Requirements to provide information

Energy Bill [Lords] – in a Public Bill Committee at 12:15 pm on 28 January 2016.

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Question proposed, That the clause stand part of the Bill.

With this it will be convenient to consider clause 72 stand part.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Energy and Climate Change)

I seek the Minister’s thoughts on clause 72, “Applications to use infrastructure: changes of applicant and owner”. Hon. Members will see that the clause contains a process for applications to use infrastructure. Parties who perhaps did not have a hand in building the infrastructure should make proper application to use that infrastructure where it is in the best interests of the development of the field as a whole, so it is essential that we have a process that allows that to proceed in an orderly fashion.

Clause 72 goes a little further. It envisages circumstances where someone might apply to use, in the North sea, for exploration or exploitation through a pipeline or something similar, infrastructure originally developed by someone else.

Clause 72 allows that right once, I assume, it has been agreed and all the various activities have been gone through relating to whose interest is best served and how agreement can be reached about proper joint use of that pipeline, or whatever it is. It gives a right for someone to assign that arrangement to someone else, substantially amending the Energy Act 2011. I am afraid this is one of those processes where, to see where the rabbit is going, one needs to refer to a number of different rabbit holes. Indeed, I must admit that, although I was a member of the Bill Committee for the 2011 Act, my concentration was not on assignments and assignations of applications. It was rather more on whether the green deal would work well, which was the main substance of the Bill. In passing, I might say that we all saw what happened to that.

The relevant part of the 2011 Act seems to me to provide substantial arrangements already, relating to assignments of applications. The clause inserts several new sections into the Act. Interestingly, it does so in relation to a miscellaneous section at the end of a chapter relating to other matters. It does not actually amend sections on assignments and assignations of applications in the 2011 Act. I assume it has an effect on them—clearly it must do—but it seems a little odd to amend the Act in that way, particularly given that it has sections about assignments.

Will the Minister elucidate what the clauses add to the 2011 Act, and how they will work with what is already in it, to enhance the process of third-party assignment? I can see the importance, particularly if licences and companies change hands, of the exploitation of future fields in the North sea. Indeed, as some of the larger assets have been worked out, they have been sold to second, third and fourth-tier companies, for further exploitation. There has been considerable churn in the ownership of companies operating smaller North sea fields, and undoubtedly that will be so over the next period. It is important to have a robust system of assignment and to ensure that it can be related properly to the process of agreement on applications for infrastructure use. However, I remain a little mystified about what clause 72 does in relation to the existing provisions. I would welcome any light that could be shed on that.

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change 12:30, 28 January 2016

I will describe the purpose of the third-party access, and then answer the hon. Gentleman’s questions.

Clause 71 amends the third-party access to the upstream petroleum infrastructure regime found in the Energy Act 2011. Specifically, it amends section 87 of that Act, which relates to powers to require information, and inserts new sections 87A and 87B, which make provisions for appeals and sanctions respectively.

The clause requires that, where the OGA issues a notice under section 87 of the 2011 Act requiring information to be provided, it must specify a time for compliance with that notice. It also provides an appeal right to the first-tier tribunal against the issuance of a notice on the grounds that the information required is not relevant to the OGA’s functions relating to third-party access or that the length of time given to comply with the notice is unreasonable.

The clause also allows for any requirements imposed by such a notice to be treated as petroleum-related requirements and therefore sanctionable under chapter 5. However, the OGA will not be able to revoke a licence or terminate an operatorship in relation to such breaches. The clause therefore increases the utility of the third-party access to the upstream petroleum infrastructure regime, which is an important tool in the OGA’s pursuit of maximising economic recovery for the UK.

To turn to the hon. Gentleman’s points, clause 72 inserts two new sections into the Energy Act 2011, which establish the third-party access to the upstream petroleum infrastructure regime. New section 89A allows for applications for access to upstream petroleum infrastructure made under section 82 of the 2011 Act to be assigned to another party. Specifically in answer to his point, section 82(13) of the 2011 Act says only that the transfer of such rights may be affected, but the clause makes that automatic. That is an important point.

New section 89B allows for a new owner of infrastructure to which an application for access has been made to be treated as a party to that application. Clause 72 therefore ensures that where the ownership of infrastructure, in respect of which a notice under section 82(11) imposing access rights has been issued, is transferred, the obligations under the notice transfer as well. Once such an assignment or transfer occurs, anything done by the original party is treated as having been done by the party to which the application was assigned or the ownership transferred.

Essentially, the provisions allow for the third-party access regime to continue rather than having to restart on a change of party, and then facilitate the transfer of non-commercially sensitive information already provided to the OGA, ensuring that all new parties are aware of the relevant history of the application. The key point is that the clause automatically assigns the rights and obligations attached to the infrastructure, which provides ongoing certainty of rights to applicants, but does not prevent parties from agreeing to amend the terms of the access if appropriate to do so in future.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Energy and Climate Change)

I thank the Minister for that explanation. Clearly, there are differences, but I hope that they can be fully incorporated into the process as it develops.

Question put and agreed to.

Clause 71 accordingly ordered to stand part of the Bill.

Clause 72 ordered to stand part of the Bill.

Clause 73