Sanctions

Part 2, Chapter 5 (sections 42 to 60) of the 2016 Act details the circumstances when the OGA is empowered to give Sanction Notices and the approach to be followed to impose a Sanction Notice. 

Sanction Notices can be issued where a person has failed to comply with one of three petroleum-related requirements[1]:

  1. A duty imposed under section 9C of the 1998 Act to act in accordance with the Strategy for enabling the Principal Objective to be met;
  2. A term or condition of an offshore licence; and
  3. A requirement imposed on a person by or under the 2016 Act which is sanctionable in accordance with Chapter 5 of the 2016 Act.

There are four forms of Sanction Notice each preceded by a Sanctions Warning Notice:

  • enforcement notice (directing compliance),
  • financial penalty notice (up to £1million),
  • revocation notice, and
  • operator removal notice[2].

The OGA will normally undertake an initial ‘triage’ process to assess the appropriate power or function to use, selecting from sanctions, non-binding dispute resolution, third party access determination and the exercise of licence powers. The triage process does not oblige the OGA to take any specific action to address any suspected failure to comply.

Where the triage process has routed a suspected failure to comply with one of the petroleum-related requirements listed above into the sanction notice process, the OGA will follow its published procedure to determine whether and what type of sanction notice to impose to address the suspected failure. The Sanction procedure can be found here (PDF, 16 pages) along with guidance as to the matters to which the OGA will have regard when determining the level of a financial penalty in a financial penalty notice (PDF, 15 pages).

 

[1] Energy Act 2016, section 42(3).
[2] The sanction notices are described in sections 43 to 48 of the Energy Act 2016.