CELEX: 51977PC0532
Language: en
Date: 1977-10-25
Title: Proposal for a COUNCIL REGULATION on support for joint hydrocarbon-exploration projects (Amendment to the proposal from the Commission to the Council of 29th November 1974) (presented by the Commission to the Council pursuant to the second paragraph of article 149 of the EEC Treaty)#Proposal for a COUNCIL REGULATION implementing Council Regulation (EEC) on support for joint hydrocarbon-exploration projects 1977 (presented by the Commission to the Council)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (77) 532
Vol. 1977/0171
 ---pagebreak--- Disclaimer
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In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1.
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Wirtschaftsgemeinschaft und der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983,
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der genannten Verordnung freigegeben.
 ---pagebreak---       COMMISSION OF THE EUROPEAN COMMUNITIES
                                                                   COM(77)532 final.
                                                                   Brussels , 25 October 1977
                                               Proposal for a
                                            COUNCIL REGULATION
                      on support for joint hydrocarbon-exploration projects
                   (Amendment to the proposal from the Commission to the Council
                                           of 29th November 1974 )
               ( presented by the Commission to the Council pursuant to the
                    second paragraph of article 149 of "the EEC Treaty)
                                              Proposal for a
                         ,.- w              COUNCIL REGULATION
                 implementing Council Regulation (EEC ) on support for joint
          f\ .
        (  ,                          hydrocarbon-exploration projects
                  : .                        . _
                                       /            1977
                                  ...
                                -
                               (presented by the Commission to the Council )
CQM(77 ) 532 final .
 ---pagebreak---                     Proposal for a
                  COUNCIL REGULATION
                          on
 support for joint hydrocarbon-exploration projects
 ( Amendment to the proposal from the Commission to the
 Council of 29 November 1974 )*
                           o
( Presented by the Commission to the Council pursuant to the
second paragraph of Article 149 of the EEC Treaty )
* OJ N° C 18 / 3 of 25 January 1975
 ---pagebreak--- Proposal for a Council Regulation on support for joint
hydrocarbon-exploration projects .
( Amendment to the proposal from the Commission to the Council
of 29 November 1974 )*
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic
Community , and in particular Article 235 thereof ,
Having regard to the proposal from the Commission ,
Having regard to the Opinion of the European Parliament ,
Having regard to the Opinion of the Economic and Social Committee ,
Whereas the implementation of a Community energy policy is one of the
objectives of the Community ; whereas the Council , in its Resolution
of 17 September 1974 concerning a new energy policy strategy for the
Community , has affirmed its political will to draw up and implement
a Community energy policy ;
Whereas , in view of the hydrocarbon supply difficulties caused by the
international situation , specific efforts are required in the field
of hydrocarbon exploration ;
Whereas the encouragement of exploration projects which are of
paramount importance for safeguarding the hydrocarbon supply of the
Community serves to carry out this policy , in particular by means of
searches for reserves of hydrocarbons situated in regions under the
jurisdiction of the Member States ;
Whereas the primary responsibility for financing such activities lies
with the petroleum industry ; whereas , in view of the risks and
investments involved in such activities , provision should be made
for the Community to grant them financial support ;
Whereas such support should be repayable in the event of the
exploitation of the fields discovered ;
* OJ N° C 18 / 3 , 25 January 1975 .
 ---pagebreak--- Whereas , in view of the need to limit such support to that which
 is strictly essential , the Community must have all possible means
of assessing benefits which may accrue to it from such projects
and their conformity with the objectives of Community energy
policy ;
Whereas such support should as a general principle constitute only
a minority share of the financing of a project during the period
in which a subsidy is granted ; whereas the geographical zones in
which these investigations will be made must be well defined ;
Whereas the Treaty does not provide the powers necessary for these
purposes ,
HAS ADOPTED THIS REGULATION :
                         Article 1
1 . Subject to the following Articles , the Community may grant support
     for hydrocarbon exploration projects in regions under the
     jurisdiction of the Member States .
2 . The above-mentioned projects shall relate to geophysical work ,
     stratigraphi c drilling and exploratory drilling , as defined in
     Article 2 , for the purpose of determinging the existence of
     accumulations of hydrocarbons in the subsoil of the territory and
     of the continental shelf of the Member States .
                         Article 2
The work referred to in Article 1     is defined as follows :
( a ) "geophysical work " means prospecting involving the use of magnetic ,
      seismic , gravimetric or other physical methods for the purpose
      of collecting information in connection with the search for
      hydrocarbons , but not involving geophysical study of the wells
      drilled ;
< b ) " stratigraphic drilling " means the drilling of a well intended ,
      essentially or to a large extent , to collect stratigraphic
      information such as the thickness , lithology , sequence , porosity
      and permeability of the rock penetrated or to locate the position
      of a distinctive stratum ;
Cc ) " exploratory drilling " means the drilling of a well in a
      promising structure for the purpose of determining the presence
      or absence of hydrocarbons .
 ---pagebreak---                           Article 3
 1 . Support for exploration projects shall be granted in the form
      of a subsidy repayable in the event of the exploitation of the
      fields discovered .
2 . Such support may not exceed :
      ( a ) 75% of the actual cost in the case of geophysical work , and
      ( b ) 50% of the actual cost in the case of stratigraphic and / or
            exploratory drilling .
                          Article 4
Projects may emenate from Member States or from the Commission .
After consulting the Member States , the Commission shall submit to
the Council a proposal for support for one or more projects ,
accompanied by a report including :
- a detailed description of the project and , where appropriate , of
    the drilling programme ;
- indications as to the probable presence of hydrocarbons in the
    exploration zone , and the results of geophysical work ;
- the cost of the project , and the financing arrangements proposed
    for carrying it out ;
- any other information which may justify the type and extent of the
    support proposed for the project by the Commission ;
- any support provided for , or expected from , Member States for the
    project .
The Council may ask the Commission for additional information .
                          Article 5
The Council , acting unanimously on a proposal from the Commission ,
shall decide on the projects td be supported .
                          Article 6
The Commission shall invite applications to carry out the projects
in the Official Journal of the European Communities .
 ---pagebreak---                        Article 7
1 . The carrying out of exploration projects shall be entrusted
    solely to groups of natural persons , who are nationals of the
    Member States , or to legal persons , constituted in accordance
    with the laws in force in the Member States of the Community ,
    who shall undertake to be jointly and severally liable to the
    Community .
2 . However , the carrying out of such projects may be entrusted to a
    natural person who is a national of one of the Member States , or
    to a legal person constituted in accordance with the laws in
    force in the Member States of the Community .
                       Article 8
Those responsible for carrying out exploration projects shall submit
an annual report to the Commission upon the progress of the work and
the expenditure incurred .    Representative of the Commission shall
have access at all times to the technical and financial documents
relating to the projects .
                       Article 9
All information contained in the reports referred to in Article 8
shall be confidential .
                       Article 10
The Commission shall report annually on the progress of each of the
projects to the European Parliament and to the Council .
                       Article 11
This Regulation shall enter into force on the day following its
publication in the Official Journal of the European Communities .
It shall remain in force for a period of three years from the date
of its entry into force .
This Regulation shall be binding in its entirety and directly
applicable in all Member States .
Done at                                     For the Council
                                             The President
 ---pagebreak---                     Proposal for a
                  COUNCIL REGULATION
Implementing Council Regulation ( EEC ) N°             of
on support for joint hydrocarbon exploration projects
                        ( 1977 )
        ( presented by the Commission to the Council )
 ---pagebreak---                    EXPLANATORY MEMORANDUM
1 . The Council , in its Resolution of 17 September 1974 concerning
     a new energy policy strategy for the Community ( Doc . R / 2391 / 74
     ( ENER 45 ) of 19 September 1974 ), has affirmed its will to draw
     up and implement a Community energy policy .      One of the
     guidelines adopted was the use of hydrocarbon resources in the
     Community in order to improve the security of the Community 's
     energy supply .
2 . The Council , in its Resolutions of 17 December 1974 ( 1 ) and
     13 February 1975 ( 2 )/ has spoken in favour of the development of
     hydrocarbon exploration and production on shore and on the
     continental shelf of the Member States through the provision of
     financial support in certain cases .
3 . On 29 November 1974 the Commission submitted to the Council a
     proposal for a Regulation concerning the provision of financial
     support for joint hydrocarbon-exploration projects ( OJ N° C 18 / 3
     of 25 January 1975 ).      During the discussion concerning this
     document in the Council on 26 June the vast majority of the
     delegations were in favour of financing a phased programme of
     well-defined exploration activities .
4 . The Commission therefore placed a panel of geologists in charge
     of studying and selecting subsoil-investigation projects designed
     to bring to light zones in which there are likely to be
     accumulations of hydrocarbons on the territory and on the
     continental shelf of the Member States , through geophysical work ,
     stratigraphic drilling or exploratory drilling .      These experts
     have presented their report to the Commission which has informed
     the Member States * experts of it .
( 1 ) Doc . R / 3649C74 ), ENER 79 .
( 2 ) Doc . R / 505<75 >, ENER 24 .
 ---pagebreak---                           .2.
    This report shows that there are in the Community vast , hitherto
    unexplored sedimentary zones , whose geological structures favour
    the accumulation of hydrocarbons .    Investigation of these
    zones would provide better knowledge of the potential reserves
    of hydrocarbons in the Community , encourage further exploration
    by the petroleum industry and increase Member States' hydrocarbon
    resources in the long term .
5 . The petroleum industry which has been consulted by the Commission ,
    has expressed an interest in such projects , but has indicated
    that , in view of the technical and economic risks entailed , it
    does not contemplate taking sole responsibility for them in the
    near further .
    Also , as mentioned in the geologists' report , the petroleum
    industry 's interest in exploration projects will depend on the
    terms offered by the Member States in question regarding mining
    concessions and the economic exploitation of fields discovered .
    An appropriate statement to be included in the Council minutes
    is proposed .
6 . Under the framework Regulation , the Commission proposes to grant
    financial support to an initial group of projects involving
    geophysical prospecting in zones under the sovereignty of the
    Member States or contiguous thereto , and exploratory drilling
    at sites in zones which are also under the sovereignty of the
    Member States .
7 . The three projects covered by this proposal have been chosen by
    the Commission from the projects selected by the panel of
    geologists .    These projects meet the following criteria :
    - Existence of sedimentary basins whose characteristics favour
       the accumulation of hydrocarbons , e.g.
      - thick sedimentary sequence ,
      - possibility of the presence of traps ,
      - presence of impermeable sedimentary overburden .
 ---pagebreak---      - Possibility of gaining access to the sedimentary strata
        using technology available now or in an advanced state of
        development .
     - Foreseeable extraction costs economically acceptable , though
        higher than those of fields now being worked .
     - Vast extent of the regions concerned , entailing a significant
        increase in the Community 's potential hydrocarbon reserves
        if the results are positive .
 8 . The three projects selected entail capital investment totalling
     48.7 million u.a ., with 15.3 million u.a . for geophysical
     prospecting and 33.4 million u.a . for exploratory drilling .
 9 . The Commission is proposing support of 75% in the case of
     stratigraphi c prospecting and 40% in the case of exploratory
     drilling ( Article 3 of the proposal for a framework Regulation ).
     The support involved would therefore be 11 475 000 u.a . and
     13 360 000 u.a . respectively , a total of 24 835 000 u.a .
     Support will be granted in the form of a subsidy repayable in the
     event of exploitation of the fields discovered by the
     receipients of Community support .
10 . The Community 's Budgetary Authority included 24 million u.a . of
     appropriations for commitment for joint hydrocarbon-exploration
     projects in the 1977 budget ( item 3201 ).   The support which the
     Commission is proposing for the three exploration projects is
     therefore covered by the appropriations available .
11 . The Commission would entrust responsibility for the projects to
     Community companies , or consortia of Community companies ,
     following the receipt of applications in response to invitations
     published in the Official Journal of the Communities .
     ( Articles 6 and 7 of the proposal for a framework Regulation ).
     The Commission would administer the contracts .
                           *
                      *           *
The Council is therefore asked to adopt the following Regulation .
 ---pagebreak---           PROPOSAL  FOR A COUNCIL REGULATION
Implementing Council Regulation ( EEC ) N°         of
on support for joint hydrocarbon-exploration projects
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic
Community ,
Having regard to Council Regulation ( EEC ) N°    of
on support for joint hydrocarbon-exploration projects , and in
particular Article 5 thereof ,
Having regard to the proposal from the Commission ,
Whereas it is necessary to encourage exploration activities in
new zones in the Community ;
Whereas studies carried out by the Commission have shown that there
are in the Community vast , hitherto unexplored , sedimentary zones
whose geological structures favour the accumulation of hydrocarbons
Whereas the development of these resources would increase in the
long term the Member States' availability of hydrocarbons ;
Whereas it is important to carry out hydrocarbon-exploration
projects in order to assist the development of these resources ;
Whereas , because of the high risks inherent in carrying out such
projects , the petroleum industry would defer the investments
necessary to carry them out unless financial support were provided
by the Community ;
HAS ADOPTED THIS REGULATION :
 ---pagebreak---                       Article 1
The hydrocarbon-exploration projects set out in the Annex hereto
shall receive Community support in the form of subsidies repayable
in the event of the exploitation of the fields discovered , up to
a maximum amount of 24 830 000 units of account .
                      Article 2
The amount of subsidy shall be calculated by applying to the actual
project cost , as audited and accepted by the Commission , the
percentages laid down for each project in the table in the Annex
subject to the maximum amounts set out therein .
                      Article 3
Following the receipt of applications in response to an invitation
published in the Official Journal of the European Communities , the
Commission shall negotiate and conclude with the persons and
undertakings selected by it , the contracts necessary for the
implementation of the projects .   These contracts shall not be
concluded until the mining licences and rights required for the
implementation of the projects have been granted by the Member States
concerned .   The Commission shall administer the contracts .
                      Article 4
This Regulation shall enter into force on the day following its
publication in the Official Journal of the European Communities .
This Regulation shall be binding in its entirety and directly
applicable in all Member States .
Done at Brussels ,                          For the Council ,
                                              The President
 ---pagebreak---                                                          ANNEX
I. MEDA PROJECT
    Situation :  Western part of the Mediterranean bounded :
                 ( a ) to the west / by the meridian 5° west of
                       Greenwich ,          1
                 ( b ) to the east / by the meridian 20° east of
                       Greenwi ch .
   Project description
   ( a ) Carry out detailed seismic surveys in deep water
         (1 000-3 000 m );
   ( b ) Supplement the initial seismic data in order to locate an
         appropriate drilling site ;
   ( c ) Make an exploratory borehole at the site thus defined .
   Importance of the project
   Work and experiments already carried out have shown that this
   basin is filled with 5 to 7 kilometres of sediments at depths
   of 1 000 to 3 000 metres of water .
   The sedimentary sequence comprises a thick salt formation
   ( over 1 500 m thick ) providing an excellent cover for the under­
   lying horizons which probably comprise permeable / porous strata
   likely to conceal accumulations of hydrocarbons .       In addition /
   these salt strata have caused the formation of very many salt
   domes which can act as hydrocarbon traps .
   The thickness of the sediments / the existence of a salt cover
   isolating the strata likely to contain hydrocarbons / the
   structural features provided by the salt domes and the very large
   extent of the basin show that the Western Mediterranean could
   constitute a source of oil of the same order of magnitude as the
   Arabian platform .
 ---pagebreak--- . NAD PROJECT
  Situation :     south-east part of the continental shelf of
                  Greenland situated between :
                  ( a ) to the north , parallel 70° N
                  ( b ) to the south , parallel 55° N
  Project description
  ( a ) Carry out detailed seismic surveys on the edge of the
        continental shelf to the south-east of Greenland ;
  ( b ) Carry out detailed additional seismic work in order to
        determine an appropriate drilling site ;
  Cc ) Possibly drill an exploratory borehole at a site thus
        defined .
  Importance of the project
  Initial aeromagnetic prospecting of a general nature shows the
  probable existence of a very thick sedimentary basin ( over
  10 000 m thick ).        Extrapolating from the geological data
  obtained on shore there is a case for thinking that these marine
  sediments are likely to contain excellent oil-bearing structures .
 ---pagebreak--- III . UD PROJECT
      Situation :  Any deep horizon situated in the territory of the
                   member countries and below the zones where oil is
                   usually found , i.e. at depths of penetration greater
                   than 5 000 / 6 000 m .
                   In the first place , the objectives of the UD project
                   will be restricted to the following zones :
                   ( a ) In Italy ( Puglia region and Apenines )
                   ( b ) In France ( Aquitaine-Languedoc zone )
                   ( c)  In the Netherlands ( on shore ).
      Project description
      Carry out broad seismic surveys with existing techniques in order
      to define the major prospects in the above-mentioned deep zones .
      These techniques will include seismic reflection and refraction ,
      gravity and magnetism adapted to the peculiar problems of these
      sites .
      Adaptation of geophysical diagraphy to the high pressures and
      temperatures existing at great depth .
      Importance of the proiect
      Recent developments in modern geochemistry have shown the
      compatibility of porous , permeable strata and hydrocarbons
      ( especially gaseous ones ) at temperatures of around 350°C and at
      pressures corresponding to depths down to 10 000 m .       Exploration
      of ultra-deep structures is a new aspect of the search for oil , an
      aspect which could be as important to the Community as its
      offshore operations have been from the 1960 's onwards .
 ---pagebreak---                                                                                                       ANNEX
                            Proposed support for joint hydrocarbon-exploration projects
                                                                                                ( in U.A. )
              1         2             3   I        4        I           5    I     6          7         I          8
                  Cost of         Rate of   Corresponding     Cost of          Rate of Corresponding      Total amount
                  geophysical     support   amount            dr i l ling      support amount             of support
     Projects
                  work                                        work                                        (4 + 7 )
  I.       MEDA "    9 000 000      75%        6 750 000         20 000 000      40%       8 000 000        14 750 000
  II .   " NAD "     1 800 000      75%        1 350 000  .      10 700 000      40%       4 280 000         5 630 000
  III .    UD "      4 500 000      75%        3 375 000           2 700 000     40%       1 080 000         4 455 000
| Total             15 300 000                11 475 000        33 400 000                13 360 000        24 835 000
 ---pagebreak---                          FINANCIAL RECORD
1 . Relevant budget heading :    Article 320 - Item 3201
2 . Title of budget heading :    Joint hydrocarbon-exploration projects
3 . Legal basis :
    Proposal for a Regulation sent to the Council on 29 November 1974
    ( 0J N° C 18 of 25 January 1975 ) on support for joint jydrocarbon-
    exploration projects .
4 . Description of the operation : Provision of Community financial
    support for three hydrocarbon-exploration projects .
5 . Objective of the operation : Geophysical work and exploratory
    drilling in deep sedimentary basins of the continental shelf and
    in ultra-deep structures on shore in the territory of the member
    countries .
6 . Justification of the operation : Exploration for oil offshore and
    in ultra-deep regions entails very great technical and financial
    risks .    Without a financial contribution from the  Community towards
    these risks , the oil companies would prefer not to   carry out this
    type of exploration or to postpone it , which would   seriously
    impair the security of the Community 's supplies of   hydrocarbons
    in the future .
7 . Appropriations :   ( See table on the next page ).
8 . Inspection arrangements
    8.1 . No provision for inspection by the member countries .     The
          authorising department and Financial Control will carry out
          periodic in situ and documentary checks and will fillow up
          the projects on the basis of the technical and financial
          reports which the firms are required to send periodically .
    8.2 . The Commission is required to report annually to the European
          Parliament and to the Council on the execution of the
          exploration programme and on the state of progress of work on
          each project .
 ---pagebreak---     7.1 . Multiannual schedule of non-differentiated and differentiated appropriations  ( in EUA from 1978 onwards )
              Year                   1976             1977            1978              1979              1980         i
     Appropri ations                                                Payments                                               Total
    'A . Non-di f f erent i ated
         appropriations
         1976 :     1 000 000       1 000 000                                                                             1 000 000
     6 . Appropriations for
         commitment
         1977 :  25 000 000                          9 000 000                          8 000 000        8 000 000       25 000 000
         1978 :  25 000 000                                          9 000 000          8 000 000        8 000 000       25 000 000
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1                                                                                                                    i
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I    Total                                           9 000 000       9 000 000
                                                                                                                     i
                                                                                                                         51 000 000
                                    1 000 000    |
                                                 i
                                                                                       16 000 000       16 000 000
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 ---pagebreak---               PROPOSAL FOR A STATEMENT
      TO BE INCLUDED IN THE COUNCIL MINUTES
The Member States will determine the conditions on which they will
ultimately grant concessions for the production of fields
discovered in the execution of support contracts , and which will
permit their economic exploitation .