Establishing Norwegian subsidiariesSea Gem strikes gas on the UKCS

First NCS licensing round

person by Trude Meland, Norwegian Petroleum Museum
The Norwegian government announced on 13 April 1965 that 278 blocks were available for applications to secure exclusive production licences. The NCS below the 62nd parallel (which marked the northern boundary of the North Sea) was divided into 36 quadrants, each normally comprising 12 blocks which measured 15 minutes of latitude by 20 minutes of longitude.
— First licensing round in 1965. Jens Evensen (left) showing the blocks in the North Sea. Photo: Unknown/Norwegian Petroleum Museum
© Norsk Oljemuseum

This was far the largest licensing round in Norwegian oil history. The deadline for submitting applications was 15 June 1965, and awards were announced on 18 August.

Industry minister Karl Trasti gave weight to financial strength, practical experience and willingness to make a positive contribution to the Norwegian economy. Those who secured licences were also required to use bases in Norway, and to utilise Norwegian industry and labour to the extent that these were competitive on price and time. Applications were submitted for 208 blocks. Since a number of companies applied for the same acreage, however, the total number of blocks involved was 81.

The Petronord group secured three licences for exploration drilling in 12 blocks, each covering 500 square kilometres. It undertook to carry out a work programme of five wells over six years. The licences were numbered 007, 008 and 009, and corresponded to a sixth of all the acreage awarded. A quarter of the acreage awarded was to be relinquished to the state after six years, followed by a further quarter after another three years. The duration of the licences for the remainder of the blocks was 46 years.

Phillips Petroleum Company applied for 20 blocks and secured 12, the same as Petronord. Both companies had largely secured their priority acreage, with the difference that Phillips focused on younger structures than Petronord. Drilling for oil was expensive.

To spread their risk, Petronord and Phillips swapped 20 per cent of the rights in each other’s blocks. This also meant that possible future revenues would be divided, but the swap proved advantageous for Petronord. The Ekofisk field was later discovered in the blocks awarded to Phillips, which yielded major revenues both for the US company and for the participants in Petronord. The latter’s licences failed to yield commercial discoveries.

Establishing Norwegian subsidiariesSea Gem strikes gas on the UKCS
Published October 24, 2017   •   Updated May 19, 2020
© Norsk Oljemuseum
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