Pinsent Masons Report: UK Unit Increases Offshore Inspections Post-Macondo

Energy specialists at the firm say that the number of inspections carried out by the Offshore Environmental Inspectorate (OEI), part of the Department of Energy and Climate Change, have increased by over 70% since 2007. Inspections are also on course to rise by around a third since the Gulf of Mexico spill[1].

The news, which coincides with the two year anniversary of the Gulf leak being capped, comes at a sensitive time for the oil and gas industry after the European Union recently outlined proposals for a Regulation governing offshore safety – something which critics argue would effectively lower safety standards. Oil and Gas UK, the body representing the industry, recently said that the EU proposals would "dismantle the UK's world-class safety regime" and have the opposite effect of that intended.[2]

Laura Cameron, a Partner at Pinsent Masons, says that the increased level of inspections by UK authorities "is clear evidence that the EU is trying to fix something which is not broken."

Cameron says, "Oil and gas operators in the UK learnt some very difficult lessons after Piper Alpha and the Cullen report. It would be catastrophic if we see any diminishment of standards in the UK as a result of EU action."

"The UK offshore safety regime is – rightly – one of the toughest in the world. Directors can be held personally and criminally liable for Health & Safety failings under the Health and Safety at Work Act. In our experience that certainly focuses the mind at boardroom level, so it's hard to see how an additional level of bureaucracy at an EU level would make a significant or beneficial difference."

"Further, these figures demonstrate that DECC is playing an active and energetic role in using its powers of inspection. The message has to be that they should be allowed to get on with it and that the industry should not be subjected to unnecessary change."

Pinsent Masons, which obtained the data through a Freedom of Information request, points out that the number of Enforcement Notices issued by OEI – orders to comply with relevant regulations of face prosecution – are also on the rise. Meanwhile, prosecutions undertaken by OEI are down, something which Cameron says suggests that operators are heeding warning shots.

Cameron concludes "We shouldn't underestimate the impact uncertainty like this can have on investment decisions. Aberdeen is the oil capital of Europe and as such it's important that the views of its constituents are heard at Holyrood, in Westminster and in Brussels."

1. Based on annualised data. 33 Inspections were carried out by OEI during the first 5 months of 2012

2. http://www.oilandgasuk.co.uk/ProposedEURegulation.cfm