New and stricter European legislation for offshore oil and gas drilling

The EU didn't hesitate to draw conclusions from the Deepwater Horizon oil spill and shortly afterwards began a thorough overhaul of its existing safety legislation for drilling operations. If a similar accident were to happen in EU waters this could have serious consequences across Member-State borders. Recognising the need to make drilling operations at sea safer, the European Parliament strengthened the Commission's proposal substantially.

Given the environmental, health and safety standards for the offshore industry are different in each Member State, aligning these is key to safety. The new legislation on the safety of offshore oil and gas prospection, exploration and production activities therefore aims at applying recognised global best practice in major hazard management throughout the EU. Adequate emergency responses are vital to limiting the consequences of any spill or accident. The proposal therefore aims to strengthen the EU's preparedness and response capacity for dealing with emergencies as well as improve liability and compensation provisions.

Independent risk assessment

While agreeing with the overall objectives of the Commission's proposal, the European Parliament's major concern was the independence of the authority assessing the safety and environmental risks of operations. The accident on the Deepwater Horizon rig demonstrates just how crucial a truly independent supervisory body is.

Who pays for the damage?

The environmental damage caused by oil spills is most of the time considerable and the costs of cleaning up are high. Although the Commission proposal did not include provisions on economic liabilities and the Council was reluctant to include them, the European Parliament succeeded in strengthening the rules governing the licensing process. Strict conditions were imposed on companies applying for a licence, requiring them to provide, before the start of operations, evidence of their financial ability to cover liability for potential environmental and economic damage.

Standards to apply to operations worldwide for EU companies

The new regulation also addresses operations worldwide. Companies operating in EU waters must demonstrate that their risk prevention policy also applies to operations outside the EU. The European Parliament made it compulsory for companies registered in the EU to report on accidents that occur outside the EU. Also, whistleblowing procedures set up for confidential reporting of safety and environmental concerns apply to people involved in operations in third countries.

Since the EU has no waters in the Arctic, it did not make sense to call for a moratorium on drilling in this area. Therefore, it was agreed that within the Arctic Council (an intergovernmental forum that promotes cooperation and coordination between countries in the Arctic area; Canada, the US, Russia, Norway, Sweden, Denmark, Finland and Iceland are Members of the Arctic Council, the EU has applied for an observer status) the highest safety standards for oil drilling must be promoted. As regards remote areas and areas where access is difficult, the effectiveness of the emergency response must be assessed in all weather conditions.

The role of EMSA

On the role of EMSA, the European Maritime Safety Agency, Parliament managed to ensure that its expertise in emergency planning would be taken into account. All new tasks conferred on EMSA were decided in accordance with the agency's capacities, budget and legal framework. There were calls for an enlarged role for EMSA, i.e. for EMSA to check compliance and enforcement of the new legislation. While theoretically a nice idea, in practice, without extra resources, this enlarged mandate would be meaningless.

Public consultation

Public consultation on projects with environmental impact is provided for in the environmental legislation (Environmental Impact Assessment). However, some Member States have implemented the EU rules in such a way that that some offshore oil and gas projects would escape this assessment. The agreement between Parliament and Council guarantees that also in those cases, early and efficient public participation is undertaken before the commencement of any operations.

What's next?

The European Parliament's report on the safety legislation proposal, negotiated by EPP Group MEP Ivo Belet, member of the Committee on Industry, Research and Energy, will be submitted to vote in plenary on 21 May 2013.