French mining code revamp aims to smooth environment spats

Tue Dec 10, 2013 3:34pm EST

* New code to go through parliament in spring 2014

* Aims to simplify permit-granting procedures

* Public, environment groups to be given more say

By Michel Rose

PARIS, Dec 10 (Reuters) - France hopes a revamp of its mining regulations unveiled on Tuesday will reconcile demands for stricter environmental rules with the interests of oil, gas and commodities firms who complain about an unstable legal framework, ministers said.

The much-delayed reform of the mining code, set to pass through parliament next spring, has exposed divisions in the government between those pushing for a revival of French industry and advocates of tougher green policies.

"Today's mining code, as we have inherited it from the 19th century, does not satisfy anybody, neither environment groups nor companies wishing to exploit our mining resources," Industry Minister Arnaud Montebourg told a news conference.

He was flanked by Environment Minister Philippe Martin, who said the government had let Thierry Tuot, the author of the nine volumes and more than 700 articles of the new code, work independently without government interference.

"It's now up to the government to arbitrate," Martin said, adding he aimed to present the reform to the cabinet in the first quarter of next year before sending it to parliament.

Tuot said the new code aims to simplify the procedure to grant permits by centralising the process at ministerial level rather than letting local prefects decide.

The new granting process would also involve a public consultation, but would make legal challenges based on technical procedure flaws impossible after judicial approval.

"It's better to spend one year discussing with the public and be sure everybody is satisfied with the economic and social compromise, than do everything in three months and then spend 10 years in a legal guerrilla (war)," Tuot told reporters.

The reform also aims to give a bigger share of tax revenue from extraction to local authorities. In France, the state, not landowners, owns underground resources.

ENVIRONMENTAL CONCERNS

France has never been a major oil and gas producer and produced about 16,000 barrels of oil per day in 2012, or about 1 percent of national needs. But with oil prices at high levels above $100, some fields in the Paris basin or southern France have become potentially profitable.

However, France's decision to ban the hydraulic fracking technology used to explore for shale oil and gas in 2011, and a freeze of drilling permits on French soil, has deterred foreign investors in the oil and gas sector.

Last month, a request by U.S. firm Hess Corp to explore for shale oil and gas in the Paris basin was rejected by the government despite assurances it would not use fracking.

The fracking technique, which involves pumping water and chemicals underground, was banned under the previous government due to concerns over the environmental impact including possible contamination of groundwater.

The ban was upheld by the country's constitutional court earlier this year, after a challenge by another U.S-based company, Schuepbach Energy, which held two permits that were cancelled.

"Will this new mining code restore trust in the government among foreign investors? They were really badly shaken by the decision on Hess," said Philippe Auzas, a lawyer at Bonna Auzas Avocats advising oil and gas firms in France.

"The industry considers it is treated with hostility, with the feeling that a confusion between conventional and unconventional oil and gas is being deliberately instilled," Auzas said.

Apart from the oil and gas sector, the reform of the mining code is also aimed at facilitating the development of mining projects in France to help secure supply of mineral resources such as rare earths that are seen as strategic.