My Lords, in moving Amendment 11 I shall speak also to Amendments 27 and 28 and to government Amendment 26, which is in this group. The Government’s Amendment 26 is a welcome concession. It is obviously a response to the debate held during the passage of the Bill where a number of noble Lords from different sides of the House raised the very important issue of whether the OGA’s powers, and indeed from my perspective its principal objectives, were fit for purpose. There was a strong sense that a review ought to be provided for in the Bill which the Government would undertake and then report back to Parliament. We are pleased to see
that an amendment which would at least introduce a review has been tabled. I would say, however, that the review is of performance alone and not of purpose, and certainly makes no mention of a review of the primary objectives of the Bill. It is those primary objectives which are causing me the most concern. If noble Lords will bear with me, I should like to spend a little time articulating why that is, which will explain why we have brought forward Amendment 11 to change the principal objective of the OGA.
Noble Lords will be aware that the OGA was first created as a temporary executive agency under the Infrastructure Act 2015, and the intention was to implement the recommendations made by Sir Ian Wood as set out in the Wood review, which coined the phrase, “maximising economic recovery”. The eagle-eared among us will note that often when the Minister refers to MER, he actually describes it as “maximising economic return”, which is quite a significant difference. It may just be one word, but it indicates a subtle shift in focus that has happened since we received the Wood review in 2013. It has been eloquently alluded to on many occasions by the noble Lord, Lord Howell, and my noble friends Lady Liddell and Lord O’Neill, and others. There has been a significant change in the North Sea in particular since the Wood review was published and now, when we find ourselves looking at the detail of the OGA and how it will go about meeting the objectives of MER.
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I want to take some time to go back to the principal objectives as defined in law. They do not occur in this Bill but are in the Petroleum Act 1998, as amended by the Infrastructure Act. To get the full context of what we are discussing today, one has to go back through two layers of legislation to find out what the OGA is set up to do. Section 9A of the Infrastructure Act provides two objectives. The first is,
“maximising the economic recovery of UK petroleum”,
which is subdivided into,
“development, construction, deployment and use of equipment used in the petroleum industry (including upstream petroleum infrastructure)”.
That does not sound like the object of a regulator. It sounds more like the object of a company that might be seeking to invest in technical infrastructure and construction. I repeat that the legislation refers to,
“development, construction, deployment … of equipment”.
It is an interesting object for a regulator.
The second part of this section is subdivided to include,
“collaboration among the following persons”.
The word used is “collaboration”, and not regulation, dispute resolution or licensing. There is no reference to any of those in this legislation. The collaboration is among,
“holders of petroleum licences … operators under petroleum licences … owners of upstream petroleum infrastructure … persons planning and carrying out the commissioning”—
let us note that it refers only to commissioning and not decommissioning—
“of upstream petroleum infrastructure”.
That is the collaboration that was imagined. There is no reference to people who may seek to reuse the infrastructure for carbon capture and storage or any reference, significantly, to those who might be decommissioning infrastructure.
The legislation goes on to refer to a strategy which the Secretary of State must produce and that it “may”—I repeat “may”, so there is no real lock on what has to be done in the strategy—
“relate to matters other than those mentioned in subsection (1)(a) and (b)”.
Those are the objectives of the OGA.
As I have said, that does not strike me as a very clear set of objectives or a very comprehensive set of objectives. Nor does it strike me as a set of objectives that sounds like it applies to a regulator. The objectives sound awfully like they might apply to a company that might be established to attract investment into the North Sea and to oversee the deployment of that investment—hence, my reference to privatisation in the previous debate. Although it may be the first time the Minister has heard that phrase, that is not necessarily very comforting. That is not to say that the Minister is not across his brief. Of course, he is but he is very new to his position. I suspect that if it has been talked about, that will have been not in his department but in the Treasury, which, as we know, is obsessed with making sure that overall commitment to spending is kept at an absolute minimum, and that all new bodies are kept at arm’s length and do not appear on the Government’s balance sheet. That is despite the fact that in this Bill clauses have been improved to give the OGA the ability to have grants from the Government. Indeed, the word is “grants” and not loans.
One can see why we have a concern about the primary objectives and why we have raised it in this Bill in the way that we have. This has led us to put down Amendment 11, which seeks to change those principal objectives to make them much more in line with what we now know to be the set of activities that will be undertaken by the OGA. I have no doubt that when Sir Ian Wood wrote his review in 2012-13, he had a great vision of simply needing a little government intervention to make sure that investment was happening in a logical way, which would keep the oil and gas flowing, and that some element of dispute resolution would be needed, but that by and large everything would be relatively rosy if people would just get talking to each other, and that is what led to those objectives.
However, now we know that that is not the situation in the North Sea—far from it. We have a crisis. We have people exiting and not investing. It is an economic problem, for the country as a whole and for public receipts, and a social problem. As we heard from noble Lords, people are losing their jobs. There is a great deal of uncertainty. It is not at all clear what the strategy now is in the North Sea.
We tabled Amendment 11 to change the fundamental objective of the OGA: to make it fit for purpose, comprehensive and a little bit closer to what we would expect a regulator representing the Government’s interests in the extraction of oil and gas to be interested in; and to maximise economic return from our resources, not necessarily just the economic recovery of fossil fuels.
Amendments 27 and 28 are amendments to the Government’s Amendment 26. As I mentioned, the Government have come forward with a review of performance that we think does not get to the nub of our problem. It would be at least useful to have a review, but it is not appropriate to delay for another three years before that review reports to Parliament. It should be one year. We should have a proper review of the OGA’s fitness for purpose.
As I said in my introductory comments to the first group of amendments, this could have been so different had proper time been allocated to this very important piece of legislation. Had we had the chance to have pre-legislative scrutiny, I am sure that many of these issues would have been flushed out and we would have found ourselves with a far better Bill than the one we face today. As I say, we are where we are and we are doing what we can to encourage the Government to take another look at this—to have a proper assessment of whether this is fit for purpose for the challenges facing us now, not the challenges that Sir Ian Wood was asked to look at three years ago.
I have one question for the Minister: when was the last time he had a conversation with Sir Ian Wood? His name is often used; it is almost as if he were Moses, handing down his diktats in stone and we have been enforcing them. Has Sir Ian Wood been engaged with by the Government? What are his views on what is now happening in the North Sea? What does he think about the OGA, with the benefit of being able to see what has happened to our oil and gas infrastructure over the last 24 months?
I am afraid that the Government have no strategy for energy in this country and are out of their depth when they consider what should be done in the North Sea in particular. I am concerned that we are establishing in statute a body that simply is not fit for purpose, neither in future-proofing for the challenges of the 21st century, nor in reflecting what is happening now. I hope that the Government will give me their reassurances that they will accept the amendment, because we feel very strongly that it is an important aspect of the Bill that has been overlooked.