The Gas (Third Party Access) Regulations 2004

Explanatory Note

(This note is not part of the Regulations)

These Regulations partially implement in respect of Great Britain Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas (O.J. L176, 15.7.2003, p 57) (“the Directive”). The Directive amended and repealed Directive 98/30/EC.

Provisions in the Directive concerning interconnectors are implemented in the Energy Act 2004, which amends the Gas Act 1986 and introduces a licensing regime for interconnectors.

Directive 98/30/EC was implemented by the Gas (Third Party Access and Accounts) Regulations 2000 (S.I.2000/1937). Those Regulations made amendments to the Pipe-lines Act 1962, the Gas Act 1986, the Gas Act 1995 and the Petroleum Act 1998. The Regulations inserted sections 19B and 19D into the Gas Act 1986 to provide a way for applicants to gain access to gas storage facilities and liquid natural gas (“LNG”) facilities respectively. Sections 19A and 19C provided the possibility of exemption from the requirements of sections 19B and 19D in certain circumstances. The Regulations also inserted section 17D into the Petroleum Act 1998 to provide a way for applicants to gain access to offshore gas storage facilities. Section 17C provided the possibility of exemption from the requirements of section 17D in certain circumstances.

The remainder of Directive 98/30/EC was largely already implemented in Great Britain by pre-existing legislation, notably the Gas Act 1986, and by conditions in licences issued under sections 7 and 7A of that Act. As regards market opening, in article 23 all final customers on distribution systems of licensed gas transporters may choose their supplier. Access to the majority of the pipeline system in Great Britain may be obtained in accordance with article 18 of the Directive by any person who holds a shipper’s licence under section 7A of the Gas Act 1986 and who contracts with a licensed gas transporter on the terms set out in the network code which such transporters are obliged by the licence conditions to publish.

These Regulations amend the Gas Act 1986 to implement Articles 2 9) and 11), 18.1, 22 and 25 of the Directive in respect of storage and LNG import facilities. Article 2 9) amends the definition of storage facility, which now includes facilities for the storage of liquid gas. Article 2 11) amends the definition of LNG facility, which now includes a terminal used for importation and temporary storage of LNG. (These facilities are now called LNG import facilities in the Regulations.) Articles 18.1 and 25 impose an obligation on Member States to ensure third party access to LNG facilities based on regulated published tariffs or the methodologies underlying their calculation. Article 22 provides that major new LNG and storage facilities or modifications to existing facilities, which increase capacity significantly or enable the development of new sources of gas supply, may be exempted from some requirements of the Directive under certain conditions.

Schedule 1—amendments to the Gas Act 1965

This Schedule makes consequential amendments to section 12 of the Gas Act 1965 so that where a licensed gas transporter has acquired compulsorily a right to store gas in natural porous strata underground another person is not prevented from acquiring a right to store gas there whether in accordance with section 19B of the Gas Act 1986 or otherwise.

Schedule 2—amendments to the Gas Act 1986

This Schedule amends sections 19A to 19E of the Gas Act 1986. Paragraphs 1 and 3 amend the requirements in sections 19A and 19C for exemption from the provisions of sections 19B and 19D dealing with third party access to storage and LNG import facilities and implement Article 22 on major new infrastructure exemptions. Section 19A(5) now sets out the requirements for the giving of an exemption in respect of a storage facility which is not a new facility. Section 19A(6) to (10) sets out the requirements for the giving of an exemption in respect of a storage facility which is a new facility. In the case of an exemption in respect of a new facility, which has been modified to provide for a significant increase in capacity, the exemption will only be given in relation to the amount of the increase of the capacity. Section 19C as amended by these Regulations sets out the requirements for an exemption in respect of LNG import terminals. Again where an application is made in respect of a facility, which has been modified to provide for a significant increase in capacity, the exemption will only be given in relation to the amount of the increase of the capacity.

Paragraph 2 inserts references to liquid gas in section 19B as a person may now acquire a right under that section to store gas or liquid gas in a storage facility.

Paragraph 4 amends section 19D so that tariffs or methodologies underlying tariffs for the right to have liquid gas treated in an LNG import facility and any changes thereto are approved by the regulator, the Gas and Electricity Markets Authority, prior to publication. Before seeking such approval the owner of the facility must carry out such consultation as the regulator may require. Consequential amendments are also made to the dispute settlement procedure to reflect the fact that access is now regulated access.

Paragraph 5 inserts section 19DA, which imposes an obligation on an owner of an LNG import facility to provide information to the regulator to enable the regulator to meet the requirements of Article 25.

Paragraph 6 inserts a definition of new facility, amends the definition of storage facility, substitutes a definition of LNG import facility for the definition of LNG facility and makes consequential amendments to various other definitions.

Schedule 3—amendments to the Petroleum Act 1998

This Schedule amends sections 17C, 17D, 17H and 28 of the Petroleum Act 1998. Paragraph 1 amends the requirements in section 17C for exemption from the provisions of section 17D dealing with third party access to offshore gas storage facilities, in the same way as the requirements in section 19A of the Gas Act 1986 have been amended, and implements Article 22 on major new infrastructure exemptions. Paragraph 3 inserts a definition of new facility and substitutes a new definition of offshore gas storage facility.

Paragraph 2 amends section 17 H(1) so that an obligation to comply with a notice from the Gas and Electricity Markets Authority under section 17D(11) containing provisions dealing with the right of a third party applicant to have gas stored in an offshore gas storage facility becomes a duty owed to a person affected by a failure to comply with the notice. Section 17H(2) provides that a breach of such a duty which causes a person to sustain loss or damage shall be actionable at the suit or instance of that person.

A Transposition Note has been placed in the libraries of the Houses of Parliament and is also available from the Energy Markets Unit, 1 Victoria Street, London SW1H OET.