1. Croatian Legislation with Regard the Seabed Hydrocarbons
1st ADRIATIC MARITIME LAW CONFERENCE
May 2016
Portorož, Slovenia
Doc. dr. sc. Mišo Mudrić
Department for Maritime and Transport Law
Faculty of Law, University of Zagreb

2. Hydrocarbons Exploration and Exploitation (i)
Current Status
Hydrocarbons Exploration and Exploitation (i)
106 mil. t
On-shore Oil
Off-shore Oil
45 oil fields
74 bil. m3
On-shore Gas
gas fields
18 bil. m3
Off-shore Gas

5. Key Primary Legislation With regard the Hydrocarbons
Exploration and Exploitation of Hydrocarbons Act
Mining Act
Offshore Hydrocarbons Exploration and Exploitation Safety Act
Hydrocarbons Reserves Determination
Exploitation Field Determination
Exploration and Exploitation Field Registry
Mining Projects Preparation and Audit
Mining Facilities Construction and Utilization
Mining Plans Preparation
Mining Measurement Performance
Field Rehabilitation
Liability Provisions
Security and Protection Provisions
Necessary Personnel Qualifications
Hydrocarbons Management, Exploration and Exploitation
Exploitation License Issuance
Exploitation Contract Issuance
Fees and Charges
Inspection Supervision
Prevention of Major Accidents
Mitigation of Negative Effects to the Marine Environment
Operator’s Obligations
Non-Exploitation Object Owner’s Obligations

6. Further Concessions Act Mineral Raw Minerals Management Strategy
Relevant Legislation
Concessions Act
Mineral Raw Minerals Management Strategy
Environment Protection Act
Physical Planning Act
Forests Act
Agricultural Land Act
Geological Exploration Act
State Survey and Real Estate Registry Act
Management and Disposition of State Owned Property Act
Obligations Act …
Variety of secondary legislation…

7. Hydrocarbons Exploration and Exploitation
Permit Procedure
Hydrocarbons Exploration and Exploitation
Public Tender
for hydrocarbons exploration and exploitation, Government
Applications
by the interested parties; potential Investors

8. Most Advantageous Bidder
Choice of the best bidder, Ministry of Economy, based on the recommendation of the Expert Commission, (possible) members: Ministry of Construction and Physical Planning, local self-government unit, Ministry of Maritime Affairs, Transport and Infrastructure
Approval
for hydrocarbons exploration, Ministry of Economy

9. Contract Evidence Between the State and the Investor
That all property issues have been resolved, Investor
Other requirements – Ministry of Economy, Ministry of Finance, relevant inspection body

10. Exploration Phase Commercial Discovery No Commercial Discovery
5 years maximum + 6 months extension x2, Investor
Commercial
Discovery
No Commercial Discovery
Permit and Contract revoked
Rehabilitation obligation
Investor

11. Hydrocarbons Reserves Study And Approval
Study – Investor
Approval – Ministry of Economy
Pre-Exploitation
Phase
Investor

12. Pre-Exploitation Phase Further Steps to be Undertaken (i)
Conceptual Mining Project
Investor – to be approved by the Ministry of Economy
Study of the Environmental Impact
Authorized institution – Ministry of Environmental and Nature Protection: Decision over the Study’s acceptability; Followed by the Conceptual Project implementing the Study’s findings (Investor)
Location Permit
Ministry of Construction and Physical Planning
Exploitation Field
Ministry of Economy – based on the Decision on the hydrocarbons quality and quantity, and the location permit

13. Pre-Exploitation Phase Further Steps to be Undertaken (ii)
Main Mining Project
Investor – including the evidence on having settled all property issues – to be approved by the Ministry of Economy
Concession Grant and Contract
Ministry of Economy – Contract – concessionaire’s information, fee, duration; Maximum duration – 40 years (+5 if necessary for rehabilitation)
Main Construction Project
Investor
Construction Permit and Utilization Permit
Ministry of Economy

14. From Investment to Profit
Average Duration
From Investment to Profit
Public Tender
Pre-Exploitation Phase
Can last for 1 to 2 years
Average duration of 3 to 5 years
Public Tender
Exploration Phase
Pre-Exploitation Phase
Exploitation Phase
Exploitation Phase
Exploration Phase
Total average of 15 years (possibly longer in the off-shore sector)
Maximum – 40 years (plus 5 years for rehabilitation)
Up to 5 years (plus 6 months extensions x2)

15. Safety Issues Four Categories:
Major Accidents
Four Categories:
Explosion, Fire, Loss of Control, Uncontrollable Leakage – high probability of loss of life, serious injuries, pollution and damage in maritime and land zones
Serious Damage to Offshore Object – high probability of loss of life, serious injuries, pollution and damage in maritime and land zones
Any other Accident – high probability of loss of life, serious injuries, pollution and damage in maritime and land zones
Event causing or likely causing a disadvantageous or negative effect on the environment

16. Safety Issues Main Obligations
Operator and owner of the non-exploitation object (sub-contractors, license holder) – under obligation to undertake all appropriate measures to:
Prevent the occurrence of major accidents
Mitigate the negative effects of major accidents
Risk Management System – acceptable level of risk with regard the possibility of major accidents occurrence
Necessary requirement with regard the license – in accordance with EEHA (including risks, dangers, sensitive maritime and onshore areas, mitigating and rehabilitation)
License holder – financially liable for prevention and mitigation damage and costs to the nature and environment, mandatory insurance (prevention, rehabilitation, recovery with regard the nature and environment damage)

17. Safety Issues Competent Authority
Commencement and discontinuation – pending the adoption of major accidents report by the Coordination
Coordination: appointed by the Government, consists of: Ministry of Economy, Agency for Hydrocarbons, Croatian Registry of Shipping, Ministry of Maritime Affairs, Transport and Infrastructure, Croatian National Protectorate Agency, Ministry of Environmental and Nature Protection, and, Agency for Explosive Atmosphere Hazardous Areas
Evaluation of all relevant documentation, evaluation of operator’s capabilities, state bodies coordination and cooperation, annual reports, cooperation with relevant European bodies, definition of license holder’s, owner’s and operator’s responsibilities, identification of anticipated danger with regard the offshore activities, determination of risk supervision measures and incident response measures, determination of risk management system, determination of nature and environment protection measures, determination of independent verification resolution.

18. Major Accidents Reports
Safety Issues
Major Accidents Reports
Major accidents report (to be prepared by the operator) – includes: operator’s or owner’s policy with regard the major accidents prevention; safety management; supervision mechanisms; nature and environment protection; independent verification system explanation; offshore object intervention plan
To be reassessed every three years or sooner if so requested by the Coordination
Removal or repair – hazardous substances isolation; well rehabilitation; determination of relevant risks; emergencies response measures
License holder – must inform the Coordination with regard the offshore object’s movement; provide additional information:
Major accidents scenarios; basic risk supervision rules description; major accidents risk reduction to an acceptable level; safety challenges (including the underwater cables and pipelines); possible major dangers resulting from offshore activates performance

19. Offshore Intervention Plans
Safety Issues
Offshore Intervention Plans
Offshore Intervention Plan (operator or owner)
Unpredictable events, major accidents, major dangers
Adequate manpower, equipment and know-how (with regard the predictable conditions and events), analysis of predictable dangers, early warning system, dispersion tools analysis
Aligned with the local and regional, and national Plan of interventions in case of the unpredicted pollution of sea (Official Gazette, 92/08, 80/13)
National Center for Sea Search and Rescue Coordination
Plan of Interventions
All competent state bodies and other entities cooperation
Cross-border pollution cooperation (regional plan, Sub-Regional Plan for Adriatic Sea, Official Gazette, International Agreements, 7/08)
EU Civil Protection Mechanism

20. The necessity of further legislation
Legal Gaps
The necessity of further legislation
Insurance
Mandatory insurance: Investor; License holder; Knock-for- knock?
Responsibility and Liability
Scope of damage? Definition of damage?
Strict Liability or Presumed Fault?
Croatian Maritime Code – what rules to apply in case of any sort of an accident?
Croatian Obligations Act – general contractual and tort rules?
Limitation of Liability?

21. Thank You for Attention
1st ADRIATIC MARITIME LAW CONFERENCE
May 2016
Portorož, Slovenia