THIRD PARTY ACCESS TO UPSTREAM OIL AND GAS INFRASTRUCTURE Upstream pipelines and offshore processing facilities are typically built by field owners to process and transport to shore output of specific oil or gas fields, with spare capacity progressively being made available for use by third parties on payment of a negotiated tariff. As the UKCS matures and spare capacity becomes available in pipelines, production facilities and terminals there is scope for gains by all parties with the development of small fields being made viable by owners allowing access to existing infrastructure and gaining additional revenue from new users. In principle, the more mature areas of the Southern North Sea, with increasing amounts of spare capacity in the infrastructure, offer a choice of pipeline export routes to new developments which cannot support their own pipeline, though in practice this is limited by the small size of most new fields. In other regions, notably the Central North Sea, there is less spare capacity and gas production is associated with oil production. Throughout the North Sea there is, therefore, the potential for commercial tension between the owners of infrastructure and the owners of fields seeking third party access to that infrastructure. This is addressed by both voluntary and legal frameworks for commercial arrangements for third party access. An industry Offshore Infrastructure Code of Practice was introduced in January 1996. This sought to streamline and facilitate the timely application of the processes of seeking, offering and negotiating third party access to offshore pipelines and processing facilities and onshore terminals and ensuring that access is easy and fair, with terms offered on a negotiated, non-discriminatory basis. The Code has been reviewed in consultation with industry. A revised version was published by UKOOA (now Oil & Gas UK) in August 2004 and has been widely endorsed by the upstream industry. If requested by a would-be user, and having considered the interests of all parties, the Secretary of State has powers to require, and set the terms of, access for a third party's hydrocarbons to pipelines, associated offshore production facilities and onshore gas processing facilities. DTI (now DECC) has published guidance principles on the use of these powers to settle disputes over third party access. This guidance includes tariff-setting principles which recognise the need to strike a balance between the importance of maintaining ageing infrastructure and attracting new exploration and development. In most cases the terms that would be determined by the Secretary of State are likely to be in line with those that would be offered by infrastructure owners were they to face effective competition. Gas Terminals Owners of onshore gas processing terminals, as well as complying with the Code and legislative provisions on third party access described above, must also publish annually their main commercial conditions of third party access. This covers information to enable a potential applicant for a right to have gas processed by a gas processing facility or conveyed in a relevant gas pipeline to make a reasonable assessment of the cost of, or the method of calculating the cost of, acquiring the right and other significant terms on which such a right would be granted. Where an owner has a website, the main commercial conditions and any in-year changes to them are available there. In case applicants for access do not have facilities enabling access to electronic documents, owners also make the main commercial conditions and any in-year changes available in hard copy on request.
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