Facing the Challenge of the Safety of Offshore Oil and Gas Activities

1. Facing the Challenge of the Safety of Offshore Oil and Gas Activities [European Commission proposal for regulation of safety and environmental protection against EU offshore major accidents] A presentation by Directorate General for Energy for a meeting with IndustriAll 18 June 2012 Taf Powell Courtesy of Wintershall

2. Problem definition • Likelihood of an EU major incident is significant (and can be reduced)Precursor reports UK & Norway; frequency analysis of incidents • Full-scale consequences of an EU major incident not acceptableGaps in EU legislation; maritime response model • Provisions for financial liability/recovery are incompleteScale of costs and damages seen in GOM

3. Offshore licensing in EU/EEA & adjoining states 3

4. Exclusive economic zones in the EU 4

5. Case for EU action • No case for non-action: • Accident frequency and costs surprisingly high • Industry and MS action uneven • EU voice in global efforts (G20, ….) • Subsidiarity vs. European interest: • Health & safety of workers • Protection of wider communities and the environment: cross-border impacts of spills • Deepening of single market: consolidation of product stds • Security of energy supplies

6. Objectives of EU action

7. Measures to implement objectivesBlack measures considered separately, red measures not taken further

8. Key points of Legislative Proposal • General measures to prevent major accident • Risk-based planning and operations • Best practices by operators and regulators • Transparency/sharing of information • Co-ordination and co-operation amongst regulators, and with non-EU countries • Emergency preparedness and response • Technical annexes for detailed provisions

9. Framework Directive & Directive 92/91 includes provision for risk based approach to protection from all workplace hazards New EU regulation requires in addition: Enhanced scrutiny of licensing applications for major accident prevention and response capability Incorporating environment risks into major hazards risk assessment Assessment by and acceptance of major hazards risk assessment report (MHR) and specified activities by new competent authority Independent verification of safety critical elements & well control Sector specific inspections and penalties regime Major accident response plans for each installation, feeding into national arrangements Common reporting format and sharing lessons learned Extending liability for environmental damage to full extent of continental shelf Relationship with existing EU legislation – safety directives

10. Seveso 2 Directive 96/82 provides for control of major accident hazards integrated for environment and safety at onshore high hazard sites New EU regulation has many similar provisions e.g. MHR for safety/environment Competent authority Emergency response plans New EU regulation differs or goes further Specific provisions needed for marine environment Protection measures for local populations not relevant Qualifying hazards of Seveso not appropriate Stringent licensing reviews Thorough assessment  acceptance of MHR Enhanced liability provisions Common reporting & transparency Relationship with existing EU legislation – environment directives

11. Legal instrument: Regulation raison d'etre • Counter the fragmented and uneven application of existing law (Directives). • Act swiftly and directly on industry – highest priority as the risks are in the industry. • Limit impact only to MS with offshore licensing. • Level up all MS to the sum total of best EU practices (no MS has achieved it, but UK, NL and DK closest). • But Commission continuing to engage on the legal form MS can set stricter requirements in national legislation (art. 192.1/193 TFEU)

12. Legal instrument: Regulation Reaction of stakeholders • Most MS opposed to the form of the instrument (except DE, SE) on grounds of unwarranted disruption of national regimes • BUT all MS in Council supportive and constructive towards principle and substance of the COM proposals • NGO's strongly in favour • Industry and offshore TU's strongly against EU regulation • EP? (Previous opinion – ITRE/Vicky Ford/2011 – supportive of EU intervention)

13. EU Offshore Authorities Group – purpose (1st meeting held 8 May 2012) • First EU-wide forum for regulators, builds on NSOAF and IRF • Advisory role • Identification and exchange of • best practices for: • Major Hazard prevention • Emergency preparedness • Disseminating lessons learned from • accident investigations • Facilitating rapid information • exchange between national • authorities and the Commission • Identification and exchange of • best practices for • competent authorities: • Verifying compliance • Execution of projects • Auditing and enforcement • Comment on new (national) legislation and EU or international proposals for oil and gas industry

14. EU Timetable (provisional/May 2012) • 2nd draft revision of text by energy working party released 16 April • Progress report from DK Pres in drafting (NB recitals have not been discussed so far) • TTE meeting will discuss 15 June • In EP, File divided, including points of detail: • ITRE (most) – Rapporteur Ivo Belet • ENVI (quite a lot) • JURI (little) • COM has met with representatives of ITRE and ENVI committees • EP may complete first reading in the autumn • CY Pres indicated Lex Offshore is 2nd high priority • Several discussions so far with IE officials who show keen interest