Energy Bill [HL] — Report (1st Day) (Continued)

– in the House of Lords at 7:45 pm on 19th October 2015.

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Clause 5: Directions: national security and public interest

Amendment 19

Moved by Baroness Worthington

19: Clause 5, page 3, line 41, at end insert—

“( ) Directions given under subsection (1) may require the OGA to postpone or prohibit decommissioning of oil or gas infrastructure until such time as the Secretary of State determines that a carbon capture and storage operator is in position to utilise the infrastructure.”

Photo of Baroness Worthington Baroness Worthington Shadow Spokesperson (Energy and Climate Change) 7:52 pm, 19th October 2015

My Lords, the next group of amendments have been tabled under the heading of decommissioning and the risks associated with the,

“decommissioning of oil or gas infrastructure”, and safeguards. In speaking to Amendment 19, I shall speak also to Amendment 77. As we have said previously, we are grateful to the Minister for listening to some of the concerns raised during the passage of this Bill. Under the previous group, we talked about carbon capture and storage and use. The other aspect of this Bill which we felt needed more attention was decommissioning. This afternoon, the noble Lord, Lord Howell, who is not in his place, kicked off by reminding us that the world is changing very fast. The very low prices, which look likely to be sustained, have had a big impact on the North Sea and the pipeline of investment into and operations within it. We are seeing a somewhat contracted timetable for decommissioning as a result of that change in the global oil price.

It is fair to say that the resource discovered in the North Sea in the 1970s has been an absolute mainstay of our economy and our public finance. It has paid a huge sum—some £300 billion, I think—in tax income since then. Obviously, it has helped to generate many jobs, to bring about world-class engineering and has been a considerable boon to the UK. However, all good things seem to come to an end and, particularly when it comes to fossil fuel reserves, that end can come rather more swiftly than one might expect. That is partly because of oil and gas prices and the commodity market, but also because we are now entering a world in which we know that we can no longer burn and combust oil and gas without paying heed to the fact that that is contributing to global warming.

Obviously, the recent oil price reductions have not yet been directly related to policy interventions on climate change, but they may be a foretaste of things to come as more nations move to a low carbon economy. I am thinking specifically of the US, China and Europe—the three big economic blocs where it is clear that the commitment to tackling climate change is real and the desire to move to cleaner energy systems is starting to be witnessed.

We are now seeing decommissioning occurring. In tabling these amendments, our concern is that this is happening on a more condensed timetable than we might have expected or perhaps wished. On the one hand, we have a desire to develop a new industry in the form of carbon capture, storage and utilisation, which obviously requires the fitting of equipment to capture the gases that are transported and potentially stored in areas of the North Sea, or onshore in saline aquafers and other locations.

The move to deploy these projects has been very slow. It was way back in 2005, under a Labour Government, when we first said that we were going to pay for such projects. There have been several iterations of that policy since and here we are, 10 years later, still awaiting the first sods to be turned and projects to go ahead. We know that we now have a funding mechanism—at least, we hope we do—in the form of the contract for difference. We expect those projects to be successful and to see at least two, or possibly three, demonstration projects in the UK, which will then result in relatively large volumes of CO2 needing to be stored. But that is all taking rather a long time.

In the mean time, we see the major players in the North Sea wishing to withdraw. Therefore, the decommissioning of their infrastructure may happen sooner than we are able to reuse it through CCS, which poses quite a significant challenge. Our purpose in tabling these amendments is to explore the extent to which the OGA will have and should have powers to manage decommissioning, so that, if a large oil and gas operator wants to move out of the North Sea, it cannot simply begin the decommissioning process without giving due notice to government and considering the reuse of that infrastructure.

For avoidance of doubt, I am sure the Minister will explain that government Amendments 73, 74, 84 and 85 are relevant to this discussion and seek to address the misalignment between potential decommissioning and the need for that infrastructure, which is welcome. Our amendments are perhaps a little more explicit. Certainly, Amendment 19 would give the Secretary of State a specific power to direct,

“the OGA to postpone or prohibit decommissioning”.

Of course, the next obvious question is: should costs be incurred, who should pay? We would need to explore where the balance of that payment should rest, but in that context it is worth remembering that, although the oil and gas sector has paid handsomely into the public account over the decades, it is now in the very secure position of having tax rebates to help to pay for its decommissioning. Provisions created under the Finance Act have now been converted into private contracts between oil and gas operators and the Government, which essentially compensate for any changes in the tax regime. In essence, they have their own form of a contract for difference to pay for decommissioning. It does not allow the Government to change the tax breaks without providing compensation. It is an interesting model that I am not sure has had enough scrutiny.

Obviously, there are financial flows between the state and the sector. It is not as simple as it once was, when tax revenues simply flowed in, we thanked the industry and, by and large, left it to its own devices—not without some regulation, but it is not as highly regulated as energy is on land. We now see the subtle shift in the contract between the sector and government. Indeed, the creation of the OGA is another example of that subtle shift, where arm’s-length regulation is perhaps no longer fit for purpose. There is a need for independent intervention and government intervention to help manage what is happening in the North Sea. Again, if the Government are making loans or provisions—or, indeed, providing the staff of the OGA with pensions under Civil Service terms—that changes the nature of what is occurring in the North Sea, making the relationship between the Government and the private sector different and more fluid.

Clearly, there are ways that money could be found to enable this to happen. It is important that we debate this and get a clear sense from the Government of where we are going. Can the OGA postpone the removal of essential infrastructure if it is deemed necessary for reuse for other energy purposes? I know that the noble and learned Lord, Lord Wallace, the noble Lord, Lord Teverson, and the noble Baroness, Lady Maddock, will speak to a similar amendment. I know that they feel similarly that this is getting to the nub of what we can do with the OGA.

Amendment 77 relates to my worry that we are entering a phase where we have inadvertently—or perhaps knowingly—taken an unlimited liability on the public purse through the deeds of contract that have been agreed between the sector and the Government, which compensate for any changes in Finance Act tax arrangements. We need from the Government a clear sense of how much of a liability we have created. I have seen estimates that the loss of revenue from decommissioning costs that will fall to the Exchequer—to the public purse—will be in the region of £5 billion between now and the end of the decade. Those will rise swiftly thereafter, potentially reaching £20 billion or higher in the next decade. These are not insignificant sums when we live in a time of austerity.

As I said, we now have these contracts, which have been signed and essentially bind the hands of future Governments—they are not time-limited. Rather a large amount of tax will be paid back to the sector. Of course, the taxes were paid by the sector in the first instance, but you cannot have it both ways. You cannot say, “We are the great providers and we have been paying in tax; aren’t we wonderful? Oh, by the way, we’d like it all back now because we have to pay for decommissioning”. That simply will not wash. It is not as if, during those decades of providing tax revenues, they were not also providing massive profits—huge profits—to their shareholders and all their investors.

It is fine to say that the industry is on its knees and running out of money. Times might be hard now, but times have been very good. It is prudent to plan for your future, knowing that you will be able to pay for your decommissioning and not be caught out. If you have prudent management, you should never find yourself unable to pay for the things you have caused to be created in the first place.

The reason for Amendment 77 is that we simply want to make the House, lawmakers and policymakers aware that this is the current arrangement: that there are these deeds of contract, that they are creating a liability and that we ought to be well informed of what the cost will be. This is obviously not the precise wording—it is very much a probing amendment—but I would like to hear from the Minister the Government’s thinking on these decommissioning costs and the liability they create.

To return to Amendments 19 and 21, which I am sure noble Lords from the Lib Dem Benches will speak to, what can we do to ensure that we are not simply rushing to decommission, and that we have a planned strategy? What can the OGA do and not do? Ultimately, I suspect that the hardest question will be: who pays? I look forward to hearing from the Minister and from other contributors to the debate.

Photo of Lord Teverson Lord Teverson Liberal Democrat Lords Spokesperson (Energy and Climate Change) 8:00 pm, 19th October 2015

My Lords, I thank the Minister for the meetings that we have had. I found one of them particularly useful because we had a wide range of representatives, from both the department and the OGA. One of the issues that came up, which perhaps I should have understood more but did not, was that oil and gas infrastructure, particularly in the North Sea, was of particular importance, as well as the importance of managing that infrastructure in terms of decommissioning and making sure of other uses, such as CCS. What came out was that a lot of this infrastructure could well be critical to the nation, not just in the context of carbon capture and storage, but even in how the oil and gas market might move.

The question then came down to: if there was critical infrastructure and this decommissioning took place, what happened if the commercial sector— the industry—decided that there was no way that it wanted to keep particular assets operational and they should therefore be decommissioned, but the Secretary of State, the Government and the nation had a different view? Who carries the financial can for that in the future? If industry was not there, who else would step in?

I ask the Minister to forgive me for this: in a way our amendment is a probing amendment, which of course we should not really do on Report, but it is an important point to understand. My question is a fundamental one: if we have critical infrastructure in this industry—in the North Sea, say—and it is to be decommissioned, yet the OGA sees it as critical for future development, whether with greenhouse gases or the future of oil and gas itself, what happens when the private sector will no longer pay for that asset to remain operational, or at least be mothballed? Our amendment asks that question, but it also lays down that the OGA should have a specific responsibility to bring it to the attention of the Secretary of State, should such a situation arise. To solve that, the Secretary of State should be able to pay out of public funds for that critical infrastructure to remain.

I am not completely naive in this area. Clearly, if the private sector sees that the taxpayer is likely to underwrite an asset into the long-term future, perhaps not surprisingly people in that sector might be rather quicker to decommission, move out of these assets and move that cost across to the taxpayer. There is clearly that risk. However, we on these Benches seek through this amendment to obtain clarity on how we defend and preserve the national interest in terms of these assets while at the same time making sure that any taxpayer commitment will be protected—namely, that we keep these strategic assets when the OGA and the Secretary of State believe that they are critical for the nation’s future.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Energy and Climate Change, Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Wales

My Lords, I thank the noble Baroness, Lady Worthington, and the noble Lord, Lord Teverson, for these amendments. I wish to speak to the non-government amendments before addressing the government amendments. Following discussions held during the dinner break, I am happy to revisit Amendment 72, which we looked at before the dinner break.

Amendment 19 seeks to amend Clause 5 to give the Secretary of State the power to direct the Oil and Gas Authority to postpone or prohibit decommissioning of infrastructure until such time as she determines that a carbon capture and storage operator is in a position to utilise the infrastructure. I must first clarify that it is not the intention that the Bill will give the OGA the power to prohibit or postpone decommissioning. The ultimate power to approve, or disapprove as necessary, a decommissioning plan lies with the Secretary of State under Part 4 of the Petroleum Act 1998, and will continue to do so.

In any event, taking a power to delay or prohibit decommissioning on an open-ended basis for the purpose suggested would appear to require an owner of relevant infrastructure to pay for the ongoing maintenance of the infrastructure on an indefinite basis until the CCS development is ready. These would be significant costs, running to tens of millions of pounds for ongoing maintenance every year, simply to keep the relevant infrastructure safe until such time as it might be reused for CCS. When, as we all hope will quickly become the case, CCS is a proven technology, we can be certain of how and when relevant infrastructure can be reused for CCS and a commercial deal is viable, preventing decommissioning of existing assets to make way for CCS may be sensible and permissible under the current proposals the Government have made. However, as we debate the merits of this amendment today, we cannot say with any certainty when or how such infrastructure could be reused for CCS. I fear that this amendment risks making the United Kingdom continental shelf less attractive to investors and jeopardising the vital investment we need for the future of the basin. This would put us in significant conflict with the recommendations set out in the Wood review, and would be perilous given the challenging economic realities in the United Kingdom continental shelf today.

I hope that this explanation is helpful in setting out why this amendment is not workable from a structural perspective, since it will be the Secretary of State, not the OGA, who will hold the key power to decide whether to approve or reject an abandonment programme. In addition, as I will outline shortly, the government amendments brought forward on Report today aim to strike the right balance between keeping the continental shelf open for business while putting rigorous checks in place to ensure that the preservation and reuse of North Sea infrastructure, including for CCS, is appropriately considered before any decommissioning can take place.

The Government’s proposals would allow the Secretary of State to ensure that decommissioning takes place in accordance with an approved decommissioning plan, enabling her to ensure that alternatives to decommissioning are taken into account and that the costs of plans are kept to the minimum reasonably practicable. The intention is very much to bring consideration of such reuse to the forefront of the process and ensure that opportunities are identified early, allowing for adequate commercial arrangements to be made between parties and preventing situations requiring a party to maintain an asset against their will.

I turn to non-government Amendment 21. This amendment seeks to insert a new clause after Clause 7. The new clause would require the Oil and Gas Authority to report to the Secretary of State if the operability of any element of critical oil and gas infrastructure is at risk due to the financial condition of the owner, or for any other reason. It would also enable the Secretary of State to provide financial support to maintain such assets, if she considers the asset is at risk of closure or becoming inoperable, and it is in the national interest for it to remain in operational order.

I, too, am concerned to ensure that critical oil and gas infrastructure is properly identified and safeguarded in the national interest. This is an area already being addressed by the Oil and Gas Authority. Its recent Call to Action: Six Months On report highlighted actions being taken to protect critical infrastructure. However, we will continue to monitor this work and provision in this Bill will already enable the Secretary of State to require action from the OGA if necessary.

The existing drafting of Clause 5 “Directions: national security and public interest” and Clause 6 “Directions: requirements to notify Secretary of State” cover all the circumstances and issues identified in proposed new subsection (1) of the amendment. If this is not the case, the Pepper v Hart case of 1993 can be used on the basis of the debate today to indicate that that is the view of the operation of the clause.

Under Clause 5, the Secretary of State has the power to issue a direction to the Oil and Gas Authority as to the exercise of its functions, if the direction is either necessary in the interests of national security or otherwise is in the public interest. We believe that the operability of critical oil and gas infrastructure is in the public interest, and as such it is something in respect of which the Secretary of State could issue a direction. In support of this power, Clause 5(7) requires the OGA to notify the Secretary of State of any cases, matters or circumstance which have arisen or are likely to arise in relation to which she may issue a direction. The potential closure or shutdown of a nationally significant oil and gas infrastructure asset is an issue on which the Secretary of State would expect the OGA to report to her under the above provisions.

Where infrastructure is critical, there will almost certainly be a commercial deal to be done. It will be the role of the OGA to facilitate this by bringing parties together. Only once the market had failed to provide such a commercial deal would the Government step in. We are not yet in that place but, should it be necessary, we are of the view that sufficient financial mechanisms already exist that, in the event that such support was necessary, it could be provided by government, subject to approval by Her Majesty’s Treasury. However, before such support could be given, the Government would need to ensure that they were acting in compliance with state aid rules. I hope noble Lords have found this explanation reassuring.

Non-government Amendment 77 seeks to insert a new clause into the Bill requiring the Secretary of State to report annually to both Houses of Parliament on the estimated cost of decommissioning North Sea oil and gas infrastructure. As we have discussed previously, the inevitable consequence of a maturing basin means that the future cost of decommissioning activity in the North Sea is expected to be substantial. This forthcoming increase in decommissioning activity presents a major opportunity to increase efficiencies and reduce costs to both the industry and the taxpayer.

We recognise that the reporting of costs plays an important role in this. Most importantly, we recognise the need for transparency regarding the costs that may ultimately fall to the taxpayer as a result of tax relief mechanisms for decommissioning costs mentioned by the noble Baroness, Lady Worthington. Our current estimates are that between 2015 and 2041, the cost to Her Majesty’s Treasury would be £16 billion. Industry’s costs would be well in excess of that. Those are, of course, estimates. To this end, Her Majesty’s Revenue & Customs provides a detailed account of expected decommissioning liability in its annual accounts, which are publicly available.

The approach by which that liability is accounted for has recently been revised in order to provide a more long-term estimate of the costs of decommissioning. This provides both industry and government with a much fuller picture of the expected future cost landscape, allowing these costs to be robustly managed and ensuring that decommissioning is executed as efficiently as practically possible. I hope that this explanation, coupled with the relevant government amendments aimed at ensuring that the cost of decommissioning plans is kept to the minimum reasonably practicable, reassures noble Lords that the reduction of decommissioning costs is at the forefront of the Government’s agenda. For these reasons I ask that Amendment 77 be not moved.

Government Amendment 84 inserts a new schedule into the Bill relating to decommissioning. This schedule is introduced by Amendment 73, and Amendment 85 amends the title of the Bill to ensure that Amendment 84 is within the scope of the Bill. We agree that decommissioning is an integral part of the life cycle of oil and gas infrastructure. There is a real need to manage the interrelationship between extending economic production, retaining facilities and utilities to optimise decommissioning, and preserving assets for future use where appropriate. As the inevitable consequence of a maturing basin, decommissioning activity in the North Sea is expected to ramp up significantly in the coming years. This increased activity will bring increased cost, as I have indicated. While the industry will bear the upfront cost of the decommissioning, a significant portion will be borne by the Government, as I have set out.

The forthcoming increase in decommissioning activity presents a major opportunity to increase efficiencies and reduce costs to both the industry and the taxpayer. It is imperative that costs are robustly managed and that decommissioning is executed as efficiently as practically possible, while ensuring that the highest safeguards for health and the environment are satisfied.

As noble Lords have recognised, there is also a need to preserve such infrastructure for reuse, where viable, as an alternative to decommissioning. The consideration of such reuse is essential in ensuring that key North Sea infrastructure is not decommissioned prematurely. I am sure we all agree it is vital that we also consider the viable reuse of relevant infrastructure for purposes not related to those for which it was originally put. Not only does the consideration of such reuse help to maximise field life but it facilitates the essential development of technologies such as carbon capture and storage. As such, the provisions in this amendment seek to provide a legislative framework within which these twin aims of viable reuse and reduction of costs can be achieved.

The provisions seek to ensure that the viable preservation and reuse of assets is considered by owners of relevant infrastructure as an alternative to decommissioning. As mentioned in the Wood review, and as discussed in Committee, this concept plays, and will continue to play, a crucial role in maximising economic recovery from the North Sea. As such, these provisions ensure that reuse is considered throughout the decommissioning process; for instance, the provisions set out in proposed paragraph 4 of the new schedule inserted by Amendment 84 require any person planning the decommissioning of an asset to first consult the OGA with regards to viable alternatives to decommissioning,

“such as re-using or preserving it”.

A similar consultation duty is imposed on the Secretary of State, when deciding whether to approve a decommissioning plan, by paragraph 5. In addition, such a duty applies when a revision to a decommissioning plan is proposed, as in paragraph 6; when amendments are proposed under an approved plan, as in paragraph 7; or when, in response to a failure to submit a plan, the Secretary of State imposes her own plan, as in paragraph 5.

As has been mentioned, it is essential to note that consideration of reuse at each stage of the decommissioning process should include reuse for purposes other than those for which the infrastructure was originally put. Importantly, this includes reuse for purposes related to carbon capture and storage. Viable reuse in this vein provides industries such as CCS with crucial opportunities for development, which these measures aim to ensure we do not miss.

Turning to how the provisions in the amendment seek to minimise the costs of decommissioning activities, it is vital we ensure that the costs of decommissioning are controlled and minimised throughout the decommissioning process, not least to ensure that the ultimate bill borne by the Government is minimised, a matter that noble Lords are rightly concerned about.

It is also important that costs are reduced in a way that is consistent with our domestic and international obligations regarding the environment and health and safety. These provisions seek to do this in the following ways. First, they create a consultative role for the OGA throughout the decommissioning process. Paragraphs 3 to 7 and paragraph 9 of the Schedule inserted by Amendment 84 oblige both those preparing to decommission and the Secretary of State to seek advice from the OGA at each step of the process regarding how to frame decommissioning plans to ensure that costs are minimised. From planning through approval to implementation, the OGA will have the power to scrutinise decommissioning activity to ensure that it represents the best value for money.

Secondly, the provisions create a duty on both those preparing decommissioning plans and the Secretary of State to ensure—whether by means of the timing of the measures proposed, the inclusion of provision for collaboration with other persons, or otherwise—that such plans are framed so as to ensure that the costs of carrying it out are kept to the minimum that is reasonably practicable in the circumstances, while ensuring the strongest safeguards for health and the environment are satisfied. Again, provisions in paragraphs 3 to 7 give effect to this.

Thirdly, the Secretary of State is given the power to require action to ensure that the costs of decommissioning are minimised while the plan is being implemented. The provisions in paragraph 8 allow the Secretary to State to intervene in the decommissioning process to ensure that specific measures are taken to reduce costs.

I hope that noble Lords will agree that the cumulative effect of these amendments relating to the reuse of infrastructure and the reduction of costs is a more robust and cost-effective decommissioning process that aims to ensure that suitable alternatives to decommissioning are considered at every possible opportunity and that decommissioning plans represent the best value for money.

Government Amendment 74 inserts a new clause after Clause 62 adding a further duty on owners of relevant offshore installations and upstream petroleum infrastructure beyond those in section 9C of the Petroleum Act 1998, to act in accordance with the MER UK strategy when planning and carrying out decommissioning of such infrastructure. As I have mentioned, there is no doubt that ensuring the preservation and viable reuse of infrastructure—for example, to facilitate use for carbon capture and storage—as well as reducing the cost of carrying out decommissioning, is of crucial importance in our quest to maximise economic recovery from the North Sea. This amendment, coupled with the decommissioning obligations to be included in the draft strategy to maximise economic recovery of UK petroleum, will provide a clear legislative framework within which these vital decommissioning goals can be met.

This amendment, together with government Amendments 8 and 9—which I shall discuss further shortly—seeks to address this by ensuring that all owners of relevant offshore infrastructure are obliged to act in accordance with the strategy when planning and carrying out decommissioning of that infrastructure. Importantly, this amendment also clarifies that consideration of alternative uses of such infrastructure—including its reuse for purposes other than that to which the infrastructure was originally put, such as carbon capture and storage—plays a crucial role in this process.

Photo of Baroness Worthington Baroness Worthington Shadow Spokesperson (Energy and Climate Change) 8:15 pm, 19th October 2015

My Lords, I am grateful to the noble Lord, Lord Teverson, for speaking to Amendment 21 and to the Minister for speaking to the government amendments in this group. Part of the reason why I did not have a weekend is that these are quite substantial amendments to be bringing forward on Report. It is regrettable that we are considering this much detail on Report. However, on the positive side, they reflect that the Government have been listening to the concerns raised in this House. Those concerns have been consistently about the fitness of the purposes set for the OGA. We have tonight managed to win a vote that will look at again at those principal objectives.

I do not wish to go over old ground, but the fact that here we do need to change those objectives in order to add a new category of people into Section 9C indicates a need for those primary objectives to keep pace with what we are asking the OGA to do. Here we are making it clear that the decommissioning of the North Sea in particular is complex and is going to be a difficult job. Far from its being a distraction to make it clear that this is part of the OGA’s job, this recognises that maximising the usefulness of that infrastructure going forward is clearly a fundamental aspect of what the OGA has to do. The concept of maximising economic recovery has indeed changed. Some of these amendments do change it, so it is only right and proper that the objectives of the organisation have been changed and should change.

The Government’s amendments are comprehensive and thorough. I suspect they are trying to tread this very careful line over how we avoid causing undue costs when we are not yet clear about the future—nobody has a crystal ball or can be 100% clear about the future. We want to preserve infrastructure, but at the same time we do not want to incur costs unnecessarily. This is not an easy thing and possibly why a little more time to reflect is needed—some more pre-legislative scrutiny might have helped us navigate this important area. None the less, we welcome the Government’s amendments and the clarity that they bring, although this further highlights the need for a review of the OGA, as has been mentioned, and I do not know whether we can wait for three years. I know that is the maximum time we will have to wait, but given the seriousness of the situation, the complexity of this and the speed with which we are having to scrutinise this legislation on Report, a review earlier rather than later is definitely called for. However, I am happy at this stage to withdraw Amendment 19. As I say, the Government’s amendments have gone some way to addressing our concerns.

I know we are not supposed to table probing amendments on Report, but Amendment 77 on the decommissioning costs was intended to enable us to have a debate about the decommissioning liabilities that are accruing. I sense that this subject will not go away and I imagine that, when the Bill transfers to the other place, people will comment on the open-ended nature of these liabilities. However, at this stage I am happy to withdraw my amendment.

Amendment 19 withdrawn.

Clause 7: Power of Secretary of State to require information and samples

Amendment 20

Moved by Lord Bourne of Aberystwyth

20: Clause 7, page 5, line 10, leave out subsections (3) and (4) and insert—

“(3) The Secretary of State may use protected material only for the purpose for which it is provided.

(4) Protected material must not be disclosed—

(a) by the Secretary of State, or

(b) by a subsequent holder, except in accordance with this section.

(5) For the purposes of subsection (4)(b), “subsequent holder”, in relation to protected material, means a person who receives protected material directly or indirectly from the Secretary of State by virtue of a disclosure, or disclosures, in accordance with this section.

(6) Subsection (4) does not prohibit the Secretary of State from disclosing protected material so far as necessary for the purpose for which it was provided.

(7) Subsection (4) does not prohibit a disclosure of protected material if—

(a) the disclosure is required by virtue of an obligation imposed by or under any Act, or

(b) the OGA consents to the disclosure and, in a case where the protected material in question was provided to the OGA by or on behalf of another person, confirms that that person also consents to the disclosure.”

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Energy and Climate Change, Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Wales 8:30 pm, 19th October 2015

My Lords, government Amendment 20 places controls on the disclosure of information. Clause 7 of the Bill as introduced provides the Secretary of State with the power to require information from the OGA for certain purposes which are listed in subsection (1). The Secretary of State may disclose such information onwards for these same purposes or if required to under legislation, or with the consent of the OGA and, where applicable, that of the original information holder.

This amendment applies restrictions on the ability of any subsequent holders of this information to further disclose such information. It will ensure that they may do so only if required under or by an Act of Parliament or with the consent of the OGA and, where applicable, of the original provider of the information. This will ensure that potentially commercially valuable information provided to the OGA cannot be disclosed by subsequent holders of information except in certain narrowly prescribed circumstances. I beg to move.

Photo of Baroness Byford Baroness Byford Conservative

My Lords, I will contribute to this short debate by thanking the Minister for reconsidering this aspect of the Bill, which certainly caused me, and one or two other noble Lords, slight concerns as to what material was protected and how it should be protected. I welcome the amendment he has moved tonight. It is extremely important that the balance is right between the value of sharing information and the value of keeping protected, in a proper manner, information that really should be protected. I will not delay the House any longer but thank the Minister for having given thought to our discussions in Committee. I am happy to support this amendment.

Photo of Baroness Worthington Baroness Worthington Shadow Spokesperson (Energy and Climate Change)

My Lords, I am grateful to the Minister for introducing Amendment 20 and to the noble Baroness, Lady Byford, for her comments. I am sure it is correct that material should be used only for the purpose for which it is provided, but I am left wondering what the concern or fear was. If the Minister will bear with me, I would like just one further clarification as to what, in real-world terms, we are avoiding here. Obviously we do not want unnecessary disclosure if the information is going to be misused, but I wonder what this is really for.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Energy and Climate Change, Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Wales

My Lords, I think I can answer that question. I thank my noble friend Lady Byford for her support. As I understand it, it is commercially sensitive information that would be protected in those circumstances, which seems entirely proper.

Amendment 20 agreed.

Amendment 21 not moved.

Clause 8: Powers of the OGA to charge fees

Amendment 22

Moved by Lord Bourne of Aberystwyth

22: Clause 8, page 5, line 27, at end insert—

“( ) on an application made to it under section 12A of the Energy Act 1976;”

Amendment 22 agreed.

Amendment 23

Moved by Lord Bourne of Aberystwyth

23: Clause 8, page 6, line 16, at end insert—

“( ) The OGA may not charge fees under this section for the exercise of any function which it is authorised to exercise by virtue of—

(a) an order under section 69 of the Deregulation and Contracting Out Act 1994, or

(b) an agreement under section 3(3).”

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Energy and Climate Change, Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Wales

My Lords, the Oil and Gas Authority has been set up to maximise economic recovery of petroleum from the continental shelf. The new body will be funded by industry. That is consistent with the “user pays” principle as industry will be benefiting from the work and expertise of the regulator. The OGA is providing a range of services to industry. Those services include issuing licences as well as issuing relevant consents and permits: for example, to begin petroleum production. It is right, and in compliance with Managing Public Money, that the costs of these services be recovered via direct fees rather than the general levy. This will ensure that only those requiring the service and benefiting from it will bear its costs.

Licensing of onshore oil and gas within Scotland and Wales is to be devolved to Scottish and Welsh Ministers respectively. Amendment 23 ensures that the OGA does not have a concurrent power to charge a fee where the matter has been devolved. I beg to move.

Photo of Baroness Worthington Baroness Worthington Shadow Spokesperson (Energy and Climate Change)

My Lords, I am grateful for that explanation, which answers my question: this involves only activities which relate to devolved Administrations. Obviously, the OGA can charge fees to people whose activities are caught by its functions even if the word “benefit” might be open to interpretation. The Minister said that those who were not benefiting could not be charged fees. Would everyone necessarily benefit from the OGA? It is a regulator, so it might not always be seen to be beneficial. Can he clarify that?

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Energy and Climate Change, Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Wales

I am happy to try. The word “benefit” is probably interpreted objectively rather than subjectively—possibly in a slightly paternalistic way. Where a service is provided for somebody, they should pay for it. I hope that that provides clarification.

Amendment 23 agreed.

Clause 9: Levy on licence holders

Amendment 24

Moved by Lord Bourne of Aberystwyth

24: Clause 9, page 6, line 37, after “exceed” insert “the sum of—”

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Energy and Climate Change, Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Wales

My Lords, Amendments 24 and 25 amend Clause 9 to ensure that the costs payable to the OGA through the levy on licence holders include the costs incurred by Her Majesty’s Courts and Tribunal Service in relation to the setting up and running of the appeal right against the OGA’s sanctions.

The First-tier Tribunal is an established judicial body, but adding a new appeal right to its functions incurs administrative costs. It is normal practice for HM Courts and Tribunal Service to pass costs associated with setting up and running new appeal rights to the body for whom the appeal right is being established. The amendment ensures that such costs will be met by industry, as the regulated community for whom the appeal right is provided, through the levy. I beg to move.

Amendment 24 agreed.

Amendment 25

Moved by Lord Bourne of Aberystwyth

25: Clause 9, page 6, line 38, at end insert—

“( ) the costs incurred in respect of that period by the Lord Chancellor in connection with the provision of Tribunals to consider appeals against decisions of the OGA, and”

Amendment 25 agreed.

Amendment 26

Moved by Lord Bourne of Aberystwyth

26: After Clause 11, insert the following new Clause—

“Review of OGA and guidance from Secretary of State

(1) The Secretary of State must review the OGA’s performance for each review period.

(2) The first review period—

(a) begins with the day on which section 1 comes into force, and

(b) ends at the end of the three year period beginning with that day, or on such earlier day as the Secretary of State may determine.

(3) Subsequent review periods—

(a) begin with the day (“the first day”) after the last day of the preceding review period,

(b) end at the end of the three year period beginning with the first day, or on such earlier day as the Secretary of State may determine.

(4) A review must, in particular—

(a) assess how effective the OGA has been in exercising its functions, and

(b) consider the OGA’s functions under—with regard to their fitness for purpose and scope.

(i) Part 2, and

(ii) Chapter 3 of Part 1 of the Energy Act 2008 (storage of carbon dioxide), with regard to their fitness for purpose and scope.

(5) As soon as practicable after a review period, the Secretary of State must—

(a) publish a report of the findings of the review for that period, and

(b) lay a copy of the report before Parliament.

(6) As a result of the findings of a review, the Secretary of State may give guidance to the OGA about any matter relating to the OGA’s functions.

(7) The OGA must take account of any such guidance in carrying out its functions.

(8) For the purposes of this section “function” does not include any function which the OGA is authorised to exercise by virtue of—

(a) an order under section 69 of the Deregulation and Contracting Out Act 1994, or

(b) an agreement under section 3(3).”

Amendments 27 and 28 (to Amendment 26)

Moved by Baroness Worthington

27: After Clause 11, line 7, leave out “three” and insert “one”

28: After Clause 11, line 12, leave out “three” and insert “one”

Amendments 27 and 28 (to Amendment 26) agreed.

Amendment 26, as amended, agreed.

Clause 12: Overview of Part 2

Amendment 29

Moved by Lord Bourne of Aberystwyth

29: Clause 12, page 9, line 15, leave out paragraph (d)

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Energy and Climate Change, Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Wales

My Lords, I now speak to government Amendments 29, 30, 33, 41 to 43 and 61 to 70, which create a new Chapter 6, titled “Disclosure”. This covers the powers of the Oil and Gas Authority to share information. This chapter consists of new clauses, which are described later in the Bill, and, for clarity, and on the advice of parliamentary counsel, we have consolidated the various existing information disclosure provisions in Chapters 2 to 5 of Part 2 of the Bill into this new Chapter 6.

Amendments 29 and 30 introduce the fact that there is a new Chapter 6 and make a consequential amendment at the start of Part 2.

Amendments 33, 41, 42, 43 and 61 remove the provisions dealing with the disclosure of information obtained under the current clauses—that is, Clause 21, “Disputes: disclosure”, Clauses 31 and 32, “Disclosure of information and provision of samples” and “Timing of disclosure”, Clause 39, “Meetings”, and Clause 58, “Sanctions”—which are now contained in Chapter 6. There is no change to their legal effect.

Amendments 62 to 70 consolidate into the new Chapter 6 the information disclosure provisions previously included in Chapters 2 to 5 of Part 2, and introduce the two new powers to enable the Oil and Gas Authority to disclose information to UK governmental bodies and for the purpose of legal proceedings.

Amendments 62 and 63 reinstate the general prohibition on disclosure of protected information by the Oil and Gas Authority, or a subsequent holder of such information, as applicable to the disclosure provisions of the Bill as introduced. These amendments are therefore required to consolidate the disclosure provisions into the new Chapter 6.

Amendment 64 inserts a new disclosure power permitting the OGA to disclose information obtained under specified chapters of Part 2 to certain listed UK governmental bodies to facilitate the carrying out of their functions. Owing to the possible inclusion of commercially valuable data within chapters of the Bill as introduced, the existing disclosure provisions in the Bill provide only narrow powers for information to be disclosed by the OGA, such as where required by an Act of Parliament or with the consent of the information owner. This may have prevented the OGA from disclosing information obtained under these powers to DECC and its agencies, such as the Office of Carbon Capture and Storage, other central government departments, the devolved Administrations and law enforcement agencies. These amendments will allow the OGA to disclose information obtained under Part 2 to such listed UK government bodies for the purpose of their functions.

I can advise noble Lords that any changes to the list of bodies or to the categories of information they may receive may be made only by affirmative resolution of both Houses of Parliament.

Amendments 65, 66, 67, 68 and 69 consolidate the disclosure provisions which were already included in the Bill covering, respectively, general disclosure required for the OGA to prepare returns and reports, disclosure in the exercise of its disputes and sanctions powers, release after a specified confidentiality period and disclosure with consent, or as required by legislation. The effect of these provisions is unchanged. Lastly, Amendment 70 provides authority for the OGA to disclose information if required for civil or arbitration proceedings or to law enforcement bodies for the investigation or prevention of criminal activities.

I now turn to government Amendments 76 and 87, which deal with information-sharing with foreign Governments. Amendment 76 inserts a new clause covering the exchange of information with foreign Governments. Amendment 87 alters the Title of the Bill to ensure that Amendment 76 is within its scope.

Her Majesty’s Government engage in co-operative arrangements for the exploitation of transboundary oil and gas reserves and for the use of infrastructure, such as pipelines, with a number of partner nations, including Norway, the Netherlands and the Republic of Ireland. These arrangements are set out in a number of treaty agreements. Conducting such activities requires Her Majesty’s Government to share information with foreign Governments. This amendment provides the authority for the Oil and Gas Authority, as a representative of the Government, to continue to disclose information under the existing licensing arrangements and under the powers in Part 2 of the Bill for the purposes of giving effect to such treaties. This amendment also provides the Secretary of State with a similar power to share information with foreign Governments.

There are a number of conditions attached to any disclosure to ensure that information is protected. The treaty must include provisions governing information exchange, and the Secretary of State, or the Oil and Gas Authority as applicable, must be content that adequate safeguards are in place in the receiving nation to ensure that information is protected before disclosing. In addition, no onward disclosure of the information by the foreign Government is permitted without Her Majesty’s Government’s consent unless a treaty allows the production of general reports. I trust that noble Lords agree that co-operation with partner nations is vital to our exploitation of oil and gas and to our industry, and I beg to move.

Photo of Baroness Maddock Baroness Maddock Chair, Works of Art Committee (Lords), Chair, Works of Art Committee (Lords) 8:45 pm, 19th October 2015

My Lords, this group of amendments highlights something we have already raised today: a lot are technical, they are quite long and we had very little time over the weekend to get round to looking at them in detail. It is not very satisfactory. However, we on these Benches certainly welcome consultation. It is something we have always supported. I am surprised that these amendments dealing with co-operation with other nations with regard to gas and oil were not in the Bill originally as co-operation is rather key. Earlier in the proceedings, I asked whether we are looking at the way Norway operates. I am sure that when it is looking at these matters, it takes them into consideration. I have raised this concern, as have other people, during the passage of the Bill. We find it very difficult to scrutinise properly, in the way this House should, when we get information so late. I shall probably not speak again tonight, but we have another day on Report on Wednesday, and we will be in exactly the same position.

Photo of Lord Grantchester Lord Grantchester Opposition Whip (Lords), Shadow Spokesperson (Energy and Climate Change), Shadow Minister (Environment, Food and Rural Affairs)

My Lords, I thank the Minister for explaining these amendments, which reshape disclosure into a separate chapter in the Bill. They all seem reasonable enough, but they give rise to consideration of why they are now being so adjusted. I follow the noble Baroness, Lady Maddock, in her comments about the short notice and the comments made earlier by my noble friend Lady Worthington regarding the future prospects of the OGA and the Government’s intentions regarding it. One wonders whether something has happened. Can the Minister inform the House whether attention has been drawn to them so that they get consolidated? Can the Minister confirm that the Data Protection Act applies to the ODA with regard to information generally and to disclosure? Will he clarify the position and provide some assurances about questions that come to mind in relation to disclosure to third parties? We would support sharing information with other government departments and agencies, including the devolved Administrations, for the purposes of their functions, as the OGA will need to be able to work collaboratively with the different departments and the department itself.

In relation to third parties and foreign Governments, care certainly needs to be exercised and precautions taken with regard to possible unintended consequences. Will anything appear in the public domain regarding the nature and frequency of the sharing of information with foreign Governments? The Minister will be aware that there could be many agencies, especially regarding the environment, where the Government could come under scrutiny in how they handle sensitive information, and where any secrecy between Governments could be misconstrued.

On another point, is the Minister satisfied on the question of the Secretary of State undertaking a review into these matters? Will the Secretary of State have any oversight and details of the information shared by the OGA? Would there be any independent oversight of disclosures regarding legal proceedings and foreign Governments? Could the Minister give an example of the information that might be requested and then shared in relation to these amendments? That would certainly help to settle any disquiet that these powers could give rise to. Meanwhile, the amendments seem well balanced and reasonable.

Photo of Lord Oxburgh Lord Oxburgh Crossbench

I thank the Minister for his comment earlier on Amendment 72. I have a specific question on Amendment 64. It relates to Clause 31(3)(b), which says that disclosures may be made to the National Environment Research Council,

“or any other similar body carrying out geological activities”.

My question is simply what those other similar bodies might be. For example, would they be universities carrying out geological activities?

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Energy and Climate Change, Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Wales

I am grateful to noble Lords who have participated in the debate on this part of the Bill. I acknowledge the point, as I think I did previously, about the technical nature of these late amendments. I understand the point made forcefully and correctly by the noble Baroness, Lady Maddock. On the general point about consolidation, I think there is general welcome for that, to try to ensure that everything is all in one place.

There were then some specific questions about the sharing of information with foreign Governments. I think that the legislation will be subject to the Data Protection Act; that is quite true. My understanding is that disclosure to third parties is not appropriate. If there is a body that the information is being shared with, whether domestically or with an overseas Government, that is the limit of it for the function concerned, unless, for example, the treaty were to provide otherwise. I am trying to think of the type of information that might be shared. The examples that I gave of Norway, Ireland, the Netherlands and so on are probably in relation to interconnectors. There may be a need to share information about where pipelines are at the moment, and so on. That is the sort of thing, rather than anything of an operational nature; I do not anticipate there being anything in any way sinister about this. I will write to the noble Lord, Lord Grantchester, about the oversight of the Secretary of State. I think that she would have oversight of this, but I will check that point. I shall also check whether there is to be publication of the information concerned. I cannot see why not, in all honesty; as I say, this is a functional managerial thing rather than anything else.

The noble Lord, Lord Oxburgh, raised a point about Clause 31(3)(b) regarding the National Environment Research Council or other similar bodies. I anticipate that that would include universities. The other eventuality covered here is if for any reason the council were to cease to exist and something else were to take over its functions—it is most unlikely—that would then qualify as a similar body. I hope that that deals with the points that were made.

Noble Lords will be interested to know that arrangements exist in treaties to ensure that the Secretary of State is satisfied that adequate protection is in place.

An example is the showing of protection measurement systems and production measurement for joint fields of exploration in the North Sea. In relation to the point made about consolidation, for which I think we have general support, it was parliamentary counsel’s advice to consolidate those disclosure provisions. That is not an attempt to take the credit for what we all think is a very good idea, but it is to give credit to the parliamentary counsel for that. I hope that helps.

Amendment 29 agreed.

Amendment 30

Moved by Lord Bourne of Aberystwyth

30: Clause 12, page 9, line 24, at end insert—

“(6) Chapter 6 makes provision about the disclosure of information and samples which have been obtained by the OGA under this Part.”

Amendment 30 agreed.

Clause 16: Action by the OGA on a dispute reference

Amendment 31

Moved by Lord Bourne of Aberystwyth

31: Clause 16, page 11, line 44, leave out from “parties” to “in” in line 45 and insert—

“(a) under subsection (5)(a), or

(b) by directions under subsection (5)(b), are sanctionable”

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Energy and Climate Change, Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Wales

My Lords, I will now speak to government Amendments 31 and 32, 44 and 45, 47, 49 to 52, 54, 58 to 60 and 79 to 82. The majority of these make minor and technical changes to Chapters 2 and 5 of Part 2 of the Bill. Amendments 49 and 52 also provide for the effect of devolution. These amendments are either drafting improvements or are clarificatory in nature and do not alter the policy intent of the relevant clauses. Other amendments in this group make provision regarding the powers in the Bill to make regulations.

Amendments 31, 32 and 44 are intended to achieve the same aim. They make minor changes to Clauses 16 and 18 of Chapter 2 and Clause 42 of Chapter 5. They provide clarification so that there is no doubt that when the OGA gives a direction that imposes a requirement on a person, that requirement is a “petroleum-related requirement” within the meaning of Clause 41(3)(c). This makes clearer the policy intention that the OGA may give a sanction notice in respect of a breach of a requirement imposed by such a direction.

Amendments 47 and 52 are intended to achieve the same aim. They make minor changes to Clauses 46 and 47 of Chapter 5 to clarify the policy intention that the OGA should be able to give revocation notices and operator removal notices to a licence holder and an operator only in respect of a breach of a “petroleum-related requirement” imposed on the licence holder or operator in that capacity.

The Petroleum Act 1998 imposes a duty to act in accordance with the strategy to maximise economic recovery of United Kingdom petroleum. This acts upon various categories of persons, including licensees and owners of upstream petroleum infrastructure. Where a person acts in more than one such capacity, the amendment makes it clear that the OGA cannot, for example, give a licence revocation notice to an owner of upstream petroleum infrastructure in respect of a breach of the duty to act in accordance with the strategy imposed on the person as an owner of upstream petroleum infrastructure if that person also happens to be a licence holder.

Amendments 49 and 54 are intended to achieve the same aim. They amend Clauses 46 and 47 of the Bill to prevent the OGA giving an operator removal notice or revocation notice in relation to licences which, on the date the notice is given, the OGA would not have the power to grant. This amendment removes the possibility for the OGA to revoke a licence or remove the operator of a licence in circumstances where the OGA does not have the power to grant the licence. This reflects the proposed devolution through the Scotland Bill and the forthcoming Wales Bill—to be published in draft form tomorrow—of the licence-granting functions in respect of onshore licences under the Petroleum Act 1998.

Amendment 50 makes minor changes to Clause 46 to ensure that existing obligations binding a licensee remain in cases where the OGA issues a revocation notice under Clause 46. The amendment provides clarification and ensures certainty that the provisions of licences will apply following revocation of the licence under Clause 46 in the same way as they would apply if the licence were revoked under the terms of the licence. It does not alter the policy intention.

Amendment 51 makes a minor drafting change to the wording of Clause 46(8) for consistency with the wording of Clause 46(4). There is no change of policy. Amendment 58 makes a minor change to Clause 51 to place it beyond doubt that on an appeal against a revocation notice or an operator removal notice which is given by the OGA, the tribunal’s powers to vary the notice are limited to varying the date on which revocation of the licence or removal of the operator takes effect.

Amendments 45, 59 and 60 are intended to clarify that if the OGA gives a financial penalty notice which does not require compliance with a “petroleum-related requirement” within a specified period—for example, because the requirement has already been remedied at the time the notice is given—no further sanction notice may be given in respect of the breach. This merely clarifies the existing policy intention.

After speaking to Amendments 79, 80 and 81, which deal with information disclosure, I will speak to Amendment 82. These first amendments modify Clause 67, which makes provision regarding the powers in the Bill to make regulations. Amendments 79 and 80 are consequential changes that are required to deal with the fact that the power to make regulations permitting publication of information obtained under Chapter 3—which deals with “information and samples” —have now been consolidated within the new Chapter 6.

Amendment 81 reflects Her Majesty’s Government’s intention that any changes to the list of bodies to which the Oil and Gas Authority may disclose information or to the categories of information that may be disclosed under Amendment 64 must be made by regulation approved by each House of Parliament.

On Amendment 82, currently the Bill contains provisions which require the Secretary of State to consult the OGA before exercising her power to make certain regulations. This is an important requirement, which ensures that the views of the OGA as an independent regulator are taken into account. However, this requirement would initially be problematic and impractical, because the Secretary of State would be under an obligation to consult the OGA in circumstances where it does not have any functions or staff, and it would also cause delay.

This amendment seeks to disapply the consultation requirement to any first exercise of each of the Secretary of State’s powers to make regulations that occurs within one year, beginning with the date on which the provision establishing the OGA comes into force. We do not think that disapplying this requirement would be a problem, because the OGA would initially be an executive agency of the department—that is, it is legally indistinct from the department. Officials in the OGA would therefore still have a key role in developing the policy which will be given effect by the regulations. I beg to move.

Photo of Baroness Worthington Baroness Worthington Shadow Spokesperson (Energy and Climate Change) 9:00 pm, 19th October 2015

My Lords, I did not intend to speak any more this evening. I thank the Minister for running through all these amendments. Amendment 82, on the disapplication of the requirement to consult the OGA, caught my attention. I am feeling slightly bruised by the Bill, and if the regulations that come from it are anything like this process, it will be a dreadful experience. I am therefore hopeful that any regulations made under the Act will receive due care and attention and that proper time will be made available for their development. Part of that would naturally mean that consultation would take place. I am left with the following question. If, in the first year, in which we can expect quite a raft of regulations to flow, we are not consulting the OGA, who will be consulted?

I know that the Minister will be tempted to say that there will not be any staff, and it will not be possible. However, we already have an OGA, which has been in existence for some time, and it clearly can and does offer advice. Indeed, representatives of the OGA attended a meeting with the Minister when we discussed CCS. Therefore, I do not follow the logic and I am slightly concerned about the issue of proper consultation for these regulations. For the majority of the Bill, we have not seen proper consultation, and I would hate that to be repeated with the regulations.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Energy and Climate Change, Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Wales

My Lords, we intend to bring in regulations as quickly as possible once the relevant powers are commenced. Because of this, the drafting and formulating of some regulations will have to be done before the OGA is established as a government company and functions and staff are transferred to it. The year timeframe will apply only to the first set of regulations made under each power within that period, so it will not necessarily apply throughout that period. A year is the outside limit that can apply, and it will apply to a set of regulations made under each power. That gives us the opportunity to pass regulations before the OGA is up and running effectively. I accept what the noble Baroness says about it already having staff. Yes, it has, but it is not really up and running and functional as yet, and that is what is intended.

Photo of Baroness Worthington Baroness Worthington Shadow Spokesperson (Energy and Climate Change)

As I understand it, the Bill states that the company originally incorporated under the Companies Act as the Oil and Gas Authority Ltd is renamed the Oil and Gas Authority. Clearly it exists, it has staff and it performs functions, but I simply do not understand why there is a one-year period. Perhaps the Minister could write to me with further information. Furthermore, the idea that he is going to bring forward regulations quickly fills me with dread.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Energy and Climate Change, Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Wales

I do not think I said that it would necessarily be quick; I said it would be within the year. The noble Baroness makes a valid point, but I come back to the point not that it is not set up—I agree that it is—but that it is not fully functional as yet. I will gladly write to the noble Baroness and perhaps give some examples of what this is intended to cover. I beg to move.

Amendment 31 agreed.

Clause 18: Procedure for consideration of disputes

Amendment 32

Moved by Lord Bourne of Aberystwyth

32: Clause 18, page 12, line 32, leave out “Directions given by the OGA to relevant parties” and insert “Requirements imposed by directions”

Amendment 32 agreed.

Clause 21: Disputes: disclosure

Amendment 33

Moved by Lord Bourne of Aberystwyth

33: Clause 21, leave out Clause 21

Amendment 33 agreed.

Clause 23: Petroleum-related information and samples

Amendment 34

Moved by Lord Bourne of Aberystwyth

34: Clause 23, page 15, line 17, at end insert—

“(2) In this Chapter, “petroleum-related information” and “petroleum-related samples” include information or samples acquired or created as mentioned in subsection (1) which are relevant to activities carried out under a carbon dioxide storage licence.

“(3) In subsection (2) “carbon dioxide storage licence” means a licence granted under section 18 of the Energy Act 2008.”

Amendment 34 agreed.

Clause 29: Information and samples plans: supplementary

Amendments 35 to 38

Moved by Lord Bourne of Aberystwyth

35: Clause 29, page 17, line 36, after “licensee” insert “or to a person holding a carbon dioxide storage licence”

36: Clause 29, page 17, line 37, at end insert—

“( ) An information and samples plan prepared by the OGA under section 27(4) may not include provision under subsection (1)(b) for the transfer of information or samples to another person without the consent of the responsible person.”

37: Clause 29, page 17, line 37, at end insert—

“( ) Where an information and samples plan makes provision under subsection (1) for a person, other than the responsible person, to hold information or samples in accordance with the plan—

(a) the plan may, with the consent of that other person, impose requirements on that person in connection with the information and samples, and

(b) any such requirements are sanctionable in accordance with Chapter 5.”

38: Clause 29, page 18, line 5, at end insert—

“( ) In subsection (1)(b) “carbon dioxide storage licence” means a licence granted under section 18 of the Energy Act 2008.”

Amendments 35 to 38 agreed.

Clause 30: Power of the OGA to require information and samples

Amendments 39 and 40

Moved by Lord Bourne of Aberystwyth

39: Clause 30, page 18, line 10, after “objective” insert “or which relate to activities carried out under a carbon dioxide storage licence”

40: Clause 30, page 18, line 30, at end insert—

“( ) In subsection (1) “carbon dioxide storage licence” means a licence granted under section 18 of the Energy Act 2008.”

Amendments 39 and 40 agreed.

Clause 31: Disclosure of information and provision of samples

Amendment 41

Moved by Lord Bourne of Aberystwyth

41: Clause 31, leave out Clause 31

Amendment 41 agreed.

Clause 32: Timing of disclosure etc: supplementary

Amendment 42

Moved by Lord Bourne of Aberystwyth

42: Clause 32, leave out Clause 32

Amendment 42 agreed.

Clause 39: Meetings: disclosure

Amendment 43

Moved by Lord Bourne of Aberystwyth

43: Clause 39, leave out Clause 39

Amendment 43 agreed.

Clause 42: Enforcement notices

Amendment 44

Moved by Lord Bourne of Aberystwyth

44: Clause 42, page 25, line 16, leave out “Directions” and insert “Requirements imposed by directions”

Amendment 44 agreed.

Clause 43: Financial penalty notices

Amendment 45

Moved by Lord Bourne of Aberystwyth

45: Clause 43, page 25, line 28, leave out from “notice” to end of line 30 and insert “, in a case where it is appropriate to require such compliance and the failure to comply with the requirement has not already been remedied at the time the notice is given, and”

Amendment 45 agreed.

Amendment 46

Moved by Lord Bourne of Aberystwyth

46: Clause 43, page 25, leave out lines 34 and 35 and insert “end of the period of 28 days beginning with the day on which the financial penalty notice was given.”

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Energy and Climate Change, Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Wales

My Lords, I will speak to government Amendments 46, 48, 53, 55, 56 and 57. These amendments make minor changes to Chapter 5 of Part 2 of the Bill to harmonise the provisions relating to appeals against the OGA’s sanctions with the procedural rules for the General Regulatory Chamber of the First-tier Tribunal. The procedural rules are made by the Tribunal Procedures Committee. These rules govern the practice and procedure in the First-tier Tribunal and Upper Tribunal.

Amendment 55 deletes subsection (2) of Clause 49, which has the effect of removing the 28-day period for bringing an appeal against the OGA’s sanctions. The time period for bringing an appeal will therefore revert to that set out within the tribunal procedural rules, which is also set at 28 days but which allows the tribunal discretion to extend that time period beyond the 28-day period.

As a result of Amendment 55, Amendments 46, 48 and 53 make consequential amendments to the clauses dealing with financial penalty notices, revocation notices and operator removal notices, which currently cross-refer to the existing 28-day period referred to in Clause 43(2). This ensures that, notwithstanding the deletion of this 28-day time period, a financial penalty notice, revocation notice or operator removal notice still cannot take effect until 28 days after the relevant sanction notice was given. This ensures that, regardless of the removal of the 28-day period referred to in Clause 49, a person is still given an appropriate opportunity to appeal before a sanction takes effect.

Amendment 56 amends Clause 49 to make it clear that, where an appeal is made to the First-tier Tribunal against a sanction notice and the sanction notice ceases to have effect, the effect of that suspension lasts until the tribunal confirms, varies or cancels the notice.

Amendment 57 adds a new subsection to Clause 49 to provide that, where an appeal is brought against a sanction imposed by the OGA, either the First-tier Tribunal or the Upper Tribunal may further suspend the effect of that sanction for the duration of any further appeal to the Upper Tribunal. I beg to move.

Photo of Lord Grantchester Lord Grantchester Opposition Whip (Lords), Shadow Spokesperson (Energy and Climate Change), Shadow Minister (Environment, Food and Rural Affairs)

I thank the Minister for providing the details of the amendments. They seem minor in nature and largely clarificatory—that is rather a long word at this time of night—and therefore they should raise no objection.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Energy and Climate Change, Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Wales

My Lords, I am most grateful to the noble Lord. It is a long word at this time of night or indeed at any other time.

Amendment 46 agreed.

Clause 46: Revocation notices

Amendments 47 to 51

Moved by Lord Bourne of Aberystwyth

47: Clause 46, page 26, line 24, leave out subsection (2) and insert—

“( ) A revocation notice may be given only in respect of a failure to comply with a petroleum-related requirement imposed on a licensee in that capacity.”

48: Clause 46, page 26, line 34, leave out from “period” to end of line 36 and insert “of 28 days beginning with the day on which the revocation notice was given.”

49: Clause 46, page 26, line 36, at end insert—

“( ) A revocation notice may not be given in circumstances where the licence to be revoked in accordance with the notice is one which, on the date the notice is given, the OGA would not have the power to grant.”

50: Clause 46, page 26, line 38, leave out from “notice” to end of line 42 and insert—

“(a) the rights granted to the person by the licence cease on the revocation date;

(b) the revocation does not affect any obligation or liability imposed on or incurred by the person under the terms and conditions of the licence;

(c) the terms and conditions of the licence apply as if the licence had been revoked in accordance with those terms and conditions, subject to section 55(2).”

51: Clause 46, page 27, line 6, leave out “respect of” and insert “relation to”

Amendments 47 to 51 agreed.

Clause 47: Operator removal notices

Amendments 52 to 54

Moved by Lord Bourne of Aberystwyth

52: Clause 47, page 27, line 12, leave out subsection (2) and insert—

“( ) An operator removal notice may be given only in respect of a failure to comply with a petroleum-related requirement imposed on an operator under a petroleum licence in that capacity.”

53: Clause 47, page 27, line 30, leave out from “period” to end of line 32 and insert “of 28 days beginning with the day on which the operator removal notice was given.”

54: Clause 47, page 27, line 32, at end insert—

“( ) An operator removal notice may not be given in circumstances where the licence under which the operator operates is one which, on the date the notice is given, the OGA would not have the power to grant.”

Amendments 52 to 54 agreed.

Clause 49: Appeals in relation to sanction notices

Amendments 55 to 57

Moved by Lord Bourne of Aberystwyth

55: Clause 49, page 28, line 41, leave out subsection (2)

56: Clause 49, page 28, line 44, leave out “in respect of the appeal” and insert “to confirm, vary or cancel the notice.”

57: Clause 49, page 28, line 44, at end insert—

“( ) Where, on an appeal made in relation to a sanction notice—

(a) the Tribunal makes a decision to confirm or vary the notice, and

(b) an appeal is or may be made in relation to that decision, the Tribunal, or the Upper Tribunal, may further suspend the effect of the notice pending a decision which disposes of proceedings on such an appeal.”

Amendments 55 to 57 agreed.

Clause 51: Appeals against sanction imposed

Amendment 58

Moved by Lord Bourne of Aberystwyth

58: Clause 51, page 30, line 18, leave out from “decision” to end of line 22 and insert “to revoke a licence or to require the removal of an operator the Tribunal may—

(a) confirm the decision,

(b) vary the decision by changing the revocation date or the removal date, as the case may be, or

(c) quash the decision, and confirm, vary or cancel the sanction notice in question accordingly.”

Amendment 58 agreed.

Clause 53: Subsequent sanction notices

Amendments 59 and 60

Moved by Lord Bourne of Aberystwyth

59: Clause 53, page 31, line 2, at end insert—

“( ) If the sanction notice given is a financial penalty notice which does not require compliance with the petroleum-related requirement, no further sanction notices may be given in respect of the failure to comply.”

60: Clause 53, page 31, line 3, leave out “an enforcement notice or a financial penalty notice” and insert—

“(a) an enforcement notice, or

(b) a financial penalty notice which requires compliance with the petroleum-related requirement.”

Amendments 59 and 60 agreed.

Clause 58: Sanctions: disclosure

Amendment 61

Moved by Lord Bourne of Aberystwyth

61: Clause 58, leave out Clause 58

Amendment 61 agreed.

Amendments 62 to 70

Moved by Lord Bourne of Aberystwyth

62: After Clause 60, insert the following new Clause—

“6 DisclosureGeneral prohibition

Prohibition on disclosure

Protected material must not be disclosed—

(a) by the OGA, or

(b) by a subsequent holder, except in accordance with this Chapter.”

63: After Clause 60, insert the following new Clause—

“Meaning of “protected material” and related terms

(1) In this Chapter “protected material” means information or samples which have been obtained by the OGA under this Part.

(2) In this Chapter—

“original owner”, in relation to protected material provided to the OGA under this Part, means the person by or on whose behalf, the protected material was so provided;

“subsequent holder”, in relation to protected material, means a person holding protected material who has received it directly or indirectly from the OGA by virtue of a disclosure, or disclosures, in accordance with this Chapter.

(3) References to disclosing protected material include references to making the protected material available to other persons (in a case where the protected material includes samples).”

64: After Clause 60, insert the following new Clause—

“Permitted disclosures

Disclosure by OGA to certain persons

(1) Section (Prohibition on disclosure) does not prohibit a disclosure of protected material by the OGA which—

(a) is made to a person mentioned in column 1 of the table below,

(b) is made for the purpose of facilitating the carrying out of that person’s functions, and

(c) is a disclosure of information obtained by the OGA under a Chapter mentioned in the corresponding entry of column 2 of the table.

Column 1 Column 2
A Minister of the Crown Chapters 2 to 5
Her Majesty’s Revenue and Customs Chapters 2 to 4
The Competition and Markets Authority Chapters 2 to 5
The Scottish Ministers Chapter 3
The Welsh Ministers Chapter 3
A Northern Ireland Department Chapter 3
The Coal Authority Chapter 3
The Office for Budget Responsibility Chapter 3
An enforcing authority Chapters 2 to 5
The competent authority under article 8 of the Offshore Safety Directive Chapters 2 to 5
The Statistics Board Chapters 2 to 5

(2) In the table—

“enforcing authority” has the same meaning as in Part 1 of the Health and Safety at Work etc Act 1974 (see section 18(7)(a) of that Act);

Minister of the Crown” has the same meaning as in the Ministers of the Crown Act 1975;

“Offshore Safety Directive” means Directive 2013/30/EU of the European Parliament and of the Council of 12 June 2013 on safety of offshore oil and gas operations.

(3) Section (Prohibition on disclosure) does not prohibit a disclosure of protected material by the OGA which—

(a) is a disclosure of protected material obtained by it under Chapter 3 (information and samples),

(b) is made to the Natural Environment Research Council, or any other similar body carrying on geological activities, and

(c) is made for the purpose of enabling the body to prepare and publish reports and surveys of a general nature using information derived from the protected material.

(4) A person to whom protected material is disclosed by virtue of subsection (1) or (3) may use the protected material only for the purpose mentioned in subsection (1)(b) or (3)(c) (as the case may be).

(5) Section (Prohibition on disclosure) does not prohibit such a person from disclosing the protected material so far as necessary for that purpose.

(6) The Secretary of State may by regulations amend the table in subsection (1)—

(a) to remove a person from column 1,

(b) to add to column 1 a person to whom subsection (7) applies, or

(c) to add, remove or change entries in column 2.

(7) This subsection applies to—

(a) persons holding office under the Crown;

(b) persons in the service or employment of the Crown;

(c) persons acting on behalf of the Crown;

(d) government departments;

(e) publicly owned companies as defined in section 6 of the Freedom of Information Act 2000.”

65: After Clause 60, insert the following new Clause—

“Disclosure required for returns and reports prepared by OGA

(1) Section (Prohibition on disclosure) does not prohibit the OGA from using protected material obtained by the OGA under Chapter 3 (information and samples) for the purpose of—

(a) preparing such returns and reports as may be required under obligations imposed by or under any Act;

(b) preparing and publishing reports and surveys of a general nature using information derived from the protected material.

(2) Section (Prohibition on disclosure) does not prohibit the OGA from disclosing protected material so far as necessary for those purposes.”

66: After Clause 60, insert the following new Clause—

“Disclosure in exercise of certain OGA powers

(1) Section (Prohibition on disclosure) does not prohibit a disclosure of protected material if—

(a) the protected material was obtained by the OGA under Chapter 2 (disputes), and

(b) the disclosure is made in the exercise of the OGA’s powers under section 18(6) (publication of recommendations for resolving disputes).

(2) Section (Prohibition on disclosure) does not prohibit a disclosure of protected material if it is made in the exercise of the OGA’s powers under section 52 (publication of details of sanctions).

(3) Section (Prohibition on disclosure) does not prohibit a disclosure of protected material which is permitted by section (International oil and gas agreements: information exchange) (international oil and gas agreements: information exchange).”

67: After Clause 60, insert the following new Clause—

“Disclosure after specified period

(1) Section (Prohibition on disclosure) does not prohibit protected material obtained by the OGA under Chapter 3 (information and samples) from being—

(a) published, or

(b) made available to the public (in a case where the protected material includes samples), by the OGA or a subsequent holder at such time as may be specified in regulations made by the Secretary of State.

(2) Regulations under subsection (1) may include provision permitting protected material to be published, or made available to the public, immediately after it is provided to a person.

(3) Before making regulations under subsection (1), the Secretary of State must consult such persons as the Secretary of State considers appropriate.

(4) Subsection (3) does not apply if the Secretary of State is satisfied that consultation is unnecessary having regard to consultation carried out by the OGA in relation to what time should be specified in regulations under subsection (1).

(5) In determining the time to be specified in respect of protected material in regulations under subsection (1), the Secretary of State must have regard to the following factors—

(a) whether the specified time will allow owners of protected material a reasonable period of time to satisfy the main purpose for which they acquired or created the material;

(b) any potential benefits to the petroleum industry of protected material being published or made available at the specified time;

(c) any potential risk that the specified time may discourage persons from acquiring or creating petroleum-related information or petroleum-related samples (as defined in section 23);

(d) any other factors the Secretary of State considers relevant.

(6) In balancing the factors mentioned in subsection (5)(a) to (d), the Secretary of State must take into account the principal objective.

(7) For the purposes of subsection (5)(a), the owner of protected material is the person by whom, or on whose behalf, the protected material was provided to the OGA under Chapter 3 (information and samples).”

68: After Clause 60, insert the following new Clause—

“Disclosure with appropriate consent

(1) Section (Prohibition on disclosure) does not prohibit a disclosure of protected material if it is made with the appropriate consent.

(2) For this purpose a disclosure is made with the appropriate consent if—

(a) in the case of disclosure by the OGA, the original owner consents to the disclosure;

(b) in the case of disclosure by a subsequent holder—

(i) the OGA consents to the disclosure, and

(ii) in a case where the protected material in question was provided to the OGA under this Part, the OGA confirms that the original owner of the material also consents to the disclosure.”

69: After Clause 60, insert the following new Clause—

“Disclosure required by legislation

Section (Prohibition on disclosure) does not prohibit a disclosure of protected material required by virtue of an obligation imposed by or under any Act.”

70: After Clause 60, insert the following new Clause—

“Disclosure for purpose of proceedings

(1) Section (Prohibition on disclosure) does not prohibit a disclosure of protected material by the OGA for the purposes of, or in connection with—

(a) civil proceedings, or

(b) arbitration proceedings.

(2) Section (Prohibition on disclosure) does not prohibit a disclosure of protected material by the OGA for the purposes of, or in connection with—

(a) the investigation or prosecution of criminal offences, or

(b) the prevention of criminal activity.”

Amendments 62 to 70 agreed.

Amendments 71 and 72 not moved.

Amendments 73 to 76

Moved by Lord Bourne of Aberystwyth

73: After Clause 62, insert the following new Clause—

“Abandonment of offshore installations

Schedule (Abandonment of offshore installations) makes provision about the abandonment of offshore installations.”

74: After Clause 62, insert the following new Clause—

“Duty to act in accordance with strategy: decommissioning and alternatives

(1) Part 1A of the Petroleum Act 1998 (maximising economic recovery of UK petroleum) is amended as follows.

(2) In section 9A (the principal objective and the strategy), in subsection (1)(b), after paragraph (iv) insert—

“(v) owners of relevant offshore installations.”

(3) In section 9C (carrying out of certain petroleum industry activities)—

(a) omit subsection (3), and

(b) after subsection (4) insert—

“(5) A person who is the owner of—

(a) a relevant offshore installation, or

(b) upstream petroleum infrastructure, must act in accordance with the current strategy or strategies when planning and carrying out the activities mentioned in subsection (6).

(6) Those activities are—

(a) the person’s activities as the owner of the installation or infrastructure (including the development, construction, deployment and use of the infrastructure or installation);

(b) the abandonment or decommissioning of the installation or infrastructure.

(7) For the purposes of subsection (5), planning the activities mentioned in subsection (6)(b) includes the preliminary stage of—

(a) deciding whether or when to proceed with the proposed abandonment or decommissioning, and

(b) considering alternative measures to abandonment or decommissioning such as re-use or preservation.”

(4) After section 9H insert—

“9HA“Relevant offshore installations” and their owners

(1) For the purposes of this Part an offshore installation is a relevant offshore installation if and in so far as it is used in relation to petroleum within subsection (2) (including such petroleum after it has been got).

(2) Petroleum is within this subsection if it is petroleum which for the time being exists in its natural condition in strata beneath—

(a) the territorial sea adjacent to Great Britain, or

(b) the sea in any area designated under section 1(7) of the Continental Shelf Act 1964.

(3) In this Part “owner”, in relation to a relevant offshore installation, means—

(a) a person in whom the installation is vested, and

(b) a lessee and any person occupying or controlling the installation.”

(5) In section 9I (other definitions), at the appropriate place insert—

““offshore installation” has the same meaning as in Part 4 (see section 44);”;

““owner”, in relation to a relevant offshore installation, has the meaning given in section 9HA;”;

““relevant offshore installation” has the meaning given in section 9HA;”;

““submarine pipeline” has the meaning given in section 45;”.”

75: After Clause 62, insert the following new Clause—

“Part 1A of the Petroleum Act 1998: Northern Ireland

(1) Part 1A of the Petroleum Act 1998 (maximising economic recovery of UK petroleum), as amended by this Act, extends to Northern Ireland (as well as to England and Wales and Scotland).

(2) In that Act, for section 9H substitute—

“9H“Upstream petroleum infrastructure” and its owners

(1) In this Part “upstream petroleum infrastructure” means anything that for the purposes of section 82(1) of the Energy Act 2011 is—

(a) a relevant upstream petroleum pipeline,

(b) a relevant oil processing facility, or

(c) a relevant gas processing facility, if and in so far as it is used in relation to petroleum within subsection (2) (including such petroleum after it has been got).

(2) Petroleum is within this subsection if it is petroleum which for the time being exists in its natural condition in strata beneath—

(a) the territorial sea adjacent to Great Britain, or

(b) the sea in any area designated under section 1(7) of the Continental Shelf Act 1964.

(3) In this Part “owner”, in relation to upstream petroleum infrastructure, means—

(a) a person in whom the pipeline or facility is vested;

(b) a lessee and any person occupying or controlling the pipeline or facility; and

(c) any person who has the right to have things conveyed by the pipeline or processed by the facility.”

76: After Clause 62, insert the following new Clause—

“International oil and gas agreements: information exchange

(1) This section applies where—

(a) there is a treaty or agreement in force between the government of the United Kingdom and the government of a territory outside the United Kingdom (“the overseas territory”) concerning cooperation in relation to oil and gas activities, and

(b) the treaty or agreement includes arrangements for the exchange of information between the two governments (“information exchange arrangements”).

(2) If it appears to the Secretary of State that adequate safeguards are in place, information held by the Secretary of State may be disclosed so far as the Secretary of State considers necessary for the purpose of giving effect to the treaty or agreement in question.

(3) If it appears to the OGA that adequate safeguards are in place, information held by the OGA may be disclosed so far as the OGA considers necessary for the purpose of giving effect to the treaty or agreement in question.

(4) For the purposes of this section adequate safeguards are in place if the information exchange arrangements and the law in force in the overseas territory are such as to ensure that information disclosed to the government of the overseas territory under this section may be disclosed by that government only—

(a) with the consent of the government of the United Kingdom, or

(b) so far as necessary for the purpose of preparing and publishing reports of a general nature.

(5) References in this section to the OGA are to the OGA acting as a representative of the government of the United Kingdom for the purposes of the agreement with the overseas territory.”

Amendments 73 to 76 agreed.

Amendments 77 and 78 not moved.

Amendment 78A (in substitution for Amendment 78) not moved.

Consideration on Report adjourned.

House adjourned at 9.15 pm.