The Danish government proposes an amendment of the Subsoil Act, which expands the secondary financial liability for costs in connection with decommissioning of offshore facilities.

According to the amendment proposal, the costs for decommissioning of offshore facilities shall also cover “indirect transfers” of licences for exploration and production of oil and gas.

The amendment means that also parent companies of participants in a licence for exploration and production of oil and gas will be subject to secondary financial liability for costs in connection with decommissioning of offshore facilities that exist at the time of the transfer, even if the parent company has sold the shares of the participant (an "indirect transfer" of the licence).

The secondary financial liability is towards the other participants in the licence, but also towards the Danish State to the extent that the costs cannot be paid by the other participants.

The amendment of the Subsoil Act is an expansion of the secondary financial liability under Section 29 a of the Subsoil Act, which currently only imposes the secondary liability in case of direct transfers of the licence. The purpose of the amendment is to give equal status to indirect transfers (sale of shares of the licensee) and direct transfers of the licence.

The Danish Energy Agency has shared a draft bill for informal consultation in Oil Gas Denmark. The draft bill contains an exception from the new rule on the expansion of the secondary financial liability. The exception is supposed to apply where the facilities covered by the liability are of a very limited scale, or in case of intra-group transfers of the licence.

contacts

Søren Hornbæk Svendsen

Partner

Christian Tullberg

Partner