Regulations relating to the use of facilities by others

Laid down by the Ministry of Petroleum and Energy on 20 December 2005 pursuant to Section 10-18, first paragraph, and Section 4-8 of the Act of 29 November 1996 No. 72 relating to petroleum activities and Section 86 of the Regulations of 27 June 1997 No. 653 to the Act relating to petroleum activities. Last amended 19 December 2012.

Unofficial translation from Norwegian

 

CONTENTS

 

Section 1
Scope

These Regulations apply to the conclusion of agreements for the use of facilities by others for the production, transportation or exploitation of petroleum pursuant to Sections 1-4 and 4-8 of the Petroleum Act, including the facilities stated in Section 12 in these Regulations.

The Regulations do not apply to the extent that the rules contained in the Regulations of 20 December 2002 No. 1724 relating to the determination of tariffs etc. for certain facilities provide otherwise.

 

Section 2
Objective

The objective of these Regulations is to achieve efficient use of facilities in order to ensure good incentives for licensees to conduct exploration and production activities with a view to promoting efficient resource management.

 

Section 3
Definitions

a) In these Regulations the Ministry means the Royal Ministry of Petroleum and Energy.

b) In these Regulations the Petroleum Act means the Act of 29 November 1996 No. 72 relating to petroleum activities.

c) In these Regulations owner means a party (a group of licensees or an individual licensee) that owns a facility used by others or that others wish to use.

d) In these Regulations user means a party (a group of licensees or an individual licensee) that uses or wishes to use a facility owned by others.

e) In these Regulations use means any service that may be encompassed by an agreement on the use of facilities by others pursuant to Section 4-8 of the Petroleum Act. Such use may inter alia encompass the drilling of wells, connection, controlling sub-sea production systems, injection of water and, gas lift services, mixing/removal of CO2/H2S, processing well streams, transportation by pipeline from a connecting field to a host facility, oil storage and offshore loading, transportation of produced petroleum by pipeline, access to power, inspection and maintenance, as well as any option for production of additional resources from the connecting field.

 

Section 4
General principles

A user which needs to use a facility owned by another party shall, on objective and non-discriminatory terms and conditions, be entitled to such use pursuant to the rules in Section 4-8 of the Petroleum Act and these Regulations.

Agreements on the use of the facilities of other parties shall be based on the principle that profits from production shall primarily be earned by the producing field. The owner’s incentives to maintain the capacity of the facilities and to make sensible investments in additional capacity shall be safeguarded.

Negotiations between the owner and user concerning use of a facility shall be organised and conducted in a spirit of integrity and good faith, in line with good corporate governance and such that the negotiations do not provide one party with an unreasonable advantage at the expense of the other. A licensee shall normally participate in negotiations on the side which represents the greatest participating interest of the party. The licensee in question shall account for its choice of side to the respective management committees.

When the operator of a field is participating in negotiations on behalf of the other field, the operator shall prepare proposed principles for good corporate governance to regulate the operator's work to provide technical assistance in the negotiations. The principles shall be considered and adopted by the management committee at the same time as it considers the chief negotiator's mandate.

While negotiations are ongoing, the parties shall exchange updated information on the user's needs and available capacities, with a view toward determining, at the earliest stage possible, the conditions that are to govern the desired use.

 

Section 5
Request for overview of capacity

Upon receiving a request for an overview of capacity concerning the use of a facility from licensees and undertakings pre-qualified as licensees on the Norwegian shelf, including the possibility for extending the capacity of the facility, the owner shall provide such information within 15 working days.

 

Section 6
Request concerning use

A request concerning the use of a facility shall describe the services that are required, important milestones and relevant technical information, for example about reservoir properties and anticipated production from the deposit in question, and the services to which the request applies.

The owner shall respond to a request concerning the use of a facility within reasonable time of receiving the request. The reply from the owner shall reflect the content of the request and it shall as a minimum provide information on the services that can be provided, reservations, priority, liabilities and compensation, as well as other relevant information.

The owner's reply to a request concerning the use of a facility may emphasise that such use shall not unreasonably be to the detriment to the owner's own use of the facility, or that of any other user granted the right of use of the facility. Moreover, the owner may emphasise that the petroleum that is to be produced, transported or exploited via the facility shall have specifications that are reasonably consistent with technical requirements and the need to operate the facility efficiently.

If there is no capacity available on the facility, the owner shall as far as possible make arrangements whereby additional capacity can be made available to the user. In such event, the owner's reply shall explain the estimated costs involved in establishing such additional capacity, including whether studies will be required in order to determine how capacity might be extended, and what risks this would be expected to entail for the owner. The costs of such studies shall be covered by user, unless the parties otherwise agree.

 

Section 7
Progress plan

If the owner and user conclude that grounds exist for initiating negotiations concerning use of the facility, the parties shall, as soon as possible, agree on a progress plan with specific milestones and a time limit for completing the negotiations.

The progress plan may be amended if both parties so agree.

 

Section 8
Access to agreements during negotiations

When two parties have agreed on a progress plan, cf. Section 7, first paragraph, the owner shall grant the user access to agreements concerning use of the facility by others, entered into by the owner after these Regulations entered into force.

 

Section 9
Agreement terms

The parties shall seek to agree on tariffs and other terms governing use of the facility which are acceptable to both parties and in pursuance of the objective of the Regulations, cf. Section 2 and the general principles stated in Section 4.

If requested by the user, the owner shall offer tariffs and other terms for each of the services separately, unless there are genuine economic gains associated with offering tariffs and other terms for the applicable services jointly, and both parties so agree. In the case of pipelines for transporting oil and/or gas, a separate offer shall be formulated.

The owner's tariffs and other terms shall be limited to the following:

  • operating costs incurred by the owner as a result of the use of the facility, as well as payment for any operating costs the owner has previously incurred to maintain capacity beyond its own needs with a view toward future third-party use,
  • any new investments entailed by the use of the facility,
  • payment for any investments in additional capacity which have previously been made with a view toward future third-party use, including a reasonable share of the risk that the additional investment will not be fully utilised. This does not apply if the owner has already achieved or will achieve reasonable returns on its investment, including returns as a result of own or agreed use,
  • compensation for any loss of earnings, including loss and/or postponement of production as a result of use of the facility by others. The compensation for loss and/or postponement of production shall be determined on the basis of the profit which could have been achieved on the lost and/or postponed production. The owner shall, insofar as possible, facilitate tie-in to the facility so as to minimise any lost and/or postponed production as a consequence of the tie-in,
  • other documentable costs or losses incurred by the owner through the use of the facility,
  • a reasonable profit for the owner, considering the risk undertaken by the owner as a consequence of use of the facility by others. The user field's profitability shall not be emphasised in the assessment of what constitutes a reasonable profit.

In special cases, tariffs and other terms may deviate from the third paragraph, if the owner and user so agree.

The owner shall be able to provide an account of the principles applied in formulating the tariffs and other terms.

The Ministry may, on its own initiative, stipulate tariffs and other terms and amend agreed tariffs and terms to ensure that projects are carried out based on the consideration for resource management and that the owner of the facility is provided a reasonable profit based on e.g. the investment and risk.

 

Section 10
Standardised contract clauses

Agreements concerning use of facilities by others under these Regulations shall be based on standardised contract clauses which have been approved by the Ministry and published on the Norwegian Petroleum Directorate's website.

Deviations can be made from the first paragraph in special cases.

 

Section 11
Voting rules

Decisions by the individual joint venture about requests, replies, mandates to negotiate and the conclusion of agreements encompassed by these Regulations are adopted by the management committee in accordance with the ordinary voting rules applying to each individual joint venture.

The final agreement concerning the use of a facility shall be entered into by the operator on behalf of the members of the joint ventures in question in accordance with the resolution of the management committee. If a licensee disagrees with the outcome of the negotiations, then the licensee in question may bring the matter before the Ministry.


Section 12
Leased facilities

The right of a user pursuant to these Regulations also applies to the use of facilities that a licensee or a group of licensees has leased for use in petroleum activities pursuant to the Petroleum Act.

Unless the holder of the title to the facility otherwise agrees, the user's right to use the facility is limited by

  • the term of the lease agreed between the holder of the title and the lessee;
  • the right of the lessee to make modifications to the facility;
  • any specific restrictions on use.

The user's right pursuant to these Regulations cannot be further restricted by agreement between the holder of the title of the facility and the lessee.

 

Section 13
Disagreement

Any disagreement arising under these Regulations may be brought before the Ministry for decision. The Ministry may limit its decision to only apply to parts of the disagreement.

Before a decision is made, the parties shall each be given the opportunity to present their views. The Ministry may require the parties to submit the information necessary for a decision to be made.

 

Section 14
Duty to provide information, etc.

The user shall inform the Ministry about inquiries as mentioned in Section 6, first paragraph, and provide information concerning who the inquiry was addressed to, which services are requested and the timeframe when the services are needed.

The user shall inform the Ministry if none of the inquiries have provided a basis for such negotiations.

If agreement has been reached on a progress plan as mentioned in Section 7, first paragraph, the user shall inform the Ministry that negotiations for use of the facility are underway and submit the progress plan to the Ministry.

If the negotiations concerning use of the facility have not been completed within two months after the deadline set out in the progress plan, cf. Section 7, first paragraph, the user shall keep the Ministry informed about the causes of this, as well as the stipulated or presumed completion time for the negotiations.

As soon as an agreement concerning use of the facility has been signed by the parties, cf. Section 11, second paragraph, the user shall submit a copy of this to the Ministry and the Norwegian Petroleum Directorate. If the agreement deviates from Section 9, third paragraph, or the standardised contract clauses, cf. Section 10, this must be stated.

Within 30 days of achieving a binding agreement concerning use of a facility by others, the user shall report elements from the negotiation process and the main terms of the agreement to the Norwegian Petroleum Directorate for publication. Forms drawn up by the Ministry shall be used for such reporting.

When the Ministry is kept informed pursuant to this Section, a copy shall be submitted to the Norwegian Petroleum Directorate.

 

Section 15
Entry into force

These Regulations shall enter into force on 1 January 2006.

 

Last translated 23.01.2013


24.01.2013