Disputes and Sanctions

The OGA’s escalation process describes the steps the OGA will usually take leading up to a decision whether or not to exercise its powers, and the process is illustrated in the figure below:

OGA's measured escalation process

When the OGA launches an investigation, a summary of this will be recorded in our online case register. The latest version of the case register can be found here. Once an investigation has been concluded the outcome will be published by the OGA on its case register.  Details of cases archived since May 2019 can be found on our Regulatory Decisions (archived since May 2019) page.

Prioritisation

When considering whether or not to take action using the formal powers the OGA will review that issue alongside its prioritisation criteria which includes, Impact on MER UK, Strategic significance for the OGA, OGA time and cost; and Likelihood of success.

 

For more detailed information on the prioritisation criteria please refer to the OGA’s Enquiry Guidance.

 

Latest News

Thematic Review – Regulatory Obligations

On 9 October the OGA hosted a very well attended breakfast briefing to launch its first Thematic Review – if you missed the session, please find the accompanying slides here. This thematic review aims to increase compliance with regulatory obligations, a vital part of the oil and gas industry’s social licence to operate, by means of an open, transparent and consultative process.

The first step in the thematic review is for the OGA to carry out a grassroots industry survey with OGUK, who will send out the survey and receive all responses before passing on anonymised and collated information to the OGA. This will ensure that the responding companies feel able to provide honest responses to the survey, which will maximise the benefits of the review. The survey is being sent out on 10 October, with a 4 week period for responses ending on 7 November. It will ask a number of questions in relation to various areas of licences and consents, designed to find out where most assistance is needed – whether it be better guidance, better processes, more education, and so on.

Once the responses have been received and analysed, the OGA will be working with OGUK to develop tailored solutions to address the feedback received. We will also be carrying out some international benchmarking work as part of the review in order to benefit from established best practice. We are also offering licensees the opportunity for a 1:1 meeting with members of the thematic review team before the end of November, to discuss any particular perspectives they may have including areas they feel need fixing, solutions they have found which can be shared to the benefit of others, or just general comments on the areas covered by the thematic review. Please get in touch with brian.malone@ogauthority.co.uk if you would like to avail yourself of this. 

Investigation – Cygnus and Pegasus

On 30 August 2019, the OGA concluded its own initiative non-binding dispute resolution investigation into the prioritisation of access to Cygnus capacity in relation to transportation and processing services for gas from the Pegasus field.

The parties to the investigation were on the one hand, the owners of the Cygnus hub, comprising Neptune E&P UK Ltd and Spirit Energy, and on the other hand, the owners of the Pegasus field, comprising Spirit Energy and Hague and London Oil BV.

The OGA has issued a recommendation to the parties pursuant to section 23 of the Energy Act 2016. A non-confidential summary of the recommendation can be found here.

 

The OGA’s Regulatory Approach

On 4 June 2019, Tom Wheeler, the OGA's Director of Regulation, wrote to all licensees and infrastructure owners regarding the next stage of our regulatory approach.  The text of the letter can be viewed here

 

Enquiry process

The OGA has recently (May 2019) published guidance on its new Enquiry process. When an issue has not been resolved by stewardship, facilitation or enhanced facilitation it will be passed onto the OGA’s Regulation Directorate for further consideration and whether formal powers could be applied to resolve the issue. A link to the guidance can be found here along with the OGA’s response to comments received from the Commercial Manager’s Forum steering group.

 

Quick links to Guidance

The OGA have published a range of guidance which can be accessed (by clicking the graphics) below:

Enquiry Guidance

When an issue has not been resolved by stewardship, facilitation or enhanced facilitation it will be reclassified as a case.

The Enquiry process acts as a filter to enable the OGA to assess the most appropriate course of action.

Sanction Procedure

The OGA can give a person a sanction notice if it considers that the person has failed to comply with a ‘petroleum-related requirement’, which is defined as either a duty to act in accordance with the MER UK Strategy, a term or condition of an offshore licence, or a requirement imposed by specified provisions in the Energy Act 2016.

Financial Penalty Guidance

Guidance as to the matters to which the OGA will have regard when determining the level of financial penalty in a financial penalty notice.

Guidance on Disputes over Third Party Access to Upstream Oil and Gas Infrastructure      

If a third party is unable to agree satisfactory terms of access with the owner of upstream oil and gas infrastructure, the third party seeking such access can – and in line with the Infrastructure Code of Practice may have committed to – make an application to the OGA to require access to be granted and to determine the terms on which it is to be granted.

The OGA’s guidance on disputes over third party access to upstream oil and gas infrastructure sets out the requirements and obligations on all parties. It also sets out the approach the OGA would take in handling applications and the principles the OGA would expect to be guided by in determining terms of access.

Dispute Resolution Guidance  

A wide range of disputes can be referred to the OGA under the provisions of Part 2 Section 2 of the Energy Act 2016.

The OGA’s dispute resolution guidance sets out the requirements and obligations on all parties. It also sets out the approach the OGA would take in handling disputes and the principles the OGA would expect to be guided by in determining an optimal outcome that the OGA considers will best contribute to the fulfilment of the principal objective to maximise the economic recovery of UK petroleum whilst having regard to the need to achieve an economically viable position for the parties.

Guidance on satisfactory expected commercial return (SECR)  

This guidance sets out the approach the OGA will usually take in assessing whether a project achieves a SECR.

The OGA is aware companies use a wide range of metrics and inputs in assessing their returns, not all of which are included in the guidance. The OGA will assess SECR only for the purposes of and as set out in the MER UK Strategy.

Where the SECR safeguard is applied, the OGA aims to take a pragmatic approach, including having discussions with the companies involved, to understand the project.

 

 

Contact us:

For all general enquiries, please contact: disputesandsanctions@ogauthority.co.uk