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Unofficial translation



AWARDS IN PREDEFINED

AREAS 20XX



PETROLEUM PRODUCTION LICENCE

NO.xxx.

FOR

PETROLEUM ACTIVITIES



awarded

x

[Petoro AS]

x

by royal decree xx.xxxx.xxxx



By Royal Decree XX.XX.XXXX it is decided:



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Pursuant to Act No. 72 of 29 November 1996 pertaining to petroleum activities (the

Petroleum Act) petroleum production licence no. XXX is granted.

The Licensees are:

X

[Petoro AS*]

X



X%

X%

X%



[*Petoro AS is licensee on behalf of the State's participating interest (the State's Direct

Financial Interest - SDFI)]

The Production Licence is granted subject to the conditions stated below and the laws and

regulations in effect at any time.

1. RIGHTS, AREA AND DURATION

a) This Production Licence gives an exclusive right to the exploration for petroleum,

exploration drilling and production of petroleum in the licence area:

Field

No.:



Block

No.:



Sq. km:



Total area:

Corner co-ordinates:



b) This Production Licence is valid until and including xxxx (the initial period).

c) When the obligatory work commitment described in Art. 4 below has been carried out, the

Licensees may require an extension of the Production Licence period after the expiry of the

initial period or after the expiry of any extension of the initial period in accordance with the

Petroleum Act section 3-9. The duration of such extension shall be xx year(s).

d) The Licensees may require an extension in accordance with litra c) for those part(s) of the

Petroleum Production Licence comprised by a plan for development and operation which has

been submitted to the Ministry of Petroleum and Energy (the Ministry). Based on the plan

submitted, the Ministry will determine the extension of the area comprised by the extended

Production Licence period.

e) A Production Licence area not comprised by litra d) shall be relinquished at the time of

expiry of the initial period.

2. AREA FEE

On extension of the initial period, and on extension of the licence period beyond the initial

period in accordance with item 1 c), the Licensees shall pay an area fee in accordance with

the laws and regulations in effect at any time. The amount is payable to the Norwegian

Petroleum Directorate (NPD).



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3. OPERATOR

Y has been appointed and has accepted the designation and responsibility as operator.

4. OBLIGATORY WORK COMMITMENT (EXAMPLE)

The Licensees have accepted to undertake a work commitment which shall be completed in

its entirety by xxxx.

The content of the work commitment, and specifications for its completion, are as follows:

a) Within x years from the time of award of this Production Licence, the Licensees

shall:

 Acquire seismic data of the entire area of the Production Licence.(example)

 Conduct relevant geological and geophysical studies. (example)

b) Within y years from the award of this Production Licence, the Licensees shall decide

whether or not to to drill an exploration well. The decision shall be made pursuant to Article

3.2 of the Joint Operating Agreement. If a majority decision on drilling an exploration well is

made, the Production Licence shall continue to be valid.

If no majority decision on drilling an exploration well is made, but one or more Licensees

wish to drill an exploration well in any case, the Licensees who do not want to drill the

exploration well shall withdraw from the joint venture pursuant to Article 24 of the Joint

Operating Agreement. The procedures for approval by the Ministry shall apply accordingly.

For the Production Licence to continue to be valid, the remaining Licensees must within y

years from the award apply to the Ministry, with a copy to the NPD, for approval to drill the

exploration well. If the Ministry does not accept the application, the Production Licence must

be surrendered in its entirety. Any change of Operator shall be subject to the approval of the

Ministry pursuant to the Petroleum Act Section 3-7.

If none of the Licensees wish to drill an exploration well, the Production Licence must be

surrendered in its entirety within y years.

The Licensees must within y years from the award notify the Ministry in writing, with copy

to the NPD, of their decision under this item b).

c) Within Z years from the award of this Production Licence, the Licensees shall decide

whether to prepare a plan for development and operation of the relevant petroleum deposit(s)

(Decision on Continuation). If one or more Licensees do not wish to take part in the

preparation of a plan for development and operation, the participating interests concerned

must be transferred either to a third party or to one or more of the remaining Licensees to

ensure 100 % participation in the development plan. If the participating interest concerned is

not acquired by a third party or remaining Licensee, no Decision on Continuation is

considered to have been made.

For the Production Licence to continue to be valid, the remaining Licensees must within z

years from the award agree to prepare a plan for development and operation of the relevant

petroleum deposit(s). Any change of Operator will be subject to the approval of the Ministry

pursuant to the Petroleum Act Section 3-7.

If none of the Licensees wish to prepare a plan for development and operation for the



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relevant petroleum deposit(s), no Decision on Continuation is considered to have been made.

If no Decision on Continuation is made, the Production Licence must be surrendered in its

entirety within z years from the award of the Production Licence.

The Licensees must within z years from the award notify the Ministry in writing, with copy

to the NPD, of their decision under this item c).

d) Within ø years from the award of this Production Licence, the Licensees must decide

whether to submit to the Ministry for approval a plan for development and operation for the

relevant petroleum deposit(s).

If no decision to submit a plan for development and operation is made, but one or more

Licensees wish to submit a plan for development and operation in any case, the Licensees

who do not want to submit such plan shall withdraw from the joint venture pursuant to

Article 24 of the Joint Operating Agreement. The procedures for approval by the Ministry

shall apply accordingly. Any change of Operator shall be subject to the approval of the

Ministry pursuant to the Petroleum Act Section 3-7.

If no plan for development and operation is submitted, the Production Licence must be

surrendered in its entirety within ø years from the award of the Production Licence.

e) When applying, as appropriate, for a deviation from the work commitment the Licensees

shall submit to the NPD a copy of all documentation necessary to consider the application.

f) When drilling, the Licensees shall undertake any coring and other tests or measurements

which the NPD considers necessary in order to evaluate possible petroleum deposits.

Emphasis shall be put on coring in all prospective intervals. The coring and sampling shall be

followed up by comprehensive analyses and interpretations.

g) An exploration well is defined as a well testing a new and clearly defined geological unit

(separated by one or more of the following criteria: structure, lithology, facies or pressure),

penetrating all prospective intervals at the particular location lying within the terms of the

work commitment as defined above. If the Licensees want to have a well approved as an

exploration well, an approval from the NPD may be applied for in advance. This requires all

relevant data and interpretations to be submitted to the NPD and that the drilling of the well

is completed as planned.

h) If areas covered by the Production Licence are reliquished or surrendered according to

litras b) – d), the Licensees shall, no later that 3 months after the relinquishment submit to the

NPD a report on the status regarding the areas being relinquished or surrendered. The report

shall contain a summary of any collected data, studies performed including the result of

these, and give an overview of the prospectivity in the area relinquished.

5. MISCELLANEOUS CONDITIONS

The Licensees may be required to use supply bases selected by the Ministry.

When planning drilling activities, particular care must be taken with respect to fishery

activities and marine organisms. Prior to exploration drilling, measures to inform the parties

concerned must be taken.

When planning seismic surveys, the licensees must take particular care with respect to

fishery activities and marine organisms at critical stages in their life cycles.



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Licensees are required to undertake necessary mappings of possible coral reefs and other

important benthic communities, including important habitats for sandeels, that can be

affected by petroleum activity in the awarded blocks, and ensure that these possible

communities are not mud covered or damaged by the petroleum activity. The seabed

mapping shall be carried out in a format that is compatible with the MAREANO programme

before initiating activity in the specific block(s). Separate conditions can be set to avoid

damage on coral reefs and important benthic communities. Refer to Mareano

[www.mareano.no] for information on identified coral reefs on the Norwegian Continental

Shelf.

Licensees are required to map and report discoveries of wrecks and other cultural monuments

that can be affected by petroleum activity in the awarded blocks and, in cooperation with

cultural monument administration, ensure that possible cultural monuments are not damaged

by the petroleum activity.

The operator shall on behalf of the licensees apply to the Norwegian Environment Agency

for a discharge permit in due time before planned activity.

In accordance with the Report to the Storting no. 28 (2010 - 2011) there shall as a main rule

be zero discharge of environmentally harmful components to the sea. Furthermore, it is a

goal that the risk of environmental damage caused by discharge of other chemical

components is minimized. The target of zero discharge applies to all offshore operations,

both drilling and well operations, as well as production and discharges from pipelines. For

each single field an overall evaluation of relevant issues, including environmental

consequences, safety related matters, reservoir related issues and issues relating to costs shall

be undertaken in order to choose the most suited measures to achieve the zero discharge

target. This evaluation will be undertaken in connection with the impact assessment study

that, according to the Petroleum Act, must be undertaken as a part of the Plan for

Development and Operation. Special conditions apply for the Barents Sea and the

Norwegian Sea, see below.

Requirements relating to contingency plans in the event of accidental oil spills will be

stipulated in accordance with the Pollution Control Act (Forurensningsloven) and the

Regulations relating to this act and the HSE-regulations, when specific plans for drilling

activities exist. Approval for drilling is, among other factors, subject to contingency plans. In

determining the extent of these requirements distance to the shoreline, distance to

environmentally sensitive areas and effects on other commercial interests will, among other

aspects, be taken into consideration. In support of prevailing regulations there shall in the

areas nearest to the coast be carried out more comprehensive preparedness measures in case

of possible exploration and production.

The operator shall, by means of risk analysis, cf. Regulations relating to management in the

petroleum activities of 3 September 2001, identify the environmental considerations which

the licensees deem to be critical to their preparation of an oil spill contingency plan, cf.

Regulations relating to execution of activities in the petroleum activities of 3 September

2001, and for planning the measures employed in order to reduce the risk of such pollution.

The analysis of environmental risks shall also include an evaluation of the effects of

operational discharges during exploration drilling.

Pursuant to the Report to the Storting no. 38 (2001-2002), it is expected that the industry will

continue to contribute to the biological monitoring of living marine resources in order to

survey possible effects of the petroleum activity.

The Government sees a continued need to improve the knowledge of occurrence of seabirds

in areas that can be affected by discharges from petroleum activities. It is expected that the

industry will contribute to the monitoring for seabirds in the North Sea and Norwegian Sea in



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connection with the environmental impact assessment following any plans for development

and operation for new stand-alone developments in this area.

There is an ongoing work to establish lanes for ships and to strengthen safety at sea in parts

of Norwegian waters. Any exploration drilling in the vicinity of the traffic separation system

must be planned so that unintended obstacles for the shipping traffic which may increase the

risk of collision are avoided.

Special requirements for the North Sea

Parts of the announced acreage lie in areas with special environmental challenges. This

applies to the blocks 32/1, 2, 4, 5 and 7, 35/1, 2 and 3, and 36/10, because these blocks are

located near to or in the coastal current. Prior to any production in these blocks, special

consideration to avoid potential environmental damage must be emphasized in the overall

evaluation for measures to reach the zero discharge target. In connection with a possible Plan

for Development and Operation for new stand-alone developments in this area, special

conditions may be put in place with regard to the protection of the marine environment.

More comprehensive preparedness measures for any exploration or production activities

particularly apply for the blocks 32/1, 2, 4, 5 and 7 and 36/10. In connection with possible

developments in these blocks, emphasis will be put on preventive measures against

unintentional discharges. The competent Authorities will collaborate especially on

requirements for installations in coastal areas in order to minimize the risk of unintentional

discharges.

In parts of the predefined area there is, in certain periods of the year, extensive fishing for

sandeels, see map at www.npd.no/apa2010. This applies to the blocks; 2/2, 3 and 6, 3/1, 2, 3,

4 and 5, 4/1, 2 and 3, 5/1, 7/2, 3, 6 and 9, 8/1, 2, 3, 4, 5, 6, 7, and 9, 9/1, 2, 4, 5, 7, 8, 9, 11

and 12, 10/7, 8, 10, 11 and 12, 16/11 and 12 and 30/5, 6, 8, 9, 11 and 12. In the event that

some of these blocks are awarded, drilling restrictions will apply during the time that the

fishing for sandeels takes place from 1st of April until 30th of June. Exploration drilling on

and in a zone surrounding these sandeels-fields must be undertaken without discharges of

drill cuttings, including the drilling of the top hole section, to ensure that the quality of the

sandeels-fields does not suffer damage from drilling activities. In case of future

developments of resources in this area, the licensees shall use development solutions that

minimise the negative effects for the fishing of sandeels and that alter the seabed of the

sandeels-fields to the least extent possible. In connection with the approval process for Plans

for Development and Operation in this area, the Authorities will attach special importance to

proper fulfilment of this condition.

Among the announced blocks in the North Sea there are blocks which are rich fishery areas.

These are blocks 26/10 and 11, 17/1, 2, 5, 6, 8, 10 and 11 and 8/1, 2, 4 and 5. In connection

with awards in these blocks, separate conditions regarding fisheries may be set.

The extensive fishery activities in the blocks 31/10 and 11 and 26/1, 2, 4, 5, 7 and 8 imply

that permission to drill more than one exploration well at a time will not be granted. Subject

to a specific evaluation of the fishery activities, permission for one additional exploration

well may be granted.

In the blocks 33/2 and 3 and 34/1 and 2 there is extensive industrial trawling in certain

periods of the year. In these areas exploration drilling will not be allowed between 1 October

and 31 March.

Special requirements in the Norwegian Sea



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With regard to the blocks announced in the Norwegian Sea, the conditions described in the

Report No. 37 to the Storting (2008-2009) «Integrated Management of the Marine

Environment of the Norwegian Sea » shall apply. This implies that:





Inside the 500 meter depth contour no exploration seismic activities will be permitted

in the period between January 1st and April 1st. This restriction does not apply for

well site surveys.







No exploration drilling into oil bearing layers in the period between April 1st to June

15th in the blocks 6204/1, 2, 3, 4, 5, 7, 8 and 6304/12 inside 500 meter depth contour;

quadrant 6305 inside 500 meter depth contour; quadrants 6306, 6307, 6407/2, 3, 5, 6,

8, 9, 11 and 12, 6408/4 and 7, 6508, 6509, 6510, 6608/3, 5, 6, 7, 8, 9, 10, 11 and 12,

6609, 6610 and 6611.







No exploration drilling into oil bearing layers in breeding and moult periods (April

1st to August 31st) in the blocks 6204/7, 8, 10, 11, 6306/6, 8, 9 and 6307/1, 2, 3, 4, 5

and 7.



The Authorities will exercise flexibility in the practising of the environmental and fishery

conditions.

In special areas with occurrence of vulnerable benthic fauna or key spawning areas for

bottom-spawning fish, provisions to use technology for dealing with cuttings and drilling

mud may be required, in order to avoid sediment deposition.

Special requirements for the Barents Sea

With regard to the blocks announced in the Barents Sea, the conditions described in the

Report No. 8 to the Storting (2005-2006) «Integrated Management of the Marine

Environment of the Barents Sea and the Sea Areas off the Lofoten Islands» shall apply. This

implies that:





The operations shall be based on injection or other technologies, if applicable, that

prevents discharge of produced water. In the event of operational non-conformities, a

maximum of five per cent of the produced water may be discharged on the condition

that it is treated before it is discharged. Exact treatment requirements will be given by

the concessionary Authorities with regard to actual activities;







Drill cuttings and drilling fluid are re-injected or brought to land for deposition. Drill

cuttings and drilling fluid from drilling of the top hole section may normally be

discharged. The condition is that the discharge does not contain components with

unacceptable environmental properties. This applies only to areas where the potential

for damage to vulnerable environmental components is considered to be low. Such

considerations shall be based on thorough mapping of vulnerable environmental

components (spawning grounds, coral reefs and other vulnerable benthic fauna). Such

discharges will be subject to application and permission from the concessionary

Authorities;







No exploration drilling will be permitted in oil-bearing formations in the zone 50-65

km from the baseline in the period 1 March - 31 August;







No exploration drilling will be permitted in oil-bearing formations on Tromsøflaket

outside 65 km from the baseline in the period 1 March - 31 August;



Planning of drilling activities and seismic surveys in the Barents Sea is expected to take place

in consultation with the Fishery Authorities in order to reduce operational inconveniences for



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the fisheries. Seismic activities must not disturb important spawning grounds for fish in this

area.

With regards to possible developments in the predefined area in the Barents Sea, special

emphasis will be put on preventive measures against unintentional discharges.

6. AGREEMENTS

The Licensees shall no later than thirty (30) days after the granting of this Petroleum

Production Licence, enter into the enclosed:

- Joint Operating Agreement Concerning Petroleum Activities (the Joint Operating

Agreement)

- Accounting Agreement Concerning Petroleum Activities (the Accounting Agreement)

Any subsequent supplements to, amendments of or exceptions from these agreements are

subject to the Ministry's approval.

7. APPLICATION OF NORWEGIAN LAW

All activities carried out under this Petroleum Production Licence shall be governed by

Norwegian law and be based on Norwegian contractual tradition.

[8. DEPLETION POLICY AND POLICY CONCERNING THE STATE'S

FINANCIAL INTERESTS

The Licensees are obliged to adhere to the State's depletion policies and policies concerning

the State's financial interests, as these policies are expressed in the Petroleum Production

Licence and in relevant laws and regulations. If this obligation is not respected, the State or

its manager may oppose a decision made by the Licensees.]

8. [9] EXEMPTION

Exemptions from the provisions of this Petroleum Production Licence may be granted by the

Ministry or whomever it authorizes. An application for exemptions shall be submitted to the

Ministry, with a copy to the NPD of all the documentation necessary to consider the

application.



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This Petroleum Production Licence is issued in x originals, of which one is retained by the

Ministry.



Oslo, …… 200X



THE ROYAL MINISTRY OF PETROLEUM AND ENERGY