ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(77)532
Vol.1977/0171

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(77)532final.
Brussels,25October1977
Proposalfora
COUNCILREGULATION
onsupportforjointhydrocarbon-exploration projects
(AmendmenttotheproposalfromtheCommissiontotheCouncil
of29thNovember1974)
f\.
(,(presentedbytheCommissiontotheCouncilpursuanttothe
secondparagraphofarticle149of"theEECTreaty)
Proposalfora
,.-w COUNCILREGULATION
implementingCouncilRegulation (EEC)onsupportforjoint
hydrocarbon-exploration projects
:. ._
/1977
...
-
(presentedbytheCommissiontotheCouncil)
CQM(77)532final.

Proposalfora
COUNCILREGULATION
on
supportforjointhydrocarbon-exploration projects
(AmendmenttotheproposalfromtheCommissiontothe
Councilof29November 1974)*
o
(PresentedbytheCommissiontotheCouncilpursuanttothe
secondparagraphofArticle149oftheEECTreaty)
*OJN°C18/3of25January1975

ProposalforaCouncilRegulation onsupportforjoint
hydrocarbon-exploration projects.
(AmendmenttotheproposalfromtheCommission totheCouncil
of29November 1974)*
THECOUNCILOFTHEEUROPEAN COMMUNITIES ,
HavingregardtotheTreatyestablishing theEuropeanEconomic
Community,andinparticularArticle235thereof,
HavingregardtotheproposalfromtheCommission,
HavingregardtotheOpinionoftheEuropeanParliament,
HavingregardtotheOpinionoftheEconomicandSocialCommittee,
Whereastheimplementation ofaCommunityenergypolicyisoneofthe
objectivesoftheCommunity;whereastheCouncil,initsResolution
of17September 1974concerning anewenergypolicystrategyforthe
Community,hasaffirmeditspoliticalwilltodrawupandimplement
aCommunityenergypolicy;
Whereas,inviewofthehydrocarbon supplydifficulties causedbythe
international situation,specificeffortsarerequiredinthefield
ofhydrocarbon exploration ;
Whereastheencouragement ofexploration projectswhichareof
paramountimportanceforsafeguarding thehydrocarbon supplyofthe
Communityservestocarryoutthispolicy,inparticular bymeansof
searchesforreservesofhydrocarbons situatedinregionsunderthe
jurisdiction oftheMemberStates;
Whereastheprimaryresponsibility forfinancing suchactivitieslies
withthepetroleumindustry;whereas,inviewoftherisksand
investments involvedinsuchactivities,provisionshouldbemade
fortheCommunitytograntthemfinancialsupport;
Whereassuchsupportshouldberepayableintheeventofthe
exploitation ofthefieldsdiscovered;
*OJN°C18/3,25January1975.

Whereas,inviewoftheneedtolimitsuchsupporttothatwhich
isstrictlyessential,theCommunitymusthaveallpossiblemeans
ofassessingbenefitswhichmayaccruetoitfromsuchprojects
andtheirconformitywiththeobjectivesofCommunityenergy
policy;
Whereassuchsupportshouldasageneralprincipleconstituteonly
aminorityshareofthefinancingofaprojectduringtheperiod
inwhichasubsidyisgranted;whereasthegeographical zonesin
whichtheseinvestigations willbemademustbewelldefined;
WhereastheTreatydoesnotprovidethepowersnecessaryforthese
purposes,
HASADOPTEDTHISREGULATION :
Article 1
1.SubjecttothefollowingArticles,theCommunity maygrantsupport
forhydrocarbon exploration projectsinregionsunderthe
jurisdiction oftheMemberStates.
2.Theabove-mentioned projectsshallrelatetogeophysical work,
stratigraphi cdrillingandexploratorydrilling,asdefinedin
Article2,forthepurposeofdeterminging theexistenceof
accumulations ofhydrocarbons inthesubsoiloftheterritory and
ofthecontinental shelfoftheMemberStates.
Article 2
TheworkreferredtoinArticle 1isdefinedasfollows:
(a)"geophysical work"meansprospecting involvingtheuseofmagnetic,
seismic,gravimetric orotherphysicalmethodsforthepurpose
ofcollecting information inconnection withthesearchfor
hydrocarbons ,butnotinvolvinggeophysical studyofthewells
drilled;
<b)"stratigraphic drilling"meansthedrillingofawellintended,
essentially ortoalargeextent,tocollectstratigraphic
information suchasthethickness,lithology,sequence,porosity
andpermeability oftherockpenetrated ortolocatetheposition
ofadistinctive stratum;
Cc)"exploratorydrilling"meansthedrillingofawellina
promisingstructureforthepurposeofdetermining thepresence
orabsenceofhydrocarbons .

Article3
1.Supportforexploration projectsshallbegrantedintheform
ofasubsidyrepayableintheeventoftheexploitation ofthe
fieldsdiscovered .
2.Suchsupportmaynotexceed:
(a)75%oftheactualcostinthecaseofgeophysical work,and
(b)50%oftheactualcostinthecaseofstratigraphic and/or
exploratory drilling.
Article4
ProjectsmayemenatefromMemberStatesorfromtheCommission .
Afterconsulting theMemberStates,theCommission shallsubmitto
theCouncilaproposalforsupportforoneormoreprojects,
accompanied byareportincluding :
-adetaileddescription oftheprojectand,whereappropriate,of
thedrillingprogramme;
-indications astotheprobablepresenceofhydrocarbons inthe
exploration zone,andtheresultsofgeophysical work;
-thecostoftheproject,andthefinancingarrangements proposed
forcarryingitout;
-anyotherinformation whichmayjustifythetypeandextentofthe
supportproposedfortheprojectbytheCommission;
-anysupportprovidedfor,orexpectedfrom,MemberStatesforthe
project.
TheCouncilmayasktheCommissionforadditional information .
Article 5
TheCouncil,actingunanimously onaproposalfromtheCommission,
shalldecideontheprojectstdbesupported.
Article6
TheCommissionshallinviteapplications tocarryouttheprojects
intheOfficialJournaloftheEuropeanCommunities .

Article7
1.Thecarryingoutofexploration projectsshallbeentrusted
solelytogroupsofnaturalpersons,whoarenationalsofthe
MemberStates,ortolegalpersons,constituted inaccordance
withthelawsinforceintheMemberStatesoftheCommunity,
whoshallundertaketobejointlyandseverallyliabletothe
Community.
2.However,thecarryingoutofsuchprojectsmaybeentrustedtoa
naturalpersonwhoisanationalofoneoftheMemberStates,or
toalegalpersonconstituted inaccordance withthelawsin
forceintheMemberStatesoftheCommunity.
Article8
Thoseresponsible forcarryingoutexploration projectsshallsubmit
anannualreporttotheCommission upontheprogressoftheworkand
theexpenditure incurred.Representative oftheCommissionshall
haveaccessatalltimestothetechnical andfinancial documents
relatingtotheprojects.
Article9
Allinformation containedinthereportsreferredtoinArticle8
shallbeconfidential .
Article10
TheCommissionshallreportannuallyontheprogressofeachofthe
projectstotheEuropeanParliament andtotheCouncil.
Article 11
ThisRegulationshallenterintoforceonthedayfollowingits
publication intheOfficialJournaloftheEuropeanCommunities .
Itshallremaininforceforaperiodofthreeyearsfromthedate
ofitsentryintoforce.
ThisRegulationshallbebindinginitsentiretyanddirectly
applicable inallMemberStates.
Doneat FortheCouncil
ThePresident

Proposalfora
COUNCILREGULATION
Implementing CouncilRegulation (EEC)N° of
onsupportforjointhydrocarbon exploration projects
(1977)
(presented bytheCommission totheCouncil)

EXPLANATORY MEMORANDUM
1.TheCouncil,initsResolutionof17September 1974concerning
anewenergypolicystrategyfortheCommunity (Doc.R/2391/74
(ENER45)of19September 1974),hasaffirmeditswilltodraw
upandimplement aCommunityenergypolicy.Oneofthe
guidelines adoptedwastheuseofhydrocarbon resourcesinthe
CommunityinordertoimprovethesecurityoftheCommunity's
energysupply.
2.TheCouncil,initsResolutions of17December1974(1)and
13February1975(2)/hasspokeninfavourofthedevelopment of
hydrocarbon exploration andproduction onshoreandonthe
continental shelfoftheMemberStatesthroughtheprovisionof
financialsupportincertaincases.
3.On29November 1974theCommission submittedtotheCouncila
proposalforaRegulation concerning theprovisionoffinancial
supportforjointhydrocarbon-exploration projects (OJN°C18/3
of25January1975).Duringthediscussion concerningthis
documentintheCouncilon26Junethevastmajorityofthe
delegations wereinfavouroffinancing aphasedprogrammeof
well-defined exploration activities .
4.TheCommissionthereforeplacedapanelofgeologists incharge
ofstudyingandselectingsubsoil-investigation projectsdesigned
tobringtolightzonesinwhichtherearelikelytobe
accumulations ofhydrocarbons ontheterritory andonthe
continental shelfoftheMemberStates,throughgeophysical work,
stratigraphic drillingorexploratorydrilling.Theseexperts
havepresentedtheirreporttotheCommission whichhasinformed
theMemberStates*expertsofit.
(1)Doc.R/3649C74),ENER79.
(2)Doc.R/505<75>,ENER24.

.2.
ThisreportshowsthatthereareintheCommunityvast,hitherto
unexplored sedimentary zones,whosegeological structures favour
theaccumulation ofhydrocarbons .Investigation ofthese
zoneswouldprovidebetterknowledgeofthepotential reserves
ofhydrocarbons intheCommunity,encouragefurtherexploration
bythepetroleumindustryandincreaseMemberStates'hydrocarbon
resourcesinthelongterm.
5.ThepetroleumindustrywhichhasbeenconsultedbytheCommission,
hasexpressed aninterestinsuchprojects,buthasindicated
that,inviewofthetechnical andeconomicrisksentailed,it
doesnotcontemplate takingsoleresponsibility fortheminthe
nearfurther.
Also,asmentionedinthegeologists' report,thepetroleum
industry'sinterestinexploration projectswilldependonthe
termsofferedbytheMemberStatesinquestionregardingmining
concessions andtheeconomicexploitation offieldsdiscovered .
Anappropriate statementtobeincludedintheCouncilminutes
isproposed.
6.UndertheframeworkRegulation,theCommission proposestogrant
financialsupporttoaninitialgroupofprojectsinvolving
geophysical prospecting inzonesunderthesovereignty ofthe
MemberStatesorcontiguousthereto,andexploratory drilling
atsitesinzoneswhicharealsounderthesovereignty ofthe
MemberStates.
7.Thethreeprojectscoveredbythisproposalhavebeenchosenby
theCommission fromtheprojectsselectedbythepanelof
geologists .Theseprojectsmeetthefollowingcriteria:
-Existenceofsedimentary basinswhosecharacteristics favour
theaccumulation ofhydrocarbons ,e.g.
-thicksedimentary sequence,
-possibility ofthepresenceoftraps,
-presenceofimpermeable sedimentary overburden .

-Possibility ofgainingaccesstothesedimentary strata
usingtechnologyavailable noworinanadvancedstateof
development .
-Foreseeable extraction costseconomically acceptable,though
higherthanthoseoffieldsnowbeingworked.
-Vastextentoftheregionsconcerned,entailing asignificant
increaseintheCommunity'spotentialhydrocarbon reserves
iftheresultsarepositive.
8.Thethreeprojectsselectedentailcapitalinvestmenttotalling
48.7millionu.a.,with15.3millionu.a.forgeophysical
prospecting and33.4millionu.a.forexploratorydrilling.
9.TheCommissionisproposingsupportof75%inthecaseof
stratigraphi cprospecting and40%inthecaseofexploratory
drilling(Article3oftheproposalforaframeworkRegulation).
Thesupportinvolvedwouldtherefore be11475000u.a.and
13360000u.a.respectively ,atotalof24835000u.a.
Supportwillbegrantedintheformofasubsidyrepayableinthe
eventofexploitation ofthefieldsdiscovered bythe
receipients ofCommunitysupport.
10.TheCommunity'sBudgetaryAuthorityincluded24millionu.a.of
appropriations forcommitmentforjointhydrocarbon-exploration
projectsinthe1977budget(item3201).Thesupportwhichthe
Commissionisproposingforthethreeexploration projectsis
therefore coveredbytheappropriations available.
11.TheCommission wouldentrustresponsibility fortheprojectsto
Communitycompanies,orconsortiaofCommunitycompanies,
followingthereceiptofapplications inresponsetoinvitations
publishedintheOfficialJournaloftheCommunities .
(Articles6and7oftheproposalforaframeworkRegulation).
TheCommission wouldadminister thecontracts.
*
* *
TheCouncilisthereforeaskedtoadoptthefollowingRegulation .

PROPOSAL FORACOUNCILREGULATION
Implementing CouncilRegulation (EEC)N°of
onsupportforjointhydrocarbon-exploration projects
THECOUNCILOFTHEEUROPEAN COMMUNITIES ,
HavingregardtotheTreatyestablishing theEuropeanEconomic
Community,
HavingregardtoCouncilRegulation (EEC)N°of
onsupportforjointhydrocarbon-exploration projects,andin
particularArticle5thereof,
HavingregardtotheproposalfromtheCommission,
Whereasitisnecessarytoencourageexploration activities in
newzonesintheCommunity;
WhereasstudiescarriedoutbytheCommission haveshownthatthere
areintheCommunityvast,hithertounexplored,sedimentary zones
whosegeological structures favourtheaccumulation ofhydrocarbons
Whereasthedevelopment oftheseresources wouldincreaseinthe
longtermtheMemberStates'availability ofhydrocarbons ;
Whereasitisimportanttocarryouthydrocarbon-exploration
projectsinordertoassistthedevelopment oftheseresources;
Whereas,becauseofthehighrisksinherentincarryingoutsuch
projects,thepetroleumindustrywoulddefertheinvestments
necessarytocarrythemoutunlessfinancialsupportwereprovided
bytheCommunity;
HASADOPTEDTHISREGULATION :

Article 1
Thehydrocarbon-exploration projectssetoutintheAnnexhereto
shallreceiveCommunitysupportintheformofsubsidiesrepayable
intheeventoftheexploitation ofthefieldsdiscovered,upto
amaximumamountof24830000unitsofaccount.
Article 2
Theamountofsubsidyshallbecalculated byapplyingtotheactual
projectcost,asauditedandacceptedbytheCommission,the
percentages laiddownforeachprojectinthetableintheAnnex
subjecttothemaximumamountssetouttherein.
Article3
Followingthereceiptofapplications inresponsetoaninvitation
publishedintheOfficialJournaloftheEuropeanCommunities,the
Commissionshallnegotiate andconcludewiththepersonsand
undertakings selectedbyit,thecontractsnecessaryforthe
implementation oftheprojects.Thesecontractsshallnotbe
concludeduntilthemininglicencesandrightsrequiredforthe
implementation oftheprojectshavebeengrantedbytheMemberStates
concerned .TheCommission shalladminister thecontracts .
Article 4
ThisRegulation shallenterintoforceonthedayfollowingits
publication intheOfficialJournaloftheEuropeanCommunities .
ThisRegulationshallbebindinginitsentiretyanddirectly
applicable inallMemberStates.
DoneatBrussels, FortheCouncil,
ThePresident

ANNEX
I.MEDAPROJECT
Situation :WesternpartoftheMediterranean bounded:
(a)tothewest/bythemeridian5°westof
Greenwich, 1
(b)totheeast/bythemeridian20°eastof
Greenwich.
Projectdescription
(a)Carryoutdetailedseismicsurveysindeepwater
(1000-3000m);
(b)Supplement theinitialseismicdatainordertolocatean
appropriatedrillingsite;
(c)Makeanexploratory boreholeatthesitethusdefined.
Importance oftheproject
Workandexperiments alreadycarriedouthaveshownthatthis
basinisfilledwith5to7kilometres ofsedimentsatdepths
of1000to3000metresofwater.
Thesedimentary sequencecomprises athicksaltformation
(over1500mthick)providing anexcellent coverfortheunder­
lyinghorizonswhichprobablycomprisepermeable/porousstrata
likelytoconcealaccumulations ofhydrocarbons .Inaddition/
thesesaltstratahavecausedtheformationofverymanysalt
domeswhichcanactashydrocarbon traps.
Thethicknessofthesediments/theexistenceofasaltcover
isolatingthestratalikelytocontainhydrocarbons /the
structuralfeaturesprovidedbythesaltdomesandtheverylarge
extentofthebasinshowthattheWesternMediterranean could
constitute asourceofoilofthesameorderofmagnitude asthe
Arabianplatform.

.NADPROJECT
Situation :south-east partofthecontinental shelfof
Greenlandsituatedbetween:
(a)tothenorth,parallel70°N
(b)tothesouth,parallel55°N
Projectdescription
(a)Carryoutdetailedseismicsurveysontheedgeofthe
continental shelftothesouth-eastofGreenland;
(b)Carryoutdetailedadditional seismicworkinorderto
determine anappropriatedrillingsite;
Cc)Possiblydrillanexploratory boreholeatasitethus
defined.
Importance oftheproject
Initialaeromagnetic prospecting ofageneralnatureshowsthe
probableexistenceofaverythicksedimentary basin(over
10000mthick).Extrapolating fromthegeological data
obtainedonshorethereisacaseforthinkingthatthesemarine
sedimentsarelikelytocontainexcellentoil-bearing structures .

III.UDPROJECT
Situation:Anydeephorizonsituatedintheterritoryofthe
membercountries andbelowthezoneswhereoilis
usuallyfound,i.e.atdepthsofpenetration greater
than5000/6000m.
Inthefirstplace,theobjectivesoftheUDproject
willberestrictedtothefollowing zones:
(a)InItaly(PugliaregionandApenines)
(b)InFrance(Aquitaine-Languedoc zone)
(c)IntheNetherlands (onshore).
Projectdescription
Carryoutbroadseismicsurveyswithexistingtechniques inorder
todefinethemajorprospectsintheabove-mentioned deepzones.
Thesetechniqueswillincludeseismicreflection andrefraction,
gravityandmagnetismadaptedtothepeculiarproblemsofthese
sites.
Adaptationofgeophysical diagraphytothehighpressures and
temperatures existingatgreatdepth.
Importanceoftheproiect
Recentdevelopments inmoderngeochemistry haveshownthe
compatibility ofporous,permeablestrataandhydrocarbons
(especially gaseousones)attemperatures ofaround350°Candat
pressurescorresponding todepthsdownto10000m.Exploration
ofultra-deep structuresisanewaspectofthesearchforoil,an
aspectwhichcouldbeasimportanttotheCommunity asits
offshoreoperations havebeenfromthe1960'sonwards.

ANNEX
Proposedsupportforjointhydrocarbon-exploration projects
(inU.A.)
1 2 3I4 II5 I6 7 I8
ProjectsCostof
geophysical
workRateof
supportCorresponding
amountCostof
drilling
workRateof
supportCorresponding
amountTotalamount
ofsupport
(4+7)
I.MEDA" 9000000 75% 6750000 20000000 40% 800000014750000
II."NAD" 1800000 75% 1350000.10700000 40% 4280000 5630000
III.UD" 4500000 75% 3375000 2700000 40% 1080000 4455000
|Total15300000 1147500033400000 1336000024835000

FINANCIAL RECORD
1.Relevantbudgetheading:Article320-Item3201
2.Titleofbudgetheading:Jointhydrocarbon-exploration projects
3.Legalbasis:
ProposalforaRegulation senttotheCouncilon29November1974
(0JN°C18of25January1975)onsupportforjointjydrocarbon-
exploration projects.
4.Description oftheoperation :ProvisionofCommunityfinancial
supportforthreehydrocarbon-exploration projects.
5.Objectiveoftheoperation :Geophysical workandexploratory
drillingindeepsedimentary basinsofthecontinental shelfand
inultra-deep structures onshoreintheterritoryofthemember
countries .
6.Justification oftheoperation :Exploration foroiloffshoreand
inultra-deep regionsentailsverygreattechnical andfinancial
risks.Withoutafinancialcontribution fromtheCommunitytowards
theserisks,theoilcompanies wouldprefernottocarryoutthis
typeofexploration ortopostponeit,whichwouldseriously
impairthesecurityoftheCommunity'ssuppliesofhydrocarbons
inthefuture.
7.Appropriations :(Seetableonthenextpage).
8.Inspection arrangements
8.1.Noprovisionforinspection bythemembercountries.The
authorising department andFinancialControlwillcarryout
periodicinsituanddocumentary checksandwillfillowup
theprojectsonthebasisofthetechnical andfinancial
reportswhichthefirmsarerequiredtosendperiodically .
8.2.TheCommissionisrequiredtoreportannuallytotheEuropean
Parliament andtotheCouncilontheexecutionofthe
exploration programme andonthestateofprogressofworkon
eachproject.

7.1 .Multiannual schedule ofnon-differentiated anddifferentiated appropriations (inEUA from 1978 onwards )
I
ί
*
!
j
î
I
1
I
J
(
î
i
ι
i
IYear 1976 1977 1978 1979 1980
i
Appropri ations Payments Total
'A.Non-di fferent iated
appropriations
1976 : 1000 000
6.Appropriations for
commitment
1977 :25000000
1978 :25000 0001000000
9000 000
9000 0008000 000
8000 0008000 000
80000001000000
25000 000
25000 000
Total1000000 |
i9000 000 9000 000 16000000i
'
i
16000000 51000 000

PROPOSAL FOR ASTATEMENT
TOBEINCLUDED INTHE COUNCIL MINUTES
TheMember States will determine the conditions onwhich they will
ultimately grant concessions fortheproduction offields
discovered intheexecution ofsupport contracts ,and which will
permit their economic exploitation .