Documents considered by the committee on 10 November 2010, including the following recommendation for debate: Safety of offshore oil and gas activities - European Scrutiny Committee Contents

1   Safety of offshore oil and gas activities



COM(10) 560

Commission Communication: Facing the challenge of the safety of offshore oil and gas activities

Legal base
Document originated12 October 2010
Deposited in Parliament15 October 2010
DepartmentEnergy and Climate Change
Basis of considerationEM of 25 October 2010
Previous Committee ReportNone
To be discussed in CouncilNo date set
Committee's assessmentPolitically important
Committee's decisionFor debate in European Committee A


1.1  The Commission notes that the oil leak arising from the explosion of the Deepwater Horizon drilling rig in the Gulf of Mexico earlier this year caused significant environmental, economic and social damage, and it says that the first lessons can already be drawn, not least in relation to the large number of offshore installations in the north east Atlantic, as well as those in the Mediterranean and other waters in the close vicinity of the EU. It observes that the European offshore oil and gas industry has not been immune to severe accidents, as a result of which it says a number of European countries have in recent years introduced strict safety requirements and regulatory regimes. However, it suggests that the Deepwater Horizon incident requires a fresh look to be taken at the adequacy of these arrangements, as does the increasing tendency for exploration to be carried out in more challenging environments, arising from the EU's need to maintain indigenous oil and gas production both for energy supply and wider economic reasons.

1.2  It says that it has therefore launched an urgent assessment of the safety of offshore activities in European waters, as well as reviewing applicable legislation, as a result of which it has identified a number of areas where action is needed to maintain appropriate safety and environmental standards. In particular, it says that the aim should be to ensure that the best practices which currently exist should become the norm throughout the EU involving determined action by public authorities and a strong partnership between all those involved, and it has sought in this Communication to set out ways in which that goal can be achieved.

The current document

1.3  The Commission says that improved safety cannot be achieved by self-regulation, and that steps are needed to ensure that industry complies with clear, robust and ambitious rules, allowing only safe and sustainable operations and providing a high level of transparency. It goes on to note that the situation in Europe is largely determined by national legislation, as EU measures either do not cover relevant aspects or provide only performance minima, and that national regimes vary as between Member States, thereby slowing down a coordinated response to accidents. It says that it will work towards an overhauled and more coherent legal framework for offshore exploration and production activities in Europe, its preference being a single new piece of specific legislation to govern offshore oil and gas activities (possibly supported by guidelines).


1.4  The Commission then looks at a number of different ways of achieving a "state of the art" regime. These include:

Responsible licensing

The Commission says that licensing is the key tool, but that existing EU legislation deals only with the competition aspects in order to ensure equal access to national bidding rounds, as a result of which other criteria for awarding licences are set by individual Member States. At the same time, it observes that drilling approvals issued by one Member State can affect others, and it says that licensing procedures anywhere in Europe should conform to certain basic common criteria, with all national procedures being reviewed to reflect recognised best practices and to include EU-wide obligations for safety, health and environmental performance, risk management and independent verification. It also believes that this needs to be backed up by an unequivocal liability regime, including adequate financial security instruments to cover major incidents. It says that it will put forward in 2011 proposals the key requirements of which would:

  • involve a "safety case" regime, comprising the use of quantified risk assessment and management prior to engaging in offshore activities such as the drilling of wells;
  • oblige operators to demonstrate that they have the technical and financial means to deal with critical events (such as blowouts).

Achieving high operational safety

The Commission observes that the fragmentation of legal frameworks concerns not only licensing, but the operation of installations, which can result in rigs owned by a company in the waters of different Member States having to conform to different regimes, with adverse consequences for both safety and operational costs. It therefore believes that, in order to guarantee maximum safety and a level playing field, there need to be uniform and rigorously enforced criteria covering financial and technical capability, the protection of worker health and safety, the integrity of installations, a high level of environmental protection, and the prevention of accidents (as well as the response to them). In particular, it notes that offshore installations are not covered by EU legislation on pollution control and major accident hazards, and that, although product safety legislation applies in general to equipment in offshore facilities, it does not extend to mobile offshore drilling units. It says that it will:

  • strengthen existing legislation (or draft new measures) to address pollution control, inspection, accident prevention and the management of individual installations;
  • review Directive 92/91/EC on the safety of workers in the mineral-extracting industries, amending it if necessary in the light of the investigation into the Deepwater Horizon accident;
  • call on Member States to review and update of existing "safety cases" in the light of that investigation;
  • investigate the feasibility of extending of the scope of EU product safety legislation to include equipment used in offshore activities;
  • assess current regulations and practices with regard to well design and control;
  • encourage the development of necessary technical standards.

Liability regimes

The Commission suggests that clear provisions on the responsibility for clean-up and the ultimate liability for damage discourage operators from under-estimating risks and compromising on safety measures, thereby helping to limit the likelihood of environmental damage: and it notes that, based on the precautionary and polluter pays principles, EU environmental and maritime legislation contains provisions for the remedy of damage following an accident. However, it says that the Environmental Liability Directive must ensure that offshore operators are under strict liability, not only for damage caused to protected species, natural habitats and the waters covered by the Water Framework Directive, but also to all marine areas under the jurisdiction of Member States. It says that it will:

  • amend the Environmental Liability Directive to broaden its scope to all marine waters as defined in the Marine Strategy Framework Directive;
  • re-consider the option of introducing a requirement for mandatory financial security, and examine the adequacy of existing financial ceilings for potential major accidents which involve parties with limited financial capacity;
  • address in a new guidance document the application of the Waste Framework Directive to oilspills.

Responsibility of industry

The Commission says that industry bears the primary responsibility for the safety of its operations, and that it is in companies' own interest to give unequivocal priority to safety and sustainability, through investment in prevention, accident response and oil recovery. It notes that the steps taken vary from company to company, and need to be complemented by joint industry initiatives: and it points out that, although resources were effectively mobilised to contain the oil spill in the Gulf of Mexico, the time needed to stem the leak was a matter of concern, suggesting a need to work on new response tools capable of use in all marine environments in Europe. It says that it will call on industry:

  • to contribute to standard setting and the imposition of standards and self regulation;
  • to present in 2010 individual action plans for scrutiny by regulators;
  • to establish joint facilities in Europe for first rapid response in case of accidents.

Public oversight

The Commission believes that public authorities bear crucial responsibility for setting a correct regulatory framework for offshore activities, and ensuring full compliance. It also highlights the need for active engagement with the public and affected interests, and for transparency and inclusion in decision-making, with oversight being based on the best practices already available and reinforced at EU level. It says that it will:

  • define state-of-the-art practices in offshore licensing, inspecting and compliance monitoring;
  • establish a voluntary consultation/reporting mechanism on licensing to enable wider "Peer review" of licensing;
  • work with Member States and industry to increase transparency;
  • provide an independent framework for the evaluation of the performance of national regulators.


1.5  The Commission says that, until complete results are available from the investigation into the causes of the Deepwater Horizon accident, additional caution should be applied both to ongoing exploration and to new operations. It adds that precaution should be proportional to the risks and focus in particular on complex offshore operations where extreme climate, high pressure/high temperature reservoirs, deep water or particularly sensitive natural environments would warrant extra care and a temporary suspension of future operations. The Commission calls upon Member States to review all complex oil and gas exploration, to ensure best standards apply, to apply a precautionary approach to the licensing of new operations, and to examine whether a suspension of such licensing is needed until the results of the Deepwater Horizon investigation have been assessed.


1.6  The Commission says that, where a serious accident occurs off a Member State's shores, it must be able to call on all available capacities, including those of industry and other Member States. It notes that the EU has instruments to complement those of Member States through the Community Civil Protection Mechanism, and that the Monitoring and Information Centre operates around the clock. It adds that the Centre can, if needed, quickly mobilise the oil recovery capacity of the European Maritime Safety Agency, and that it is therefore initiating changes to the Agency's Founding Regulation. In addition, work is under way to strengthen the overall EU disaster prevention and response capacity, and to seek synergies with actions taken by the industry, though the Commission points out that the response to an emergency also depends on the availability of information on the state of the water column and sea bottom (which it says is not fully available on an EU-wide basis). It says that it will:

  • present, in 2010, a Communication on a strengthened EU disaster response system;
  • seek ways to enhance the availability of the emergency response capacity;
  • call on Member States to share information on the water column and sea bed in order to enhance the efficiency of emergency responses.


1.7  The Commission says that the EU needs to pay close attention to offshore areas adjacent to its territory where drilling is growing and where an accident would affect several coastal Member States. It therefore suggests that the EU should seek regulatory framework and industry supervision in jurisdictions neighbouring European waters which provide equally high levels of protection, and that the potential of regional conventions should be explored. It notes that European oil and gas companies often have increasing offshore operation outside Europe, and that the industry needs to maintain state-of-the-art safety and environmental practices regardless of where it operates, with one option being to introduce obligations on industry with headquarters in the EU to apply uniform offshore safety and environmental policies to all its operations worldwide. Finally, the Commission points out that the coverage and enforcement of international law governing prevention, emergency planning and response is uneven and incomplete, and that financial liability for oil and gas pollution from offshore installations is not covered by any international convention. It suggests that, although the EU will need to engage with its partners, it is well placed to take a key role in strengthening existing rules globally, the ultimate aim being a global system fixing common targets in order to promote strict rules on safety and coordinate action in areas beyond national jurisdictions.

1.8  The Commission says that it will:

  • intensify dialogues with European neighbours on offshore safety;
  • work with Member States to export the knowledge and experience of North Sea authorities to the Mediterranean, Black and Baltic Sea states;
  • promote action in the context of existing conventions and protocols;
  • call on industry and Member States to adopt obligations to apply European standards of safety in all of industry's operations worldwide;
  • initiate an EU-driven global initiative for offshore safety.

The Government's view

1.9  In his Explanatory Memorandum of 25 October 2010, the Minister of State at the Department for Energy & Climate Change (Mr Charles Hendry) says that oil and gas are still a major UK resource, and that, although some 40 billion barrels of oil equivalent (boe) have been produced so far, there are perhaps 20 billion boe, or more, left to produce, with the overall deepwater oil and gas resource potential being estimated at around 3 to 3.5 billion boe (some 15-17.5% of UK total resources). He adds that the UK has had decades of experience in regulating the offshore regime, including the lessons learned from the Piper Alpha incident over 20 years ago, and that those lessons resulted in a dramatic improvement in the regulatory system in the UK and more generally in Europe. As a consequence, the UK now has a robust, proven, national regime.

1.10  The Minister says that the Government would have to consider very carefully any proposals the Commission may make for changes in the licensing or consenting of offshore activities, and that it is not convinced that there would be added value from another layer of regulation regardless of where it is located. He also observes that, although any legislative proposals are at a very early stage, making it impossible to determine whether they will be consistent with the principle of subsidiarity, a number of them might raise subsidiarity issues.

1.11  Finally, the Minister points out that the Commission proposes to consult before tabling proposals for legislative and non-legislative measures in 2011, and he says that the Government intends to play a full role in that process.


1.12  As the Government points out, this document is not in itself a legislative proposal, but it does deal with a subject which is highly topical in the light of the Deepwater Horizon incident, and which has substantial, political, economic and environmental ramifications. Also, insofar as the Commission appears to envisage a more coordinated European approach in future, there clearly could be important subsidiarity issues.

1.13  In view of this, and the major UK interest at stake in this area, we think it would be helpful if the various issues to which the Communication gives rise were to be aired more fully at this stage, rather than when the Commission's thinking has become more firmly established. We are therefore recommending the document for debate in European Committee A.

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