French Oil and Gas Regulation
French Oil and Gas Regulation
French oil and gas regulation is governed principally by the Code minier (Mining Code), which establishes the legal framework for the exploration and exploitation of hydrocarbon deposits within French territory, including metropolitan France, overseas departments and territories, and France’s exclusive economic zone. The regulatory regime has undergone significant transformation in response to the energy transition, culminating in the progressive phase-out of hydrocarbon exploration and production.
The Code Minier: Exploration Permits
The Code minier distinguishes between exploration permits (permis exclusifs de recherches) and exploitation concessions (concessions d’exploitation). Exploration permits grant the holder the exclusive right to search for hydrocarbons within a defined geographical area for a limited period, typically five years, renewable. The permits are granted by decree of the Minister responsible for mines, after consultation with the Direction Générale de l’Énergie et du Climat (DGEC) and the Commission des Mines et des Carrières. The holder must satisfy technical and financial capacity requirements and must undertake minimum work commitments, including geological surveys and drilling obligations.
Upon discovery of a commercially exploitable deposit, the permit holder may apply for an exploitation concession. Concessions confer the right to extract hydrocarbons for a fixed term, typically 25 to 50 years, subject to renewal. The concession holder must pay royalties to the State (redevance des mines) and to local authorities, and must comply with environmental, safety, and decommissioning obligations. The Code minier also regulates the storage of natural gas in underground facilities (stockage souterrain de gaz naturel), which is essential for supply security given France’s limited domestic gas production.
DGEC and Regulatory Oversight
The Direction Générale de l’Énergie et du Climat (DGEC), under the Ministry of Ecological Transition, is the principal regulatory authority for the hydrocarbon sector. The DGEC evaluates permit applications, monitors compliance with exploration and exploitation obligations, coordinates energy policy, and administers the stockage souterrain regime. The Autorité de Sûreté Nucléaire et de Radioprotection (ASNR) and the Bureau de Recherches Géologiques et Minières (BRGM) provide technical expertise.
The Code minier requires environmental impact assessments and public consultations before the grant of exploration permits and exploitation concessions. Operators must obtain autorisation environnementale (environmental authorisation) under the Code de l’environnement, which consolidates multiple permits and approvals. The loi du 10 juillet 1976 on the protection of nature introduced the étude d’impact requirement, which has been progressively strengthened through EU environmental directives.
Energy Transition and the Phase-Out of Hydrocarbons
France’s energy transition policy has fundamentally altered the hydrocarbon regulatory landscape. The loi de transition énergétique pour la croissance verte (Law No. 2015-992 of 17 August 2015) set long-term decarbonisation targets, including the reduction of the share of fossil fuels in primary energy consumption. The most significant legislative intervention was the loi Hulot (Law No. 2017-1839 of 30 December 2017 ending the exploration and exploitation of hydrocarbons), named after Environment Minister Nicolas Hulot.
The loi Hulot prohibits the grant of new exploration permits for hydrocarbons in French territory, with immediate effect from 2018. Existing exploration permits may not be renewed. All hydrocarbon exploitation concessions will terminate no later than 2040, and no new concessions may be granted after 2017. The law also ends the possibility of extending existing concessions beyond their current term, with a hard deadline of 1 January 2040 for all hydrocarbon production to cease. France is the first country to enact a legislative prohibition on both exploration and exploitation of hydrocarbons within its territory.
Gas Storage and Security of Supply
Natural gas storage (stockage souterrain de gaz) is regulated under the Code minier and the Code de l’énergie. France maintains extensive underground storage facilities, including aquifer storage and salt caverns, which are essential for balancing seasonal demand and ensuring supply security. Storage operators, principally Storengy (a subsidiary of Engie) and Terega, are subject to regulated access regimes and must maintain strategic reserves under the loi du 3 janvier 2003 and EU Regulation 2017/1938 on security of gas supply.
Impact of the 2017 Loi Hulot
The loi Hulot has had far-reaching consequences. French domestic oil production, already negligible (approximately 0.5% of national consumption), will cease by 2040. The law has not, however, reduced France’s consumption of petroleum products, which are overwhelmingly imported. Critics argue that the law merely exports environmental impacts to producing countries. The constitutionality of the loi Hulot was challenged by petroleum companies but upheld by the Conseil constitutionnel (Decision No. 2017-755 DC of 29 December 2017), which held that the prohibition of new permits did not infringe property rights or freedom of enterprise.
The loi Hulot also amended the Code minier to strengthen decommissioning obligations. Operators must now provide financial guarantees for site restoration before commencing exploitation. The Code minier provides for the transfer of decommissioned sites to the State if the operator fails to comply. The Agence de l’Environnement et de la Maîtrise de l’Énergie (ADEME) and the DGEC monitor the transition of hydrocarbon-dependent regions through the Comité de Suivi et d’Évaluation established under the 2017 law.