Offshore Oil & Gas Decommissioning - Netherlands

• SodM – the State Supervision of Mines (Staatstoezicht op de Mijnen,)

Compliance with the decommissioning provisions set out in the Mining Act (Mining Act, Mijnbouwwet) is overseen by SodM, which is headed by the Inspector General of Mines. SodM is part of the Ministry of Climate and Green Growth.

• Minister and EBN (Energie Beheer Nederland B.V.)

Compliance with the obligation to provide financial security for the decommissioning costs of mining structures, cables, and pipelines, is monitored by the Minister and EBN (Energie Beheer Nederland B.V.) (see also section 2.1).

In the Netherlands, the Mining Act (Mijnbouwwet) is the most important law governing decommissioning of oil and gas pipelines, installations, and wells.

• Decommissioning of mining structures

Under the Mining Act, mining structures are works, wells, and equipment pertaining to the storage, exploration or mining of minerals (or geothermal energy).

In line with UNCLOS and the International Maritime Organisation guidelines, the Mining Act stipulates that in principle, all 'disused' mining structures should be removed. This is the case if the mining structure is no longer in use for the purpose of a mining activity, i.e. for the exploration, mining, or storage of minerals. The removal obligation applies to the mining structures (including their wells), and to any contaminated soil, contaminated groundwater, contaminants on or in surface water, waste, including scrap, and other materials that have ended up in the area or in the immediate vicinity of the mining structure during the construction or operation of the mining structure.

Within four weeks after the mining structure becomes disused, the permit holder or operator has to notify the Minister 1 . Subsequently, and ultimately within a year after the mining structure becomes disused, the operator or permit holder will have to submit a decommissioning plan to the Minister for approval. The decommissioning must take place in accordance with the approved decommissioning plan. Once the decommissioning works are completed, a decommissioning report is provided to the Minister. This report does not require to be approved by the Minister.

In order to repurpose (part of) a mining structure, permission will have to be requested from the Minister, who can award an exemption from the decommissioning obligation and/or the obligation to submit the decommissioning plan.

• Decommissioning of cables and pipelines

The Mining Act does not stipulate that disused cables and pipelines must be removed, but leaves it to the discretion of the Minister whether removal is necessary. It is important to emphasise that this only applies to cables and pipelines that are not part of a mining structure.

Within four weeks of a cable or pipeline becoming disused, the operator will have to notify the Minister. 2  The Minister can decide that the cable or pipeline does not have to be removed but may be left in a clean and safe manner, provided that (i) this has been agreed with the owner of the grounds in which the cable or pipeline is located or (ii) the cable or pipeline is located in a special area assigned by the municipality. Alternatively, the cable or pipeline has to be removed in accordance with a decommissioning plan to be provided by the operator. Whether a cable or pipeline will have to be removed is therefore decided on a case-by-case basis. In practice most offshore cables and pipelines are nowadays left in a clean and safe manner, in line with the government's North Sea policy 2022-2027 (Programma Noordzee 2022-2027). For onshore cables and pipelines the agreements with the landowner will primarily determine whether they must be removed.

• Party responsible for decommissioning

The Mining Act ensures that the decommissioning obligation always rests with a single party: either the sole permit holder or the operator in respect of mining structures (and should the permit have expired, the last party who was subject to the decommissioning requirement) and the (last) operator in respect of cables and pipelines (and if a cable or pipeline is no longer in operation, the last operator).

Failure to comply with decommissioning obligations may lead to sanctions and liabilities under administrative, criminal, and civil law.

• Administrative law

Compliance with the provisions to decommission a mining structure, cable or pipeline is monitored by SodM. If a default of a decommissioning obligation is established, SodM may impose the following administrative law measures:

• order subject to a penalty (last onder dwangsom): SodM will provide a remedy period for the operator/permit holder to perform the decommissioning works, failure to do so will result in penalty payments;
• administrative enforcement (bestuursdwang): SodM will carry out the decommissioning works itself (or engage a third party to do so), and the operator/permit holder will be liable for all costs and damages.

• Criminal law

In addition, the failure to comply with decommissioning obligations pursuant to the Mining Act also qualifies as an economic criminal offence pursuant to the Economic Offences Act (Wet op de economische delicten). This means that in addition to administrative law measures, criminal law measures may also be imposed, including fines, (and in theory community service and imprisonment, which as far as we are aware have never been imposed for violations of the Mining Act).

• Civil law

In addition to administrative and criminal penalties, the operator or permit holder may be held liable for damage caused by failure to remove installations, cables, or pipelines (in a timely manner), for example in the event of environmental damages or damages to third parties.

There are no specific tax reliefs available for decommissioning costs. This may be different if the decommissioned installations are replaced by more durable installations (i.e., other durable energy resources).

• Impact on consortium parties

The responsibility for decommissioning primarily rests with the operator. To secure that the operator has sufficient funds to cover the costs of decommissioning, each permit holder shall pursuant to the joint operation agreement contribute its pro rata share to the costs of decommissioning. The permit holders are jointly and severally liable for the decommissioning obligations. If one of the permit holders fails to contribute its share of the decommissioning costs, the remainder of the costs will be shared pro rata between the other permit holders.

• Financial security

To further reduce the risk that a permit holder or operator fails to meet its decommissioning obligations, the Minister may require the provision of financial security for decommissioning, as further detailed in sections 2.2 and 2.3 below.

This financial security for decommissioning is managed by specially established foundations, which may be set up for each permit holder or operator. Should a party default on its obligations, the funds held by the relevant foundation are used to cover the associated decommissioning costs.

If all permit holders were to default, the State would ultimately become the final beneficiary of the financial security maintained within the foundation.

• Liability and the Role of the State

Under the Mining Act, all holders of exploration and mineral extraction permits are required to have the State participate for 40% in their operations through EBN (Energie Beheer Nederland B.V.), a limited liability company wholly owned by the Ministry of Economic Affairs. EBN does not act as a permit holder itself; rather, it participates as a non-operating partner in the mining activities, based on a cooperation agreement with the permit holders. Pursuant to the cooperation agreement EBN will receive 40% of the profits, and will contribute to 40% of the costs, including decommissioning costs.

In addition to its financial participation, EBN also plays a significant monitoring and advisory role on behalf of the Minister of Economic Affairs. It is responsible for conducting annual checks to verify the accuracy of financial calculations and the adequacy of financial security provided by the permit holders (see also section 2.2). This oversight function ensures that the financial arrangements, including those related to decommissioning and other long-term obligations, are properly managed and accounted for.

If EBN identifies any deficiencies or irregularities during its checks, it is required to report these directly to the Minister.

Should EBN’s monitoring reveal concerns regarding the sufficiency of financial security, the Minister retains the ultimate authority to intervene. In such cases, the Minister can invoke its statutory powers under the Mining Act to require the relevant permit holders or operators to provide additional financial security.

The Dutch regulatory framework for decommissioning financial security is designed to ensure that the financial responsibility for decommissioning mining structures, including pipelines and cables, rests squarely with the mining companies—namely, the operators and permit holders. The primary objective is to prevent the costs associated with decommissioning from being transferred to the public or the State, thereby avoiding these expenses being met by taxpayers.

The Minister is empowered to require holders of exploration and production permits to provide financial security for the fulfilment of their obligations to remove mining structures (including pipelines and cables) that are no longer in use. 3  The Minister has considerable discretion in this area, including deciding whether or not to require financial security in any given case, determining the amount of the financial security and setting the terms and conditions under which the financial security must be provided.

In recent years, the approach to determine whether financial security is required for decommissioning of projects located in the continental shelf has evolved from being decided on a case-by-case basis to a more structured framework and set of guidelines, including a Decommissioning Security Agreement (DSA) entered into between the operator and all permit holders and a Decommissioning Security Monitoring Agreement (DSMA) entered into between EBN and all permit holders. This change has been implemented in close cooperation with industry stakeholders, including Netherlands Oil and Gas Exploration and Production Association (NOGEPA - the branch organisation of oil and gas companies) and EBN (the State's participation company) and aims to provide clarity and consistency in the application of financial security requirements, ensuring that all parties involved understand their obligations and the criteria used to assess the need for financial security and aligning with similar frameworks in other jurisdictions (e.g. the UK).

The DSA and DSMA have subsequently been integrated into the Mining Act, 4  and are since 2019/2020 applied to all decommissioning projects located on the continental shelf, which has since 2021 been extended to also include onshore decommissioning projects.

The following financial security may be provided:

• Parent company guarantee (subject to sufficient creditworthiness);
• Bank guarantee from a reputable financial institution;
• Cash deposit; and
• Alternative forms of security, subject to the agreement of all DSA parties.

Under the DSA, the required security is reassessed annually, based on, inter alia, the asset's expected value, remaining reserves and projected decommissioning and removal costs. Under the DSMA, EBN monitors compliance and can advise the Minister to intervene if needed. 

The Dutch regulator plays an active role in both sale processes to ensure compliance and effective management of decommissioning obligations, which is reflected in the transaction documentation, e.g. in the form of conditions precedent.

• Asset transfer

The approval of the Minister is required for the transfer of (a share in) the permit. 5  The Minister is entitled to attach conditions to its approval, such as the provision of additional security or guarantees to meet decommissioning obligations.

The transaction documentation will generally include, as conditions precedent for completion of the transaction, the release of the seller of obligations and liabilities under the decommissioning security provided, the accession of the purchaser to the DSA (which may need to be amended to reflect the change in ownership) and the provision of the necessary replacement decommissioning security. In addition, the transaction documentation will generally include an obligation for the purchaser to indemnify the seller for all decommissioning liabilities.

Moreover, depending on the assets to be transferred, the Netherlands Screening of Investments Mergers and Acquisitions Act (Wet veiligheidstoets investeringen, fusies en overnames) may apply to the transaction, in which case the envisaged transaction has to be notified to the Bureau of Investment Assessments (Bureau Toezicht Investeringen or BTI). BTI may attach conditions to its approval.   

• Corporate sale

Under the Mining Act, 6  any person that holds a permit must notify EBN within four weeks of any change in direct or indirect control if that control concerns:

• acquiring or losing 50% or more of the voting rights in the general meeting; or
• the right to appoint, dismiss or suspend 50% or more of the management board members, supervisory board members or partners.

In case the change of control gives cause to do so, EBN shall issue advice to the Minister. If the required notification is not made within the four-week period, and the change may adversely affect financial security provided or to be provided, the legal act leading to the change of control is voidable by court judgement. The satisfaction of this process as well as the release of the seller's group of their obligations and liabilities under the security provided and the replacement of such financial security under the DSA by financial security to be provided by the purchaser's group will be conditions precedent for completion of the transaction. If security is provided by a person not established in the Netherlands, a legal opinion from a law firm in the relevant jurisdiction will be necessary, including enforceability, capacity and power.

• Escalating Costs and State Liability Exposure

The current forecast for dismantling Dutch oil and gas assets sits at approximately €6.7 billion. Historically, actual expenditure on well plugging and abandonment has a tendency to exceed initial estimates. Under the prevailing legal framework, it is anticipated that around 70 per cent of these costs will ultimately be borne by the Dutch State, largely via its participation via EBN. This cost exposure is prompting calls for enhanced financial security obligations to be imposed on operators at the permit application stage, thereby reducing the risk of cost overruns falling to the public purse.

• Proposals for a national decommissioning platform

Unlike its counterparts in the United Kingdom and Norway, the Netherlands does not yet maintain a dedicated authority to oversee decommissioning projects. Stakeholders, including industry bodies and EBN, have advocated for a national decommissioning platform to serve as a central point of coordination. Such a body could harmonise regulatory standards, clarify liability allocation among operators, joint‑venture partners, and the State, and support cost‑efficient decommissioning while upholding safety and environmental standards.

• Balancing Decommissioning and re‑use in the energy transition

Dutch policy, as reflected in the 'Masterplan for Decommissioning and Re‑use' drafted by EBN, in cooperation with the NOGEPA and Association of Dutch Suppliers in the Offshore Energy Industry (IRO) branch organisations, promotes the repurposing of offshore platforms and pipelines for alternative uses such as carbon capture and storage, hydrogen production, or as grid hubs for offshore wind projects. The practical challenge lies in timing: assets may be decommissioned years before a viable re‑use scheme materialises, risking the permanent loss of potentially strategic infrastructure. This creates interim liability questions — in particular, in determining who bears responsibility for maintenance, insurance, and environmental compliance during any period of suspension.

The Dutch government, as well as market parties, aim to re-use and repurpose existing oil and gas projects as this provides economical benefits, compared to the decommissioning of the oil and gas projects and the construction of new low carbon energy infrastructure.

In the Netherlands there is currently a strong focus on the repurpose of existing oil and gas pipelines for CO2 storage and hydrogen projects, such as the offshore hydrogen transport grid. 

According to the HyWay27 study of June 2021, commissioned by the Ministry of Economic Affairs, the existing onshore natural-gas transmission network can, for the most part, be repurposed for an onshore hydrogen grid with only minimal modifications. Development of that grid will be undertaken by Hynetwork Services B.V. (a subsidiary of the national gas transmission operator, Gasunie), and it is anticipated that roughly 85 per cent of the future onshore hydrogen grid will consist of converted oil and gas pipelines. Offshore conversion likewise appears technically feasible—initial analyses indicate that large-diameter pipelines such as Noordgastransport (NGT) and Northern Offshore Gas Transport (NOGAT) could be adapted - but the legal landscape is considerably more complex, since most North Sea pipelines are privately owned and therefore not subject to the designation rules that govern onshore gas networks.

Under the European Union’s forthcoming framework, hydrogen networks, wherever situated, will be treated as regulated gas transmission systems and will be required to comply with either full ownership unbundling or an Independent System Operator (ISO) model. Should the Netherlands adopt full ownership unbundling, private owners could be compelled to transfer their title to Hynetwork Services; adoption of an ISO model could avoid compulsory transfers yet may provoke disputes over investment obligations and operational expertise. Current law also fails to specify clearly when a converted gas pipeline becomes a regulated hydrogen line.

The Minister has signalled a preference for full ownership unbundling, and the Cabinet is expected to provide clarity on the governance model and any mandatory transfers of existing offshore infrastructure in the near future (the decision was expected in Q4 2024, however, thus far no decision has been made made/published).