Extraction of Oil, Gas, Coal

The exploration and extraction of oil, natural gas, coal, and other solid fuels is listed as one of the covered activities in Annex II of Directive 2014/25/EU. Entities that carry out these activities and that qualify as contracting entities (because they are public bodies, public undertakings, or holders of special or exclusive rights) must follow the Utilities Directive when procuring works, supplies, and services above the applicable financial thresholds.

What is Extraction of Oil, Gas, Coal (under procurement law)?

Annex II of 2014/25/EU defines the covered activity as: exploitation of a geographical area for the purpose of exploring for or extracting oil, gas, coal, or other solid fuels. This covers upstream extraction activities, including seismic surveys, well drilling, platform construction and maintenance, subsea infrastructure, onshore field development, mining operations, and mine closure works.

The key jurisdictions in Europe for this category are those with significant remaining hydrocarbon or coal extraction activities: Norway (the Norwegian Oil and Gas sector is the largest in Europe and applies the equivalent national rules under the EEA Agreement), the Netherlands, Denmark, the UK (North Sea operations), and several central and eastern European countries with coal or gas extraction.

The entities in scope are those that hold a special or exclusive right to explore or extract in a defined geographic area. An oil company that holds an exclusive exploration and production licence from a national authority over a specific block is a contracting entity under 2014/25/EU for contracts relating to that licensed activity. State-owned oil and gas companies that operate under statutory frameworks are typically public undertakings and therefore also contracting entities.

Common contract categories in this sector include: drilling services and rig hire; subsea engineering and underwater services; pipeline construction and inspection; platform topside maintenance; environmental monitoring and decommissioning; logistics and marine services; and specialist technology procurement including process safety systems and reservoir modelling software.

The directly exposed to competition exemption is relevant here. Some extraction activities, particularly in fully liberalised licensing regimes where blocks are awarded through competitive auctions open to any qualified operator, may be found by the European Commission to be directly exposed to competition. If an exemption is granted, the entity is released from the Utilities Directive's obligations for that activity.

Why it matters for bidders

Suppliers to the upstream oil and gas sector in Europe encounter a mixed procurement landscape. State-owned or licensed operators subject to 2014/25/EU must run transparent regulated procedures for above-threshold contracts. Fully commercial private operators that have obtained a competition exemption procure without regulatory constraints. Suppliers should check whether their target buyers are regulated under the Utilities Directive for a given activity before committing resources to a structured bid.

Example

A Norwegian state-owned oil company holds production licences on the Norwegian Continental Shelf. As a public undertaking, it is a contracting entity under Norwegian procurement rules equivalent to 2014/25/EU. When it procures a multi-year drilling services framework, it must run a regulated procedure, typically using a qualification system to maintain a list of approved drilling contractors. Suppliers not on the qualification system cannot be invited to tender for specific call-offs.

Frequently Asked Questions

Does the Utilities Directive apply to all oil and gas companies operating in Europe?

Only those that hold a special or exclusive right granted by a public authority (such as an exploration and production licence over a defined geographic block) and that are public undertakings or controlled by contracting authorities. Fully private companies operating purely commercially in a liberalised market without exclusive rights may not be contracting entities and may have obtained an exemption.

How does Norway apply equivalent rules to EU member states?

Norway, as an EEA member, applies procurement rules that mirror EU directives through Norwegian national legislation (FOR 2016-08-12-975, the Procurement Regulations for Utilities Sectors). Norwegian buyers publish above-threshold notices on Doffin (the Norwegian procurement journal), and major contracts also appear on TED. The substantive rules are equivalent to 2014/25/EU.

Is coal extraction still in scope given the European Green Deal?

Yes. The legal text of 2014/25/EU has not been amended to exclude coal. Entities exploring or extracting coal remain contracting entities under the Directive for their procurement activities, regardless of the political direction to phase out coal. Whether the directly exposed to competition exemption might apply to specific coal mining activities depends on whether free market access exists in the relevant jurisdiction.