Offshore Oil and Gas Prospection
The Committee consisted of the following Members:
† Connarty, Michael (Linlithgow and East Falkirk) (Lab)
† Donaldson, Mr Jeffrey M. (Lagan Valley) (DUP)
† Doran, Mr Frank (Aberdeen North) (Lab)
† Dunne, Mr Philip (Ludlow) (Con)
† Greatrex, Tom (Rutherglen and Hamilton West) (Lab/Co-op)
† Hendry, Charles (Minister of State, Department of Energy and Climate Change)
† Hinds, Damian (East Hampshire) (Con)
† Pincher, Christopher (Tamworth) (Con)
† Rees-Mogg, Jacob (North East Somerset) (Con)
† Smith, Sir Robert (West Aberdeenshire and Kincardine) (LD)
† Tami, Mark (Alyn and Deeside) (Lab)
† Whitehead, Dr Alan (Southampton, Test) (Lab)
Mark Etherton, Committee Clerk
† attended the Committee
The following also attended, pursuant to Standing Order No. 119(6):
McDonnell, John (Hayes and Harlington) (Lab)
European Committee A
Tuesday 28 February 2012
[Sir Alan Meale in the Chair]
Offshore Oil and Gas Prospection
4.30 pm
The Chair: Does a member of the European Scrutiny Committee wish to make a brief explanatory statement?
Jacob Rees-Mogg (North East Somerset) (Con): It might be helpful to the Committee if I take a few minutes to explain the background to document 16175/11 and the reason why the European Scrutiny Committee recommended it for debate.
Following the explosion of the Deepwater Horizon drilling rig, the Commission put forward in October 2010 a communication that identified a number of areas where it considered that action was needed. In view of the issues raised, including the possible impact on the United Kingdom’s proved regime, it was debated in European Committee A on 22 March 2011, on the recommendation of the European Scrutiny Committee.
In October 2011, the Commission followed up that communication by putting forward document 16175/11. It is a draft regulation, which seeks to ensure the use of best practices for major hazard control by offshore operations in European Union waters; to implement best regulatory practices in all relevant European jurisdictions; to strengthen the EU’s capacity to deal with emergencies; and to improve and clarify existing EU liability and compensation provisions. In particular, it would place a number of specific obligations on member states and operators, and it would also give the Commission the power to adopt delegated Acts.
The Government said that, although the proposal was based mainly on existing UK and Norwegian experience, they were not convinced that it would provide added value. They were also concerned that the Commission had proposed a regulation rather than a directive. Those views were echoed in representations that the European Scrutiny Committee received, either directly or via the Select Committee on Energy and Climate Change.
Although a good number of the issues raised by the proposal had been aired in the earlier debate, the European Scrutiny Committee took the view that there should be a further debate because the document reinforced many of the fears expressed at that time that the Commission might try to assume competence in that area. Furthermore, during the debate, the Government gave assurances that they would resist any attempt to erode the UK’s competence, and the European Scrutiny Committee thought that it would be helpful for the House to have a further look at whether and how that objective can now be achieved.
4.32 pm
The Minister of State, Department of Energy and Climate Change (Charles Hendry): It is a great pleasure to serve under your chairmanship this afternoon, Sir Alan. I want first to thank the Whips for their work in putting together an incredibly well-qualified Committee to discuss
such issues. It comprises members of the Select Committee on Energy and Climate Change and those who have a constituency interest in the matters before us and a great understanding of what affects the oil and gas industry. That is an important element and shows the seriousness with which the House and all hon. Members take the matter.It is now almost two years since the Deepwater Horizon accident in the gulf of Mexico, in which 11 people lost their lives and an estimated 4.9 million barrels of oil were released to the ocean. The incident has been thoroughly investigated and reported on since then and many oil-producing countries, including the United Kingdom, along with the European Commission, have reviewed their regimes in light of the reports. The European Commission acknowledges that several European countries with mature oil and gas industries already have strict safety requirements and regulatory regimes. However, the situation is not uniform throughout the European Union, where there are considerable disparities and fragmentation among member states’ laws and practices.
Following the assessment, the Commission is now proposing to introduce a new regulation on the safety of offshore oil and gas activities as it seeks to minimise the risk of such an event occurring in the EU—in particular in the less well-developed areas of the Mediterranean and the Black sea. The UK welcomes and supports the Commission’s initiative in trying to avoid a repeat of such an incident and the aim of bringing relevant regulatory regimes throughout the Union up to the level of the best. Nevertheless, we have real worries about the form of legislation that is proposed, namely a regulation.
We are concerned that the impact of legislating in that way will be to divert resources away from the maintenance of the high safety standards already practised in the United Kingdom. We would prefer the introduction of an appropriately worded directive, as that could achieve the same objective in a more efficient manner with no detrimental impact on safety. It would be less onerous and take significantly less time and resource.
The UK has a robust regulatory regime, with a clear allocation of responsibilities for safety, environmental protection and responding to any incident. Ours was one of the first areas in the world to experience a take-off in offshore exploration and production, and we have more than four decades of experience. More than 10,000 wells have been drilled in UK waters, including more than 300 in water depths of over 300 metres. Correspondingly, our regulatory system has been developed to meet evolving challenges.
The UK’s high standards have been acknowledged by both the Energy and Climate Change Committee in its report into the implications of the gulf of Mexico oil spill and in the report of the US National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, which recommended that US safety regulations be expanded to be at least as stringent as those in the UK. That report specifically identified our regime as one to emulate.
More recently, in recommending how the UK can make further progress, the report from the independently chaired regulatory review recognised the positive aspects of the UK regime. In particular, that report recognised the stringent assessment of environmental impacts, the
safety system that requires industry to identify hazards, assess risks and follow best practice to manage them, and the comprehensive emergency response framework. All those points support our view that the UK’s regime is robust and appropriate.We have not been and must not be complacent and, where appropriate, we have introduced several new measures. We have increased the number of offshore inspectors to allow us to undertake more environmental inspections—not only to mobile rigs, but to fixed, manned installations. We have implemented changes to the industry’s oil pollution emergency plans to address the possibility of an uncontrolled blow-out, and we have increased our efforts in relation to new drilling operations in deep water.
With the industry, a joint team, from the Department of Energy and Climate Change and the Health and Safety Executive, is considering all the recommendations of the independent review, some of which have already been actioned. I have asked for an initial report on progress by the middle of this year.
The Commission’s proposals are largely based on existing UK and Norwegian practice, so there is much that we can support in principle, and we recognise that there is scope further to enhance our robust regime. However, we are concerned by the fact that the proposals are in a regulation rather than in a directive. Implementing the proposed regulation may result in the revocation of some parts of our national legislation, which already contains many of the regulation’s provisions. That might apply to much UK legislation concerning offshore drilling and oil and gas extraction, and it would be likely to uproot many areas of our world-class safety system and cause confusion for the industry.
We see no substantive benefit from the implementation of the regulation in achieving the actual objectives of the proposal. Furthermore, such an exercise would divert front-line safety and environmental inspectors and practitioners from doing vital hands-on work on offshore installations, while they remain desk-bound in carrying out the redrafting work. As a result, we have argued strongly for the replacement of the proposed regulation with a directive.
The UK has already taken action in key areas. The Commission has called for the strengthening of the EU’s preparedness and response capacity to deal with offshore emergencies, and for the improvement and clarification of existing EU liability and compensation provisions. The UK has already worked with the industry, as part of the Oil Spill Prevention and Response Advisory Group—OSPRAG—in the development of a new technical solution for bringing a blow-out under control as rapidly as possible. That is an outstanding example of the industry taking the lead and working closely with the Government. The Offshore Pollution Liability Association —OPOL—agreement, which is unique to North sea operations, has increased its cover from $125 million to $250 million on any one incident. Significant steps have therefore been made to ensure that substantial liability cover is available for operations in the North sea.
We are concerned about other items in the proposed regulation, including the extent to which delegated powers may be too widely applied, with the Commission seeking to regulate issues that, in our view, are the competence
of member states. The Commission has said that the UK will have a veto when delegated powers are exercised, but we will continue our dialogue on that with the Commission.Another key concern is the transitional arrangements. We need to ask for complementary transitional arrangements that will give all parties sufficient time to implement the regulation’s requirements effectively. In addition, to ensure that safety cases, notifications or environmental assessments do not need to be resubmitted and approved all at once at a cost greater than the suggested benefits, we will negotiate for a clear way forward for proposals that have already been through domestic acceptance or consent processes.
Another concern was the structure of the competent authority, as the proposals appeared to exclude licensing and other agencies of competent authority co-existing within single Departments. We consider that there is sufficient separation of licensing from environmental regulation within DECC and that there is no conflict of interest. Several other member states shared our concern about the Commission’s original proposals, but alternative wording was suggested and has been incorporated into a revised draft of the regulation. The proposed regulation duplicates or overlaps with other European directives, which might result in dual requirements being placed on industry and confusion about what is expected of member states that have already implemented directives with similar requirements. The UK will ask for all duplications and overlaps to be removed.
A number of European Council energy work group meetings have been held specifically to discuss in detail each article of the regulation. Meetings will continue in the coming months as member states continue their negotiations before any final decisions are made later in the year. Although the Commission’s proposals contain a number of welcome suggestions, such as the sharing of information and the desire to level standards in some member states to ensure best practice, we must argue forcefully against the risks of having to rewrite large parts of our statute book, which will not add value and might diminish the effectiveness of our own proven, robust national regime.
We wish to continue to push for alternative approaches that would enable the UK to continue using its existing effective national legislation and guidance. I accordingly urge all Committee members to support our position on the development of the EU proposals.
The Chair: We have until 5.30 pm for questions to the Minister. I ask Members to be brief, but they may ask supplementary questions if I deem it appropriate.
Michael Connarty (Linlithgow and East Falkirk) (Lab): May I ask the Minister why, in the phraseology of the proposal, we are asked to support further
“the Government’s intention to negotiate a legal instrument”?
Why are the Government not standing by their position of wanting a directive and putting that before us? I note that Committee members are not wearing jerseys. Is that because the Minister has already sold them?
Charles Hendry: I am grateful for the question. We have been clear that we must have a dual track. The Commission has strong powers to introduce a regulation,
but to stop one there must be unanimity among all 27 members; it is not qualified majority voting, but unanimity. To stop a regulation, we must form the strongest alliances we can. On the one hand we are pushing for a directive, which we believe would be a better way of implementing the regulation, but on the other, we recognise that we may not be able to achieve unanimity even though several countries are coming together to express concerns. Consequently, it is important for us to keep our options open to secure the best outcome for the industry.Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): For many decades, there has been drilling and offshore activity in the North sea. As the Minister outlined, a regime has grown up and evolved from that experience. In that time, has the EU shown any great interest in the safety of offshore operations and drilling?
Charles Hendry: Great interest has been shown, because the system that applies in the United Kingdom and Norway has been regarded as one of the best in the world. We do not want to sound complacent in saying that, but having looked carefully at other regimes around the world, we can legitimately claim that ours is one of the most robust. The Commission has always recognised that, and part of our approach has been to hope that it would see that our system and national regulation works.
Ever increasing standards are imposed by the industry as it endeavours to apply best practice, and we have seen that standard being driven up consistently. We certainly support measures to encourage other countries to move up to the level of safety and environmental standards that we have here. There has never been any criticism of the approach that we have adopted and developed—indeed, to the contrary.
Dr Alan Whitehead (Southampton, Test) (Lab): The Minister states that the proposed regulations are based substantially on UK and Norwegian practice. What are the areas that are not so based? Were a directive to be introduced, to what extent could the regulations in the UK reflect the differences between that best practice and those other areas that have been suggested?
Charles Hendry: That may be an issue that we need to come back to in the course of the debate. We have particular concerns over a number of areas, including duplication of major accident and hazard legislation, which is already covered by European legislation; additional information-sharing burdens on industry and regulators, which happens as a result of unnecessary duplication of existing arrangements; and measures that place greater responsibility on the licensee to assess the capability of operators and to monitor that they discharge their responsibilities, whereas we have this obligation that companies should always endeavour to take the best possible measures.
It is also being proposed that internal emergency response plans should be restricted to 500 metres. It remains our position that the operator must respond to all incidents, irrespective of whether they are limited to the safety zone. Finally, the proposed transitional
arrangements are flawed because they do not give all parties sufficient time effectively to implement the requirements of the regulation.Jacob Rees-Mogg: Does the Minister think that there is a case to be made under subsidiarity that this is not a suitable matter for the European Union at all, especially considering that some European member states have no coastline, that many have no offshore drilling and that the most important country involved in this is Norway, which is outside the European Union?
Charles Hendry: We have heard comments recently from the Norwegian Minister saying that he does not believe that the measure would apply to Norway and therefore it may choose not to implement it. It is checking the legality of that position. To some extent, it depends on whether this is seen as an energy measure or an environmental measure. Clearly, there are different degrees of competence in those areas. It is of course an area that we are watching very closely. We are most concerned about mission creep by the Commission into areas that are not actually part of its responsibility.
Michael Connarty: To take the Minister back to his first answer, I must challenge his statement that a directive can be stopped only by getting unanimity in the Council. The legal advice that I received from the legal adviser to our Committee is that it requires a qualified majority vote to put this through and that a minority can block it. It does not require unanimity of the Council to block it. It just requires a minority that is big enough to stop the directive from going through. That is our advice and it contradicts what the Minister said about it requiring unanimity to be stopped.
Charles Hendry: The hon. Gentleman picks on an important point. He talked about a directive. He is absolutely correct about a directive requiring qualified majority voting. If it is a regulation, the Commission has much wider powers. If a regulation is introduced by the Commission, it can be withdrawn only if there is unanimity among members. There may come a point when the Commission recognises that there is such overwhelming objection to a measure that it is putting forward as a regulation that it would decide to withdraw it in any case, but it can only be required to withdraw it if there is unanimity. Therefore, there is a difference between withdrawing a measure and qualified majority voting in terms of agreement on elements within it.
Sir Robert Smith: What response have the Government had from the Commission to the concern about the redrafting of regulation that will be required in the UK for no appreciable gain? That seems to be a key argument of the Government and I just wondered how the Commission responded to what seems to be a blindingly obvious argument about just how disruptive it would be for no gain.
Charles Hendry: My hon. Friend is absolutely right and he makes an important point. We have looked at the number of man hours that would be involved in transposing that regulation. It would take an entire year of work for most of the team who are involved in
regulation in order to do the transposition, to withdraw the various regulations and to rewrite them in a way that complied with the regulation. An enormous amount of activity is required. Time would be better spent on enforcing the rules, carrying out inspections and ensuring that things are operating safely, which is how we believe it should be, rather than being involved in withdrawing existing rules and replacing them with those that would be required under the regulation. We are further concerned that there would be a period of time in which our safety would actively be diminished and in which the scope for looking after it to the highest standard, as we would wish, would be undermined. That is one of our greatest concerns.Jacob Rees-Mogg: May I come back to the Minister on the point made by the hon. Member for Linlithgow and East Falkirk on the question of how regulation is introduced? I thought that the repeal of a regulation required the unanimity of the Council of Ministers, but the introduction of regulations required a qualified majority. Otherwise, the Commission could simply introduce regulations without any check by the Council. The Council has to approve the regulation in the first place by a qualified majority, but to change or repeal the regulation requires unanimity.
Charles Hendry: If we were to ask the Commission to withdraw the regulation, there would have to be unanimity. Withdrawal of a regulation requires unanimity, but there are other aspects that can be done by qualified majority voting. Our concern is that we want the measure to be withdrawn and to be replaced by a directive, but that requires unanimity.
Dr Whitehead: This may be an ingenuous question, but if the proposed regulation would require the UK to rewrite its regulations, does that mean that all member states would be required to write the Commission’s proposed regulation into their national legislation, regardless of whether they might conceivably be able to undertake any offshore drilling?
Charles Hendry: We accept that it would be vaguely bizarre to require Luxembourg to put in place measures for oil and gas drilling offshore, but I have focused primarily on how the measures would affect us rather than on how they would affect land-locked countries elsewhere in Europe. I hope that it will provide us with extra reasons for forming alliances and agreements with them if they will be required to put in place such measures.
The Chair: If no more Members wish to ask questions, we will proceed to a debate on the motion.
Motion made, and Question proposed,
That the Committee takes note of European Union Document No. 16175/11 and Addenda 1 to 4, relating to a Draft Regulation on the safety of offshore oil and gas prospection, exploration and production activities; supports the Government’s view that the UK has a proven, robust offshore environmental and safety regime; and further supports the Government’s intention to negotiate a legal instrument which ensures that high standards of health and safety and high levels of protection for the environment are maintained across Europe in respect of oil and gas operations, and that any new proposals do not negatively impact upon the present UK regime.—(Charles Hendry.)
4.51 pm
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): It is a pleasure to serve under your chairmanship, Sir Alan. This is my first experience of a European Committee, so I apologise in advance if I stray from the procedure. It is important to start with a little bit of context. Today, Oil and Gas UK publishes its activity survey, which will highlight that the industry is a hugely dynamic one, where things change, technologies improve and opportunities emerge. The ability to extract oil and gas changes; the massive Forties field was due to be decommissioned this year, but it is now producing 16,000 more barrels of oil a day than it was when BP sold it to Apache in 2003, which highlights how dynamic the industry is.
That dynamism is matched by the offshore safety regime that has emerged since the events of Piper Alpha in 1988, which claimed 167 lives. My hon. Friend the Member for Aberdeen North will be able to describe the changes that have been made and the effects they have had on the city, the industry and the work force in the North sea. The Cullen report, which resulted from the disaster, changed the regime significantly. When I was in Aberdeen shortly after the report was published I spoke to many trade union and work force representatives, who did not have a particular problem with the draft regulation at that time because they were looking at its intent. I do not think that people would object to the legislation’s aim of implementing best regulatory practices in European jurisdictions with offshore oil and gas activities, because the best possible regime should be in place.
On further examination of the detail, however, we find that the proposals have many unintended consequences. That is the position not only of the industry, which people may suspect of having a degree of vested interest, but of the unions that represent workers in that industry. As it is drafted the regulation seems to say nothing about the role of safety representatives. Anyone familiar with this industry will know that while different policies may be made and guidance put in place, it is in the offshore environment that those policies make a difference. The role of safety representatives in making that happen and keeping the degree of vigilance needed in the offshore environment is crucial. That does not seem to be reflected in the way that the regulation is drafted.
The Minister referred to the issue of whether this should be a regulation or a directive. We must not lose sight of the fact that it is 20 years since the Cullen report; all of the implementation and the guidance that sits behind it took seven years to get into a fit state. The adaptability of a safety case regime provides the level of flexibility that means that the regime has worked so well over such a long period of time. We should never be complacent. There always needs to be vigilance about safety in an offshore environment. But that process and that way of doing things has by and large served the North sea and the UK continental shelf very well.
It is therefore with a degree of concern that we are now looking at a proposal from the Commission which, while it may not be the intention, effectively undermines significant aspects of that regime. It undermines it because this is a regulation rather than a directive. The objective is sound for the 10% of current activity. Who knows, with the changes in technology and the opportunities, there may be more possibilities for offshore
activity in other parts of Europe at some point in the future. I have no objection to seeking to ensure that that is done as safely as possible, but doing it in a way that means that aspects of what we have now will be undermined is not tolerable.It is incumbent on the Government to make that position exceptionally clear in all the discussions that happen in the Council of Ministers and beyond. The Government should make it clear that the European Commission is right when it says that the UK regime is among the very best in the world and so it should not propose something that undermines that. It talks about the need for a “comprehensive new blueprint”. We do not need a comprehensive new blueprint. We have a comprehensive blueprint with the degree of adaptability, that serves the industry well and serves the people who work offshore well. That is what the Government should seek to protect in the European discussions.
The Minister referred to the various other reports: the Maitland report, which highlighted this point again in the context of what happened elsewhere in the world, and the report of the Select Committee on Energy and Climate Change. I have also referred to the Commission’s own terminology. The concern is genuine. This is not about vested interests but about the safety of the people who work offshore. The North sea industry needs vigilance and an engaged work force who help to ensure exacting standards are met. It needs operators who put safety at the top of their priorities, even under challenging circumstances and when they are under pressure, and a culture where shortcuts are not tolerated.
The reality is that this is on ongoing effort and not everything is perfect all the time. But the record is currently enviable. The current safety case model has been developed since those events from 1988. The North sea community understand it. They appreciate it and they work hard to observe it. That progress should not be allowed to be lost through an attempt to put in place a uniform and probably diluted standard. We should not allow the inevitable confusion while the existing regulation is integrated, particularly when the Commission has referred to some of this being in place by 2013. As I have said, given that it took seven years to get the guidance in place for the recommendations arising from Cullen, it is somewhat naive to suggest that it could be done at that speed and be effective without creating confusion or causing other activity in the industry to be put to one side.
The Government have often talked about standing up for the national interest in European affairs. This gives the Government an opportunity to do just that with a degree of support perhaps wider than they have sometimes received in other areas.
The industry is dynamic. Circumstances change and are not within the Government’s control. The Government cannot control the commodity price or the way in which geopolitical issues affect displacement activity between different parts of the world. What the Government can do, and should do, in this example is stand up for the interests of this crucial industry and the people who work in it. The Government should help the Commission to see the error of its ways before it is too late and persuade it of the importance of safety in the North sea. The Government should demonstrate the UK’s
enviable record of achievement over the past 20 years and persuade the Commission that the best route for doing what it says it wants to do, rather than some sort of power grab, is to look at this in terms of a directive to incorporate the work that already happens and, therefore, that the UK regime is a beacon for others to seek to reach, rather than to be put aside. And the Government should work to ensure that the industry and its work force, for whom safety must always be paramount, get the support they deserve to ensure that that can be the case for the next 20 years, and into the future, for the North sea.5.1 pm
Jacob Rees-Mogg: I have had the good fortune to serve on any number of these Committees, although not normally on oil and gas, because the hon. Member for Linlithgow and East Falkirk is the European Scrutiny Committee’s expert on that issue.
This seems to be classic European behaviour in that it lets no good crisis go to waste. Europe sees a crisis as an opportunity for a regulatory grab. If I may bring people’s attention to page 2, paragraph 1.7, the European Scrutiny Committee observes that
“the EU has no sector specific legislation for oil and gas, but…there is a broader acquis, which applies (often only partially) to the sector”.
So the European Union has taken a limited part of the acquis and decided to extend it into a full-blown regulation.
That can be seen throughout the documentation. If we look at pages 10 and 11, we can see the specifics under which the European Union has decided to act, one of which is, as the Minister said, environmental liability. Yes, the European Union is able to act in the environmental field, so suddenly it has decided to extend that to energy under the pretext of the environment. The European Union uses its favourite, health and safety, to come to grab this as an extra power. We know that the working time directive came in under a health and safety sleight of hand some years ago, and it is classic European Union behaviour to centralise powers unnecessarily.
I made the point earlier in a question to the Minister that many European countries have no coastline, let alone offshore oil drilling, so how is it possibly their business to be involved in voting on how such industries are regulated when the major countries involved—Norway, which is outside the European Union, and the UK, which in some sense is semi-detached as it is not signed up to the full scale of the European Union—are the ones with the expertise and ability to understand and regulate the industry? The draft regulation is all about the European Union’s push to create a superstate.
The draft regulation is opposed by the industry, and the industry body has given evidence that
“its initial analysis has…confirmed that the proposal raises very many serious issues and concerns. Its overriding concern is that there could be a seriously detrimental impact on the safety of the UK industry and those working offshore, and in particular it fears that the proposal risks undermining the current UK offshore safety regulatory regime and the high safety standards this drives”.
Is it not the utmost folly that we have expertise, capacity and capability and we know what we are doing, but instead we are going to hand it over to people in Brussels who in some cases do not even have a coastline? It is almost certainly an error to proceed in that direction.
There was a most robust report from the Committee on Energy and Climate Change, and I refer Members to page 379 of the bundle, but I must confess that I did not read all the intervening pages. I skimmed through them— I am not trying to show off by saying that I read every page of this extraordinarily lengthy document. However, I want to end with what was said by that Committee, which is not a firebrand Eurosceptic committee by any means; its chairman is a well known pro-European. It said:
“We utterly reject calls for increased regulatory oversight from the European Commission. We recommend that EU countries without a North Sea coastline should not be involved with discussions on regulation of the offshore industry on the UK Continental Shelf.”
That recommendation could not be clearer, so I hope that Her Majesty’s Government will be very fierce in their negotiations with the Commission and say that this is quite unnecessary. I hope that they will appeal on the grounds both of subsidiarity and of the sheer ignorance of the Commission, and that they will prevent the proposals from being pushed forward either as a regulation or a directive. I also hope that the Government will say that this can be done best between the UK and Norway, as a matter of co-operation between the countries who really understand what needs to be done, and have the ability to do it.
5.6 pm
Mr Frank Doran (Aberdeen North) (Lab): I do not often find myself agreeing with the hon. Gentleman, but he makes a valid point. As someone who represents not only part of the oil capital of Europe, but one of the major fishing hubs, I know that we have spent decades coping with the problems created by the common fisheries policy. Decisions are made in exactly the way that he has described, by many countries that have no coastline or fishing industry, but have a vote on the Fisheries Council. The resulting common fisheries policy has been a disaster.
It is one thing to affect the fishing yield from the North sea or anywhere else, but quite another to tamper with the safety regime in the North sea. Those who speak nowadays about the safety of the North sea oil and gas industry, saying that it is a paragon of virtue for the rest of the world, have got it partly right, but it is not perfect and the lessons have been hard-learned. The number of deaths offshore has been staggering over the years, not only on the production platforms and in the drilling industry, but in transport. Only three years ago we lost 16 men in a helicopter disaster, so it has been a long, hard process to get where we are now.
The oil and gas industry is crucial to the country. My hon. Friend the Member for Rutherglen and Hamilton West mentioned the Oil and Gas UK activity survey that is published today, which is fairly negative, because of the reductions in the amount of oil produced this year and in drilling. It is still clear, however, that by the end of this financial year, the oil industry will have contributed about £40 billion of taxation directly to the Treasury over the past four years, which is a staggering amount. Some 20% of industrial investment is by the North sea oil and gas industry. This year, the industry is likely to spend about £8.5 billion, while next year, we are talking about £11.5 billion. It is a huge industry, which is vital to the country.
As my hon. Friend guessed, I want to focus on safety in the industry, because I am very concerned about the way in which the proposal might work, and the Minister has made one or two points that I want to repeat. There is a serious lack of experience in the EU, which is an issue we must consider.
Progress on safety has been made. My first contact with the oil and gas industry was in the 1970s, when I was a student on what I think was the first undergraduate oil and gas law course, and then as a lawyer dealing with personal injury cases. In those days, safety came second and production came first. I understand why that happened; there was light government regulation—that is not a party political issue, because it happened under both major parties—and billions of pounds were invested in kit before a penny in return was made. There were huge investments and anxiety to get the recovery. Piper Alpha put an end to all that, and Lord Cullen produced a report setting out a safety regime that moved away from the tick-box culture to one with goal-setting, proper objectives, risk assessment, and safety cases for every individual installation. That was crucial to the way that the North sea has developed.
A properly regulated health and safety regime is crucial to the operation of the offshore industry. If a workplace is not safe, that can lead to accidents that threaten not only life, but also the integrity of an installation. Piper Alpha not only caused significant loss of life, but also was a huge environmental disaster. The release of massive quantities of hydrocarbons into the ecosystem, as well as a range of very toxic chemicals, radioactive material, explosives and polychlorinated biphenyls, was a disaster in itself. The area around the old platform is still regularly monitored 24 years later.
The draft regulations from the European Commission focus on environmental issues, which has already been made clear. That may or may not give the European Council competence in this area, but I want to hear from the Minister what efforts are being made to challenge that, because it seems that mission creep is already happening. It is not something that we need to guard against. It is already there in the way that the regulations look at the health and safety system.
My hon. Friend the Member for Rutherglen and Hamilton West mentioned that he has spoken to the trade unions and that there was little reference to the work force in the proposals. I am told by someone who has read the report much more carefully than I that there is just one reference to the work force, which is one reason why the unions changed their position. They have built up a close relationship with the oil and gas industry, which would have seemed miraculous and unlikely to me in the ‘70s when I first became involved. There have been several inquiries recently, such as OSPRAG, which was mentioned by the Minister, and the helicopter disaster taskforce, which featured both industry and trade union representatives, and the people who chaired those committees often made it clear just how important that involvement was. The Offshore Petroleum Industry Training Organisation, which is now the main industry training body and the benchmark for safety in quite a number of countries around the world, has a trade unionist on its board, and one of its past chairmen was a local trade union official from Aberdeen.
We now have a sophisticated health and safety system operating offshore in the UK, and most of the rest of the world follows our lead. The leading benchmark for health and safety systems in the offshore oil and gas industry around the world is provided by a small UK company, OPITO, which I have mentioned, with a presence in 91 oil and gas producing countries around the world. The fact of the matter is that we know more about health and safety than any other area in the world. The only country that does not take its benchmark from OPITO is the US, which goes its own way on most things, and that is perhaps why it has had the Macondo blowout and we have not.
I can understand why Ministers in DECC are focusing on the regulations from the point of view of the industry, but I believe that health and safety, which is the responsibility of DWP, is the key issue. If the health and safety of workers offshore is not properly protected, there will be a much higher risk of incidents impacting on the environment. Piper Alpha is the prime example of that reality.
Sir Robert Smith: Particularly at the moment, the Health and Safety Executive is focusing on the integrity of existing production platforms as they get to a certain age, whereas the EU’s interest in the whole issue was prompted by a drilling accident. However, with modern drilling rigs and equipment, the biggest risk to safety is poor maintenance of old infrastructure.
Mr Doran: That is absolutely right. The hon. Gentleman is right to point to that work, which has been ongoing for some years. The Key Programme 3 report, which was published some years ago, was an assessment of offshore facilities, and it showed an awful lot of problems. One hundred facilities were inspected, and a review was needed to see where the industry stood. Some of the issues that were raised created major problems and things have improved, but that is a different situation from that which created the Macondo disaster.
One of my major concerns is that, as I understand it, advice obtained by the HSE suggests that the implementation of the regulations would have serious repercussions for our system. I have been told that lawyers’ advice is that our existing offshore regulations cannot sit alongside the proposed European regulations and would need to be dismantled. Every offshore installation would need to be reassessed and a new safety case developed. That would mean 300 new safety cases—one for each offshore installation in the UK sector. The HSE, much like every other public body at the moment, is suffering cuts and is not in a position to produce new safety cases to meet the regulations while also carrying out its day-to-day responsibilities. There is a major gap in the system and a worrying situation. The withdrawal of day-to-day inspections and the work currently being done to assess individual facilities, effectively threatens to take us back to pre-Piper days.
I hate to scaremonger as that is usually a cheap shot, but I believe that there are serious risks and that European oversight will increase, rather than reduce, the risk of disasters and accidents. That is a serious claim, but one that the Government must take seriously. I am an ignoramus as far as European law and European processes
are concerned, and throughout my years in this House I have avoided attending European Committees. I have now lost my virginity in that respect. I think, however, that we need to ramp up our activities. A number of other countries have—or would like to have—oil and gas facilities. They may be in the same position as us, which might enable us to stop the regulations before they go too far.5.17 pm
Sir Robert Smith: It is a pleasure to follow the hon. Member for Aberdeen North, as he has a long experience of the industry and the safety issues that we are addressing. Before I begin my remarks, I must remind the Committee of my entry in the Register of Members’ Financial Interests to do with the oil and gas industry.
My real interest in this debate, however, is due to the fact that my constituency is in the north-east of Scotland and many of my constituents live and work in the North sea. I, too, remember the Piper Alpha disaster. My flat was under the flight path of the helicopters that night. No flying was allowed from the airport after 10.30 pm, so when a load of helicopters were flying over my head after midnight, I knew that something had gone seriously wrong in the North sea. We all lived through the consequences of Piper Alpha, and as the Committee has been reminded, we have learned many lessons and built a major safety system.
The document before us today has been prompted by the disaster in the gulf of Mexico in which 11 lives were lost. It was not only an environmental disaster but a human tragedy that was all the more telling because of the many slips that were missed, any one of which could have prevented the tragedy from happening. We must not, therefore, be complacent about the North sea, and it was right to look at the safety impact of lessons learned from the gulf. I serve on the Energy and Climate Change Committee, which recognised that although detailed lessons may need to be learned for the UK regime, there was no need for a moratorium on drilling. As this Committee has been eloquently reminded, the Energy and Climate Change Committee did not see a need for the EU to step in and do more damage than good.
I welcome the fact that the Government are honing in on the importance of trying to get the regulation withdrawn and a directive put in its place. The crux of the challenge seems to be about the disruption caused by the regulatory route, which the EU Commission does not seem—or want—to recognise in its desire to get its way. I welcome the remarks from the hon. Member for Rutherglen and Hamilton West in which he supported going down that road.
If we are united in this Parliament on the need to make that change, it will help to build the foundations on which we can go out to other countries and explore our common interest. Norway co-operates with the EU, but does not want to see these regulations imposed or adopted in its waters. Denmark and Holland also have an offshore interest. We need to build on that common ground across Europe. Importantly, what is coming out of this Committee is a genuine interest—it is not a producer interest—in avoiding another tragedy in the most constructive and effective way possible.
The hon. Member for Aberdeen North highlighted the importance of the industry. If these EU regulations damage the importance of the industry, but achieve a real step change in safety, we would welcome them even if there was an economic price. The fact that they achieve no direction in further safety is our real concern. It is beginning to become clear that the crux of the fear is that the upheaval will create a more unsafe environment during the transition to these new regulations.
The EU needs to grasp the legal advice. It cannot just say, “Oh well, you’ve got a good regime. We’re doing the regulatory route, but we will be soft on you and you can sort of mix and match.” The EU has an underpinning court system that cannot take into account fine words from the Commission; it actually looks at the regulation. If regulations are incompatible, we are in breach of those regulations. Much of the resource of the HSE would be taken up going through a whole paper exercise rather than inspecting and ensuring that the existing safety regime has been kept up to scratch.
I was talking to someone who used to work in the HSE and who lived through the Piper Alpha transition. He pointed out that at that time, there was a downturn in industry, so there was a skill surplus in the industry, and the kind of skills that the HSE needed to recruit were available. There is now a worldwide skills shortage in this industry, so even if the HSE were to get the largesse of a Treasury that saw the need to adapt to this European pressure, there would be the practical problem of just not being able to recruit that skill base to take on the upheaval.
I also have serious concerns that the spotlight of the EU has shone on to this matter because of the gulf of Mexico headlines, but it does not have the skill base to take this forward or to keep it going. The whole point of an effective safety regime is that it has to be dynamic. The skills are required for future learning, the feedback loop, to ensure that if there are developments, the regulations are honed and refined. At the moment, such a practice is effective in provinces of the EU where there is an active oil and gas industry and an active regulator. They can see developments and feed back in the need for change or, as we discussed earlier, spot the growing concern about lack of maintenance and do something proactive to improve that.
I have dealt with the skills shortage, the future learning and the common interests of those countries. As the common fisheries policy shows, if there is a whole load of countries that have no direct interest in a regulation, the horse-trading that goes on is not the most effective way in which to ensure the best decision. The EU needs to see how severe the disruption will be and to withdraw this regulatory route and come in with a directive. In that way, it will maintain and build on the gold standard that we have here in the UK—although we should not be complacent about it. The EU must ensure that the lessons of Piper Alpha are still truly learned and enforced and that it does not take any risk with the livelihood of those people working offshore for our common interest.
5.24 pm
Michael Connarty: I am disappointed. I have such a warm personal feeling for the Minister, but he consistently lets me down. In “Love Actually” there is a scene in which the Prime Minister stands up to the US President,
saying that he will put the UK first. It is not the Minister who will get that part, because he never takes such action when I expect him to.The Minister assured us that the Government’s position was that they would not cede any competence to the EU on the matter. We now have a well drafted, but mealy-mouthed motion that says nothing about committing us to a directive. It says nothing about competence. It says that we are asked to support the Government’s intention to negotiate a legal instrument. The regulation is a legal instrument, so we could end up with it. The reality is as described by the hon. Member for North East Somerset.
Sir Robert Smith: Will the hon. Gentleman give way?
Michael Connarty: I am not required to give way. The hon. Gentleman made his own speech. [Interruption.] I shall make my own speech. I know that the coalition now seems to bind the Liberals into arguing their case, but it is not necessary. I could have intervened in the speech of the hon. Gentleman several times, but I did not.
Sir Robert Smith: On a point of order, Sir Alan. Would it be worth reminding the hon. Gentleman that the nature and style of European Committees is one of inquiry and inquisition, and that interventions during a debate are a very important part of developing an argument and ensuring that proper scrutiny is given to the issues before us?
The Chair: I think that you have made your point, Sir Robert.
Michael Connarty: The issue began with a strange response from the EU Commission. If there were concern about what happened at Horizon, the directorate-general for the environment would have been expected to raise the matter. Why was it the directorate-general for energy and the European Commissioner for Energy? It is quite simple. It is not just about subsidiarity and proportionality; it is a massive power grab by the Commission.
In the original constitution, the Commission proposed a whole chapter on energy that would have given it control over the resources of all the energy available in the EU. It was turned back on that matter. It was not in the Lisbon treaty, which did not contain a chapter on energy. However, the issue has not gone away for the Commission as a proposal that it should have control over the resources, which it probably regards as market resources; it probably thinks that energy resources should be regarded as a market question. It saw an opportunity to demand a moratorium, and I commend the Government for saying no.
I shall give an example. The Italian Government, who seem to comply quickly with requests from the Commission, have put in a moratorium. I have been speaking to people in the company Mediterranean Oil Ltd, which has spent £23 million on a well that is ready for production, yet it is sitting there unable to produce. It is costing the company money each day, and it could threaten a £500 million project. Does the Commission care? No, it does not, because it is concerned about
getting control. If we had been foolish enough to give it control and the moratorium, it would have ceased the production.It is not a question of new wells; I am referring to a well that was actually drilled and had received permission from the Italian Government. That was the first stage, and when the Commission did not get what it wanted, it came back with a communication. We said that that was silly and that it was nonsense. The Minister responded correctly at the time and said, “This is not the way to go. If you want to introduce the high-quality standards that we have in the UK, we are all for it. You should do that through a directive.” Did it go away and think sensibly about the matter, come back and say, “That is fine, because we want to spread it”? No. It pressed forward with the regulation.
That is the problem with the European Commission. When it decides that it is on a course, it is self-perpetuating and self-fulfilling, which is what we have before us now. The regulation breaches subsidiarity and should be rejected immediately on that basis. Proportionality clearly far outstrips the need for it; 90% of all oil and gas resources and drilling are in the UK or Norwegian fields. The rest are small in real terms. We have a regime that is not only strong, but one that is amending: OSPRAG and the fact that we have developed a device that would have plugged the Horizon problem following the 16-month study of what would be needed in such a situation. We are learning all the time. The regime is to be commended.
The question is whether we can ask the Government to do something other than what they are saying now. Can they be more direct and specific? Can they build a reasoned and reasonable blocking minority? The Minister said—the terms he used were correct, but it was not necessarily easy to understand—that to get the Commission to withdraw completely and not return with any new proposals, everyone in the Council would have to agree to that. For the regulation to be approved by the Council, 255 out of 345 votes are required, which is a qualified majority. We are talking about the UK, France and Germany having 27 votes each, Ireland having 7 and Italy having 29, which is well over the 90 votes that could block it.
It is clear from talking to Italian politicians that they are deeply uncomfortable with the idea that what is happening during their moratorium might become the control mechanism from the EU. As the regulation states, once a regulation is in, it is self-amending. It is up to the Commission to bring back changes to that regulation again and again. We cannot stop that; unlike a directive, once a regulation is adopted it exists in perpetuity. It is like a ratchet device that will never go backwards, but will always go forwards, which is why the Government must be much stronger about the matter.
I am the honorary secretary of the British offshore oil and gas industry all-party parliamentary group. I have no shares in any oil company, but I have a great investment in the human beings from my constituency who go offshore and earn a living, and in those who use the taxation that that industry produces to provide services. We have received advice from Oil and Gas UK,
which represents the industry and pushes for changes and improvements in the industry as strongly as it defends it. Oil and Gas UK told us:“Whilst we support the drive/desire for continual improvement of national and international regulatory frameworks, our overriding concern is that the proposed Regulation will have an immediate detrimental impact on safety standards in the UK offshore oil and gas industry and, longer term, will provide no significant improvement in overall standards. For that reason, we find the proposal unacceptable. The industry however would welcome the opportunity to work closely with the EC to help disseminate the UK’s good practices elsewhere in Europe through means of an appropriately worded Directive (or through amendments to an existing Directive).”
We should be advancing such a structure and framework, and similar ideas were concealed in the Minister’s speech. If we couch them in such terms, however, without saying that we have drawn a line in the sand, over which we will have to be dragged kicking and screaming, we send a strong signal to our potential allies. If we indicate that we like such ideas, but we do not want to muddy the waters by saying what we stand for, we send a signal—to the Commission, to those around the Commission who deal with energy and to those in countries who may have influence—that undermines the solidarity that we need for a minority blocking group. It is important for the Committee to send a message. I see a slide from the Government’s position.
Michael Connarty: I shall give way now.
Sir Robert Smith: I thank the hon. Gentleman for giving way. Of course, this motion has been on the Order Paper for some time, and if he really felt that its wording did not fully embrace the position that we should be taking, it was open to him or his party to table an amendment to it—yes, one can amend such motions. If such an amendment had been tabled, we would not be voting against the view that
“the UK has a proven, robust offshore environmental and safety regime”.
If we simply reject that, we are nowhere. If the hon. Gentleman really felt that the motion was not up front enough, he should have tabled an amendment.
Michael Connarty: That is a very good suggestion, and I have to admit that I had not seen the motion on the Order Paper anywhere. Just before the recess, I informed my Front-Bench colleague that no date had been set for the debate. Our Whips did not know the date of it, and then we had the recess. I must admit that I looked at the motion only when I entered the room. It may have been on an Order Paper, but I had not searched for it. I expected the motion to be the same as it was before, and I assumed that the Government were travelling in the right direction.
It is disappointing to find that we do not have a strong motion, and I cannot see how we can possibly support this one. It is very Liberal for people to say why they do not want to vote against what they have been asked to support. No one will vote against it because we are being asked to “take note” of the regulation—we are all taking note of it; people will vote against because of what the Government are asking us to support.
The Government are wrong to ask for our support to give them the licence, which is what they are asking for, to say that the regulation has been properly debated so that the Minister has the authority to find a conclusion, which is not one that we want. I cannot support the motion. I do not believe that we should allow the Minister, in our name, to vote for anything other than a directive. I hope that we will convince him not to take the regulation forward.5.36 pm
John McDonnell (Hayes and Harlington) (Lab): I am not a member of the Committee, but I shall speak under the relevant Standing Order. I have attended various debates on the offshore oil and gas industry, as chair of the National Union of Rail, Maritime and Transport Workers parliamentary group. The RMT has 4,500 members who work in the sector. The debates do not usually get so rough—for the Minister to be told that he is not the Hugh Grant of the House of Commons is pretty vicious.
I want to raise some of the concerns expressed by workers in the fields. Like the Minister and other Members, I support the principles set out in the regulation on licensing, independent verifiers, inspections and transparency, as well as on the need to plan for the emergency response, to clarify the liability of companies and to have international co-operation. When I last attended a European Committee, the Maitland report was expected, and it came out in January. In it, Professor Maitland carefully stated:
“Particular care should be taken to ensure that any future changes at an EU level neither dilute the fundamental strengths of the UK system or undermine the authority of the relevant regulatory bodies within it nor, through the mechanism and process of their introduction, frustrate or delay the potential improvements highlighted elsewhere in this report.”
The practical reality is that the proposed EU regulation flies in the face of virtually every concern expressed by Professor Maitland in that sentence.
In the previous European Committee, we debated the point, which was made by my hon. Friend the Member for Rutherglen and Hamilton West, that the UK system could be modelled slightly more closely on the Norwegian one, with its full appreciation of the role of safety reps. To some extent, such a practice exists in this country, but the Health and Safety Executive, which undertakes to enforce compliance with statutory instrument No. 971 on the involvement of workers in the safety of individual operations, has found that improvements were needed in 80% of cases.
We had looked to the Maitland review for the recognition, which may be reflected in the practice of other states, of the role of safety reps in Norway. We wanted such a recognition to be introduced into both UK regulation and practice, and perhaps for that best practice to be extended elsewhere. The EU regulations do not address that issue. They address whistleblowing but whistleblowing is action by workers after they have identified a specific problem. It is not about prevention. Therefore the EU regulations go nowhere near our ambition to mobilise and develop the expertise of safety reps while fully recognising their role. In some ways ignoring that role and concentrating on whistleblowing undermines our approach, which has been identified elsewhere as being of a fairly high standard, if not of gold standard.
My hon. Friend the Member for Aberdeen North expressed concern about the diversion there would be as we moved away from our own regime of safety case into this exhaustive process of examining every operation afresh, producing major hazard reports and the diversion of resources from the Health and Safety Executive to do that. In addition, looking at the impact assessment, it is startling to learn that to fund the exercise whereby we redraft all our regulations in light of this proposed EU regulation, we must establish a new team within the HSE and elsewhere at a cost of £1.6 million. That is at a time when we are criticising the Government for the cuts in the HSE already, such as the staffing reductions and the reduction of the inspection regime.
I concur with my colleagues. There are real concerns about these proposals both because they do not address the real agenda, which is about the development of safety representation, and because they divert resources away from where we need to apply them to improve the inspection regime. There is absolute confusion now about what is a competent authority in this respect. I am unsure whether, because there is a requirement in the new regulations that the competent authority has to be completely independent of Government, the HSE and the Department of Energy and Climate Change have to be reconstituted in some form. There certainly has to be another examination of our regulation in relation to them. One of the proposals is for an EU offshore authorities group. There is no harm in bringing people together to share information but there are concerns that this is just another tier of bureaucracy where money will be expended to little effect for something that may well be undertaken by other means in a more co-operative framework than the one set out in the regulation.
Finally, I wholeheartedly agree with all the criticisms that have been made about this being a regulation and not a directive. It threatens our whole regulatory system. It diverts resources for 12 months at least, most probably longer, into redrafting regulations when we should be concentrating on inspection and ensuring that we maximise our safety regime. At our last discussion the Minister kindly agreed to meet the RMT parliamentary group on this matter after the Maitland report had been published. Now it has been published we would like to reinforce that request, particularly in advance of any response the Government makes to these proposals for EU regulations. I concur with my hon. Friend the Member for Aberdeen North. It requires a robust response because, as he says, we do not want to do anything that jeopardises the system and the mechanisms that we have put in place after years of bitter experience; we want to work co-operatively across the industry to achieve the gold standard in Europe itself.
The Chair: As we have seen the debate has been fairly wide ranging and different democratic perceptions have been drawn out. Before I call the Minister I should like to explain that the bell came up as a sign for a vote in the Commons due to an electronic malfunction.
5.44 pm
Charles Hendry: I have never been introduced as an electronic malfunction before nor been compared to Hugh Grant or others. The debate this afternoon reinforces the comments I made at the start. We had in the
Committee room today some of the best qualified Members of Parliament to discuss these issues. The expertise that they have brought to this I find extremely helpful. I have also been grateful for the strong support for the position the Government are taking. I hope that I can reassure the hon. Member for Linlithgow and East Falkirk about our determination to take this forward to achieve the right outcome for the industry.We are all concerned about safety. Anyone looking in from outside would be in no doubt that we are not doing this because we want to cut corners or find an easy way of regulating to support industry in this country. We are doing it because we genuinely believe that we have the most robust safety standards in the world, and we do not want anything to undermine them.
Our view is reinforced by those of others. Professor Geoffrey Maitland, who is chair of the independent regulatory review, said:
“We have found a great many positives in the UK’s safety and environmental regulation, in what is generally regarded as a world-leading regime”.
We have also heard from the Bureau of Ocean Energy Management, Regulation and Enforcement in the United States. In relation to measures that it is introducing, it states:
“This rule introduces for the first time in the US regulatory regime performance-based standards similar to those used by regulators in the North Sea.”
The US’s National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling recommended in its report:
“The Department of the Interior should develop a proactive, risk-based performance approach specific to individual facilities, operations and environments, similar to the “safety case” approach in the North Sea.”
Independent people, who are outside this country looking at our regime, are in no doubt that our system is one of the most effective and robust in the world, and we will fight hard to maintain it. We are not prepared to allow it to be watered down.
In the course of the debate, the danger of upheaval has been emphasised time and again. The hon. Member for Aberdeen North referred to the fact that the disadvantages of upheaval would outweigh any benefits in a particular period of a year or more, when such risks would be intense. He did not overstate the case when he said that there would be an increased risk of disaster. I think we would both use those words extremely carefully, but in the process of dismantling a regime that works to replace it with something broadly similar—I will go into more detail on that shortly—there will be a period of enhanced risk. As policy makers, we should all be determined to avoid such a situation.
My hon. Friend the Member for North East Somerset said that we should resist both regulation and a directive. He has heard the views of other hon. Members and those in industry who think that there is a case for a directive. There are issues relating to raising standards across the European Union to bring them more in line with those here and, perhaps, elsewhere. We can see benefits in doing that, but we start from a position of wanting the Commission to withdraw the regulation, which requires unanimity. If the Commission will not
withdraw the measure and move it into a directive, we will work to improve it, but our focus is for it to be withdrawn.We are going through a process of forming alliances and are indentifying the position of other member states so that we can go to the Commission and say, “This is the strength of feeling.” It has already seen some of that: three weeks ago, regulators from across Europe and trades unions representatives met. The Commission was genuinely taken aback by the unanimity from all the countries represented, right across the political spectrum, whose view was that regulation was wrong.
We are now talking to our European counterparts to find out their view. For many, this is a marginal issue. If they have some coastline, they might not have a tremendous amount of oil and gas exploration experience offshore. We must therefore explain our position—it is about high standards—to create alliances, so that we can go to the Commission with the strongest case and group possible, to say, “There is not support for regulation. Go away and come back with it as a directive, and we will reconsider it in that light.” We will use all means at our disposal. I hope that the hon. Member for Linlithgow and East Falkirk accepts that we must form alliances to make the most compelling and strongest case.
The hon. Member for Aberdeen North and my hon. Friend the Member for West Aberdeenshire and Kincardine mentioned a lack of experience in the European Union in relation to the measures. I suspect that in Aberdeen there is greater expertise in health and safety issues than in any other city in the European Union. Lessons were learned from Piper Alpha that are seared into the souls of everyone who works in that industry in Aberdeen, and more generally in this country. Through that awful experience, we have learned that we must never compromise on high standards. Our approach of looking towards the industry and always going for the best that we can achieve has been right for us.
We are not looking to cut corners, and people have talked about the safety case, too. The legal advice is that any domestic regulations that duplicate the EU draft regulation would have to be removed, just as the hon. Member for Hayes and Harlington (John McDonnell) said. That would involve not only inconvenience but a massive cost for no benefit. We are required to produce a new major hazard report to replace the existing safety cases for the UK’s 293 offshore installations. It is estimated that the major hazard reports will cost the industry £146 million, while sticking with the existing regime would cost some £29 million. If the existing UK verification schemes had to be reintroduced to meet the requirements of the new regime, it is estimated that that would cost some £61 million. Whereas if the safety case regime and other UK domestic requirements remained, they should be able to remain in place without incurring that cost. As the hon. Member for Aberdeen North rightly says, some 300 major hazard reports would need to be redone. That would occupy some 11,000 inspector days, which indicates the extent of the work necessary to change the regime for no perceivable benefit.
I welcome the words of the hon. Members for Aberdeen North and for Hayes and Harlington on the role of trade unions. Let me say at the outset that I would be delighted to meet the parliamentary group of the RMT to talk through their concerns because the RMT’s
commitment in this area has been exceptional. PILOT, which I chair, seeks to identify the barriers to the development of the North sea and the oil and gas industry more generally. I am delighted that the head of the Scottish Trades Union Congress, Grahame Smith, has agreed to come on board to represent union views. In my discussions with him in Scotland last week, one of the issues we went through was how we could use his contacts with the trade unions to try to make a case on these issues across Europe, because the experience and expertise of the work force is an important element.The hon. Member for Rutherglen and Hamilton West, who speaks for the Opposition on such matters, talked about the role of the safety representatives, which is covered in the offshore drilling directive 92/91/EEC. That directive will still apply, so such requirements will remain in place.
The hon. Member for Aberdeen North talked about the role of OPITO. The great impression one has of OPITO is not that it is simply there to train and to help people to meet standards, but that it is the organisation that has done most to set the global standards. That is the extent to which it is admired and seen as a strong body in this sector. OPITO’s involvement is also something that we are keen to encourage.
My hon. Friend the Member for West Aberdeenshire and Kincardine talked about the moratorium proposed last year. It would be useful for the Committee to recognise that 18 months ago it was a serious proposal and that, along with other countries, we managed to persuade the Commission that this was not the right course. I hope that, through reason, the Commission will see sense on the draft regulation, too.
The hon. Member for Linlithgow and East Falkirk should be in no doubt whatsoever about our determination in the existing engagement with other Ministers across the European Union and our willingness to find out where they stand and how we can reassure them of any doubts they may have on our position so that we can go to the Commission with the strongest group possible.
Hopefully I have addressed most of the issues raised in this debate. There was one further issue raised by the hon. Member for Hayes and Harlington on safety representatives. The Health and Safety Executive has been working with the industry and the unions via Step Change in Safety and the work force involvement group to identify additional measures that could be taken further to improve safety culture offshore. The Offshore Industry Advisory Committee’s work force involvement group has initiated and completed a report specifically to assess the offshore industry’s compliance with the Offshore Installations (Safety Representatives and Safety Committees) Regulations 1989. Although there was general compliance with those regulations, the project team also collected examples of best practice and engagement activities across the industry that could be shared to raise standards. The offshore work force
involvement group made recommendations to improve safety representative training. We are already moving forward on all of the issues highlighted in this debate.In conclusion, I reiterate that we are looking for the best standards in the world. We believe that the regime in place here and in Norway already delivers that. The measures we have taken since the gulf of Mexico incident have further improved those standards, and we will continue to consider any other reasonable ways to ensure that we remain robust and effective.
The Commission’s draft regulation does not help that process; it makes it more difficult to deliver the levels of safety that we believe are essential. We have more at stake than any other European country, which is why we are determined to get it right not only by ensuring that this ends up in the right place as a European measure, but by achieving our overriding objective of ensuring the safety of offshore drilling activities around our coastline.
With those words, I hope the Committee will be reassured of the Government’s determination to address these issues as comprehensively as possible and to build alliances with as many other member states as necessary to persuade the Commission to go back to the drawing board and withdraw the regulation.
The Committee divided: Ayes 7, Noes 6.
AYES
NOES
Question accordingly agreed to.
That the Committee takes note of European Union Document No. 16175/11 and Addenda 1 to 4, relating to a Draft Regulation on the safety of offshore oil and gas prospection, exploration and production activities; supports the Government’s view that the UK has a proven, robust offshore environmental and safety regime; and further supports the Government’s intention to negotiate a legal instrument which ensures that high standards of health and safety and high levels of protection for the environment are maintained across Europe in respect of oil and gas operations, and that any new proposals do not negatively impact upon the present UK regime.