Norway Announces Acreage for Predefined Areas 2004

The Norwegian Government announces "Awards in Predefined Areas 2004" (APA 2004). This year further improvements of the concession system have been made in order to contribute to higher activity on the shelf. The area in the North Sea and the Norwegian Sea is somewhat expanded compared to APA 2003. Before Christmas the Government decided to allow for further all-year petroleum activity in the Barents Sea south and concluded that it is important to prove additional gas resources that can be tied in to the Snohvit field. In line with the Government's decision an area in the Barents Sea around Snohvit will be included in the announcement, says Einar Steensnæs, Minister of Petroleum and Energy.

In 2003 the Government modified the licensing system in the mature areas with the introduction of the "Awards in Predefined Areas" (APA). The changes were well received by the industry, something that the interest in the APA 2003 shows. The system ensures that a very large area close to existing and planned infrastructure will be available for the industry in years to come.

Minor expansions have been undertaken in the North Sea and the Norwegian Sea compared to the announced acreage in APA 2003. The major difference compared to APA 2003 is that blocks in the Barents Sea are included in the APA 2004. The Government discussed "the Environmental Impact Assessment study of all-year petroleum activity in the area Lofoten – Barents Sea" (ULB) in a cabinet meeting on December 15, 2003 and decided to allow for further all-year petroleum activity in the Barents Sea south, except for certain especially valuable areas. The Government simultaneously concluded that it is important to prove additional gas resources that can be tied into the Snohvit field in order to improve the profitability of the field. In line with the Government's decision an area in the Barents Sea around Snøhvit is included in the announcement.

The conditions relating to environmental concerns and fishery interests in the Barents Sea are based on the condition in the ULB, which is no discharge to the sea under normal operations. This is a stricter condition than what applies for the other parts of the shelf, where the requirement is zero discharges of environmentally harmful components to the sea. Strict environmental conditions also apply to the other announced areas. Particular conditions may be applied to protect the marine environment, to minimize the risk of unintentional discharges in areas close to the coastline and to ensure that drilling activities take due consideration of the fishery activities. The conditions will be tailored to the challenges of the individual blocks.

Substantial modifications in the concession system in the mature parts of the shelf have been undertaken in recent years. To further improve the system the Ministry has decided that acreage within the predefined area relinquished in the period from the announcement to the submission deadline shall continuously be included in the announced area. Consequently, all acreage relinquished within the predefined area will automatically be regarded as announced at the time of relinquishment. Companies with a different view of the prospectivity of the area in question will thus quickly have the opportunity to explore the area. This will result in increased turnover of acreage and more efficient exploration of the mature areas.

Another improvement of the system is the fact that the work obligations in awarded production licenses in APA 2004 and future APA licensing rounds, will be made public. A disclosure of the work obligations will contribute to increased transparency and predictability for the companies, by letting them gain better knowledge of the content and extent of work obligations required in awarded licenses in mature areas. This will be especially useful for new companies that are considering applying for a production license in mature areas of the shelf.

The procedure of relinquishment of part of the production license upon the expiry of the initial period, has been changed for awards in mature areas. Normally in APA awards the licensees must relinquish the area of the production license not comprised by a submitted plan for development. This rule will apply for production licenses awarded with a work obligation that leads towards a submission of a plan for development.

The deadline for submission of applications is 12.00 a.m. on October 1, 2004. The awards are planned to take place in December 2004.

Applications for participating interests in production licenses may be submitted for the blocks that are not licensed within the predefined area, which are marked out on the maps in this brochure. It is also possible to apply for acreage that is relinquished within the predefined area before the submission deadline.