Regulatory Framework · Recommendation Licensing Regime* Assessment of Provisions ... Senior...
Transcript of Regulatory Framework · Recommendation Licensing Regime* Assessment of Provisions ... Senior...
MER UK in Practice
Regulatory Framework
Simon Toole, Nicola Higgins, Tom Wheeler,
Robert White and Simon Churchfield
OGA Regulatory Framework
Regulatory framework underpins approach and priorities
Legislative Context
Supporting Obligations
Execution
Guidance
Sanction Notices
Statutory, non-statutory and Stewardship Expectations
Enforcement notice
Financial penalty notice
Operator removal notice
Licence revocation notice
Central Obligation
Regulatory Powers
Facilitation
Licensing regime Strategies and
delivery programmes
MER UK plans
Regulatory powers
Non-binding dispute resolution
Information and samples
Meetings Licence
model clauses Third party
access
Exploration Regional development Asset stewardship Technology Decommissioning
Collaboration
Cost reduction
Principal Objective The principal objective is that of ‘maximising the economic recovery of UK petroleum’
MER UK Strategy: ‘to take the steps necessary to secure that
the maximum value of economically recoverable petroleum is recovered’
Sanctions
Infrastructure Act 2015 Petroleum Act 1998 Energy Acts 2011 and 2016
Integration of Powers
* Failure to provide relevant information to the OGA is sanctionable.
§ Issues that are subsequently found not to be in scope for Thrid party access or Sanctions may be considered for dispute resolution.
‡ Evidence in support of a failure to comply with the Central Obligation may include, depending on the context, such things as a person’s underperformance against the OGA’s published Stewardship Expectations or an OGA Plan.
OGA Board Decision
Third party access*
Third party access Procedure§
Impose
Recommendation
Licensing Regime*
Assessment of Provisions
Impose
Recommendation
Sanctions*
Impose
Evidence of failure to comply§ ‡
Recommendation
Facilitation of Activity
Triage
Senior Leadership Decision
Disputes*
Consideration
Recommendation
Propose
Mediate
MER UK in Practice
Licence Powers
Licence Powers
If exercised these powers generally act to prevent activity
UK has sovereign rights to exploit petroleum
Licensing regime OGA grants licences that confer exclusive rights to "search for bore for and get" petroleum
Work Programme for First Term
Approval of Field Development Programme, including field determination and unitisation if needed
Development consents: Wells and Pipeline Works Authorisations
No production consent: field management governed by FDP plus flare and vent consents
Cessation of Production
Assignments and Changes of Control
MER UK in Practice
Third Party Access
Third Party Access – History
Pipe-lines Act 1962
(onshore pipelines)
Petroleum and
Submarine Pipe-lines
Act 1975
(offshore pipelines)
Gas Acts 1986 & 1995
(onshore gas
processing facilities)
Energy Act 2008
(oil processing
facilities)
Energy Act 2011
(upstream petroleum pipelines and
oil & gas processing facilities,
onshore and offshore)
All earlier legislation
essentially replaced by:
Guidance on legislation in place since 2002
Petroleum Act 1998
(offshore pipelines)
Third Party Access and ICOP
Infrastructure Code of Practice (ICoP)
ICoP Guidance Notes
Guidance on Disputes over Third Party
Access to Upstream Oil & Gas
Infrastructure (OGA)
Legislation
(Energy Act 2011) Commercial Code of Practice (CCoP)
The CCoP & ICoP are voluntary industry codes with broad
support but no legal obligation to use them
When a user submits an Automatic Referral Notice (ARN), they
are making a commitment to make an application to OGA to
impose terms if they do not reach agreement within the defined
period
The Guidance refers to the ICoP and encourages its use
However, there is no reference to the ICoP in the legislation,
and terms are imposed under the Energy Act 2011
Yes
Consider further
Third Party Access Process
Application Made (s.82)
OGA reviews, seeks owner view
Action? End
OGA considers
acting on own
initiative (s.83)
Inform parties and
seek views
Reject
Minded to
set terms? Draft ‘Minded To’ letter and/or
draft Notice
Allow time for
comment(s)
Draft Notice and offer to User
User
Accepts?
Impose terms on Owner
End
Adjourn for further
negotiation
(Parties may
negotiate further)
No Yes
No
Yes
Decide to
act?
Offer parties opportunity to be heard
Seek information from Owner
MER UK in Practice
Non Binding Dispute Resolution
Issue timetable s.23
(3)(a) (and directions)
Issue non-binding recommendation to
relevant parties s.23 (2)(b)
End
No
Possible sanctions for breaches:
of timetable, directions, non-
provision of information
Consider significance of dispute
Consider key factors likely to affect
recommendation
Request information and/or meetings
s.24 and/or 25
Dispute referred
(Energy Act 2016
s.20)
Action
End
Reject
s.21
(1)(a)
Consider further
s.21 (1)(c)
Adjourn for further
negotiation s.21 (1)(b)
OGA considers
acting on own
initiative (Energy
Act 2016 s.22)
Request information
s.24(1)(d)
Decide
to act?
Failure to follow may be
evidence of failure of MERUK
Notify parties
Yes
Issue timetable
s.21 (5)(a)
(and possible mediation)
Non Binding
Dispute
Resolution
MER UK in Practice
Sanctions
Sanctions
Central Obligation,
Supporting Obligations
and Behaviors MER UK
Strategy
Petroleum-related requirements:
- MER UK Strategy
- Licence terms
- 2016 Act (meetings, information etc.) Sanctions
Sanction Notices Enforcement
notice
Financial
penalty notice
Operator
removal notice
Licence
revocation notice
Sanctions Procedure – Figure 1
Facilitation
Deviation from Expectation?
Initial Triage
Undertake Enquiry
Suspected Failure? ¥
Continue with sanctions?
Conduct Investigation
Deploy other powers?
Deploy other
powers
N*
Y
Y
N *
N
Y
N
Y
• ‘Facilitation’ is led by the Initiating Directorate (e.g. EPD)
• ‘Triage’ is conducted by the Initiating Directorate and the Disputes and Sanctions Team
• Subsequent application of powers are led by the Disputes and Sanctions Team
Disclaimer: The flowchart is for indicative guidance purposes only and does not provide legal advice.
* ¥ Sanctions apply to a Failure to Comply with a Petroleum-Related Requirement.
* Triage process is repeated following each exit from the sanction procedure.
Sanctions Procedure – Figure 2
Recommend draft SWN
D+S issues SWN
Representations
Redraft
SWN
Evaluation
Continue to SWN?
Board rejects SWN?
Board varies SWN?
Board decision
Deploy other powers?
Deploy
other
powers
Y
N *
Y
N
Y *
N
Y
N
Facilitation
* Triage process is repeated following each exit from the sanction procedure.
Disclaimer: The flowchart is for indicative guidance purposes only and does not provide legal advice.
Sanctions Procedure – Figure 3
D+S recommendation to
vary / stop / issue SN
Board rejects SN?
Board decision
D+S issues / publishes SN
Board varies SN?
Redraft SN
Deploy other powers?
Deploy other
powers
Y
N
Y *
N
Y
N
Facilitation
* Triage process is repeated following each exit from the sanction procedure.
Disclaimer: The flowchart is for indicative guidance purposes only and does not provide legal advice.