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Petroleum Act 1998 (Third Party Access) Order 2007

rose to move, That the draft order laid before the House on 20 November be approved [Second Report from the Statutory Instruments Committee]. The noble Lord said: My Lords, the order before you makes certain amendments to the Petroleum Act 1998 and should be seen in the wider context of the UK’s security of supply and diversification of supplies agenda. Noble Lords will be aware that earlier this week the order was debated in Committee in the other place. During that debate, the Minister of State for Science and Innovation reminded the Committee of the strategic importance of the Langeled South pipeline from Norway, which flowed first gas to the national grid in October this year. The pipeline has capacity to meet up to 16 per cent of the UK’s winter demand for gas and is a very welcome addition to the UK’s import capacity at a time when our reserves of oil and gas are declining. We are fortunate in having a long history of close partnership with the Norwegians, who have proven to be stable and reliable partners and suppliers. The purpose of the order—the Petroleum Act 1998 (Third Party Access) Order 2007—is to make certain amendments to the Petroleum Act 1998. The amendments are consequent on provisions agreed in the 2005 UK/Norway framework agreement on cross-boundary petroleum co-operation and, in particular, provisions that relate to the Langeled South pipeline. The 2005 framework agreement was an innovative umbrella agreement to streamline the processes for approving a variety of projects in the future, but it also laid down specific provisions in respect of this major gas pipeline to the UK. When we negotiated it, it was agreed that the Norwegian regulated access system, where shippers are subject to published tariffs and terms, would apply to the whole of the Langeled South pipeline, which forms an integral part of the Norwegian offshore gas pipeline network. The regulated access system differs from the United Kingdom’s offshore system, where access terms are a matter for negotiation between individual shippers and the pipeline owner, with subsequent determination by the Secretary of State only if negotiation proves unsuccessful. The provisions in the framework agreement thus avoid the complexity of different access systems at points along the pipeline length. There are safeguards built into the agreement that allow a measure of joint agreement between the Norwegian and UK authorities. In particular, both the Norwegian and UK authorities must agree on the entry tariffs charged to UK companies seeking access to the Langeled South pipeline and the points at which access is to be made to it. In addition, should a UK company claim that the terms of the Norwegian regulatory system are not being fully and properly complied with, the framework agreement provides for joint determination of the dispute by the UK and Norwegian authorities. The need for an amendment to our law to ensure that it is consistent with provisions agreed in the framework agreement was signposted in the Explanatory Memorandum that accompanied that agreement when it was laid before both Houses in May this year. I shall take your Lordships through the key points of the order. First, it amends the Petroleum Act 1998 to remove any pipeline that, under the terms of the framework agreement, is to be subject to the Norwegian regulatory access system from the scope of Section 17F of the Petroleum Act 1998. That category includes Langeled South. In the absence of the amendment, Langeled South would have remained a controlled pipeline within Section 17F. As I am sure all noble Lords know, Section 17F makes provision for application to the Secretary of State for the right of access to pipelines on the UKCS following failure to agree between the person seeking access and the owner of a pipeline. Secondly, the order establishes, under two new sections—17GA and 17GB—a new category of dispute that the Secretary of State, jointly with the Norwegian authorities, may resolve under the Petroleum Act 1998. The new sections provide that, where access to Langeled South has already been awarded to a third party under Norwegian regulatory rules but that third party subsequently claims that the owner or operator of Langeled South has not complied with the terms and conditions under which access was awarded, a determination is made jointly by the Secretary of State and Norwegian authorities. The changes to the Petroleum Act 1998 are required before Her Majesty’s Government will be in a position to notify the Norwegian Government that all the internal procedures are complete and that the framework agreement can enter formally into force. The Norwegians have completed all their internal procedures. I therefore commend the draft order to the House and beg to move. Moved, that the draft order laid before the House on 20 November be approved [2nd Report from the Statutory Instruments Committee].—(Lord Truscott.)