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France’s Mining Code to Increase Oil-Project Scrutiny

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Dec. 10 (Bloomberg) -- French oil and mining projects may be scrutinized at environmental hearings under a new mining code meant to make the industry more transparent.

Exploration and production proposals could be subject to public consultations, according to the planned legislation unveiled today that could reach parliament in March. The revised code would also change the distribution of oil and gas taxes and make exploration licensing more open.

“We want to marry environmental and economic interests,” Industry Minister Arnaud Montebourg said today at a press conference. France’s current code, which dates to 1810, “satisfies no one.”

After France became the first country in the world to ban hydraulic fracturing, or fracking, in 2011, a succession of ministers vowed to rewrite the code to allow more scrutiny of oil and gas projects. A commission charged with the job has debated the new framework for more than a year.

In the lead-up to the ban on fracking -- a drilling technique widely used in the U.S. to extract oil and gas from shale rock -- many criticized rules that allowed ministers to award hydrocarbon permits without public consultations or environmental hearings.

In a draft of the mining code made public today, the rules stipulate that information on permits be published and possibly contested by the public. The code would also prohibit companies from using industrial or commercial secrets or intellectual-property rights as a pretext to block the public’s right to information.

Royalty Distribution

“We are giving the population the means to participate right from the exploration stage,” Thierry Tuot, who headed the mining code commission, said at the press conference. As a consequence, the procedure to obtain permits and authorizations may be lengthened.

“It’s better to discuss properly for a year than do it quickly for three months without reaching an understanding,” he said. “We want to instill confidence.”

It was in the face of public outcry and criticism from environmental groups about the potential effects of fracking that the former government passed a law banning the procedure. The government also canceled exploration permits that had been granted to oil companies including Total SA.

The new rules would allow local communities to benefit from royalties that are currently paid to the central government. The law would apply to onshore and offshore projects covering a range of minerals, hydrocarbons and geothermal installations.

Following the fracking ban, oil companies such as Hess Corp. complained that projects that use conventional drilling methods have been held up because of administrative delays.

France’s energy exploration and production industry is “threatened with paralysis” because almost 100 requests for permits are being blocked by the government, the country’s oil lobby, the Union Francaise des Industries Petrolieres, said Nov. 28. The group has said the government is delaying authorizations until a new mining code is adopted.

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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