Unitisation and unitisation agreements

why they do not think the field in question should be unitised. However, the
guidance notes also state that the Secretary of State will not necessarily refuse to
grant development consent to a particular group of Licensees who have not
concluded an agreement with the Licensees of an adjacent block on the basis that
they have not concluded a unitisation agreement, and that the Departments
acceptance or rejection of any Field Development Programme will, therefore, be on
the basis of whether or not it is an optimum development in terms of maximising
the economic recovery of oil and gas. This makes it clear that DECC will only
interfere in so far as unitisation will have a bearing on the total amount of petroleum
recovered from the field. DECC does not consider that its role is to deal with any
potential disputes or inequities between licence holders groups in relation to how
much petroleum the respective groups are able to extract from the underlying field.
5.

Cross-border unitisation
As mentioned above, petroleum fields may also cross international boundaries. The
issues involved in the international context are more complex, because for unitisation
to take place agreement needs to be reached not just between the different concession
or licence holders, but also with the countries involved. It is usual for the respective
governments to enter into a treaty or other intergovernmental agreement in order to
deal with unitisation of the particular field. Sometimes cross-border unitisation is a
way for resolving a maritime boundary dispute.6
One example of a cross-border unitisation is the Markham Field. The United
Kingdom and the Netherlands entered into the UK/Dutch Markham Gas Field Treaty
on May 26 1992. The treaty provides that the exploitation of the Markham Field
Reservoirs is to be undertaken in an integrated manner, and each government must
ensure compliance by the Markham licensees with the terms of the treaty. In
particular, each government is obliged to require its respective groups of Markham
licensees to conclude licensees agreements to regulate the exploitation, in
accordance with the treaty, of the Markham Field Reservoirs. The licensees
agreements require the approval of both governments. Under the treaty, production
may not commence until a development plan for the effective exploitation of the
Markham Field Reservoirs, which has been submitted by the unit operator and
contains a programme and plans agreed in accordance with the licensees agreement,
has been approved by the two governments.
The UK government has also entered into treaties with Norway7 in relation to a
number of fields.
On April 4 2005, the United Kingdom and Norway signed a new treaty on crossborder cooperation between the two countries in relation to offshore oil and gas
resources (the Framework Agreement between the Government of the United
Kingdom of Great Britain and Northern Ireland and the Government of the Kingdom
of Norway concerning Cross-boundary Petroleum Co-operation). The principal

6
7

The Greater Sunrise gas field in the Timor Gap is one example.
The two governments entered into treaties relating to the exploitation of, and the offtake of petroleum
from, each of the Frigg, Statfjord and Murchison fields.

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