NoC19/128 OfficialJournaloftheEuropeanCommunities 25.1.93
APPENDIX
totheOpinionoftheEconomicandSocialCommittee
ThefollowingamendmenttotheSectionOpinion,tabledinaccordancewiththeRulesofProcedure,was
defeatedinthecourseofthedebate:
'Point2.2.
Amendthelasttwosentencesofthispointtoreadasfollows:
«Anymovetowardsbasingtariffsoncostsshouldbegradualandshouldbelinkedtomeasurestoensure
thatallusersenjoyadvantagesintheshapeofcostreductionsonanequalfootingwithbusinesssubscribers,
andmeasurestoencouragetheconnectingtothenetworkofhouseholdswhichcouldnototherwisebe
connected .Tariffprinciplesmustnotdestroythefinancialviabilityofpublicoperators,whichisessentialto
themaintenanceanddevelopmentofthepresentnetworksandtheguaranteedprovisionofauniversal
service.»'
Voting
For:24,against:42,abstentions :21.
OpinionontheproposalforaCouncilDirectiveontheConditionsforgrantingandusing
authorizationsfortheprospection,explorationandextractionofhydrocarbons (!)
(93/C19/32)
On26May1992,theCouncildecidedtoconsulttheEconomicandSocialCommitteeunder
Articles57(2)and100AoftheTreatyestablishingtheEuropeanEconomicCommunityon
theabovementioned proposal.
TheSectionforEnergy,NuclearQuestionsandResearch,whichwasresponsibleforpreparing
theCommittee'sworkonthesubject,adopteditsOpinionon30October1992.The
RapporteurwasMrSala.
Atits301stPlenarySession(meetingof25November1992)theEconomicandSocial
CommitteeadoptedthefollowingOpinionbyalargemajority,withtwoabstentions .
1.Introduction
1.1.Thecurrentsituation
1.1.1.Communityhydrocarbonresourcesfallfar
shortoftotalinternalneeds.Internalproductionisnot,
ingeneral,ontheincrease.Whilenotentirelytobe
ruledout,theoutlookfornewmajordiscoveriesis
notveryencouraging .Significanttechnologicalprogress
continuestobeachieved,however,inprospectionandexplorationtechniquesandinstruments :newsources
maythereforeyetbefoundeveninpreviouslyprospect­
edandmarginalzones.
1.1.2.Thenumberofprimaryandqualifiedoper­
atorsremainslow,asaresultofthehighlevelof
technicalknow-howandfinancialsupportrequiredfor
hydrocarbonsexploration .Anumberofindustrialcon­
cernshaverecentlycomeontotheexplorationmarket,
however,partlybycooperatingwithhighlyspecialist
sub-sectors .Nevertheless ,relativelysmallnumbersof
primaryandsecondary(specialistsub-contractor )oper­
atorsareinvolved. (!)OJNoC139,2.6.1992,p.12.

25.1.93 OfficialJournaloftheEuropeanCommunities NoC19/129
1.2.ThebackgroundtothedraftDirective includesanobligationuponthelicenseetocarryout
specificoperationsinaccordancewithaspecifiedtime­
table,laiddowninadvancebytheStateinlinewith
localgeographicalcircumstances .
1.3.3.Unextracted hydrocarbons aregenerally
ownedbyindividualStates.Theyareusuallytrans­
ferred,inpartorinwhole,totheentitywhichhas
locatedthehydrocarbons ,andisextractingtheminline
withconditionspreviouslysetbytheState.
1.3.4.The'authorization'procedureseenasawhole
andasappliedtotheoperatorcarryingoutprospection ,
explorationandextractionactivities,bearsmanysimi­
laritiestothelegalinstrumentgenerallyknownasa
'concession',insofarastheoperatorcarriesoutallthe
necessaryoperationsathisownrisk,shoulderingall
thecostsandderivinganeconomicreturnfromthe
possiblefutureexploitationoftheinvestmentmade.
Nevertheless ,themultiplicityanddiversityof'authoriz­
ation'proceduresamongthevariousStatesdoesnot
allowthe'concession'labeltobeappliedinallcases.
1.3.5.ThedraftDirectivesetsouttoestablishsome
basiccriteriatobeappliedinalltheMemberStatesin
ordertoensureopen,transparentauthorizationpro­
ceduresandtoremoveanydefactodiscriminatory
proceduresorrestrictions .TheMemberStatesareat
libertytofollowtheirownproductionplanningpolicies
andtheirownmethodsofsharingoutproductionpro­
ceedsbetweenoperatorsandtheState.1.2.1.On27March1984theEconomicandSocial
CommitteeinstructedtheSectionforEnergy,Nuclear
QuestionsandResearchtodrawupanInformation
Reportontheprospectionandexploitationofhydro­
carbons.ThereportwasadoptedbytheEnergySection
on11January1985(CES834/84fin.).Thereport's
conclusionspointedtotheneedfortheCommunityto
playadiscreetbutvigorousstimulatingrole.Itcalled
upontheCommunitytotakemeasuresinthefieldof
technologicalresearchintoprospectinganddrilling,
togetherwithsecurityofsupply(reservesandgaspipe­
lines).
1.2.2.On16September1986,theCouncilofMinis­
tersadoptedaresolution (CouncilResolutionconcern­
ingnewCommunityenergypolicyobjectivesfor1995
andconvergenceofthepoliciesoftheMember
States)(*)establishinggreaterintegration,freefrom
barrierstotrade,oftheinternalenergymarketasa
Communityenergypolicyobjective.
1.2.3.In1989theCommissionproposedalegal
analysisofconstraintsonthecompletionoftheinternal
energymarket,upstreamanddownstreamofthehydro­
carbonsindustry,drawnupbyoutsideconsultants
(contractXVII/7080/ETD/89-20).Inbrief,thereport
emphasizedthewidevarietyofexistingsituationsand
concludedbyrecommending aDirectivetorenderthe
marketopenandnon-discriminatory inawaythat
couldnotbereversedbyindividualStatesinemerg­
encies.Manyoftherecommendations containedinthe
reporthavebeenincorporatedintothedraftDirective
underconsideration .1.4.LinkbetweenthedraftDirectiveandDirective
90/531/EEC(2)(publicsectorcontracts)
1.3.ThecurrentlegalsituationintheCommunity 1.4.1.Directive90/531/EECstipulatesthathydro­
carbonexplorationoperators,as'authorized'entities,
nearlyalwaysonanexclusivebasisforagivengeo­
graphicalarea,mustobserveopen,non-discriminatory
procedureswhenprocuringgoods,worksorservices.
1.4.2.Article13ofthedraftDirectiveamendscertain
ArticlesofDirective90/531/EEC:providedauthoriz­
ationhasbeengrantedonopen,non-discriminatory
terms,therulesgoverningselectionofsuppliersof
goods,worksandservices,tobeobservedbytheoper­
ator,arelessrigid.1.3.1.Prospection,explorationandextractionactivi­
tieswithinspecifiedgeographicalareasarecurrently
'authorized'(throughlicenses,authorizations andcon­
cessions)bytheMemberStatesunderawiderangeof
nationalprocedures,reflectingthedifferentbasiclegal
approachesandgeologicalandproductiveconditions.
IntheabsenceofaCommunitydirectiveforthisarea,
theindividualMemberStatesareinapositiontoamend
theirdomesticlegislation,particularlywhencrisesor
emergenciesarise.
1.3.2.Apartfrominitialprospectingactivities,which
arenotgenerallyauthorizedonanexclusivebasis,
subsequentoperations,whicharenowofanindustrial
scaleandnature,areauthorizedonanexclusivebasis,
forrelativelylengthyperiodsoftime.Authorization1.5.ThelegalbasisofthedraftDirective
1.5.1.ThedraftDirective'sultimateandmainaim
istoextendtheprincipleofopeningupCommunity
(!)OJNoC241,25.9.1986. (2)OJNoC297,29.10.1990.

25.1.93 NoC19/130 OfficialJournaloftheEuropeanCommunities
marketstocompetitiontothehydrocarbons pros­
pection,explorationandextractionsector.2.2.1.1.ThistallieswiththefindingsoftheInfor­
mationReportreferredtoinparagraph1.2.1.
1.5.2.ThedraftDirectiveindicatesthatanopen
market,transparency inauthorization awardpro­
ceduresandtheabolitionofdiscriminatory provisions
wouldstimulateinterestamongsectoroperators.It
wouldthustriggeranincrease—albeitprobablyamod­
estone—inCommunityhydrocarbonproduction .2.2.2.TheCommitteewouldemphasizethesignifi­
canceandscopeofthenewprospectionandproduction
technologies ,whichmayjustifyincreasedactivityeven
inareasforwhichauthorizations alreadyexist.
1.5.3.ThedraftDirectiveisbasedonArticles57(2)
and100aoftheTreaty(point30oftheExplanatory
Memorandum ).2.2.2.1.Inviewofthenew(particularlythreedimen­
sionalseismic)prospectiontechnologies ,ahighlydetail­
ed,accuratesurveyofgeologicalconditionsinboth
currentprospectionzonesandareaspreviouslypros­
pectedwithlessaccuratemeansshouldnowbecarried
out.Majordepositsmaynotbefound,butatleast
smallfieldswhichhadpreviouslyescapeddetection
couldbeidentified.
2.Generalcomments
2.2.2.2.Thenewextractiontechnologiesallowdrill­
ingatgreaterdepthsandinmoregeologicallycomplex
and/ordifficultzones. 2.1.Authorization publicityandawardprocedures
2.2.2.3.Technological progressisalsobeingmade
intheareaofsecondaryandtertiaryrecoveryofhydro­
carbonsandtheuseofexhaustedfieldsasnaturalgas
storagereservoirs.2.1.1.TheCommitteeagreesthatnewprospection,
explorationandextractionauthorizations shouldbe
subjecttoauniversalsetofrulesmakingcompetitive
tenderinganddecision-making onareascompulsory,
freeofdiscriminatory conditions.Suchrulesshould
guaranteefixedandstableoperatingconditions
throughouttheCommunity ,evenintimesofcrisis.
2.1.2.TheCommitteeagreesthatuseofauthoriz­
ationsmustbesubjectonlytoconditionsprovento
betechnicallyoreconomicallynecessaryforthemore
rationalexploitationofdeposits.2.2.2.4.Asaconsequenceofthethreepointsabove,
theintroductionofnewtechnologiesandtheresulting
identification ,duringtheprospectionandextraction
phases,ofnewdataoftenmeansthattheoriginalpro­
grammesrequireslightreadjustment .Theparties
involvedthereforeneedrepeatedlytoamendtheauthor­
izationperiod.Thisisalreadystandardpractice:the
Directiveshouldmakeproperformalprovisionforit.
2.2.Communityproductionprospects
2.2.3.TheCommitteeisoftheviewthatevenrela­
tivelysmalldepositsshould,providedtheyareeconomi­
callyjustifiable,beaccordedstrategicimportance,in
viewoftheirimportanceintermsofsecurityofsupply
andreducedenvironmental risk.2.2.1.TheCommission'scommentsonthedraft
Directiveindicatethat:
theCommunity'sownresourcesarelimited,
thebulkoftheseareprobablylocatedinareas
forwhichauthorizations alreadyexistandwhere
extractionisunderway,2.2.4.TheCommitteeagreesthattheMemberStates
shouldretainsovereigntyovertheirhydrocarbon
resources,managementrights,responsibilityforcom­
pliancewithenvironmental regulationsandhealthpro­
tection,anddecision-making powersintheareaof
nationaldefence(asprovidedunderArticle3inpar­
ticular).large-scalediscoveriesinunassignedareasarenot
anticipated,exceptpossiblyindeep-seazones.

25.1.93 OfficialJournaloftheEuropeanCommunities NoC19/131
2.3.Durationandextensionofauthorizations 2.3.2.TheCommitteeagreesthatauthorizationare­
asshouldberigorouslydefined.Itbelievesthatifafind
extendsintoaborderingareanotyetsubjecttoan
authorization ,theoperatormakingthediscoverycould
begrantedprioritystatusintheauthorizationpro­
cedureforthatarea,onacompetitivebasis.2.3.1.TheCommitteeagreesthatnewauthoriz­
ationsshould,asindicatedinArticle5b),beofsufficient
durationtoofferoperatorstheprospectofprofitable
exploitation,butwithoutbeingexcessivelylong.Inany
case,itisimportantthatthelengthofnewauthoriz­
ationsshouldbespeltoutwhenawardproceduresare
published. 2.4.Relinquishment ofunexploitedareas(Article8)
2.3.1.1.TheCommitteealsoagreesthatduration
maybeextendedwhenagreedprogrammesaredelayed
byunforeseencircumstances [asstatedinArticle5(b)].2.4.1.Asaresultofvaryingnationallegislation,
certainareasarecurrentlyreservedbylaworofficial
authorizationforaparticularoperatorindefinitely,
withnopriorelementofcompetition .Insomecases,
theauthorizedoperatorshaveamajorityStateholding.
2.4.1.1.TheCommitteeagreesthatinsuchcases,
exceptwhereexploratorydrillingorextractionof
hydrocarbons wouldbeinterrupted,thosepartsof
authorizations concerningzonesasyetunexploited
shouldbereviewedandpossiblytheareasopenedup
tonew,competitiveauthorization procedures.This
wouldbeintheinterestsofrenewedcompetitiveness
andofboostingfuturehydrocarbonproductionon
Communityterritory.2.3.1.2.Inmanycases,asdescribedinparagraphs
2.2.2.1.to2.2.2.4.,itmaybeappropriatetoadjustthe
originaltimelimitsset,wherethisisinthegeneral
interest,asaresultofcircumstances which,although
theoreticallypredictable,werenotaccuratelyquantifia­
bleoridentifiablewhentheauthorizationwasgranted.
TheCommitteefeelsthat,incaseswereexploration
anddrillingprogrammes havebeensubstantially
implementedinaccordancewithcontractprovisions
whicharealreadyinforcewhenthisDirectivetakes
effecton1January1993(oratalaterdate),these
contractsshouldremainvaliduntiltheirdateofexpiry.
Incaseswhereauthorizations havebeengrantedby
legislationwithoutindicationofexpirationtime,the
proceduresoutlinedbyArticle8oftheproposedDirec­
tiveshouldbeappliedwiththemodificationshereafter
proposed.2.4.2.TheCommitteehopesthatrelinquishment of
unexploitedareaswillbecarriedoutinsuchawayas
tominimizelitigationandwithoutinterruptingpros­
pectionandproduction .Inparticular,operatorsshould
beguaranteedcontinuedaccessnotonlytoexisting
productionareas,butalsotothoseforwhichtheycan
producegeologicaldatapointingtolikelyfindsinthe
nearfutureandundertaketoimplementashort-/
medium-termdrillingprogramme .2.3.1.3.Acaseinpointwouldbewhereminoror
highlyspecificadditionsoramendmentstoanoriginal
programmewouldnotwarrantanewauthorization
procedure,andshouldbeconsideredtoflownaturally
fromtheoriginalprogramme .
2.4.2.1.Wherethecurrentauthorization doesnot
includetimelimitsforthecompletionofspecificpros­
pectionphases,Article8(2)oftheDirectiveprovides
forrelinquishment ofthosesectorsofgeographical
areaswhereextractionhasnotbegunwithin5years
afterthegrantingoftheauthorization .2.3.1.4.TheDirectiveshouldthereforecontaina
clauseallowingforlimitedextensionsoforiginaltime
limits,indefinedcases,withoutrecoursetonewauthor­
izationprocedures .Thisisthecaseinotherrecent
Communitydirectives,suchasthoseonpublic-sector
worksandservicescontracts.
2.4.2.1.1.TheCommitteebelievesthisclausecould
bemademoreflexibleinordertoaccommodate the
pointsmadeabove. 2.3.1.5.Insuchcasesstepsshouldbetakentodeter­
minegeneralcriteria,andwhetheritisinappropriate
tolaunchanewauthorizationprocedureforadditional
activities(onasmallscaleand/orwheretodosocan
beshowntobeuneconomicand/orlikelytocause
significantoperatingdelays).2.4.2.2.Whereauthorization hasbeengrantedby
statute,Article8(2)stipulatesthatthosepartsofgeo­

NoC19/132 OfficialJournaloftheEuropeanCommunities 25.1.93
graphicalareasshallberelinquishedwhichhavenot
beenexploredorforwhichextractionhasnotbegun
withintheperiodfixedbythelegislation.Thisclause
doesnotmakeclearprovisionforcasesinwhichlegis­
lationstillinforcedoesnotstipulateaperiod.2.4.2.6.Therelinquishment plansdescribedin
2.4.2.4.shouldbemadepublicandsubmittedtothe
Communityfortheappropriateregistrationand/or
decision.
2.4.3.TheCommitteewouldhighlighttheneedfor
aclauseintheDirectivestatingthatspecificperiods
andmethodsshallbelaiddownfortherelinquishment
ofunexploitedareas,andthattheseshallbeexplicitly
includedinbothauthorizationpublicityanddecisions.
Thisis,infact,alreadystandardpractice.
2.4.4.Thegeneralprincipleofrelinquishment of
unexploitedareasisalreadyenshrinedinauthorization
agreementsinanumberofthirdcountries,with
methodsandlegalinstrumentsvaryingfromplaceto
place.
2.4.4.1.TheCommitteenotesthatgiventheCom­
munity'sconsiderablecloutthedraftDirectivecould
haveanimpactinthirdcountries,thescaleofwhichis
hardtopredict.Itthereforeurgesthatinstruments
shouldbeadoptedundertheDirectivesuchasthe
relinquishment plansoutlinedaboveorsimilar:these
instrumentsshouldnotbebasedexclusivelyonunilat­
erallegalaction.2.4.2.2.1.Thereshouldbeacleardefinitionofwhat
ismeantby'exploredareas'and,inanycase,ofthe
proceduresandperiodsunderwhichexistingauthoriz­
ationsshouldberelinquished .Theprincipleofleaving
exploredareaswhichmaybeconsideredtoholdout
reasonablediscoveryprospectstoexistingoperators
shouldagainapplyhere,accompaniedofcoursebya
specificundertakingtoproceedtothedrillingphasein
thenearfuture.
2.4.2.3.Asexplainedabove,if'unexploitedareas'
aretoberelinquished ,theymustfirstlybedefined:
legallycomplexproceduresaretobeexpected.Liti­
gationcouldalsobegeneratedoverexpropriationand/
orcompensationprocedures .Thiscouldhavetheunde­
sirableeffectofslowingdownprospectionandpro­
duction.TheCommitteehopesthattherelinquishment
processwillonlytakeplaceafterareasonableperiod
ofanalysisanddiscussionandthattheentryintoforce
oftheDirectivewillnotthereforeimmediatelyrequire
drasticunilateralrestructuringofvulnerableauthoriz­
ations.2.5.Practicalarrangements forauthorization pro­
cedures
2.5.1.TheCommitteeendorsesthearrangementsfor
thepublicationandconductofauthorizationpro­
cedures,togetherwiththebasiccriteriaforthegranting
ofauthorizations .
2.5.2.Whereauthorizations aregrantedundercom­
petitive,non-discriminatory procedures,authorized
companiesmustnotbeboundbyspecificrequirements
concerningacquisitionofworks,goodsorserviceson
thesameregulatoryfootingascompaniesoperating
onthebasisofexclusiveconcessions suchasthose
responsibleforwater,electricityorpublictransport.
2.5.2.1.TheCommitteeendorsestheincorporation
ofthisprincipleinthedraftDirective,withtheconse­
quentderogationfromandamendmentofcertain
ArticlesofDirectiveEEC/90/531.2.4.2.4.TheCommitteethereforefeelsthatMember
Statesandoperatorsconcernedshould,withinareason­
ablyshortperiodoftime,drawup'relinquishment
plans'forunexploitedareas.Areaswhereextractionor
drillingarealreadyunderwaywouldbelefttoexisting
operators.Areasforwhichoperatorscanproducegeo­
logicaldatasuggestingagoodchanceoffindsand
forwhichtheyundertaketocarryoutearlydrilling
programmescouldalsobekeptbythem.Otherparts
shouldbeputupforauthorization ,withexistingoper­
atorsretainingtherighttotakepartintherelevant
procedures .
2.6.Thirdcountries
2.6.1.Article9ofthedraftDirectivecontainsa
numberofprovisionsonequalityandreciprocitycon­
cerningaccessforCommunityentitiesinprospecting,
exploringandproducinghydrocarbons inthird
countries .
2.6.1.1.Provisionismadefornegotiationsinthe
eventofdifficulties :iftheseprovefruitless,accessfor2.4.2.5.TheCommitteeendorsestheprinciplethat
operatorsshouldbecompensatedforrelinquishedare­
as.Suchcompensation shouldbesetonthebasisof
locallegislationandlegalprecedent.Nofurtherpro­
visionsneedtobemade,contrarytoArticle8(4).This
wouldavoidunnecessarylegaldifficultiesinspecific
MemberStates.

25.1.93 OfficialJournaloftheEuropeanCommunities NoC19/133
companiesfromthecountryconcernedtosimilarpro­
ceduresintheCommunitymayberefused.
2.6.1.2.TheCommitteeendorsestheprinciple
underlyingthesearrangements ,whichmaybeapplied
withadegreeofflexibilityordainedbytheCouncilof
Ministers.Itshould,however,beborneinmindthat
thereislittlelikelihoodofsubstantialprospectionand
explorationprogrammesonCommunityterritoryby
companiesnotyetestablishedintheCommunityinvolv­
ingmajoroperationsbyCommunitycompanies .
2.6.2.TheDirectiveasawholewill,inanycase,
serveasamodelforthirdcountriesneedingtoupdate
theircurrentlegislationinthisfield.AlthoughtheCom­
mitteeseesnospecificgroundsforconcernfromthis
pointofviewinthedraftDirective,otherthanthose
pointedoutabove,itneverthelessrecommendsthat
Article2(2)beredraftedinmoregeneralterms,perhaps
bysubsumingitspracticaleffectsintoArticle3(1).
2.7.Finalremarks
2.7.1.TheCommitteewelcomestheDirective'spro­
visionsonstepstoopenupmarketsandmakepro­
cedurescompetitive .
2.7.2.Thenewawardcriteriacouldstimulatethe
marketandperhapstriggeraprobablymodestincrease
inproduction .2.7.3.However,theCommitteenotesthatasignifi­
cantproportionoftheCommunity'shydrocarbon
requirements isimportedfromthirdcountries.Any
majorEEClegislationonhydrocarbonproduction,such
asthedraftDirective,shouldbecarefullyscrutinized
inviewofitspotentialknock-oneffectonlegislation
inthirdcountriessupplyingtheEC.
2.7.4.ThemostsensitiveaspectsofthedraftDirec­
tivefromthispointofvieware,firstly,theprincipleof
reciprocityofaccess,asindicatedinparagraph2.6.1.2.
aboveand,secondly,theprincipleofrelinquishment of
areasnotyetexploitedandauthorizedunderprocedures
whicharenotstrictlycompetitive .
2.7.4.1.TheCommitteeisparticularlyconcerned
aboutthesecondprinciple,andthereforeemphasizes
thatrelinquishment ofunexploitedareasshouldbe
broughtaboutthroughrelinquishment plansrather
thanunilaterallegalaction.
2.7.5.Lastly,theCommitteehopesthatCommunity
energypolicywillbeincreasinglyintegratedboth
internallyandexternally,inordertoensurethatthe
measuresprogressivelyopeningupthevarioussectors
oftheEuropeanenergymarketarecompatiblewith
thoseconcerningtheestablishmentofrationalandhar­
moniousrelationswithproducercountries.
DoneatBrussels,24November1992.
TheChairman
oftheEconomicandSocialCommittee
SusanneTIEMANN