Third Party Access to Upstream Oil and Gas Infrastructure by etssetcf

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									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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