My Lords, I thank the Minister for the meetings that we have had. I found one of them particularly useful because we had a wide range of representatives, from both the department and the OGA. One of the issues that came up, which perhaps I should have understood more but did not, was that oil and gas infrastructure, particularly in the North Sea, was of particular importance, as well as the importance of managing that infrastructure in terms of decommissioning and making sure of other uses, such as CCS. What came out was that a lot of this infrastructure could well be critical to the nation, not just in the context of carbon capture and storage, but even in how the oil and gas market might move.
The question then came down to: if there was critical infrastructure and this decommissioning took place, what happened if the commercial sector— the industry—decided that there was no way that it wanted to keep particular assets operational and they should therefore be decommissioned, but the Secretary of State, the Government and the nation had a different view? Who carries the financial can for that in the future? If industry was not there, who else would step in?
I ask the Minister to forgive me for this: in a way our amendment is a probing amendment, which of course we should not really do on Report, but it is an important point to understand. My question is a fundamental one: if we have critical infrastructure in this industry—in the North Sea, say—and it is to be decommissioned, yet the OGA sees it as critical for future development, whether with greenhouse gases or the future of oil and gas itself, what happens when the private sector will no longer pay for that asset to remain operational, or at least be mothballed? Our amendment asks that question, but it also lays down that the OGA should have a specific responsibility to bring it to the attention of the Secretary of State, should such a situation arise. To solve that, the Secretary of State should be able to pay out of public funds for that critical infrastructure to remain.
I am not completely naive in this area. Clearly, if the private sector sees that the taxpayer is likely to underwrite an asset into the long-term future, perhaps not surprisingly people in that sector might be rather quicker to decommission, move out of these assets and move that cost across to the taxpayer. There is clearly that risk. However, we on these Benches seek through this amendment to obtain clarity on how we defend and preserve the national interest in terms of these assets while at the same time making sure that any taxpayer commitment will be protected—namely, that we keep these strategic assets when the OGA and the Secretary of State believe that they are critical for the nation’s future.
My Lords, I thank the noble Baroness, Lady Worthington, and the noble Lord, Lord Teverson, for these amendments. I wish to speak to the non-government amendments before addressing the government amendments. Following discussions held during the dinner break, I am happy to revisit Amendment 72, which we looked at before the dinner break.
Amendment 19 seeks to amend Clause 5 to give the Secretary of State the power to direct the Oil and Gas Authority to postpone or prohibit decommissioning of infrastructure until such time as she determines that a carbon capture and storage operator is in a position to utilise the infrastructure. I must first clarify that it is not the intention that the Bill will give the OGA the power to prohibit or postpone decommissioning. The ultimate power to approve, or disapprove as necessary, a decommissioning plan lies with the Secretary of State under Part 4 of the Petroleum Act 1998, and will continue to do so.
In any event, taking a power to delay or prohibit decommissioning on an open-ended basis for the purpose suggested would appear to require an owner of relevant infrastructure to pay for the ongoing maintenance of the infrastructure on an indefinite basis until the CCS development is ready. These would be significant costs, running to tens of millions of pounds for ongoing maintenance every year, simply to keep the relevant infrastructure safe until such time as it might be reused for CCS. When, as we all hope will quickly become the case, CCS is a proven technology, we can be certain of how and when relevant infrastructure can be reused for CCS and a commercial deal is viable, preventing decommissioning of existing assets to make way for CCS may be sensible and permissible under the current proposals the Government have made. However, as we debate the merits of this amendment today, we cannot say with any certainty when or how such infrastructure could be reused for CCS. I fear that this amendment risks making the United Kingdom continental shelf less attractive to investors and jeopardising the vital investment we need for the future of the basin. This would put us in significant conflict with the recommendations set out in the Wood review, and would be perilous given the challenging economic realities in the United Kingdom continental shelf today.
I hope that this explanation is helpful in setting out why this amendment is not workable from a structural perspective, since it will be the Secretary of State, not the OGA, who will hold the key power to decide whether to approve or reject an abandonment programme. In addition, as I will outline shortly, the government amendments brought forward on Report today aim to strike the right balance between keeping the continental shelf open for business while putting rigorous checks in place to ensure that the preservation and reuse of North Sea infrastructure, including for CCS, is appropriately considered before any decommissioning can take place.
The Government’s proposals would allow the Secretary of State to ensure that decommissioning takes place in accordance with an approved decommissioning plan, enabling her to ensure that alternatives to decommissioning are taken into account and that the costs of plans are kept to the minimum reasonably practicable. The intention is very much to bring consideration of such reuse to the forefront of the process and ensure that opportunities are identified early, allowing for adequate commercial arrangements to be made between parties and preventing situations requiring a party to maintain an asset against their will.
I turn to non-government Amendment 21. This amendment seeks to insert a new clause after Clause 7. The new clause would require the Oil and Gas Authority to report to the Secretary of State if the operability of any element of critical oil and gas infrastructure is at risk due to the financial condition of the owner, or for any other reason. It would also enable the Secretary of State to provide financial support to maintain such assets, if she considers the asset is at risk of closure or becoming inoperable, and it is in the national interest for it to remain in operational order.
I, too, am concerned to ensure that critical oil and gas infrastructure is properly identified and safeguarded in the national interest. This is an area already being addressed by the Oil and Gas Authority. Its recent Call to Action: Six Months On report highlighted actions being taken to protect critical infrastructure. However, we will continue to monitor this work and provision in this Bill will already enable the Secretary of State to require action from the OGA if necessary.
My Lords, government Amendment 20 places controls on the disclosure of information. Clause 7 of the Bill as introduced provides the Secretary of State with the power to require information from the OGA for certain purposes which are listed in subsection (1). The Secretary of State may disclose such information onwards for these same purposes or if required to under legislation, or with the consent of the OGA and, where applicable, that of the original information holder.
This amendment applies restrictions on the ability of any subsequent holders of this information to further disclose such information. It will ensure that they may do so only if required under or by an Act of Parliament or with the consent of the OGA and, where applicable, of the original provider of the information. This will ensure that potentially commercially valuable information provided to the OGA cannot be disclosed by subsequent holders of information except in certain narrowly prescribed circumstances. I beg to move.
My Lords, I will contribute to this short debate by thanking the Minister for reconsidering this aspect of the Bill, which certainly caused me, and one or two other noble Lords, slight concerns as to what material was protected and how it should be protected. I welcome the amendment he has moved tonight. It is extremely important that the balance is right between the value of sharing information and the value of keeping protected, in a proper manner, information that really should be protected. I will not delay the House any longer but thank the Minister for having given thought to our discussions in Committee. I am happy to support this amendment.
My Lords, I am grateful to the Minister for introducing Amendment 20 and to the noble Baroness, Lady Byford, for her comments. I am sure it is correct that material should be used only for the purpose for which it is provided, but I am left wondering what the concern or fear was. If the Minister will bear with me, I would like just one further clarification as to what, in real-world terms, we are avoiding here. Obviously we do not want unnecessary disclosure if the information is going to be misused, but I wonder what this is really for.
My Lords, I think I can answer that question. I thank my noble friend Lady Byford for her support. As I understand it, it is commercially sensitive information that would be protected in those circumstances, which seems entirely proper.
My Lords, the Oil and Gas Authority has been set up to maximise economic recovery of petroleum from the continental shelf. The new body will be funded by industry. That is consistent with the “user pays” principle as industry will be benefiting from the work and expertise of the regulator. The OGA is providing a range of services to industry. Those services include issuing licences as well as issuing relevant consents and permits: for example, to begin petroleum production. It is right, and in compliance with Managing Public Money, that the costs of these services be recovered via direct fees rather than the general levy. This will ensure that only those requiring the service and benefiting from it will bear its costs.
Licensing of onshore oil and gas within Scotland and Wales is to be devolved to Scottish and Welsh Ministers respectively. Amendment 23 ensures that the OGA does not have a concurrent power to charge a fee where the matter has been devolved. I beg to move.
My Lords, I am grateful for that explanation, which answers my question: this involves only activities which relate to devolved Administrations. Obviously, the OGA can charge fees to people whose activities are caught by its functions even if the word “benefit” might be open to interpretation. The Minister said that those who were not benefiting could not be charged fees. Would everyone necessarily benefit from the OGA? It is a regulator, so it might not always be seen to be beneficial. Can he clarify that?
I am happy to try. The word “benefit” is probably interpreted objectively rather than subjectively—possibly in a slightly paternalistic way. Where a service is provided for somebody, they should pay for it. I hope that that provides clarification.
My Lords, Amendments 24 and 25 amend Clause 9 to ensure that the costs payable to the OGA through the levy on licence holders include the costs incurred by Her Majesty’s Courts and Tribunal Service in relation to the setting up and running of the appeal right against the OGA’s sanctions.
The First-tier Tribunal is an established judicial body, but adding a new appeal right to its functions incurs administrative costs. It is normal practice for HM Courts and Tribunal Service to pass costs associated with setting up and running new appeal rights to the body for whom the appeal right is being established. The amendment ensures that such costs will be met by industry, as the regulated community for whom the appeal right is provided, through the levy. I beg to move.
My Lords, I now speak to government Amendments 29, 30, 33, 41 to 43 and 61 to 70, which create a new Chapter 6, titled “Disclosure”. This covers the powers of the Oil and Gas Authority to share information. This chapter consists of new clauses, which are described later in the Bill, and, for clarity, and on the advice of parliamentary counsel, we have consolidated the various existing information disclosure provisions in Chapters 2 to 5 of Part 2 of the Bill into this new Chapter 6.
Amendments 29 and 30 introduce the fact that there is a new Chapter 6 and make a consequential amendment at the start of Part 2.
Amendments 33, 41, 42, 43 and 61 remove the provisions dealing with the disclosure of information obtained under the current clauses—that is, Clause 21, “Disputes: disclosure”, Clauses 31 and 32, “Disclosure of information and provision of samples” and “Timing of disclosure”, Clause 39, “Meetings”, and Clause 58, “Sanctions”—which are now contained in Chapter 6. There is no change to their legal effect.
Amendments 62 to 70 consolidate into the new Chapter 6 the information disclosure provisions previously included in Chapters 2 to 5 of Part 2, and introduce the two new powers to enable the Oil and Gas Authority to disclose information to UK governmental bodies and for the purpose of legal proceedings.
Amendments 62 and 63 reinstate the general prohibition on disclosure of protected information by the Oil and Gas Authority, or a subsequent holder of such information, as applicable to the disclosure provisions of the Bill as introduced. These amendments are therefore required to consolidate the disclosure provisions into the new Chapter 6.
Amendment 64 inserts a new disclosure power permitting the OGA to disclose information obtained under specified chapters of Part 2 to certain listed UK governmental bodies to facilitate the carrying out of their functions. Owing to the possible inclusion of commercially valuable data within chapters of the Bill as introduced, the existing disclosure provisions in the Bill provide only narrow powers for information to be disclosed by the OGA, such as where required by an Act of Parliament or with the consent of the information owner. This may have prevented the OGA from disclosing information obtained under these powers to DECC and its agencies, such as the Office of Carbon Capture and Storage, other central government departments, the devolved Administrations and law enforcement agencies. These amendments will allow the OGA to disclose information obtained under Part 2 to such listed UK government bodies for the purpose of their functions.
I can advise noble Lords that any changes to the list of bodies or to the categories of information they may receive may be made only by affirmative resolution of both Houses of Parliament.
Amendments 65, 66, 67, 68 and 69 consolidate the disclosure provisions which were already included in the Bill covering, respectively, general disclosure required for the OGA to prepare returns and reports, disclosure in the exercise of its disputes and sanctions powers, release after a specified confidentiality period and disclosure with consent, or as required by legislation. The effect of these provisions is unchanged. Lastly, Amendment 70 provides authority for the OGA to disclose information if required for civil or arbitration proceedings or to law enforcement bodies for the investigation or prevention of criminal activities.
I thank the Minister for his comment earlier on Amendment 72. I have a specific question on Amendment 64. It relates to Clause 31(3)(b), which says that disclosures may be made to the National Environment Research Council,
“or any other similar body carrying out geological activities”.
My question is simply what those other similar bodies might be. For example, would they be universities carrying out geological activities?
I am grateful to noble Lords who have participated in the debate on this part of the Bill. I acknowledge the point, as I think I did previously, about the technical nature of these late amendments. I understand the point made forcefully and correctly by the noble Baroness, Lady Maddock. On the general point about consolidation, I think there is general welcome for that, to try to ensure that everything is all in one place.
There were then some specific questions about the sharing of information with foreign Governments. I think that the legislation will be subject to the Data Protection Act; that is quite true. My understanding is that disclosure to third parties is not appropriate. If there is a body that the information is being shared with, whether domestically or with an overseas Government, that is the limit of it for the function concerned, unless, for example, the treaty were to provide otherwise. I am trying to think of the type of information that might be shared. The examples that I gave of Norway, Ireland, the Netherlands and so on are probably in relation to interconnectors. There may be a need to share information about where pipelines are at the moment, and so on. That is the sort of thing, rather than anything of an operational nature; I do not anticipate there being anything in any way sinister about this. I will write to the noble Lord, Lord Grantchester, about the oversight of the Secretary of State. I think that she would have oversight of this, but I will check that point. I shall also check whether there is to be publication of the information concerned. I cannot see why not, in all honesty; as I say, this is a functional managerial thing rather than anything else.
The noble Lord, Lord Oxburgh, raised a point about Clause 31(3)(b) regarding the National Environment Research Council or other similar bodies. I anticipate that that would include universities. The other eventuality covered here is if for any reason the council were to cease to exist and something else were to take over its functions—it is most unlikely—that would then qualify as a similar body. I hope that that deals with the points that were made.
Noble Lords will be interested to know that arrangements exist in treaties to ensure that the Secretary of State is satisfied that adequate protection is in place. An example is the showing of protection measurement systems and production measurement for joint fields of exploration in the North Sea. In relation to the point made about consolidation, for which I think we have general support, it was parliamentary counsel’s advice to consolidate those disclosure provisions. That is not an attempt to take the credit for what we all think is a very good idea, but it is to give credit to the parliamentary counsel for that. I hope that helps.
My Lords, I will now speak to government Amendments 31 and 32, 44 and 45, 47, 49 to 52, 54, 58 to 60 and 79 to 82. The majority of these make minor and technical changes to Chapters 2 and 5 of Part 2 of the Bill. Amendments 49 and 52 also provide for the effect of devolution. These amendments are either drafting improvements or are clarificatory in nature and do not alter the policy intent of the relevant clauses. Other amendments in this group make provision regarding the powers in the Bill to make regulations.
Amendments 31, 32 and 44 are intended to achieve the same aim. They make minor changes to Clauses 16 and 18 of Chapter 2 and Clause 42 of Chapter 5. They provide clarification so that there is no doubt that when the OGA gives a direction that imposes a requirement on a person, that requirement is a “petroleum-related requirement” within the meaning of Clause 41(3)(c). This makes clearer the policy intention that the OGA may give a sanction notice in respect of a breach of a requirement imposed by such a direction.
Amendments 47 and 52 are intended to achieve the same aim. They make minor changes to Clauses 46 and 47 of Chapter 5 to clarify the policy intention that the OGA should be able to give revocation notices and operator removal notices to a licence holder and an operator only in respect of a breach of a “petroleum-related requirement” imposed on the licence holder or operator in that capacity.
The Petroleum Act 1998 imposes a duty to act in accordance with the strategy to maximise economic recovery of United Kingdom petroleum. This acts upon various categories of persons, including licensees and owners of upstream petroleum infrastructure. Where a person acts in more than one such capacity, the amendment makes it clear that the OGA cannot, for example, give a licence revocation notice to an owner of upstream petroleum infrastructure in respect of a breach of the duty to act in accordance with the strategy imposed on the person as an owner of upstream petroleum infrastructure if that person also happens to be a licence holder.
Amendments 49 and 54 are intended to achieve the same aim. They amend Clauses 46 and 47 of the Bill to prevent the OGA giving an operator removal notice or revocation notice in relation to licences which, on the date the notice is given, the OGA would not have the power to grant. This amendment removes the possibility for the OGA to revoke a licence or remove the operator of a licence in circumstances where the OGA does not have the power to grant the licence. This reflects the proposed devolution through the Scotland Bill and the forthcoming Wales Bill—to be published in draft form tomorrow—of the licence-granting functions in respect of onshore licences under the Petroleum Act 1998.
Amendment 50 makes minor changes to Clause 46 to ensure that existing obligations binding a licensee remain in cases where the OGA issues a revocation notice under Clause 46. The amendment provides clarification and ensures certainty that the provisions of licences will apply following revocation of the licence under Clause 46 in the same way as they would apply if the licence were revoked under the terms of the licence. It does not alter the policy intention.
Amendment 51 makes a minor drafting change to the wording of Clause 46(8) for consistency with the wording of Clause 46(4). There is no change of policy. Amendment 58 makes a minor change to Clause 51 to place it beyond doubt that on an appeal against a revocation notice or an operator removal notice which is given by the OGA, the tribunal’s powers to vary the notice are limited to varying the date on which revocation of the licence or removal of the operator takes effect.
My Lords, I did not intend to speak any more this evening. I thank the Minister for running through all these amendments. Amendment 82, on the disapplication of the requirement to consult the OGA, caught my attention. I am feeling slightly bruised by the Bill, and if the regulations that come from it are anything like this process, it will be a dreadful experience. I am therefore hopeful that any regulations made under the Act will receive due care and attention and that proper time will be made available for their development. Part of that would naturally mean that consultation would take place. I am left with the following question. If, in the first year, in which we can expect quite a raft of regulations to flow, we are not consulting the OGA, who will be consulted?
I know that the Minister will be tempted to say that there will not be any staff, and it will not be possible. However, we already have an OGA, which has been in existence for some time, and it clearly can and does offer advice. Indeed, representatives of the OGA attended a meeting with the Minister when we discussed CCS. Therefore, I do not follow the logic and I am slightly concerned about the issue of proper consultation for these regulations. For the majority of the Bill, we have not seen proper consultation, and I would hate that to be repeated with the regulations.
My Lords, we intend to bring in regulations as quickly as possible once the relevant powers are commenced. Because of this, the drafting and formulating of some regulations will have to be done before the OGA is established as a government company and functions and staff are transferred to it. The year timeframe will apply only to the first set of regulations made under each power within that period, so it will not necessarily apply throughout that period. A year is the outside limit that can apply, and it will apply to a set of regulations made under each power. That gives us the opportunity to pass regulations before the OGA is up and running effectively. I accept what the noble Baroness says about it already having staff. Yes, it has, but it is not really up and running and functional as yet, and that is what is intended.
As I understand it, the Bill states that the company originally incorporated under the Companies Act as the Oil and Gas Authority Ltd is renamed the Oil and Gas Authority. Clearly it exists, it has staff and it performs functions, but I simply do not understand why there is a one-year period. Perhaps the Minister could write to me with further information. Furthermore, the idea that he is going to bring forward regulations quickly fills me with dread.
I do not think I said that it would necessarily be quick; I said it would be within the year. The noble Baroness makes a valid point, but I come back to the point not that it is not set up—I agree that it is—but that it is not fully functional as yet. I will gladly write to the noble Baroness and perhaps give some examples of what this is intended to cover. I beg to move.
My Lords, I will speak to government Amendments 46, 48, 53, 55, 56 and 57. These amendments make minor changes to Chapter 5 of Part 2 of the Bill to harmonise the provisions relating to appeals against the OGA’s sanctions with the procedural rules for the General Regulatory Chamber of the First-tier Tribunal. The procedural rules are made by the Tribunal Procedures Committee. These rules govern the practice and procedure in the First-tier Tribunal and Upper Tribunal.
Amendment 55 deletes subsection (2) of Clause 49, which has the effect of removing the 28-day period for bringing an appeal against the OGA’s sanctions. The time period for bringing an appeal will therefore revert to that set out within the tribunal procedural rules, which is also set at 28 days but which allows the tribunal discretion to extend that time period beyond the 28-day period.
As a result of Amendment 55, Amendments 46, 48 and 53 make consequential amendments to the clauses dealing with financial penalty notices, revocation notices and operator removal notices, which currently cross-refer to the existing 28-day period referred to in Clause 43(2). This ensures that, notwithstanding the deletion of this 28-day time period, a financial penalty notice, revocation notice or operator removal notice still cannot take effect until 28 days after the relevant sanction notice was given. This ensures that, regardless of the removal of the 28-day period referred to in Clause 49, a person is still given an appropriate opportunity to appeal before a sanction takes effect.
Amendment 56 amends Clause 49 to make it clear that, where an appeal is made to the First-tier Tribunal against a sanction notice and the sanction notice ceases to have effect, the effect of that suspension lasts until the tribunal confirms, varies or cancels the notice.
Amendment 57 adds a new subsection to Clause 49 to provide that, where an appeal is brought against a sanction imposed by the OGA, either the First-tier Tribunal or the Upper Tribunal may further suspend the effect of that sanction for the duration of any further appeal to the Upper Tribunal. I beg to move.
I thank the Minister for providing the details of the amendments. They seem minor in nature and largely clarificatory—that is rather a long word at this time of night—and therefore they should raise no objection.
My Lords, I am most grateful to the noble Lord. It is a long word at this time of night or indeed at any other time.