Oil and gas exploration companies currently benefit from a derogation from the EU procurement rules, under Commission decision 97/367/EEC [1997], such that the only obligations they need to observe are to:

  • observe principles of non-discrimination and competitive procurement (Regulation 8(2));
  • hold a competition unless they can objectively justify not doing so (Regulation 8(2) (a));
  • make decisions objectively on the basis of relevant criteria when providing information to potential suppliers, establishing and operating qualification systems, selecting providers to tender for or negotiate contracts, holding design contests or awarding contracts (Regulation 8 (2) (b)); and
  • in certain cases, supply information about contract awards to the Commission.

Given the broadness of the derogation however, a large number of oil and gas companies comply with the procurement regulations in full to ensure "belts and braces" compliance. There is the potential for the oil and gas industry in the UK to seek to become fully exempt from the application of the procurement regime (see the Article 30 procedure below) but to date there seems to have been little if any appetite for an application for exemption.

In February 2009, the Commission received a request from the Nederlandse Aardolie Maatschappij B.V. pursuant to Article 30(5) of EU Directive 2004/17/EC seeking an exemption for activities related to exploration for, or extraction of, oil and gas in the Netherlands.

If the Commission can be persuaded that such activities are already directly exposed to competition, it may grant an exemption for these sectors under Article 30(4) of that Directive. This would mean that Dutch oil and gas companies would not have to comply with the public procurement requirements for tendering and awarding contracts.

On 17 March 2009, the Commission announced that it has extended the time period for reviewing the request and so a decision is expected by 27 August 2009.

Shepherd and Wedderburn drafted the first successful application for an exemption under Article 30 of the Directive (for Great Britain's electricity generation industry) and so we are very familiar with this mechanism. 

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