Petroleum licensing

Last updated November 27, 2021

Petroleum licensing or exploration license is the act of giving licenses (geographical areas at land or sea) to a company or a joint venture allowing them to search for commercially feasible deposits for the extraction of petroleum.

Each sovereign country distributes licenses in what is typically called a licensing round. The procedure for such, can greatly vary from country to country. The largest change is usually if it is a bid system or a grant system. In the bid system, each company or joint venture will offer a bid to gain the rights for the petroleum exploration at the license for a limited period of time. The highest bid, will obtain the rights. In the grant system, the license will be granted to the company or joint venture that shows the highest interest and ability for the exploration of the license. This can be shown by the company experience, projected plan for the exploration (by high investment) and or longest presence on the country as a petroleum exploration company.

Countries licensing rounds

Malaysia - The Malaysia Petroleum Management (MPM) is pleased to announce the launch of their ‘" 2018 Exploration Bidding Round ".
United Kingdom - The Department of Energy and Climate Change (DECC - formerly the Department of Trade and Industry)^[1] grants licences. The UKCS (United Kingdom Continental Shelf) is divided into quadrants of 1 degree latitude and one degree longitude. Each quadrant is divided into 30 blocks measuring 10 minutes of latitude and 12 minutes of longitude. Some blocks are divided further into part blocks where some areas are relinquished by previous licensees. For example, block 13/24a is located in quad 13 and is the 24th block and is the 'a' part block. The UK government has traditionally issued licences via periodic (now annual) licensing rounds. Blocks are awarded on the basis of the work programme bid by the participants. The UK government has actively solicited new entrants to the UKCS via "promote" licensing rounds with less demanding terms and the fallow acreage initiative, where non-active licences have to be relinquished.
Norway - The Norwegian Petroleum Directorate ^[2] grants licences. The NCS is also divided into quads of 1 degree by 1 degree. Norwegian licence blocks are larger than British blocks, being 15 minutes of latitude by 20 minutes of longitude (12 blocks in a quad). Like in Britain, there are numerous part blocks formed by re-licensing relinquished areas. One of the attractiveness of the license blocks in Norway are the economical benefits given by its taxation policy. The Norwegian tax system refunds 78% of all directly related exploration costs, which are paid the year after the costs occurred.
Denmark - The Danish Energy Authority^[3] administers the Danish sector. The Danes also divide their sector of the North Sea into 1 degree by 1 degree quadrants. Their blocks, however, are 10 minutes latitude by 15 minutes longitude. Part blocks exist where partial relinquishments have taken place.
Germany - Germany and the Netherlands share a quadrant and block grid - quadrants are given letters rather than numbers. The blocks are 10 minutes latitude by 20 minutes longitude. Germany has the smallest sectors in the North Sea.
Brazil - The National Petroleum Agency^[4] grants licenses. The license blocks are named by BT or BM, followed by the state code and a number. BT means the block is onshore, on land. While BM means the block is offshore, at sea.
United States - Oil and gas rights in the onshore US tracts may be owned by private individuals or corporations, states, or the federal government. Rights to explore for oil on privately owned mineral rights tracts are obtained by leases negotiated between the parties. The rules for obtaining licenses to explore on state mineral rights vary from state to state. Federal onshore exploration licenses are obtained through oral competitive bidding.

Oil and gas rights in the offshore US are divided between the state and federal governments (see Offshore oil and gas in the United States ). Rights to explore on US federal offshore areas are obtained through competitive sealed bids. Individual tracts are generally 9 square miles (23 km²). Current leases being offered in the Gulf of Mexico have 5-year terms for tracts in water depths of less than 400 m, and 8 years for tracts in water greater than 400 m. Royalty rates are 18.75%.^[5]

Relinquishment

When a petroleum license is granted, the company or join venture is given a limited time for the exploration of the license. If after the limited time, the company has not discovered or performed its minimal obligations (usually agreed with the government as a minimum number of exploration wells and investment on seismic ) the license will be relinquished. Relinquished licenses can be re-attributed in next licensing rounds, or even kept as relinquished if the government believes there is little interest on that area for the petroleum exploration.

Related Research Articles

Hydrocarbon exploration is the search by petroleum geologists and geophysicists for deposits of hydrocarbons, particularly petroleum and natural gas, in the Earth using petroleum geology.

North Sea oil is a mixture of hydrocarbons, comprising liquid petroleum and natural gas, produced from petroleum reservoirs beneath the North Sea.

Group Sonangol is a parastatal that oversees petroleum and natural gas production in Angola. The group consists of Sonangol E.P. and its many subsidiaries. The subsidiaries generally have Sonangol E.P. as a primary client, along with other corporate, commercial and individual clients. Angola is estimated to have over 5 billion barrels (790,000,000 m³) of offshore and coastal petroleum reserves, and new discoveries are outpacing consumption by a 5 to 1 ratio.

The Corrib gas project entails the extraction of a natural gas deposit off the northwest coast of Ireland. The project includes a development of the Corrib gas field, and constructions of the natural gas pipeline and a gas processing plant. The project has attracted considerable opposition.

Pharos Energy Plc, previously SOCO International, is an oil and gas exploitation and production company, headquartered in London. The company changed its name to Pharos Energy Plc in October 2019 after coming under fire for illegal activity in Virunga.

Madagascar Oil SA is an oil company operating in Madagascar. It is the principal onshore oil company in Madagascar in terms of oil resources and land.

Lundin Energy is an independent oil and gas exploration and production company formed from Lundin Oil in 2001 and based in Sweden with focus on operations in Norway. It is listed on the Stockholm Stock Exchange.

The UK Continental Shelf (UKCS) is the region of waters surrounding the United Kingdom, in which the country has mineral rights. The UK continental shelf includes parts of the North Sea, the North Atlantic, the Irish Sea and the English Channel; the area includes large resources of oil and gas. The UK continental shelf is bordered by Norway, Denmark, Germany, the Netherlands, Belgium, France, and the Republic of Ireland. A median line, setting out the domains of each of these nations was established by mutual agreement between them, see the Continental Shelf Act 1964.

QatarEnergy, formerly Qatar Petroleum (QP), is a state owned petroleum company of Qatar. The company operates all oil and gas activities in Qatar, including exploration, production, refining, transport, and storage. The President & CEO is Saad Sherida Al-Kaabi, Minister of State for Energy Affairs. The company's operations are directly linked with state planning agencies, regulatory authorities, and policy making bodies. Together, revenues from oil and natural gas amount to 60% of the country's GDP. As of 2018 it was the third largest oil company in the world by oil and gas reserves.

Entreprise Tunisienne d'Activités Pétrolières (ETAP) is a state-owned industrial and commercial company in Tunisia directly in charge of the petroleum sector as well as the state's partnerships with foreign exploration and production operators.

Dana Petroleum plc is an oil and gas exploration and production company based in Aberdeen, Scotland. Its activities are focused on the North Sea, Africa and The Middle East. It is a subsidiary of the Korea National Oil Corporation and is a former constituent of the FTSE 250 Index.

In 2006, Cambodia's mineral resources remained, to a large extent, unexplored. Between 2003 and 2006, however, foreign investors from Australia, China, South Korea, Thailand, and the United States began to express their interest in Cambodia's potential for offshore oil and gas as well as such land-based metallic minerals as bauxite, copper, gold, and iron ore, and such industrial minerals as gemstones and limestone.

The mineral industry of São Tomé and Príncipe does not play a significant role in the country's economy.

Perenco is an independent Anglo-French oil and gas company with a headquarters in London and Paris. It conducts exploration and production activities in 16 countries around the globe.

Addax Petroleum was established in 1994 and since August 2009 has been a subsidiary of the Sinopec Group, one of the largest oil and gas producers in China, the biggest oil refiner in Asia and the third largest worldwide. Addax Petroleum was an international gas and oil production and exploration company mainly focused on the Middle East, the North Sea and Africa. Since 1994, the company become one of the largest oil producers in West Africa.

The oil and gas industry plays a central role in the economy of the United Kingdom. Oil and gas account for more than three-quarters of the UK’s total primary energy needs. Oil provides 97 per cent of the fuel for transport, and gas is a key fuel for heating and electricity generation. Transport, heating and electricity each account for about one-third of the UK’s primary energy needs. Oil and gas are also major feedstocks for the petrochemicals industries producing pharmaceuticals, plastics, cosmetics and domestic appliances.

Xcite Energy was an oil company based in the United Kingdom. The company's main asset is the Bentley Heavy Oil Field in the North Sea, although it also has a number of smaller assets included in License P.1979, located near to the Bentley Oil Field.

New Exploration Licensing Policy (NELP) was conceptualised by the Government of India, during 1997-98 to provide an equal platform to both Public and Private sector companies in exploration and production of hydrocarbons with Directorate General of Hydrocarbons (DGH) as a nodal agency for its implementation. It was introduced to boost the production of oil and natural gas and providing level playing field for both public and private players.

Cove Energy plc, also known as Cove, was a London-headquartered oil & gas exploration company with assets in East Africa. The company was created in June 2009. In 2012, following significant gas discoveries offshore Mozambique, Royal Dutch Shell and PTT Exploration and Production (PTTEP), a subsidiary of Thailand's national oil company PTT Public Company Limited, engaged in a prominent bidding war to acquire Cove. Ultimately, the company was sold in August 2012 to PTTEP.

References

↑ Departament of Energy and Climate Change - License information data Archived 2012-07-13 at archive.today
↑ Norwegian Petroleum Directorate - in English
↑ Danish Energy Authority - in English Archived 2013-05-18 at the Wayback Machine
↑ National Petroleum Agency National Petroleum Agency of Brazil
↑ Federal Register, 13 February 2008, v.73, n.30, p.8349-8350.

External links

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.

[1] Departament of Energy and Climate Change - License information data Archived 2012-07-13 at archive.today

[2] Norwegian Petroleum Directorate - in English

[3] Danish Energy Authority - in English Archived 2013-05-18 at the Wayback Machine

[4] National Petroleum Agency National Petroleum Agency of Brazil

[5] Federal Register, 13 February 2008, v.73, n.30, p.8349-8350.

[1]

[2]

[3]

[4]

[5]