EUROPEAN ENERGY HANDBOOK

A SURVEY OF THE LEGAL FRAMEWORK AND CURRENT ISSUES IN THE EUROPEAN ENERGY SECTOR

LEGAL GUIDE TENTH EDITION

2017

9 780955 503788 Third Energy Package Throughout this publication, we refer to the two Directives and three Regulations adopted by the European Council and the Parliament on 13 July 2009 as the “Third Energy Package”. For ease of reference, the Directives and Regulations adopted as part of the Third Energy Package: EU Directives 2009/72/EC, 2009/73/EC and Regulations (EC) No 713/2009, No 714/2009 and No 715/2009 are referred to as the “Third Electricity Directive”, the "Third Gas Directive”, the “ACER Regulation”, the “Electricity Regulation” and the “Gas Regulation”, respectively. Where the context so requires, we refer collectively to the two Directives as the “Third Electricity and Gas Directives” and to the Regulations as the “Electricity and Gas Regulations”, as appropriate.

Climate Change Package We refer to the four Directives, one Regulation and one Decision adopted by the on 17 December 2008 and the European Council on 6 April 2009 as the “Climate Change Package”. For ease of reference, throughout this publication, we refer to EU Directives 2009/29/EC, 2009/28/EC, 2009/31/EC and 2009/30/EC as the “New EU ETS Directive”, the “Renewable Energy Directive”, the “CCS Directive” and the “Biofuel Directive” respectively. Further, we refer to EU Decision No 406/2009/EC and Regulation (EC) No 443/2009 as the “GHG Reduction Decision” and the “Emissions Standards Regulation”, respectively.

Where required, we have referred to the previous internal energy market directives 1996/92/EC and 1998/30/EC as the "First Electricity Directive" and the "First Gas Directive", respectively and to Directives 2003/54/EC and 2003/55/EC as the "Second Electricity Directive" and the "Second Gas Directive", respectively.

Throughout the publication, we refer to Transmission System Operators as “TSO” and to Distribution System Operators as “DSO”.

We use the following abbreviations for the various unbundling models:

FOU: Full Ownership Unbundling

ITO: Independent Transport Operator

ISO: Independent System Operator

Legal advice Please note that the content of this publication does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances. The deadline for the submission of chapters was 31 March 2017. Norway EEH - THE EUROPEAN ENERGY HANDBOOK 2017 361

Energy law in Norway

Recent developments in the Norwegian energy market

Karl Erik Navestad and Dag Erlend Henriksen, partners, Arntzen de Besche Advokatfirma AS, Oslo

Energy policy Consultations by the regulator In April 2016, the Norwegian government presented a white A number of consultation processes are currently ongoing or paper on energy policy: 'Power for change – an energy policy were recently finalised by the enactment of proposed changes, towards 2030'. The main message of this paper is that security of of which the most important are briefly mentioned below: supply, consequences on the climate, and economic growth must ••As of 1 January 2017, an amendment was made to the Energy be considered together to ensure efficient and climate-friendly Act that allows players other than , the TSO, to obtain energy supply. The energy policies will focus on four areas: a licence to build and operate interconnectors. The ••Enhanced security of supply based on market solutions that NorthConnect project, a direct submarine power cable enhance the flexibility of the energy system; strengthened between Norway and Scotland, could be the first project in Nordic energy cooperation; better coordination between which private parties own and operate the Norwegian part of transmission, consumption and production; new technology; an interconnector. and the use of smart management systems. ••Amendments to the Act relating to el-certificates have been ••Efficient and profitable production of renewables through the proposed with respect to the el-certificate curve in the development and use of new technology for renewable coming calculation years. The changes will bring the curve energy; stronger integration with other energy markets to down, ensure consistency with the Swedish regime (which is maintain the value of Norwegian renewable resources integrated with the Norwegian system), and provide the through increased connections with European energy Ministry of Petroleum and Energy with the authority to adjust markets; opening the ability to own and operate the curve in regulations. Changes to the el-certificates will interconnectors out to players other than the state-owned also mean that all certificates, whether they are issues in TSO Statnett; repealing the green certificate system, and Norway or Sweden, should be tradeable in a Swedish making the licensing process more efficient. continuation of the scheme, ensuring the certificate's validity in both countries. ••More efficient and climate-friendly use of energy through supporting the development of new energy and climate ••Amendments to the Water Resource Act have been solutions, in particular within the transport and industry sectors. proposed, amongst other things to provide the municipalities with the authority to grant concessions for small hydro power ••Economic growth and value creation through efficient use of production facilities (up to 1MW installed capacity). profitable renewable resources, and the introduction of new legislation to enable industrial owners of hydropower to ••Taking effect from the income year 2015, the new rules on access predictable supplies in the future. depreciation of wind farms was adopted 17 June 2016; the legislation now stipulates a five year straight line Trends in the energy market depreciation rule. The Norwegian electricity market has been facing low power Carbon capture and storage prices over a long period of time. This not only challenges the dividend policies of the producers, which in turn threatens The Norwegian government has developed a strategy for CCS, necessary investments and reduces operational leeway for local with the aim of identifying measures to promote technology municipalities; it also endangers investments in grid facilities. development and to reduce the costs of CCS. A feasibility study report presented in July 2016 shows that realising a full-scale At the same time, Norwegian grid companies need to invest CCS chain in Norway by 2022 is possible and at lower costs huge sums in the maintenance and upgrade of existing than for projects considered in Norway earlier. transmission capcity, as well as the development of new such capacity in the coming years. TSO Statnett SF will be in charge of The government's CCS-policies span across a broad range of the largest investment plans through its Grid Development Plan. measures including research, development and demonstration (for example through the existing Technology Center Mongstad), realising a full-scale CCS-facility, transport, storage

and alternative use of CO2 and international co-operation for promoting CCS. Norway 362 HERBERT SMITH FREEHILLS

Part of the CCS-strategy is further support for CLIMIT, the ownership interests (Statoil retained a minor interest) to Norwegian research centres for climate-friendly energy (FME), financial investors. The subsequent amendment to the Tariff and international research activities. Regulation triggered litigation by the investors who claimed that the amendment to the Tariff Regulation is invalid. The claimants E&P transactions stated that their total loss as a result of the amendment to the Tariff Regulation was about 34 billion NOK. The State prevailed in The NCS has seen several asset and share transactions in the the first instance. The judgment was appealed by the claimants. last 12 months, suggesting a trend of consolidation of oil companies and of the exit of majors. The transaction making the most headlines in 2016 has been the merger of Det norske oljeselskap and BP Norge, creating a new large player on the NCS: AkerBP. Behind the still dominant Statoil, the two smaller players Lundin Norway and AkerBP have grown as challengers and have taken active roles on the NCS, both signalling the intent to lead. While Lundin has made its reputation as an oil finder, most prominently by discovering the giant Johan Sverdrup field, AkerBP has carried out several transactions which have strengthened its position, in addition to commencing production from its first operated field development, the Ivar Aasen field. In what many see as a step towards further consolidation, Statoil increased its shareholding in Lundin to 20% in 2016. At the same time, many foreign-based majors are looking to divest assets or even exit the NCS. However, sellers and buyers are still struggling to align price expectations, and so far of the majors only BP has been successful in its efforts to divest.

The impact of low oil prices on the Norwegian upstream and oil services sector Although in the last months of 2016 the price of oil was around 50 USD/barrel, which might suggest some degree of stability after a long period of price decline, the level of activity on the NCS remains depressed. Exploration activity has reduced significantly and investment in field development is expected to continue to decline. Oil companies are still looking to reduce investment exposure, leading to work obligations being postponed and some production licences handed back to the State. The reduced appetite for exploration also strongly affects the Norwegian oil service industry, including drilling rig owners and service and supply vessel owners. Many employees have been laid off, and many companies forced into financial restructuring. Although older rigs are increasingly being scrapped, a significant surplus capacity has been built up over many years while the demand looks to remain low. However, some projects are still being carried out, and there is some optimism related to possible field development in the Barents Sea, particularly the Johan Castberg and Alta/Gotha discoveries.

Gassled tariffs Through an amendment to the Tariff Regulation in June 2013, the regulated tariffs for the use of the upstream gas pipeline network at the Norwegian continental shelf (owned by Gassled joint venture) were reduced by 90%. The reduction applies for capacity reservations made after 1 July 2013 for transportation after 1 October 2016. The decrease in the cost for transportation and processing of natural gas is considered to strengthen the incentives for exploration and development of marginal fields, and was made to promote resource management. The government was also of the opinion that the owners of Gassled have received reasonable profits on their investment. During 2011 and 2012 several oil companies including ExxonMobil, Total, Shell, Eni and Statoil divested their Norway EEH - THE EUROPEAN ENERGY HANDBOOK 2017 363

Overview of the legal and regulatory framework in Norway

A. Electricity The regional and distribution grids are owned by a large number of companies, mostly owned, in turn, by county and municipal A.1 Industry structure authorities. Privately owned companies are more common within Norway’s domestic electricity production is based almost electricity trading than other areas of the industry, although there entirely on hydropower, accounting for approximately 96% of are private companies in all parts of the resource chain. the energy mix. Under Act no. 16 of 14 December 1917, relating to acquisition of waterfalls, mines and other real estate Regulatory responsibility and supervision within the electricity (“Norwegian Industry Concession Act”), only public sector is, to a large extent, delegated from the MPE to the undertakings may acquire concessions for the ownership of national regulatory authority, the Norwegian Water Resources hydropower resources.1 Public undertakings are defined as and Energy Directorate ("NVE"). This includes activities such as undertakings where the Norwegian public sector directly or granting concessions, in the first instance, for the building and indirectly control at least two thirds of the shares and the operation of electricity production plants7 and grid capital, and which are organised in such a manner that genuine infrastructure, and the setting of overall grid tariff levels public ownership exists.2 Consequently, in Norway, large and ("Income Frames"). medium scale hydropower must be publicly owned. This has been the case since the first developments in the electricity The Energy Act represents the backbone of Norwegian sector at the start of the last century. With regards to electricity electricity market regulation, covering all parts of the resource production from other energy sources, such as wind power, the chain from electricity production to consumption.8 With the same ownership restrictions are not applicable. adoption of the Energy Act in 1990, full competition was (at least in principle) introduced in the Norwegian electricity sector, The largest Norwegian electricity producer is Statkraft SF3 with effect from 1 January 1991. This regime has been developed ("Statkraft") which is a fully state-owned enterprise. Statkraft into a Nordic competitive electricity market, which can be owns approximately 36% of the Norwegian electricity characterised today as an advanced regulatory market model generating capacity. A large number of local municipalities and which functions effectively. county authorities own approximately 52% of the generating capacity, mostly exercised through ownership interests in public The Energy Act is a framework act which, inter alia, sets out undertakings. Private companies4 still own roughly 12% of the the following: generating capacity on the basis of previous ••the general concession requirements for local area licences 5 concession legislation. for the construction of distribution grids; Unlike most other European countries, Norway has three grid ••construction and operating licences for other installations, levels rather than two: the central grid; the regional grid; and the including power stations and transmission grids; local distribution grid. The central grid, which for most practical •• trading licences applicable to monopoly grid operators as purposes is the Norwegian transmission grid, is operated by the well as electricity producers and traders, marketplace wholly state-owned enterprise Statnett SF ("Statnett"). Statnett licences, and import and export licences. is designated as the TSO with particular system responsibility 6 pursuant to the Norwegian Energy Act (the "Energy Act"). The key group of licences are the trading licences which provide, Statnett owns around 87% of the central grid and operates the inter alia, the power to govern grid company operations and remaining parts of the central grid on the basis of tariffs as further set out in the regulations which accompany the rental agreements. Energy Act.9 As from 1 July 2013, import and export licences are only granted to the projects where the TSO (Statnett) has a The state's interest in Statnett is held by the Ministry of controlling interest. Petroleum and Energy ("MPE") whereas the state's interest in Statkraft is held by the Ministry of Trade and Energy. The Norwegian electricity market regime generally complies Consequently the structure of public ownership in Statnett and with the provisions of the Third Electricity Directive, which is Statkraft complied from the outset with the full ownership deemed EEA relevant by the Norwegian Government. unbundling requirements of the Third Electricity Directive. This Amendments have been made in the energy legislation to position was made clear in Article 9(6) of the Third Electricity reflect the requirements of the Third Energy Package with Directive, which states that two separate public bodies are not respect to a.o. ownership unbundling and the roles of the deemed to be the same entity. transmission system operator. Further amendments may still be necessary, in particular in relation to the Third Electricity Norway 364 HERBERT SMITH FREEHILLS

Directive’s comprehensive new set of provisions governing The stipulation of point tariffs for individual customers (ie, national regulatory authorities. These regulatory changes have tariffs referring to the customer’s connection point to the grid been made regardless of the fact that the EEA Committee has that are independent of power purchase and/or sales yet to decide whether the Third Electricity Directive can be agreements) must be non-discriminatory and objective.17 deemed relevant to the EEA, and the directive has not yet been Further requirements to this effect are provided in part five of incorporated into the EEA Agreement. the Control Regulation.

A.2 Third party access regime A.5 Market entry Regional grid and distribution grid companies operate the grid Licences are required for construction, ownership and operation pursuant to a trading licence.10 The objective of this licensing of power producing facilities, as well as for trading and regime is to facilitate an efficient electricity market and effective transportation of electricity. Subsequent to the entry into force operation, utilisation and development of the grid.11 The licence of the amendment to the Energy Act that repealled the requirements for grid operators include conditions concerning, provision that granted Statnett a monopoly to obtain licences to inter alia, organisation, non-discriminatory market access, build and operate interconnectors, there are no particular legal impartial behaviour, and the calculation of tariffs.12 In this or practical barriers for obtaining licences. respect, licensees must ensure market access for all customers who want grid services at non-discriminatory and objective Section 3-1 of the Energy Act sets out the licence requirements point tariffs and terms.13 for the construction, ownership or operation of electrical installations such as electricity generation and transmission Distribution grid companies with local area licences are at the facilities. Electricity distribution grids are in practice governed outset required to ensure that customers within their grid area by a separate area licence requirement pursuant to section 3-2 are supplied with electricity from their grid.14 Grid companies are of the Energy Act. The Planning and Building Act sets out also required, if necessary, to invest in new grids in order to requirements for construction projects, including impact connect to new production or supply facilities.15 Grid companies assessment requirements including environmental impact may be exempted from the investment obligation in electricity assessments,18 as well as other requirements. production facilities if the grid investment is not considered to be socio-economically efficient, while an exemption from the Ownership of hydropower resources over a certain potential investment obligation in new supply will only be granted in capacity threshold (in practice large and medium scale extraordinary cases. On the production side, the investment hydropower production) is subject to specific restrictions obligation is likely to be of greatest practical significance for new pursuant to the Industry Concession Act (see section A.1 small-scale renewable production facilities where project above). Consequently, foreign and private market participants financing of a separate production grid may be difficult to obtain. cannot be granted such hydropower licences and may only participate in their capacity as minority shareholders in A.3 Market design Norwegian public companies. The Norwegian electricity sector is characterised by a Trading licences must be obtained by companies trading liberalised end-consumer market, a very advanced wholesale electricity in their own name. The process for obtaining a market, a detailed regulation of natural monopolies such as grid trading licence for a trading company is standardised, and services and tariff levels (point to point tariffs and regulator set applications may be filed online to the regulator, NVE. As of income frames), a strict licensing regime for activities such as 25 November 2016, approximately 460 companies held a construction, ownership, operation, trading etc. There are no trading licence in Norway, including producers, grid companies feed-in tariffs or capacity markets (apart from the balancing and trading companies as well as integrated companies power market which provides an operating reserve capacity). performing several of the aforementioned services.19 Of these, approximately 165 are actively engaged in trading electricity. There is a strong focus on security of supply, efficient production Companies must sign a standardised participant agreement in of renewables, integration with European energy markets, and a order to trade electricity on the Spot.20 more efficient and climate-friendly use of energy. A.6 Public service obligations and smart metering These instruments and objectives are laid down in the Energy Act and its pertaining regulations. In addition, the Planning and No particular public service obligations apply to specific Building Act, the Greenhouse Gas Emissions Trading Act and producers and suppliers in Norway (a possible exception being the El-Certificate Act, as well as the different support schemes, that the TSO, Statnett, may instruct market participants, all play important roles in the Norwegian energy policy which typically larger producers, to provide regulating capacity at cost drives the market design. plus a reasonable rate of return). With respect to grid companies, Statnett is subject to a number of obligations in its A.4 Tariff regulation role as TSO with system responsibility. DSOs are also subject to a number of obligations. The obligations of the TSO and DSOs Grid tariffs are set by the grid operators on the basis of yearly to a large extent correspond to the tasks appointed to these grid Income Frames determined by the regulator, NVE. The overall operators under the Third Electricity Directive. principles for the determination of Income Frames are that the grid revenues, over a period of time, will cover the costs of The regulatory requirement, which was introduced in July 2011, operation and depreciation of the grid while giving a reasonable stipulates that the grid companies shall install advanced rate of return on invested capital assuming efficient operation, metering systems at all measuring points within their licensing utilisation and development of the grid.16 area by 1 January 2019.21 The regulation assumes a gradual Norway EEH - THE EUROPEAN ENERGY HANDBOOK 2017 365

approach, whereby the grid companies as from 1 January 2015 behov) for transportation (shippers) are entitled to access the on a regular basis report periodically on the progress of system on objective and non-discriminatory conditions. installation of smart metering systems to NVE. By the end of 2016, close to 500 000 householdings have installed smart It is the responsibility of Gassco as the system operator to metering, and by the end of 2017 it is expected that installation operate the access regime, which consists of a primary and a will be completed for approximately 70% of all electricity secondary market. In the primary market the shippers reserve customers. The total number of smart meters to installed is capacity through Gassco. If the requested reservations are around 2.7 million. higher than the spare capacity, the right to use the spare capacity is allocated according to an allocation formula. A.7 Cross-border interconnectors In the secondary market, natural gas undertakings and eligible Cross-border interconnector capacity from Southern Norway customers may transfer their reserved capacity to other natural today amounts to a total of 3,700MW (under normal conditions), gas undertakings and eligible customers with a duly substantiated including 2,050MW capacity to Sweden, 950MW to Denmark reasonable need for transportation, either through the market and 700MW to the Netherlands (the NorNed cable). place organised by Gassco or by bilateral agreements. Interconnector capacity in mid and Northern Norway includes another 1,400 to 1,700MW to Sweden, 120MW to Finland and Onshore gas distribution in Norway is limited to a small 50MW to Russia.22 A 700MW cable to Denmark (Skagerrak 4) distribution network, which is linked to the Kårstø gas is under construction, and is planned to be operational in 2014. processing facility on the Norwegian West Coast. Gas Planned new projects include a new 1,400MW cable to Sweden distribution is regulated by the Natural Gas Act26 and pertaining (Sydvestlinken), which was notified to the NVE in October 2011 regulations. There is currently no particular legislative and is planned to be operational by 2020, as well as two new framework addressing transportation tariffs in the Norwegian cables to and the UK, called Nord.link/NorGer and downstream gas market. NSN, respectively. These are planned to be operational in 2018 and 2021.23 In total, the new planned cross-border transmission B.3 LNG terminals and storage facilities capacity is 4,000MW in the coming 10 years. In Norway, domestic gas consumption is limited, and there are As mentioned above, the Norwegian Parliament decided on only a few small scale facilities for receiving LNG, located on the 25 October 2016 to repeal the provision in the Energy Act such Norwegian West Coast. The Snøhvit LNG facility, located in that Statnett shall no longer be the only entityallowed to hold Hammerfest in Northern Norway, is a full scale facility for the licences for cross-border interconnectors. export of LNG, processing gas from the Snøhvit field in the Barents Sea. B. Oil & Gas Upstream LNG facilities also fall within the Petroleum Act and B.1 Industry sturcture follow the same regulatory regime as other petroleum activities. Norway is a gas exporter; only small quantities of gas are Downstream LNG facilities are governed by the Natural Gas transported onshore for domestic use. Crude oil is partly refined Act, and are subject to less detailed regulation and no general in Norway and partly exported abroad. For a description of the third party obligations (although such access may be stipulated Norwegian upstream licensing regime, an overview of key by the government on a case-by-case basis). market players, the national regulatory authority, key legislative, regulatory and contractual features etc., please refer to There is no onshore gas storage in Norway, except some section F below. storage facilities at the Kårstø gas processing facility.

The Norwegian domestic downstream gas market has not yet B.4 Tariff regulation matured and is considered an emergent market for the The transportation (and/or processing) of natural gas within the purposes of the Second Gas Directive. Unbundling in the Gassled upstream transportation system is regulated by a downstream gas market has not yet been considered a pressing standard agreement entered into between Gassco (on behalf of issue in Norway. The Third Gas Directive which at the time of Gassled) and the shipper. The tariff is regulated in a separate writing is not yet included in the EEA agreement and Tariff Regulation27 and is payable on a ship-or-pay basis. The incorporated under Norwegian law, will most likely not alter this. tariffs consist of a capital and an operating element,28 and the transportation system is divided into different zones, with B.2 Third party access regime to gas separate tariffs applying to each zone. transportation networks Access to the Norwegian upstream pipeline system is regulated B.5 Market entry 24 by the MPE, through the Petroleum Act and the Petroleum In order for a company to be eligible for the award of a production 25 Regulation, which follow the principles of third party access licence, it must be pre-qualified as a licensee, meaning that the laid down in the upstream pipeline system provision of the company must fulfil certain criteria such as its qualification or Second Gas Directive. The Third Gas Directive has not yet been financial strength. In practice it is required that the licensee is implemented, but the MPE considers that it will not necessitate incorporated and registered in Norway. While the award of any changes to the current upstream regime. licences is subject to the principles set forth in the Licensing Directive,29 the authorities will, when considering whether a Natural gas undertakings and eligible customers with a "duly pre-qualified company will be awarded production licence(s), substantiated reasonable need" (behørig begrunnet rimelig take into account the particular features of the application in Norway 366 HERBERT SMITH FREEHILLS

question, such as the applicant’s proposed work obligations. typically with durations of 20 years or more. Most of the long The final award is subject to negotiations with the authorities. term contracts are traditionally based on price formulas which are linked to the price of alternative sources of energy. However, B.6 Cross-border interconnectors there has been a transition to the use of more gas indices in long term contracts as well. Short term contracts are typically The Norwegian natural gas transportation system is complex, entered into on the basis of market standards such as the NBP, with several interconnections and export pipelines. Currently, ZBT and EFET contracts. there are seven major pipelines transporting natural gas from the NCS to the UK and continental Europe; the Vesterled Licensees are required to report to the authorities, on a pipeline, the Langeled pipeline, the Franpipe pipeline, the quarterly basis, information regarding their gas delivery Zeepipe pipeline, the Norpipe pipeline, and the Europipe I and II obligations, including information on volume profiles and main pipelines. Norwegian gas is also transported to the UK through contractual terms. the British Flags pipeline. All of these pipelines are comprised by the Gassled upstream transportation system. Please refer to B.2 As there is no gas hub trading taking place in Norway there is no and B.4 for a description of access regime and tariffs. downstream balancing regime as such. In the upstream sector, Gassco is responsible for balancing the inlet and outlet of C. Energy trading natural gas and maintaining necessary pressure in the Gassled C.1 Electricity trading transportation system. Electricity can be traded bilaterally or on the regulated market In order to use the upstream transportation system, shippers places Nord Pool Spot or NASDAQ OMX Oslo AS. The Nordic need to reserve capacity with Gassco. Apart from providing the power exchange, Nord Pool Spot,30 offers physical trading with volume information as required pursuant to the access regime both day-ahead ("Elspot") and intra-day ("Elbas") markets. (see section B.2 above), no particular notification requirements Gate closure for day-ahead trades on the Elspot market is apply with regard to contractual volumes. 12pm.31 In order to participate in Nord Pool Spot’s physical markets, participants must, inter alia, sign a participant D. Climate change and sustainability agreement which also applies Nord Pool Spot’s trading rules.32 D.1 Climate change Market participants are required to achieve a balance between The Norwegian climate policy is built on the 2008 and 2012 commitments and rights for each hour in each Elspot area.33 agreements on climate policy, in which the political parties in Several instruments are available to achieve such hourly Norway agreed for Norway to be carbon neutral by 2050. The balance. The Elbas market opens up for hourly trade and government wants the Norwegian energy supply to be the basis consequently also provides a balancing market. In addition, the for continued growth and welfare, focusing on enhanced Norwegian TSO Statnett administers a regulating power market security for supply, efficient production of renewables, more (where market participants bid for regulating power) and a efficient and climate friendly use of energy and economic regulating power options market for balancing purposes. In the growth and value creation through efficient use of profitable use latter options market, which is operated on a weekly basis, of energy sources.35 participants may commit to future bids in the regulating power market for a fee paid by Statnett. Further, the Paris Agreement and the UN targets for sustainability are both influencing the Norwegian efforts and Financial trading is organised by the power derivative exchange policies for the climate and environment. A number of NASDAQ OMX Oslo ASA (formerly known as Nord Pool ASA). important measures have been taken as part of these Through the brand name NASDAQ OMX Commodities, the agreements. One of the more recent ones, took place in the first financial power trading exchange provides trading and clearing half of June 2016 when the majority of the political parties in the services for power derivatives (and carbon contracts), thus Parliament decided upon a much more ambitious target and providing price hedging possibilities for participants also pushing the target for carbon neutrality forward to 2030.36 This engaged in physical trade, as well as trading opportunities for came just weeks prior to the formal ratification of the Paris participants solely engaged in financial transactions.34 Contract Agreement on 21 June 2016, followed up by an agreement with terms of up to 6 years are offered. the EU to collaborate in order to meet the targets set in the Paris Agreement. Norway is now aiming for a 40% reduction in C.2 Gas trading emissions by 2030 compared to the baseline year 1990, and will Gas produced on the NCS is the property of the respective have to operate with an emission budget, annually reporting to licensees, who are obligated to market, transport and sell their the EU and with a settlement of the emission accounts every gas; the exception being that the equity gas of the State’s Direct five years. All of these activities are done in parallel with the Financial Interest ("SDFI") is marketed and sold by Statoil on-going work to implement a new Climate Act, which is together with its own equity gas. Gas sales are carried out by intended to legislate the emission reduction targets and make the individual licensees on a bilateral basis. the Government accountable. The proposed Climate Change Act was out on public hearing in the period September- Trading is primarily carried out on a physical basis and there is December 2016, and is expected to be sanctioned in 2017. The very little financial trading in natural gas in Norway. Although proposed National State Budget for Norway 2017 had climate gas volumes are increasingly being sold on short term contracts, change as an important topic, and it is recognised that Norway most Norwegian natural gas is still sold on long term cannot reach its targets without proper funding.37 take-or-pay contracts to the UK and continental buyers, Norway EEH - THE EUROPEAN ENERGY HANDBOOK 2017 367

D.2 Emission trading Norway has a long history demonstrating the secure storage of CO in the offshore environment. In 2016, Statoil celebrated the The emission trading scheme is regulated by the Greenhouse Gas 2 20 year anniversary of CO injection at the Sleipner CO Storage Emission Trading Act. This Act introduced a quota system for 2 2 Project. In this period, more than 16 million tonnes of CO have carbon dioxide emissions which has been effective since 1 January 2 been securely stored beneath the seabed. In 2008, Statoil 200538 The authorities then allocated a certain number of free further launched the Snøhvit CO Storage Project, which since tradable allowances for carbon dioxide emissions among certain 2 then has injected more than three million tonnes of CO .These entities in the business sectors subject to the quota system. 2 two projects have been the only active CCS projects in Europe since commissioning, and were initiated party due to the need Norway did not implement the earlier emission trading directive to strip the natural gas for CO prior to selling it in the European (2003/87/EC) in the 2005 to 2007 period, but as of January 2 market and partly due to a CO tax that was implemented in 2008 the Norwegian emissions trading system was merged 2 1990.47 In early August 2016, Statoil submitted a Plan for with the EU scheme, allowing Norwegian businesses to trade Development and Operation ("PDO") and a Field Development allowances within the EU. The New EU ETS Directive was Plan ("FDP") for the Utgard Field, in which they plan to incorporated into the EEA agreement in July 2012, and the transport gas and condensate it through a new pipeline to the allowance award rules are identical to the EU rules. Norwegian Sleipner field for processing and use the carbon capture businesses may trade and surrender both facilities at Sleipner to separate the CO and re-inject it in the Allowances and Certified Emission Reductions issued directly 2 Sleipner Field prior to further transportation to the market.48 by the Norwegian authorities in addition to allowances when fulfilling their obligations under the aforementioned Act. In addition to the activities mentioned above, the Norwegian Government has initiated and participated in a number of Being a part of the EEA, Norway will further have to adapt to activities, through the state-owned company Gassnova SF. One any changes in the EU ETS, and currently the EU ETS is of their most successful projects is the CO Technology undergoing a reform as a result of the Energy Union strategy 2 Mongstad ("TCM"), the world’s largest test facility for CO adopted in 2015. The reform aims at a significant decrease in 2 capture technology, which has been built and operated in emission caps and a gradual increase in the carbon price. In collaboration with Statoil ASA, A/S Norske Shell and South addition, they are aiming at establishing an Innovation Fund, African energy company Sasol. TCM was opened for operation NER400, to replace NER300. The Innovation Fund shall fund in 2012, with an initial period of operation for five years. This innovative renewable energy, CCS and projects aiming at period has been extended for another three years.49 decarbonising industrial production.39 The Innovation Fund will be an additional measure to the Market Stability Reserve as was Following the cancellation of the full-scale CCS project Carbon agreed on in 2015, which intends to adjust the number of Capture Mongstad in 2013,50 the Norwegian Government allowances to be auctioned in order to address the current published a new CCS strategy in 2014, which comprised the surplus on the carbon market and make the system more three pillars of research, demonstration and testing of resilient to changes in demand.40 technology and broad scale utilisation of CCS.51 In addition to the renewed efforts on TCM, this meant a continuance of D.3 Carbon capture and storage CLIMIT, which is Norway’s national programme for research As part of the EEA, Norway is obligated to implement the EU and development of CCS, as well as the initiation of a new regulatory framework for carbon capture and storage ("CCS"), project aiming at a full-scale CCS demonstration. Phase one of as reflected in the EU Storage Directive.41 This implementation this project, the pre-feasibility study, was finalised in June 2015. was finalised on 5 December 2014, through the Regulations on The studies focused on three different emission sources; Transport and Storage of CO on the Continental Shelf ("Storage 2 Norcem AS assessed the possibility for capturing CO2 from the Regulations"),42 a new chapter 4a to the Petroleum Regulations flue gas at its cement factory in Brevik, Yara Norge AS assessed ("PR")43 and a new chapter 35 to the Pollution Control CO2 capture from three different emissions points at its Regulations ("PCR").44 ammonia plant at Herøya in Porsgrunn and the Waste-to-Energy

Agency in Oslo municipality assessed CO2 capture from the In general all CCS activities in relation to petroleum activities, waste recovery plant at Klemetsrud (Klemetsrudanlegget AS). like CO2-EOR (separation and storage of CO2 while extracting, In addition, Gassco studied alternative solutions for for example. natural gas for processing and sales), will be transportation and Statoil studied storage sites offshore. The regulated by the Petroleum Act ("PA")45 and the PR in following phase, feasibility studies, was finalised in June 2016. combination with the requirements under the PCR, meaning The conclusion was that it would be feasible to realise a that the storage permit is subject to approval under both the PR full-scale project on all of the three emission sources, and and the PCR. CCS activities initiated in relation to other preferable solutions for transport and storage were selected industrial activities, or industrial CCS, are regulated by the and put forward as recommendations for the Government.52 Storage Regulations in combination with the PCR, implying that the permit is subject to approval under both the Storage The proposed Norwegian budget for 2017 allocated over one Regulations and the PCR. The permitting regime was further billion Norwegian Kroner to CCS, including funding for FEED refined in March 2016, by the release of Guidelines on the studies, for a full-chain CCS project with all the three emission 46 Financial Security and Financial Mechanism for CO2 Storage, sources with transport and storage options, renewed efforts for given subject to the PCR Section 35-15 and the Storage TCM as well as further funding for research and development Directive’s non-binding guidelines for financial security and through the CLIMIT programme. Furthermore, the Government financial mechanisms. emphasised its ambitions of commissioning at least one full-scale CCS demonstration project by 2022, adjusted from Norway 368 HERBERT SMITH FREEHILLS

the previous ambitions to realise the project by 2020 due to the As mentioned above, in order to increase the possibility for recommendations put forward in the feasibility studies.53 investments in interconnector projects, both to ensure Norway’s needs in terms of security of supply and in order to D.4 Renewable energy export renewable energy, the Parliament decided on 25 October 2016 to amend the Energy Act in order to allow entities The Renewable Energy Directive is EEA relevant and was other than the TSO to own and operate interconnectors from incorporated into the EEA agreement in December 2011 and the Norway. However, the new provision has not entered into made applicable to Norway. While almost all electricity force yet. production in Norway is currently based on renewable energy sources, the extended scope of the Renewable Energy Directive D.5 Biofuel (compared to Directive 2001/77/EC) to include other categories of energy production holds challenges for Norway in The Biofuel Directive is considered EEA relevant and is meeting its target of increasing the total share of gross domestic incorporated in Norwegian law under the Norwegian Product energy consumption originating from renewables to 67.5% by Regulation, as per the amended Directives 98/70/EC and 2020 from approximately 60%. The Norwegian government 99/32/EC. Chapter 3 of the Product Regulations includes submitted its action plan for meeting this target just before blending requirements for biofuel, requirements with regard to summer 2012. It is foreseen that energy efficiency measures the sustainable cultivation of the raw material used, will play a major role, as will electrification of the transportation requirements that production and use of biofuel must lead to sector (where there has already been a huge increase in the reduced emissions of greenhouse gases compared to fossil fuels presence of electric cars), decreased use of fossil fuels for and sustainability criteria for biofuels and liquid biofuels. heating, and a decrease in total energy consumption. In addition, Norway has large potential with regard to the An amendment has been made to chapter 3 of the Product development of electricity production from renewables. Wind Regulation regarding supply of biofuel in connection with road power in particular has a lot of potential. Existing hydropower transportation. This amendment will enter into force on 1 facilities are also being upgraded, and investment in new small January 2017. The amendment was made as a result of a scale hydropower generation is taking place. Norway and Parliamentary budget decision to ensure compliance with the Sweden have a common system with green certificates, and EU sustainability criteria in order to increase use of biofuel in have a combined goal of establishing 26.4TWh of new Norway. This amendment requires that a minimum share of 7 electricity production based on renewable energy by 2020. per cent of the total supply of fuel for road transportation shall Norway and Sweden are each responsible for financing be from biofuel, except biogas. There is also a requirement that 13.2TWh in the certificate system, regardless of the amount of a minimum of 1.5 per cent of all biofuels used in road production that is located in each of the two countries. transportation shall be produced from wastes, residues, non-food cellulosic material and ligno-cellulosic material and The electricity certificate system is a market based support that such fuels will be considered twice when calculating the scheme to promote new electricity production based on blending requirements under the regulations. Moreover, the renewable energy sources. Producers will receive one certificate amendment clearly set out an obligation to reduce greenhouse per MWh of renewable electricity that is generated for a period gas emissions from road transportation by use of biofuels to of 15 years. Electricity suppliers and certain consumers have a between 35 and 50 per cent in the coming years. statutory duty to buy electricity certificates. Norway and Sweden have a common system with green certificates in place. The ILUC Directive (2015/1513) on the quality of petro fuels and promotion of use of energy from renewable sources is currently Despite the electricity certificate support scheme, investments being considered by the EEA Committee in order to evaluate the in wind power remained low. In order to increase the EEA relevance for the EEA countries. If the ILUC Directive is attractiveness of investments in wind power, Norway introduced regarded as relevant by the EEA Committee it will have to be more favourable tax incentives for this sector. The new regime implemented into Norwegian law. included a 5 year linear depreciation of production factors in wind power stations. This amendment will lead to more Certain biofuels such as biogas, hydrogen, hythane and profitable early stages of development for new hydro power electricity used in electric cars and hybrid cars, are exempt from stations. The new depreciation rules are limited to investments the duty of payment relating to the Norwegian Road Use made from 19 June 2015 and until 31 December 2021. In 2016 Charge. This exemption will promote use of such renewable the EFTA Surveillance Authority ("ESA") approved this tax types of fuels. regime to be compliant with EU state aid legislation. E. Nuclear energy Furthermore, as part of the path towards reaching the national There is no nuclear energy production in Norway. target, NVE has significantly improved its case handling capacity and efficiency, which in 2012 resulted in concessions encompassing almost twice the generating capacity compared to the same in 2011. Norway EEH - THE EUROPEAN ENERGY HANDBOOK 2017 369

F. Upstream The company appointed as operator by the MPE becomes responsible for executing the day to day management of the The ultimate authority for the regulation of petroleum activities petroleum activities on behalf of the licensees. In addition to on the NCS lies with the Norwegian Parliament (Stortinget). The fulfilling the general requirements for all licensees, the operator overall responsibility for ensuring that the petroleum activities must have the additional capabilities necessary to carry out the are carried out in accordance with the regulatory framework day to day activities of the licence group. No particular rests with the MPE. Below the MPE there are two entities, the corporate structure requirements apply, although in practice Norwegian Petroleum Directorate (the "NPD") and the most licensees are set up as Norwegian limited companies. The Petroleum Safety Authority (the "PSA").54 Policy and legislation qualifications of the operator will in practice vary with the concerning petroleum taxation is handled by the Ministry of developing stages of the licence, and stricter requirements will Finance (the "MoF") and annual tax assessments are carried apply for operating a licence in the production phase than in the out by the Oil Taxation Office. exploration phase. Transfer of operatorship is subject to government approval, and the same requirements will apply to The legal basis for government regulation of the petroleum the prospective new operator. sector is found in the Petroleum Act which provides the legal framework for the licensing system. The legal basis for taxation The production licence is awarded for an initial period (which of offshore petroleum activities is the 1975 Act relating to may be up to 10 years). Within this period, a specified work Taxation of Subsea Petroleum Deposits.55 obligation must be fulfilled – this is often an obligation to procure seismic data and to drill an exploration well. After such In addition to the high level provisions in the Petroleum Act, fulfilment, the duration of the licence is normally extended. An offshore petroleum activities in Norway are subject to a very area fee also applies after the initial period, based on the size of comprehensive system of regulations and approvals, including the licence acreage. If the work obligation is not fulfilled within the Petroleum Regulation, which mainly addresses resource the stated time limit, the licence will generally be revoked. A management, and the HSE Regulations56 which address the licence can also be withdrawn as a result of serious or repeated health, safety and environmental aspects of the activities. As a violations of the Petroleum Act such as those pertaining to general approach, the HSE Regulations are function-based and regulations or licence conditions. risk-based, leaving it up to the oil companies to choose how to fulfil the requirements. The Norwegian system also implies a If a licensee wants to grant security over a production licence "see-to" duty (påse-plikt) on the licensees. This means that the interest to finance its activities associated with the licence, the oil companies have a duty to ensure that all of its contractors consent of the MPE is required, which is regularly given. The and subcontractors comply with applicable regulations. The MPE can also, 'in special cases', consent to allow the financing non-operators also have a "see-to" duty towards the operator. to include activities pursuant to a licence other than the one which is mortgaged. While the possibility for extending the The level of state participation in the Norwegian oil and gas purpose of financing was originally meant to be limited, such industry is high. The Norwegian state is the largest player on the consent has in practice been granted quite often. NCS, by way of its shareholdings in Statoil ASA, and through the SDFI, whereby the state participates directly in various One of the conditions of the award of the production licence is production licences.57 that the licensees enter into a joint operating agreement (the "JOA") in a standard format prepared by the MPE. The JOA The Norwegian offshore licensing system comprises various governs the relationship between the licensees, forming the licences, approvals, agreements and other mechanisms. basis for day to day management of the activities, allocation of costs, decision making processes, and other processes. All The production licence is the core document in the licensing petroleum produced is allocated to the licensees in accordance system, and gives the licensee an exclusive right to explore for, with their participating interest. develop and produce petroleum in the block(s) covered by the licence. Production licences are normally awarded through In order to develop a petroleum discovery, the licence partners annual licensing rounds. In addition, all unlicensed acreage in must submit a plan for development and operation ("PDO") to the mature North Sea area is open for application in annual the authorities. The PDO sets out, inter alia, the development award procedures, a process known as awards in predefined solution, estimated development costs and a production profile areas ("APA"). Companies can apply for licence awards for the deposit.59 individually or in groups. Based on the PDO, the NPD issues annual production permits The production licence can be awarded to one or several oil which allow the licensees to produce defined volumes of companies. To become licensees, companies must fulfil certain petroleum. The export of petroleum is not subject to a specific criteria regarding technical qualifications, organisational legal regime as such. requirements, financial strength, and others. The MPE offers a pre-qualification procedure which outlines these criteria in The licensees are also required to submit a plan for order to facilitate the application preparations of prospective decommissioning and cessation of the petroleum activities to the licensees. The same criteria will apply to a prospective assignee MPE. The MPE then decides, based on the plan, on the disposal of a production licence interest or the shares in a company of the facilities. In relation to the transfer of the production licence holding licence interests. Transfer of a licence interest and interest, the transferor will remain liable to the remaining transfer of shares in a company holding a licence interest is licensees for the share of the decommissioning costs associated subject to approval by the MPE and MoF.58 with the transferred licence interest. This requirement, which was Norway 370 HERBERT SMITH FREEHILLS

introduced in 2009, has in practice affected the market for Gross income generated by oil sales is assessed according to a licence share transactions, as assignors will regularly demand norm price system, where sales prices are fixed by an additional security from the assignee in order to be held harmless administrative body, whereas income generated by gas sales is for such potential secondary liability. Contractually, this is usually assessed on actual sale prices. A licensee on the NCS that is structured around a decommissioning security agreement, which subject to Norwegian taxation will be entitled to tax deductions is appended to the sale and purchase agreement. against income taxed at 78% with regard to exploration and production costs (running expenses, net financial items, Construction and operation of transportation and/or processing depreciations and uplift) and transportation costs (tariff facilities is subject to a plan for installation and operation payments). Production installations depreciate over six years, ("PIO"), which must be submitted to the MPE for approval.60 and an uplift is granted on a special tax basis for a four year period for investments in production and pipeline facilities. The The Norwegian offshore gas transportation infrastructure uplift was changed from 7.5% to 5.5% per year by law in 2013, system ("Gassled") is organised as one joint venture. with effect from 5 May 2013.61 Historically, Gassled has been owned by the main shippers of natural gas from the NCS. However, ExxonMobil, Total, Norske An exploration refund scheme was introduced in 2005, Shell and Statoil have sold their ownership interests to financial whereby companies not entitled to deductions may annually investors (but with Statoil retaining a 5% ownership interest). claim a refund from the state of the tax value of direct and Standard provisions apply for access to the Gassled facilities indirect costs. This is with the exception of financial charges, (see section B.2 above). The Gassled system is operated by incurred in exploration for petroleum resources.62 The tax value Gassco, a fully state owned company which is not a shareholder is currently 78%. The refund will reduce in correspondence with in Gassled. Gassco exercises its operator duties as an the tax loss carried forward. independent system operator ("ISO"), pursuant to the provisions of the Petroleum Act and in accordance with an operator agreement with Gassled.

For companies engaged in oil and gas operations on the NCS, there are two, partially overlapping income tax regimes: ordinary income tax imposed by the general rules in the Norwegian General Tax Act of 1999 ("GTA"), and the special petroleum tax on income imposed by the Petroleum Tax Act ("PTA"). As a result, the total marginal income tax rate for companies engaged in exploration and production activities on the NCS is 78%, consisting of a 27% general income tax and a 51% special petroleum tax to the state. These rates were changed in 2013, with effect from 1 January 2014, from 28% general income tax and 50% special petroleum tax. The marginal income tax is thus the same.

Endnotes 1. Other than small scale hydropower. 2. Norwegian Industry Concession Act, see in particular sections 1 and 2. 3. Formally its fully owned subsidiary Statkraft Energi AS. 4. Although with some minority public shareholding. 5. See further The Norwegian Ministry of Petroleum and Energy,Facts 2008 – Energy and Water Resources in Norway, pp. 78 et seq. for an overview of ownership shares [www.regjeringen.no/en/dep/oed/Documents-and-publications/Reports/2008/fact-2008---energy-and-water-resources-i.html?id=536186] (url last visited on 14 September 2010). 6. Act 29 June 1990 No. 50, section 6(1). See also the appurtenant Regulation 7 May 2002 No. 448 concerning system responsibility in the power system. 7. This does not include licences for acquisition of hydropower resources pursuant to the Norwegian Industry Concession Act. Norway EEH - THE EUROPEAN ENERGY HANDBOOK 2017 371

8. See section 1(1) of the Act. 9. The more specific provisions relating to market operation follow from regulations to the Energy Act, including the Energy Regulations of 7 December 1990 No 959, which is a Royal Degree, and subordinate regulations such as the Control Regulation of 11 March 1999 No 302 and the Electricity Supply and Grid Services Regulation of 11 March 1999 No 301. Other important regulatory instruments relevant to the electricity market include the Industry Concession Act of 14 December 1917 No 16 and the Watercourse Regulation Act of 14 December 1917 No 17 (both for hydropower development), the Planning and Building Act of 27 June 2008 No 71 and the Competition Act of 5 March 2004 No 12). 10. Awarded under Section 4-1 of the Energy Act. 11. Section 4-1 of the Energy Regulation. 12. Section 4-1 of the Energy Act and Chapter 4 of the Energy Regulation. 13. Section 4-1(2)(2) of the Energy Act and section 4-4(d) of the Energy Regulation. 14. Section 3-3 of the Energy Act. 15. Section 3-4 of the Energy Act. 16. Section 4-4(b) of the Energy Regulation. More detailed provisions on how to achieve this result are given in the appurtenant Control Regulation. 17. Section 4-1(2)(2) of the Energy Act and section 4-4(d) of the Energy Regulation. 18. Act 27 June 2008 No. 71. See also section 2-1 of the Energy Act. 19. The Norwegian Ministry of Petroleum and Energy,Facts 2008 – Energy and Water Resources in Norway, p. 76. 20. See section A.2 above. 21. Regulation 3 November 1999 No. 301, , ref chapter 4 concerning advanced measuring and control systems. 22. See Statnett, Netutviklingsplan 2011, p. 80, available at [http://www.statnett.no/Documents/Kraftsystemet/Nettutviklingsplaner/Nettutviklingsplan%202011.pdf.] (last visited 25 October 2013). 23. See further ibid, pp. 11. 24. Act 29 November 1996 No. 72. 25. Regulation 27 June 1997 No. 653. 26. Act 28 June 2002 No. 61. 27. Regulation 20 December 2002 No. 1724. 28. The capital element is stipulated by the MPE and will give the investors about 7% interest on the invested capital before tax. The operating element is cost based and laid down by the operator. 29. Directive 94/22/EC. 30. Owned by the Nordic TSOs. 31. The power exchange had a turnover of 310TWh in 2010 (including the auction volume in the UK market N2EX for energy contracts), and approximately 74 % of the total electricity consumption in the Nordic countries was traded on Nord Pool Spot, see further Nord Pool Spot’s web pages [www.nordpoolspot.com/About-us/] with further presentations (last visited 3 October 2011). 32. Documents are available on [www.nordpoolspot.com/TAS/Day-ahead-market-Elspot/Rulebook-for-the-Physical-Markets/] (last visited 3 October 2011). 33. Section 8 of the System Responsibility Regulation. 34. See further NASDAQ OMX Commodities’ web pages [www.nasdaqomxcommodities.com/]. 35. Meld. St. 25 (2015-2016), the White Paper Power for Change. 36. C.f. Innst. 407 S (2015-2016). 37. C.f. Prop. 1 S (2016-2017). 38. Act 17 December 2004 No. 99. 39. http://ner400.com/ , https://ec.europa.eu/clima/policies/ets/revision/index_en.htm. 40. https://ec.europa.eu/clima/policies/ets/reform/index_en.htm. 41. Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide and amending Council Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No 1013/2006. 42. Full Norwegian name: Forskrift om utnyttelse av undersjøiske reservoarer på kontinentalsokkelen til lagring av CO₂ og om transport av CO₂ på kontinentalsokkelen. 43. Full Norwegian name: Forskrift til lov om petroleumsvirksomhet. 44. Full Norwegian name: Forskrift om begrensning av forurensning. 45. Full Norwegian name: Lov om petroleumsvirksomhet.

46. Full Norwegian name: Nærmere bestemmelser om finansiell sikkerhet for CO2-lagring.

47. C.f. Act 21 December 1990 no 72 relating to tax on discharge of CO2 in the petroleum activities on the continental shelf. 48. http://www.statoil.com/en/NewsAndMedia/News/2016/Pages/09aug-utgard.aspx. 49. http://www.tcmda.com/en/Press-center/News/2016/The-Norwegian-Governments-supports-TCM-operations-until-2020/. 50. http://www.gassnova.no/en/ccs-projects/full-scale-mongstad. 51. https://www.regjeringen.no/en/aktuelt/Strong-commitment-to-CCS/id2005662/. 52. https://www.regjeringen.no/en/aktuelt/good-potential-for-succeeding-with-ccs-in-norway/id2506973/. 53. http://www.gassnova.no/en/crucial-climate-commitment-in-the-2017-budget. 54. The main functions of the NPD relate to resource management while the responsibilities of the PSA relate to issues regarding health, safety and environment. 55. Act 13 June 1975 No. 35. 56. The Framework Regulations (Regulation 12 February 2010 No 158), the Management Regulations (Regulation 29 April 2010 No 611), the Facilities Regulations (Regulation 29 April 2010 No 634), the Activities Regulations (Regulation 29 April 2010 No 613), and the Technical and Operational Regulations (Regulation 29 April 2010 No 612) 57. The SDFI is managed by the state-owned company Petoro AS. 58. The tax effects of a transaction are normally approved by default pursuant to Regulation 1 July 2009 no. 956. 59. The PDO must be approved by the MPE, and must also be presented to Stortinget if the estimated investment is more than NOK 10 billion. 60. A PIO is not required if the facilities are already covered by a PDO. 61. Section 1 Act 21 June 2013 No. 66. 62. PTA section 3(c)(5). The cover and all inner pages of this publication are printed on Splendorgel EW - papers with FSC® certification. The papers used are either elemental or totally chlorine free and the manufacturing mills are certified to the ISO 14001 standard for environmental management. All inks used are vegetable oil based. This publication is fully recyclable. If you do not wish to keep this book, please pass it on to someone else or dispose of it in your recycled paper waste. Thank you.

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