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France Denies Hess Energy Exploration Permits in Paris Basin

Nov. 28 (Bloomberg) -- France blocked the transfer to Hess Corp. of seven exploration permits in the Paris Basin on the grounds that the New York-based oil company remains interested in shale-energy development despite a ban.

Hess “has not abandoned its original project,” French Environment Minister Philippe Martin said in a statement today, referring to past plans for the permits that involved hydraulic fracturing for shale oil.

The decision is the latest in a longstanding dispute with oil companies over the country’s ban on the drilling technique widely used in the U.S. to extract oil and natural gas from shale rock. France outlawed fracking in 2011 in the face of claims by companies including Total SA and Toreador Resources Corp. that the country may have substantial reserves.

Hess in France is an “empty shell” that lacks technical competencies required by the mining code, Martin said.

Hess is “surprised” by the minister’s comments, the oil company said in a statement. It has used only conventional exploration techniques, “without damage to the environment.”

“The suspicion cast on the oil industry that it intends to use a banned technology is unacceptable,” France’s oil lobby Union Francaise des Industries Petrolieres said in a statement. “France’s image in the eyes of foreign investors has been tarnished by this legal instability.”

Bakken Shale

Hess and Toreador announced plans in May 2010 to spend as much as $120 million searching for oil in the Paris basin, whose geology may be similar to that of North America’s sprawling Bakken Shale deposit. They obtained exploration permits and planned to use fracking to probe for shale oil over as much as 420,000 hectares, mostly to the south and east of the French capital.

After parliament banned fracking, Toreador merged with ZaZa Energy France SAS. It sold conventional oil-producing assets to Vermilion Energy Inc. and said others had been transferred to Hess. The transfer had to be approved by the government.

The original plan for one of the permits called Chateau Thierry was “incontestably and exclusively” to explore for shale oil and gas, Martin said today. “Effective” exploration of the permit can’t be done without fracking.

France’s constitutional court upheld a ban on fracking last month, ruling that the law is a valid means of protecting the environment.

The ban remains controversial with a parliamentary report published yesterday urging the government to allow limited fracking to evaluate potential reserves.

Martin today said he backs less use of fossil fuels and nuclear energy and more renewables and energy efficiency.

France’s energy exploration and production industry is “threatened with paralysis” because almost 100 requests for permits are blocked, the UFIP lobby said today.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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