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What are the primary laws and regulations governing the oil and gas industry in your jurisdiction?
The Mining Act, effective as of January 1 2003, forms the legal basis for exploration and production activities relating to minerals in the Netherlands (including the Dutch part of the continental shelf). The Mining Act is complemented by the Mining Decree and the Mining Regulation.
Specific rules for the midstream and downstream gas markets have been set out in the Gas Act (since 2000). Implementing EU Regulation 2009/73, the Gas Act provides rules for the storage (including of LNG), transmission, distribution and supply of gas.
Specific rules implementing EU Directive 2009/119/EC on the obligation of EU member states to maintain a minimum stock of crude oil or petroleum products have been set out in the Oil Product Stockpiling Act 2012. This act requires the Netherlands to maintain stocks (the ‘statutory stock’) of crude oil or crude oil products corresponding to at least 90 days of average daily net imports or 61 days of average daily inland consumption, whichever is greater (normally the former). These stocks must be maintained in the Netherlands or an EU member state by the state-owned National Petroleum Stockpiling Agency (around 80%) and relevant market participants.
In addition, the oil and gas industry must adhere to environmental and nature conservation regulations, as well as safety and security regulations set out by the Dutch government.
The European Union’s consecutive energy packages have been transposed into national legislation – in particular, through the Gas Act. EU Regulation 1227/2011 on energy market integrity and transparency, which aims to counter insider trading and market manipulation and increase transparency in the wholesale markets for electricity and natural gas, required legislative action in the Netherlands. The relevant law, amending the Electricity Act 1998, the Gas Act, the Financial Supervision Act, the Economic Offences Act and the Code of Criminal Procedure, entered into force on July 26 2013.
The Netherlands is a party to the Energy Charter Treaty 1994, which focuses on, among other things:
- the promotion and protection of foreign energy investments based on the more favourable of national treatment or most-favoured nation clauses;
- free trade in energy materials, products and energy-related equipment;
- freedom of energy transit, including through pipelines; and
- dispute resolution mechanisms for intra-state and investor-state disputes.
The Netherlands is party to over 100 bilateral investment treaties. Alongside the equally extensive tax treaty network, this has significantly contributed to the attractiveness of the Netherlands as a country through which multinationals can structure their foreign investments.
What government bodies are charged with regulating the oil and gas industry and what are the extent of their powers?
The Mining Act gives principal regulatory powers in upstream oil and gas, apart from environment and planning in general, to the minister of economic affairs and the State Supervision of Mines (SSM). The SSM falls under the competence of the minister of economic affairs.
Two statutorily established advisory bodies – the Mining Council and the Technical Committee on Soil Movement (TCB) – complete the main decision-making, supervisory, enforcement and advisory bodies in upstream oil and gas.
Minister of economic affairs
The minister of economic affairs has the power to make bind decisions, including:
- issuing, revoking and changing Mining Act licences;
- approving mandatory production plans and other approvals; and
- administrative enforcement of the Mining Act, subordinate legislation and licence conditions.
Provisions for small fields in the Gas Act are also administered by the minister.
The SSM supervises and reports on compliance with the Mining Act, subordinate legislation and licence conditions. It also carries out operational inspections of prospecting, drilling, production and storage activities, with a view to ensure well integrity and health, safety and environmental aspects to the extent that these are subject to Mining Act regulations. The SSM must report annually to the minister of economic affairs on its activities and make recommendations on how to increase its efficiency and expediency. The SSM’s annual reports are publicly available.
If solicited, the Mining Council, a non-departmental advisory body, will advise the minister of economic affairs on the exercise of statutory powers. The minister must request the Mining Council’s advice on the issuance or revocation of licences.
Due to concerns over recurring cases of soil movement as a result of oil and gas exploration and production – notably in the northern province of Groningen – the Mining Act 2003 established the TCB. It has advisory tasks with regard to both the minister of economic affairs and citizens.
The TCB advises the minister, at his or her request, on exercising the powers set out in the Mining Act, focusing on any soil movement-related consequences that may occur because of a decision.
In addition, the TCB advises the minister on the soil movement paragraph which, if the initiative involves onshore production, must be included in the production plan submitted by the production licence holder for approval by the minister in advance of production.
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