Energy: Oil & Gas 2020

Last Updated August 10, 2020

Faroe Islands

Law and Practice

Authors



Bech-Bruun has an energy team that is one of the largest and most specialised departments at a Danish law firm. The team consists of 43 partners, associates and legal consultants that have significant experience in handling regulatory and contentious matters within the energy sector and M&A of energy companies. The energy team is located in Bech-Bruun’s offices in Copenhagen, Aarhus and New York. Bech-Bruun’s office in New York is headed by partners working on major renewable energy projects. The core expertise of Bech-Bruun’s energy team includes regulatory frameworks for energy production and supply, M&A of energy companies, project financing, taxation of energy products, and negotiation and conclusion of offshore infrastructure contracts. The energy team has extensive experience rendering advice to the oil and gas sector within all aspects from purchase/sale to the conclusion of contracts, licence applications, etc. The team has been involved in the majority of the high-profile energy transactions involving Danish interests, including Total S.A.’s acquisition of Maersk Oil and Energinet’s acquisition of gas distribution networks and storage facilities from DONG (now Ørsted).

All petroleum reservoirs are the property of the Faroe Islands and may only become subject to prospecting, exploration or production by any third party by virtue of a licence granted by the Faroese government in accordance with the Hydrocarbon Activities Act (1998).

As a part of the Danish Common Community – consisting of Denmark, Greenland and the Faroe Islands – the Faroe Islands are an integral part of the Danish Constitution and the Danish legal system. In 1948 the Danish Parliament passed the Faroese Home Rule Act and the Faroe Islands were given a special, self-governed status within the Danish Common Community.

In December 1992, an agreement was made between the Danish government and the Faroese government for the Faroese home-rule authorities to take over the rights to natural resources in the subsoil and bedrock in and around the Faroe Islands. From then on it has been the Faroe Islands that, independent of Denmark, have had the legislative and administrative authority over the exploration and production of hydrocarbons.

The governmental policy for petroleum activities is exercised by the Ministry of Environment, Industry and Trade primarily through the Faroese Geological Survey, Jarðfeingi.

Jarðfeingi is responsible for all administrative tasks related to petroleum activities in the Faroe Islands. The administrative tasks include communication with foreign and Faroese companies, and with Faroese ministries and other public institutions responsible for tasks related to the petroleum activities.

Specific matters in relation to the environment are divided between the Environment Agency and the municipalities, whereas competition regulation is governed by the Competition Authority.

More information about the ministry and the above agencies is available at their respective websites.

The Hydrocarbon Activities Act does not contain provisions on the rights of the Faroese government to participate in licences issued according to the Act. So far, the Faroese government has not and does not participate in any licences. Thus, there is no national oil or gas company in the Faroe Islands.

The Hydrocarbon Activities Act provides the framework, whereas adaptations and more detailed regulation can be issued by the Ministry of Trade and Industry. Pursuant to the Hydrocarbon Activities Act, the government has established:

  • the Executive Order of 8 March 2001 on reimbursement of expenses in connection with hydrocarbon activities;
  • the Executive Order of 8 March 2001 on health, safety and the environment during the exploration phase of hydrocarbon activities; and
  • the Executive Order of 20 November 2003 on geological and geophysical matters in connection with approval of deep drilling.

Prior to inviting applications, the areas to be offered for licensing and the general terms as well as the conditions of the offered licences must be fixed in a parliamentary act in accordance with the Hydrocarbon Activities Act. The explanatory notes to the parliamentary act must include an assessment of the possible impact of the hydrocarbon activities in respect of, inter alia, the environment, the fishing industry and the economy. The terms and conditions for the fifth licensing round were regulated by the Parliamentary Act on the Fifth Licensing Round for exploration and exploitation of hydrocarbons. The fifth round opened on 11 July 2019 in conjunction with the 32nd UK Licensing Round. The deadline for applications was 12 November 2019.

In 2010, an amendment to the Hydrocarbon Activities Act was passed by the Parliament that established the possibility to apply for a licence for exploration and production of hydrocarbons through an open-door procedure. As of July 2020, the areas south and east of the Faroe Islands are open for out-of-round bids. The Faroese Geological Survey states that the structures near the Fugloy Ridge, Ymir Ridge and Wyville Thomson Ridge are the most promising. The licences granted under the open-door regime are subject to the same terms and conditions that were passed in the Parliament for the previous round. 

Taxation of petroleum activities is governed by the Act of 21 April 1999 on the Taxation of Revenue relating to hydrocarbon activities with later amendments (Act of 7 March 2000) and the Parliamentary Act of 14 February 2000 on assessment, collection, audit, etc in connection with taxation of income derived from hydrocarbon activities. The area of taxation has been taken over by the Faroese authorities.

The Faroese government grants licences with the exclusive right for and production of petroleum within a certain area and subject to specific terms and conditions. Separate licences may not be granted for exploration and production. Prior to the granting of such licences, the government invites applicants in a publicly announced licensing round. As of July 2020, a total of five licensing rounds have been held for hydrocarbon exploration in the Faroese territory. Exploration and production activities may only take place by virtue of a licence granted by the Faroese government.

A prospecting licence is cheaper and simpler to get than a licence for exploration and production. Such licence gives the licensee the right to perform various geological surveys. The application can be submitted by regular mail or email.

The government may also reissue a licence for which all possibilities of ex-tension have been exhausted, but where it has not been possible to fully exploit the accumulation of hydrocarbons. Licences may only be granted to applicants that are considered to have the requisite expertise, experience, resources and financial capacity.

In determining who will be granted a licence, the Faroese government is to have regard to the extent to which the Faroese society will gain insight into and benefit from the activities carried out by the applicant pursuant to a licence.

After a public notice inviting applications, the Faroese government may decide not to grant any licences on the basis of the applications received.

Licences with the exclusive right for and production of petroleum within a defined area and subject to specific terms and conditions are granted by the Faroese government pursuant to the rules in the Hydrocarbon Activities Act. Licences for exploration and production of petroleum are granted following a public notice inviting applicants to a "licensing round".

The fourth licensing round of the Faroese Continental Shelf was officially opened by the Faroese government on 17 May 2017 and the round closed nine months later on 17 February 2018. In February 2018 it was announced by the Minister of Foreign Affairs and Trade that one application had been received. The application was processed by Jarðfeingi and discussed with the applicant. However, in April 2018 it was announced that the application had been withdrawn by the applicant. Therefore, no licences were issued in the fourth licensing round. A fifth licensing round opened on 11 July 2019 in conjunction with the 32nd UK Licensing Round. The closing date for applications was 12 November 2019. To date, there has not been any announcement regarding the amount of applications received.

In 2010, an amendment to the Hydrocarbon Activities Act was passed by the Faroese Parliament establishing the possibility to apply for a licence for exploration and production of petroleum through an open-door procedure, meaning that companies may apply for a licence within the areas comprised by the previous licensing rounds without prior invitation for applications. As of July 2020, the areas south and east of the Faroe Islands are open for out-of-round bids. The Faroese Geological Survey states that the structures near the Fugloy Ridge, Ymir Ridge and Wyville Thomson Ridge are the most promising. The licences granted under the open-door regime are subject to the same terms and conditions that were passed in the Parliament for the previous round. The out-of-round applications are handled in the same way as applications received during a licensing round.

Another procedure is the neighbouring block procedure. This procedure may be used in situations where an accumulation or a potential discovery already licensed extends into an unlicensed area. In these situations, the most commercially viable solution may be to explore the border-straddling accumulation in connection with the already licensed accumulation.

The licence fees are laid down in the model licences for the respective licensing rounds. In the fifth licensing round the licensee shall pay periodic payments calculated as the amounts specified in annex 2 b of the Parliamentary Act on the Fifth Licensing Round multiplied by the number of square kilometres comprised in the licensed area.

If determined by Jarðfeingi, the periodic payments can be increased or subsequently reduced in line with movements in the Index of the Price of Crude Oil acquired by Refineries (published in the Digest of Faroe Islands Energy Statistics).

The Faroe Islands have divided their fiscal regime into a corporate tax on production income and a special tax on particularly high production income.

The corporate tax rate is 27%, whereas the corporate tax rate for companies other than oil companies is 18%. In addition, if oil companies generate a particularly high income, they are subject to a special tax. The special tax consists of three levels: if the rate of return on investment and development cost is below 20%, no special tax is payable; if the rate of return is between 20% and 25%, the special tax rate is levied at 10%; and if the rate of return exceeds 30%, the special tax rate is levied at 40%, which is the highest rate payable.

Taxpayers subject to the Hydrocarbon Tax Act are assessed by the Assessment Council, which may, under the Hydrocarbon Tax Administration Act (2000), authorise the Faroese Customs and Tax Administration to exercise the authority of the Assessment Council under the Hydrocarbon Tax Act.

There is no national oil or gas company in the Faroe Islands.

In order to ensure that Faroese companies can participate in hydrocarbon exploration activities, the Hydrocarbon Activities Act stipulates that all transport related to hydrocarbon activities to and from the Faroese region shall take place via Faroese ports or the Faroese international airport.

In the model licence for the fifth licensing round, the licensees were obliged to provide Faroese companies genuine opportunities, in free and open competition with others, to obtain contracts to provide goods and services in connection with the performance of the activities stipulated by the licence.

The licensee must obtain a specific environmental permit or approval before undertaking any particular operation. Furthermore, it can be required that the licensee, prior to the granting of the licence, has to submit an environmental impact assessment of the contemplated activities. Rules as to the approval are specified in executive orders established pursuant to the Marine Environmental Act (2005), which is administered by the Minister of Environment, Industry and Trade through the Faroese Environment Agency. The affected public authorities and organisations must be given an opportunity to express their opinion on the environmental impact assessment prior to the approval of activities.

Further, the Hydrocarbon Activities Act stipulates that production activities and drilling activities may only take place following a prior approval by the Faroese government (Jarðfeingi) of equipment, programme and mode of operation. The Executive Order of 8 March 2001 on Health, Safety and the Environment during the exploration phase of hydrocarbon activities contains further regulation of drilling activities. Jarðfeingi monitors production and drilling activities.

There is not yet any production of oil in the Faroe Islands. There is therefore not yet any specific regulation regarding different production methods.

A granted licence comprises the right to produce hydrocarbons in the defined area if discoveries are made in the exploration period. However, some activities such as drilling are subject to further individual controls. A licence may be issued with a view to exploration for a term of up to 12 years, which may be prolonged by up to two years at a time. The total term of exploration may not exceed 16 years. The licensee may be entitled to an extension of the licence with a view to production for a period to be fixed in the licence, which may not exceed 30 years.

As of July 2020, there has been no production of hydrocarbons and, as yet, no plans to establish hydrocarbon facilities in the Faroe Islands. The Hydrocarbon Activities Act provides framework provisions on decommissioning in accordance with which cessation of operations may only take place following prior approval by the Faroese government. The Hydrocarbon Activities Act requires licensees to draft a decommissioning plan to be submitted for the approval of the Faroese government no later than two years before cessation of the hydrocarbon activities. The decommissioning plan shall include provisions for the financing of the decommissioning. There is no detailed regulation for abandonment and decommissioning yet.

Neither the Hydrocarbon Activities Act nor the model licence for the fifth licensing round contains specific provisions regarding security deposits or specific amounts required. Deposits and conditions may vary on a case-by-case basis depending on the size and character of the specific facility. The Faroese government may at any time order the licensee to substantiate its ability to finance the implementation of a decommissioning plan or to furnish requisite security in order to do so, if the Faroese government has reason to presume that the licensee does not have the necessary financial resources.

The licensee is obliged to make good any damage caused in connection with activities performed in pursuance of the licence. This also applies if the damage is caused by accident. The licensee is obliged to take out insurance to cover any liability.

The fourth licensing round of the Faroese Continental Shelf was officially opened by the Faroese government on 17 May 2017. The round closed nine months later on 17 February 2018. In February 2018 it was announced by the Minister of Foreign Affairs and Trade that one application had been received. The application was processed by Jarðfeingi and discussed with the applicant. However, in April 2018 it was announced that the application had been withdrawn by the applicant. Therefore, no licences were issued in the fourth licensing round. A fifth licensing round opened on 11 July 2019 in conjunction with the 32nd UK Licensing Round. The closing date for applications was 12 November 2019. To date, there has not been any announcement regarding the amount of applications received.

Transfer of interest in a licence, concession or production sharing agreement to another company requires government consent by the Minister of Environment, Industry and Trade. Change of control requires similar approval. The transfer of interest in a licence may be conditional on the government’s approval or approval may be requested beforehand. Transfer of interests in a licence (direct or indirect) requires documentation for the financial and technical capacities of the new licensee (or group of licensees). The timetable may vary but the process will usually not exceed a few weeks.

The costs for transfers of interests may vary. According to Executive Order No 34 on reimbursement of expenses in connection with hydrocarbon activities, licensees will pay the expenses incurred by the authorities in connection with the administration of matters regarding licences and approvals, etc. The authorities may charge an hourly rate of DKK740 for work related to administrating the Hydrocarbon Activities Act.

To date, there has been no hydrocarbon production in the Faroe Islands. There are no legal or regulatory restrictions on production rates. However, where warranted by concern for safe appropriate or efficient production, or necessitated by weighty considerations for society, the Hydrocarbon Activities Act provides the Faroese government the legal basis to make changes in approved production plans and regulate production. This could be either by fixing maximum or minimum production rates.

Any establishment or operation of pipeline facilities in the land territory or the territorial sea can only take place in accordance with a licence granted by the government of the Faroe Islands pursuant to the Hydrocarbon Activities Act.

The Faroese home-rule authorities have not provided any regulation on natural gas supply (downstream) comparable to, for instance, the Danish Natural Gas Supply Act, since there is no natural gas supply sector, nor any current plans to establish any natural gas supply infrastructure in the Faroe Islands. Regulation on natural gas supply will presumably be provided before any steps are taken towards commencing any natural gas supply or establishing any natural gas infrastructure.

The government may, based on the nature of the facility, decide that the establishment or operation of natural gas storage facilities is subject to permission in pursuance of the Environmental Protection Act (1988). Further, offshore installations are subject to rules and permit requirements in executive orders established pursuant to the Marine Environmental Act.

The Faroe Islands does not have a state-owned oil or gas company with national monopoly.

There are no natural gas transportation systems or storage facilities in the Faroe Islands. There is also no regulation regarding the establishment of tolls and tariffs on access to natural gas transportation systems and storage facilities.

The Faroese Competition Council may, in pursuance of the Faroese Competition Act (2007), take action against abuse of a dominant position, including on parties imposing unfair purchase or selling prices, or other unfair trading conditions.

The Faroese Competition Council enforces the competition regulation in the Faroe Islands. The Competition Authority serves as secretariat to the Competition Council and handles the day-to-day administration of the Act on behalf of the Competition Council. There is no sector-specific supervisory authority for the natural gas sector.

The Competition Council’s main task is to react if companies holding a dominant position in their respective relevant markets take unfair advantage of their market position. The underlying principle is that consumers should enjoy fair, uniform and transparent prices and conditions of supply.

Decisions made by the Competition Council may be appealed to the Competition Appeals Tribunal. Decisions by the Competition Council cannot be brought before the courts until the Competition Appeals Tribunal has made its decision.

Since there is no supply of natural gas in the Faroe Islands, the authorities have not yet set any standards to determine anti-competitive or manipulative behaviour in the natural gas sector. As a general rule, undertakings must provide their services on objective, transparent and non-discriminatory terms.

Pursuant to the Hydrocarbon Activities Act, any establishment or operation of pipeline facilities in the land territory or the territorial sea may only take place pursuant to a licence granted in accordance with the Act. The government must make sure that the pipelines do not cause inconvenience, especially to oil, gas and fishing operations in the shelf area.

Since there is no natural gas supply sector, nor any current plans to establish any natural gas supply infrastructure in the Faroe Islands, the Faroese home-rule authorities have not provided any regulation on natural gas supply (downstream) comparable to, for instance, the Danish Natural Gas Supply Act. Regulation on natural gas supply will presumably be provided before any steps are taken towards commencing any natural gas supply or establishing any natural gas infrastructure.

The government may, based on the nature of the facility, decide that the establishment or operation of natural gas storage facilities is subject to permission in pursuance of the Environmental Protection Act. Further, offshore installations are subject to rules and permit requirements in executive orders established pursuant to the Marine Environmental Act.

There have not previously been and nor are there presently any fiscal terms under downstream licences in the Faroe Islands. So far, no downstream licences have been issued in the Faroe Islands.

See 2.4 Income or Profits Tax Regime Applicable to Upstream Operations. The same regulation applies for revenues relating to pipeline transmissions of extracted hydrocarbons as is the case for upstream operations.

There is no national oil or gas company in the Faroe Islands.

The government of the Faroe Islands has not yet issued midstream or downstream licences.

No downstream licences have yet been issued by the Faroese government.

In the absence of an agreement with the landowner, and provided that regard for public interest dictates it and to the extent necessary, the government or the relevant municipality may subject to a statutory authority order a compulsory sale of the necessary rights over land. Any compulsory sale of real estate with a view to activities comprised by the Hydrocarbon Activities Act can be made in accordance with the Expropriations Act (1881).

There are no natural gas transportation systems or storage facilities in the Faroe Islands. There is also no regulation regarding the establishment of tolls and tariffs on access to natural gas transportation systems and storage facilities.

The Faroese Competition Council may, in pursuance of the Faroese Competition Act, take action against abuse of a dominant position, including on parties imposing unfair purchase or selling prices, or other unfair trading conditions.

There is no supply or trading of petroleum in the Faroe Islands.

The government has not yet provided any regulation on oil or natural gas supply and no governmental sector-specific supervisory authority has yet been established.

The Faroese Competition Council may take action in pursuance of the Faroese Competition Act.

To date, there has been no hydrocarbon production in the Faroe Islands. There are no specific rules governing exports of crude oil, natural gas and petroleum products.

Establishment and operation of pipeline facilities for activities governed by the Act on Hydrocarbon Activities may only take place pursuant to a licence from the Faroese government. A licence to build a pipeline may be granted subject to certain conditions in relation to routing, dimensions, ownership, user payment, etc.

The establishment and operation of subsea pipeline facilities by another country for transporting hydrocarbons in transit across the Faroese continental shelf must be approved by the Faroese government.

A company will need governmental consent from the Minister of Environment, Industry and Trade if the company wants to transfer its interest in a licence. A similar approval is required in the case of a change of control. The transfer of interest in a licence may be conditional on the government’s approval or the approval can be requested beforehand.

The new licensee (or group of licensees) must document that the required financial and technical capacities are in place.

The timetable is not fixed. However, usually the process will not exceed a few weeks.

The costs of the transfer of interest may vary. According to Executive Order No 34 on reimbursement of expenses in connection with hydrocarbon activities, licensees will pay the expenses incurred by the authorities in connection with the administration of matters regarding licences and approvals, etc. The authorities may charge an hourly rate for work related to administrating the Hydrocarbon Activities Act.

The regulation of petroleum activities on the Faroe Islands does not make a distinction between foreign and local investors in petroleum. This entails that both local and foreign investment are subject to the same rules in accordance with the Hydrocarbon Activities Act.

The Faroese government may grant a licence with an exclusive right for the exploration for and production of petroleum. Such a licence is granted for a specific area and subject to more specific terms and conditions. The Faroese government may only grant such a licence to applicants that are considered to have the requisite expertise, experience, resources and financial capacity.

In determining to whom a licence is granted, the Faroese government shall have regard to the extent to which the Faroe Islands will gain insight into and benefit from the activities carried on by virtue of the licence.

The area of environmental protection is regulated in the Hydrocarbon Activities Act, the Marine Environmental Act and the Executive Order of 8 March 2001 on Health, Safety and the Environment during the exploration phase of hydrocarbon activities.

The Hydrocarbon Activities Act stipulates that a specific environmental permit or approval must be obtained prior to the undertaking of any particular operation. The Act also entails that the licensee can be required to submit an environmental impact assessment of the contemplated activities prior to being granted a licence. The specific rules as to the approval are specified in executive orders established pursuant to the Marine Environmental Act.

Further, the Hydrocarbon Activities Act specifies that production activities and drilling activities may only take place following a prior approval by the Faroese government (Jarðfeingi) of equipment, programme and mode of operation. The Executive Order of 8 March 2001 on Health, Safety and the Environment during the exploration phase of hydrocarbon activities contains further regulation of drilling activities.

The governmental policy for the petroleum sector is exercised by the Minister of Environment, Industry and Trade through The Faroese Geological Survey, Jarðfeingi, which is responsible for all administrative tasks related to petroleum exploration and production activities in the Faroe Islands. The administrative tasks include communication with foreign and Faroese survey and oil companies, and with Faroese ministries and other public institutions responsible for tasks related to the oil activities. Further, Jarðfeingi monitors production and drilling activities.

The Marine Environmental Act is administered by the Minister of the Interior through the Faroese Environment Agency. The affected public authorities and organisations must be given an opportunity to express their opinion on the environmental impact assessment prior to the approval of activities.

More information on the regulation of the area of environmental protection is available at the respective websites of Jarðfeingi and the Faroese Environment Agency.

The general provisions of the Hydrocarbon Activities Act establish that the aim of the Act is to provide prudent and appropriate exploration and exploitation of petroleum resources for the benefit of the Faroese economy and employment opportunities. This entails that such activities shall be planned with due consideration to, among others, the environment, nature and fishing in the Faroe Islands.

The areas to be offered for licensing as well as the general terms and conditions on which licences are to be granted must be fixed by law. This law is required to include explanatory notes with an assessment of the possible impact of the petroleum activities on, inter alia, the environment and nature.

Both exploration and production must be carried out in a safe and appropriate manner in accordance with common international practice as established for activities carried out under similar conditions. It is a requirement that the activities are carried out with due consideration to the environment in order to avoid any waste of petroleum. Appropriate measures must also be taken to avoid damage to flora and fauna, and any other pollution of the environment.

If a licensee decides to develop and initiate production from a petroleum accumulation, such licensee shall draw up a plan for these activities – a so-called field development plan – and shall submit the plan to the Faroese government for approval. The plan must include information and assessments regarding the petroleum discovery and the associated production activities, including environmental, technical, financial, safety, navigation and fishing information. The licensee must also obtain a specific environmental permit or approval before undertaking any particular operation. Rules as to the approval are specified in executive orders established pursuant to the Marine Environmental Act.

Moreover, part 4 of the Hydrocarbon Activities Act specifies that it can be required that the licensee, prior to the granting of the licence, has to submit an environmental impact assessment of the contemplated activities.

Production, drilling activities and decommissioning may only take place following a prior approval by the Faroese government. The Executive Order of 8 March 2001 on Health, Safety and the Environment during the exploration phase of hydrocarbon activities contains further regulation of drilling activities.

According to the Hydrocarbon Activities Act, offshore installations as well as onshore installations and facilities for the production of hydrocarbons may only be established by a licensee following the prior approval by the Faroese government of a field development plan.

The Faroese government issued an executive order in 2001 concerning health, safety and the environment during the exploration phase of the hydrocarbon activities. The executive order includes rules on the management of hydrocarbon activities, risk and emergency response analyses, technical requirements for offshore installations, working environment and drilling and well-related equipment, operations on offshore installations and requirements for information and documentation regarding the implementation of the requirements in the executive order.

The operator is required to lay down management and control systems regarding health, safety and the environment. Further, the operator must conduct risk and emergency response analyses, and ensure that the risk level does not exceed what is acceptable. The analyses are to identify all relevant risks, evaluate these risks against the defined risk acceptance criteria, identify risk-reducing measures and assess the general emergency response.

The operator must develop a plan for positioning the offshore installation and if necessary, include a mooring plan and underwater operations for positioning subsea equipment.

The Faroese government supervises compliance with the provisions in the executive order concerning health, safety and the environment.

Transgressions of the requirements or failure to comply with orders are punishable by a fine or simple detention. Employers transgressing the provisions of the executive order may be fined, even though the transgression is not attributable to the employer’s wilful act or gross negligence. Public limited companies, private limited companies and co-operative societies may become liable to a fine for transgressions.

To date, there has been no production of hydrocarbons and, as yet, no plans to establish hydrocarbon facilities in the Faroe Islands. The Hydrocarbon Activities Act provides framework provisions on decommissioning in accordance with which cessation of operations may only take place following prior approval by the Faroese government. The licensees are required to draft and submit a decommissioning plan for the approval of the Faroese government no later than two years before cessation of the hydrocarbon activities. The plan shall include provisions for the financing of the decommissioning. There is no detailed regulation for abandonment and decommissioning yet.

Neither the Hydrocarbon Activities Act nor the model licence for the fifth licensing round contains specific provisions regarding security deposits or specific amounts required. Deposits and conditions may vary on a case-by-case basis depending on the size and character of the specific facility.

The regulation of petroleum activities on the Faroe Islands does not include any rules on climate change laws.

There are no onshore oil and gas activities in the Faroe Islands, nor have there been any. As a general rule, local governments cannot limit oil and gas development as such activities are governed by the Faroese government. The Faroese government may authorise governmental and other public institutions to exercise powers vested in the Faroese government by the Act on Hydrocarbon Activities.

There is no special scheme relating to unconventional upstream interests.

There are no LNG facilities in the Faroe Islands.

Liquid natural gas storage facilities may only be established or commenced subject to permission in pursuance of the Environmental Protection Act. Further, LNG facilities may be subject to permissions according to other legislation, including the planning regulation.

The government has not yet provided any regulation on natural gas supply, including any regulation of LNG prices or terms of service.

The Faroese Competition Council may, in pursuance of the Faroese Competition Act, take action against abuse of a dominant position, including on parties imposing unfair purchase or selling prices, or other unfair trading conditions.

The Faroese continental shelf remains a relatively unexplored part of the north-west Atlantic Margin and recent developments immediately adjacent to the Faroese–UK boundary have increased optimism. Only relatively few exploration wells have been drilled, and the wells are not widely distributed and have only penetrated a limited part of the stratigraphy. The Faroe Islands have no consumption of petroleum and no petroleum infrastructure, including storage, transport or distribution facilities.

There have not been any material changes in oil and gas law or regulation over the past year.

Bech-Bruun

Langelinie Allé 35
2100 Copenhagen
Denmark

+45 72 27 00 00

+45 72 27 00 27

info@bechbruun.com www.bechbruun.com
Author Business Card

Law and Practice

Authors



Bech-Bruun has an energy team that is one of the largest and most specialised departments at a Danish law firm. The team consists of 43 partners, associates and legal consultants that have significant experience in handling regulatory and contentious matters within the energy sector and M&A of energy companies. The energy team is located in Bech-Bruun’s offices in Copenhagen, Aarhus and New York. Bech-Bruun’s office in New York is headed by partners working on major renewable energy projects. The core expertise of Bech-Bruun’s energy team includes regulatory frameworks for energy production and supply, M&A of energy companies, project financing, taxation of energy products, and negotiation and conclusion of offshore infrastructure contracts. The energy team has extensive experience rendering advice to the oil and gas sector within all aspects from purchase/sale to the conclusion of contracts, licence applications, etc. The team has been involved in the majority of the high-profile energy transactions involving Danish interests, including Total S.A.’s acquisition of Maersk Oil and Energinet’s acquisition of gas distribution networks and storage facilities from DONG (now Ørsted).

Compare law and practice by selecting locations and topic(s)

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.