Oil and gas industry welcomes provisional deal on EU offshore installation safety rules

Out-Law News | 22 Feb 2013 | 5:13 pm | 3 min. read

Oil and gas firms operating in the EU could have to submit emergency response plans and prove that they can afford to remedy potential environmental damage if new laws proposed by the European Commission come into force.

The UK oil and gas industry has welcomed the announcement, as the proposed regime will allow each member state to implement the changes as it sees fit. Industry body Oil and Gas UK had lobbied against the Commission's original proposal, which would have seen the new rules implemented in the form of a directly-applicable Regulation.

"Oil and Gas UK has worked tirelessly to highlight the very real damage that an EU Regulation could have done to workers' safety," said Robert Paterson, its health and safety director. "The Commission's decision to establish a Directive on offshore safety is the best way to achieve the objective of raising standards across the EU to the high levels already present in the North Sea."

Announcing that it had provisionally agreed the text of the new directive with representatives from member states, the European Parliament's Energy Committee said that the compromise would allow individual countries to "avoid redrafting existing equivalent national laws".

Under the proposed rules, drilling companies would have to set out their "corporate major accident prevention policy" to national authorities before beginning works. This policy should guarantee an open reporting culture, protection for 'whistleblowers' and consultation with elected safety officials. Companies would have to outline potential major hazards for the particular installation and what special measures they were adopting to protect workers before drilling begins.

Companies would have to provide an internal emergency plan, setting out the equipment and resources they have available and what action they will take in event of an accident. National authorities would also have to prepare external emergency response plans covering all offshore drilling installations within their jurisdiction. These plans would specify the role and financial obligations of the companies, as well as the roles of relevant authorities and emergency response teams.

Companies would have to provide evidence that "adequate provision" has been made to cover their potential liabilities as a precondition to having a licence for an offshore installation granted. These provisions must include "sufficient physical, human and financial resources to minimise and rectify the impact of a major accident", according to the provisional text. Financial resources would cover liability for potential economic damage, as well as cleanup costs.

The European Commission proposed the creation of a unified offshore safety regime following the Deepwater Horizon accident in the Gulf of Mexico in 2010. Control of installations varies widely across the EU, with almost half of the nearly 1,000 offshore oil and gas installations in operation located in UK-controlled waters. Italy, the Netherlands and Denmark operate a number of facilities, while nine other states have either a minimal offshore drilling presence or have been awarded licenses to do so.

Energy law expert Willie Park of Pinsent Masons, the law firm behind Out-Law.com, said that the proposals "largely reflected" the framework already in place in the UK. In its announcement, the Energy Committee said that landlocked states, and states with no offshore oil and gas operations, would only need to apply a limited number of the proposals.

"All those with an interest in offshore safety will be relieved that what has been built up over the years into a robust and fit-for-purpose regime will not be discarded and replaced with a brand new framework," Park said. "That would have taken time and money to put in place as well as causing uncertainty in the industry and concern that the safety of those working offshore and the environment was not being protected to the standards they have been for so long."

EU Energy Commissioner Günther Oettinger said that the proposals would ensure that "the highest safety standards already mostly in place in some member states" would be followed across Europe.

"Past accidents have show the devastating consequences when things go badly wrong offshore," he said. "Recent 'near-misses' in EU waters reminded us of the need for a stringent safety regime. The new law will ensure that we react effectively and promptly in the event of an accident and minimise the possible damage to the environment and the livelihoods of coastal communities."

Once formally adopted, the text will be subject to further votes by the Energy Committee and the European Parliament.