TiSA Energy Related Services 2

8/20/2019 TiSA Energy Related Services 2

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Energy Related Services (ERS) Annex Proposal: Questions and Answers

1. This document is meant to address a number of questions raised orally and in writing

during the presentation of Iceland and Norway's proposal at the December 201 Ti!" round.

General Comments

Rationale or Energy Related Services Proposal

2. The #nergy sector is an important and growing mar$et in the global economy. #nergy

related ser%ices are no less important and constitute an integral part of the energy production

chain. &T members and ser%ices agreements ha%e struggled to capture this important

mar$et in a clear and meaningful way( both for ser%ices suppliers and consumers. The fact is

that commitments in this field are limited. There are a number of reasons for this( including)

* +lassification) #,! were ne%er defined as a specific sector or sub*sector in the &120.

* !cope) #,! are %ery di%erse and co%er a lot of other sectors-sub*sectors

* !ensiti%ity) #nergy is sensiti%e and related to issues of security-so%ereignty.

. In order to address some the shortcomings-issues( the approach ta$en in the proposal is

meant to distinguish between energy related ser%ices * as we define it * from the more

sensiti%e energy sector as such. This we belie%e will allow us both to define the ser%ices we

are aiming at( sub/ect these ser%ices to certain disciplines and allow parties to ma$e more

ambitious commitments.

!ain o"#ective o t$e proposal:

. The proposal see$s to highlight( define and capture this important ser%ices mar$et in a

modern Ti!" agreement. The International #nergy "gency pro/ects see figure below thatthe global use of energy will increase by 3 from 2012 to 201. This implies that the need

for ser%ices in relations to e4ploration for and production of energy in the coming years will

also increase( thus underlining the importance of parties ma$ing commitments on energy

related ser%ices.

5. In so doing we want to a%oid the most challenging and sensiti%e issues * including the

classification issue * and to create a definition-scope for energy related ser%ices that is

understandable( functional and reflects mar$et reality.

6. There is a close inter*relationship between sets of acti%ities pro%ided by suppliers of

energy related ser%ices. The absence of commitments in an offer regarding some of theseser%ices undermines the %alue of commitments with regard to other energy related ser%ices.

. ne of the $ey features of the proposal is that it see$s to raise the o%erall le%el of

ambition across offers in this sector( through the use of binding mar$et access scheduling

disciplines. This approach also ensures that any future Ti!" parties are held to the same

standard as current parties.

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%ensive &nterest:

7. Iceland and Norway ha%e companies that speciali8e in ser%icing energy companies for

both renewable energy and fossil energy sources. The proposal is meant to encompass all

ser%ices related to the e4ploration for and production of energy from renewable or non*

renewable energy sources( as well as all deli%ery forms such as fuels( heat( and electrical

energy. !pecific rules in the energy related ser%ices sector should therefore establish thatcommitments are neutral with respect to the energy source( technology and whether offered

onshore or offshore.

Example of typical ERS supplier in Iceland:

9. :or Iceland the main interest is in the renewable energy sector( in particular

geothermal and hydro. Iceland has a handful of small firms that offer comprehensi%e ser%ices

for energy pro/ects through all phases of de%elopment( based on the decades of e4perience

harnessing renewable energy in Iceland. This includes mainly consultant type ser%ices as

contractors or sub*contractors to energy companies in a number of areas and +;+ categories *

ranging from business ser%ices engineering( architecture( technical testing and analysis to

plant design( construction( site formation and clearing ser%ices( including scientific drillinggeoscience( information technology and en%ironmental impact assessments.

Example of Energy Related Services supplier in Norway:

10. Norway has e4tensi%e industries both in oil and gas and renewable energy hydro(

wind. Norwegian companies supply ser%ices in the whole %alue chain in this respect such as

engineering( architecture( technical testing and analysis seismic( plant design( platform

design( constructions( e4ploration and productions drilling and impact assessments.

Article on scope and deinition

11. The scope and definitions articles are designed in a manner that a%oids the

classification issue. Instead( we are proposing a functional description of #,! that reflects

what is actually happening in the mar$et place * since this mar$et is more or less defined by

the consumers of these ser%ices) the energy companies.

12. It also ensures that sensiti%e issues related to ownership( resource management and

regulatory space are outside the scope of the proposal. The intent is to capture( in a

meaningful and understandable way( the growing mar$et of specialised ser%ices supplied by

contractors and subcontractors to the energy companies themsel%es.

1. &hile the approach might be no%el for a ser%ices agreement( it is not without its

challenges. The main concern we hear from Ti!" negotiating parties is that the scope is too

broad) some parties would prefer an illustrati%e list of +;+ categories to better define thesectors that are most rele%ant to #,!. To address this concern( and wor$ing within the +;+

;ro%. classification( we ha%e tried to incorporate them in the new mar$et access pro%isions

see below.

Questions:< 1) +ould we include other pro%isions in the scope of #,! such as transmission and energy

efficiency ser%ices=

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") >es( the idea is to capture all rele%ant-primary facets of the energy sector noting that #,!

are incidental ser%ices supplied to energy companies in all phases ? from e4ploration to

transmission and distribution.

< 2) "re all possible energy related ser%ices co%ered= Does that include nuclear=

") >es( all #,! as defines in the scope-definitions are co%ered by the proposal( including

nuclear. The scope regarding the mar$et access pro%isions is( howe%er( limited to the +;+sectors listed thereunder. ,egarding nuclear energy( we understand the particular sensiti%ities

around this energy source( but belie%e they are adequately addressed both by the scope of the

proposal itself as well as the security e4emption in the core te4t.

Articles on mar'et access

1. "rticles .1 and .1 are meant to ensure that parties ta$e full commitments for modes

1( 2 and respecti%ely( without limitations of any $ind for energy related ser%ices that fall

within the sectors and sub*sectors listed thereunder. This standard applies to mar$et access

and national treatment( and would preclude parties from ta$ing policy space reser%ations that

would apply to #,! for the listed +;+ categories.

15. "rticles .2 and .2 are meant to ensure that parties ta$e commitments for modes 1( 2

and respecti%ely( partially or with limitations( conditions or restrictions( for energy related

ser%ices withing the sectors and sub*sectors listed.

16. The lists of +;+ categories and sub*categories and the distribution of +;+ categories

between paras 1 and 2 of the two articles( are based on a detailed analysis of parties' offers.

The two articles are meant to reflect the reality of achie%ing a doable common standard for

Ti!" participants in this area.

1. Iceland and Norway are fully cogni8ant of the general discussion related to +,;s andthe challenges raised by certain delegations regarding hard mar$et access standards. &e are

loo$ing at possible solutions( including a model schedule that parties could use in order to

retain the o%erall %alue added of a dedicated #,! anne4 and good mar$et access

commitments.

Questions:< ) &here is the scheduling fle4ibility for those that need it= @ow to schedule partial

commitments= @ow to distinguish hori8ontal limitations in specific sectors= &hat about

hori8ontal policy space reser%ations=

") ur aim is to create an ambitious mar$et access standard for this important ser%ices sector

based on a realistic assessment of offers and the current le%els of mar$et openness. There isintentionally no fle4ibility in the +,; articles as an analysis of the initial offers re%eals that

the ma/ority of Ti!" members already comply with these obligations. &e are ready to loo$ at

offers id the analysis is deemed incomplete. There is( on the other hand( fle4ibility in articles

.2 and .2. :urther discussion will show whether more nuanced approached are needed to

maintain realism.

@ori8ontal limitations and policy space reser%ations may apply( but sectoral limitations and

reser%ations applicable to one or more of the sectors and sub*sectors listed( are not necessarily



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applicable to the energy related ser%ices that belong under a gi%en category. To what e4tent

they do( will be guided by the further refinement of the offers and mar$et access analysis.

< ) Do the articles co%er both mar$et access and national treatment=

") "rticles .1 and .1 co%er both mar$et access and national treatment( while articles .2 and

.2 do not add %alue with respect to national treatment beyond what may be deri%ed directly

from the core pro%isions.

<5) Is wording with respect to which disciplines are co%ered precise-clear enough( i.e.

that is co%ers both mar$et access and national treatment- ;art " or ;art A of the schedule=

") &e might amend the wording to ensure more clarity.

< 6) +ould we include other rele%ant +;+ categories such as pipeline transport or energy

distribution=

") &e would be open to include other #,! rele%ant categories to gi%e a 'complete' picture( or

a complete list of all such categories.

General uestions on mar'et access:

< ) &ould there be appetite to include B" pro%isions for mode =

") &e are open to any suggestions to strengthen commitments-ambitions( including in mode

( which is both rele%ant and important for the supply of #,!. In this respect we could loo$ at

different approaches being adopted in other proposals( including +anada's approach on mode

in the en%ironmental ser%ices proposal.

< 7) D the B" pro%isions o%erlap with other proposals=

") There is an o%erlap with certain proposals but no conflict. n the one hand we are trying to

capture a %ery broad 'sector'. n the other hand we are trying to capture %ery specifically

defined ser%ices within indi%idual +;+ categories and sub*categories. @owe%er( when it

comes to consistency on how we approach different methods to capture mar$et access

obligations +,;s in anne4es( we would be open to e4ploring a common approach.

< 9) Cegal o%erlap=

") This proposal would supersede the scheduling pro%isions of the core te4t for the purposes

of parties' scheduled commitments for #,!.

< 10) Cocal content requirements that disturb trade flows e4ist in se%eral mar$ets. Is this a

challenge that may be addressed separately in the #,! anne4=

") The issue of local conte4t is comple4. If the participants are interested in addressing this

issue in the anne4 it should be possible to introduce pro%isions to that effect. Ci$ewise( if

participants wish to address other issues that will add %alue to the anne4 this may also be

discussed.

Articles on sovereignty and rig$t to regulate

17. This pro%isions ma$es e4plicit that each ;arty has full so%ereignty and so%ereign rights

with respect to the ownership of natural resources( including energy resources. +ommitments

on trade in energy related ser%ices do not interfere with these so%ereign rights. &e ha%e seen

numerous e4amples in party offers of a hori8ontal car%e*out of all energy ser%ices(

presumably based on the sensiti%ities described abo%e.



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19. The right of ;arties to regulate ser%ices and to introduce new regulations to meet

national policy ob/ecti%es is particularly pertinent in the field of energy related ser%ices. In

e4ercising this right( ;arties ha%e to ma$e sure that the regulatory measures on aspects not

co%ered by mar$et access and national treatment are clearly defined( transparent and

ob/ecti%e.

Questions:< 11) &here does this te4t come from=

") Canguage is inspired from the #nergy +harter Treaty( art 17.1( 2 and .

< 12) Is it necessary to ha%e such articles= &hat is the purpose-%alue added=

") The main purpose of this "rticle is to state e4plicitly that commitments with regard to

energy related ser%ices will in no way limit the so%ereignty or so%ereign rights of ;arties o%er

energy resources. &e ha%e tried to e4emplify this in "rticle I para. of the ;roposal( by

stating that each ;arty continues to hold the e4clusi%e right to)

• decide the geographical areas to be made a%ailable for e4ploration( de%elopment and

e4ploitation of its energy resourcesE

• decide the optimisation of the rate at which their energy resources be depleted or

otherwise e4ploitedE

• specify and en/oy any ta4es( royalties or other financial payments payable by %irtue of

such e4ploration and e4ploitationE

• regulate the en%ironmental and safety aspects of such e4ploration( de%elopment and

e4ploitationE

• participate in such e4ploration and e4ploitation( inter alia( through direct participation

by the go%ernment or through state enterprises.

< 1) &ould a right to regulate article be redundant if included in the core te4t-preamble=

") No

Articles on competition and government procurement

20. This pro%ision sets out some common standards such as transparency( ob/ecti%ity( and

independent regulator and requirements that pre%ent anti*competiti%e practices for energy

related ser%ices. In some &T Bembers the energy ser%ices mar$et is dominated by one or

%ery few entities with e4clusi%e rights to natural resources. The dominant position warrants

some sort of disciplining( addressing issues normally regulated in competition rules.

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TiSA Energy Related Services 2

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