The NPD's responsibilities and tasks

22.12.2003
The Crown Prince Regent's decree concerning the roles and responsibilities of the new Norwegian Petroleum Directorate after separation of the Petroleum Safety Authority Norway was laid down by the Council of State on 19 December 2003.
Ministry of Petroleum and Energy

The Council of State
The Crown Prince Regent`s decree

Ref no:
Item no: 2003/1341
Date: 17 december 2003



On the roles and responsibilities of the Norwegian Petroleum Directorate after separation of the Petroleum Safety Authority Norway

1. Introduction
The Norwegian Petroleum Directorate was established based on a resolution by the Storting (Norwegian Parliament) on 14 June 1972.  At that time, the Directorate sorted under the Ministry of Industry.  The Ministry of Petroleum and Energy was established in January 1978 as a result of a stated need to ensure that the necessary considerations in the petroleum activities were safeguarded by a separate sector ministry dedicated to these activities.

Since 1978, the Norwegian Petroleum Directorate has sorted under the Ministry of Petroleum and Energy.  The Directorate's tasks have been twofold: to safeguard overall resource management considerations and to safeguard the working environment and safety considerations in the petroleum activities.  In 1979, the constitutional responsibility for safety and the working environment in the petroleum activities was transferred to the Ministry of Local Government and Labour (now the Ministry of Labour and Government Administration), in order for these factors to be managed at a general level by a different ministry.

The technological development is clearly progressing towards moving large parts of the upstream petroleum activities from the continental shelf to land.  This is reflected in part in the expansion of the scope of the (Norwegian) Petroleum Act (Act of 29 November 1996 No. 72 relating to the petroleum activities) which entered into force on 1 July 2003.  The amendments entail that also petroleum activities on land, including utilisation of petroleum on land that is necessary to or constitutes an integrated part of production or transport of petroleum, is subject to the Act.  Petroleum facilities on land will thus also fall under the Ministry of Petroleum and Energy's responsibility for the petroleum activities.
 
This trend is also reflected in the Storting's consideration of Storting White Paper No. 17 (2002 ? 2003) on State supervision bodies, when it was determined that the Norwegian Petroleum Directorate would be split starting from 1 January 2004. That portion of the Directorate that safeguards safety and working environment considerations in the petroleum activities was to be split off as a separate supervisory body - the Petroleum Safety Authority Norway. The Petroleum Safety Authority Norway is to report to the Ministry of Labour and Government Administration, and it will be supplemented with resources from the former Directorate for Fire and Electrical Safety (DBE) and the Directorate of Labour Inspection.  This is intended to ensure comprehensive supervision of health, safety and the working environment in the petroleum activities, regardless of whether the activities take place on the continental shelf or on land.

The separation of the Petroleum Safety Authority Norway from the Norwegian Petroleum Directorate will not have an impact on Norwegian oil and gas policy, or on the Ministry of Petroleum and Energy's general sector responsibility for the petroleum activities.  The Norwegian Petroleum Directorate will thus continue to safeguard general resource management considerations under the Ministry of Petroleum and Energy.

The Petroleum Safety Authority Norway has the technical supervisory authority for safety, emergency preparedness and the working environment in the petroleum activities on the Norwegian continental shelf and for certain facilities on land.  As the Norwegian Petroleum Directorate has done in the past, the Petroleum Safety Authority Norway will also coordinate the supervisory responsibility of the HES authorities, ref. Royal Decree of 19 December 2003 relating to the establishment of the Petroleum Safety Authority Norway, and stipulation of instructions concerning coordination of the supervision of health, environment and safety in the petroleum activities on the Norwegian continental shelf, and in certain facilities on land, which continues and supplements the Royal Decree of 28 June 1985 regarding the arrangement of supervision of safety, etc. in the petroleum activities on the Norwegian continental shelf.  The coordination arrangement does not entail any changes in the relevant authorities' formal powers to pass resolutions, which emerges in the applicable legislation and stipulated delegations of authority.

As a consequence of the division of the Norwegian Petroleum Directorate, a decree by the Crown Prince Regent to confirm the new Norwegian Petroleum Directorate's roles and responsibilities is deemed appropriate..

2. Norwegian petroleum policy - main objectives - the Ministry of Petroleum and Energy's sector responsibility for the petroleum activities
The main objectives of the Norwegian petroleum activities have largely remained fixed for a long period of time and they are founded on a broad-based political consensus.  The petroleum activities shall contribute to value creation and shall ensure welfare and industrial development in the best interests of the Norwegian society.  Further development of the petroleum sector shall be facilitated through ensuring that the Norwegian continental shelf remains an attractive area for investment, value creation and industrial development in Norway.  Norway shall combine the aspect of being a major producer and exporter of petroleum with being a pioneer when it comes to the environment.  Internationalization of the Norwegian petroleum industry shall also be fostered.  This will provide the industry with development opportunities in addition to the activities on the Norwegian continental shelf, while experience from international activities can also contribute to further development of the Norwegian continental shelf.

The framework for the Ministry of Petroleum and Energy's sector responsibility for the petroleum activities follows from the mandate laid down by the Storting through the goals and conditions stipulated for the activities, and from the authority delegated to the Ministry through the Petroleum Act.  The Ministry's right and obligation to ensure good resource management is a primary consideration in the activities.  The Ministry must thus ensure that the framework conditions for the petroleum activities facilitate long-term, profitable petroleum activity on the Norwegian continental shelf.

The framework conditions are largely established through the decisions made pursuant to the Petroleum Act in connection with the respective phases of the activities - opening of areas for petroleum activities, scientific research, exploration, development, production and cessation/disposal.  The decisions of other authorities with independent supervisory responsibility in relation to the petroleum activities must thus, both in terms of process and materiality, lie within the framework stipulated for the activities through decisions made by the Storting and the Government  This is essential in order to ensure that the industry has the necessary predictability in relation to the rights and obligations assigned to it through these decisions.

3. Resource management and tasks for the Ministry of Petroleum and Energy and the Norwegian Petroleum Directorate
As previously mentioned, the framework that comprises the tasks and authority of the Ministry of Petroleum and Energy and the Norwegian Petroleum Directorate is laid down through decisions made by the Storting and by virtue of the Petroleum Act, and - as regards the Norwegian Petroleum Directorate - delegation decisions from the superior authority.  In Proposition to the Storting No. 1 on the Ministry of Petroleum and Energy, the following objectives for the Norwegian Petroleum Directorate are derived from the Government's main energy policy goals:

The Norwegian Petroleum Directorate shall contribute to creating the greatest possible values for the Norwegian society from the oil and gas activities through prudent resource management based on considerations for safety, emergency preparedness and the external environment.

Prudent resource management, which is a primary consideration in the petroleum activities, ref. Sections 1-1 and 1-2 of the Petroleum Act, will include tasks in relation to:

- Resource and factual basis
- Scientific research and exploration
- Development and operations
- Cessation/disposal
- External environment
- Emergency preparedness

To contribute to the Government's general objectives for the petroleum activities, the specific tasks will be linked to the various stages of these activities, whether they take place offshore or on land.  In these stages, the Ministry of Petroleum and Energy and the Norwegian Petroleum Directorate will stipulate specific framework conditions for the activities through individual decisions, approvals, consents and conditions.  The main decisions made are:

- Opening of new areas (Section 3-1 of the Petroleum Act)
- Granting of exploration licence Section 2-1 of the Petroleum Act)
- Award of production licence (that gives the licencee an exclusive right to explore for and produce petroleum) (Section 3-3 of the Petroleum Act)
- Approval of plans for development and operation of fields (PDO) (Section 4-2 of the Petroleum Act)
- Permission to install and operate installations (PIO) (Section 4-3 of the Petroleum Act)
- Production permits (Section 4-4 of the Petroleum Act)
- Decisions on disposal (Sections 5-1 and 5-3 of the Petroleum Act)

4. Details concerning the Norwegian Petroleum Directorate's tasks in the specific stages of the petroleum activities

4.1. Resource and factual basis
The Norwegian Petroleum Directorate shall manage and further develop knowledge concerning the petroleum resources on the Norwegian continental shelf.  This is a key aspect both as regards the opening of new areas for petroleum activities and in the award of new production licences.  The Directorate shall possess knowledge concerning the activities and shall at all times maintain an overview of the resource base on the Norwegian continental shelf.  The Norwegian Petroleum Directorate has a national responsibility to ensure that data and information from the petroleum activities are available, thus contributing to the creation of value.

4.2 Surveying and exploration
The Norwegian Petroleum Directorate shall contribute to cost-effective and optimal surveying in accordance with exploration licences, and to exploration for petroleum on the Norwegian continental shelf in accordance with production licences.  In connection with licence awards, the Directorate shall, among other things, supply the Ministry with evaluations in the early phases of licencing rounds, particularly through the updating of play models and review of the prospect database.  The Directorate shall analyze the activity level, give its recommendations to the Ministry of Petroleum and Energy on the scope of the area to be included in licencing rounds and evaluate applications in licencing rounds. 


4.3 Development and operations
The Norwegian Petroleum Directorate shall contribute to cost-effective production of petroleum, exploitation of infrastructure and coordination across licence boundaries, etc.  The Norwegian Petroleum Directorate shall identify and highlight value creation measures that are deemed necessary to realize the potential on the Norwegian continental shelf, and be a driving force to implement such measures.  The Directorate shall also follow up field development plans in an early stage and evaluate plans for development of fields (PDOs), and plans for installation and operation of infrastructure (PIOs), including operations and petroleum activities on land.

4.4 Disposal
The Norwegian Petroleum Directorate shall evaluate cessation/decommissioning plans and follow up the Ministry's disposal decisions, thus contributing to the selection of optimum solutions for disposal of installations after production has ceased.

4.5 External environment
The Norwegian Petroleum Directorate shall contribute to fulfillment of the Ministry of Petroleum and Energy's sector responsibility for the petroleum activities.  In relation to the external environment, this will entail a sector responsibility to reduce emissions/discharges from the petroleum activities to the air and the sea by establishing cost-effective measures to reduce emissions and discharges pursuant to national and international commitments, as well as the establishment of framework conditions for the petroleum activities.  The Directorate shall work to implement measures to reduce emissions and discharges, and prepare forecasts for such emissions and discharges.  In its work on the external environment, the Directorate's responsibilities include ensuring that the ongoing work in the industry facilitates and contributes to meeting national targets and international commitments regarding the external environment.  The Norwegian Petroleum Directorate shall maintain a high level of expertise as regards the external environment in relation to the petroleum activities.  The Norwegian Petroleum Directorate's technological and resource expertise in the petroleum activities shall be a key aspect in assessing how the environmental objectives and considerations can best be achieved in relation to design and use of installations in the petroleum activities.  The Norwegian Petroleum Directorate shall address the challenges found in the intersection between the petroleum activities, fishery activities and the external environment.

4.6 Emergency preparedness
The Ministry of Petroleum and Energy has the emergency preparedness responsibility as regards the security of deliveries from the Norwegian continental shelf.  The Norwegian Petroleum Directorate shall prepare procedures for reporting and further notification to the Ministry of Petroleum and Energy of incidents that include production shutdowns, major discharges to sea and emissions to air, fatalities, major damage to material assets, strikes and changes in the form of operation.  A specialized emergency preparedness expertise in the Norwegian Petroleum Directorate shall be combined with the Directorate's knowledge of pipelines, process facilities, maintenance, technical safety, gas management and the resource portfolio to provide an overall picture of the supply security.  The Norwegian Petroleum Directorate's emergency preparedness expertise shall also be combined with the Petroleum Safety Authority Norway's expertise in this area.  The Directorate shall follow up the licencees' preparation of and compliance with relevant emergency preparedness plans of significance for the supply security.  The Directorate shall assist the justice and defense authorities as needed in their work on the overall preparedness in situations of crisis or war.

4.7 Other
The Norwegian Petroleum Directorate wields authority under the Act of 21 June 1963 No. 12 relating to scientific research, and the Act of 21 December 1990 No. 72 relating to tax on emissions of CO2 (the CO2 Tax Act).  The Norwegian Petroleum Directorate carries out supervision of the metering of produced petroleum and emissions of CO2 as well as supervising the payment of taxes and stipulating requirements for metering equipment, etc.

5. Relationship to the Petroleum Safety Authority Norway
The Norwegian Petroleum Directorate and the Petroleum Safety Authority Norway shall draw on each other's expertise, but in such a way that this does not have an adverse impact on orderliness and clarity of roles.  One of the objectives of the split is to avoid a situation in which the two organizations must develop double expertise.  The Petroleum Safety Authority Norway will therefore be established in Stavanger and share the same premises as the Norwegian Petroleum Directorate.

The Norwegian Petroleum Directorate and the Petroleum Safety Authority Norway shall:
- Have a mutual responsibility to provide information and exhibit openness within areas where the two agencies work in parallel
- Have regulations with clear reporting lines for the petroleum industry.  This is supplemented with underlying case processing procedures that, among other things, govern the flow of information between the authorities
- Assist each other with expertise in connection with technical evaluations, in tasks which are to be carried out in the other agency and in matters which involve both authorities
- Consider establishing a coordinating responsibility for one of the agencies within a given case area or phase
- Establish solutions that limit the need for overlapping administrative functions and joint services

Potential trade-offs or balances between resource management considerations on the one side and working environment and safety considerations on the other must be resolved between the Ministry of Petroleum and Energy and the Ministry of Labour and Government Administration.

The cooperation between the Norwegian Petroleum Directorate and the Petroleum Safety Authority Norway shall be specified in a cooperation agreement between the agencies which will be tied to important milestones in the petroleum industry, such as the opening of new areas for petroleum activities, award of production licences, evaluation of development plans, plans for installation and operation and cessation/decommissioning plans.  Coordinated follow-up must take place as necessary so that the overarching considerations and goals for the petroleum activities are safeguarded. This cooperation shall ensure optimum and efficient handling of both agencies' respective emergency preparedness responsibilities, as well as the superior ministries' need for information in this context. Follow-up of agreements with foreign states under signed treaties shall take place in a coordinated manner where appropriate.

Through their databases, the Norwegian Petroleum Directorate and the Petroleum Safety Authority Norway shall ensure that both agencies receive the information and data that are of relevance for the agencies' responsibilities.

6. Cooperation and coordination with other authorities
As the responsible sector Ministry, the Ministry of Petroleum and Energy must ensure comprehensive compliance with the frameworks established for the petroleum activities through decisions made by the Storting and the Government.  The Ministry of Petroleum and Energy and the Norwegian Petroleum Directorate shall, in cooperation with other relevant authorities with their own regulatory responsibility, ensure that the activities associated with the petroleum activities are followed up in a comprehensive manner so that decisions are made in a timely manner and with such content that the adopted central decisions relating to the various stages of the activities can be implemented and complied with by the licencee in a predictable manner.

The Ministry of Petroleum and Energy and the Norwegian Petroleum Directorate shall cooperate with other ministries and their underlying agencies in connection with consideration of matters related to the Ministry of Petroleum and Energy's sector responsibility for the petroleum activities.  When simultaneous decisions are made by multiple authorities in connection with the key decisions that are made in all phases of the activities, and these decisions affect each other, the decisions shall be coordinated by the Ministry of Petroleum and Energy.  As regards decisions by other authorities that cannot be regarded as having significance for the overall evaluations in this connection, and which are therefore made at different points in time, the authorities shall keep each other informed on a mutual basis through the coordination of the Ministry of Petroleum and Energy.

The Ministry of Petroleum and Energy r e c o m m e n d s:

that the new Norwegian Petroleum Directorate be established as of 1 January 2004.