Energy Bill [HL]

My Lords, this chapter is designed to replace the current legislation on third-party access to upstream petroleum infrastructure. Perhaps I can further clarify what information the noble Baroness has already received; she obviously has a good grasp of what this section seeks to do. It relates to access to offshore pipelines, platforms and processing facilities and to the onshore terminals and pipelines to which they connect. The existing provision, which in part dates back to 1975, has grown piecemeal. As the noble Baroness said, it is scattered over four Acts of Parliament. The procedures are not fully consistent; the definitions are not well aligned and some kinds of facilities are not explicitly covered, which is why the provision needed to be updated. The need for third-party access is increasingly important. This is the significant point. Even after four decades of exploitation, there are 20 billion barrels or more that might still be produced from the UK continental shelf. The remaining pockets of oil and gas are typically individually small. Many are not large enough to justify dedicated pipelines or processing facilities. Economic development of these discoveries will increasingly depend on getting timely access to existing pipelines—where these have spare capacity—and on getting reasonable terms for that access. This is the kind of shift that helps to explain why this has been brought about. The time is therefore right to overhaul the existing legislation and to make sure that it is fit for purpose in this situation. Of course, dispute resolution should not be a routine process. Third-party access can be and in the overwhelming majority of cases has been, as the noble Baroness acknowledges, agreed amicably between the parties involved. We have every intention that this should remain the case. We are fully engaged in and fully support the industry’s work to develop its own voluntary code of practice for infrastructure access. Disputes will nevertheless happen and negotiations will from time to time break down, so it is necessary that the Government should have the means of resolving an impasse where it occurs. This chapter therefore re-enacts the existing legislation, but as a unified process that has full coverage of all relevant pipelines, platforms and terminals. Clause 78 sets out the basic procedure for resolution of disputes about access. It specifies the scope of the procedure—that is, the pipelines and other facilities to which it applies; the right of a person seeking such access to apply to the Secretary of State for the rights if unable to secure them by negotiation; the procedure that is to be followed; certain matters that are to be taken into account; and appropriate safeguards for the interests of the owners and others with existing rights. Finally, subject to that procedure and the safeguards, it sets out the powers of the Secretary of State to issue a notice granting appropriate rights to the applicant. These provisions make two key changes. First, the current legislation provides a safeguard for the reasonable requirements of the owners for transport or processing of oil and gas and for the entitlements of other users who already have rights to the infrastructure for transport or processing. The Secretary of State must be satisfied, before making an access notice, that doing so will not prejudice these requirements or rights. In general principle, this is clearly right but, on reflection, we think that an unqualified requirement on this point will prove unduly restrictive. There will be circumstances in which introducing a third party into an existing facility will reduce, at least temporarily, the capacity available to others. If nothing else, the making of a physical connection is required, which entails a risk of interruption to operations. We think it desirable that the Secretary of State should have a similar flexibility in determining terms for access. Accordingly, we have qualified the safeguard provision for existing capacity requirements or rights so that such rights and requirements can be effected, provided that suitable compensation is available to the affected users. The other innovation is that the access notice has effect only if accepted by the applicant within a defined time. This meets a concern that has been raised in discussion with the industry. We think that it will provide a helpful degree of clarity for all involved. The noble Baroness made reference to this being left to the market. I emphasise that the market model applies to the Green Deal, and we are moving on to another part of the Bill here. I hope that she can see the case that is being made for why, in these circumstances, these measures need to be taken forward.