Search terms: Energy & Natural Resources
A 1998 act created an industrial and commercial public corporation, the National Petroleum Company of Congo, which has replaced Hydro-Congo as the relevant intermediary for petroleum exploration and production activity. The body will also act on the state's behalf in these matters.
Tunisia has remodelled its legislation on petroleulm and has introduced measures that will encourage exploration and exploitation of its oil fields.
The Parliamentary Committee on Economy has approved, in principle, the privatisation of 100% of the shares of Albpetrol, an Albanian state-owned oil company. After the privatisation, Albpetrol will be stripped of the tax privileges that derive from its position as a state-owned company. However, the seven concessionary agreements that it has entered into with foreign companies will remain unchanged after the sale.
At the beginning of 2011 Parliament raised the idea of privatising state assets, including some medium-capacity hydropower plants. This sparked a heated public debate, with opponents proposing a national referendum on the issue. However, with the recent passage of the Hydropower Plants Privatisation Law, Parliament has voted for the plants' privatisation, but also opened the door for a concession.
The Power Sector Law, which establishes the main legal framework for the electricity sector in Albania, has been amended to reflect renewable energy and incentives for the construction of power plants using renewable energy. The amendments also introduce some additional powers of the Energy Regulatory Entity regarding renewable energy.
The Council of Ministers has issued a decision establishing the National Nuclear Agency in order to progress the development of Albania's nuclear programme. The new agency is tasked with the preparation, supervision and development of the national nuclear programme. In order to accomplish its mission, it will cooperate with various public and private, national and international bodies.
Some new construction projects that involve the construction of hydropower plants are subject to the Concessions Law. Other projects that are not subject to this law are regulated by Article 34.1 of the Power Sector Law. The Council of Ministers has approved the Regulation on Procedures for Granting of Authorizations for the Construction of Power Plants Not Subject to the Concessions Law.
With the approval of Decree 51/04, a number of energy-related projects can no longer be licensed without environmental clearance. During this year, a number of ongoing energy projects may also have to measure their impact on the environment.
A new Ministry of Petroleum order sets out requirements on the procurement of goods and hiring of services by oil companies operating in Angola. As a result, foreign oil companies wishing to do business in Angola will increasingly opt to structure their businesses through joint ventures with local partners, and the price of goods and services prices may also rise.
Tight new regulations on diamond mining will be beneficial to Angola, as they should go a long way towards reducing illegal practices and boosting government revenues. However, it appears that some of the principles established may be over-protective of Angolan companies, thus creating disincentives to foreign investment.
In February 2003 the National Bank of Angola, the country's foreign exchange authority, issued a new order setting forth the foreign exchange rules applicable to the mining sector. The new regime imposes important restrictions on foreign exchange operations and may have an impact on the acquired rights of existing diamond mining companies.
Since the enactment of the Glaciers Law in 2010, natural resources companies in Argentina have been waiting with interest for the results of the national inventory of glaciers and the environmental audits of priority areas. According to preliminary findings, the work carried out in both the cross-border Pascua Lama project and the Veladero project has been deemed to have no impact on local glaciers.
International resources companies are aware of the need to pay attention to indigenous rights from their experiences of mining around the world. Accordingly, many companies currently go beyond what is specifically required of them by Argentine law to protect indigenous rights. However, changes proposed by the new Civil Rights Reform Bill could provide greater certainty for both resources companies and indigenous communities.
The mining industry in Argentina has experienced unrelenting growth over the past decade, but has met with opposition from local communities due to its perceived environmental impact. The Supreme Court recently issued a series of decisions that may be crucial in the government's effort to reconcile mining, economic development and environmental protection.
Argentina's largest oil and gas company, YPF, was recently nationalised. A major reason given by the government for the expropriation was that hydrocarbons self-sufficiency is a matter of national public interest and a state priority. The government has also indicated that it envisages increased investment activity in the oil and gas sector in the immediate future.
Historically, mining and drilling for hydrocarbons in Argentina have met with considerable opposition. However, the government has recently taken steps to promote the resources industry in a sustainable way that aims to give a real economic return to the provinces in which such activity is located. It is hoped that the new measures will promote a simplified process and alleviate some of the activists' concerns.
The provinces of Rio Negro and Neuquen have recently implemented decrees that encourage investment in the exploration and exploitation of shale gas reserves, as well as other unconventional oil and gas reserves. The decrees provide for a relaxation or pausing of the exploration periods when discoveries cannot currently be exploited economically.
A new policy body, the Energy Reform Implementation Group (ERIG), has been established in order to consider further reforms to the Australian energy markets. The ERIG will initially address three key areas for possible reform, including transmission grid planning, governance and investment.
Australia and China have recently signed a nuclear material transfer agreement and a nuclear cooperation agreement which will allow for the exportation of uranium from Australia to China. However, as Australia's uranium production is fully committed for the next two years, exports to China are not expected to start until 2008.
The federal government has introduced into Parliament the Renewable Energy (Electricity) Amendment Bill 2006, which proposes amendments to the Renewable Energy (Electricity) Act 2000. The bill is the result of extensive government consultation carried out since 2002 and is designed to improve the administrative integrity, effectiveness and efficiency of the act.
In 2000 Australia was the first country in the world to introduce a mandatory national renewable energy certificate scheme, designed to encourage the development of renewable energy generation. However, in light of concerns regarding possible impediments to the continued development of renewable energy, the Ministerial Council on Energy Standing Committee of Officials has released a discussion paper.
The South Australian Essential Services Commission has lifted its ban on the issue of new wind farm licences and released a statement of principles for the licensing of wind power generators in South Australia. The statement sets out the minimum obligations which the commission will require of wind generators in addition to those obligations already imposed by the National Electricity Rules.
On October 28 2005 the New South Wales (NSW) government made an Energy Savings Order and a Water Savings Order, requiring approximately 200 large users of energy to prepare an energy savings action plan and approximately 200 large users of water to prepare a water savings action plan. These plans must be submitted to the NSW Department of Energy, Utilities and Sustainability for review.
A recent court case has caused concern in the foreign investment community over the ease with which a shareholder in an Azerbaijani company can be deprived of its shares. The case involves the ownership of shares in the largest downstream oil company Azpetrol and the largest oil transporter Azertrans.
The stability of the regime in Azerbaijan over the past decade has helped to attract investors such as Anglo Asian Mining, which was recently listed on the Alternative Investment Market of the London Stock Exchange. It is hoped that this trend will continue, with further mining companies commencing exploration. This will make the Azerbaijani economy less dependent on oil and gas, and boost local economies.
On May 25 2005 the first crude oil was pumped into the Baku-Tbilisi-Ceyhan (BTC) main export pipeline. With the pipeline on the verge of operation, Azerbaijan will soon have an export route for its oil with significant capacity and Baku stands to become a crude oil transportation hub. It is anticipated that large volumes of oil will be shipped across the Caspian Sea to the BTC pipeline, principally from Kazakhstan.
The Energy Regulatory Commission Bill 2003 proposes the formation of an independent energy regulatory commission. While the government claims that the bill is a revolutionary step in reforming the energy sector, the opposition Awami League suspects a gas export plan.
Unocal has rejected Petrobangla’s compensation claim for the Magurchhara explosion. Unocal argues that the matter was resolved through the signing of a supplementary agreement, which allows Petrobangla an additional 5% share for gas discovered in certain blocks. Now the matter seems set to proceed to litigation.
An international consultant recently provided his eagerly awaited opinion on the continuing dispute between Petrobangla and Shell Oil.
National oil company Petrobangla is submitting a compensation claim of approximately $600 million to US oil company Unocal over the Magurchhara gas explosion of 1997.
Bangladesh's newly elected government estimates that around $100 million could have been saved by its predecessor if certain public sector power projects had been properly negotiated. A thorough review will be underway soon.
The Bangladesh Energy Companies Association brings together companies and other business entities that are involved in the extraction, transmission and distribution of natural gas, petroleum and related products, as well as the generation and distribution of electricity.
The Belize government has nationalised Belize Electricity Limited (BEL), the major supplier of electricity to the Belizean public. When presenting the bill concerning BEL's nationalisation in the National Assembly, the prime minister said that the reason for nationalising BEL was to prevent Belize from being plunged into rolling blackouts.
The government has entered into several production sharing agreements with different contractors pursuant to the Petroleum Act. Each contractor is authorised to conduct petroleum explorations as defined by the act, within a designated area defined by the relevant agreement. However, the owner of the land which is the subject of an agreement retains certain rights in relation to the conduct of petroleum operations on and under such land.
In a curious recent case, the Court of Appeal decided that the Supreme Court had no jurisdiction to oversee a case brought by Belize Electricity Limited (BEL) against the Public Utilities Commission. In the case, BEL brought three questions before the Supreme Court by a so-called 'case stated'. This is a relatively unusual procedure by which a person or body having power to hold a hearing or make a decision may be empowered to state a case to the court for its opinion.
In 2006 Bolivia and Venezuela executed an agreement for cooperation in the energy sector which led to the incorporation of a mixed economy company between two state-owned oil companies. The new company's purpose was to develop exploration and exploitation activities in Bolivia's hydrocarbon sector.
Law 3058, introduced in 2005, provides for the ownership of hydrocarbons at the wellhead to be brought under state ownership and control. Further decrees have helped to determine the degree of control which Yacimientos Petrolíferos Fiscales Bolivianos, the state-owned oil company, exercises and plans to acquire in the sector.
Following on from the nationalization of the Bolivian hydrocarbons industry, the government has executed an agreement with the Brazilian government increasing the price of gas exported to Cuiaba in Mato Grosso, Brazil. However, the price increase applies to only 4% of the total gas exported by Bolivia to Brazil.
The 120-day period for oil and gas companies engaged in the exploration, exploitation and production of hydrocarbons to cease activities under the joint venture contracts executed under the now-superseded Law 1689/1996 and to comply with the new contractual framework has now ended.
Although Bolivia has the second largest natural gas reserves in Latin America, the country currently sells natural gas to only two countries: Brazil and Argentina. At the same time as taking care of this existing market, the government also needs to consider ways in which it can expand the market to new clients.
Despite hope in the private sector that the government might assume only a certain degree of control over the hydrocarbons industry, new Supreme Decree 28701 on the nationalization of hydrocarbons has awarded the state complete control over the industry. Private companies have 180 days to comply with the decree's requirements or cease operations in Bolivia.
The Brazilian Constitution provides oil-producing states and municipalities with the right to receive a larger share of royalties as indemnification for allowing potentially hazardous activities to be carried out in their jurisdiction. However, following the 2007 discovery of huge oil and gas reservoirs in the pre-salt layer offshore Brazil, the existing system for the distribution of royalties has been called into question.
Following the discovery of the so-called 'pre-salt area' offshore southern Brazil, the government enacted a new law that established the production sharing agreement as the contract that would govern exploration and production activities in the area. However, licences to blocks outside this area are still granted through a concession agreement. Whether this mixed regime will be positive for the sector remains to be seen.
The National Agency of Petroleum, Natural Gas and Biofuels (ANP) recently published a draft of the preliminary tender package for the 11th oil and gas bidding round. The package lists the procedures that companies willing to participate in this bidding round must follow. Through a public consultation procedure, ANP hopes to gather additional information on the bidding round's rules and on the draft concession agreement.
Fourteen power companies have purchased the relevant tender documentation as a precondition for participation in the privatization of the Varna, Rousse and Bobov Dol sub-peak thermo power plants. Binding offers must be submitted by March 25 2004. The privatization procedure is expected to fetch some €150 million to €200 million in privatization proceeds.
The framework that governs the exploitation and exploration of renewable energies is identical to that which applies to other types of energy. Its use depends on competitiveness in terms of price and quality when compared to traditional energy sources.
The Law on Mining Concessions declares that a mining concession is a real right in the nature of immovable property. Private investors may undertake mining activities by obtaining concessions, although certain issues must be considered.
A new Electric Bill, to be presented to the president in mid-October, provides a substantial transformation of the current regulatory framework. Changes include the introduction of restrictions and conditions on the ownership and management of power transmission systems.
The Electricity Law has recently been amended to include certain electric services within the price fixing regime, when market conditions do not guarantee that prices are set freely.
According to preliminary estimates by the Ministry of Commerce, Industry and Tourism, foreign direct investment for 2013 is expected is to be approximately $15.5 million. This figure, which exceeds the figure for 2012, is predicted to be principally focused on the oil and mining sector - and there is no indication that the wind will change any time soon. Thus, there are great opportunities in terms of mergers and acquisitions.
Several significant players in Colombia's energy sector have applied for approval from the Superintendence of Industry and Commerce (SIC) for key mergers or acquisitions. The SIC has been approving, objecting and conditioning mergers and acquisitions since 2001 in order to avoid concentrations of economic power in the market.
Mining has become a major source of growth for Colombia's economy during the last decade, and was recently designated as an engine for economic development by the government. In 2012 mining accounted for more than 23% of the country's total exports. However, many fear that 2012 marked a turning point in the mining sector's upward dynamic. But all is not lost - there is some positive news.
In less than a decade Colombia has moved from being a country in an energy crisis to a regional power provider. The electricity sector owes its current strength to the fact that it is regulated by the independent Colombian Energy and Gas Regulatory Commission, which applies strict technical and financial criteria to ensure the smooth running of the sector and its expansion.
The Ministry of Transport has paid Drummond – a multinational company exploiting coal on the north coast – nearly Ps60 billion (more than $30 million) for breach of contract, in compliance with a decision of the Court of Arbitration of the Paris Chamber of Commerce. The Civil Cassation Chamber of the Supreme Court had to decide whether the Paris court's award was in line with Colombian domestic law.
The Colombian government has just requested the Constitutional Court to extend for an additional two years the deadline by which a new Mining Code must be presented to Congress, as the necessary consultation with ethnic communities has proved difficult and the process has been delayed.
With the sale of most of the shares in Croatia's national oil and gas company to its Hungarian counterpart in 2006 and the passage of the new Energy Act, the government has lost control of the gas market. In response to this changing landscape, Croatia's strategic plan for the national gas market is based on two goals: ensuring a free market and developing a network that would facilitate this.
One of Croatia's obligations as part of its forthcoming accession to the European Union is the incorporation of the EU Third Energy Package. To this end, Parliament has passed the Energy Act, which regulates security of supply and sustainability, generation and consumption, policy and planning, energy market and public service energy activities, and general principles of energy activity.
The exploration and exploitation of oil and gas in Croatia, performed in accordance with the legal framework in force, has faced several difficulties. Consequently, the Ministry of Economy is eager to pass a new act which would facilitate the tendering process. Other developments in this sector include progress of the Plomin C tender and the discovery of new oil reserves in northeast Croatia.
In April 2012 the Croatian government increased the tariff rates for all customer categories and announced that prices will continue to rise until they meet the EU average. Meanwhile, in order to achieve security of electricity supply, the government is planning a number of projects, including investments in existing facilities and several new hydropower plants.
Following a tender announced in October 2011, Prirodni Plin doo has begun the exploration of possible storage capabilities on the Grubiško polje field. The company has also invested in two additional wells, expected to commence operation later this year, which will add an additional 20,000 to 45,000 cubic metres an hour to the current extraction capacity of the Okoli storage facility.
A tender for exploration permits in 14 areas in northern Croatia has been annulled by the new government because the tender terms did not ensure free competition and allow all potential bidders to make serious bids. Meanwhile, the new mining regulations, which have been harmonised with EU law, will open up national oil and gas natural reserves to all interested parties for exploration and exploitation.
The Danish Energy Authority recently granted a permit to Nord Stream AG to construct the Danish section of its planned Nord Stream pipeline. The pipeline has been subject to intensive political protests in Eastern European countries, particularly regarding national security and potential environmental hazards from the pipeline. However, such political protests have been mainly absent in Denmark.
Much of the attention in recent months has been on the political situation in Egypt, in particular the development of Egypt's gas reserves. The gas sector in Egypt remains one where the development potential is significant. Investor confidence remains good, but it is important that this is maintained, particularly during this period of uncertainty, and efforts made to encourage additional investment in the future.
The government has reassessed its policy on private sector participation and announced that the power generation plan for 2012 to 2017 will include three build-own-operate/build-own-operate-transfer generation power plants. A new electricity law is also expected to be promulgated, which aims to establish a competitive electricity market that encourages private sector involvement in the generation and distribution of electricity.
The European Council recently adopted its Common Position on proposed amendments to the Internal Market in Electricity Directive. Despite a delay in full market opening, it constitutes an important step in the progress of creating an integrated electricity and gas market. It also achieves a timeline which is more ambitious than may have been thought possible.
According to the targets set out in Annex I of the EU Renewable Energy Directive, 38% of the energy consumed in Finland must be generated by renewable resources by 2020, an increase of almost 10% compared to 2005 figures. This update looks at the challenges that the Finnish government must overcome in order to meet this target.
The 'Mankala model' is an ownership model for energy producers which is unique to the Finnish energy markets. The pro-competitive effects of the model are undisputable, so instead of arguing over whether the existing legislation permits the model, politicians in Finland and the European Union would be better advised to spend their time considering how best to secure its future.
Since its enactment in 1965 the existing Mining Act has been subject to many amendments. After a decade of preparatory work by two different working groups, the legislative proposal for a new Mining Act has finally been brought before Parliament. However, the proposal is still subject to committee debate and it is unclear whether the new act will be passed before the forthcoming parliamentary elections.
The government has submitted a new proposal to Parliament on new legislation on a feed-in tariff system for electricity produced by renewable energy. Given the number of delicate judicial and administrative issues which are yet to be resolved at legislative level, it remains to be seen whether the system will be implemented by the time the next parliamentary elections take place.
A bill for a new Water Act has been submitted to Parliament. The bill aims to replace the existing act, which dates back to 1961. The energy industry would welcome a more flexible environmental impact assessment regime in order to allow the initiation of hydropower projects. Finland must increase its renewable power capacity in order to meet its emission reduction requirements.
A Ministry of Employment and Economy working group to assess the possibility of implementing a feed-in tariff system for electricity produced by renewable energy has submitted its report. Preparations for the feed-in tariff legislation have continued at various ministry and government committee levels and the government plans to introduce a legislative proposal to Parliament in Spring 2010.
The instability of the legal framework resulting from the restrictive French policy on solar power raises questions as to whether the measures taken comply with the EU principles of legitimate faith and legal security. France has put an end to the strong support given to the development of solar energy, but the method of implementing this radical change has created an unstable situation.
Under French tax law, windmills used by a company for the production of electricity can benefit from a derogatory tax regime with respect to corporate income tax, property tax and business tax. Moreover, a specific tax is applicable to windmill manufacturers established in France; there is thus a risk that a company producing electricity through windmills may be subject to this tax.
The Ministry for Economy, Finance and Industry has decided to suspend an increase in the sale price of gas provided by the public distribution network operator, despite the unfavourable opinion of the Energy Regulatory Authority. Among other things, the authority has issued a document aimed at helping household customers to choose their gas and electricity supplier.
The Georgian government has enacted new resolutions to address local power generation and energy import matters. In addition, Georgia has taken steps to develop further the legal regime for hydrocarbon transportation across its territory. This update has the details.
The Renewable Energy Sources Act 2009 has been designed to meet Germany’s renewable energy target of 30% of total power by 2020. It will result in significant changes for plant operators, in particular regarding remuneration, self-marketing of electricity and the consequences for grid system operators of disconnection due to grid capacity shortages.
Last year, Germany - the former world leader in wind power installations - lost a considerable amount of ground. Hopes that offshore wind power would fill the gap left by the long-expected downturn in onshore business were not fulfilled. This update reports on the status of German offshore projects and the possibility that planned legislation will boost the German market for wind power at sea.
Just four months after the Ministry of Environment, Energy and Climate Change announced a set of measures to combat the deficit in the Renewable Energy Sources (RES) Special Account - and despite disagreements over these measures and legal actions taken against them - the ministry is preparing further legislation which will increase the burden on RES producers in Greece.
The European Commission has declared several energy projects, which are of strategic importance for Greece, as potential 'projects of common interest'. The highlighting of these projects – and the renewed interest that this has generated in the development of Greek energy projects – is of great significance, considering the recent cautious attitude towards investment in the Greek energy sector.
The Greek electricity system has been functioning at its limit for the past few months as the renewable energy sources special account faces a serious cash deficit. The Ministry of Environment, Energy and Climate Change recently outlined a series of measures in order to resolve the deficit, as well as the ministerial decisions which will implement them.
Various projects are in place to enable Greece to meet its 2014 renewable energy sources (RES) target. In order to ensure the viability of the proposed mechanisms, and to reduce the deficit of the RES special account, the minister of environment, energy and climate change has consulted stakeholders in the energy market and environmental organisations regarding a reduction of the photovoltaic feed-in tariffs.
Parliament recently passed new legislation introducing structural changes to various sectors of the economy, as agreed with the European Union under a memorandum of cooperation for a new loan programme for Greece. The changes that relate to the energy sector are aimed at full liberalisation and will be welcomed by market players, which have long been calling for such reforms.
The Ministry of Environment, Energy and Climate Change recently issued preliminary guidelines for public international tenders which have been announced for the creation of three new gas supply companies. These tenders are to be overseen by the Public Gas Corporation SA, with the aim of selecting private investors which will participate in the incorporation of the new gas supply companies.
Greenland has recently accelerated the process of redefining its foundation, moving from a reliance on fisheries to becoming an industrialised country within the kingdom of Denmark. Due to findings already made, as well as expected future discoveries of mineral deposits (including oil and natural gas), the mineral industry is likely to become the most important industry in Greenland.
The Constitutional Court has confirmed a decision upholding an action brought by the attorney for human rights against the ministers of economy and energy and mines. The action accused the authorities of inaction and non-compliance with their obligation to safeguard consumer and user rights by failing to protect consumers against the National Energy Commission's approval of adjustments to electricity rates.
Legislation establishing the Hungarian Energy and Public Utilities Office (HEPO) recently entered into force. HEPO has replaced the former regulatory body for the energy sector, the Hungarian Energy Office. The government has stated that the new authority will work to protect efficient energy consumption, security of supply and consumers' interests.
When considering Hungary's energy policy, the security of natural gas supplies is the most important unresolved issue. Hungary's own fossil resources are relatively low quality and comprise limited reserves, while natural gas dominates the heating industry. These two circumstances make Hungary significantly dependent on imported natural gas, mainly from Russia.
The government has recently established a commission to consider strategic issues related to the construction of new power blocks in the Paks nuclear plant, and has ranked the expansion as a "high-priority project for the national economy" in recognition of nuclear power's strategic role in Hungary's electricity supply and energy security. The tendering process is expected to start later in 2012.
The Ministry of National Development has proposed a new mandatory takeover system for heat and electricity produced from renewable and alternative resources. Strategic priorities of the proposed system include promoting small and medium-sized power plants, enhancing efficiency in energy production, ensuring long-term sustainability and diversifying energy supply channels.
Hungary's mandatory electricity takeover regime seeks to provide a reliable environment for producers of energy from renewable resources while encouraging investment in the renewable energy sector. However, it has been criticised ever since its implementation. As Hungary aims for ambitious renewable energy targets by 2020, a revision of the regime is underway.
The National Energy Strategy sets out the government's key approaches to energy policy for the next 20 years as it attempts to address Hungary's reliance on imports and ensure competitiveness and sustainability. However, the strategy has been sharply criticised by some commentators, who see it as out of step with global and EU trends in supporting nuclear energy and not giving preference to renewable sources.
The Supreme Court recently imposed a ban on ore extraction, transportation and exports in Goa, pending review by the Central Empowered Committee. While those in support of the ban justify it as a necessary measure to curb rampant illegal mining, those affected by the ban have deemed the court's decision unconstitutional. As the sharp divisions continue to surface, debate on whether the ban should remain still awaits resolution.
The Mineral Concession Rules 1960 outline the procedure and conditions for obtaining reconnaissance permits, prospecting licences and mining leases. The rules apply to all minerals other than atomic minerals. The central government has also issued the Mineral Concession (Amendment) Rules 2003, which prescribe a minimum size for any mining lease granted under the rules.
In recent years the government of India has deregulated the domestic oil and gas industry with the objective of encouraging private participation and eradicating price controls. Specifically, the upstream, refining, transportation and marketing sectors have been reformed.
Including: Mining Law; Electricity Law.
The West Bengal Electricity Regulatory Commission has called for the gradual abolition of cross-subsidies. If implemented across the board, abolition will have far-reaching effects throughout India, particularly in states such as Punjab, Haryana, Uttar Pradesh, Madhya Pradesh and Rajasthan, where agriculture is mostly mechanized.
Parliament has cleared the Offshore Areas Mineral (Development and Regulation) Bill 2002. The bill empowers the central government to make rules for addressing concerns relating to pollution of the offshore environment and the security and safety of marine life. Each holder of operating rights is liable for any pollution or damage to marine environment resulting from activities in the offshore areas.
The minister of energy and mineral resources has issued Regulation 11/2012, which amends the obligation to refine minerals imposed under Regulation 7/2012 on Increasing Minerals' Added Value Through Mineral Processing and Refining Activities. This new regulation relaxes the previous ban on miners exporting raw materials, ore and rocks.
In an effort to curb raw mineral exports, the minister of trade has issued the Regulation on Provisions of Mining Products Export. The mining products subject to the regulation comprise 65 metal minerals, non-metal minerals and rocks. Under the regulation, these regulated products may be sourced only from parties that hold a mining permit and their export may be conducted only by exporters that are licensed as a registered exporter.
The president has finally signed the long-awaited implementing regulation for Article 74(4) of Law on Limited Liability Companies. The regulation answers the controversial question of whether corporate social responsibility is voluntary or obligatory for companies, and has particular relevance for natural resources companies and those in related industries.
Government Regulation 42/2012 on Cross-Border Power Sale and Purchase was recently signed by the president. The regulation stipulates that cross-border electricity sale and purchase are subject to the prevailing customs laws and regulations, and must adhere to certain requirements.
The government has issued a new regulation to implement certain provisions of the Electricity Law. It covers a range of issues, including licensing and certification, land use for electrical power supply activities and the determination of sales prices, network leases and tariffs.
The Regulation on Mining Business Activities created divestment obligations for foreign shareholders of a company with a mining licence or a special mining licence. A new amendment requires a further divestment of up to 51% to an Indonesian party no later than 10 years after the start of commercial production. A number of other changes may also affect investors in the extractive industries.
In many oil and gas M&A transactions, the valuations by acquirers and vendors tend to differ, and the valuation of oil and gas upstream assets is inherently uncertain, particularly in respect of undeveloped reserves. Although the mechanism has its difficulties, one way to bridge the value gap is by employing contingent consideration.
Carbon capture and storage (CCS) as a way of reducing carbon dioxide emissions is relatively new, but the oil and gas industry has long used many of the processes involved. However, the reduced efficiency of power plants and the cost of CCS technologies are barriers to implementation. As well as providing legislative frameworks, governments must look to implement incentives and penalties.
Responding to industry calls for standard form documentation for the spot and short-term cash-trading sector, the Association of International Petroleum Negotiators released a model form in October 2009, seeking to create a more efficient secondary market for liquefied natural gas. With the industry take-up still unclear, what are its prospects of being used to document spot arrangements?
Japan and Iran have signed a contract on the development of the Azadegan oilfield which will guarantee the energy security of Japan for 20 years and inject about $1 billion into the Iranian economy. All products of the oilfield, worth $2.8 billion and with an estimated capacity of 36 billion barrels, will be exported to Japan.
The crude oil export objectives set out in the Third Development Plan have not been fully achieved during the first three years of implementation. According to a report on the plan's implementation, this was due to the irregular growth of domestic consumption, which curtailed exports, and the pursuit of OPEC policies on limited supplies of crude oil.
The project manager of Phase I of the South Pars project has reported that work is now back on schedule thanks to a concerted effort, and the project should become operational as planned. Work that has recently been completed includes the installation of two offshore wellhead platforms and the construction of production platforms.
Following the recent introduction of a new bill, consumers in Iran have been hit with a 10% price increase for a range of petroleum products, including ordinary petrol, super petrol and diesel.
A member of the Industries and Mines Committee of the Islamic Consultative Assembly has alleged that the oil export revenues forecasted in this year's Budget are unrealistic, and that the government's dependence on these revenues has caused state companies to become oil-dependent. Increasingly severe cutbacks may well be the end result.
Iran has declared itself ready to supply Europe with the energy it needs. The minister for oil has stated that a wide range of activities aimed at boosting gas production are set to emerge in order to meet increasing domestic, regional and global demand in the upstream and downstream gas sectors.
Many international commentators have recently argued that the Iraqi upstream petroleum sector has stalled in a post-conflict setting, besieged by competing political factions, corruption and turmoil. While these commentators are not altogether incorrect, Iraq has successfully implemented four generally successful petroleum licensing rounds with the aim of replacing the former state monopoly on oil and gas with private development.
Several recent events have prompted a return to the debate over the legality of production sharing contracts entered into between the semi-autonomous Kurdistan Regional Government (KRG) and private international companies over the past few years. The KRG is adamant that the signing and negotiation of contracts for any 'new' petroleum developments remains its sole responsibility.
A new unity government was recently announced, whereby former Prime Minister Nouri Al Maliki maintained his position and Iyad Allawi, who won the most seats in the March 2010 election, joined in a special power-sharing deal. Despite the almost 10-month impasse, since the government's formation several systemic changes have occurred in quick succession that affect the upstream petroleum industry.
The recently competed first and second-bid petroleum rounds revealed Chinese corporations as the single largest investor in the Iraqi oil and gas sector. Mainland China's clear interest in Iraq's oil is driven partly by the highly lucrative petroleum profits, but also by its domestic need for natural resources.
War, neglect and over three decades of mismanagement have left Iraq with an electric power infrastructure that barely meets half of its total demand for electricity. Thus, an aggressive plan to address this problem within the next five years has been created. It involves re-tooling nearly every aspect of the national grid, along with power generation and delivery.
Following first and second-round bids between several international oil companies and the Ministry of Oil, there has been much discussion about whether these successful companies are subject to further ratification by the Council of Representatives (Parliament) in order for the tender to be a comprehensive and legally binding contract. This discussion has dominated Iraqi domestic politics and petroleum policy.
An Irish parliamentary committee has published a report on offshore oil and gas finds in Irish coastal waters, with recommendations including a substantial increase in the tax take from any future licences. The report calls for a more transparent system regarding licensing and public consultation, while also recommending regular reviews of fiscal and licensing terms.
The Commission for Electricity Regulation (CER) recently issued a important decision paper that should be reviewed by anyone that is considering a contestable build of connection works to connect its generation assets to the distribution or transmission system. In making its decision, the CER sought to balance the interests of system operators and independent power producers.
Contrary to high-profile criticism of the Irish planning system, energy projects in the 'strategic infrastructure' process have a success rate of almost 100%. The strategic infrastructure planning process is a fast-track process allows applications for certain energy developments to be made directly to the Planning Board. Although the system has its critics, the evidence is that it has delivered good results in the energy sector.
The Department for Communications, Energy and Natural Resources has published a welcome update on the status of the main public support scheme for renewable energy projects in Ireland. The proposed terms and conditions of eligibility for support under RE-FIT 2 and RE-FIT 3 have not yet been published, but the inclusion of these details on the department's website provides welcome confirmation that further support for renewable electricity generation in Ireland is at an advanced stage of planning.
The Commission for Energy Regulation recently published its final assessment on the deregulation of the domestic retail electricity market and duly removed all remaining price regulation from the retail electricity market. This deregulation decision occurred at the final stage of the commission's Roadmap to Deregulation, in which it outlined its plan to phase out the remaining price controls.
President Mary McAleese has signed the Energy (Biofuels Obligation and Miscellaneous Provisions) Act 2010 into law. The act is a significant piece of legislation as it obliges fuel suppliers in Ireland to sell a specified amount of biofuels (ie, fuels derived from sustainable sources) each year. It is hoped that this obligation will aid Ireland in reducing its carbon emissions and developing its biofuels production capacity.
In the past few years the electricity market has undergone many regulatory reforms. A large portion of the regulation aims at promoting the renewable energy sector, which until recently was non-existent in Israel. This regulation stems from the government's policy to incentivise the renewable energy sector, while promoting independent power producers in general.
Since the discovery of the Tamar natural gas field offshore Israel in 2009, there has been a significant increase in the number of transactions connected to the acquisition of interests in petroleum rights in Israel. As a result, the relevant authorities have been taking steps aimed at tightening the degree of control that they have over such transactions and at imposing stricter requirements for acquiring petroleum rights.
Since the recent discovery of large natural gas reserves off the coast of Israel, the government has decided that the oil and gas fiscal regime requires significant change. With this in mind, a government-appointed committee proposed a new fiscal regime for the petroleum industry. This update examines the industry's existing tax regime before the new legislation and sets out the main principles of the proposed new tax regime.
In spite of the overall economic climate, the renewable energy sector shows promising signs of improvement. Long-awaited national guidelines on authorisation for renewable energy plants, as well as new classifications for photovoltaic plants, will be crucial to the future development of the sector.
The Ministry of Economic Development and the Ministry of Environment have prepared a draft decree to amend the system of incentives for photovoltaic solar power generation. The main concern for entities working in the sector is the overall reduction in incentive tariffs. However, the framework for investment is still advantageous.
In addition to the general liberalization of electricity generation in Italy over the past decade, further liberalizing incentives apply to generation from renewable sources. A streamlined application system applies for authorization to establish and manage new renewable energy plants.
A report of a subcommittee to the Electricity Industry Committee has recommended that the liberalization of the electricity industry be expanded to included sales to high-voltage consumers. Once the changes have been implemented, about 63% of Japan's retail electricity market will be open to competition.
Deregulation of the Japanese petroleum industry first began in 1986 and has since been implemented in several stages by the Ministry of Economy, Trade and Industry. This update describes some of the latest legislative reforms and the effects they will have.
This update examines the impact of the second stage of the liberalization of the electricity market in Japan and how new entrants are beginning to win tenders for supply.
The Law on Gas and Gas Supply seeks to provide a framework for the developing gas market in Kazakhstan, particularly for liquefied natural gas, liquefied petroleum gas and associated gas. In so doing, it seeks to secure the country's energy and environmental safety and to prioritise domestic gas supply. However, practical questions remain as to how the law will work in conjunction with existing legislation.
In 2011 several new restrictions for obtaining work permits - affecting the ratios of foreign to local employees - were introduced. The government, apparently in response to a backlash from large international oil and gas companies operating in Kazakhstan, introduced exemptions in connection with certain major oil and gas fields. However, certain aspects of the legislation raise practical questions.
A recent Supreme Court decision has provided guidance to the energy industry by clarifying its interpretation of recent legislative changes that prohibited the resale of power by power-supplying organisations. Its ruling resolves an issue which had divided the two industry regulators in Kazakhstan.
In addition to a signature bonus, commercial discovery bonuses and reimbursement of historical costs, subsoil users are subject to a number of specific taxes. These include the main minerals extraction tax - on varying rate scales for mining companies and oil and gas companies - and excess profits tax.
New legislation demonstrates the government's wish to establish greater control over the subsoil industry and to introduce more mechanisms to monitor the performance of subsoil use contracts. The main innovations affect sector regulation and the approvals process, but other key changes affect national security, procurement and the right to international arbitration.
The latest hydrocarbon developments indicate that Lebanon is on its way to becoming a key player in the Middle Eastern oil and gas industry. The nomination of the board of directors of the Petroleum Administration Authority has led to major progress ahead of the launch of the first offshore oil and gas licensing round, while a recently discovered oil reservoir has stirred the optimism of investors.
A number of two-dimensional and three-dimensional seismic surveys suggest that the Lebanon basin has favourable geological prospects and significant potential for hydrocarbon production. The Offshore Petroleum Resources Law seeks to encourage the exploitation of the country's potential offshore resources by providing a regulatory basis for the petroleum sector.
The growing interest in exploring the Lebanese Basin has been stimulated by recent discoveries of massive gas reserves in neighbouring Mediterranean states. Significant deepwater discoveries have encouraged Lebanon to act quickly, passing legislation and commissioning a number of two-dimensional and three-dimensional surveys to determine the potential of the geological prospects.
Including: The Oil and Gas Sector; The Power Industry
The articles of association of the four subsidiary entities of Mexican Petroleum (Pemex) recently became effective. The new articles are in line with the recently published amendments to Pemex's articles of association and contain provisions to establish the entities' basic organisational structure and the scope of authority of their general directors, administrative units, departments, managerial and general personnel.
The Ministry of Energy has published its guidelines for the authorisation of drilling works for oil and gas exploration and production. The guidelines set forth the documents to be submitted to the ministry and the requirements that must be met by Pemex before it can be authorised to undertake drilling activities. The list of required documents and conditions to be met is significant and, in places, vague.
The Federal Commission for Regulatory Improvement has published a draft of the new Dispatch and Operation Rules of the National Electric System. The dispatch rules will supersede those that were previously in effect and include both specific rules for renewable energy and efficient cogeneration facilities and further details about the necessary procedures for the dispatch of generation facilities.
The Energy Regulatory Commission has passed a resolution establishing the legal, administrative and technical requirements that power generators must satisfy to be eligible to interconnect their renewable energy and efficient cogeneration projects to the National Electric System. The new rules are another step forward in the government's efforts to improve the regulatory framework for renewable energy projects.
An amendment to the Contracting Administrative Provisions for Acquisitions, Leases, Works and Services of the Substantive Productive Activities of Mexican Petroleum (Pemex) and Subsidiary Entities has been published in the Federal Register. This amendment allows Pemex to negotiate and execute contracts dealing with regulated sectors with greater flexibility.
The Ministry of Foreign Affairs has published in the Federal Register the Agreement Between the United Mexican States and the United States of America Concerning Transboundary Hydrocarbon Reservoirs in the Gulf of Mexico. The treaty establishes the terms and conditions for exploring and developing the oil and gas reservoirs along the maritime border between the two countries in the Gulf of Mexico.
As part of the ongoing reworking of the legislation governing the mining sector, a new set of Marketing Regulations for Mineral Products was recently approved by the Council of Ministers. The main purpose of this new decree is to define the rules which apply to the trade in mineral products, as well as the terms and conditions of the licensing procedure for entities wishing to conduct such business.
The government of Mozambique recognizes the importance of electrification for the welfare of the population and the economic growth of the country. Regulations are being drafted to further the development of the country's energy sector; the liberalization of the electricity distribution and transmission markets should encourage foreign investors to play a part in this development.
Despite the country's significant hydropower potential, only 7% of Mozambique households have access to electricity. To remedy this situation, major plans are underway to develop the country's electricity sector at all levels, the most important of which is the World Bank-sponsored Energy Reform and Access Programme.
As part of the ongoing reform of the petroleum exploration and production legislation, the government has approved a set of new Petroleum Production Tax (Royalty) Regulations. The regulations set out fixed tax rates for the production of crude oil and natural gas, and clarify the tax treatment of non-resident oil service contractors and subcontractors.
In a country with limited financial resources, where until recently only 5% of the population benefited from electricity, private enterprise could play an important role in electrification. As a result, the government has been particularly active in searching for legal mechanisms to attract private companies, in particular foreign investors, to the domestic electricity sector.
The long-awaited Petroleum Operations Regulations will provide further guidance and clarity on how to negotiate petroleum concessions with the government. However, another step needed to attract more international players to Mozambique remains outstanding - the special tax and customs regime for petroleum operations.
In 2012 the Dutch Supreme Court referred to the European Court of Justice preliminary questions in a dispute between three Dutch energy companies and the Dutch state over the compatibility with the Treaty on the Functioning of the European Union of certain provisions in the Electricity Act 1998 and the Gas Act. Advocate General Niilo Jääskinen has now presented his legal opinion on these questions.
A new bill has recently been introduced that will bring legislation in the Netherlands in line with the EU Regulation on Energy Market Integrity and Transparency (REMIT). REMIT aims to counter insider trading and market manipulation and increase transparency in the wholesale markets for electricity and natural gas. The bill also grants new powers to the authorities and the courts to punish infringement.
A new decree provides further information with respect to the obligation to notify the minister of economic affairs, agriculture and innovation of a change of control over a production installation with a capacity of more than 250 megawatts or a company that operates such production installation, a liquefied natural gas installation or a liquefied natural gas company .
Energy was an important topic throughout the recent parliamentary election campaign, particularly the country's ability to reach EU targets for sustainable energy and carbon dioxide emissions. The coalition negotiations in the coming weeks will decide the energy policy for the next four years, and the parties' pre-election plans give some indication of the course that the Netherlands may follow.
The State Council recently ruled on the legitimacy of 11 Public Works Management Act permits granted in 2009 for the construction, operation and decommissioning of 11 wind parks. The State Council's judgment is a crucial step in the development of the offshore wind parks on the Dutch continental shelf.
There has been much discussion in the Netherlands on the feasibility of introducing a transport tariff payable by producers. A recent letter sent to Parliament indicates that the minister of economic affairs is considering two possibilities: either a producer's transport tariff for all producers (centralised and decentralised), or a transport tariff payable by centralised producers only (exempting local producers).
The Marine and Coastal Area Act has changed the way in which the marine and coastal area is to be managed, partly by placing further requirements on consent authorities and consent applicants operating under the processes of the Resource Management Act. However, its impact on these parties will mainly depend on the extent to which claims for protected customary rights and customary marine title are successful.
The government recently released a consultation document outlining preliminary proposals for a possible replacement of the Foreshore and Seabed Act 2004. Under the government's preferred proposal, new legislation would state that no one owns, or can own, the foreshore and seabed; with the exception of privately held titles, they would be renamed as public domain.
The date on which a resource consent application obtains priority of hearing over other competing applications has been much debated. A recent Court of Appeal decision confirms that priority for a full hearing is determined by the date of lodgement of a complete consent application, not the date on which the application is ready for notification, on which an earlier test was based.
A recent speech by the minister of energy and resources identified lack of access to land in the conservation estate as the main barrier to growth in the mineral industry. Combined with the streamlining of the Resource Management Act, the minister's three-point plan to improve access will be well received by an industry that is already experiencing something of a mineral rush.
The minister of energy and resources has released a preliminary report on the ministerial review of electricity market performance. In seeking to address concerns about electricity price rises, it presents a number of proposals for consultation. However, the government appears to be looking for immediate, tangible results for households, rather than fundamental changes to market structure and design.
Five electricity generators and retailers brought proceedings against the electricity and gas commissioner, seeking declarations as to the proper interpretation of the Consumer Guarantees Act 1993 as applied to the supply of electricity as a 'good'. It was held that retailers can be liable for supplying electricity that is below acceptable quality, regardless of the point in the supply chain at which the defect arises.
Including: Background; Oil Sector; Gas Sector; Cross-sectional Projects.
Foreign and Nigerian vessel owners engaged in the Nigerian petroleum industry must consider the impact of the cabotage and local content regimes in their funding, investment and operational decisions. While both regimes have increased compliance requirements, there is still an urgent need to harmonise and consider the efficacy of both regimes, and to adopt structures to close out continuing local capacity gaps.
The Petroleum Industry Bill, which is under debate in the House of Representatives, aims to introduce a new fiscal framework for the upstream oil and gas sector which is flexible, stable, progressive and competitively attractive. However, critics of the bill argue that the tax proposals are complex and are likely to hinder investment in new exploration - particularly in risky or frontier areas.
For over a decade, successive Nigerian governments have worked towards developing a national oil and gas policy. The federal executive recently presented a new Petroleum Industry Bill to the seventh session of the National Assembly for consideration and enactment into law. The government hopes that this version of the bill, if passed into law, will revise, update and consolidate current petroleum legislation in Nigeria.
The government recently announced the immediate removal of the longstanding fuel subsidy on premium motor spirit, triggering nationwide strikes. The government is now embarking on initiatives to promote the benefits of the subsidy removal and to inform the public of the projects proposed to benefit from the redirection of the subsidy funds, in the hope that a complete deregulation of premium motor spirit will soon be achievable.
The Nigerian Content Development and Monitoring Board (NCDMB) has the power to issue guidelines and regulations for the implementation of the Nigerian Oil and Gas Industry Content Development Act. In exercising these powers, the NCDMB has recently issued the Procedure for Waiver Approval to guide applications for the grant of waiver approvals subject to ministerial consent.
The president has unveiled the 'Gas Revolution' initiative to catalyse industrialisation and revive the country's fledgling gas sector. The primary drivers for the initiative, as described by the federal minister for petroleum resources, are to achieve a sustainable gas supply and delivery system for the ailing power sector and to implement a commercial framework for domestic gas.
During the past 10 years, the high-yield bond market has provided an alternative source of funding for less-developed companies and projects. To a large extent, this is a result of capital needs in projects for which traditional bank financing has been difficult to obtain, especially on competitive terms. Players in the renewable sector are therefore beginning to look to the bond market as a source of financing.
Article 30 of Directive 2004/17/EC contains an exclusionary provision for sectors which are directly exposed to competition, on approval of the European Free Trade Association Surveillance Authority. Several Norwegian power producers recently submitted a request to the authority for the application of Article 30.
Investing in wind power is becoming increasingly popular in Norway due to stable winds, an efficient market for physical delivery and hedging of exposure, and possibilities for foreign ownership. Recent legislation which provides financial support for new projects through the issuance of energy certificates that are tradable in Norway and Sweden has led to renewed interest in this sector.
The new green certificates bill, which was passed in June 2011, provides for the establishment of a market mechanism that will give renewable power producers green certificates based on actual power production. Power purchasers will have a statutory duty to buy the certificates, which must be redeemed every year, based on annual power consumption.
A report delivered by a committee comprising representatives from the oil industry and government administration in 2010 has proposed a shift of focus from exploration to development of existing fields that will favour the mayor players on the Norwegian Continental shelf. However, some of the proposals have been seen as controversial, such as the proposed changes to the voting rules in joint operating agreements.
To achieve flexibility in the electricity sector and market, and to ensure that the organisation of the sector helps to improve expertise and innovation, the Industrial Licensing Act has been amended to give domestic and international, and public and private, companies the opportunity to lease already built hydropower plants for a period of up to 15 years.
The government has passed a new law transferring responsibility for the inspection of mines and the protection of the environment during mining activities from the Ministry of Energy and Mines to the Organismo Supervisor de la Inversión en Energia, the energy regulatory agency.
The presidency of the Council of Ministers has initiated the appointment process for a new president of the board of directors of the Organismo Supervisor de la Inversión en Energia y Mineria (OSINERGMIN), the energy regulatory agency. The board of directors is OSINERGMIN's highest decision-making body.
The Lima Stock Exchange and competent authorities have considered various foreign frameworks in the regulation of a mechanism that permits national and foreign investors to promote the development of the mining industry by means of access to the local stock market. As a result, the venture capital segment of the Lima Stock Exchange has been created.
Law 28,090 lays down key obligations regarding the implementation of mine closure plans (MCPs). It has been criticized for not expressly stating that accounting provisions and expenses incurred under MCPs are deductible for income tax purposes. Mining companies have also called for income tax exemptions on interest and capital gains which may be derived from guarantees to be granted for MCPs.
The Sejm - the lower house of the Polish Parliament - recently ratified the Act on Taxation of the Extraction of Certain Minerals. The act presents a new approach to the taxation of natural resources, especially in relation to copper and silver, and will inevitably change the natural resources landscape in Poland.
PGNiG SA, which has a monopoly position in the Polish natural gas market, has recently published its view on the Natural Gas Release Programme. The concept of the programme presented by PGNiG discusses two issues - the functioning of the natural gas market and the implementation of the programme.
Recent press releases have shed some light on the long-anticipated Renewable Energy Sources Act, due to be enacted in coming months. The act is expected to provide a comprehensive regulation of the Polish renewables market and regulate the renewables support scheme, currently covered by the Energy Law. The act will not change the fundamental instruments of renewable energy support.
As the parliamentary election draws nearer, the debate on the future of the exploration and production of shale gas in Poland is heating up. While there is currently no separate legislation regarding Polish shale gas, according to representatives of the largest opposition party draft legislation has been prepared and will be submitted for discussion immediately after the elections.
The lower house of the Polish Parliament recently adopted an amendment to the Act on Stocks of Crude Oil, Petroleum Products and Natural Gas. The amendment provides for the possibility of maintaining compulsory stocks of natural gas in storage facilities located outside Poland. This option will be available where the supplier guarantees that the stocks will be supplied to the Polish transmission system within 40 days.
The lower house of the Polish Parliament recently passed a bill amending the Energy Law. If passed, the amendments will provide for the inclusion of electricity sold on the Warsaw Stock Exchange Energy Market in the so-called 'exchange obligation' (ie, the mandatory sale of generated electricity on a commodity exchange). Several provisions introduced by a previous amendment will also be amended and clarified.
The Council of Ministers recently adopted two decree laws on the implementation of a national natural gas system. The measures revise the corporate structure of the energy sector and its public service concessionaires, introduce new pricing mechanisms and address the issue of security of supply.
The Portuguese government has put in place a series of incentives and measures to encourage investment in renewable energies, and the sector is developing as a result. However, it will be extremely difficult to meet the country's renewable energy targets if the licensing procedure is not made more flexible by dismantling bureaucratic hurdles.
After successive advances and setbacks, Portugal and Spain have signed an agreement setting up the Iberian Electricity Market (MIBEL). Government authorities hope that end consumers will be the greatest beneficiaries of an open market, which should result in better electricity services, lower prices and higher supply guarantees.
Two recent decree-laws recognize that the Portuguese Electricity Regulation Framework must continue to evolve in order to adapt the national electricity system to a market regime which is open to competition. To this end, they set out the conditions for the commercialization, import and export of electricity within a market regime.
The government recently set out its new energy strategy. The programme has several ambitious objectives which aim to make the national sector more dynamic and efficient. The privatization of the leading Portuguese player in the petroleum and gas markets is also continuing.
Romania has transposed the provisions of the EU Renewable Energy Directive into national legislation, creating a comprehensive legal basis for the development of electricity generation from renewable sources. The new law also outlines an extensive programme of tax and other incentives for investors, but much secondary legislation is still required to bring the programme into effect.
If signed into law, new amendments to the Subsoil Law will dramatically change the political balance in Russia between the federal centre and the regions. The amendments will change the way in which mineral rights are granted in Russia and will streamline the relationship between subsoil users and the licensing authorities.
It seems that Russia has not given up on the idea of using production sharing agreements (PSAs) for the development of its natural resources and is now making some progress in establishing the legal framework under which PSAs will operate. The most recent initiatives concern the procedure for tax registration of PSA investors and operators.
Despite the enactment of amendments to the Production-Sharing Agreement (PSA) Law in 2003, which effectively killed off most future PSA projects, the Russian government issued a number of regulations in January 2004 clarifying the application of certain tax exemptions under the PSA regime.
A new federal law has changed both the circumstances in which Russia's production-sharing agreement (PSA) regime may be availed of and the procedure for awarding PSAs. Use of the PSA regime has been restricted to mineral deposits for which no investors are available to develop them under the regular licence/tax regime.
The US government views Russia as a vital alternative source of oil, and US government lending agencies have clearly been instructed to facilitate financing for Russian energy projects. However, opposition from Russian oil companies to foreign oil companies’ involvement in production sharing agreement (PSA) projects could stall the negotiation of new PSAs.
Facing major electricity shortages, Russia has embarked on important new efforts to attract capital to the sector, including restructuring the national utility, offers of shares in existing generators, tariff liberalization and licensing reform to permit new types of competitors. However, significant obstacles remain.
The National Assembly recently adopted legislation regulating the state guarantee for the performance of obligations from the loan made to the Šoštanj Thermal Power Plant by the European Investment Bank for financing the lignite-fired steam turbine power plant. Voting in relation to the act was very tight - it was adopted with only 29 votes cast in its favour - and the project still faces opponents and critics.
The government recently expressed its conditional support for the construction of the new 600 megawatt Unit 6 at the Šoštanj thermal power plant, which is already underway. Although the government is prepared to give a state guarantee of €440 million under certain conditions, the project is facing other obstacles that may have an impact on its future.
Representatives of Slovenia, Austria, Croatia, the Czech Republic, Germany, Hungary, Poland, Romania, Slovakia and the European Commission recently signed in Brussels a memorandum of understanding on north-south interconnections in Central Eastern Europe. The representatives expressed their joint determination to promote and further develop electricity, gas and oil infrastructure in the region at a ministerial level.
The Constitutional Court recently adopted a decision in which it ruled that several provisions of the Energy Act with respect to the regulation of electricity network charges did not comply with the Constitution. The court argued that such provisions had not provided the adequate legal framework for implementing regulations. To date, the National Assembly has not yet remedied the established unconstitutionality.
The merger project for the Slovenian and Italian electricity markets was initiated in April 2008, following a collaboration between the Slovenian and Italian power exchanges and the Slovenian market operator. The Energy Agency recently supported the project. The positive impact of the merger of the electricity markets can already be detected on the Slovenian power exchange.
The European Union's third legislative package on energy will come into force in March 2011 and will have a substantial impact on Slovenian domestic laws. In particular, it will significantly affect the status of the domestic energy regulator, the Energy Agency, and debate has already begun on necessary amendments to the agency's competence and the manner in which it operates.
In South Africa, mining royalties are currently capped at 5% for refined mineral resources and 7% for unrefined mineral resources, but there is no guarantee that they will remain so. However, mining companies can 'peg' the maximum royalty rate payable on the extraction on mineral resources by concluding fiscal stability agreements with the state.
A recent decision highlighted the fact that it is important for any business to ensure that it has the proper water-use authorizations under the National Water Act. A business that uses water (as defined in the act) without the relevant authorization risks incurring a fine and opens the possibility that the authorities and courts may issue a directive to cease its use of water.
The draft Expropriation Bill 2008, if approved, is likely to affect investors with interests in South Africa's prospecting and mining rights. Although the bill provides for the expropriation of prospecting and mining rights for less than their market value, its status remains unclear following a recent suspension of government deliberations.
Transworld Energy Minerals, the South African subsidiary of Australian mining company Mineral Resource Commodities, is the holder of the right to prospect for ilmenite in the sand dunes at the Wild Coast, an area of natural beauty. Recently it applied for a mining right over this area, as it was entitled to do as a result of its prospecting rights. However, the application has met with opposition.
The Bloemfontein High Court recently ruled in favour of DeBeers Consolidated Mines Ltd against the Department of Minerals and Energy in a lawsuit that could have significant implications for the mining industry. The crucial issue was whether the Mineral and Petroleum Resources Development Act authorized the granting of new prospecting rights for tailings dumps.
Former President Thabo Mbeki recently ordered the Department of Minerals and Energy to conduct a health and safety audit of all mines. South Africa’s deep mines and lack of safety history are causing increasing concern, and government and industry have finally begun taking steps to increase the health and safety of mineworkers nationwide.
A new royal decree has introduced significant changes to the financial regime relating to power generation through solar photovoltaic technology. Although the new decree applies only to plants that did not obtain final registration in the Administrative Special Register on or before September 29 2008, a second additional provision has raised concerns due to its potential retroactive application.
A major Swedish paper pulp producer has recently announced that it might move part of its production to South Africa due to high electricity prices in Sweden. Prices are expected to rise this year, as the allocation of emission allowances will be reduced during the second trading period. Sweden is now at a crucial point: the industry will either adapt to the emission allowance system or seek new ground.
Nord Stream has recently notified the Baltic Sea governments of its plans to build a pipeline for the transmission of natural gas from Russia to Germany, including a service platform near the Swedish island of Gotland. All political parties represented in the Swedish Parliament seem to be against the pipeline. This update reviews the legal possibilities to stop the laying of the pipeline.
The Energy Agency has developed a method to evaluate the reasonableness of network tariffs: the performance assessment model. The model is based on a virtual reference network, which is considered to be run in an economical and technically efficient manner. The model has been heavily criticized ever since its introduction and is soon to be examined by a court for the first time.
The Energy Market Inspectorate has delivered a report on price formation and competition in the electricity market. It suspects that the three companies dominating the market have limited the generation of electricity to influence electricity prices. Moreover, under governmental pressure, state-owned energy company Vattenfall has decided to offer a lowest price guarantee to its customers.
The government recently proposed changes to the current system of electricity certificates, which was implemented to increase the production of renewable electricity. This update provides an introduction to the electricity certificate system, reviews the principal changes proposed by the government and comments on a possible common Swedish/Norwegian market for electricity certificates.
Following a storm which caused the breakdown of large parts of the electricity network, the government announced the forthcoming implementation of rules aimed at achieving increased security of electricity supply. Among other things, the legislation will introduce a minimum requirement for secured electricity supply, as well as mandatory compensation for interrupted supply.
In the aftermath of the Japanese earthquake and the accidents that ensued at the Fukushima nuclear power plants, the Swiss Federal Department of Environment, Transport, Energy and Communications has suspended the authorisation process for the construction of new nuclear power plants in Switzerland. The suspension will be in effect "until safety standards have been carefully reviewed and if necessary adapted".
The Department of Mineral Resources issued an invitation on July 19 2000 to submit applications for petroleum concessions. This will be the eighteenth round of bidding since the enactment of the Petroleum Act. The invitation prescirbes various conditions to be met and matters to be considered.
This article discusses plans for restructuring the energy sector through corporatization/privatization, and recent public/private gas projects.
Two major developments have taken place in the Turkish energy market: a new draft regulation regarding the electricity market and privatization efforts in the sector. The draft regulation aims to make use of excess electricity and decrease production costs.
The new Petroleum Market Law is intended to create an environment in which commercial petroleum is supplied safely from domestic and external sources to consumers through a transparent and fair market. It provides for the proper regulation and monitoring of the market in order to achieve this aim.
Recently, the Energy Market Regulatory Authority and other governmental authorities have conducted talks about privatizing the electricity distribution sector and reducing the number of electricity distribution districts. The overarching aim of the discussions is to create a liberal and competitive environment in line with the Electricity Market Law.
Recent consultations concerning the liberalization of the domestic petroleum market have resulted in a major legislative change, namely the new Petroleum Market Law, which was enacted on December 4 2003. The law aims to ensure a steady and economically viable supply of petroleum.
The Electricity Market Law and the Natural Gas Market Law aim to establish transparent, competitive markets that operate in accordance with private law principles. To date, the Energy Market Regulatory Authority has passed a number of decisions to expedite the implementation of these laws and related secondary legislation.
Several private sector electricity companies have initiated legal actions against the Energy Market Regulatory Authority (EMRA) following the cancellation of various provisions of the Electricity Market Licensing Regulation. The companies claim that the replacement provisions impose additional liabilities on them or affect their existing agreements.
A regulation on special permits for subsoil use has recently entered into force. Among other things, it introduces a viable procedure for joint ventures in Ukraine's subsoil sector. If a special permit holder establishes a new company, the latter may continue to operate on the basis of the previously granted special permit.
Parliament has approved amendments to the Production Sharing Agreements Law that would reintroduce a stabilisation clause which received a presidential veto in 2010. Players in the upstream oil and gas industry have welcomed this as a pro-investor development and consider that, if approved, the reintroduction of the stabilisation clause will be beneficial to the investment climate.
Ukraine's 'green tariff' not only sets one of Europe's highest rates for electricity from alternative sources, but also imposes a statutory obligation on the wholesale electricity market to buy all alternatively sourced electricity that is not sold to retail customers. However, it is unclear how the tariff will be implemented if the government succeeds in reforming the electricity market.
It is too early to say whether tax incentives will help Ukraine to become more energy efficient and less reliant on conventional fuels in the long term. However, green tariffs, customs incentives and beneficial corporate profit tax and value-added tax exemptions should encourage today's foreign investors to consider Ukraine's investment potential.
Recently enacted legislation broadens the definition of 'land for energy facilities', provides for easier access to state-owned and municipal land and addresses previously unregulated issues surrounding land allocation and use for energy facilities. In cutting the land tax rate to 30% of the standard rate for energy facilities, it also provides a significant incentive for the development of alternative energy.
The newly adopted Tax Code significantly increases royalty payments and charges for subsoil use. Royalty payments have risen by approximately 16% for natural gas and almost 29% for oil and gas condensate. Charges for subsoil use have increased by approximately 66% for oil and gas condensate and almost 90% for natural gas.
The government plans to increase sustainable crude oil production capacity by nearly 1 million barrels per day by the end of 2006. Its response to the continuing high prices and demand has been to announce new production, transport and refining projects, with more likely to follow.
The government has published its response to a consultation on a fast-track review of the feed-in tariffs scheme for small-scale, low-carbon electricity generation. It has maintained the changes to tariff bands as originally proposed, going against over 80% of the submissions. A solution for benefiting from higher tariffs beyond the reduction date is regarded as a loophole by the government and may soon be removed.
Decommissioning security and costs have become key factors in oil and gas development, financing and asset trade, particularly in more mature oil and gas basins. This update considers the state of the industry on the UK continental shelf and outlines the legal framework for decommissioning, together with the problems that it has caused and some of the solutions that have been proposed.
The announcement of a rise in the rate of supplementary charge on corporation tax paid by the oil and gas industry surprised many in the energy sector. Some experts have warned that the move will deter investment in the North Sea and increase UK dependence on imported resources.
The Energy Bill 2010-11 has received its second reading. It mainly provides for the implementation of the government's Green Deal initiative, but it also seeks to improve the regime for third-party access to upstream oil and gas infrastructure in order to maximise recovery from the United Kingdom's declining North Sea reserves.
There are numerous model form joint operating agreements and although their basic principles are very similar, they take different approaches to certain issues. In particular, parties should be aware of the differences between the joint operating agreements issued by Oil and Gas UK and the Association of International Petroleum Negotiators.
The crisis at the Fukushima Daiichi nuclear power plant has prompted a worldwide debate about nuclear safety, with some countries taking steps to halt their nuclear power programmes. Secretary of State for Energy and Climate Change Chris Huhne has instructed Dr Mike Weightman, the chief nuclear inspector, to review the implications of the events in Japan and the lessons for the UK nuclear industry.
The Environmental Protection Agency (EPA) has proposed new rules on verifying the validity of transferred or purchased renewable fuel identification numbers. The proposed rules represent a major step in the EPA's effort to support the expansion of production and consumption of renewable fuels. Parties which participate in this market would be well advised to monitor the development of these rules.
A bipartisan group of US senators has introduced legislation to amend Section 3(c) of the Natural Gas Act and broaden the scope of countries that would receive expedited treatment in the review process for proposals to export liquefied natural gas (LNG). If passed into law, the act would require the Department of Energy to approve, on an expedited basis, proposals to export LNG to certain countries.
The Federal Energy Regulatory Commission (FERC) has dismissed a request for authorisation under Section 3 of the Natural Gas Act, finding that the proposed project did not constitute a liquefied natural gas (LNG) terminal as envisioned under the act, and required no other authorisation from FERC. The Gas Company, LLC proposed to import LNG from the Continental United States to Hawaii for regasification and distribution to end-use customers.
Recently the Texas Commission on Environmental Quality explicitly affirmed that equipment that avoids polluting emissions solely by improving efficiency may constitute "pollution control equipment" entitled to whole or partial exemption from ad valorem property taxation. Owners of listed property should be especially zealous in pursuing any pollution control exemption that they may be entitled to under that statute.
Recently, the Texas Railroad Commission (RRC) approved several amendments to the Texas Administrative Code relating to drilling, casing, cementing, well control and the commercial recycling of produced water and/or hydraulic fracturing flowback fluid. These changes reflect the transfer of the Texas Commission on Environmental Quality's Groundwater Advisory Unit to the RRC.
Although hydraulic fracturing has been utilised in the United States for decades, in the past two years the process and its alleged impact on water quality have received increasing attention and scrutiny. At the heart of these concerns are the additives used in fracturing fluids, which some argue contain potentially toxic substances. Most of the recent lawsuits that implicate hydraulic fracturing are still in the early stages of litigation.
The proposals of bidders in a tender for an international financial consultant to advise on the privatization of national energy holding company Uzbekneftegaz are under evaluation. The privatization plan is part of an aggressive oil and gas investment bid under which foreign companies involved in exploring and extracting oil and gas would enjoy major concessions.
A recently published law approves the treaty executed between Venezuela and China on cooperation for long-term financing. The treaty establishes that representatives from China will grant a line of credit to Venezuela to a maximum of $10 billion and Rmb70 billion. The Venezuelan representatives will pay for the line of credit through the sale of crude.
Only two consortia presented offers to participate in the incorporation of mixed companies that will develop the fields subject to the Carabobo Project bidding process. As such, the consortia were awarded the blocks for which they bid. The process has progressed rapidly and the National Assembly recently approved the incorporation of two mixed companies and established the main conditions for their incorporation.
The government has announced that the national interconnected power system is beyond its capacity and certain measures must be imposed in order to reduce power use. The measures include a compulsory 20% power reduction, regulated opening and working hours, scheduled electricity cuts and a ban on the use of incandescent or halogen lamps and light bulbs in advertisements.
Companies that are participating in the Carabobo Project bidding procedure (a project that involves upstream activities in the Orinoco Basin to produce extra heavy crude and its transport and upgrading) were recently invited to attend a meeting with the Ministry of the Popular Power for Energy and Petroleum. The purpose of the meeting was to reactivate the project, which was put on hold in June 2009.
The new Organic Law for the Development of Petrochemical Activities was published recently. The law imposes important restrictions on a sector that until now was fully open to foreign or national private investment. As a result of the law, new projects in this area cannot be carried out by entities that are not mixed companies with a state participation of at least 50%.
The organic law that reserves to the state the goods and services linked with hydrocarbon primary activities recently entered into force. As a result, the assets and services of oil service contractors that are required to carry out primary activities will be owned or carried out only by the state, PDVSA and its affiliates, and mixed companies controlled by the state. The possible impact of this law on private companies could be significant.
The Yemeni oil exploration sector is at a crossroads. As the major producing fields decline, Yemen has recently been looking for, and attracting, interest from the oil industry's major players. The two most recent licensing rounds saw applications from Total, Petronas, DNO, OMV, Petrobas, Repsol and Sonatrach, among others.
Including: Nationalisation; Privatisation; Supertax; Reaching equilibrium.
At least two major legislative amendments are pending that may affect regulation of the resources sector. The amendments to the Mines and Minerals Development Act and the Constitution have been on the drawing board for the past three years, and both pieces of legislation appear close to being revised in the next few months. However, the proposed amendments are not all positive.
Zambia's regulation of the petroleum sector was overhauled with the enactment of the Petroleum (Exploration and Production) Act 2008. The entry into force of the new act and the granting of the first two licences under its regime has provided a framework for the country's quest for its petroleum reserves.