Upstream oil and gas infrastructure access dispute resolution
Current UK platforms
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UK/Norway Framework Agreement 1998
The agreement relates to pipelines on the continental shelf that cross the UK/Norway boundary and link infrastructure on one side under the jurisdiction of one government to infrastructure on the other side under the jurisdiction of the other government. Please note: Vesterled was not covered by the agreement because the Heimdal facilities on the Norwegian shelf and the Norwegian Frigg pipeline on the UKCS are both under Norwegian jurisdiction. Similarly, pipelines direct from a Norwegian field, for example, to a UK landing terminal, are outside the scope of the agreement because the landing terminal would be on the UK’s land territory and not on the UKCS. The term ‘petroleum’ refers to all liquid and gaseous hydrocarbons.
Licences, authorisations, approvals and consents
Laying and operation of inter-connecting pipelines is subject to authorisations:
- inlet flange connected to infrastructure on Norwegian shelf, outlet flange connected to infrastructure under UK jurisdiction = Norway grants required authorisation from inlet flange to outlet flange. UK grants required authorisation from median line to outlet flange
- inlet flange connected to infrastructure on UK shelf, outlet flange connected to infrastructure under Norwegian jurisdiction = UK grants required authorisation from inlet flange to median line. Norway grants required authorisation from median line to outlet flange
- route of all inter-connecting pipelines is subject to consent of both governments
- governments must seek to agree on terms of authorisations before they are granted – arbitration is available if needed
- copies of authorisations must be made available to each government and must not be substantially altered or re-assigned without prior consultation between the governments
- alterations are not to be made that would prevent unified ownership or operation or prevent /impede transport of petroleum
- owner of inter-connecting pipeline must establish arrangements to regulate use of the pipeline in accordance with the agreement – governments may request a copy of any agreements setting out such arrangements
The owner is to appoint an operator. This must be approved (along with any subsequent change of operator) by both governments.
Each of the governments is to encourage optimal use of inter-connecting pipelines and take whatever measures they can to assist connections or access to such a pipeline for use to be made of spare capacity (without prejudicing efficient operation for the transport of petroleum owned by the owner of the pipeline).
Arrangements made by the owner to regulate use of the pipeline will include provisions on priorities for transport of petroleum (royalty in kind to get same priority as petroleum from field from which royalty is taken).
Dispute settlement about third party access
Responsibility for dispute settlement sits with the Norwegian Government where the proposed point of entry of petroleum is on the Norwegian shelf and the UK Government where the proposed point of entry is on the UK shelf.
Governments must consult on dispute settlement, seeking to agree a mutually acceptable response. Arbitration is available if needed. Both governments must apply principles of non-discrimination and fairness for all parties during a dispute, and they must take account of:
- spare capacity available (allowing for owner’s contractual obligations and reasonably expected usage)
- technical compatibility of third party petroleum with already contracted petroleum in the pipeline
- economic factors, including costs, tariffs and other conditions applied to use of pipeline
- need not to endanger security of supply or prejudice safety or environmental measures
- technical capability and financial viability of third-party applicant
- other matters relevant to either government
The government responsible for settling the dispute will take into account consultation with the other government and, at least 21 days prior to informing the applicant of the outcome, inform the other government how it intends to respond. Arbitration is available if needed. The other government shall, on request, give effect to an agreed response.
Governments, jointly and severally, after consultation, will exert every effort to ensure the laying and operation of a pipeline shall not cause pollution of the marine environment or damage by pollution to the coastline, shore facilities, vessels or fishing gear of any country. Competent authorities will develop procedures to implement environmental protection measures in the agreement during an emergency.
Governments are to consult on common construction and safety standards for inter-connecting pipelines, and to require owners to comply.
Nothing in the agreement is to prejudice special powers in the case of national or international emergencies. Each of the governments are to consult with the other as early as possible for an agreement on measures to reconcile urgency of the situation.
Competent authorities are to agree on the establishment of operation and control of radio communications relating to inter-connecting pipelines. Other communication systems to be subject as far as possible to common design standards. If there are no common standards, standards of each government shall be compatible.
Exchange of information and confidentiality
Governments may exchange information received from the pipeline owner as long as it does not conflict with any restrictions on disclosure. Such information received by one government from the other is to be treated as confidential with no further disclosure, but information may be used to prepare general reports. Copies of general reports are to be made available to each government by the other.
Double taxation convention applies.
The quality and quantities of petroleum are to be metered (entry and exit) by the pipeline owner. The metering system must be compatible with the metering system of the infrastructure and be properly installed/maintained. Where governments have a legitimate interest in the metering system for quantities of petroleum entering a pipeline, the system shall be subject to agreement between their competent authorities. Competent authorities must agree on regular calibration of the metering system.
Each government must appoint inspectors for safe and proper laying of the pipelines. Inspectors must consult and co-operate. Available measures are to be taken to give respective inspectors access to relevant parts of the pipeline. Inspectors may order cessation of operation without consultation in cases of emergency – reasons are to be reported to the governments, which will then consult to consider action necessary for safe and speedy resumption of operations. Competent authorities must consult on inspection matters.
If the governments agree, use and operation of a pipeline shall continue after expiration, surrender or revocation of an authorisation. The Government that had granted the authorisation shall grant a new authorisation or conduct for use and operation of the pipeline itself or take other action as agreed by both governments. Any arrangement established by the owner to regulate the use of the pipeline shall continue to apply, but may be subject to supplementary agreements.
If one government considers continued operation of all or part of a pipeline is not practical, the other government must be given the opportunity, in consultation with the owner, to ensure continued operation on fair terms and conditions. Subject to environmental considerations, neither government will prevent the other from securing continued use. Where one government takes over operation, it shall ensure any part of the pipeline no longer in use is removed or isolated if both governments agree on that course of action.
Each government shall agree measures to be taken in connection with decommissioning. If the governments agree continued use of all or part of a pipeline is not practical, they shall require the owner to submit a decommissioning plan. The plan will include an estimate of the costs of the measures proposed in it; details of timing of the measures or provisions on how timings are to be determined. The governments, in considering a plan, shall take into account:
- best available cost-effective techniques
- economic factors
- applicable international standards/guidelines
- safety hazards
- safety of navigation
- environmental impacts
- impact on other sea users
- timetable for decommissioning
- financial implications and other consequences for either government
- other matters raised by either government
Governments may approve the plan with or without modifications and conditionally or unconditionally. The owner will be given the opportunity to make representations about any proposed modifications or conditions. The governments will act without unreasonable delay in deciding whether to approve or reject a plan. An approved plan must be implemented. The owner must be informed of the reasons for rejecting a plan and will submit a revised plan with a time limit acceptable to the governments. Arbitration is available if the governments are unable to agree a response to an application.
Any disputes about the interpretation or application of the agreement, or any other matter referred to the governments for settlement under any agreements between a pipeline owner and a user, will be resolved by negotiation between the governments. If a dispute cannot be resolved in that way, or by any other procedure agreed by the governments, either government may request dispute settlement by an arbitration tribunal composed as follows:
Each government designates one arbitrator. Both arbitrators elect a third, who will be chairman. They must not be a national of or habitually reside in either country. If either government fails to appoint an arbitrator within three months of a request, either government may request the International Court of Justice appoint an arbitrator. The same procedure applies if, within one month of the designation or appointment of the second arbitrator, the third arbitrator has not been elected. The tribunal will determine its own procedure, except that all decisions must be taken by a majority vote. The tribunal’s decisions are binding on the governments and regarded as agreements between the governments.
Amendment and termination
The governments may amend or terminate the agreement at any time by agreement. Either government may request consultations on an amendment to the agreement at any time; such a consultation is to commence within two months of the request and will be conducted expeditiously. During a consultation, the governments will take full account of the proposals for amendment with the aim of reaching a mutually acceptable solution within the shortest possible time.
Completion of Pipeline Works Authorisations