Use the Lexology Navigator tool to compare the answers in this article with those from other jurisdictions.
Exploration and production
Who holds the rights to oil and gas reserves in your jurisdiction?
Minerals under the surface of the Netherlands (including the continental shelf) are owned by the Dutch state. Ownership of the minerals is transferred to the licence holder(s) once they have been produced under a production licence issued by the minister of economic affairs. A production licence will be granted if the minerals within the area for which the licence applies are deemed economically producible. The licence will specify the validity period and the applicable licence area. Before granting a production licence, an exploration licence is required. The holder of an exploration licence that demonstrates the commerciality of an oil or gas reservoir has priority to apply for a production licence.
Is there a distinction between surface and subsurface rights?
Please see the previous question with regard to the ownership of (sub-surface) minerals. According to the Mining Act, landowners (rightful claimants) must grant the holder of an exploration licence or storage licence (in accordance with the rules governing exploration and storage activities) access to their land, as long as these activities take place at a depth of more than 100 metres beneath the surface. In exchange, landowners have the right to compensation for damages caused by these activities.
What rules and procedures govern the grant of rights for exploration and production purposes (eg, through licences, leases, concessions, service contracts, production sharing agreements)?
The existing Mining Act introduced a uniform licensing regime for onshore and offshore licensing. The act distinguishes licences for various onshore and offshore activities, including:
- exploration of minerals (including hydrocarbons) and geothermal energy;
- production of minerals (including hydrocarbons) and geothermal energy;
- underground storage;
- underground carbon dioxide storage suitability appraisals; and
- underground carbon dioxide storage.
The Mining Act distinguishes between exploration licences and production licences. The ‘exploration of minerals’ is defined to include drilling. Mere prospection requires only prior notification and the submission of certain information to the State Supervision of Mines (SSM); however, separate consent or licences may be required from the minister of economic affairs (in concert with the minister of infrastructure and the environment or the minister of defence, as the case may be) in specific cases relating to shipping safety or military restrictions. Ex ante regulation of prospecting is achieved through the Mining Decree and the Mining Regulation.
Applications or exploration and production licences must be filed with the minister of economic affairs. The Mining Regulation details the information that must be submitted. The application must state the applicant’s registration number with the Dutch Trade Register or a similar registration in another EU member state, 36 of which imply that Mining Act licences can be obtained only by companies with a registered business in the European Union. Once a complete application has been filed, the minister of economic affairs must make a decision within six months. This term may be extended once for a further six months. The initial six-month term is extended by operation of law to allow for competing application procedures as described below.
What criteria are considered in awarding exploration and production rights (eg, are there any restrictions on the participation of foreign investors/companies)?
Applications or exploration and production licences must be filed with the minister of economic affairs. The Mining Regulation details the information that must be submitted.
The application must state the applicant’s registration number with the Dutch Trade Register or a similar registration in another EU member state, implying that Mining Act licences can be obtained only by companies with a registered business in the European Union (that said, a company can be a subsidiary of a non-EU based parent or group of companies).
Are there any special legal provisions applicable to joint ventures?
Licences can be held by more than one entity. All entities holding the licence are considered holders, irrespective of their percentage interests, which are not revealed in the licence. If multiple entities apply for a licence, the application must appoint an operator. The replacement of an operator following the grant of the licence is subject to prior written consent from the minister of economic affairs. The operator or the entity that acted as the operator immediately before the expiration of the licence is responsible for compliance with the Mining Act and subordinate laws.
A holder or co-holder can transfer a licence or its share in a licence to a third party, subject to the minister’s consent. The same grounds for refusal apply as at the initial application.
A change of control in a licence holder, notably following a share transaction, is not subject to the minister’s consent.
Can exploration and production rights be transferred to third parties?
Licence transfers require the prior written approval of the minister of economic affairs. The Mining Act does not require such consent in the event of an indirect transfer through a change of control of the licence holder. However, the minister may withdraw a licence under certain circumstances (eg, where incorrect information was provided in the application or the licensee is in default under its licensing obligations).
In the event that an operator no longer qualifies (regarding its financial or technical capabilities), the minister may designate another operator. Therefore, the transfer of a licence interest via a change of control in the participating entity is often notified to the minister – in particular, in the case of an operated interest. The transfer of a licence interest may also require accession to cooperate with Energie Beheer Nederland BV (EBN).
The disposal of a licence interest is subject to the fulfilment of decommissioning and abandonment obligations. These obligations rest with the last operator and last co-holders of the licence.
Is hydraulic fracturing (‘fracking’) permitted in your jurisdiction?
Fracking is permitted in the Netherlands under extremely strict conditions and only if safety is guaranteed. Fracking activities are inserted in the extraction plan. Therefore, no separate consent procedure is needed.
However, the general rules set out under the Mining Regulation, the General Mining Industry (Environmental Rules) Decree and the Working Conditions Decree apply to fracking activities. More specifically, these general rules require the submission of a safety and health document. This document contains a risk analysis which is based solely on the fracking activities in a specific location. According to the minister, safety aspects are adequately regulated by safety and health documents.
In accordance with the amendment bill to the Mining Act (which is still under debate by the Senate), extraction plans must focus in more detail on soil movement in relation to the use of stimulation techniques such as fracking. In addition, extraction plans must address risks for local residents, nearby buildings and local infrastructure. The minister of economic affairs must consent to the extraction plan.
Fracking techniques were used seven times by the Nederlandse Aardolie Maatschappij (NAM) between 2012 and 2014. The locations of the fracking and the techniques used (together with the chemical components) are on NAM’s website.
In a March 1 2016 letter, the minister of economic affairs presented an SSM inquiry to Parliament regarding the use of fracking and its environmental consequences. The SSM concluded that, to its knowledge, fracking has no detrimental impact on living creatures or the environment.
However, shale gas exploration and production activities using fracking techniques are under a moratorium until 2020.
Click here to view the full article.