Many laws and regulations govern where wells can be drilled. Offshore blocks are are under the control of the national government. They identify the offshore blocks which have potential for oil exploration.
A company or group of companies can lease a block for a period of time. Typically, a drilling permit is required in which the Operator (holding a lease on a block) will have to demonstrate that the drilling is within the rules and laws of the country to gain approval.
A company can be held liable for environmental damage, so oil companies are highly motivated to drill wells only where they receive permission.
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