Companies are required to obtain a licence under the Danish Subsoil Act in order to explore and produce oil and natural gas.
Companies can apply to the
Danish Energy Agency for a licence to explore and produce oil and gas within a specified area. An exploration licence is typically granted for a period of six years. If the oil companies make commercial discoveries of oil or gas, and start planning production, the licence can be extended by up to 30 years. Licences are issued by the Minister for the energy area.
Via a licensing round, the Danish Energy Agency will announce a number of conditions for making a tender for an area, and the terms of competition for granting a licence are published after review by the Standing Committee on Energy in the Danish Parliament (Folketinget). Applicants can be either individual companies or a consortium of companies. The application contains a technical and financial assessment of the likelihood of a discovery. For the purpose of acquiring more information and clarifying the possibilities of discoveries, applicants also offer a work programme for completion within a specified period of time. The work programme typically contains offers to obtain new information, e.g. through seismic acquisition or wells. The company or consortium that offer the most comprehensive work programme are normally granted the licence.
The Danish North Sea Fund is part of the group with 20% share interest.
The Danish sector is divided into two areas in relation to licences; the area west of 6°15’E, which includes the Central Graben and adjacent areas east of this area; and the area east of 6°15' E, which includes the eastern part of the North Sea, the onshore area and the inner Danish waters. In the eastern area, where no commercial oil or gas discoveries have yet been made, an Open Door procedure was introduced in 1997.
Through this procedure, oil companies can regularly apply for, and have licences granted for, a specific period.