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The likelihood of a major offshore accident in European waters remains unacceptably high. With a stringent safety regime it is possible to bring the risk of such an accident down to the absolute minimum. Damage done to the environment and coastal economies can be significantly reduced if an effective emergency response plan is put in place beforehand. This is why the European Commission yesterday proposed  a new law which will ensure that European offshore oil and gas production will respect the world's highest safety, health and environmental standards everywhere in the EU.

Energy Commissioner Günther Oettinger said: "Today, most oil and gas in Europe is produced offshore, often in harsh geographical and geological conditions. Given our growing energy demand, we will need all the oil and gas from beneath our seas. But we need to prevent accidents like Deepwater Horizon in the Gulf of Mexico from happening. Securing best industry practices in all our offshore operations is an undisputable must. Today's proposal is a crucial step forward towards safer offshore activities to the benefit of our citizens and our environment".

Environment Commissioner Janez Potočnik said: "We have learnt our lessons from last year's Deepwater Horizon accident. Today's proposed regulation will help us prevent such future crises from happening in all marine waters which fall under EU Member States' jurisdiction. This safety update is good news for the environment, but it's also good news for business which will be able to deploy its operations in a predictable framework. There is ample evidence from past accidents that prevention is better than cure."

The new draft regulation sets clear rules that cover the whole lifecycle of all exploration and production activities from design to the final removal of an oil or gas installation. Under the control of the National regulatory authorities, European industry will have to assess and further improve safety standards for offshore operations on a regular basis. This new approach will lead to a European risk assessment that upgrades continuously by taking into account new technology, new know-how and new risks. It introduces requirements for effective prevention and response of a major accident:

• Licensing The licensing authorities in the Member States will have to make sure that only operators with sufficient technical and financial capacities necessary to control the safety of offshore activities and environmental protection are allowed to explore for, and produce oil and gas in EU waters.

• Independent verifiers The technical solutions presented by the operator that are critical for safety on the installation need to be verified by an independent third party prior to and periodically after the installation starts into operation.

• Obligatory ex ante emergency planning Companies will have to prepare a Major Hazard Report for their installation, containing a risk assessment and an emergency response plan before exploration or production begins. These reports will need to be submitted to national authorities who will give a go-ahead if satisfied.

• Inspections Independent national Competent Authorities responsible for the safety of installations, who will verify the provisions for safety, environmental protection and emergency preparedness of rigs and platforms and the operations conducted on them. If an operator does not respect the minimum standards, the competent authority will take enforcement action and/or impose penalties; ultimately, the operator will have to stop his drilling or production operations if he fails to comply.

• Transparency Comparable information will be made available to citizens about the standards of performance of the industry and the activities of the national competent authorities. This will be published on their websites.

• Emergency Response Companies will prepare emergency response plans based on their rig or platform risk assessments and keep resources at hand to be able to put them into operation when necessary. Member States will likewise take full account of these plans when they compile national emergency plans. The plans will be periodically tested by the industry and national authorities.

• Liability Oil and gas companies will be fully liable for environmental damages caused to the protected marine species and natural habitat. For damage to waters, the geographical zone will be extended to cover all EU marine waters including the exclusive economic zone (up to about 370 km from the coast) and the continental shelf where the coastal Member State exercises jurisdiction. For water damage, the present EU legal framework for environmental liability is restricted to territorial waters (about 22 km offshore).

• International The Commission will work with its international partners to promote the implementation of highest safety standards across the world.

• EU Offshore Authorities Group Offshore inspectors of Member States will work together to ensure effective sharing of best practices and contribute to developing and improving safety standards.

Background

Oil and gas have been extracted from beneath the seabed in Europe since the 1970s. Today, over 90% of oil and over 60% of gas produced in the EU and Norway comes from offshore operations. There are more than 1000 offshore oil or gas installations in operation in European waters. Whilst most production is from the North Sea region, and most of the oil come from the UK and Norway, interest is developing throughout the EU offshore provinces and 13 Member States (UK, the Netherlands, Denmark, Germany, Ireland, Italy, Spain, Greece, Romania, Bulgaria, Poland, Malta and Cyprus) have awarded offshore oil and gas licences.

The offshore industry in different Member States operates to different environmental, health and safety standards. To date EU legislation does not cover all the aspects of the offshore oil and gas industry and national legislation is very different between Member States. Despite action by some Member States to reform their systems after disasters in the North Sea in the 1980s there is still a significant risk of severe accidents in the EU. Past events show that at least 14 major offshore disasters – such as well blow-outs and total loss of production platforms - have occurred around the world in the last 30 years, 5 of them in the last 10 years. Possible consequences of a major accident are extreme. They include loss of lives, major environmental damage, and collateral damage to coastal and marine livelihoods. In financial terms, as we have seen, an event on the scale of the Gulf of Mexico disaster can cause damages of Euro 30 billion.

In conjunction to this legislative proposal, the Commission is putting forward a proposal for the EU to accede to a Protocol of the Barcelona Convention that protects the Mediterranean against pollution from offshore exploration and exploitation activities (see IP/11/1261).

Further Information:

http://ec.europa.eu/energy/oil/offshore/standards_en.htm

MEMO/11/740