We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
12 May 2014
In April 2014 the government opened the long-awaited seventh licensing round for new oil and gas licences in the Danish parts of the North Sea. At the same time, the government initiated work on the preparation of a new oil and gas strategy to ensure the effective exploitation of oil and gas resources in the North Sea.
On April 24 2014 the Danish Energy Authority (DEA) announced the terms for the seventh licensing round for new North Sea oil and gas licences. Interested companies are invited to submit applications to the DEA by October 20 2014 (for further details see "Seventh licensing round for North Sea oil and gas exploration due").
According to the DEA, initial interest from international oil companies has been so great that the licensing round is likely to result in new players in the Danish parts of the North Sea.
The DEA believes that there are still large quantities of oil and gas to be discovered in the Danish areas. The areas offered for licensing are located in the Central Graben – where most Danish fields have been discovered – and in the areas further to the east, where oil discoveries were made in the sixth licensing round.
The proposed financial terms are identical to those in the sixth licensing round. State-owned Nordsøfonden shall hold a 20% interest in all new licences.
The government has begun work on an oil and gas strategy in collaboration with the oil and gas industry. The strategy will help to ensure the effective exploitation of oil and gas resources in the North Sea, to the benefit of Danish society.
Oil and gas production from the North Sea has a significant impact on the Danish economy. It contributes billions of kroner to the treasury each year, and Denmark has been energy self-sufficient for many years. However, production has decreased recently, leading the government to conclude that new initiatives are needed to optimise oil and gas production from Danish fields.
Based on an analysis of the status of the industry, the government will create a strategy for the future exploration and commercial exploitation of Danish resources. The strategy will focus on four areas.
Potential for exploitation of oil and gas
The analysis will assess the potential of:
Current production forecasts are based on an average recovery factor of 26% of existing oil resources. An increase in the recovery factor by just 1% is expected to increase production by around 20 million cubic metres. With an oil price of $100 per barrel, this represents a production value of nearly $12.6 billion.
Renewal and renovation of existing infrastructure
The analysis will examine the framework conditions to ensure that future infrastructure takes the following considerations into account:
Continued availability of highly educated workers
Recruitment in the sector will also be analysed. Specifically, the analysis will consider how to attract young people to train in the oil and gas industry.
Framework for future exploration
Based on lessons from the recently launched seventh licensing round, the future organisation of licensing under the Subsoil Act will be considered in order to maximise exploration activity.
For this work, a steering committee composed of the following will be established:
Work on the strategy is set to be completed by the end of May 2015.
For further information on this topic please contact Nicolaj Kleist at Bruun & Hjejle by telephone (+45 33 34 50 00), fax (+45 33 34 50 50) or email (firstname.lastname@example.org). The Bruun & Hjejle website can be accessed at www.bruunhjejle.com.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.