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Regulatory overview

Regulation

What are the primary laws and regulations governing the oil and gas industry in your jurisdiction?

The Norwegian legal system is civil law based, and the oil and gas industry is regulated primarily by legislation, the principal law being the Petroleum Act (Act 29, November 1996, No 72). The Norwegian regulatory system for petroleum exploration and production is concession, permit and approval based. All petroleum activities are subject to prior authorisation by the relevant regulatory authorities. The most important concession is the production licence.

A production licence grants exclusive rights to exploration and production of petroleum to licensees (concessionaires) within a pre-defined area. The production licences are usually granted to a group of licensees. As a condition for awards, the licensees are required to form an unincorporated joint venture under the Petroleum Agreement, which includes a joint operating agreement and an accounting agreement. The Petroleum Agreement is a non-negotiable model agreement.  

Pursuant to the Petroleum Act, petroleum activities must take place within a sound health, safety and working environment framework. Environmental concerns must be taken into account throughout the industry. Mandatory provisions relating to health, safety and environmental protection are also addressed in:

  • the Pollution Control Act;
  • the Working Environment Act;
  • the Fire and Explosion Prevention Act;
  • the Electrical Supervision Act; and
  • the Wage Agreements Application Act.

The more detailed provisions are set out in number of secondary regulations. Generally, these regulations stipulate functionally defined risk and performance-based requirements through descriptions of required results, levels and standards to be met. Compliance with regulatory functionality is secured through application and reference to established standards and guidelines, allowing the industry to choose among several methods, tools, procedures or solutions to achieve regulatory compliance.

The state's share of the value of the natural resources is secured through direct and indirect state participation, corporate and petroleum special tax. There is no production sharing, production bonus or royalty (abolished stepwise from 1986). Special provisions relating to taxation of petroleum activities are set out in the Petroleum Tax Act and the Carbon Dioxide Tax Act.

What government bodies are charged with regulating the oil and gas industry and what are the extent of their powers?

Roles and responsibilities are divided between governmental bodies on various levels and the commercial sector. The various authorities administer the activities through individual awards, approvals and other administrative decisions.

The most important governmental bodies and some of their key powers are as follows:

Stortinget
The Stortinget (Parliament) is the primary legislature in Norway passing laws, state budgets and confirming government petroleum policy through adopting formal proposals and discussing policy white papers. Approval by the Stortinget is necessary for the government to open new acreage for petroleum activities.

King in Council
The King in Council approves the award of production licences, the appointment of operators and development plans; it also submits budget proposals, projects, procedures, white papers and bills to the Stortinget. Much of the powers afforded to the King in Council through law are delegated to the Ministry of Petroleum and Energy.

Ministry of Petroleum and Energy
The Ministry of Petroleum and Energy has general responsibility for the management of the petroleum sector, including a wide range of tasks and responsibilities, such as:

  • administration of licensing rounds and preparation of the award of production licences, pre-qualification of licensees and operators;
  • approval of the main plans and procedures required to perform petroleum activities, including the plan for development and operation, the plan for installation and operation of facilities, the decommissioning plan and approval of production plans and production schedules;
  • regulating third-party access to upstream production facilities, including stipulating tariffs for transportation of natural gas in upstream gas transportation network facilities;
  • approval of direct and indirect transfer of participating interest in exclusive petroleum rights and approval of operators;
  • enforcement measures pursuant to the Petroleum Act;
  • oversight of the state's direct participation portfolio (the State Direct Financial Interest) managed by the wholly state-owned Petoro AS;
  • managing the state's majority shareholdings in Statoil ASA; and
  • oversight of the upstream gas transportation network, operated by the wholly state-owned Gassco AS.

Petroleum Directorate
The Petroleum Directorate has key technical expertise on petroleum resource matters and provides input to the Ministry of Petroleum and Energy on opening new acreage for petroleum activities, nomination of acreage, pre-qualification of licensees and evaluation of geo-science components of applications for award of production licences, development plans, production profiles, schedules and plans, as well as partitioning of licence areas or areas for unitisation.

The Petroleum Directorate individually administers and decides on several matters, including:

  • awarding exploration licences;
  • area fee collection;
  • approval of plans or procedures during exploration;
  • approval of drilling programmes;
  • administration of the Petroleum Register;
  • exploration and production data storage and filing;
  • petroleum production measurement;
  • carbon dioxide emission regulation;
  • follow-up of licence activity through technical meetings; and
  • monitoring compliance with regulatory requirements.

Ministry of Finance
The Ministry of Finance is in charge of tax policy and fiscal regulation, state budget and other tax, customs or excise matters relevant to petroleum activities. It is also responsible for the administration of the fiscal system (eg, tax assessments and the approval of tax effects of licence transfers). Tax assessments and supervision of petroleum special taxation have been delegated to the Oil Taxation Office.

Ministry of Climate and Environment
In respect of the petroleum industry, the Ministry of Climate and Environment is responsible for initiating, developing and implementing environmental and climate-related legislation, measures and actions, promoting and coordinating the government's environmental protection policies. The Environment Agency is the key authority on environmental matters, working with the Petroleum Safety Authority and the Petroleum Directorate on environmental issues related to exploration, development and production (focusing particularly on water and air emissions, waste handling, climate surveillance and the environmental status of the sea).

Ministry of Labour and Social Affairs
The Ministry of Labour and Social Affairs has the overall responsibility for the working environment and for safety and emergency preparedness in the petroleum sector. The Petroleum Safety Authority is the key subordinate agency of the Ministry of Labour and Social Affairs, responsible for technical and operational safety, working environment and emergency preparedness. The Petroleum Safety Authority regulates, inspects and exercises enforcement powers over all health, safety and environmental matters throughout the petroleum industry.

Ministry of Transport and Communications
The Ministry of Transport and Communications is the responsible authority for preparedness and response to acute sea pollution. The Coastal Administration is the subordinate agency responsible for oil spill preparedness and response, coordinating with the other relevant authorities.

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