Relinquishment

kartet_v1
22.09.2016
Relinquishment of areas and surrender/expiry of production licences – requirement for status report

The licensees in a production licence have the opportunity to relinquish parts of the area in a production licence, or to surrender the entire licence. This could typically happen if parts of a production licence are not considered to be commercially interesting, or where the licensees have not found (recoverable) petroleum resources.

There is a difference between relinquishment of an area and surrender/expiry of a production licence:

 

1. Relinquishment

If a licensee hands back parts of the area covered by the production licence, this is considered a relinquishment, as governed in Section 3-14 of the Petroleum Act. Relinquishment can take place with 3 months' notice; however, for licences in the extension period, the relinquishment must also take place at the end of a calendar year. As a general rule, the Ministry will require that the work commitment be fulfilled before the relinquishment is carried out.

 

2. Surrendering

If a licensee no longer wants to retain the production licence, it must be surrendered in its entirety. This is governed in Section 3-15 of the Petroleum Act. Surrender can take place with 3 months' notice; however, for licences in the extension period, the surrender must also take place at the end of a calendar year. As a general rule, the Ministry will require that the work commitment be fulfilled before the surrender is carried out.

 

3. Expiry

If a licensee does not make decisions, or makes negative decisions in relation to the work commitment, the production licence will expire. This is governed in article 4 of the respective production licence. Such decisions will be a decision to drill, a decision to concretise (BOK), a decision to continue (BOV) and a decision to submit a development plan (PDO). A resolution regarding a decision must not take place later than the time indicated in the work commitment, otherwise the licence will automatically expire as from the date when the decision should have been made, or from the date stipulated in the production licence. Expiry will also be the result when a production licence period comes to an end.

Production licences from 2006 (APA) and from 2012 (22nd round) include a requirement that licensees must prepare and submit a status report when a production licence is surrendered or expires. There is no such requirement in connection with relinquishment.

 

The required content of a status report is detailed in the NPD's Guidelines regarding content of the  status report at licence surrender or expiry.