North Sea Oil - Licensing

Licensing

Following the 1958 Continental shelf convention and after some disputes on the rights to natural resource exploitation the national limits of the exclusive economic zones were ratified. Five countries are involved in oil production in North Sea. All operate a tax and royalty licensing regime. The respective sectors are divided by median lines agreed in the late 1960s:

• United Kingdom - The Department of Energy and Climate Change (DECC - formerly the Department of Trade and Industry) 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 (NPD Website in English ) 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.
• Denmark - The Danish Energy Authority (website in English) 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 sector in the North Sea.
• Netherlands - The Dutch sector is located in the Southern Gas Basin and shares a grid pattern with Germany.