All clear for natural gas extraction in North Sea – CMS advises GEMS consortium
Hamburg – Following several months of negotiations, ONE-Dyas, Neptune Energy and Hansa Hydrocarbons reached an agreement with the regional government of Lower Saxony on 30 June 2022 on a joint declaration with regard to natural gas extraction in the GEMS area (Gateway to the Ems). The cross-border reserves of natural gas that have been found there will be tapped by a production platform located in the Dutch sector. Initially, the regional government had expressed major concerns about the proposal and had been urged by Lower Saxony’s parliament to block the project. The companies involved then brought an action against the Lower Saxony mining authority for failing to act.
To avoid a lengthy legal dispute, the companies and the Ministry for Economic Affairs commenced negotiations in January 2022. The talks were fast-tracked against a backdrop of rising energy prices and greater demand for gas sourced from north-west Europe in response to Russia’s war against Ukraine. After the regional government re-assessed the proposal, the negotiations were successfully concluded in May 2022. The region’s parliament also expressly supported the project in a resolution passed on 30 June 2022. Both sides agreed to start natural gas extraction as a matter of urgency in order to reduce dependence on Russian gas supplies, thus helping to increase security of supply. Lower Saxony agreed to issue the pending licenses and expedite the mining license procedure. In return, the companies will make the natural gas produced from the German sector available to cover domestic demand.
The relevant licences have now been issued. The operations plan procedure required under mining law will be initiated shortly. With reserves estimated at 60 billion cubic metres, extraction of natural gas in the GEMS area will make a substantial contribution to ensuring and diversifying domestic supply of gas. The CO2 footprint of extracting the natural gas is also around 30% lower than for gas imports, with one reason being that the production platform can be supplied with green electricity from the Riffgat offshore wind farm.
A CMS team headed by lead partner Dr Fritz von Hammerstein represented the companies in the proceedings against the mining authority and in the negotiations with the regional government.
CMS Germany
Dr Fritz von Hammerstein, Lead Partner, Hamburg
Insa Nutzhorn, Counsel, Hamburg
Jan Gröschel, Senior Associate, Hamburg
Katja Meisel, Associate, Hamburg, all Public Law
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