojects;'12.325.942 EUA
totalsupportisstilltobepaid/20%representing thefinal
paymentafterconclusion oftheprojectsandfinalauditing;
-thethirdroundofprojectsshows23.583.761 EUAremain­
ingtobepaid.-
*
-therelatively lowfigureforpaymentsin,thefourthroundof
projects(7.228.395 EUA)canbeexplainedbythefactthatthe
majorityoftheprojectshaveonlyjustcommencedattheend_
ofJune1979.

8.
4.Asaconclusion ,by30.-6.1979 ,6^,1million ofEUAremain tobepaid outof
137.3 mi 1.1ion EUA which have been committed for the four rounds
ofprojects .This means that 54,8 oftheallocations committed
bycontract forCommunity support have been paid tothebene­
ficiaries intheperiod from June 1975 ,when thefirst support
contract wassigned ,toJune 19^9 ,thedeadline forthepresent
report .
Repayment ofthesubsidy •
5.Article 4ofRegulation 3056 stipulates that Community support -
isrepayable under certain conditions .The*Commission has ,
established that repayment begins when theprojects *results
are commercially exploitable .
6.ByJune .30,1979 ,13contractors have entered into anagreement
.andestablished atimetable torepay theCommunity for the
i
.subsidy received . ' '$
Bythe same date ,986,598 EUAhave already been repaid from a
total of7,286,413 EUAcommitted for repayment .

RESULTS OFCOMMUNITY TECHNOLOGICAL PROJECTS INTHEHYDROCARBONS SECTOR
1.1975-1stRoundProjects •;
1
Ofthe16projectssupportedinthe1975round,15havebeen
"completedsuccessfully and1isstilLtobecompleted.
Themostsignificant resultswereobtainedintheareasof
pipelaying ,.indeepseadrillinganddeepwaterproduction
techniques .ThepipelayingtestsintheStraitsofMessina
andtheSicilyChannelweredirectly'responsible forproving -
theviabilityofdeepwaterpipelaying intheMediterranean
andhaveledtotheproposedAlgerie-Italy naturalgaspipe­
line. '' '
Indeepseadrillingseveralhewpiecesofequipment,especially
thedrillingequipmentofthedrillship"Petrel"weredeveloped
suchasdeepseablow-outpreventercontrols,.re-entrysonarand
variousdrillingtools.Aswellasthe'hardware'developed,■'
manyofthetoolsweretestedandproceduresevolved. x
Indeepseaproduction studieswerecarriedoutontheusesof.
articulated columns,submergedstorage,productionrisersand
templets.Thesestudresledtothedevelopment ofthemain
components commontomostrealisticproduction systemsbasedon
maintaining thegreatestpossibleproportion ofinstallations
onthesurface. '
2.1976-2ndRoundProjects ,, ,■
AmuchwiderFangeofprojectswassupportedinthe1976roundand
todate16havebeensuccessfully completed,13arestilltobe
completedand1hasbeenabandoned.
IndeepwaterdrillingsupportwasgiventotheBenOceanLancerand
tothedrillship"Pelerin",dynamically positioneddrillships capable
ofdrillingin1000mwaterdepths.Thedrillships arepresentlyin
serviceandareprovingverysuccessful . <

10.
Inproduction technology twoareas stand out .Firstly the
development ofnovel production systems involving theuse
"oftethered buoyant platforms .Five projects were supported
inthis area and results todate have taken tethered buoyant
platforms from theconceptual stage tothefinal design stage .
Secondly excellent results have been obtained in"thearea of
offshore LNGproduction .
The1976 round shows theemergence ofsecondary recovery in
oilandgasproduction ;5projects received support andmuch
valuable data hasbeen developed bytheCommunity projects .
The results ofthegeophysics projects have considerably
improved theability oftheindustry tolocate possible oil
reservoirs through improved methods anddata processing .
1977 -3rd Round Projects
Inthe1977 round 32projects received support ofwhich only
2have been completed thus far,29arestill inprogress and
1has been abandoned .-
Yet .again theemphasis wasonproduction technology with
19projects receiving support .Themain areas ofresearch
centered onnovel production systems andondeep water prod­
uction .Results obtained todate show theviability of&total
sub-sea production system andmuch oftheequipment developed
intheearlier deep seaproduction project hasbeen -fully tested
However ,many oftheprojects arestill atavery early stage
#
and itisdifficult to -predict theoutcome atthis particular
time .

"11.
Threeenhancedrecoveryprojectsreceivedsupportand
asinthe1976roundmuchofthedatageneratedwillprove
usefulintheestablishment offullscalerecovery
techniques .\.
1978~4thRoundProjects :
Sincethe4throundprojectshaveonlyjustbegunitis.
impossible atthistimetoanticipate anyresults*

TABLE 1
!
LISTING OFPROJECTS SPLIT UPBYROUNDS AND ACTIVITIES
'Prospection DriHing Production
techniques ■Enhanced
recoveryTransportation Storage
'I
Subsidy
(inUA)
No.of
Projects432.000
(1)1stRound
9.380.000
(2)(1975 )
13.790.360
(6)1.883.673
(2)11.945.926
(4)
.f.1.482.000
(D
Subsidy
(inUA)
Mo.of
Projects3.287.933
(3)2nC'Round
1.483.200
(1)(1976 )
20.913.651
(18)7.358.101
(5)1.353.500
(3) (-)
Subsidy
(inUA/EUA )
Mo."of
Projects605 .344
(4)3rdRound
2.160.528(1977 )*
29.376.876
(19)3.399.101
•
(3)f
5.663.303
(4)290.246
(1)
Subsidy
(inEUA )
Mo.of
Projects1.055.450
(5)4t'1Round
4.281.599
(4)(1978 ) ·
19.517.390
(21)4.881.513
(5)5.091.159
(5)1.864.769
(3)

Table 2 .
SITUATION OPCOMMITMENTS AT30.06.1979
Year
1974
1975Credits allocated
25.000.000 UA......
• ' 25.OOO.OOO UA
50.000.000 UACredits committed
committed at31.12.1975 =25,000.000 UA)-38.9i4.8l6 UA=1stseries of
committed at31.12.1975 =13.914/816UA) contracts .
forwarded to1976 : =ll.O85.l84 UA -
'50.000.000 UA
1976 forwarded from 1975 :ll.O85.l84 UA......
'28.000.000 UA
\
39.O85.l84 UAcommitted at31.12.1976 =10.541.540 UA)=35.116 .265UA=2ndseries of
committed at31.12.1976 a24.574.725 UA)- contracts
forwarded to1977 =3.425.275 UA
remaining from 1975 not
utilised because .ofpro-,
jects withdrawn β 543.644 UA
. 39.O85.l85 UA
1977 forwarded from 1976 .3.425.275 UA ...¿..
5O.OOO.OOQ UA
53.425.275 UAcommitted at31.12.1977 ■-3.425^275 UA)=22.474.161 UA=1stpart ofthe3rd
committed at31.12.1976 =19.048 .886UA) - series ofcontracts
forwarded toI978 =30.95I.II4 UA
1 _ ■ v
; 53.425.275 UÀ
1978 forwarded from 1977 27.959 .278 ,63-EUA ...
35.000.000 ,–EUA...
'62.959.278,63 EUAcommitted for3rc* · ,-
series in'1978 =17.892.080,83 EUA =2ndpart of3rdse­
" ' - ■ ' ' : ries ofcontracts
221.946,32 EUA «scommitted forexpert
.-· . ·and symposium
committed for4th series ·, ■
1978 =18.692.270,69 EUA =1stpart of4thserie
ofcontracts
forwarded toI979 «26.152.980,79 EUA '
. , / 62.959'.278,63 EUA
1979 forwarded from 1978 26.152.980,79 EUA
revalued at ,26.067.147,70 EUA '
30.06.1979committed for1979 -=12.873.100,53 EUA . .N ' , = part ofthe
• 4 series of
- ■■'. / projects
remaining appropria - .=13.194.047,17 EUA
tions -

Table 3
SITUATION OFPAYMENTS AT30,6.1979
•1'J" -· 1»*TJ–M·'U".II II.
TOTAL SUPPORT
(in EUA )1975
UA1976
UA * '1977
UA1978
EUA1979
EUARemaining
EUA
1st series' ' "" i '"
36.577,152 25.466.715 5.156.310 477.847 3,703.647 . m 1.842,938
2nd series 31,466.349 .· .-7
: ■ ) :9.444.637
3■5,596,653 2,914,136 . 1.'184 ,981 12,325.942
3rdseries ^ 37.740.187
1 ,4: 35.307,287 5.50ë,855 3.340,284 23.583.761
4th series 31,565.372" 3
4,144,897 3.083,498 24,336,977