Oil and gas production policies across North Sea countries

Report 2023/25

Haakon Riekeles og Martin Ørbeck

Oil and gas production policies across North Sea countries

Category	Reports
Sub-Categories	Oil and gas Reguleringer og konkurranseøkonomi Climate change and the green transformation Power and energy
Year	2023
Report Number	25
Author(s)	Haakon Riekeles Martin Ørbeck
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Report 2023/25	 | 	For 	Oil	 Change International	 	
 	
 	
 	
Oil and gas 	production 	polic	ies	 across	 North Sea countries	 	
Descriptive study 	of 	oil and gas 	regulations 	in Norway, Denmark, UK, Germany 	
and the Netherlands	 	
Haakon 	Riekeles and Martin Ørbeck

Oil 	and gas production policies across North Sea countries	 	
 
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D	ocument details	 	
Title	 	Oil and gas production policies across North Sea countries	 	
Report Number	 	2023/25	 	
Author	 	Haakon Riekeles and Martin Ørbeck	 	
ISBN	 	978	-82	-8126	-636	-0 	
Project Number	 	23	-HVE	-12	 	
Project Leader 	 	Haakon Riekeles	 	
Quality Controller 	 	Haakon Vennemo	 	
Commissioned by 	 	Oil Change International	 	
Date of completion 	 	16th June 2023	 	
Source front page photo 	 	Jan Rune Smines Reite vi	a Pexels	 	
Availability 	 	Public 	
Keywords	 	Oil and gas, climate change and the green transition, 	public policy, energy	 	
 
 
 
 
 
 
 
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Preface	 	
The report surveying oil and gas policies across North Sea countries was commissioned by 	the organisation Oil 	
Change International	. The repo	rt was written in	 May	-June 	and is up to date as of June 16	th. Silje Lundber	g has been 	
the contact point at 	Oil Change International. We thank her for constructive discussions and for 	pointing to	 useful 	
source material.	 	
 
 
June 16	th, 2023	 	
Haakon Vennemo	 	
Partner	 	
Vista Analyse AS

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Contents	 	
Executive summary	 ................................	................................	................................	................................	.......................	 6 	
1 	Introduction	 ................................	................................	................................	................................	..........................	 7 	
2 	Norway	 ................................	................................	................................	................................	................................	.. 8 	
2.1	 	Background and history	 	8 	
2.2	 	Key laws and public institutions	 	9 	
2.3	 	Exploration, licensing and permitting regimes	 	12	 	
2.4	 	General environmental regulations in exploration and production phases	 	14	 	
2.5	 	General climate regulations in exploration and production phases	 	16	 	
2.6	 	Oil and gas tax system	 	17	 	
2.7	 	Decommissioning plans and policies	 	18	 	
2.8	 	Just transition polic	ies	 	18	 	
2.9	 	Political landscape	 	19	 	
3 	The United Kingdom	 ................................	................................	................................	................................	...........	 22	 	
3.1	 	Background and history	 	22	 	
3.2	 	Key laws and institutions	 	23	 	
3.3	 	Exploration, licensing and permitting regimes	 	24	 	
3.4	 	General environmental and climate regul	ations in exploration and production phases	 	26	 	
3.5	 	Oil and gas tax system	 	27	 	
3.6	 	Decommissioning plans and policies	 	28	 	
3.7	 	Just transition policies	 	28	 	
3.8	 	Political landscape	 	29	 	
4 	The Netherlands	................................	................................	................................	................................	..................	 31	 	
4.1	 	Background and history	 	31	 	
4.2	 	Key laws, Exploration, licensing and permitting regimes	 	34	 	
4.3	 	General environmental and climate regulations in exploration and production phases	 	34	 	
4.4	 	Just transition policies	 	35	 	
4.5	 	Oil and gas tax system	 	35	 	
4.6	 	Decommissioning plans and policies	 	36	 	
4.7	 	Political landscape	 	36	 	
5 	Denmark	 ................................	................................	................................	................................	..............................	 37	 	
5.1	 	Background and history	 	37	 	
5.2	 	Key laws and public institutions	 	39	 	
5.3	 	Exploration, licensing and permitting regime	 	40	 	
5.4	 	General environmental regulations in exploration and production phases	 	41	 	
5.5	 	General climate regulations in exploration and production phases	 	42	 	
5.6	 	Oil and gas tax system	 	43	 	
5.7	 	Decommissioning plans and policies	 	44	 	
5.8	 	Just transition 	policies	 	44	 	
5.9	 	Political landscape	 	45	 	
6 	Germany	................................	................................	................................	................................	..............................	 47	 	
6.1	 	Background and history	 	47

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6.2	 	Key laws, licensing and permitting regimes	 	48	 	
6.3	 	General environmental and climate regulations in exploration and production phases	 	48	 	
6.4	 	Oil and gas tax system	 	48	 	
6.5	 	Political landscape	 	49	 	
7 	References	 ................................	................................	................................	................................	..........................	 50	 	 
Figur	e 	
Figure 2.1	 	Annual oil production in Norway 1971	-2021 in thousand tonnes of oil	-equivalent	 .........................	 9 	
Figure 2.2	 	Annual gas production in Norway 1970	-2021 in billion cubic meters	 ................................	..............	 9 	
Figure 2.3	 	Public institution for regulation of the oil and gas industry in Norway	 ................................	...........	 10	 	
Figure 2.4	 	Overview of status (June 2022) for petroleum activity on the Norwegian Continental Shelf	 .........	 13	 	
Figure 3.1	 	Annual oil production in the UK 1971	-2021 in thousand tonnes oil	-equivalent	 .............................	 22	 	
Figure 3.2	 	Annual gas production in The UK 1970	-2021 in billion cubic meters	 ................................	.............	 23	 	
Figure 3.3	 	Map of UK offshore petroleum, with blocks on offer in the 33	rd round	 ................................	.........	 25 	
Figure 3.4	 	High	-level, simplified illustration of the NSTA’s approach to net zero regulation	 ..........................	 26	 	
Figure 4.1	 	Annual oil production in the Netherlands 1971	-2021 in thousand ton oil	-equivalent	 ...................	 31	 	
Figure 4.2	 	Annual gas production in The Netherlands 1970	-2021 in billion cubic meters	 ..............................	 32	 	
Figure 4.3	 	Map of oil and gas fields in the Netherlands	 ................................	................................	..................	 33	 	
Figure 5.1	 	Annual oil production in Denmark 1971	-2021 in thousand ton oil	-equivalent	 ...............................	 37	 	
Figure 5.2	 	Annual gas production in Denmark 1970	-2021 in billion cubic meters	 ................................	..........	 38	 	
Figure 5.3	 	Map of oil and gas fields in the Danish part of the North Sea	 ................................	........................	 38	 	
Figure 5.4	 	Map of Danish license area (June 2020)	 ................................	................................	.........................	 40	 	
Figure 6.1	 	Annual oil production in Germany 1971	-2021 in thousand ton oil	-equivalent	...............................	 47	 	
Figure 6.2	 	Annual gas production in Germany 1970	-2021 in billion cubic meters	 ................................	..........	 47

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Executive summary	 	
This report	 maps the o	il and gas production policies across the five North Sea countries of Nor-	
way, the United Kingdom, The Netherlands, Denmark and Germany. 	 	
These five countries are quite different with regards to oil and gas 	production but	 share some 	
similarities. 	Norway and	 the UK are t	wo large oil and gas 	producers	. The Netherlands used to be 	
the larges	t gas producer in Western 	Europe but	 was surpassed by the UK in the mid	-1990s and 	
has seen its production decline substantially	 since 2013.	 The Netherlands is a small produce	r of 	
oil.	 Denmark 	is quite a small pr	oducer of oil and gas, and Germany is an even smaller producer. A 	
common trait of all five countries is however that their production of both oil and gas 	is in	 declin	e. 	
All countries face decommissioning of oil and gas fields in the next decades. 	All will also face issues 	
of just transition. Policies to explicitly address this exists in some countries	, often in the form of 	
agreements between political parties (as in Denma	rk), between government and industry (in the 	
UK) or between 	government and a wide range of stakeholders	 (the Netherlands). Norway 	does 	
not have any such agreement on transition, despite the large importance of oil and gas in the 
country. 	Most policies aime	d at just transition however, 	are	 quite vague.	 The most specific policy 	
regarding transition away from oil and gas production is Denmark’s North Sea Agreement, which 
stipulates 	an end date for all oil and gas production in Denmark by 2050 and cancel all fu	ture 	
licensing round	s.

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1	 	Introduction	 	
This report is a descriptive 	study 	that maps out the current oil and gas policies and regulatory 	
framework in place in each country. This study will feed into a larger North Sea report that will 
perform an analysis of t	he policies and compare them to each other, in addition to applying an 	
equity lens.	 	
The report describes the history of the offshore oil and gas industry in each country, as well as:	 	
• 	Key laws governing resource extraction and government agencies 	overseeing them	 	
• 	Exploration, licensing and permitting regimes	 	
• 	General environmental regulations in both exploration and production phases	 	
• 	General climate regulations in both exploration and production phases	 	
• 	The oil and gas tax system	 	
• 	Decommissioning plans	 and policies	 	
• 	Just transition policies in place	 	
• 	The political landscape and the spectrum of policies proposed/backed by different political 
parties related to the future of the oil and gas industry	.

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2	 	Norway	 	
2.1	 	Background and history	 	
The gas discovery in G	ronin	gen in the Netherlands in 1959 sparked 	a great	 interest in	 petroleum 	
exploration in the North Sea in the 1960s. 	After Einar Gerhardsen’s government proclaimed sov-	
ereignty over the 	Norwegian	 Continental Shelf 	(NCS) 	in 1963	, the first round of 	licensing was an-	
nounced in 1965. The first major discovery at Ekofisk in 1969	 serves as 	the 	starting point for the 	
Norwegian 	oil and gas industry	, and production started in 1971. 	 	
In 1972, 	the Norwegian stat	e created the company Statoil, and a principle of	 50 percent state 	
ownership in each production license	 was established. Both of these measures were taken to 	
ensure 	state participation in the 	petroleum 	activity on the Norwegian shel	f and 	create a founda-	
tion to build an oil industry in Norway. 	There was a	 deliberate policy 	to encourage a domestic oil 	
and gas industry.	 The Norwegian oil and gas industry included the	 part	ially	 state	-owned company 	
Hydro, and the private Norwegian company Saga Petroleum	 (purchased by Hydro in 	1999)	. The 	
government 	reorganize	d their participation in	 Statoil	 1985, 	and 	the Stat	e’s Direct Financial Inter-	
est (SDFI) w	as created, an arrangement 	that 	allows 	the State to 	take ownership of a 	share of 	each 	
awarded production license	. During the 	2000’s, Statoil was 	partly 	priva	tized, 	and 	approx. 30 per-	
cent of the company 	was sold.	 In 2009 Statoil merged with the oil business of Hydro. 	In 	2018 the 	
name of Statoil was changed to Equinor.	 	
Throughout	 the 1970’s	 and 1980’s	, Norway made several 	world	-class 	discov	eries that	 accoun	t for 	
the majority of the total petroleum 	production on the NCS	 and 	are	 still in production	 today	. These 	
discoveries include: 	 	
• 	Ekofisk, 	discovered in 1969, production start in 	1971.	 	
• 	Statfjord, 	discovered in 1974, production start in 	1979.	 	
• 	Gullfaks, discovered in 1978, production start in 	1986.	 	
• 	Oseberg, discovered in 1979, production start in 	1988.	 	
• 	Troll, discovered in 19	83	, production start in 	1996.	 	
• 	Johan Sverdrup, 	discovered in 2010, 	production start in 2019.	 	
The steady increase in d	iscoverie	s in the period 1970	-2000 is reflected in 	Figure 	2.1, which dis-	
plays annual Norwegian oil production 	from 1971 up to today. 	Alongside the major discoveries, 	
many smaller petroleum fields were opened, 	which	 took advantage of the infra	structure t	hat 	had 	
been established 	for the 	larger fields.	 This development has continued up to today, as production 	
from the larger fields 	has	 tailed off, and the production is now divided among a large 	number	 of 	
fields	 of varying size	.

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Figure 	2.1 	Annual oil production in Norway 1971	-2021 in thousand tonnes of oil	-equiva-	
lent	 	
 	
Source:	 	OECD	 	
Figure 	2.2 	Annual gas production in Norway 1970	-2021 in bil	lion cubic meters	 	
 	
Source:	 	BP 	Statistical Review of World Energy	 	
The Troll field in the Northern part of the North Sea is the most valuable petroleum field in Nor-
wegian petroleum history	. Most	 of the field's resources 	consist of 	gas, and 	approx.	 60	 % of the 	
gas resources on the 	NCS 	are located on the field. 	The production from the field	 has	 contribute	d 	
to 	the 	shift in Norway's petroleum production from oil to gas that 	happened around 2000. 	This is 	
illustrated in 	Figure 	2.2. 	
2.2	 	Key laws	 and 	public 	institutions	 	
The key 	public	 institutions 	and their organization 	in relation to the	 petroleum 	policy 	in Norway 	
are	 described 	and illustrated 	by Norwegian Petroleum	 (Figure 	2.4). 	
0	
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
180 000	
1971	1973	1975	1977	1979	1981	1983	1985	1987	1989	1991	1993	1995	1997	1999	2001	2003	2005	2007	2009	2011	2013	2015	2017	2019	2021	
0
20
40
60
80
100
120
140	
1970	1972	1974	1976	1978	1980	1982	1984	1986	1988	1990	1992	1994	1996	1998	2000	2002	2004	2006	2008	2010	2012	2014	2016	2018	2020

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Figure 	2.3 	Public 	institution for regulation	 of the oil and gas industry in Norway 	 	 
Source:	 	Norwegian Petroleum	 	
 
Each has a role in the system, as follows:	 	
• 	The Ministry of Petroleum and Energy	, which	 is responsible for the ove	rarching manage-	
ment o	f Norwegian petroleum resources	, and th	e government organization of the petro-	
leum sector. 	 	
• 	The	 Norwegian Petroleum Di	rectorate is	 subordinate to the 	Ministry of Petroleum and 	En-	
ergy and	 plays a key role with the Ministry in 	the management of 	petroleum resources	. The 	
Directora	te 	is the governmen	t authority over 	petroleum exploration and production on the 	
Norwegian Continental 	Shelf and	 may exercise	 power in adopting 	the petroleum legislation 	
and regulation. 	 	
• 	The Ministry of Finance 	is responsible for 	the tax system applied to the pet	roleum 	sector.	 	
The Petroleum Tax Office is a subordinate agency to the Ministry, with the responsibility 	of 	
collect	ing	 and 	assess	ing	 whether the	 tax system put forward by the political authorities is 	
maintained. 	 	
• 	The Ministry of 	Climate and Environment 	has the ov	erarching responsibility for environmen-	
tal policy	 that the petroleum sector must comply with	. The Norwegian Environmental 	
Agency is subordinate to the Ministry, and 	exercise inspection and enforcement relating to 	
the Pollution Control Act. 	 	
• 	The Ministry of	 Trade, Industry and Fisheries 	manages the State’s interests in the 	petroleum 	
sector though ownership in 	Equinor ASA	, Petoro AS and 	Gassco	 AS	. The	 Ministry 	further 	
serves as a	n intermediary between petroleum and fishery interests in the resource manag	e-	
ment. 	 	
• 	Petoro AS 	is a stat	e-owned company with responsibility for the	 commercial	 assets 	stemming 	
from	 the State’s direct participation in the petroleum activities through SDFI. 	 	
• 	Equinor ASA is 	an energy company	 67 percent owned by the State, that operate	s around 70 	
percent of the petroleum production on the Norwegian Continental Shelf. 	The company is 	
commercially run. 	 	
• 	Gassco AS	 is a state	-owned company 	responsible for operating the gas transport system	.

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There is a comprehensive legal framework governing resource extraction in the Norwegian pe-
troleum sector, with several different government bodies overseeing them. 	The current key laws 	
are 	shortly 	de	scribed below	. In addition	, environment, 	health 	and safety	 (EHS) 	concerns for work	 	
operations	 in the petroleum sectors are	 regulated through the Framework 	Regulation	 (12 Febru-	
ary 2010 No. 158) and the Activities Regulation 	(29 April 20101 No. 613). 	They are not elaborated 	
on in this section. 	Informat	ion on the laws are retrieved directly from 	Lovdata, 	the web resource 	
on Norwegian legislation. 	 	
2.2.1	 	The Petroleum Ac	t 	
The basis for how petroleum extraction in Norway is regulated 	is described in 	The Petroleum Act 	
(29 November 1996 No. 72)	1 and 	accompanying	 Petroleum 	Regulations (	27 June 1997 No	. 653)	. 	
The Ministry of Petroleum and Energy oversees 	the regulations	 together with 	the Norwegian Pe-	
troleum Directorate	. Chiefly, i	t states that 	the Norwegian state holds the property rights to	 all 	
petroleum deposits located 	on Norwegian	 land	 or sea	, as well as 	on the	 Norwegian Continental 	
Shelf	. 	
The Petroleum Act 	describes the legal framework for the entire life 	cycle of a	 petroleum opera-	
tion, from	 opening an 	area	 for exploration 	to 	decommissioning at the 	end of production.	 This 	
includes 	licensing regulations with regards to exploration and operation, 	and 	what duties the 	
companies must comply with in relation to	. The Act	 thoroughly describes the process 	of licensing 	
companies for expl	oration and operation 	at 	specified areas	 and	 what duties 	the companies must 	
comply with during 	all phase	s of operation	. It further	 provides the regulations for the Norwegian 	
State’s 	participation in the petroleum activity through the 	SDFI. 	 	
2.2.2	 	Resource 	Management Regulation	 	
Th	e Resource Management Regulation 	(13 December 	20	17	)2 extends on the Petroleum Act and 	
states legal requirements for the collection of data and production of documentation from 	scien-	
tific	 surveying	 of 	petroleum sites, as well as fro	m 	drilling and well activities	 from the petroleum 	
extraction. 	The regulation is overseen by the Ministry of Petroleum and Energy, 	but it	 details 	the 	
legal 	regulations 	for extraction and operation 	put forward in the Petroleum Act	 that the Petro-	
leum Directorate is responsible for. 	 	
2.2.3	 	The Act on emergency storage of petroleum products	 	
This Act of 18 August 2006 	No. 61	3 sti	pulates that	 any entity 	that	 imports or produces petroleum 	
products or biofuels 	is obliged by the King to keep s	tock of these products, 	to secure 	the supply 	
of petroleum nationally and globally.	 Current regulations states that	 the Act applies to producers 	
and importers of 	more than 	10.000 m	3 of petroleum products in the 	prior year	, and 	each entity 	
is required to 	keep a stock equal to 20 days of consumption based on the entity’s total 	sales or 	
consumption 	of petroleum products that 	the Act applies to	 in the prior year	. 	
 	
1 https://lovdata.no/dokument/NL/lov/1996	-11-29-72 	
2 https://lovdata.no/dokument/SF/forskrift/2017	-12-13-2004/KAPITTEL_1#KAPITTEL_1	 	
3 https://lovdata.no/dokument/NL/lov/2006	-08-18-61?q=beredskapslagring%20av%20petroleumsprodukter

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2.3	 	Exploration, licensing and permitting regimes	 	
Chapter 3 of the Petroleum Act	 details	 the 	legal framework 	for	 the exploration and licensing re-	
gime in 	Norway.	 	
Before 	licenses to 	start petroleum operations at an area may be 	allocated, 	the area must first be 	
opened for petroleum activity	. This decision is made by the Norwegian 	Parliament	. Prior to	 the 	
Parliament decision, 	the Petroleum Act stipulates that 	the Ministry of Petroleum and Energy must 	
provide 	an impact assessment evaluating social, economic and environmental impacts of the 	sug-	
gested 	activities	. Additionally, 	relevant	 affected parties	, local authorities	 and the 	ge	neral 	public	 	
are	 allowed to put forward their views on the matter. 	 	
After an area has been opened for activity, 	production licenses are 	awarded through 	licensing 	
rounds where 	prequalified companies may apply 	for 	the exclusive right to perform petroleum 	
exploration and operation 	in the area. 	Rules for the procedures of 	announcement,	 application	 	
format and process is governed by the Petroleum Act and Petroleum Regulations	. A lice	nse is 	
awarded 	based on the applicant	s’ technical competence, financial capacity and 	plan for explora-	
tion and extraction 	in the specified area	. 	
The 	regime for licensing operators for exploration and extraction of petroleum on the Norwegian 	
Continental She	lf is made up of two rounds: 	 	
• 	Numbered licensing rounds	 are conducted 	every other year 	for	 frontier areas	 (blocks on the 	
NCS) w	here there is great uncertainty attached to 	the geology	 and	 technical difficulties of 	
operation	, and a lack of 	infrastructure	. Petroleum operators on the NCS	 nominate 	a set 	
number of 	areas 	where they are interested in 	doing exploration to the Petroleum Direc-	
torate, 	which	 review	s the nominations and perform 	its	 own geological analyses before	 rec-	
ommending 	to the Ministry of Petroleum and Energy 	which areas should	 be opened for li-	
censing	. It is customary 	that	 the recommendations 	are	 submitted for public consultation. 	
The Government makes the final decision on whic	h areas	 to include 	in a licensing round	, 	
and 	put	s forwar	d special environmental and fishery	-related 	requirements for the activities. 	
The Petroleum Directorate assess	es the applications	 and 	the Government ultimately awards 	
a number of licenses 	for the licen	sing round.	 	
• 	The Awards in predefined areas (APA) 	licensing round	s is cond	ucted 	annually 	for 	all areas 	
within a predefined 	set of blocks that ha	ve been classified as 	APA. These are 	mature areas	 	
that have been operated for many years	, the g	eology 	and technical 	details	 are 	well	-known,	 	
and 	infrastructure	 is well developed	. The Petroleum Directorate 	evaluates whether new 	
blocks	 should be classified APA	 before 	the licensing rounds, 	and provides recommendations 	
to the Ministry of Petroleum and Energy	, which	 submits 	a proposal for publi	c consultation	, 	
before the Government decides 	which APA	-areas 	to include in the licensing round	, with en-	
vironmental and fishery	-related requirements. 	From then on	 the process is identical to the 	
numbered licensing rounds for frontier areas. 	The defined APA	-areas 	cannot be narrowed 	
down, only expanded, 	except for 	a situation where new information 	calls for it.	 	
Figure 	2.4 provides an illustration of the Norwegian Continental Shelf that highlights 	its borders, 	
which areas that are open for petroleum activity, 	and what areas have been classified as APA.

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Figure 	2.4 	Over	view of	 status	 (June 2022)	 for petroleum activity on the Norwegian Con-	
tinental Shelf	 	
 	
Source:	 	Norwegian Petroleum	 	
A production 	license grants the licensee exclusive rights to perform exploration (incl. drilling) 	
and	 production of petroleum in the area that the license covers. Given the Norwegian State’s 	
ownership in all petroleum activities on the Norwegian Continental Shelf, a license also regu-
lates which rights and duties the licensee holds in relation to the State	. 	
The licenses are	 initially awarded for a period up to 10 years, reserved for exploration, 	where the	 	
licensees are	 obliged to carry out a specified work programme 	to 	ensure that the companies	 per-	
form thorough assessments 	independent o	f their findings. 	After this work is completed, the com-	
pa	nies are a	llowed to relinquish the license	 and not 	begin operating. Th	e area 	may 	later be 	li-	
censed 	to another company, 	in which	 the findings from the work programme in the previous 	
exploration stage 	are available to 	both 	public	 authorities and 	the 	petroleum companies	. 	
The licensee 	is entitled 	to 	an extension of the license 	to start operation if exploration is deemed 	
successful	. Th	e duration of this extension is determined by the Ministry of 	Petroleum and Energy,	 	
but 	as a	 general rule 	it i	s set to 30 years.	 Before 	operation	 may begin, the licensee 	is requi	red to 	
present a 	Plan 	for development and operation (PDO)	, that the Ministry must approve. 	Companies

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are also required to put forward separate plans for installation and operation (PIO), including 
onshore terminals and pipelines. 	The 	most significant projects 	are 	presente	d to the Norwegian 	
Parliament 	as part of the 	approval process	. The PDO/PIO 	consists of a plan for the operation and 	
an impact assessment o	f what effects the activities will 	generate for 	the environment, 	fisheries 	
and the society at large	. The PDO/PIO is then submitted to affected parties, 	which	 are allowed to 	
express their opinio	n before the 	Ministry makes their decision. 	The plans must further comply 	
with 	the regulations for operation 	in 	chapter 4 of the Petroleum Act and 	Petroleum Regulations.	 	
2.4	 	General environmental regulations in exploration and production 
phases	 	
The 	Norwegian Environmental Agency	 (NEA)	 is the environmental regulator of petroleum activi-	
ties in Norway	, through 	legal regulations and permissions.	 This chapter primarily draws from in-	
formation from their website. 	 	
The 	environmental effects 	of petroleum acti	vities that the agency regulates include emissions to 	
air 	(CO	2 and methane emissions are treated 	in section 	2.5	), discharges to the sea	, physical rami-	
fications for the ocean floor	 and 	risk	s of acute pollution from oil spills.	 Th	e NEA’s regulation of 	
the petroleum sector 	emphasizes	 protecting 	vulnerable	 environmental assets	 such as 	endan-	
gered species and 	habitats	, with 	authority from the Nature Diversity Act (Act of 	19 June 2008 No. 	
100). 	 	
Several laws regulate emissions to the air in the petroleum sector in Norway. 	Regulations in the 	
Petroleum Act 	serve	 as 	an 	important polic	y measure	 to ensure the integrity of environmental 	
concerns with petroleum activities. This includes 	the 	requirements 	for thorough impact assess-	
ments in the process of approving operating plans	 (PDO/PIO)	, as well as 	the en	vironmental re-	
quirem	ents that the Norwegian Environmental Agency 	obliges the operators to comply with in 	
relation to the license.	 	
The 	NEA	’s authority 	in exercising environmental regulations on the petroleum sector 	is based on 	
the 	Pollution Control Act (Act of 13 March 1981 No. 6)	. The Act 	forms the legal framework for all 	
emissions to the natural environment in Norway	, and chiefly, it 	stipulates that all activities that 	
can or will cause pollution must be given 	permits	 by the NEA.	 The NEA can attac	h several 	require-	
ments and	 duties that the applicant 	by law 	must comply with,	 relating to 	the amount of pollution	, 	
which activities that are 	allowed to pollute, an	d which technologies and production methods that 	
the applicant is 	allowed to use. 	The Pollution Control Act further stipulates that 	alle emissions to 	
air need to be	 documented in a public register overseen by the NEA. 	 	
Best 	Available 	Techn	iques	 (BAT) is a	 key principle in	 the Pollution Control Act in relation to deter-	
mining the pollution permits issued by the NEA. T	he premise of this principle	 in relation to the 	
petroleum sector is that the size of 	a permit 	associated with a specif	ic activity is determined by 	
the minimum	 level 	of pollution 	that 	can	 be achieved through the use of	 best	-practice 	techniques 	
and methods	.

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2.4.1	 	Emissions to the air	 	
In addition to 	greenhouse gas emissions of CO	2 and methane	 (CH	4), petroleum activities 	emit	 	
nitrogen oxides (	NOX), sulphur 	oxides	 (SO	X) and	 non	-methane volatile organic compo	unds 	
(NMVOC) to 	air. 	The amount	s of these emissions that can be emitted during petroleum activities 	
are directly regulated th	rough the 	pollut	ion permits 	issued by the NEA	, and the requirements 	laid 	
out in 	the approval process for PDOs and PIOs.	 	
NO	X emissions are further regula	ted by a tax that was introduced in 200	7, but most petroleum 	
companies operating on the Norwegian Continental Shelf have signe	d an environmental agree-	
ment with the Norwegian state 	on measures to 	reduce NO	X emissions	 that exempt	s the compa-	
nies from the tax. T	heir 	participation in the agreement involves paying a fe	e per kg 	NO	X emitted 	
to a 	fund	 that	 help	s finance 	investments undertaken by the companies to reduce their 	NO	X emis-	
sions. 	 	
2.4.2	 	Discharges to sea	 	
Discharges to sea from petroleum operations include 	produced water, drill cuttings, as well as 	
chemical residue and cement from drilling. 	These discharges are, similar to the emissions to air, 	
primarily	 regul	ated through 	the 	pollution permit	s issued 	by NEA	 by the authority of the Pollution 	
Control Act, 	in addition to requirements set in the	 approval process	es for PDOs and PIOS. 	 	
Th	e Activities Regulations (	29 April 2010) 	include	 legal requirements 	for conducting petroleum 	
activities in 	Norway and	 put forward 	several regulations 	about discharges to sea.	 It stipula	tes a 	
requirement for 	cleaning produced water before emitting it to sea	, and 	to regular	ly perform 	as-	
sessments of risk and environmental imp	act	s associated with 	the 	discharges	. 	
Internationally, discharges to sea are regulated 	through the Convention for Protection of the 	Ma-	
rine Environment of the North	-East Atlantic (	OSPAR	). Through the convention, Norway has an 	
obligation to 	take every 	measure to reduce the amount of emissions and 	protect 	the ocean from 	
human activity. This includes applying 	the precautionary principle in 	the regulation of petroleum 	
activities. 	 	
2.4.3	 	Physical ra	mifications 	for the ocean floor	 	
Through the processes of licensing for exploration and operation	 (incl. approval of PDO), petro-	
leum companies 	must 	perform assessments of	 the operations’ environmental impact	 and must 	
comply with 	the requirements 	set by the 	NEA. This includes environmental considerations con-	
cerning the ocean floor. Additionally, 	the 	petroleum companies are 	required to 	send in applica-	
tions 	for building pipes in areas 	with 	vulnerable 	ocean floor fauna	 that the NEA 	must approve.	 	
2.4.4	 	Acute 	pollution risk	 	
Through the pollution permit regime, t	he NEA 	ha	s the authority to 	reject pollution applications if 	
the p	etroleum companies	’ management of	 risk	s relating to oil spills	 is insufficient. 	The NEA may 	
further 	require specific 	measures 	relating to preparedness and response	 for each 	pollution activ-	
ity.	 The Norwegian Coastal Administration 	coordinates	 efforts relating to 	oil spill preparedness

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and 	response nationally, while 	the Ministry of Climate and Environment ha	s laid out specific 	re-	
qu	irement	s relating to the private companies. 	This involves chiefly that all petroleum companies 	
are required 	to have a contractual 	cooperation on 	oil spill preparedness	, which further must be 	
coordinated wi	th the Coastal Administration. 	 	
2.5	 	General climate regulations in exploration and production 
phases	 	
The foremost regulation on emitting 	greenhouse	 gases	 from 	petroleum	 activities	 on	 the 	NCS	 is 	
the 	requirement	 for 	pollution 	permits 	under the Pollution Control 	Act 	issued by the	 NE	A. This 	
process is described in section 	2.4	, but	 greenhouse gas emissions 	require 	a specific 	permit	 as they 	
are subject to 	emissions trading 	via the 	Greenhouse Gas Emission	 Trading 	Act 	(17	 December 200	4 	
No. 	99	). This chapter builds on information from 	the NEA, the Ministry of Finance and the 	docu-	
mentation for the current government’s political platform (Hurdalsplattformen)	4. 	
2.5.1	 	Greenhouse gas e	mission trading	 	
The 	greenhouse gas emissions from Norwegian petroleum fa	ll under the EU Emission trading 	sys-	
tem (EU ETS)	, which currently is in its fourth phase 	up until 2030. 	The system	 requires polluting 	
companies to 	buy permits for their emissions on a free market 	with actors across the EU, 	where 	
the number of permits have been set 	in advance and 	permits have been initially allocated to 	
participating companies 	through auction or 	gifted free of charge. 	The petroleum sect	or receives 	
most of their permits free of charge, due to 	the risk of carbo	n leakage 	in the sector. 	 	
The	 EU ETS 	price 	of emitting a ton 	CO	2 per 9 June 2023 was 	approx	imately	 € 89. 	 	
2.5.2	 	Carbon taxation	 	
The CO	2 Tax Act 	on Petroleum Activities 	(21 December 1990	 No. 72) 	stat	es that companies with 	
license to perform petroleum activities on the Norwegian Continental Shelf are obliged to pay a 
tax on the CO	2 emitted as part of the activities. The Ministry of Finance oversees the law, and are 	
responsible for determining the tax lev	el, and 	determining which instruments 	to appl	y for 	meas-	
uring emissions. The tax is determined from emitted CO	2 from petroleum 	combustion	, emissions 	
of natural gas to the air, and CO	2 that is separated from petroleum and released to the air. The 	
tax is levi	ed on both companies licensed for petroleum extraction and installation and operation 	
(onshore terminals, pipelines etc.). 	 	
The tax is set to NOK 1	.78 	per 	standard 	m3 gas and 	NOK 2	.03 per litre oil. 	The operator	s of the 	
petroleum activities 	are	 directly responsible for calculating and reporting their emissions and is-	
suing the tax payments to the Norwegian Petroleum Directorate. Further, the 	CO	2 Tax Act s	tates 	
that the CO	2 tax is non	-deductible from the production 	tax that companies licensed for petroleum 	
activities must pay according to the Petroleum Act. 	 	
The carbon tax	 and	 current EU ETS prices	 give a total price per tonne CO	2 of around €150	, which 	
is considerably higher than 	the price of emissions in other Norwe	gian sectors an	d countries with 	
 	
4 https://www.regjeringen.no/no/dokumenter/hurdalsplattformen/id2877252/

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petroleum activities.	 On the other hand, the gifting of initial quotas mean a lower financial burden 	
for owners	 and a lower	 investment incentive. 	 	
2.5.3	 	Ban on 	natural gas 	flaring	 	
By the Petroleum Act, all flaring of 	natural gas is prohibited from petroleum activities on the NCS	, 	
including during production halts or maintenance of facilities. 	Companies may however 	apply	 to 	
be 	allowed flaring when it is deemed necessary for safety reasons. 	Permissions to flare in such 	
circumstances are 	issued by the Ministry of Petroleum and Energy. 	 	
2.5.4	 	Petroleum climate policy in the Government’s political platform	 	
In 	the 	current 	Government’s political platform 	(Hurdalsplattformen)	, the Government 	details a 	
policy 	roadmap for the 	development of the petroleum sector in Norway	, with plans for climate 	
actions in the operation phase.	 Actions in the platform include: 	 	
• 	Pe	troleum 	activities on the NCS are to be powered b	y renewable energy, 	primarily pro-	
duced by offshore wi	nd facilities or other	 renewable energy production on the NCS. 	 	
• 	Greater utilization of carbon capture and storage	 (CCS) 	technologies	, with an ambition for 	
two full	-scale capture facilities and one storage facility in the North Sea 	 	
• 	Total emissions from 	the petroleum production 	on the NCS shall be cut in half	 by 2030 	com-	
pared to 	2005	 levels 	and 	be net zero by 2050. 	 	
2.6	 	Oil and gas tax syst	em	 	
Oil and gas production in 	Norway is subject to ordinary corporate income tax of 22 %	 and a re-	
so	urce rent tax of 56 %, for a total marginal tax rate of 78 %.	 The Norwegian petroleum tax 	is 	
based on the entity, not specific assets, licenses or fields.	 Inc	ome from oil and gas is however 	
ring	-fenced from 	onshore activities, so that	 Income or losses from offshore oil and gas activities 	
cannot be offset against losses or gains 	from onshore ac	tiviti	es for tax purposes.	 	
Taxable income 	from the sale of 	petroleum products is determined by an administratively set 	
“norm price”	, rather than the actual sales price obtained. The norm price is 	based on market 	
prices obtained by companies.	 	
In 2020 	the Norwegian Parliament passed a stimulus package for the Norweg	ian oil and gas sector 	
to mitigate the 	negative effects of the Covid	-19 pandemic. This package consisted of 	full	 tax dep-	
recations, 	increase of the	 tax 	uplift rate	 from the previous 20.8 % to 24 %	 and refund of tax losses	 	
incurred in 2020 and 2021	. The stim	ulus package applies to 	all investments carried out in 2020 	
and 2021, as well as all 	investment plans (PUD) delivered 	by the end og 2020 and approved by 	
the authorities by the end of 2023.	 	
In 	2022 a cash	-flow based tax 	was introduced in the 	Petroleum tax	 system	, meaning that invest-	
ments are deducted immediately	. 	
Losses can be carried forward indefinitely,	 transferred upon sale or merger with another com-	
pany	, and refunded upon exit from the Norwegian 	Continental Shelf.

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Companies may be refunde	d the tax value 	of exploration costs if they are not in a position 	to pay 	
taxes on other 	activities on the Norwegian Continental Shelf. This is to provide an even playing 	
field between established and new companies.	 	
2.7	 	Decommissioning plans and policies	 	
Regul	ations of decommissioning petroleum activities in Norway 	are 	laid down in the Petroleum 	
Act and Petroleum Regulations. 	The regulations stipulate that 	wh	en 	petroleum activities are no 	
longer conducted 	at a facility	, the facility 	must be removed and 	companies 	must clear the area.	 	
The production licensing regime requires licensed companies to provide a detailed plan 	of all 	
phases of the decommissioning to the Ministry of Petroleum and Energy. 	Submitting the plan 	
must be done within 	two to five year	s prior to 	the end of the license	, or when 	production at a 	
facility is scheduled to cease. 	 	
The decommissioning plan consists of a 	disposal part	, detailing technical and 	financial 	conditions 	
of the cessation	, and a	n impact assessment 	of what effects the planned disposal will have on 	the 	
environment and	 affected users of the sea. 	The	 decommissioning plan 	must go through public 	
hearing. 	 	
In addition to the regulations laid down in 	Norwegian legislation, 	decommissionin	g on the NCS is 	
governed by international agreements.	 Norway 	is part of both the 	United Nations Convention on 	
the 	Law o	f the Sea	 (UNCLOS)	 and the Oslo	-Paris Convention	 (OSPAR), 	which	 both 	stipulate that 	
facilities 	as a rule 	are to be removed	, and abandonment is only 	allowed under extraordinary cir-	
cumstances.	 In accordance with the agreements, the Government 	can decide to 	remove subsea 	
installations, floating steel facilities	 and 	concrete installations above sea level 	without approval 	
from the N	orwegian Parliament. 	Disposal of concrete 	facilities and 	the undercarriage on mounted 	
steel facilities may however be subject to OSPAR 	consultation and	 must then be 	presented to the 	
Parliament. An exception to the OSPAR convention is removal of pipelines,	 which is determined 	
in individual cases based on 	thorough evaluation of impacts on safety, 	the 	environment	 and users 	
of the sea such as fisheries.	 	
According to investigative reporting by the organisation Follow the Money, Norway has so far 
removed 	36 	plat	forms, while 	6 are currently inactive 	(Follow The Money, 2023)	. 	
2.8	 	Just transition policies	 	
No conventional economy	-wide policy 	for transitioning from the oil and gas sectors is in place in 	
Norway, and most climate policies and targets are driven largely by global (UNFCC) and European 
climate governance. 	However, 	there is a broad consensus across political and industrial stake-	
holde	rs that the development of renewable energy production	 will be important for the transi-	
tion, especially large	-scale development of offshore wind,	 in which Norway has great production 	
potential. Furthermore, 	the 	State	 emphasizes the role of hydrogen product	ion and large	-scale 	
utilization of CCS to 	reduce national	 emissions, activities with potential to employ	 many 	workers 	
from petroleum. 	Relatedly, 	the Longship project was included in the national budget for 2021	, a 	
full	-scale CCS project that will 	demonstrate CO	2 capture 	from industrial sources in the Oslo area	, 	
before being transported and 	temporarily stored 	in a facility outside Bergen, 	and finally be 	
pumped in pipes to the NCS for permanent storage.

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While there is no large	-scale transition polic	y in place for the petroleum sector, the	 Government 	
Pension Fund Global containing the Norwegian State’s income from 	the oil and gas 	activities	 on 	
the NCS is an important policy and financial instrument 	for	 implement	ing	 a transition from the 	
sector. 	The ma	rket value of the fund 	per 11 June 2023 totals EUR 1	.3 trillion.	 The fund is managed 	
by the Norwegian Central Bank, and 	current regulations state that 	the 	government is restricted 	
to using 3 percent of its market value per 	budget 	year, which is set	 to reflect the 	real 	market 	
return of the fund	. The fund’s rationale 	is to ensure a 	long	-term management of oil and gas 	
wealth for the benefit of current and future 	generations and	 may thus play part in smoothly tran-	
sitioning 	to a	 post	-oil Norwegian econom	y. 	 	
2.9	 	Political landscape	 	
The future of the oil and gas sector is among th	e most crucial 	topics 	in Norwegian politics	. The 	
2021 elections occurred at the same time as the first 	part of t	he 	Sixth Assessment Report on 	
climate change from IPCC 	was published, an	d part	ies across the 	political 	spectre 	were forced to 	
take a stand on 	policies 	to tackle the climate crisis. 	Given th	at emissions from petroleum activities 	
on the NCS constitute a large portion of greenhouse gas emissions in Norway, 	an	d the emissions 	
from consumption of 	Norwegian 	oil and gas 	abroad 	are even larger, 	all 	major 	parties 	have 	to 	
some extent 	currently taken a 	stance on	 what oil and gas policy 	to promote. 	This chapter de-	
scribes 	the political landscape and 	policies put forward by different parties 	regarding	 the future 	
of the oil and gas industry in 	Norway and	 draws on information from the parties’ 	political pro-	
grams. 	 	
2.9.1	 	Differing political views on the future of the Norwegian petroleum sector	 	
Different policies and political standpoints in Norway stem from differing views on 	what role the 	
petroleum sector plays in the modern Norwegian economy, and 	to what extent 	Norway shall	 take 	
part 	in 	global cooperation 	to fight climate change	. On one hand	, most of the major political forces	 	
focus on the sect	or’s essential role 	in financing	 the Norwegian welfare state	 and 	maintain that it 	
is still one of the most important industries 	nationally and in regional 	labour markets along the 	
coast. 	According to these 	views	, a situation	 where 	petroleum	 production plays a negligent role in 	
the 	Norwegian economy	 is in the distant future,	 and phasing out 	production and export of oil and 	
gas 	is unwise	. Advocates of th	is perspective stress 	the 	climate	-efficiency of Norwegian petroleum, 	
and the risk of 	decrea	sed Norwegian production leading to 	an 	increase 	in foreign 	produc	tion with 	
higher emissions. 	Major political parties 	that	 largely, but to varying degree, 	follow this line of 	
thought include the 	three largest parties (per June	 2023	, in descending order	) the Conservatives, 	
the Labor party	 and the Progress Party	, as well as the Cen	ter	 Party	. 	
On the opposite side of the spect	re, 	political views 	negatively characterize the Norwegian econ-	
omy as “oil	-dependent” and 	argue t	hat rather than being a driver of econ	omi	c growth in Norway, 	
the petroleum sec	tor	 is slowing down 	an economic and structural green transition	 that is 	neces-	
sary.	 The parties following this sentiment include 	the Green Party, the Socialist Left Party and the 	
Liberal Party	, all proponents of Norway assuming a position 	as a global forerunner	 for cli	mate 	
policy	. Relatedly	, their 	perspective on	 Norwegian climate and petroleum policy is 	to a greater 	
extent internati	onally oriented,	 advocating 	a national climate policy 	designed to 	maximize 	impact

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on climate change 	mitigation globally, rather than 	primarily	 seek to fulfil 	national 	commitments 	
about 	emission reductions.	 	
2.9.2	 	The current Government’s oil and gas policy	 	
The current Norwegian government 	(2021	-2024)	 is a coalition of the Labour Party and the Center 	
Party, 	and they form a minority government with need for support	 from other	 parties to form 	
majority in the Parliament. 	The parties went 	into	 the election in 202	1 seeking to form a 	socialist 	
majority government with the Socialist Left Party, but 	the latter	 decided to leave the Government 	
negotiations in the aftermath o	f the election as	 they were unable to agree with the 	two other 	
parties on 	issues relating to climate and redistribution. The Socialist Left Party 	play	s a pivotal role 	
in the current 	political 	circumstances	, as the Government	’s preferred 	collaborator 	in Parliament. 	 	
In an agreement on the state budget between the current governme	nt and the Socialist Left party 	
in 2022, it was agreed that the 26	th numbered licensing round will be delayed, and that no num-	
bered rounds will be carried out during this parliamentary term (which ends in 2027).	 	
The Government’s oil and gas policy	 aim	s at	 creating a	 stable framework for continued 	oil and 	
gas production on the NCS	, including the development of existing facilities and 	issuing permits 	
for exploration 	in new areas. 	This was clearly indicated 	when they 	announced 	the APA licensing 	
round for 2	023 i	n May, 	where 92 blocks previously classified as frontier areas were included in 	
the APA area. 	The	 new areas 	are in	 the	 Norwegian Sea and the Barents Sea. 	Moreover, the Gov-	
ernment has currently 	given	 no indi	cation of 	stopping petroleum operations on th	e NCS	, but	 aims 	
for 	CCS, 	offshore 	wind,	 and hydrogen production to 	form	 a greater share of the value creation in 	
the industry going forward. 	Together with elec	trification 	of existing oil and gas fields, these 	
measures constitute the current Government’s 	climate policy 	for	 the petroleum sector	. These 	
policies are guided by the overarching ambitions of halving 	Norwegian	 greenhouse gas emissions	 	
from 	the petroleum sector 	within	 2030	, and net zero 	production 	by 2050. 	 	
2.9.3	 	Proposed policy scenarios	 	
In the following, we will discuss 	the spectrum of 	policy scenarios	 proposed by different political 	
parties related to the future of the oil and gas industry	. We 	primarily 	separate 	different policies 	
related to the extraction and 	exploration of oil and gas, while commenting on 	significant differ-	
ences in 	policy perspectives among parties 	promoting the same 	development for petroleum ac-	
tivities on the NCS. 	 	
The Progress Party is the onl	y political party that proposes 	a business	-as-usual	 scenario	 with 	po-	
tentially increased production	, depending on the global market situation. 	In this policy scenario, 	
Norwegian petroleum production is governed by global energy markets, and 	all profitable r	e-	
sources shall be produced. 	This involves a scope for increased production	, and the Progress Party 	
is currently advocating a rapid increase in 	extraction and exploration activities 	in response to 	the	 	
persistently 	high energy prices	 in the global markets in recent years. 	The Party	 further opens for 	
petroleum	 activities in Lofoten, Vesterålen and Senja (LoVeSe)	 and 	propose	s petroleum produc-	
tion 	in all profitable areas 	in the Arctic areas	. Furthermore, 	the party opposes 	to electrificati	on of 	
petroleum activities 	on the NCS	, characterizing it as a “symbolic climate initiative”	, and	 offer	s no 	
policy	 relating to 	reduced	 emissions from 	Norwegian petroleum operations.

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The current Government parties Labour	 and	 Center Party, alongside the Conservatives and the 	
Christian democrats 	are proponents of 	continued production and exploration	 of oil and gas	, with 	
a focus on 	gradual	ly transitioning	 the sector	 towards more green energy production	, while	 re-	
ducing the emissions from 	the oil and gas production on the NCS.	 Th	is policy scenario	 may be 	
summarized as “transitioning, rather than 	terminating” 	the petroleum sector	, and 	is character-	
ized by continued 	extraction and exploration of 	profitable 	areas	 wi	th 	no specified end, while 	pro-	
mot	ing a policy framework for	 increased	 productio	n of renewable energy from offshore wind or 	
hydrogen, a	nd 	greater utilization of CCS technologies. 	These parties 	are 	further in favor of elec-	
trification 	of oil and gas activities (preferably through offshore wind)	 to reduce 	the direct emis-	
sions from production	. The parties are all in fa	vor of maintaining 	the 	Arctic border for 	exploration 	
in the Northern	-most part of the 	NCS, 	bu	t while 	the Conservatives are strongly in favor of 	permit-	
ting more exploration in frontier areas through the 	numbered licensing rounds, the 	Government 	
parties and the Christian democrats 	have not 	assumed a clear position on th	is matter. 	Further-	
more, the 	Government parties oppose petroleum activities in LoVeSe, but th	e Conservatives and 	
the Christian democrats remain 	indecisive	. 	
The pro	-environmental parties 	Socialist Left Party, the Liberals and the Red 	Party promotes a pol-	
icy scenario w	here 	no new licenses or exploration permits	 are issued	. These parties 	largely 	sup-	
port	 the same 	policy framework 	for a green transition of the sect	or as described in the above 	
paragraph, but	 combined with no new licenses, 	the	 promoted policy scenario by these parties 	is 	
more clearly characterized by a gradual phase	-out of the oil and gas sector. Howe	ver, none of the 	
parties propose a set	 deadline for end	-of-production 	from 	petroleum activities on the NCS	. Elec-	
trification is pr	omoted by both the Socialist Left Party and the Liberals, while the Red Party are 	
opposed to it	, arguing that it is co	stly	, has adverse distributional 	consequences	 through the	 effect 	
on the national energy market,	 and offers little climate 	impact 	globally.	 	
The 	Green Party advocates	 cessation of new licenses and exploration 	permits and	 proposes an 	
end	-of-production by 2035	 and 	an 	immediate 	stop to petroleum activities in the Barents Sea	. The 	
party’	s policy in relation to the oil and gas sector	 focuses 	less on 	the direct national emissions 	
from petroleum production, 	and their policy is rather guided by the climate impact 	of both pro-	
duction and consumption of Norwegian oil and gas.	 The party 	is opposed 	to 	the 	electrifi	cation of 	
oil and gas 	field	s with onshore 	power,	 and rather seeks to 	put forward requirements of net	-zero 	
production technologies on 	existing 	facilities	.

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3	 	The 	U	nited 	K	ingdom	 	
3.1	 	Background and history	 	
The UK produces a significant amount of oil and gas	, practically all of it from 	the North Sea. The 	
UK is Western Europe’s second largest producer, after Norway. 	Gas production started 	with the 	
West Sole field 	in the Southern North Sea	 in 1967	, whil	e offshore oil production began in 	1975 	
from the 	Argyll field	 in the Central North Sea.	 	
Produ	ction was in the first few decades 	predominantly from a few very large fields	, such as Brent, 	
Piper	, Inde and Leman	. The level of production of both 	gas	 and 	oil	 has decreases significantly from 	
a peak in 	1999 and 2000	, but h	as increased somewhat again since 2014. 	Production is now pre-	
dominantly from smaller fields. There are 	currently 	227	 fields in 	production	, and another 35 are 	
either under construction or 	under planning.	 	
 
Figure 	3.1 	Annual oil production in the UK 1971	-2021 in thousand ton	nes oil	-equivalent	 
 	
Source:	 	OECD	 	
 	
0	
20 000
40 000
60 000
80 000
100 000
120 000
140 000	
1971	1973	1975	1977	1979	1981	1983	1985	1987	1989	1991	1993	1995	1997	1999	2001	2003	2005	2007	2009	2011	2013	2015	2017	2019	2021

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Figure 	3.2 	Annual gas production in The 	UK	 1970	-2021 in billion cubic meters	 
 	
Source:	 	BP 	Statistical Review of World Energy	 	
The UK	 oil and gas sector	 in 2020	 supported around 	117,000 direct and indirect jobs in the UK 	
according to the government	. 	
The UK continental shelf (UKCS) is considered a highly mature oil and gas basin. Production is 
expected to be 	1,17 million 	boe/day 	in 2023	, of which 0,66 is crude oil and 0,53 is 	gas	.5 Total 	
production is expected to decline to 0,84 million 	boe/day in 	2028.	 Total expenditure is expected 	
to decline from 	£ 15	.83 billion in 2023, to 	£ 10	.28 billion (in fixed 	2022	-prices).	 	
There is an estimated 14.5 billion barrels of 	oil and gas (measured i	n barrels of oil equivalent	 boe	) 	
in the UKCS	, of which 4 billion b	oe	 are reserves that have been approved and sanctioned, 	6.4 	
billion 	resources from known investment opportunities in existing and	 proposed new fields	, and 	
4 billion are resources in potentia	l exploration 	(House of Commons Environmental Audit 	
Committee, 2023)	. 70 % of this is oil, and the remainder is gas.	 	
3.2	 	Key laws	 and institutions	 	
The main institution governing 	policy on the UK Continental Shelf is the 	North Sea Transition Au-	
thority	 (NSTA)	. This 	authority	 was established 	in 	April 2015	 under the name 	the Oil & Gas Author-	
ity	, first as a non	-departmental public body	, then as a wholly owned company	 under the 	Depart-	
ment 	for Energy Security and Net Zero. 	It was	 unt	il March 2022	 called	 the Oil and Gas Authority	, 	
which is still its legal name	, but it is currently 	called the North Sea Transition Authority	. The legal 	
basis for the 	operation of the authority is the E	nergy Act of 2016.	 The 	government has 	transferred	 	
to it	 most regulatory functions 	and powers 	for the UK Continental Shelf, and the authority 	oper-	
ate	s as an arm’s	-length independent body	. 	
The NSTA has	 issued a strategy	, which according to the Petroleum 	Act 1998, the authority must 	
act in accordance with	 (Oil & Gas Authority, 2021)	. The strategy 	has been laid before Parliament 	
in 2020 	and enter	ed into force in 	February	 2021. 	The strategy lists	 two central obligations	: 	
 	
5 NSTA 	medium term projections, February 2023.	 	
0
20
40
60
80
100
120	
1970	1972	1974	1976	1978	1980	1982	1984	1986	1988	1990	1992	1994	1996	1998	2000	2002	2004	2006	2008	2010	2012	2014	2016	2018	2020

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1. To 	secure that the maximum value of the economically recoverable petroleum is recovered 	
from the st	rata beneath relevant UK waters 	[usually referred to as Maximum Economic Re-	
covery or MER	]; and in doing so,	 	
2. Take appropriate steps to 	assist the Secretary of State in meeting the net zero target includ-	
ing by reducing as far as re	asonable in the 	circumstances greenhouse gas emissions from 	
sources such as flaring and venting and power generation, and 	supporting 	carbon capture 	
and storage projects.	 	
Net 	zero was added to the central obligation in the last 	revision of the strategy. 	The 	objective	 of 	
Maximising 	economic recovery of UK petroleum 	is mandated by the 	Petroleum Act 1998 (c	lause 	
9).	 	
The Energy 	Act of 2016 (section 8) 	further 	directs the 	authority to have regard to	 minimising 	
future public expense, security of energy supply, storage of carbon dioxide, collaboration with 
the UK government and people doing ‘relevant activities’, innovation in techn	ology and work 	
practice, and ‘a stable and predictable system of regulation which encourages investment in rel-
evant activities	. 	
The regulation og environmental and decommissioning activity on the UK Continental shelf is en-
trusted to 	the Offshore Petroleum 	Regulator for Environment and Decommissioning	 (OPRED).	 	
3.3	 	Exploration, licensing and permitting regimes	 	
The 	Petroleum Act of 1998 	vests all ri	ghts to petroleum, including to search for, 	drill and produce, 	
to the Crown. 	The NSTA 	is empowered to give licenses 	for exploration	 and production of petro-	
leum. 	There 	are model clauses 	which govern the obligations of the holder of license 	that 	are in-	
corporated into all new licences	 except in particular cases	. 	
Licenses are 	mainly 	awarded in 	licensing rounds	, where 	bids are awarded to companies that 	
promise 	to ensure economic recovery of 	the UK’s oil and gas resources. 	The	 latest	 round to have 	
been carried out was the	 33	rd offshore licensing round	, which was opened 	on 7	th October 2022 	
and closed for applications 	on 1	2th January 2023	, with 	awards 	of licenses expected 	in 2023. 	The 	
NSTA encouraged b	ids 	in fou	r identified priority clusters in the Southern Nort	h Sea, which 	have 	
known hydrocarbons and are close to infrastructure	 and therefore can be developed quickly.	 76 	
companies 	submitted a	 total of 115 b	ids across 258 blocks and 	part	-blocks 	in the round	.

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Figure 	3.3 	Map of UK 	offshore 	petroleum, with blocks on offer in the 33	rd round	 	
 	
Source:	 	NSTA	 	
Permits awarded 	have conditions 	relating to making agreed progress 	within certain deadlines	. 	
The progress 	can be submitting development plans, shooting seismic etc. 	Licensees must demon-	
strate their ability to meet 	technical requirements for operations, as well as demonstrate that 	
they have the financial capability to exploit the rights granted by the license.	 It takes on average 	
five years from the award of a licence to eventual production. Many awarded licen	ces do 	not lead 	
to 	production.	 	
A licence confers e	xclusive rights to explore petroleum in a given area. 	However, 	activities such 	
as drilling and commercial extraction 	following the award of a licence is still subject to 	consent 	
from the NSTA	 and regulatory requi	rements.

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The 	33	rd licensing round and all future licensing rounds	 must go through a “	Climate 	Compatibility 	
Checkpoint” to ensure that 	they are	 in step with net zero.	6 The checkpoint	 is not formally binding	 	
on the NSTA, which has 	been delegated the 	authority to decide whether and when to hold ne	w 	
licensing rounds.	 The checkpoint consists of three different tests. The first relates to reduction in	 	
operational greenhouse gas emissions from the sector, compared to commitments.	 The second 	
relates to oper	ational greenhouse gas emissions intensity from the sector benchmarked interna-	
tionally. The third test 	relates to the status of the UK as a net importer of oil and gas. 	Other 	tests 	
were considered for the checkpoint, including a test relating to scope 3 em	issions, 	but this was 	
not included in the final design of the 	Climate Compatibility Checkpoint.	 	
3.4	 	General environmental 	and climate 	regulations in exploration 	
and production phases	 	
Offshore oil and gas installations emit	ted a	pproximately	 17.3 MtCO	2e in 	2020	 (North Sea 	
Transition Authority, 2022)	, of which	 15.3 Mt were CO	2 emissions, and the remainder were me-	
thane and nitrous oxide emissions. CO	2 emissions peaked in 2001 and have 	in the period to 2020	 	
fallen by 41 %.	 The 	over	all emissions intensity of UK 	oil and gas production was	 25.1 kg CO	2 per 	
boe produced. 	Older and larger platforms on average had higher emission intensities	 (large plat-	
forms older than 25 years had 	an emissions intensity of 62	 kg CO	2 per boe	, against 	6 f	or small 	
platforms up to 10 years of age and 12 kg CO	2 per boe for large platforms up to 10 years).	 	
Figure 	3.4 	High	-level	, simplified illustration of the NSTA	’s approach to net zero regulation	 	
 	
 	
6 Climate Compatibility Checkpoint Design (publishing.service.gov.uk)

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Source:	 	North Sea Transition Authority	 	
In 2020 71 percent of the emissions were from combustion for power generation. Flaring ac-
counted for 22 % of emissions, while venting and non	-combustion processes accounted for 4 and 	
3 percent.	 	
Emissions from offshore oil and gas are covered by the UK Emissions Trading System. The NSTA 
has introduced a range of policies aimed at reducing climate emissions from oil and gas produc-
tion, in order to support the UK government’s commitment to reach net	 zero emissions by 2050. 	
Figure 	3.4 gives a high	-level overview of the approach throughout a project lifecycle. Below we 	
summarise a few of the most important policies	. 	
Energy Integration and platform electrification: 	offshore	 power generation for oil and gas pro-	
duction contributes to emissions of around 10 Mt CO	2 per year. Reducing these emissions 	is 	
therefore an important part of the net zero 	policy. 	The NS	TA published a report on energy inte-	
gration in 2020, where 	it was noted that platform electrification 	is essential for reduced 	emissions 	
(Oil & Gas Authority, 2020)	. Energy supply to oil and gas platforms is 	highlighted as a 	po	ssible 	
commercial opportunity for renewable power	, specifically offshore wind.	 	
The NSTA has 	issued a letter to licensees outlining expectations for platform electrification and 	
low carbon 	power schemes	.7 These 	are 	expectation	s that 	technical and economic assessments 	of 	
low carbon solutions are 	undertaken, 	and 	that they participate	 in regional low carbon power 	
schemes or invest in 	their own such schemes w	here reasonable	. 	
Flaring and venting:	 the NSTA has adopted a guidance on 	flaring and venting,	8 which states 	that 	
the authority	 expects the ind	ustry to follow the following principles:	 	
1. Flaring and venting and associated emissions should be at the lowest level possible	 in the 	
circumstances.	 	
2. Zero routine flaring and venting for a	ll by 2030	. 	
3. All new developments should be planned and developed on the basis of zero 	routine flaring 	
and venting	. 	
Carbon Capture and Storage	 (CCS)	: the NSTA	 states that 	Carbon Capture and Storage (CCS) is	 	
critical to the UK achieving net zero	. The UK 	government has an aim of capturing and storing 20	-	
30 	million tons of 	CO	2 per year by 2030 and over 50 million tons	 per year 	by 2035.	 The NSTA 	has 	
carried out a first round of carbon storage licensing in 2022	. 2	0 carbon storage licenses were 	
awarded. 	 	
3.5	 	Oil and gas tax system	 	
In the UK 	the 	oil and gas 	industry faces a combination of 	corporation tax, supplementary charge 	
and a petroleum revenue tax.	 The corporate tax rate 	was until 	2023	 at 30 % 	on ring	-fenced profit	s 	
from oil and gas production	, as opposed to the general 	corporate tax rate of 25 %. There is also 	
a “supplementary charge to tax” of 10 % on 	adjusted ring	-fenced profits.	 From the start of 2023, 	
the 	ring	-fenced rate for oil and gas profits has been increa	sed to 35 %.	 	
 	
7 *NSTA Industry Electrification letter (nstauthority.co.uk)	 	
8 Flaring and venting guidance (nstauthority.co.uk)

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Ring	-fenced petroleum profits 	have	 previously	 had a	 100 % capital allowances for most capital 	
expenditu	re. From 2023 the investment allowance was reduced to 	29 %.	 	
From	 26	th May	 2022	 to 31	st March 2028, there is a new 	Energy Profits Levy of 25 % on oil and gas 	
profits.	 With this 	levy, the marginal tax rate increases from 40 % to 75 %.	 	
3.6	 	Decommissioning plans and policies	 	
As a highly mature 	oil and gas basin, 	several 	large 	fields have already be	en 	decommissioned, and 	
there are further decommission	ing progra	mmes currently under consideration.	 The NSTA project 	
decommissioning costs of 	around £ 2 billion per year in the coming years.	 	
Th	e responsibility for 	ensuring that the legal 	requirements for decommissioning are follo	wed has 	
been given to a special regulator, 	the Offshore Petroleum Regulator for Environment and Decom-	
missioning (OPRED)	. OPRED is part of the 	Department for Energy Security and Net Zero	. Owners 	
of petroleum install	ations must decommission 	offshore infrastructure at the end of the infra-	
stru	cture’s 	economic life. The owners must 	set out the measures 	they will carry out in a 	decom-	
missioning programme.	 	
Considering t	he possibility of using oil and gas infrastructure for 	new uses is part of the UK de-	
commissioning policies. 	The 	NSTA strategy states that “b	efore commencing the planning of de-	
commissioning of any infrastructure in a region, relevant persons including	 the owners of such 	
infrastructure, must ensure, and be 	able to demonstrate, that all viable options for that	 infra-	
structure’s continued use including for reuse or re	-purposing for carbon capture and storage pro-	
jects have	 been suitably explored.	” 	
According to investigative reporting by the organisation Follow t	he Money, The UK has so for a 	
only removed 6 platforms, while 	42	 are currently inactive 	(Follow The Money, 2023)	. The 	UK	 also 	
has 	7867	 km of inactive pipelines that have yet to be removed.	 The UK has by far the largest 	
number o	f inactive platforms and pipelines in the North Sea.	 	
3.7	 	Just transition policies	 	
A key part of the UK’s 	just transition policies is the 	North Sea Transition Deal	. This 	is an agreement 	
between 	the UK government and the offshore oil and gas industry	, signed	 in 2021	. 	
The deal	 establishes 	emissions reduction targets 	for the upstream industry	 of 10 % by 2025, 25 	
% 	by 2025 and 50 % by 2030, compared to a 2018 	baseline.	 The deal also 	commits to delivering 	
investments of 	£ 14	-16 billion by 	2030 in new energy	 technologies, with 	a responsibility 	for the 	
government of delivering 	a business model 	for CCUS and hydrogen.	 There is also a goal of sup-	
porting 	up to 40	 000 direct and in	direct 	supply chain jobs in 	decarbonising oil and gas production	, 	
CCUS and 	hydrogen sectors.	 The oil and gas sector voluntary commits to achieving 	50 % UK con-	
tent for all new energy transition projects and 	in oil and gas 	decommissioning.	 	
The Climate Change Committee	, a	n independent, statutory body that 	advises UK authorities 	on 	
emissions targets and on progress made in reducing greenhouse gas emissions	, has criticised the 	
50 % target for 2030, and stated that it is well 	short of the 68 % it has assessed as feasible 	(Climate 	
Change Committee, 2022)	.

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3.8	 	Political landscape	 	
The	 current government in the UK is 	from the Conservative party, with the Labour party being 	
the main opposition party, and the Liberal Democrats (Libdem) the third largest party.	 	
The Conservative party manifesto for the last election i	n 2019 	stated that 	“ We believe that	 the 	
North Sea oil and gas industry	 has a long future ahead and know	 the sector has a key role to play 	
as we move to a Net Zero economy	” (page 48)	 (The Conservative Party, 2019)	. The Manifest	o 	
further pledges to 	create a transformational sector deal	, and to invest 	£ 800 million in carbon 	
capture storage cluster by the mid	-2020s	. The Labour Party Manifesto pledges to 	introduce a 	
windfall tax on oil	 companies	 to cover costs 	of climate change, and states that they 	“will 	provide 	
a strategy to safeguard the people, jobs	 and skills that depend on the offshore	 oil and gas indus-	
try	” (Labour, 2019)	. Labour also state that 	they will fund research and deve	lopment of hydrogen 	
and CCS technologies. 	The Liberal Democrats’ manifesto from 2019 did not contain specific 	
pledges related to the offshore oil and gas industry.	 	
Labour 	has 	recently indicated that it will 	pledg	e to end 	new oil and gas licences in the 	North Sea	 	
if elected.	 The Libdems have opposed several specific oil and gas 	projects but	 have 	so far 	not 	
proposed 	an end all oil and gas	 licenses	. 	
In Scottland, 	which contains an important part of the UK oil and gas production, the dev	olved 	
government is l	ed by the Scottish National Party (SNP). 	The SNP states on its website that 	“The 	
SNP Scottish Government will continue to do all it can to support the North Sea oil and gas indus-
try through its current challenges	”, but also that 	“we must transition to new,	 cleaner fuels	” (SNP, 	
2023)	. 	
The House of Commons Environmental Audit 	Committee published a report at the start of 2023 	
on 	Accelerating the	 transition from fossil	 fuels and securing	 energy supplies	 (House of Commons 	
Environmental Audit Committee, 2023)	. The Environmental Audit Committee is 	a committee 	
made up of Members of 	Parliament and	 has as its 	responsibility to consider if 	policies contribute 	
to environmental protect	ion and 	sustainable development.	 The 	committee issued a recommen-	
dation that: “	the UK set a clear date for ending new oil and gas licensing rounds in the North Sea:	 	
this date should fall well before 2050. We further recommend the Government should	 consult 	
on what this date should be, based on the oil and gas production currently being	 planned by the 	
UK and other producer states and on the remaining global carbon budget	 if temperatures are to 	
be limited to 1.5 degrees.	” It further recommended 	“that t	he 	North Sea Transition Deal be mod-	
ified to	 include stronger targets and verification arrangements in line with the Government’s	 	
commitments under the Paris Agreement.	” It also recommended 	a total prohibition on flaring, 	
and a	n electrification	 requirement 	for all new projects licensed in the 33	rd licensing round.	 	
The Government has submitted a reply to the 	recommendations of the Environmental Audit Com-	
mittee.	9 With regard to the recommendation of 	ending 	new oil and gas licensing rounds	, the Gov-	
ernment 	replies that UK production is expected to fall by 7 % per year, which is 	above the 3	-4 % 	
that the 	UN Production Gap Report	 states that 	global production	 must fall by in order to 	meet 	
1.5°C	, It also argues that even when the UK achieves net zero, 	some oil	 and gas will be needed	, 	
that the UK is expected to remain an importer of oil and gas, and that 	in the cases of gas, imported 	
LNG has significantly higher emissions. 	The Government states that it is not clear that the 	
 	
9 https://committees.parli	ament.uk/publications/34534/documents/190069/default/

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principle of 	‘equity and common but diff	erentiated	 responsibilities’	, should apply to the supply 	
side, 	because: “	If the UK were to scale down	 production, the international market would deter-	
mine where additional production is	 scaled up	”.

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4	 	The Netherlands	 	
4.1	 	Background and history	 	
The most important 	event in the history of oil and gas	 in the Netherlands 	was the discovery and 	
exploration of the	 gigantic	 Groeningen 	gas field.	 It was the largest gas field in the world when it 	
was discovered in 1959. Production began in 1963	. The Groeni	ngen gas field 	is approximately 40 	
times larger than the second largest gas field in the Netherlands. All other fields are referred to 
as the small fields.	 	
Figure 	4.1 and 	Figure 	4.2 show the annual production of oil and gas respectively in the Nether-	
lands. 	Oil production has never been particularly high, and peaked in the late 1980	s. Oil produc-	
tion 	is only a small fraction of that of other North Sea countries such as the UK or Norway. 	Gas 	
production has 	on the other hand 	been 	very 	high and was for many years Western Europe’s high-	
est. 	The production has however 	declined sharply since	 2013.	 	
Figure 	4.1 	Annual oil production in the Netherlands 1971	-2021 in thousand ton oil	-	
equivalent	 	
 	
Source:	 	OECD	 	
 	
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000	
1971	1973	1975	1977	1979	1981	1983	1985	1987	1989	1991	1993	1995	1997	1999	2001	2003	2005	2007	2009	2011	2013	2015	2017	2019	2021

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Figure 	4.2 	Annual gas production in 	The Netherlands	 1970	-2021 in billion cubic meters	 
 	
Source:	 	BP 	Statistical Review of World Energy	 	
In total 499 gas fields and 53 oil fields have been discovered. 217 gas fields and 11 oil fields were 
under production as of 	2021, with 26 gas fields and 4 oil fields expected to possibly start produc-	
tion within a five	-year timeframe.	10 The remaining natural gas resources are estimated at 128.5 	
billion Sm	3, of which 4.5 billion Sm	3 is in the Groeningen gas field 	(Ministry of Economic Affairs 	
and Climate Policy, 2022)	. 87.6 billion Sm	3 count as reserves that are in fields that are in produc-	
tion or are likely to enter into production, with the remainder 	being contingent reserves. Oil re-	
sources are estimated to be 34.8 million Sm	3, of which 10.3 	million Sm	3 are reserves and the rest 	
consists of contingent resources.	 	
In 2018 the government decided to phase out gas production from the Groeningen gas field co	m-	
pletely as soon as possible due to the earthquake risk from the extraction. No more gas is ex-
tracted from the field than necessary for the security of supply.	 	
 	
10 Oil and gas fields overview | NLOG	 	
0
10
20
30
40
50
60
70
80
90
100	
1970	1972	1974	1976	1978	1980	1982	1984	1986	1988	1990	1992	1994	1996	1998	2000	2002	2004	2006	2008	2010	2012	2014	2016	2018	2020

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Figure 	4.3 	Map of oil and gas fields in the Neth	erlands	 	
 	
Source:	 	Ministry of Economic Affairs and Climate Polic	y

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4.1.1	 	Current exploration and production activities	 	
The Netherlands announced pl	ans in 2022 to 	develop	 the field	 N05	-A in the North Sea in cooper-	
ation with Germany. 	Production is slated to begin in 2024.	 The site is located near 	the Dutch 	
island of Schiermonnikoog and the German island of Borkum	. The development is by the 	Dutch 	
company ONE	-Dyas	. The total estimated production potential is 	estimated at between 4	.5 and	 	
13 billion cubic meters of gas.	 The 	permit was challenged in court by environmental organisations, 	
with a verdict s	uspending	 the project being given in April 2023. 	A new court rulin	g is expected in 	
September 2023, which will decide whether the project can go forward.	 	
The Netherlands has a 	policy to extract gas from small fields in the North Sea	. This policy has been 	
accelerated following the war in Ukraine and the end of 	gas imports 	from Gazprom.	 	
4.2	 	Key laws	, Exploration, licensing and permitting regimes	 	
Oil and gas	 activity	 in the Netherlands is 	primarily regulated by the 	Mining Act, the Mining Decree 	
and Mining Regulation	. The law 	establishes that minerals, which are defined to 	include oil and 	
gas	 on land and on the continental shelf, 	are	 the property of the state. Furthermore, 	the explo-	
ration and 	production of oil and gas requires a license.	 	
Oil and gas licenses are issued by the 	Ministry of 	Economic 	Affairs	 and Climate Policy	. A license 	
for exploration, production or storage gives the holder the exclusive right to that activity in a 
defined area	. There are no fixed rounds of licenses, one can apply for licenses at any time. 	In 	
order to receive a license an operator must prove su	fficient 	technical and financial resources to 	
carry out the specified activities.	 A production plan must be approved by the Minist	ry of Economic 	
Affairs before 	start of production.	11 	
The Dutch state owns 	Energie Beheer Nederland B.V (EBN)	. It	 is an	 energy company, focused on 	
gas 	transition, the heat transition, and CCS 	(including 	transport systems	). The company was 	
founded	 50 years ago to invest in oil and gas projects on behalf of the Dutch State.	 	
4.3	 	General 	environmental and 	climate regulations in ex	ploration 	
and production phases	 	
The Netherlands is part of the 	EU Emission trading system (ETS), which covers the oil and gas 	
sector. 	The Netherlands is also subject to various EU environmental regulations that affect the 	oil 	
and gas production. 	One import	ant such regulation is the 	Industrial Emissions Directive 	
(2010/75/EU)	, which has several provisions 	that 	can apply to	 parts of	 oil and gas production fa-	
cilities	 (such as 	steam boilers, cogeneration plants, gas turbines	), and 	the 	Offshore Safety 	Di-	
rective (2013/30/EU)	, which 	includes requirements for environmental management systems	. The 	
European Commission 	in 2022	 published a draft proposal that would expand the coverage of 	the 	
Industrial Emissions Directiv	e to new sectors	, potentially including 	extractive industries.	 	
The EU has published a 	proposed 	regulation for the reduction of methane emissions from the 	
energy sector.	 The regulation 	aims at 	immediate reduction of emissions through mandatory leak 	
 	
11 Licences | NLOG

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detection and repair and a ban on venting and fl	aring	.12 If passed this regulation would apply in 	
the Netherlands as well as the other EU countries.	 	
The 	Dutch government is committed to reducing 	greenhouse gas emissions by 49% by 2030, com-	
pared to 1990 levels, and a 95% reduction by 2050	. These goals have been placed into law by the 	
Climate Act of 	2019.	 	
Former gas fields also play a role in climate policies in the Netherlands. There are plans to store 
CO	2 in large quantities in depleted offshore natural gas fields. One offshore storage li	cense was 	
granted in 2013, for the field P18	-4, with plans 	for	 8 million tons of CO	2 of storage. A storage 	
license has also been requested for the field P18	-2, for up to 32 million tons of CO	2 of storage.	 	
4.4	 	Just transition policies	 	
The government of the 	Netherlands entered The Energy Agreement for Sustainable Growth with 	
employers, trade unions and environmental organisations in 2013. Th	e agreement seeks to 	
achieve increased energy conservation, renewable energy and job creation. Specifically	, there is 	
a goal to create 15	 000 new jobs in these fields.	 	
In 2019 the 	National Climate Agreement was 	agreed 	(Climate Agreement Progress Meeting, 	
2019)	. This is a 	is a comprehensive set of policies and measures aimed at 	significantly reducing 	
the country's greenhouse gas emissions	, and involves 	a wide range of stakeholders, including the 	
national government, regional and local authorities, businesses, non	-governmental organiza-	
tions, and other societal groups.	 The agreemen	t discusses the impact of the disappearance of 	
jobs in oil and gas extraction as well as 	refineries.	 The agreement states that 	“people must be 	
actively guided in the transition to different work and that any corresponding training must be 
well organised” (	page 102 of the agreement).	 	
4.5	 	Oil and gas tax system	 	
The Netherlands 	has several types of taxation on oil and gas 	production. The two most important 	
are the general corporate income tax (CIT) of 25 percent, and 	a special state profit share	 (SPS)	 on 	
ring	-fenced oil and gas 	profits of 50 percent. 	The 	effective combined tax rate of the CIT and the 	
SPS is around 50 percen	t, as 	payments of one counts as a deductible expense in the calculation 	
of the other.	 All expenses are for 	the purpose of the SPS subject to a 10 % uplift	. 	
There is a special tax incentive for small	 offshore gas	 fields	 that	 was introduced in 2008.	 This tax	 	
incentive consists of a	n additional investment allowance of 25 %	 for the SPS. 	There are several 	
factors that determine whether a field qualifies for this allowance	, such as the expected produc-	
tivity, 	the technically producible gas volume of the reservoir and the distance to 	existing 	plat-	
forms	. This investment allowance can effectively 	amount to a subsidy of 12.5 % of the amount 	
invested.	 	
There is also a surface rental 	payment, of € 784 per km	2 for prod	uction areas, and bet	ween € 261 	
and € 784 for exploration 	areas.	 Furthermore, onshore oil and gas must pay royalties of between 	
0 and 7 percent, depending on the production level	. When the weighted average price of 	
 	
12 https://eur	-lex.europa.eu/legal	-content/EN/TXT/?uri=CELEX%3A52020DC0663

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imported crude oil is above € 25, the roy	alti	es are increased by 25 percent. Furthermore, when 	
there 	is no state participation in the production license, the 	royalties increase by 100 percent	. 	
4.6	 	Decommissioning plans and policies	 	
In 2016 	the state	-owned company 	EBN published 	the 	“Netherlands masterplan for decommis-	
sioning and re	-use”.	13 According to this master	plan the cost estimate of decommissioning Dutch 	
oil and gas assets 	amounts to 6.7 billion euro. 	The masterplan aims to “	to ensure a	 safe, efficient 	
and effective Dutch decom	missioning	 market continually reducing costs and minimizing residual 	
footprint	” (page 9), and 	covers 10 topics to deliver this target.	 	
In 2021 	changes were made to the Mining Act, requiring that 	offshore production licensees enter 	
into a 	Decommissioning 	Security Agreement (DSA)	 and a 	Decommissioning Security Monitoring 	
Agreement (DSMA)	. The purpose of the DSA is to	 ensure that operators can charge decommi	s-	
sioning costs to other licence holders. 	The DSMA is an agreement between the license holders 	
and 	EBN.	 	
According to investigative reporting by the 	organisation Follow the Money, The Netherland	s has 	
already removed 	39 	platforms, while 11 are currently inactive 	(Follow The Money, 2023)	. The 	
Netherlands also has 	667 km of inactive	 pipelines that have yet to be removed.	 	
4.7	 	Political landscape	 	
The Netherlands is currently governed by a four	-party coalition, led by Mark Rutte from the lib-	
eral	-conservative VVD	-party. Other parties in the coalition 	are D66 (liberal), 	CDA (	right	-wing 	Chris-	
tian	-democratic) and 	CU 	(centrist 	Christian	-democratic).	 The 	main opposition parties are 	PVV 	
(right	-wing populist), the Socialist Party	 (SP)	, the Labour Party (PvdA), and Green Left (	GL).	 A fur-	
ther eight political parties and 	six independents are represented in the lower house of the legis-	
lature.	 	
The current governm	ent 	has continued the policy of phasing out gas production from the Groe-	
ningen field as 	soon as possible, does not want any new production in the 	Wadden Sea, but 	sup-	
ports gas	 production in the North Sea	 (Government of the 	Netherlands, 2021)	. The government 	
has announced a 	35	-billion	-euro	 fund to 	help finance the transition to climate neutrality.	 	
PVV is against climate targets	 and wants to abolish the Dutch Climate Agreement. 	PvdA supports 	
the Dutch Climate Agreement, w	hilst SP	 and GL want a more ambitions agreement	, with higher 	
emission reduction targets.	 	
The decision in 2018 to 	phase out production from the Groningen gas field	 due to seismic risk, 	
was widely supported across the political field.	 	
 	
 	
13 https://www.ebn.nl/wp	-content/uploads/2016/12/EBN	-Masterplan	-for	-decommissioning.pdf

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5	 	Denmark	 	
5.1	 	Background and history	 	
Denmark is currently the third largest oil producer among the North Sea countries, and the largest 
oil producer in the whole of the European Union (Norway and the UK not being members). Its gas 
production is also below that of the Ne	therlands.	 	
The oil and gas industry in Denmark may be traced back to the discovery of the Kraka field in the 
North Sea in 1966. The state	-owed company Danish Natural Gas Ltd. (later renamed DONG Ltd.) 	
was formed in 1972, but a significant level of producti	on was not achieved until 1981, when ex-	
ploration of a second oil field (Skjold) began. A tenfold increase in production occurred between 
1981 and 1991, as five new fields were developed. By 1993 Denmark was producing enough oil 
to cover national demand. Tw	enty years earlier, all Danish consumption was imported. 	 	
22,700 m	3 oil was produced in the peak year 2004, and production has been gradually decreasing 	
in the years since. In 2019, production equalled 1988 levels. This development is illustrated clearly 
by Figure 	5.1 below, which shows annual oil production from 1971 to 2021. 	 	
Figure 	5.1 	Annual oil production in 	Denmark 1971	-2021 in thousand ton oil	-equivalent	 
 	
Source:	 	OECD	 	
The same production pattern is evident for natural gas, shown in 	Figure 	5.2. Production equalled 	
national demand in 2005. 	 	
0	
5 000
10 000
15 000
20 000
25 000	
1971	1973	1975	1977	1979	1981	1983	1985	1987	1989	1991	1993	1995	1997	1999	2001	2003	2005	2007	2009	2011	2013	2015	2017	2019	2021

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Figure 	5.2 	Annual gas production in Denmark 1970	-2021 in billion cubic meters	 	
 	
Source:	 	BP 	Sta	tistical Review of World Energy	 	
Currently, over 55 platforms produce oil and gas from 19 different oil and gas fields in the Danish 
North Sea. TotalEnergies operates on 15 of the fields. 	 	
Figure 	5.3 	Map of oil and gas fields in the Danish part of the North Sea	 	
 	
0
2
4
6
8
10
12	
1970	1972	1974	1976	1978	1980	1982	1984	1986	1988	1990	1992	1994	1996	1998	2000	2002	2004	2006	2008	2010	2012	2014	2016	2018	2020

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Source:	 	Danish Energy Agency	 	
5.2	 	Key laws and public institutions	 	
The public authorities involved in the organization of the oil and gas industry in Denmark incl	ude: 	 	
• 	Danish Ministry of Climate, Energy and Utilities, which exercises the Government authority 
on issues relating to the energy sector as a whole, including oil and gas. The Ministry de-
cides the overall energy policy and goals for Denmark’s energy transi	tion. The Ministry dele-	
gates the primary regulation and supervision of the oil and gas industry in Denmark to the 
Danish Energy Agency, a subordinate government body. Its key task is overseeing licensing 
rounds and awarding licenses for exploration and pro	duction with corresponding regula-	
tions that the licensee must comply with, including requirements for environmental impact 
assessments relating to the applications. 	 	
• 	Danish Ministry of Environment, which is responsible for developing environmental policy i	n 	
Denmark, which applies to the oil and gas industry. The Ministry has delegated the Govern-
ment authority in supervising the environmental policy to the Environmental Protection 
Agency. This includes supervising regulations of emissions and discharges to t	he sea from 	
the oil and gas industry. 	 	
• 	Nordsøfonden, a state	-owned company that actively participates in oil and gas operations 	
(exploration and production) on Danish oil and gas fields. The company owns 20 percent of 
all Danish licenses awarded after 2005	. 	
• 	Danish Maritime Authority, a subordinate government entity to the Ministry of Industry, 
Business and Financial affairs, has overarching responsibilities for safety and security in Dan-
ish waters, and facilitates growth in maritime industries. The Authori	ty works on regulating 	
offshore oil and gas activities by ensuring compliance with maritime regulations. 	 	
Three laws may be highlighted as key for governing oil and gas resource extraction in Denmark: 
the Danish Subsoil Act (16 December 2019 No. 1533) la	ys the legislative framework, and it is 	
supplemented by the Danish Continental Shelf Act (21 September 2018 No. 1189) and the Danish 
Pipeline Act (13 August 2019 No. 807). These laws are described below. Additionally, the Offshore 
Safety Act (6 February 20	18 No. 125) regulates matters of EHS for petroleum activities. 	 	
Setting out the basic legal framework for both exploration and extraction of all petroleum re-
serves on Danish soil, the 	Danish Subsoil Act	 is built on the principle that the 	petroleum activities 	
need to be regulated carefully by the Danish State. The Act provides regulations for all activities 
across the life cycle of petroleum activities: planning and prospecting, exploration, extraction and 
operation, and decommissioning at 	end	-of-production.	 	
A key regulation within the Act stipulates that all petroleum activities require a separate license 
granted by the Danish Minister for Climate, Energy and Utilities (or Danish Energy Agency through 
delegation). The licensing scheme is ex	plained in section 	5.3	. 	
The 	Danish Continental Shelf Act	 is built from the principles of the UN Convention on the Conti-	
nental Shelf. It serves as an elaborate deta	iling of the sovereignty over natural resources on the 	
Danish Continental Shelf, pursuant to the UN Convention. Furthermore, the Act states that a per-
mit is needed for building power lines and pipelines for transporting petroleum on the Danish 
Continental 	Shelf and in Danish territorial water.

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The purpose of the 	Danish Pipeline Act	 is to form 	a legal framework for the recovery of crude oil 	
and condensate in the Danish part of the North Sea, as well as regulating environmental effects 
of transportation and 	landing of oil. The law stipulates that the partially state	-owned Ørsted 	
(through its subsidiary Danish Oil Pipe) owns the oil pipe from the Danish oil fields to the mainland 
facility Frederica, which every producer of liquid hydrocarbons for selling in De	nmark is obliged 	
to connect to. The regulations of the Danish Pipeline Act are overseen by the Danish Energy 
Agency. 	 	
In relation to the two natural gas pipes from the Danish Continental Shelf to Nybro, the Danish 
Pipeline Act stipulates that everyone may 	access these pipes, provided payment and meeting set 	
requirements for third	-party access. 	 	
5.3	 	Exploration, licensing and permitting regime	 	
The Danish Energy Agency s	upervises and regulates the licensing regime for exploration and pro-	
duction of oil and gas on behalf of the Ministry of Climate, Energy and Utilities. Information on 
the permitting regime is retrieved from their online resources. The legal framework for th	e licens-	
ing regime is laid out in the Danish Subsoil Act. All licenses rewarded for oil and gas activities are 
owned 20 percent by the state through Nordsøfonden. 	 	
Substantial changes to the licensing regime have occurred in recent years. An amendment to t	he 	
Subsoil Act of 1 May 2019 stipulated that all oil and gas exploration onshore or in waters close to 
the mainland were closed. A year and a half later, the Danish Parliament reached agreement on 
the North Sea agreement on 3 December 2020. The agreement d	etails a planned phase	-out of 	
the oil and gas industry with a cessation of all production and licenses by 2050. In relation to 
licensing, the agreement brought a cancellation of all future licensing rounds, only opening for 
exploration in areas with existi	ng opportunities west of 6	° 15’ eastern longitude (see 	Figure 	5.4). 	
The changes in the licensing regime specified by the North Sea agreement were implemented 
through a	n amendment to the Subsoil Act on 14 December 2021. 	 	
Figure 	5.4 	Map of Danish license area (June 2020)	 	
 	
Source:	 	Danish Energy Agency	 	
Exploration in areas with existing opportunities are awarded 	through two different procedures: 	
mini rounds, or already licensed operators being awarded a license at a neighboring block. The

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mini rounds open for interested companies without prior invitation to apply for licenses in pre-
specified, smaller areas west of	 6° 15’ eastern longitude. The other licensing regime states that 	
licensed operators may apply for operation at a neighboring block, if geological or other produc-
tion	-related circumstances call for it. 	 	
The license states that exploration is to be carried 	out over the first six years, where the operators 	
are obliged to carry out a specified work program including seismic surveys and drilling, and re-
sults will be documented to the Ministry of Climate, Energy and Utilities in order to increase public 
knowledg	e of the area. The exploration phase may be extended for two years at a time but will 	
usually not last longer than 10 years. After the exploration, companies are free to choose whether 
to relinquish the license, or start producing, in which they have the r	ight to a 30	-year extension. 	
However, with the production deadline of 2050 put into place, current and future licenses will 
only last up to that point. 	 	
5.4	 	General environmental regulations in exploration and production 
phases	 	
Environmental regulations for e	xploration and production of oil and gas in Denmark are stipulated 	
in various laws: Danish Subsoil Act, Danish Continental Shelf Act and Danish Marine Environment 
Protection Act. We may separate two mechanisms of environmental regulation of exploration 
and	 production of oil and gas in Denmark.	 	
First, through the licensing regime, the Danish Energy Agency is responsible for putting forward 
requirements relating to the environment that the licensee must comply with during the explo-
ration and production phases	. Additionally, before being allowed to start production, operators 	
must submit a production plan which includes an Environmental Impact Assessment (EIA) and 
plans for what measures the operator will take to keep such impacts at a minimum. EIA reports 
must	 be submitted for public consultation for at least eight weeks, and requirements for the re-	
ports are laid out in the Environmental Impact Assessment Act. 	 	
Second, regulation of environmental impacts during the oil and gas activities falls under the juris-
diction of the Danish Environmental Protection Agency through delegation from the Ministry of 
Environment. Primarily, these regulations relate to associated emissions to the air and discharges 
to the sea from the activities, which are described below based o	n the agency’s online documen-	
tation.	 	
For EU environmental rules and proposals that affect the oil and gas industry, see 	section 	4.3	. 	
5.4.1	 	Discharges to sea	 	
The Act on P	rotection of the Marine Environment forms the regulatory framework of the impact 	
of oil and gas activities on the marine environment. The Act chiefly stipulates that all offshore 
operators are obliged to apply for separate permits to discharge offshore che	micals during drilling 	
activities and for discharging oil in produced water during operation. For chemicals, a classifica-
tion scheme following recommendations put forward by the OSPAR convention is applied. Den-
mark implements decisions and recommendations 	taken by the OSPAR Commission in strategic 	
policy initiatives and legislation.

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Offshore petroleum operators in Denmark are further obligated to developing and maintaining 
an Oil and Chemical Spill Contingency Plan (OCSCP), which describes processes and an organiza-
tional setup for handling oil spills if such events occur. The plan inc	ludes documentation of per-	
sonnel, equipment, relevant partnerships, and ability to take action at a necessary pace when a 
spill has occurred. 	 	
5.4.2	 	Emissions to air	 	
All emissions to air from economic activities need permission by public authorities. Danish mu-
nicipalities generally award these permissions, but for heavily polluting activities such as oil and 
gas exploration and production, the Danish Environmental Protection Agency holds the authority 
to approve and supervise permits. The permits provide limits o	n pollution of different substances 	
and stipulate several requirements for the nature of pollution with regards to measurement, pre-
cautionary actions and measures taken to keep emissions at a minimum. In relation to this, the 
Best Available Techniques (BAT	) principle is central, and operators are required to conform to 	
pollution levels associated with using the most environmentally friendly techniques available. 	 	
Emissions of NO	X to air is regulated by a tax in Denmark. The current level of the tax is DKK 5	.3 	
per kg. 	 	
5.5	 	General climate regulations in exploration and production 
phases	 	
Similarly to the regulations on emissions to air and discharges to sea described above, emitting 
greenhouse gases (CO	2 and methane primarily) from oil and gas activities require p	ermits 	
awarded by the Danish Energy Agency, with associated requirements. An additional requirement 
on greenhouse gas emissions that is currently being implemented is a ban on flaring natural gas, 
which will come into force on 1 July 2023	14. Exemptions are	 when the flaring is absolutely neces-	
sary for safety or operational reasons. 	 	
5.5.1	 	Carbon pricing (CO	2 tax and EU ETS permits)	 	
Requiring payments for emissions of CO	2 is a key climate regulation in Denmark, and the country’s 	
carbon pricing system was recently d	iscussed in the Danish Parliament, which agreed on a new 	
pricing scheme and consequently new prices on CO	2 emissions from offshore oil and gas activi-	
ties	15. Currently and up to 2025, oil and gas operators in Denmark producing more than 20 MW 	
pay for their 	emissions of CO	2 through the EU emission quota system (EU ETS). 	The EU ETS price 	
of emitting a ton CO	2 is per 9 June 2023 approx. €89.	 	
The new pricing scheme enforced by the Danish Parliament is a corporate carbon taxation 
scheme for the years 	2025	-2030. In this period, offshore oil and gas activities (and other heavily 	
polluting industries in the EU ETS system) will in addition to the EU ETS price pay a CO	2 tax on 	
each emitted tonne of CO	2. The total price per tonne CO	2 will in 2030 be €150, in	 which €50 will 	
 	
14 https://www.iea.org/policies/16013	-ban	-on-routine	-gas	-flaring	-to-reduce	-methane	-emissions	 	
15 https://www.reuters.com/markets/commodities/denmark	-agrees	-corporate	-carbon	-tax	-government	-2022	-06-24/

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stem from the CO	2 tax and €100 is the projected carbon price in EU ETS in 2030. The carbon price 	
will increase gradually from 2025 to 2030. 	 	
5.5.2	 	North Sea Agreement 	 	
In the legally binding (through amendment to the Danish Subsoil Act) North Sea	 Agreement	16 	
from 3 December 2020, the Danish Parliament decided to implement an end date for all oil and 
gas production in Denmark by 2050 and cancel all future licensing rounds. This was done as a step 
towards achieving Denmark’s goals of reducing greenh	ouse gas emissions by 70 percent by 2030 	
compared to 1990 levels, and to be net zero by 2050. The goals are laid down in the Climate Act 
of 26 June 2020, No. 965. The contents of the agreement hence serve as perhaps the most sig-
nificant climate regulations	 on the Danish oil and gas industry currently. While Denmark has not 	
put forward specific goals for emission reductions for the oil and gas industry, the North Sea 
agreement is clear policy evidence of a planned phase	-out of the Danish oil and gas industry	. 	
Denmark is the largest oil and gas producing country with a legally binding specified date for end	-	
of-production.	 	
5.6	 	Oil and gas	 tax system	 	
Oil and gas production in Denmark is subject to a combination of corporate income tax of 25 % 
(a higher rate than the	 ordinary corporate income tax of 22 %) and hydrocarbon tax of 52 %. The 	
overall combined tax rate is 64 % as corporate income tax payments are deductible against hy-
drocarbon tax income. All fields are jointly taxed, without ring fencing, meaning that loss	es from 	
one field may be used to offset gains from another. Tax losses from the corporate income tax 
from oil and gas activities (but not the hydrocarbon tax) may offset against ordinary income tax 
of activities onshore, but not the other way around.	 	
Disma	ntling costs are tax deductible under both the corporate income tax and the hydrocarbon 	
tax. Upon closing a hydrocarbon business in Denmark companies may receive a tax refund equal 
to the tax value of remaining tax losses under the hydrocarbon tax, but not	 the corporate income 	
tax.	 	
Qualifying expenditures under the hydrocarbon tax are subject to an uplift of 30 %, in order to 
ensure that the hydrocarbon tax is levied only on especially profitable fields. The uplift is granted 
in addition to the normal depre	ciation and amortization of costs and is spread out as a 5 % de-	
duction over six years. Losses may be carried forward indefinitely.	 	
In 2017 a special incentive scheme was introduced, which will last until 2025. The incentive 
scheme is voluntary. It provides	 increased tax depreciation (from 15 % declining balance to 20 %) 	
and the special hydrocarbon allowance is increased from 5 % per year to 6.5 % per year. Partici-
pants in the scheme pay supplementary tax of 5 % in years where the average yearly oil price 
ex	ceeds 75 USD, and 10 % in years where the average oil price exceeds 85 USD.	 	
 	
16 https://kefm.dk/aktuelt/nyheder/2020/dec/bred	-aftale	-om	-nordsoeens	-fremtid

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5.7	 	Decommissioning plans and policies	 	
This section describes the procedures for decommissioning of oil and gas facilities and infrastruc-
ture in Denmark and draws on information from a	 report by the Centre for Applied Research at 	
NHH	17. 	
Even though oil and gas activities have taken place for more than 50 years in Denmark, no facili-
ties have yet been decommissioned. For oil and gas companies to be awarded license to operate, 
specific pla	ns for decommissioning must be documented in the development plans for the facili-	
ties. The legal framework for decommissioning is laid down in the Danish Subsoil Act, and the 
government authority supervising decommissioning is the Danish Energy Agency. Two	 years be-	
fore planned decommissioning, licensees are obligated to submit a final decommissioning plan 
for approval, with detailed descriptions and calculations relating to the entire procedure, and 
thorough assessments of the associated environmental impac	ts. 	 	
The default decommissioning scheme is an obligation for full removal of all facilities and installa-
tions, of which the licensed operator holds full responsibility. Exemptions may be made for wells, 
pipes or parts of processing plants that are taken out of 	operation, but whose primary function is 	
continued. Installations must be decommissioned within three years from operation terminating, 
whereas the deadline is five years for subsea installations. 	 	
Regulations on decommissioning of oil and gas activities i	n Denmark have been designed to com-	
ply with international agreements, primarily the United Nations Convention on the Law of the Sea 
(UNCLOS) and the Oslo	-Paris Convention (OSPAR).	 	
According to investigative reporting by the organisation Follow the Money, D	enmark has 	3 plat-	
forms that	 are currently inactive	, and has yet to remove any	 (Follow The Money, 2023)	. 	
5.8	 	Just transition policies	 	
The North Sea Agreement o	f 2020 serves as a strategic and legally binding policy aiming to cause 	
a just transition from the oil and gas industry in Denmark. Currently, more than 4000 people are 
directly or indirectly employed by the oil and gas industry in Denmark	18, with the majority working 	
in the Esbjerg region. In relation to the phase	-out of oil and gas production by 2050, several 	
measures have been taken to secure a just transition for the actors currently involved in the in-
dustry: 	 	
• 	DKK 200 million went into th	e Energy Technology Development and Demonstration Pro-	
gramme (supervised by the Danish Energy Agency) for research and development regarding 
CCUS possibilities in abandoned oil and gas field. 	 	
• 	The North Sea Agreement specified that DKK 90 million would in 2	025 be allocated to trans-	
forming the Esbjerg Harbor into an offshore wind power hub and related measures for labor 
market transitioning in the Esbjerg region. 	 	
 	
17 https://snf.no/media/0mtbtopm/r07_21.pdf	 	
18 https://stateofgreen.com/en/news/denmark	-set	-to-end	-all-new	-oil-and	-gas	-extraction	-in-the	-north	-sea	-by-2050/

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• 	The government have established 14 climate partnerships with large private businesses and 
have f	ormed a Green Business Forum to generate an arena for the government and busi-	
ness parties to have a dialogue about the green transition of the country’s economy.	 	
More generally, the Danish government is working on continuing the growth of the country’s 
ren	ewable energy production to create business opportunities and jobs relevant for actors cur-	
rently in the oil and gas industry. Primarily, the focus is on further growth in onshore and offshore 
wind production. Furthermore, the government has implemented an 	official strategy for devel-	
oping the CCUS industry and has set aside DKK 16 billion from 2024 onwards with an aim of cap-
turing at least 1.4 million tons of CO	2 by 2030. A similar strategy has been issued for developing 	
the Power	-to-X industry, in which ele	ctricity is used to produce hydrogen, which can be used as 	
fuel or be further converted into other fuels, chemicals and materials. 	 	
Denmark’s prerequisites for achieving a just transition were strengthened in November 2022, 
when EU awarded the country €89 million from the Just Transition Fund to support the country’s 
goal of climate neutrality in 2050. 	 	
5.9	 	Political landscape	 	
Information	 about the political landscape and promoted policies for the future of the Danish oil 	
and gas industry is retrieved from the political programs of the different parties. 	 	
Compared to its Nordic neighbour Norway, there is greater political agreement on the 	future of 	
the oil and gas industry in Denmark, clearly signalled by the widespread political support of the 
production end in 2050. The key reason for this is the downward trend in the industry’s profita-
bility and national economic importance since the beg	inning of the 2000’s. The target of ending 	
production in 2050 was announced by Prime Minister Anders Fogh Rasmussen back in 2006, 
which further evolved into a government strategy of 100 percent renewable energy by 2050, in 
2011. 	 	
Generally, climate policy 	plays a crucial role on the political agenda, and Denmark is typically por-	
trayed as a global frontrunner for ambitious energy policy. This is reflected across the political 
landscape in ambitions for large	-scale development of renewable energy, and other p	olicies re-	
lating to emission cuts by from industry, agriculture and transport, and energy efficiency 
measures at both the household and business level. 	 	
The end of production by 2050 and no new licensing rounds have been implemented in legislation 
with br	oad political support, and policies relating to the future of the oil and gas industry in excess 	
of the agreed upon strategy is not a crucial topic for major political parties, whose climate policy 
has largely shifted to emissions in other sectors. In the 	following, we discuss policy perspectives 	
on the oil and gas industry that diverge from the overall strategy of ending production in 2050 
and securing a green transition among actors currently involved in the oil and gas industry 
through increased renewabl	e energy production and development of CCUS and Power	-to-X. The 	
political parties with oil and gas policies differing from the agreed upon strategy are the most 
climate ambitious parties that seek an even quicker end	-of-production date. No major parties 	
cu	rrently advocate oil and gas policies with increased production or less ambitious climate goals 	
for the sector.

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5.9.1	 	Ending oil and gas production before 2050	 	
While the 	centrist g	overnment parties’ (S	ocial Democrats, Venstre and Moderates) stance on the 	
future	 of oil and gas is ending production by 2050 and securing a just transition of the economy, 	
some green parties of the opposition are promoting a quicker phase	-out of oil and gas activities 	
in the North Sea. These parties are the Green Left (formerly Social	ist People’s Party, 15 of 179 	
seats in the Parliament), the centrist Danish Social Liberal Party (7 seats) and the green party The 
Alternative (6 seats). 	 	
The Danish Social Liberal Party proposes a goal of climate neutrality by 2040, ten years earlier 
than	 the goals set by the Climate Act, and consequently an end of oil and gas production by this 	
date. Their argument is that the climate goals of the Climate Act should not restrict efforts to limit 
Denmark’s contribution to climate change even more. The Dani	sh Social Liberal Party also pro-	
motes climate neutrality by 2040 and aims for an 80 percent reduction in emissions by 2030, 
compared to the 70 percent set by the Climate Act. The Alternative promotes the most aggressive 
policy for phasing out oil and gas, 	stating that all investments in exploration and extraction of oil 	
and gas from new areas must be stopped immediately. They have further adopted the same goal 
as the Green Left and the Danish Social Liberal Party of climate neutrality by 2040. Since the par	ty 	
formed in 2013, the Alternative has promoted the most ambitious climate policy in the political 
landscape. They were the first party to launch the goal of 70 percent emission reductions by 2030 
in 2019, which later became the national goal by legislatio	n.

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6	 	Germany	 	
6.1	 	Background and history	 	
Germany is the smallest 	petroleum producer of the North Sea 	countries	, and the production of 	
both oil and gas has been in long	-term decline as seen figures 	5.1 and 5.2	. Much of the oil and 	
gas policy is set at the state level. The two main German states for oil and gas production are 
Lower Saxony and Schleswig	-Holstein. These two states account for more than 90 % of produc-	
tion.	 	
Figure 	6.1 	Annual oil production in 	Germany	 1971	-2021 in thousand ton oil	-equivalent	 
 	
Source:	 	OECD	 	
 
Figure 	6.2 	Annual gas production in 	Germany	 1970	-2021 in billion cubic meters	 	
 	
0	
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000	
1971	1973	1975	1977	1979	1981	1983	1985	1987	1989	1991	1993	1995	1997	1999	2001	2003	2005	2007	2009	2011	2013	2015	2017	2019	2021	
0
5
10
15
20
25	
1970	1972	1974	1976	1978	1980	1982	1984	1986	1988	1990	1992	1994	1996	1998	2000	2002	2004	2006	2008	2010	2012	2014	2016	2018	2020

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Source:	 	BP 	Statistical Review of World Energy	 	
 	
6.2	 	Key laws	, licensing	 and permitting regimes	 	
The licensing	 and legislation 	for oil and gas in Germany is 	set at the state level, rather than at the 	
federal level. 	There are different kinds of licenses: exploration licenses, 	production licenses and 	
mining proprietorships. Licenses are not awar	ded in fixed licensing rounds. Rather, interested 	
parties can apply 	for licenses at any time.	 	
6.3	 	General environmental 	and climate 	regulations in exploration 	
and production phases	 	
Germany is part of the EU Emission trading system (ETS), which covers the oil and gas sector.	 	
Germay is also subject to various EU environmental regulations that affect oil and gas production. 
One important such regulation is the 	Industrial Emissions Directive (2010/75/EU)	, which has sev-	
eral provisions that can apply to large oil and gas production	 facilities, and the 	Offshore Safety 	
Directive (2013/30/EU)	, which 	includes requirements for environmental management systems	. 	
For more details on EU envir	onmental 	rules and	 proposals that affect the oil and gas industry, see 	
section 	4.3	. 	
The Federal Emissions Act 	(BImSchG)	19 applies to oil and gas production. This Act 	sets out 	rules 	
to avoid harmful effects	 on the environment.	 The Federal Mining Act, which 	regulates oil and gas, 	
also contains provisions for the protection of 	the environment.	 	
Germany does not have any inactive platforms, and has 	not yet removed any disused platforms 	
(Follow The Money, 202	3). 	
6.4	 	Oil and gas tax system	 	
There is 	no special taxation regime for oil and gas in Germany. Oil and gas activities are subject 	
to the same 	corporate taxation as other industries.	 The 	ordinary 	income taxes on corporations 	
consist of several elements 	(corporate income tax, solidarity surcharge and 	trade tax) 	and the 	
total varies between different local authorities. 	The average overall tax rate is 29.8 %	, and it varies 	
between 22	.8 % and 34 % for different localities.	 	
In add	ition to ordinary taxation, r	oyalties	 are imposed on oil and gas	. They vary between and 	
40 % 	of the market value of the produced oil and gas	. The royalties count as deductible expenses 	
towards	 the corporate taxes. 	Some field expenses 	such as transport co	sts are allowed to offset 	
against the 	assessment base for the royalties. 	In Lower Saxony the 	general 	royalt	y rates	 are 18 % 	
for oil and 29 % for gas	, but these can be reduced to 0, 9 or 18 % depending on the location of 	
the field and the exploration method	. In Schleswig	-Holstein the rates are 40 % for both oil and 	
gas, but 	for some fields a lower rate of 21 % for oil and 18 % for gas is applied.	 	
 	
19 https://www.bmuv.de/fileadmin/Daten_BMU/Download_PDF/Luft/bimschg_en_bf.pdf

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6.5	 	Political landscape	 	
As oil and gas production in Germany is 	of minor importance, the future of 	domestic oil and gas 	
industry is not a major political issue	 on the federal level	.

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7	 	Refe	rences	 	
Climate Agreement Progress Meeting, 2019. 	Klimaatakkoord. 	[Internett] 	 	
Available at: 	https://www.klimaatakkoord.nl	/ 	
[Funnet 15 6 2023].	 	
Climate Change Committee, 2022. 	Progress in reducing emissions 2022 Report to Parliament, 	s.l.: 	
s.n.	 	
Follow The Money, 2023. 	North Sea clean up of rotten infrastructure costs billions (but no one 	
wants to pay). 	[Internett] 	 	
Available 	at: 	https://www.ftm.eu/articles/north	-sea	-clean	-up	-of-rotten	-infrastructure	-costs	-	
billions	-but	-no	-one	-wants	-to-pay	 	
[Funnet 14 6 2023].	 	
Government of the Netherlands, 2021. 	Coalition agreement 'Looking out for each other, looking 	
ahead to the future' 2021	-2023, 	s.l.: s.n.	 	
House of Commons Environmental Audit Committee, 2023. 	Accelerating the transition from fossil 	
fuels and securing energy supplies, 	s.l.: s.n.	 	
Labour, 2019. 	It's time for a real change 	- The Labour Party Manifesto 2019, 	s.l.: s.n.	 	
Ministry of Economic Affairs and Climate Policy, 2022. 	Natural resources and geothermal energy 	
in the Netherlands 	- Annual review 2021, 	s.l.: s.n.	 	
North Sea Transition Authority, 2022. 	Emissions Monitoring Report, 	s.l.: s.n.	 	
Oil & Gas Authority, 2020. 	UKCS Energy Integration Final Report, 	s.l.: s.n.	 	
Oil & Gas Authority, 2021. 	The OGA Strategy, 	s.l.: s.n.	 	
SNP, 2023. 	SNP.org. 	[Internett] 	 	
Available at: 	https://www.snp.org/policies/pb	-how	-are	-the	-snp	-supporting	-the	-north	-sea	-oil	-	
and	-gas	-industry/	 	
The Conservative Party, 2019. 	Get Brexit Done 	- Unleash Britain's Potential 	- The Conservative and 	
Unionist Party Manifesto 2019, 	s.l.: s.n.

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