Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on safety of offshore oil and gas prospection, exploration and production activities
Date: 2011-10-27
Institutions: European Commission
Subjects: EU waters, environmental liability, man-made disaster, marine pollution, offshore drilling, offshore oil structure, prevention of pollution, safety standard

EUROPEAN COMMISSION 

Brussels, 27.10.2011 
SEC(2011) 1292 final 

COMMISSION STAFF WORKING PAPER 

IMPACT ASSESSMENT 

ANNEX I 

Accompanying the document 

PROPOSAL FOR  A REGULATION OF THE EUROPEAN PARLIAMENT AND OF 
THE COUNCIL 

on safety of offshore oil and gas prospection, exploration and production activities 

{COM(2011) 688 final} 
{SEC(2011) 1293 final} 
{SEC(2011) 1294 final} 

EN 

   EN 

 
 
 
 
  
 
 
ANNEXES 

Annex I 

Additional analytical background to baseline scenario 

Annex II 

List of main meetings with stakeholders 

Annex III 

Underlying drivers of the problem 

Annex IV 

Additional analysis of economic, social and environmental impacts 

Annex V 

Summary of EU acquis applicable to offshore oil and gas activities 

Annex VI 

Public Consultation questionnaire 

Annex VII 

Results of the public consultation on improving on Improving offshore safety, 
health and environment 

Annex VIII 

Questionnaire to offshore industry 

Annex IX 

List of studies taken into account 

Annex X 

Issues  amending  current  legislation  (Directives  2004/35/EC,  92/91/EEC  and 
96/82/EC) 

Annex XI 

Description  and  evaluation  of  the  implementation  options  for  individual 
measures 

Annex XII 

Overview of industry initiatives (GIRG and OSPRAG) 

Annex XIII 

Benchmarking between industry sectors and countries 

EN 

2 

   EN 

 
 
 
ANNEX I:  

ADDITIONAL ANALYTICAL BACKGROUND TO BASELINE SCENARIO  

This annex addresses the baseline scenario which corresponds to Option 0. It evaluates semi-
quantitatively the annualized economic cost of offshore accidents in the EU-27, assuming that 
no  additional  EU  action/intervention  takes  place.  Because  only  part  of  the  costs  of  offshore 
accidents  can  be  quantified  and/or  monetised,  the  purpose  of  this  annex  is  to  define  a  baseline 
scenario against which a partial cost-benefit analysis1 of proposed policy options can later be 
performed.  As  such,  this  annex  aims  to  quantify  expected  costs  where  reliable  data  is 
available,  but  it  also  highlights  important  qualitative  evidence  as  well  as  indicative  figures 
that policymakers should also incorporate into their analysis of costs and benefits. 

1. Potential costs of an offshore accident 

The negative impacts of an accident are hard to quantify precisely; they will of course depend 
on  the  type,  the  scale,  the  time  and  the  location  of  the  event.  In  the  case  of  an  oil  spill,  its 
duration  and  the  type  of  the  oil  will  also  have  a  major  impact.  The  costs  of  an  offshore 
accident will include costs to the operator(s) (damage to the installation, lost oil, containment, 
cleanup, litigation etc.) and third-party costs to victims, to natural resources, the government 
and the affected individuals/businesses (incl. lost income).  

This section will focus on quantifying the two largest directly quantifiable categories of cost 
incurred as a result of major offshore accidents: 

• 

• 

infrastructure losses; and 

losses associated with oil spills. 

The  indirect  impacts  of  offshore  accidents  –  their  effects  on  oil  prices,  the  health  of  the  oil 
industry,  or  security  of  energy  supply,  for  example  –  are  not  rigorously  addressed  in  this 
section. These costs may be very substantial, although they are difficult to reliably quantify. 
For instance, because the price of oil influences the cost of many goods and services in the 
European  economy,  oil  production  shortfalls  resulting  from  major  accidents  can  have  a 
profound  economic  cost,  albeit  one  that  is  impossible  to  measure.  In  addition,  the  large 
revenues in the offshore sector mean that government imposed drilling moratoria may result 
in significant economic losses. Some have argued that the moratorium on exploratory drilling 
in the Gulf of Mexico following Deepwater Horizon may have cost billions of dollars and tens 
of thousands of jobs.2 Although an in-depth analysis of indirect factors such as those above 
goes  beyond  the  scope  of  this  report,  policymakers  should  attempt  to  qualitatively  include 
such factors in any cost-benefit analysis of policies aimed at improving offshore safety.  

Furthermore, this section restricts itself to addressing the property losses of ‘major accidents’, 
defined3 as accidents resulting in at least one of the following:  

•  multiple fatalities; 

1 As defined in the Commission’s Impact Assessment Guidelines 

http://ec.europa.eu/governance/impact/commission_guidelines/docs/iag_2009_en.pdf, pp.45. 
2 ‘Testimony of Dr. Joseph R. Mason’, 06/04/2011, U.S. House of Representatives Subcommittee on Energy & 

Mineral Resources, http://naturalresources.house.gov/UploadedFiles/MasonTestimony04.06.11.pdf. 
3 As per ‘Risk Assessment Data Directory – Major Accidents’, Report No. 434-17, March 2010, International 

Association of Oil & Gas Producers, http://www.ogp.org.uk/pubs/434-17.pdf 

EN 

3 

   EN 

 
                                                 
• 

total loss4 or severe damage5 to offshore units; 

•  a minimum of 1000 barrels, or 136 tonnes, of oil spilt. 

Non-major accidents, such as trips, slips and falls, result in less economic loss per incident, 
but are much more common. Although they are not included in the analysis, these may also 
decrease as a result of the policies proposed.  

Finally, this report does address the costs related the loss of human life (the statistical value of 
a  life  is  put  at  €1-2  million  by  the  European  Commission6  and  at  £1.5  million  by  the  UK 
HSE7). The monetization of human life can pose ethical difficulties, and loss-of-life costs are 
not  estimated  to  be  significant  when  put  into  the  context  of  the  very  large  costs  this  report 
focuses on. 

In light of the difficulties in quantifying the true economic cost of offshore accidents in 
Europe, this annex aims to use to present policymakers with a broad, but reliable, cost 
range that is based on the best available data as well as notable case studies.  

The Deepwater Horizon disaster demonstrated how huge and far-reaching the consequences 
of a single accident can be, particularly as regards maritime and coastal pollution. 11 people 
lost their lives, an estimated 4.9 million barrels (660,000 tonnes) of oil were spilled into the 
sea and a state-of-the-art drilling rig, valued at US$560 million, was written off as a total loss 
in  the  disaster8.  The  oil  spill  occasioned  a  response  effort  involving  48,000  people,  6,500 
vessels and 125 aircraft at its peak.9 Total damages are estimated to reach tens of billions of 
dollars. In early 2011, BP estimated its costs related to the accident (including costs incurred 
by  the  end  of  2010  and  estimated  obligations  for  future  costs)  at  40.9  billion  dollars.10  The 
company  committed  to  pay  US$20  billion  over  a  three  and  a  half  year  period  into  a  Trust 
Fund out of which legitimate claims are met.  

Even a company like BP, one of the largest multinational oil companies, has been shaken by 
such an accident. In two months, its shares lost more than half their value and still trade well 
below  the  pre-accident  level.  In  order  to  be  able  to  pay  the  related  costs  (containment  and 
cleanup, claims from affected businesses and individuals, potential fines/penalties11 etc.) the 

4 Total loss of the unit including constructive total loss from an insurance point of view; however, the unit may 

be repaired and put into operation again.  

5 Severe damage to one of more modules of the unit; large/medium damage to load-bearing structures; major 

damage to essential equipment.  

6 ‘Impact Assessment Guidelines’, 15/01/2009, European Commission, SEC(2009) 92, p.43. 
7 HSE Economic Analysis Unit (EAU) appraisal values, 2006 (Q3) Short version, 28/07/08, 

http://www.hse.gov.uk/economics/eauappraisal.htm 

8 ‘Transocean Ltd. Provides Deepwater Horizon Update’, 26/04/2010, Transocean Ltd, 

http://www.deepwater.com/fw/main/Transocean-Ltd-Provides-Deepwater-Horizon-Update-
451C936.html?LayoutID=46 

9 BP Sustainability Review 2010, 

http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/e_s_assets/e_s_assets_201
0/downloads_pdfs/bp_sustainability_review_2010.pdf 

10 BP fourth quarter and full year 2010 results, 

http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/B/bp_fourth_q
uarter_2010_results.pdf 

11 Under the US Clean Water Act, 1,100 dollars are to be paid for each barrel spilled; this amount may increase 

to 4,300 dollars if the spill is the result of gross negligence. 

EN 

4 

   EN 

 
                                                 
company suspended the payment of dividends and initiated a US$30 billion asset divestment 
program. 

Whilst  this  accident  provides  one  important  indication  of  the  potential  costs  of  a  similar 
incident in European waters, significant juridical differences between the US and EU limit the 
scope  for  direct  comparison.  Additionally,  the  cost  of  an  oil  spill  depends  on  a  number  of 
variables other than just the simple volume of spillage (see Table 1: Factors affecting the cost 
of  oil  spills  other  than  spill  volume),  and  the  conditions  in  much  of  Europe  are  unique.  For 
example,  a  spill  in  a  closed  sea  with  limited  natural  circulation  of  water  –  such  as  the 
Mediterranean, the Black or Baltic Seas – will present a different set of challenges than a spill 
in the Gulf of Mexico. For these reasons, it is important to draw on previous European case 
histories as much as possible. 
Table 1: Factors affecting the cost of oil spills other than spill volume12 

Location:  The  costs  incurred  per  unit  of  spilled  oil  vary  greatly  depending  on  the  spill’s 
location. For example, the extent to which the oil reaches the shoreline is a significant factor 
boosting  the  costs  of  a  spill.  Moreover,  the  temperature  of  the  water  can  make  a  large 
difference to its dispersal. Finally, spills can variably reach environmentally or economically 
sensitive areas, fishing zones or areas with other maritime activities, enhancing the litigation 
and clean-up costs.  

Type  of  oil:  Oil  grades  vary  in  terms  of  gravity,  viscosity,  volatility,  toxicity  and  other 
properties, making them more or less difficult and costly to clean up. 

Season/weather:  In  some  cases,  natural  forces  serve  to  either  decrease  or  increase  the 
potential  financial  impact  of  an  oil  spillage.  For  example,  wind  speed  and  cloudiness  can 
respectively affect the dispersal and evaporation of oil spills on the water’s surface. Weather 
conditions can obviously influence the response efforts as well. 

Clean up response/method: In addition to the above variables, the chosen mode of response 
depends  on  the  legal  and  regulatory  regime  governing  pollution  of  the  environment.  When 
clean-up  methods  are  required  (i.e.  when  natural  clean-up  is  deemed  deficient),  the  cost  of 
dispersants, in-situ burning and the use of tools such as booms, as well as total labour costs 
need to be taken into account. 

Statistically,  the  vast  majority  of  reported  major  accidents  in  Europe  do  not  result  in 
significant spillages of oil, certainly not at a scale similar to the Gulf of Mexico disaster.13 In 
spite of this, the loss of life and/or damage to infrastructure resulting from the most common 
major  accidents  –  helicopter  crashes,  explosions,  collisions  and  capsizes  –  can  be  very 
significant. In these cases, the costs are borne by the operator and its insurer, and principally 
include asset loss, salvage and repair operations and compensation claims. Case histories of 
such accidents indicate that these costs sometimes run into hundreds of millions of euros, and 
may exceed €1 billion depending on their severity and the extent of damage, as demonstrated 

12 Source: ‘Cost of Spills’, The International Tanker Owners Pollution Federation Limited, 

http://www.itopf.com/spill-compensation/cost-of-spills/ 

13 ‘Risk Assessment Data Directory – Major Accidents’, Report No. 434-17, March 2010, International 

Association of Oil & Gas Producers, http://www.ogp.org.uk/pubs/434-17.pdf 

EN 

5 

   EN 

 
 
                                                 
by  the  Piper  Alpha  accident  (see  Table  2:  Major  property  damage  losses  to  North  Sea 
offshore facilities). 
Table 2: Major property damage losses to North Sea offshore facilities14 

Installation 

Location 

Type 

Date 

Cause 

Cost 

Loss of 
Human Life 

Piper Alpha 

UK – North Sea 

Platform 

6/7/1988 

Explosion 

Ekofisk 

Norway – 
Continental Shelf 

Unmanned 
platform 

4/6/2009 

Collision  

Sleipner A 

Norway – 
Continental Shelf 

Concrete 
deepwater structure 

23/8/1991  Structural 

failure 

Ocean 
Odyssey 

UK – North Sea – 
Shearwater Field 

Semi-sub drilling 
rig 

22/9/1988  Blowout  

$1.6 
billion  

167 

$750 
million  

$720 
million  

$98 
million  

0 

0 

1 

In  cases  where  there  is  a  significant  release  of  oil  and/or  gas,  additional  major  costs  derive 
from  clean-up  and  removal  costs,  impairment  of  natural  resources  and  correlated  economic 
activities, potential fines or penalties, as well as legal liabilities to third parties, e.g. for loss of 
earnings in the fishing and tourism sectors. The Deepwater Horizon disaster has demonstrated 
that these costs can be many times that of the loss of infrastructure, particularly in the case of 
incidents  known  as  blowouts15,  where  formation  fluid  flows  out  of  the  well  or  between 
formation layers after all the predefined technical well barriers or the activation of the same 
have failed.16 

Insurance companies consider that, in the offshore sector, blowouts carry the biggest risk in 
terms of the extent of damage. This is because of the potentially great spill volumes involved 
in  such  incidents  –  one  significant  reference  point  for  assessing  the  costs  of  an  offshore 
incident. While oil spills can also occur as a result of other types of incidents (e.g. collisions, 
pipeline ruptures), the overall amount of oil released in those cases is likely to be limited. In 
the case of a blowout, however, oil may be released at a high rate for weeks, or even months, 
until  either  successful  intervention  stops  the  flow  of  oil  or  pressure  within  the  oil  reservoir 
diminishes  sufficiently.  Because  of  this,  the  reinsurer  Munich  RE  proposed  in  September 
2010 a mechanism that would allow the global insurance and reinsurance industry to provide 
Gulf  of  Mexico  operators  with  up  to  a  US$20  billion  cushion  for  specialized  drilling 
operations; significantly more than the US$1-1.5 billion limit that covers on the international 

14 Costs estimated in December 2009 US dollars and include property damage, debris removal, and cleanup. 

Excluded were the costs of business interruption, extra expense, employee injuries and fatalities, and 
liability claims. Source: ‘The 100 Largest Losses 1972-2009; Large Property Damage Losses in the 
Hydrocarbon-Chemical Industries’, 2009, Marsh Property Risk Consulting, 
http://www.marshriskconsulting.com/Load/article_1219057.pdf 

15 Offshore blowouts result from gas, or gas and oil escaping out of control under high pressure from subsurface 

reservoirs during drilling or production. Oil may be released either at the water surface or on the sea 
bottom, depending on the type of drilling rig being used, and other factors. Every modern rig has a set 
of large control valves, known as blowout preventers, to stop the flow of oil, gas and other well fluids if 
problems occur during drilling. 

16 Definition as per SINTEF, http://www.sintef.no/Home/Technology-and-Society/Safety-

Research/Projects/SINTEF-Offshore-Blowout-Database/ 

EN 

6 

   EN 

 
 
                                                 
insurance  market  are  generally  subject  to.17  Historical  data  show  that  the  two  largest 
accidental  oil  spills  at  sea  have  been  caused  by  blowouts  (see  Table  3:  The  10  largest 
accidental oil spills in the last 50 years). 
Table 3: The 10 largest accidental oil spills in the last 50 years18 

Tanker/installation 

Location 

Type 

Date

Spill volume 
(tonnes) 

Deepwater 
Horizon 

United States 

Blowout 

2010 666,400 

Ixtoc 1 

Mexico 

Blowout 

1979 476,000 

Atlantic Empress 

Trinidad 
Barbados 

and 

Tobago, 

Tanker 

1979 287,000 

Nowruz Oil Field 

Iran 

Blowout19 1983 272,000 

ABT Summer 

Angola 

Tanker 

1991 260,000 

Castillo de Bellver  South Africa 

Tanker 

1983 252,000 

Amoco Cadiz 

France 

Tanker 

1978 223,000 

Haven 

Italy 

Tanker 

1991 144,000 

Odyssey 

Canada 

Tanker 

1988 132,000 

Torrey Canyon 

UK 

Tanker 

1967 119,000 

The largest oil spill in Europe resulting from offshore oil activities probably occurred on the 
Ekofisk  Bravo  platform  in  Norwegian  waters.  As  a  result  of  a  blowout  in  April  1977,  an 
estimated  80,000–126,000  barrels  of  oil  (about  2%  of  the  Deepwater  Horizon  spill)  was 
discharged during the course of a week before the leak was stopped.20 Rough seas and higher 
than average air temperatures aided the break up of much of the spilled oil, and as a result no 
major ecological damage resulted.21 

17 ‘Press release: Munich Re develops new insurance solution for oil catastrophes’, 12/09/2010, The Munich 

Reinsurance Company, 
http://www.munichre.com/en/media_relations/press_releases/2010/2010_09_12_press_release.aspx 
18 Source: ITOPF, http://www.itopf.com/information-services/data-and-statistics/statistics/#major; Deepwater 

Horizon MC252 Gulf Incident Oil Budget (August 4, 2010), 
http://www.noaanews.noaa.gov/stories2010/PDFs/DeepwaterHorizonOilBudget20100801.pdf; Jane 
Lubchenco et al., BP Deepwater Horizon Oil Budget: What Happened to the Oil? (August 4, 2010), 
http://www.usgs.gov/foia/budget/08-03-2010...Oil%20Budget%20description%20FINAL.pdf 

19 The Iran-Iraq war either caused or prevented blowouts in this field from being capped. 
20 http://home.versatel.nl/the_sims/rig/ekofiskb.htm 
21 ‘Well Integrity: Big contributor to Major Accident Risk’, 20/02/2008, Petroleum Safety Authority, Norway, 
http://www.ptil.no/well-integrity/big-contributor-to-major-accident-risk-article4157-145.html 

EN 

7 

   EN 

 
 
                                                 
Given the low frequency of major oil spillages from offshore facilities in Europe, another way 
of estimating the financial cost of potential spills is to use figures from tanker spills as a proxy 
for such accidents, mindful of some qualifications.22 There have been several such disasters in 
the European maritime transport sector which demonstrated the potential consequences of an 
oil spill. The sinking of the Erika and the Prestige tankers in 1999 and in 2002, respectively, 
triggered new EU-legislation as regard to maritime transport.  

Although  the  volumes  spilled  were  much  lower  than  in  the  case  of  the  Deepwater  Horizon, 
the Erika and Prestige accidents are considered the greatest environmental disasters to ever hit 
France and Spain, respectively. In case of the Erika, about 19,000 tonnes of the 30,000 tonnes 
of heavy fuel it was carrying were spilled. About 400 kilometres of coastline were polluted, 
causing serious damage to marine and bird life, fisheries and tourism. In 2000, these damages 
were valued at € 400 million.23 In case of the Prestige tanker, it is thought that more than 80% 
of its 77,000 tonne load of fuel oil was released into the sea. The oil spill polluted thousands 
of  kilometres  of  Spanish  and  French  coastline,  as  well  as  causing  great  harm  to  the  local 
fishing industry. According to some estimates, the damages amounted to over € 5 billion.24 

Because  more  comprehensive  data  exist  for  tanker  spills,  studies  have  used  these  data  to 
propose  an  indicative  cost  per  unit  of  oil  spilled  –  an  exercise  that  addresses  the  analysis-
skewing  effects  of  concentrating  on  a  select  few  high-profile  cases.  In  March  2010,  the 
International Maritime Organization’s Marine Environment Protection Committee considered 
independent statistical studies by Greece, Japan and Norway on global oil spill compensation 
data.  These  studies  showed  very  similar  non-linear  functions  of  total  spill  cost  versus  spill 
weight, obtained by regression (see Table 4: Non-linear functions of total spill costs (obtained 
by regression)). The body decided to use the formula proposed by Greece as its basis for their 
volume-dependent calculations of spill costs. 

22 In the case of the offshore spill, there may be greater release, a greater degree of uncertainty about the size of 

the spill, a different type of oil dispersal due to release near the seabed, and a more complex (and 
potentially costly) process for capping a spill. Conversely, a large number of tanker wrecks occur on, or 
close to the coastline, potentially increasing cleanup costs when compared with offshore spills due to 
shoreline oiling. 

23 Communication from the Commission to the European Parliament and the Council on a second set of 

Community measures on maritime safety following the sinking of the oil tanker Erika, COM(2000) 802 
final, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2000:0802:FIN:EN:PDF 

24 The Prestige: one year on, a continuing disaster, 

http://www.wwf.fi/www/uploads/pdf/Prestige_raportti_marras03.pdf 

EN 

8 

   EN 

 
                                                 
Table 4: Non-linear functions of total spill costs (obtained by regression)25 

Reference 

Total spill cost function, 

Data source 

Japan:  Yamada  2009  (MEPC 
59/17/1) 

V = spill weight (tonnes) 

38,735V0.66 

IOPCF26 

Norway: Psarros et al. 2009 

60,515V0.647 

IOPCF, Safeco project 

(MEPC 59/INF.21) 

Greece: Kontovas et al. 2009 

51,432V0.728 

IOPCF 

(MEPC 60/17, annex 2) 

Care must be taken when using compensation costs as a proxy for the true economic cost of 
an oil spill because the scope of the compensation regimes and the admissible claims are not 
all-inclusive (for example, they may exclude long-term damage to ecosystems), and the total 
amount of compensation is capped. Formulae derived from such data therefore underestimate 
true spill costs. Using the IMO formula 51,432V0.728, the costs of the Deepwater Horizon oil 
spill  would  be  just  over  US$893  million,  a  figure  around  45  times  smaller  than  the  costs 
estimated by BP. 

The  above  illustrates  how  the  experience  of  previous  tanker  oil  spills  can  lead  to  the 
underestimation of the costs associated with the Deepwater Horizon disaster. This is because 
existing conventions stipulate that compensation is only payable for the costs of “reasonable” 
measures taken to combat oil at sea and to protect resources vulnerable to oil. However, major 
and long-lasting oil spills often give rise to strong public reactions putting the government and 
other  public  authorities  responsible  for  spill  response  under  considerable  pressure  to 
intervene.  Offshore  blowouts  pose  the  greatest  risk  in  terms  of  sheer  spill  volume,  and 
influences  such  as  the  above  were  unquestionably  in  operation  during  the  months  the 
Deepwater  Horizon  disaster  lasted.  The  Commission  believes  that  should  a  comparable 
blowout  occur  in  European  waters,  it  can  be  expected  that  similar  public  sentiments  and 
political pressures would drive up the ultimate costs of cleanup and compensation. This view 
is  reinforced  by  the  UK  House  of  Commons  conclusion  that:  “Given  the  high  costs  of  the 
incident  in  the  Gulf  of  Mexico,  we  believe  that  the  OPOL  (Offshore  Pollution  Liability 
Association) limit of $250 million is insufficient.”27 

Given the shortcomings of the IMO formula, an alternative source on spill costs can be found 
in  a  study  by  Dagmar  Etkin.  This  sought  to  approximate  per-unit  marine  oil  spill  clean-up 

25 ‘Report of the Working Group on Environmental Risk Evaluation Criteria within the context of Formal Safety 

Assessment’, Agenda item 17, Marine Environment Protection Committee, 60th session, 24/03/2010, 
International Maritime Organization, http://www.martrans.org/documents/2009/sft/MEPC%2060-
WP.11.pdf. 

26 International Oil Pollution Compensation Funds, http://www.iopcfund.org. 
27 UK Deepwater Drilling - Implications of the Gulf of Mexico Oil Spill - Energy and Climate Change 

Committee, UK House of Commons, p26, 
http://www.publications.parliament.uk/pa/cm201011/cmselect/cmenergy/450/450i.pdf 

EN 

9 

   EN 

 
 
                                                 
costs  in  different  geographic  locations  by  examining  historical  data.28  In  general,  spills  in 
more-developed  nations  with  high  labour  costs,  complex  regulations  for  spill  response  and 
high  standards  for  environmental  protection  were  found  to  be  more  expensive.  Some  of  the 
data from this study are presented in Table 5: Average Per-Tonne Marine Oil Spill Clean-up 
Costs  by  Country  (1999  US$).  It  should  be  noted  that  these  figures  are  for  clean-up  costs 
alone, and do not include third-party damage claims or natural resource damage costs which 
may be incurred in addition. The drawback of a fixed per-unit scale such as this is that smaller 
spills are more expensive on a per-unit basis than larger ones, and therefore this analysis may 
overestimate the clean-up cost of very large spills. According to the figures in this table, the 
clean-up  costs  of  the  Deepwater  Horizon  oil  spill  would  be  US$18.8  billion  –  an  amount 
around  38%  above  BP’s  own  spill-response  figures  of  US$13.6  billion.29  Nevertheless,  this 
figure is much more in line with the Deepwater Horizon experience than the figures for tanker 
spills used by the IMO, and as such will be used as a basis for calculations further on in this 
annex. 

Table 5: Average Per-Tonne Marine Oil Spill Clean-up Costs by Country (1999 US$) 

Denmark  

Estonia 

Finland  

France  

Germany  

Greece  

Ireland  

Italy  

Latvia  

Lithuania  

Netherlands  

Norway  

Spain  

Sweden  

12,324.29

7,518.45

2,331.71

2,537.06

11,797.67

9,403.04

5,299.35

7,210.43

10,154.88

86.11

7,336.29

25,483.32

483.56

17,242.75

28 ‘Worldwide Analysis of Marine Oil Spill Cleanup Cost Factors’, Dagmar Schmidt Etkin, 2000, Presented at 

Arctic and Marine Oilspill Program Technical Seminar, http://www.environmental-
research.com/erc_papers/ERC_paper_2.pdf 

29 ‘Annual Report and Form 20-F 2010’, BP plc, 

http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/set_branch/STAGING/common_a
ssets/downloads/pdf/BP_Annual_Report_and_Form_20F.pdf, p.73 

EN 

10 

   EN 

 
                                                 
UK  

United States  

3,398.21

28,235.30

A final source on the potential costs of a blowout in Europe is environmental reports from the 
offshore  industry  itself.  In  February  2011,  the  environmental  statement30  of  the  US  oil 
company Hess, seeking to drill a deepwater well off Shetland, received much publicity. In the 
worst case scenario identified by the document, more than 4 million barrels (550,000 tonnes) 
of  oil  could  spill  into  the  sea  over  a  period  of  just  over  2.5  months  and  spread  as  far  as 
Iceland, Ireland, Norway, the Netherlands and the northeast coast of England. The document 
also  suggests  that  because  of  the  weather  conditions  (wind,  waves,  currents)  "surface 
containment and recovery equipment are unlikely to be effective". We can combine the spill 
volumes in this scenario with the per-unit marine oil spill clean-up costs to estimate the costs 
of an accident in Europe. 

In the event of a subsea blowout whereby the blowout preventer has failed and oil is freely 
flowing into the sea, Hess estimates it may take “considerably longer than 1 week” to install a 
cap  that  would  stop  the  flow  from  the  well.  Assuming  this  intervention  takes  10  days,  is 
successful,  and  a  steady  release  rate  of  88,000  barrels  (12,005  tonnes)  of  oil  per  day  is 
maintained  until  the  spill  is  capped,  the  figures  from  the  Etkin  study  presented  in  Table  5: 
Average Per-Tonne Marine Oil Spill Clean-up Costs by Country (1999 US$) estimate that the 
spill would result in US$ 1.4 billion in clean-up costs. In Hess' worst case scenario of a 2.5 
month, 550,000 tonne release, the spill would cost US$ 6.6 billion to clean-up, according to 
this same formula. This supposes that the spill affects the UK, Norway and the Netherlands 
equally. It is to be emphasized, again, that these figures are only for clean-up costs and do not 
include third party liabilities nor other potentially substantial economic costs. In the case of 
Deepwater Horizon, BP estimated such additional costs to be around twice the clean-up costs 
incurred. 

In  conclusion,  the  evidence  shows  that  it  is  very  difficult  to  generalize  about  the 
economic costs of offshore accidents. Nevertheless, for the purposes of this study we can 
assume that the average property damage cost of a major accident is €50 million. In the 
case  of  large  blowouts  in  European  waters  (over  500,000  tonnes),  we  can  assume  that 
directly quantifiable costs for cleanup and compensation will be between €5 billion and 
€30  billion.  This  range  is  es timated  using  the  cleanup-only  cost  calculations  in  the 
paragraph  above  as  a  lower  bound,  and  BP-estimated  Deepwater  Horizon  costs  as  an 
upper bound. It does not include indirect costs such as the effect on oil prices, the health 
of  the  oil  industry,  or  security  of  energy  supply.  Although  unquantifiable,  these  costs 
could  also  be  very  significant.  They  should,  therefore,  also  be  factored  into  any  cost-
benefit analysis of policies aimed at improving offshore safety, albeit qualitatively. 

2. The probability of an offshore accident 

Risk  is  the  product  of  frequency  and  consequence.  Accordingly,  high  consequence  events 
which occur infrequently may contribute as much risk as frequent events which have smaller 

30 ‘Environmental Statement: Appraisal Well 204/10a-D (Cambo 4)’, 2011, 

http://www.hesscorporation.com/environmentalstatement/Well20410a-D_Cambo4ES-13-01-11.pdf 

EN 

11 

   EN 

 
 
                                                 
consequences.  Estimating  the  frequency  with  which  events  occur  is  as  important  to  overall 
risk as accurately predicting the consequences. One way of estimating frequency is to look at 
historical records.  

The  OGP  risk  assessment  data  directory  for  major  accidents  was  compiled  to  serve  as  an 
industry  reference  for  quantitative  risk  assessments.31  It  identifies  98  major  accidents  that 
have occurred in the North Sea in the years 1970-2007, including helicopter accidents. Whilst 
this gives an aggregated rate of 2.6 per year, it should be noted that there has been a steady 
and impressive reduction in the number of offshore accidents in the North Sea throughout this 
time period.32 

Figure 1: Fatal, Major and Over-3-Day Injury Rates to Offshore Workers on the UK Continental Shelf, 
1995/1996 – 2009/2010 (provisional)33 

s
r
e
k
r
o
W
0
0
0
,
0
0
1
r
e
p
s
e
t
a
R
y
r
u
n

j

I

1800

1600

1400

1200

1000

800

600

400

200

0

Fatal + major injury rate
Over-3-day injury rate

1995/1996

1996/1997

1997/1998

1998/1999

1999/ 2000

2000/2001

2001/2002

2002/2003

2003/2004

2004/2005

2005/2006

2006/2007

2007/2008

2008/2009

2009/2010

Assuming the major accident rate is now half what is was during the time period of the OGP 
report,  and  assuming  that  the  average  property  damage  cost  of  each  major  accident  is  €50 
million, this gives an annual figure of €65 in major accident costs, not including costs related 

31  ‘Risk  Assessment  Data  Directory  –  Major  Accidents’,  Report  No.  434-17,  March  2010,  International 

Association of Oil & Gas Producers, http://www.ogp.org.uk/pubs/434-17.pdf 

32 ‘Offshore Injury, Ill Health and Incident Statistics 2009/2010: HID Statistics Report HSR 2010 – 1’, 

10/12/2010, UK Health and Safety Executive, http://www.hse.gov.uk/offshore/statistics/hsr0910.pdf; 
‘Trends in Risk Level in the Petroleum Activity: Summary Report 2009– Norwegian Continental 
Shelf’, 27/04/2010, Norway Petroleum Safety Authority, 
http://www.ptil.no/getfile.php/PDF/RNNP%202009/Trends%20in%20risk%20levels%20-
%20Summary%20Report%202009.pdf 

33 Source: ‘Offshore Injury, Ill Health and Incident Statistics 2009/2010: HID Statistics Report HSR 2010 – 1’, 

December 2010, Health & Safety Executive, Hazardous Installations Directorate, Offshore Division 
(OSD), http://www.hse.gov.uk/offshore/statistics/hsr0910.pdf 

EN 

12 

   EN 

 
 
 
 
 
 
 
                                                 
to oil spills or the loss of human life (the value of statistical life is put at €1-2 million by the 
European Commission34 and at £1.5 million by the UK HSE35). 

As  previously  mentioned,  blowouts  are  the  category  of  accident  that  have  the  greatest 
magnitude of potential loss in the offshore sector because of the large oil spills that may result 
from  them.  Historical  records  indicate  that  very  large  spills  resulting  from  blowouts  are 
comparatively rare. 

The SINTEF Offshore Blowout Database36 includes 573 offshore blowouts/well releases that 
have  occurred  worldwide  since  1955,  suggesting  that  such  incidents  are  not  uncommon. 
SINTEF states that most blowouts occurring in the US Gulf of Mexico, Norway and the UK 
since  1  January  1980  have  been  included  in  the  database.  The  database  is  an  industry 
reference  for  blowout  risk,  its  data  serving  as  the  basis  for  numerous  notable  benchmark 
studies for risk assessment. 

According  to  this  database,  64  well  releases37  or  blowouts  occurred  in  UK  and  Norwegian 
waters  between  1  January  1980  and  1  January  2008,  i.e.  on  the  average  2.3  per  year.  For 
comparison,  in  the  same  period  8,283  wells  were  drilled  in  the  UK,  including  1,690 
exploration  wells,  1,339  appraisal  wells  and  5,254  development  wells.38    In  Norway,  1,036 
exploration wells and 2,801 development wells have been drilled in this period.39  

A  recent  annual  Scandpower  report40  based  on  SINTEF  data  compares  the  risk  of  different 
offshore activities. The report reveals that, among the various phases of offshore operations, 
exploration  drilling  entails  the  highest  risk  of  blowout.  In  case  of  deepwater,  high-
pressure/high-temperature (HPHT) wells41, the blowout frequency is 1.9×10-3 per drilled well 
“for offshore operations of North Sea standard”. In case of deepwater, but “normal” wells, the 
frequency  is  only  3.1×10-4,  i.e.  one  order  of  magnitude  smaller.  The  reason  the  blowout 
frequency of HPHT wells is significantly higher is not believed to be the high pressure itself, 
but  rather  the  small  margin  between  pore  pressure  and  fracture  pressure  in  such  wells.  The 
probability  of  a  blowout  during  other  activities,  like  development  drilling,  completion  or 
production is well below that of exploration drilling, typically in the order of 10-4 or 10-6 per 
operation or well year.  

34 ‘Impact Assessment Guidelines’, 15/01/2009, European Commission, SEC(2009) 92, p.43. 
35 HSE Economic Analysis Unit (EAU) appraisal values, 2006 (Q3) Short version, 28/07/08, 

http://www.hse.gov.uk/economics/eauappraisal.htm 

36 SINTEF Offshore Blowout Database, http://www.sintef.no/sintefcom/Technology-and-Society/Safety-

Research/Projects/SINTEF-Offshore-Blowout-Database/ 

37 An incident where hydrocarbons flow from the well at some point where flow was not intended and the flow 

was stopped by use of the barrier system that was available on the well at the time of the incident. 
Definition as per SINTEF. 

38 https://www.og.decc.gov.uk/information/wells.htm 
39 http://factpages.npd.no/factpages/Default.aspx?culture=en 
40 ‘Blowout and Well Release Frequencies – Based on SINTEF Offshore Blowout Database, 2005’, 26/06/2006, 

Scandpower, http://www.oljevernportalen.no/nofo/Dokumenter/90005001_r2_2006_1.pdf 

41 HPHT wells are wells with expected shut-in pressure equal to or above 690 bar (10,000 psi) and/or bottomhole 
temperature exceeding 150°C. ‘Well integrity in drilling and well operations’, NORSOK standard 
D010, Rev. 3, August 2004, http://www.npd.no/Global/Norsk/5%20-
%20Regelverk/Skjema/Br%C3%B8nnregistrering/Norsok_standard_D-010.pdf  

EN 

13 

   EN 

 
                                                 
According to the UK Health and Safety executive, an individual risk of death of 10-3 per year 
has  typically  been  used  within  the  offshore  industry  as  the  maximum  tolerable  risk.42  For 
comparison, acceptable annual failure probabilities in the nuclear industry are typically in the 
order of or 10-6 or better. 

In  order  to  use  the  Scandpower  figures  to  calculate  the  overall  likelihood  of  an  offshore 
blowout in EU waters, we also need to know the number of active production wells and the 
annual  frequency  of  different  operations  that  may  result  in  a  blowout  –  necessary  because 
probabilities are expressed in either a per well year or per operation format. Whilst regulators 
have supplied reliable figures for former, to the best of our knowledge no comprehensive EU-
wide source exists providing the latter. We can, however, estimate the frequency of operations 
that may result in a blowout in Europe by looking at their respective frequencies per well year 
in  the  SINTEF  database43,  and  scaling  these  proportions  by  the  number  of  active  wells  in 
Europe  (see  Table  6:  Annual  Probability  of  at  least  1  Blowout  for  Offshore  Operations  in 
Europe). This method assumes that: a) the proportion of different operations per well year in 
the SINTEF database does not significantly differ from that in the North Sea at present; and b) 
that the sampling bias in this data is within acceptable tolerances. 
Table 6: Annual Probability of at least 1 Blowout for Offshore Operations in Europe44 

Operation 

Blowout 
Probability / 
Unit 

Unit 

Annual No. 
Units in 
European 
Waters 

Annual 
Probability of 
at least one 
Blowout in 
European 
Waters 

Exploration 
Drilling,  deep 
(normal 
wells)  

Exploration 
Drilling,  deep 
(HPHT wells)  

Development 
Drilling,  deep 
(normal 
wells)  

Drilling 

3.1×10-4 

per 
well 

drilled 

383 
(estimated) 

1.1×10-1 

1.9×10-3 

per 
well 

drilled 

29 
(estimated) 

5.3×10-2 

6.0×10-5 

per 
well 

drilled 

635 
(estimated) 

3.7×10-2 

Development 
Drilling,  deep 

3.7×10-4 

per 
well 

drilled 

48 
(estimated) 

1.8×10-2 

42 ‘HSE Information sheet: Guidance on Risk Assessment for Offshore Installations’, Offshore Information Sheet 

No. 3/2006, 2006, UK Health and Safety Executive. 

43 As provided in ‘Risk Assessment Data Directory – Blowout Frequencies’, Report No. 434-2, March 2010, 
International Association of Oil & Gas Producers, http://www.ogp.org.uk/pubs/434-02.pdf 

44  Excluding  shallow  gas  incidents  and  assuming:  1)  7%  of  all  wells  drilled  are  HPHT;  2)  0.08  coiled  tubing 
operations per well year; 3) 0.05 snubbing operations per well year; and 4) 0.17 workover operations 
per  well  year,  all  as  per  Scandpower.  Number  of  wells  does  not  include  those  in  Bulgaria,  Cyprus, 
Germany, Malta, or Romania. 

EN 

14 

   EN 

 
                                                 
(HPHT wells)  

Well 
Interve
ntion 

Completion  

9.7×10-5 

per operation 608 

5.7×10-2 

(estimated) 

Wirelining  

6.5×10-6 

per operation 10735 

6.7×10-2 

(estimated) 

Coiled Tubing   1.4×10-4 

per operation 505 

6.8×10-2 

(estimated) 

Snubbing  

3.4×10-4 

per operation 316 

1.0×10-1 

(estimated) 

Workover  

1.8×10-4 

per operation 1074 

1.8×10-1 

(estimated) 

Producing 
(excluding 
causes) 

Wells 
external 

9.7×10-6 

per well year  6315  

5.9×10-2 

Producing 
(external causes) 

Wells 

3.9×10-5 

per well year  6315 

2.2×10-1 

Total: 

6.45×10-1 

The last column of Table 6: Annual Probability of at least 1 Blowout for Offshore Operations 
in Europe shows the annual probability of occurrence of at least one blowout because of any 
of the potential causes. These probabilities are calculated as follows: 

Let’s call 
ip  the probability of occurrence (per drilled well, operation or well year, depending 
on the case – probabilities shown in column 3) of a blowout because of any of the 11 possible 
causes considered (11 rows in Table 6: Annual Probability of at least 1 Blowout for Offshore 
Operations in Europe). In order to get no blowout a given year because of a given possible 
cause,  there  should  not  occur  any  blowout  in  any  of  the  individual  trials  (operation  or  well 
year). For an arbitrary possible cause  i , the probability of occurrence of no blowout, 1
, 
is the probability of not experiencing a blowout in each single attempt: 

'ip−

1

−

p
i

'

=

ni

−∏
(1

1
=

i

p
i

)

. 

In  this  expression  ni   represents  the  number  of  operations  or  well  years.  The  hypothesis  of 
independence between events has been adopted (what happens in one operation or well does 
not affect what happens in any other one).Thus, the probability of occurrence per year of at 
least one blowout for each possible cause is (last column): 

EN 

15 

   EN 

 
 
 
 
 
 
 
p
i

' 1
= −

ni

−∏
(1

1
=

i

p
i

)

By means of a similar rationale, calling  1 p− to the probability per year of occurrence of no 
single blowout from any possible source, it may be deduced that the probability of occurrence 
of at least one blowout is: 

p

1
= −

11

−∏
(1

1
=

i

')i
p

Table  6:  Annual  Probability  of  at  least  1  Blowout  for  Offshore  Operations  in  Europe  thus 
indicates  that  the  annual  probability  of  at  least  one  blowout  in  European  waters  is  around 
6.5×10-1, or 65%. Other reliable studies corroborate this figure. A report presenting the results 
of  projects  undertaken  by  Det  Norske  Veritas  on  behalf  of  the  UK  Health  &  Safety 
Executive45  assesses  the  annual  probability  of  a  blowout  to  be  5.6×10-4  for  every  fixed 
offshore installation on the UK continental shelf and 4.7×10-3 for every floating installation.46 
Given that there were 272 fixed and 42 floating installations deployed in UK waters in early 
2011,  this  suggests  a  total  annual  probability  of  3.0×10-1  for  at  least  one  blowout  –  a  30% 
chance each year in the UK alone.47 

This is not to suggest that Europe can expect an event on the scale of the Deepwater Horizon 
disaster every one to two years. First, the blowout probabilities presented in Table 6: Annual 
Probability of at least 1 Blowout for Offshore Operations in Europe are for both oil and gas 
wells  in  Europe  combined,  but  Scandpower  calculates  that  the  blowout  frequency  for  gas 
wells  is  2.6  times  that  for  oil  wells.48  Assuming  an  equal  number  of  oil  and  gas  wells  in 
Europe49, the annual Scandpower-based probability of at least one oil well blowout in Europe 
is therefore 1.8×10-1, i.e. 18% per year. 

Secondly, history tells us that only a fraction of blowouts have lasted long enough to result in 
major spills. More work needs to be done to quantify the probability of a massive spill given a 
blowout,  however  Det  Norske  Veritas  has  used  the  SINTEF  database  to  calculate  expected 
blowout duration figures for a hypothetical conventional well drilled in 337 metres of water in 
the  Norwegian  Sea  using  state-of-the-art  technology  and  modern  procedures.  These  figures 
reveal that should a blowout occur, there is a 56% chance of it lasting 2 days or less, and only 
a 15% chance of it lasting more than 2 weeks. 

45 ‘Accident Statistics for Offshore Units on the UKCS 1990-2007 Issue 1’, April 2009, Oil & Gas UK, 

http://www.oilandgasuk.co.uk/cmsfiles/modules/publications/pdfs/EHS30.pdf. Data from the UK 
Corporate Operational Information system, SINTEF Offshore Blowout Database, DNV’s Worldwide 
Offshore Accident Databank and UK Marine Accident Investigation Branch. 

46 Det Norske Veritas defined blowout as: “An uncontrolled flow of gas, oil or other fluids from the reservoir, 
i.e. loss of 1. barrier (i.e. hydrostatic head) or leak and loss of 2. barrier, i.e. BOP/DHSV.”  

47 In correspondences with the Commission, HSE disputes these figures, noting that HSE wells specialists would 
only have identified only one of the four incidents Det Norske Veritas used to calculate blowout 
probabilities as a blowout. 

48 Oil wells are defined as wells where the formation has an estimated gas/oil ratio of less than 1,000. Gas wells 

are defined as wells where the formation has an estimated gas/oil ratio of more than 1,000. 

49 Scandpower figures are based on a sample of 95,270 oil well years and 82,204 gas well years in the combined 

areas of US GoM and North Sea. 

EN 

16 

   EN 

 
 
 
 
                                                 
Table 7: Probability distribution of blowout durations50 

Duration range (days) 

< 0.5 

0.5-2 

Representative duration 
(days) 

0.5 

2 

2-5 

5 

5-14 

> 14 

14 

50 

Probability 

Topside 
(20%) 

Subsea 
(80%) 

0.49 

0.19 

0.12 

0.13 

0.07 

0.33 

0.2 

0.14 

0.16 

0.17 

Assuming that these conditions represent the typical conditions for drilling in Europe, we can 
calculate  that  the  annual  probability  of  Europe  experiencing  at  least  one  oil  well  blowout 
lasting  for  over  14  days  (with  a  representative  duration  of  ca.  50  days)  is  2.7×10-2  –  an 
expected recurrence rate of around 37 years. 

In summary, historical figures suggest that the recurrence rate for a major oil spill from 
an offshore blowout in Europe is more likely to be in the order of decades rather than 
centuries. Assuming a recurrence rate of 35 years and an average economic cost of €5 to 
€30 billion, this amounts to costs of €140 to 850 million per year. Add to this an annual 
figure  of  €65  million  in  property  losses  res ulting  from  less  costly,  but  more  common, 
major  accidents,  and  we  can  estimate  a  total  annual  figure  of  €205  to  €915  million  in 
direct,  tangible  costs  for  offshore  accidents  in  Europe.  These  figures  do  not  include 
indirect costs such as the effect on oil prices, the health of the oil industry, or security of 
energy supply. Although unquantifiable, these costs must also be factored into any cost-
benefit analysis of policies aimed at improving offshore safety, albeit qualitatively. 

Policymakers  should  bear  in  mind  a  number  of  caveats  when  interpreting  the  above 
conclusions. 

On the one hand, these conclusions can be considered to be conservative estimates (i.e. on the 
high  side)  because  although  the  blowout  probabilities  from  Scandpower  are  stated  as  being 
“for offshore operations of North Sea standard”, some probabilities are derived from data that 
includes operations in the US Gulf of Mexico where two barriers against formation fluids are 
also required. Nevertheless, Det Norske Veritas notes that the blowout frequency for the Gulf 
of  Mexico  is  approximately  9  times  higher  than  in  the  North  Sea,  and  that  the  Scandpower 
probabilities overestimate the chance of a blowout when used in the European context. 

Also,  Det  Norske  Veritas  notes  that  successive  annual  Scandpower  reports  suggest  that  the 
blowout  frequency  from  an  exploration  well  has  been  reduced  by  a  factor  of  more  than  3.5 
over the last 10 years, from 5.5×10-4 to 1.54×10-4. While the frequency of a blowout has been 
reduced, probability figures are based on  information collected  over a 20  year period in the 
past,  meaning  that  they  should  be  considered  lagging  indicators.  Historical  blowout  data 

50 Det Norske Veritas, Environmental Risk Assessment of Exploration Drilling in Nordland VI, Report No. 

20/04/2010, 
http://www.olf.no/PageFiles/6525/Environmental%20risk%20assessment%20of%20exploration%20dril
ling%20in%20Nordland%20VI.pdf 

EN 

17 

   EN 

 
 
                                                 
reflects neither regulatory improvements nor the latest improvements in the industry related to 
state-of-the-art  drilling  technology,  barriers  with  improved  technical  integrity  and  better 
operating procedures.  

On  the  other  hand,  the  abovementioned  conclusions  do  not  attempt  to  anticipate  trends  in 
European  offshore  drilling  operations.  Although  drilling  expertise  may  be  improving,  the 
Norwegian  and  UK  regulators  have  indicated  that  deeper  wells  are  being  planned  in  their 
waters, and that high temperature, high pressure and more challenging wells will continue to 
be  drilled.  Operators  are  attempting  increasingly  technically  ambitious  operations,  and  they 
are expanding their operations to new, often environmentally sensitive areas. Additionally, an 
increased  number  of  smaller  companies  are  entering  the  market  as  the  major  oil  companies 
sell off older, non-cost effective assets. These smaller companies aim to remain profitable by 
having  a  smaller  cost  base  and  extending  production  from  these  ageing  installations  and 
mature fields. 

Text box: How dangerous is a particular drilling operation? 

Insurers indicate that risk factors for offshore operations include:  

1) The worst case discharge rate from a well;  

2) The time it would take to drill a relief well;  

3) Water and drilling depth;  

4) Well temperature;  

5) Well angle; and  

6) Well pressure.  

Additionally,  the  Scandpower  probabilities  have  a  great  uncertainty  in  light  of  the  small 
number  of  blowouts  upon  which  they  are  based.  This  is  to  say  that  where  incidents  are 
infrequent,  just  one  additional  incident  may  significantly  increase  the  statistical  frequency. 
This  uncertainty  has  not  been  quantified  by  Scandpower;  however,  some  consider  that  well 
blowouts  resulting  in  the  uncontrolled  release  of  hydrocarbons  have  happened  too 
infrequently in Europe for a reliable analysis of the historic frequency to be carried out.51 

Moreover,  there  are  limits  as  to  what  historical  frequencies  are  able  to  reveal.  Qualitative 
information can provide an early warning of an increase in risk so that relevant and effective 
preventive  measures  can  be  put  in  place  in  time.  In  connection  with  this,  reported  “near-
misses”, in which slightly changed circumstances could have developed into a major accident, 
suggest  the  risk  of  a  blowout  in  Europe  is  not  remote.  Just  one  month  after  the  Deepwater 
Horizon  disaster,  on  19  May  2010,  well  control  was  lost  on  the  Gullfaks  C  installation  in 
Norway;  according  to  the  Norwegian  Petroleum  Safety  Authority  (PSA):  “Only  chance 
averted a sub-surface blowout and/or explosion, and prevented the incident from developing 

51 ‘Environmental Statement: Appraisal Well 204/10a-D (Cambo 4)’, 2011, 

http://www.hesscorporation.com/environmentalstatement/Well20410a-D_Cambo4ES-13-01-11.pdf 

EN 

18 

   EN 

 
 
                                                 
into  a  major  accident”.52  The  PSA’s  investigation  of  the  incident  identified  serious 
deficiencies in the  operator’s planning of the drilling and  completion operation  in this well. 
Management checks that activities were being conducted satisfactorily were also inadequate. 

In light of the above, policymakers should bear in mind the precautionary principle53, stating 
that in the face of scientific uncertainty  it is preferable  to err  on the side of caution,  until a 
thorough data analysis along the lines sketched in this annex is able to clarify the unknowns. 

52 ‘Notification of order to Statoil – Gullfaks C’, 19/11/2010, Petroleum Safety Authority Norway, 

http://www.ptil.no/news/notification-of-order-to-statoil-gullfaks-c-article7409-79.html. 
53 ‘Communication from the Commission on the Precautionary Principle’, Brussels, 02/02/2000, 
Commission Of The European Communities, COM(2000) 1, 

http://ec.europa.eu/dgs/health_consumer/library/pub/pub07_en.pdf 

EN 

19 

   EN 

 
                                                 
ANNEX II: 

LIST OF MAIN MEETINGS WITH STAKEHOLDERS 

Date 

Meeting/Interlocutors 

11/05/2010 

14/07/2010 

29/03/2011 

15/11/2010 

16/05/2011 

03/08/2011 

Meetings with industry 

Commissioner Oettinger and Commissioner Georgieva meeting with 
high level representatives of the industry 

Commissioner  Oettinger,  Commissioner  Georgieva,  Commissioner 
Damanaki  and  Commissioner  Potočnik  meeting  with  high  level 
representatives of the industry 

The  International  Association  of  Oil  and  Gas  Producers  (OGP) 
reported  to  Commissioner  Oettinger  on  industry  measures  to 
improve the safety of offshore operations 

Meeting with the EU Committee of the International Association of 
Oil and Gas Producers (OGP) 

Meeting  with  members  of  the  International  Association  of  Oil  and 
Gas Producers (OGP), working under the GIRG/WEC remit. 

Meeting  with  members  of  the  Subsea  Well  Response  Project, 
working  on  the  development  of  well  capping  and  containment 
equipment. 

Meetings with regulators 

14/07/2010 

Commissioner Oettinger meeting  with high level representatives of 
national regulators 

25/06/2010 

Working level meeting with national regulators 

15/09/2010 

1st NSOAF-EU joint workshop with national regulators 

10/12/2010 

2nd NSOAF-EU joint workshop with national regulators 

01/03/2011 

3rd NSOAF-EU joint workshop with national regulators 

29/03/2011 

4th NSOAF-EU joint workshop with national regulators 

29/06/2011 

5th NSOAF-EU joint workshop with national regulators 

18/07/2011 

6th NSOAF-EU joint workshop with national regulators 

Meetings with stakeholders within the Berlin Forum process 

18-19/10/2010 

Berlin Fossil Fuels Forum plenary meeting with a session dedicated 
to offshore safety 

06/07/2010 

21/09/2010 

Meeting  of  the  Berlin  Fossil  Fuels  Forum  Indigenous  Fossil  Fuels 
working group 

Meeting  of  the  Berlin  Fossil  Fuels  Forum  Indigenous  Fossil  Fuels 
working group 

EN 

20 

   EN 

 
20/01/2011 

07/04/2011 

Meeting  of  the  Berlin  Fossil  Fuels  Forum  Indigenous  Fossil  Fuels 
working group 

Meeting  of  the  Berlin  Fossil  Fuels  Forum  Indigenous  Fossil  Fuels 
working group 

Meetings with international partners 

28/06/2010 

EU-OPEC Ministerial Meeting  

19/11/2010 

EU-US Energy Council 

23/02/2011 

EU-US  Workshop  on  the  progress  and  outcome  of  the  Deepwater 
Horizon investigation 

07/06/2010 

EC-Norway Energy Cooperation Working Group meeting 

20-24/09/2010 

OSPAR Commission / Ministerial Meeting 

7-11/03/2011 

OSPAR Offshore Industry Committee meeting 

In addition to the above meetings, several bilateral meetings have been held with international 
and  national  industry  associations,  individual  companies,  national  authorities,  NGOs  and 
independent verification companies. Furthermore, the Commission has regularly attended the 
meetings of the G-20 Global Marine Environment Protection (GMEP) group and the Oil Spill 
Prevention and Response Advisory Group (OSPRAG) established in the UK. 

EN 

21 

   EN 

 
ANNEX III:  UNDERLYING DRIVERS OF THE PROBLEM 

1. Drivers related to industry evolution 

The offshore oil and gas industry in the EU, and globally, has recently been facing significant 
changes in its operational environment. These are partly driven by the maturity of many of its 
traditional operations and they partly stem from discoveries of new hydrocarbon reserves in 
complex  environments,  which  have  been  enabled  by  rapidly  evolving  technologies.  These 
factors are described below. 

1.1 Ageing infrastructure and maturing industrial environment 

The industry is increasingly reliant on ageing installations, often in service well beyond their 
original design lifetime. One reason is that new technology has enabled mature installations to 
continue to access oil reserves that would otherwise have long been stranded. 

In Norway, roughly half of the offshore fields have already exceeded the original field life54. 
In the UK, more than half of the fixed platforms have exceeded the original design life of the 
field  or  will  do  so  shortly55.  The  situation  is  similar  for  Italy  in  the  Mediterranean.  The 
consequence of the passage of time on the integrity of structures and process equipment is that 
challenges  accrue  for  the  maintenance  of  reliability.  The  costs  of  these  challenges  are 
compounded by declining profit margins as production rates in these fields decline. 

1.2 Structural shift of the industry towards diversification 

The initial operators of ageing platform and declining reservoirs are often led to divest them 
to  smaller,  specialist  oil  companies  who  have  low  overheads  and  are  in  the  business 
specifically  for  these  low  yielding  operations.  This  can  lead  to  a  loss  of  corporate  memory 
concerning the operation of the installation, thus posing a potential safety risk. 

The  involvement  of  smaller  companies  is,  however,  not  inherently  undesirable  as  they 
generally operate with a shorter decision chain for expenditure (including safety-related). On 
the other hand, smaller companies often have limited in-house resources, e.g. for well design, 
and  their  emergency  response  capabilities  are  usually  less  than  those  of  the  larger,  original 
operators who developed the installation. 

1.3 Shift to "frontier" operations and new technologies 

The scarcity of new discoveries of large, conventional reservoirs has, in recent years, directed 
the  industry  to  explore  more  challenging  frontier  environments.  These  include  high-
temperature  and  high-pressure  (HPHT)  reservoirs  and  reservoirs  in  hostile  climatic 
conditions,  in  deep  water,  or  in  geographically  remote  locations.  For  example,  in  the  North 
Sea the majority of operations have been at depths of 200 to 300 metres, whereas new projects 
operate as deep as 1,700 metres56. There is also a movement towards increasing oil and gas 

54 Source: http://www.ptil.no/ageing-and-life-extension/category626.html 
55 Source: http://www.offshore-mag.com/index/article-display/9114015229/articles/offshore/equipment-
engineering/north-sea-northwest-europe/2010/08/hse-launches_uk_platform.html 
56 There are activities planned in the UK, west of Shetlands at sea depths of up to 1,600 metres, near the Faroe 
Islands at sea depths of 1,100 metres and in Norway at up to 1,700 metres. 

EN 

22 

   EN 

 
                                                 
production in the Arctic regions57. Similarly, in the Mediterranean and the Black Sea, there is 
a trend towards expansion offshore activities into more distant areas, partly in deepwater.  

In contrast to the Gulf of Mexico, deep-water and HPHT reservoirs in North-Western Europe 
generally have to contend with more extreme weather and sea conditions. A study of HPHT 
well  performance  standards  by  the  UK  HSE58  reported  that  HTHP  operations  are  set  to 
continue  expanding  together  with  a  relatively  high  rate  of  well  control  problems  –  between 
1998 and 2003, about 1 such well in 6 experienced some instability59.  

2. Drivers related to company-specific corporate practice 

Besides the drivers that are common to the industry as a whole, levels of risks in the offshore 
sector are impacted by the practices and behaviours of individual companies. Two main types 
of  drivers  can  be  distinguished  here:  one  type  related  to  the  level  of  use  of  best  available 
technology  and  practices,  the  other  reflecting  the  degree  of  compliance  with  the  regulatory 
framework.  The  latter  is  often  related  to  the  existence  of  a  strong  safety  culture  within  a 
company (or absence thereof). These factors are described in the three sections below. 

2.1 Inconsistent use of state of the art practices and technology 

Regimes  for  control  of  risks  in  all  major  accident  hazard  (MAH)  are  identified  in  both  the 
Seveso  and  Extractive  Industries  Directives60  and  aim  for  desirable  outcomes61  rather  than 
specific  inputs.  Inconsistencies  are  found  in  the  degree  to  which  companies  focus  on  MAH 
preventive  systems  and  systemic  corporate  responsibility  (and  not  solely  on  individual 
responsibility,  and  occupational  safety  compliance).  Despite  progress  having  been  made  in 
this  area,  in  the  absence  of  a  consistent  template  for  industry  (and  regulators),  greater 
divergence of practices can in fact be expected. The reason for this is that a greater number of 
players  are  expected  to  engage  in  offshore  exploration  and  production,  brining  their  own 
corporate approaches.  

2.2 Failures of compliance with rules and standards  

Investigations  of  offshore  incidents  have  frequently  found  that  whilst  the  planned  measures 
were indeed appropriate to prevent critical events, operators did not maintain or follow them. 
According  to  available  reports,  this  seems  to  have  been  at  least  partly  evident  in  the 
Deepwater Horizon and Montara accidents. Achieving consistency between plans and actual 
performance  is  dependent  on  the  degree  of  compliance  with  the  national  regulatory 
framework  and  also  the  internal  operating  rules  and  procedures  within  a  company  that  are 

57 Prospecting is taking place in the Barents Sea and off Greenland. In April 2011, Statoil announced a 
significant oil discovery on the Skrugard prospect in the Barents Sea.  
58 "HPHT developments in the UKCS" Ref http://www.hse.gov.uk/research/rrpdf/rr409.pdf 
59 "kick" is an industry term used for situations of sudden escalation of well pressure leading to temporary 
disruption of the standard operation of the well. 
60 Council Directive 96/82/EC of 9 December 1996 on the control of major-accident hazards involving 
dangerous substances, OJ L 345, 31.12.2003, p. 97–105, amended by Directive 2003/105/EC of the European 
Parliament and of the Council of 16 December 2003 amending Council Directive 96/82/EC on the control of 
major-accident hazards involving dangerous substances, OJ L 345, 31.12.2003, p. 97–105 
61 It comprises identifying major accident scenarios, assessing consequences and likelihood to evaluate risks, 
identifying control and mitigation measures, and developing suitable management arrangements for 
implementing the measures. The approach to each MAH site should be contained within a company safety report 
or safety case. This may be provided to the national regulator for regulatory assessment. 

EN 

23 

   EN 

 
                                                 
designed  to  comply  with  the  regulatory  requirements  and  which  often  go  further  than  is 
legally necessary.  

2.3 Inadequate safety culture 

Within  an  organisation,  the  degree  of  compliance  with  external  and  internal  safety  rules  is 
directly related to the degree to which safety is prioritised as a standalone corporate value and 
an  integral  part  of  the  business  model.  This  is  often  characterised  as  a  strong  "safety 
culture"62.  Available  reports  from  the  USA  suggest  that  gaps  in  safety  culture  significantly 
contributed  to  the  accident  of  the  Deepwater  Horizon.  Reports  by  Member  States  and 
professional  bodies  active  in  offshore  operations  in  the  EU  agree  that  those  concerns  have 
global  impact,  including  in  other  European  companies63  .  Analysis  shows  that  levels  of 
enforcement in the strongest EU regimes has been broadly constant for the last 10 years64. In 
the  most  recent  report  shared  between  Norway  and  the  UK  regulators,  Norway  reports  an 
upward  trend  in  major  hazard  potential  indicators  and  finds  that  companies  active  in 
Norwegian waters show lack of consistency in safety performance. 

3. Drivers related to the regulatory framework 

The level of safety and existence of residual risks in the offshore sector is determined not only 
by industry practices but also by the quality of the regulatory environment and the oversight 
enforced  by  the  competent  public  authorities.  Several  aspects  of  the  existing  EU  regulatory 
environment may affect the industry's management of risk in offshore oil and gas operations. 
These are described in three sections below. 

3.1 Uneven technical expertise amongst regulators 

Various Member States responded to the Deepwater Horizon accident by evaluating national 
regulatory  systems65.  Their  initiatives  have  shown  that  national  regulatory  practices  vary. 
While  this  inconsistency  does  not  necessarily  mean  that  the  regimes  are  ineffective,  the 
variable degree to which national regulators balance the attention given to major hazards and 
to occupational safety factors in their assessments and inspections influences the behaviour of 
industry accordingly. 

National regulators play a role in verifying that operators correctly account for the safety and 
long  term  integrity  of  their  undertakings.  It  is  the  regulators  that  need  to  provide  adequate 
supervision and guidance to the industry in all relevant EU waters. To achieve this, regulators 
need to have access to expertise to underpin their interventions and judgements. This can be 

62 The UK HSE’s Advisory Committee on the Safety of Nuclear Installations (ACSNI: HSC, 1993) produced a 
definition of safety culture that has been re-used extensively: ‘The safety culture of an organisation is the product 
of individual and group values, attitudes, perceptions, competencies, and patterns of behaviour that determine the 
commitment to, and the style and proficiency of, an organisation’s health and safety management. And: 
'Organisations with a positive safety culture are characterised by communications founded on mutual trust, by 
shared perceptions of the importance of safety and by confidence in the efficacy of preventive measures’ This is 
referred to in the USA Presidential Commission report Ch.8 pp 217. 
63 More details on available studies and reports in Annex IX. 
64 UK offshore enforcement statistics since 2001/02 (comprising the total number of prosecutions and statutory 
improvement or prohibition notices) are broadly steady over the past 10 years at 49/year (2010/11 provisionally 
= 47). See Annex XIII for more information on benchmarking between sectors/countries.  
65 E.g. of OSPAR countries five (UK, N, NL, DK and D) have evaluated their operations and all have identified 
improvement  needs.(source:  Investigations  of  Drilling  in  Extreme  Conditions  and  their  Relevance  to  Potential 
Environmental Impacts - Preliminary report)   

EN 

24 

   EN 

 
                                                 
problematic,  especially  in  cases  where  Member  States  have  only  a  handful  of  offshore 
installations. 

3.2 Suboptimal transparency and sharing of information 

Reports on industry performance are most authoritative when prepared by the regulator. Good 
initiatives  exist  between  some  Member  States  and  in  some  regions  for  information  and 
experience sharing between regulators. However, there are differences in the extents to which 
key safety information is acquired and shared across EU borders and to which adequate public 
assurance concerning the integrity of offshore activities is provided. At present, there are no 
EU-wide mechanisms for sharing intelligence or for convening regulatory forums, including 
relevant adjacent regions66. Gaps exist in the quality of data in terms of regional coverage (no 
EU-wide/global  data),  in  terms  of  comparability  (different  formats,  indicators  etc),  and  in 
terms of lack of precision (e.g. data from some industry databases are fully anonymised and 
narrowly  focused67).  These  shortcomings  appear  conspicuous  in  contrast  to  arrangements  in 
other high risk industries such as aviation or the chemical industry68. 

There is also a notable inconsistency in the way relevant information is made accessible to the 
public.  Most  national  regulators  make  available  information  concerning  breaches  of  law 
(prosecutions,  the  issue  of  enforcement  notices)  either  through  publishing  lists,  or  having 
registers  that  can  be  viewed  by  the  public.  Such  enforcement  reports  give  an  incomplete 
picture, however, and are not comparable between jurisdictions. In addition, some regulators 
publish annual reports of safety performance in their offshore jurisdictions. Taking the EU as 
a  whole,  there  is  no  system  to  provide  the  public  with  easily  accessible  and  comparable 
information on the offshore activities of companies and their regulators in all EU regions. 

To  summarise,  benefits  of  transparency  in  encouraging  key  learning  and  continuous 
improvement across the EU are being missed. Complex procedures for accessing information 
are hindering the development of new research and reducing peer pressure for the use of state 
of the art safety practices. 

3.3 Fragmented regulatory framework 

International  law  covering  offshore  exploration  and  production  is  much  less  comprehensive 
than  in  maritime  transport  and  mainly  deals  with  rights  of  access  to  reserves  in  adjacent 
seas69. Not surprisingly therefore wide differences exist in how the sector is regulated around 
the  world.  European  and  some  other  states  –  Canada,  Brazil,  Australia  and  New  Zealand  – 
have  adopted  a  goal  setting  regime70.  Some  countries  have  a  more  prescriptive  regulatory 
regime while others have de facto no discernible safety regulation.  

Discrepancies between different regulatory regimes lead to considerable variations in costs for 
the industry. In countries that rely on self-regulation, industry can deploy rigs and equipment 

66  For  example  along  the  lines  of  Senior  Labour  Inspectors'  Committee  (SLIC),  or  the  North  Sea  Offshore 
Authorities Forum in other regions. Refer to DG.EMPL/B3 website for further information. 
67  Often focus only on lagging performance indicators such as past incidents but not on leading ones, deep cause 
analyses, lessons learned etc 
68  The Seveso Directive requires extensive reporting by both operators and Member States. 
69 Ref United Nations Convention on the Law of the Sea, 1964. 
70 Under this approach, operators are required to identify and assess the major risks case by case and demonstrate 
to  the  national  authorities  how  these  risks  would  be  managed.  In  certain  jurisdictions,  the  document  used  is 
called 'safety case'. 

EN 

25 

   EN 

 
                                                 
that would not be tolerated in the North Sea. The EU has an interest in seeing a global level 
playing field with suitable standards of performance. One clear example of this interest is that 
Member States can be directly affected by incidents in adjacent, non-EU waters. Achieving a 
consistent EU approach to offshore safety and environmental protection will greatly assist the 
EU to promote higher standards beyond the EU. 

In  addition,  no  Member  State  has  developed  a  holistic,  independent,  single  offshore  regime 
that encompasses major hazards to both humans and the environment and that takes account 
of  civil  liabilities.  Whilst  the  risks  arising  from  oil  and  gas  activities  are  broadly  similar 
everywhere, the national organisations in the EU Member States vary considerably. 

The  differences  in  the  regulation  of  offshore  activities  are  even  more  marked  when  moving 
from the North Sea to other EU regions. Whilst there are similarities in offshore hazards, the 
regulation of them outside the North Sea is less clearly related to the global model71. 

Expressed in terms of safety and reliability, the engineering and product selection options for 
design  and  operation  would  be  better  supported  by  the  availability  of  a  comprehensive 
syllabus of EU-suitable standards as an accompaniment to quantitative risk assessment. At the 
moment,  offshore  product  safety  is  not  comprehensive  because  existing  EU  product  safety 
legislation doesn't apply to MODUs, which are considered to be 'ships'. Therefore consistent 
and high safety requirements for MODUs are only assured in countries where a formal safety 
assessment  regime  exists  (e.g.  the  UK,  Netherlands  and  Denmark,  who  use  a  risk  based 
approach to regulation). 

4 Drivers related to the state of risk-based planning 

Whilst it is entirely proper that most emphasis needs to be paid to preventing major incidents, 
the risk can never be entirely discounted and so provisions need to be present for suitable and 
sufficient  preparedness  and  response.  The  factors  that  make  escalation  a  higher  risk  than 
necessary are inadequate risk assessment in emergency plans, lack of joined-up responsibility 
for  response  (failure  to  maximise  the  resources  available),  and  incompatibility  of  physical 
assets and expertise of an incident.  

The current regional arrangements for risk based maritime response planning across the EU 
are  not  optimal  vis  a  vis  ensuring  oil  and  gas  activity  is  properly  considered.  In  the  Baltic 
region, the BRISK project has demonstrated an effective model for such risk based planning 
for  maritime  vessels.  Other  regions  such  as  the  Mediterranean  and  the  North  Sea  are  also 
developing a similar approach. At present, there are EU-wide coordination schemes and EU-
level  instruments  like  the  Civil  Protection  Mechanism  which  play  an  important  role  in  the 
coordination  of  emergency  response  and  provide  information  on  the  availability  of  public 
resources for emergency response.  

The two underlying drivers for this issue are further highlighted below. 

4.1 Inconsistencies in emergency planning between MS 

The external emergency plans – those pertaining to a national emergency – also depend on the 
adequacy  of  the  initial  risk  assessment  by  the  operator  so  the  same  concerns  must  apply  to 

71 For example, Romania and Bulgaria have seemingly less comprehensive regulatory regimes than the North 
Sea states. 

EN 

26 

   EN 

 
                                                 
preparedness for a national scale offshore incident as for a localised 'internal' incident in some 
regions.  In  addition,  a  national  scale  emergency  will  require  the  deployment  of  national 
assets, coordination by national representatives, consideration to adjoining Member States and 
others,  and  the  support  of  EU  marine  contingency  organisations  such  as  EMSA.  Some 
Member States do cooperate with neighbours on emergency planning – particularly so where 
risk based regimes facilitate the development of site specific risk based scenario planning. 

It  is  also  essential  to  coordinate  the  essential  environmental  sensitivity  data  relating  to  the 
state  of  the  water  column  and  the  seabed  so  that  the  correct  response  can  be  planned  if  an 
emergency arises. At present, these data are not consistently collected and collated throughout 
the EU.  

Finally, there are few current initiatives for building capacity amongst non EU countries with 
which  the  EU  shares  marine  assets.  Without  specific  attention  to  this,  emergency  planning 
will be less holistic and reliable in those regions than where EU has full jurisdiction.  

4.2 Cross-border incompatibility of response assets 

Companies operating in the Gulf of Mexico (which also operate in EU waters) clearly failed 
to  assess  all  the  possible  scenarios  of  a  major  incident  in  a  routine  and  systemic  fashion. 
Therefore the emergency response to Deepwater Horizon had to be conducted as the incident 
unfolded  which  is  entirely  in  contradiction  of  the  conventions  for  civil  contingencies.  The 
operator – BP – commanded great resources and expertise. Equally the national contingency 
resources  of  the  USA  exceed  those  of  any  nation  on  earth.  Clearly  neither  attribute  may  be 
present in some EU offshore emergency scenarios.  

Industry  has  responded  with  resolve  to  the  Deepwater  Horizon  incident  and  is  actively 
researching  multi  functional  devices  for  capping  damaged  wellheads  and  for  solutions  for 
containing  and  dispersing  major  spills.  This  is  commendable  and  must  be  encouraged  to 
continue. But we have seen that whatever the state of technology, a major offshore emergency 
response requires all that the industry can furnish, plus that which national civil contingency 
can provide, with all adjoining countries contributing.  

On  the  matter  of  compatibility  of  the  response  equipment  and  services,  only  the  immediate 
response  tools  need  to  be  available  at  the  site  of  the  accident,  or  in  close  proximity.  Other 
necessary equipment may be available at a distance, even if it is in a different continent. The 
identified  need  is  for  the  rapid  transportation  of  equipment  that  can  be  connected  to  locally 
available equipment and which may be handled using available lifting and transport systems. 
This applies also to human expertise. 

5 Drivers related to the integration of public and industry emergency plans and assets 

The maritime safety and response arrangements in the EU provide for joined up planning and 
intervention  in  a  maritime  emergency  including  for  pollution  incidents.  Compared  to  this 
benchmark  it  is  clear  that  the  offshore  oil  and gas  sector  –  which  has  the  capacity  to  cause 
pollution many times greater than any single shipping incident – can attain a greater degree of 
joined up planning between Member States than at present, taking the EU as a whole. Given 
the specialised nature of the offshore sector – which is a sea based factory environment not 
shipping, maritime standards are not fully adequate and therefore the risk of a major incident 
escalating further than necessary remains. The specific drivers for this category are discussed 
below. 

EN 

27 

   EN 

 
5.1 Lack of information on industry emergency response inventories 

In order that the national emergency response plan (in Seveso terms the 'external' emergency 
plan) is effective for the scenario of a major incident in the oil and gas industry, it is essential 
that the plan accounts for all emergency response assets and inventories that the industry or 
operator himself can supply or make available at the start of and during the incident. As such, 
this  would  ensure  coordination  of  assets  and  inventories  required  for  the  incident,  to  make 
effective  and  efficient  use  of  available  resources.  Before  the  Deepwater  Horizon  incident, 
there  are  indications  that  the  coordination  of  available  assets  between  industry  and  national 
authorities was not commonplace and ad hoc at best. After the Deepwater Horizon incident, 
the  oil  and  gas  industry  has  reviewed  and  in  certain  cases  extended  and  increased  their 
response  inventories.  National  authorities  dealing  with  emergency  response  of  some  of  the 
MS  (mainly  the  countries  around  the  North  Sea)  have  since  been  involved  in  this  process, 
which rectifies the coordination issue to some extend. However, this will not remedy similar 
issues around the Mediterranean and Black Seas. In addition, although it is likely that current 
good practices around the North Sea on this issue will continue as all parties involved realise 
this to be the best approach, there is no guarantee that this will continue once initial focus on 
the Deepwater Horizon initiatives have diminished. 

5.2 Consistency in the quality of company emergency plans 

Analysis of the deepwater Horizon incident revealed shortcomings in the preparedness of the 
companies involved, both in the initial response and in the race to cap the well and contain the 
spilled  oil.  The  recent  report  of  the  US  Coastguard  has  been  instructive  that  in  spite  of  the 
obvious  potential  scale  of  the  pollution  and  the  challenges  of  ensuring  a  good  prospect  of 
survival of the personnel, the risk assessments and response plans were relatively modest. We 
also  find  that  major  operators  in  the  Gulf  of  Mexico  were  prone  to  copy-out  similar 
emergency  response  plans  rather  than  develop  site  specific  plans  based  on  proper  risk 
assessments. 

We  believe  the  situation  in  EU  is  different  particularly  where  a  risk  based  or  goal  setting 
regime  is  deployed  –  such  as  the  North  Sea.  Also,  the  EU  has  a  long  tradition  of  maritime 
response  against  which  the  provisions  for  the  offshore  oil  and  gas  sector  may  be  tested. 
However, emergency planning can only be as good as the risk assessment undertaken for the 
activity as a whole. The first responsibility is to limit the consequences of an incident once it 
has occurred to the area under the control of the operator – i.e. the immediate vicinity of the 
rig  or  platform  or  subsea  facility.  Because  such  'internal  emergency  plans'  (in  the  Seveso 
terminology) are a natural derivative of an effective risk assessment of the entire undertaking, 
and because only some Member States have a risk based offshore regulatory regime it follows 
that  emergency  planning  will,  in  some  regions,  be  inadequate  to  ensure  rapid  and  effective 
response in all regions of the EU. 

6 Drivers related to clarity and comprehensiveness of liability provisions 

The operator  of  the Macondo license, BP (drilled by the  Deepwater  Horizon),  estimates the 
outcome costs of the incident at $40bn. Very few companies could accommodate such a sum, 
which  would  leave  the  host  country  exposed  to  unwarranted  public  financial  risk.  The 
insurance market cannot furnish an instrument that guarantees unlimited financial indemnity. 
In order to prevent liability transferring to the citizens of Member States in which the incident 
occurs some form of financial instrument would be required. In the UK the OPOL scheme is a 
risk pooling instrument amongst licensees, but as the limit is set at £250m the arrangement is 

EN 

28 

   EN 

 
not sufficient in the adjusted economic consciousness following Deepwater Horizon. This is a 
complex  issue,  and  it  is  accompanied  by  the  issue  of  how  to  make  compensation  available 
quickly  to  businesses  and  communities  stricken  by  the  effects  of  a  major  offshore  incident 
such that they are prevented from failing – compensation that is paid too late to a community 
that  is  permanently  damaged  is  not  reasonable.  The  three  drivers  for  this  problem  are 
discussed below. 

6.1 Clarity and scope of EU legislation on environmental liability 

ELD 2004 does not extend beyond territorial waters (20km/12miles). This is in line with the 
waste framework Directive (WFD) 2000. However the marine strategic framework Directive 
(MSFD)  2008  extended  protection  to  all  marine  waters  in  MS  jurisdiction  and  therefore  a 
problem is created viz under applicable law "water damage" only applies to inner and coastal 
waters, whereas current EU policy is to treat all EU waters as common good. Therefore this 
issue needs to be determined in the light of the review of offshore major incidents in the EU. 

The status quo would perpetuate the consequences of a marine accident being internalised to 
the  Member  State,  in  contradiction  to  the  polluter  pays  principle.  Also,  during  an  extreme 
emergency  the  current  framework  makes  unclear  whether  Member  States  could  enforce 
compensation from the polluter for the deployment of national contingency assets. 

6.2 Lack of financial capacity guarantees 

It  is  evident  that  not  all  Member  States  licensing  authorities  take  fully  into  account  the 
capacity  of  applicants  (who  may  be  consortia,  or  joint  ventures)  to  deal  with  the  financial 
challenges  of  responding  to  a  major  incident.  This  is  a  missed  opportunity  to  provide 
assurance  of  capacity  and  to  reinforce  to  operators  that  their  responsibility  for  the  adverse 
consequences of offshore activity is without limitation. 

6.3 Inadequate compensation schemes for traditional damages 

Even  with  the  financial  capacity  of  an  applicant  established,  there  is  no  assurance  that 
sufficient funds will be available in time to settle third party claims. The funds made available 
in the event of a major incident will most likely be initially required for this incident itself, 
e.g. capping and containing the flow from a well. Without clear and unambiguous provisions 
to swiftly settle third party claims, this could negatively affect local business and communities 
which would suffer the consequences from the major incident.  

EN 

29 

   EN 

 
 
ANNEX IV:  ADDITIONAL  ANALYSIS  OF  ECONOMIC,  SOCIAL  AND  ENVIRONMENTAL 

IMPACTS 

This annex complements Chapter 5 on the assessment of impacts by elaborating inter alia on 
the analytical process used for the assessment. Because the costs and benefits of the proposed 
policy  options  aimed  at  reducing  losses  from  offshore  accidents  can  only  partially  be 
quantified and/or monetised, this annex uses a partial cost-benefit analysis72 to evaluate their 
merit.  Expected  costs  and  benefits  are  quantified  where  reliable  data  is  available,  but 
important  qualitative  evidence  is  also  highlighted  for  policymakers  to  incorporate  into  their 
analysis where impacts are reliably unquantifiable. 

The foremost objective of any policy action in this field is to reduce the risk of accidents and 
thereby to avoid human, environmental and economic losses. Therefore, the first criterion to 
be  evaluated  will  be  the  proposed  policy’s  impact  on  mitigating  the  risks/costs  of  offshore 
accidents to the EU-27; in other words, the economic benefits they would bring. Quantifying 
the extent to which  proposed  policy  actions would improve offshore safety is  problematical 
because  no  comprehensive  international  legislation  specifically  addressing  the  subject  has 
ever  been  put  in  place  before.73  Little  data  therefore  exist  that  could  serve  as  a  direct 
benchmark for this report. 

In  spite  of  this,  qualitative  analysis  and  statistics  suggestive  of  the  effectiveness  of  policies 
implemented  at  the  national  level  may  serve  as  a  basis  for  informed  policy-making.  Since 
many proposed policies have been derived from requirements already implemented in one or 
more  national  jurisdictions,  this  annex  examines  national  offshore  safety  indicators  to 
demonstrate the likely benefits of introducing similar policies throughout Europe. As well as 
looking at how the introduction of new regulatory requirements has impacted offshore safety 
statistics,  it  also  contrasts  safety  indicators  from  countries  with  different  regulatory 
approaches, combining these figures with qualitative sources to provide an indication of the 
likely effectiveness of the collection of policies proposed. 

Following  the  policies’  safety  benefits,  the  additional  financial  and  administrative  costs  of 
implementing  the  proposed  policies  in  the  EU-27  will  then  be  highlighted;  in  other  words, 
their economic costs. Member States, the industry and the Commission may all face changes 
to  levels  of  financial  and  administrative  burden  in  implementing  the  proposed  policies.  In 
addition  to  the  impact  on  the  risk  of  future  accidents,  these  impacts  have  to  be  taken  into 
account  as  well.  Any  additional  benefits  the  policy  provides  in  terms  of  lower  risks  and/or 
improved emergency response should be weighed against additional burden imposed.  

Financial and administrative impacts can be roughly divided into regulatory costs (the costs 
incurred  by  public  authorities  in  providing  the  oversight  necessary  to  effectively  implement 
the  policies)  and  compliance  costs  (the  costs  incurred  by  industry).  All  cost  elements  can 
further be divided into one-off costs (the initial investment needed to update practices with the 
regulation) and running costs (the on-going operational cost). 

72 As defined in the Commission’s Impact Assessment Guidelines 

http://ec.europa.eu/governance/impact/commission_guidelines/docs/iag_2009_en.pdf, pp.45. 
73 Some aspects, in particular workers' health and safety in the sector are addressed in EU legislation. 

EN 

30 

   EN 

 
 
                                                 
Regarding regulatory costs, the cost to the regulator of enforcing regulations is primarily the 
opportunity cost of the time taken to enforce and provide support to the operators as required. 
This was gauged by means of two questionnaires presented to European offshore regulators in 
combination  with  calculations  from  the  EU  Administrative  Burden  Calculator.  It  should  be 
noted that many regulators bill the industry for their services, but include these revenues as 
part of their overall budget. For the sake of simplicity, this study counts these revenues as part 
of the regulatory costs and not as part of the compliance cost to industry.  

It is important to capture all the costs and benefits to society, thus, costs to both the regulators 
and industry are relevant.  The compliance cost that industry bears can be divided into three 
categories  following  the  EU  Standard  Cost  Model  as  defined  in  Annex  10  of  the  Impact 
Assessment Guidelines.74 

1)  Administrative  burdens  are  the  costs  on  businesses  of  complying  with  the  information 
obligations resulting from legislation and regulations. An example of administrative burdens 
in  the  offshore  sector  may  be  the  notification  of  dangerous  occurrences,  inspections,  and 
reading guidance material. For the purposes of this report, the preparation of safety and health 
documents have also been classed as an administrative burden. Many of the costs associated 
with regulatory compliance arise from the time it takes for the duties to be completed.  This 
time could have been spent on something else in the company (productive work).  Thus, when 
calculating administrative burden, we want to capture the opportunity cost of undertaking the 
compliance activities instead of the productive work.   

2) Substantive compliance costs are the costs that businesses incur in order to comply with the 
content  obligations  that  legislation  and  regulations  require  of  a  production  process  or  a 
product. In the offshore sector these include the costs of additional equipment or machinery to 
ensure compliance, or the costs of hiring consultants to help with compliance. In the offshore 
sector,  and  especially  in  objective-based  regimes,  it  may  be  difficult  to  estimate  the 
substantive  costs  of  safety  compliance  –  that  is  to  say  safety  expenditures  that  companies 
would  not  have  otherwise  judged  necessary  or  worthwhile  if  not  for  the  formal  or  informal 
requirements of the offshore authorities – as these are difficult to separate from what can be 
considered ‘business as usual’ operational costs. 

3) Financial costs are the result of a concrete and direct obligation to transfer a sum of money 
to the Government or the competent authority. An example of a financial cost in the offshore 
sector is the fee for notification charged by national regulators. 

In  this  annex,  each  of  these  categories  of  compliance  cost  was  gauged  by  means  of  a 
questionnaire  presented  to  industry,  and  supplemented  with  calculations  from  the  EU 
Administrative  Burden  Calculator.  To  simplify  the  analysis  and  to  save  multinational 
companies from having to complete several, possibly duplicative, surveys for their operations 
in  Europe,  this  report  intended  to  use  a  case  study  approach  to  get  an  indication  of  likely 
compliance  costs  in  two  contrasting  jurisdictions;  the  UK,  which  has  an  objective-based 
regime,  and  Italy,  which  currently  has  a  more  prescriptive  regime.  Unfortunately,  a  lack  of 
suitable  questionnaire  responses  meant  that  such  an  analysis  was  not  possible.  Gaps  in  the 
data have been duly highlighted in the appropriate sections. 

74 http://ec.europa.eu/governance/impact/commission_guidelines/docs/ia_guidelines_annexes_en.pdf. 

EN 

31 

   EN 

 
                                                 
For the purposes of calculating some regulatory costs and administrative burdens to industry, 
the opportunity cost was assumed to be equal to the wage rate of the relevant member of staff, 
inflated by 30%. This 30% adjustment is to reflect the true economic cost of employing that 
member of staff and includes employer taxes and pension contributions, as well as so-called 
‘overhead-costs’  such  as  premises,  telephone,  heating,  electricity  and  IT  equipment.  As  an 
example, if a worker’s gross wage rate was €20, then we can assume that the true economic 
cost of employing that  person  would be €26. The principle behind using the wage rate as a 
proxy for lost productivity is that it must only be worth employing someone if they are at least 
as productive as the costs of employing them. 

The  one-off  administrative  costs  to  public  authorities  in  drafting  and  amending  legislation 
were not judged to be significant in comparison with the overall scale of costs associated with 
offshore accidents, and therefore left out of this analysis for the purposes of simplification. 

As  in  the  case  of  quantifying  the  benefits  of  proposed  policy  actions,  quantifying  their 
financial  and  administrative  impacts  is  also  problematical  because  no  comprehensive 
international  legislation  specifically  addressing  offshore  safety  has  ever  been  put  in  place. 
Nevertheless, since many of the proposed policies have been derived from existing practice, 
the approach taken in this report is to extrapolate figures from Member States that currently 
already meet the standards of the proposed policies in order to estimate the additional costs of 
implementing the proposed policy throughout the EU-27, where possible. 

Another methodological challenge this exercise faced was data collection. With a handful of 
very  notable  exceptions,  it  was  difficult  to  get  reliable  and  exhaustive  data  on  the  current 
operating  costs  of  regulatory  bodies,  and  even  harder  to  get  the  equivalent  figures  from 
industry.  For  the  regulatory  authorities,  significant  differences  in  national  legislation  and 
accounting  conventions  posed  challenges  to  the  analysis,  whereas  the  problematical  task  of 
disambiguating  ‘safety’  expenditures  from  ‘business  as  usual’  expenditures  may  have 
prevented many industry stakeholders from providing meaningful data. The net result was that 
the  quality  of  data  was  patchy  with  often  incommensurable  responses  from  different 
stakeholders,  hindering  the  quantitative  comparison  of  groups  and  the  identification  of 
possible trends. Any gaps in the data have accordingly been highlighted, where relevant. 

Table 1: National Authority Questionnaire Responses Received 

Questionnaire 1 (Installations 
and Operations) 

Questionnaire 2 (Wells and 
Regulatory Costs) 

BG 

DE 

DK 

ES 

FAR 

FR 

GR 

EN 

× 

× 

× 

× 

32 

× 

× 

× 

   EN 

 
 
 
 
 
 
 
 
 
IE 

IT 

MT 

NL 

NO 

RO 

UK 

× 

× 

× 

× 

× 

× 

× 

× 

× 

× 

× 

× 

The  impact  analysis  of  the  policies  is  further  complicated  by  the  fact  that,  as  described  in 
Chapter  2,  there  are  substantial  differences  between  the  scales  of  operations  in  different 
Member States and also between the current national regulatory regimes. Member States have 
opted  for  different  regimes  and  have  dedicated  unequal  resources  and  efforts  to  them.  As  a 
result, the impacts of the individual policies will be inevitably different across Member States.  

Finally,  after  the  impact  on  reducing  the  costs  of  offshore  accidents  and  financial  and 
administrative  impacts  have  been  addressed,  any  other  relevant  environmental,  social, 
economic  or  external  impacts  of  the  combined  policies  will  be  highlighted  in  a  separate 
section of this annex. 

1. 

POLICY OPTION 1: LEVELLING  ALL EU  UP  TO  CURRENT  COMMON  DENOMINATOR 
IN  RISK  BASED  PREVENTION  AND  PREPAREDNESS  REGIMES  IN NORTH SEA (NORTH 
SEA BASIC STANDARD) 

This policy option consists of two discrete measures to be implemented throughout the EU-
27: Establishing a goal setting (Major Hazard Report/"safety case") regime; and establishing a 
regular inspections and penalties regime. First, the option would see the goal-setting approach 
to offshore safety implemented throughout the EU-27 and not just in the North Sea, as is the 
case at present. Secondly, it would also ensure that all EU offshore authorities level-up to at 
least  North  Sea  standards  on  compliance-related  tasks,  such  as  the  assessment  of  Major 
Hazard Reports (MHRs), site inspection, and the enforcement of defects. This would create a 
consistently  high  standard  of  regulatory  assurance  that  adequate  controls  to  prevent  major 
offshore incidents are put in place by industry in EU waters. As the two measures are closely 
related, the following subsections address their impact jointly. 

It should be noted that, because this option aims to level-up all European offshore regimes to 
currently existing best practice, some Member States will be more affected by it than others. 
The  calculations  presented  in  the  current  section  specifically  address  this.  By  contrast, 
because every subsequent Policy Option (1+, 2 and 3) proposed in this report is premised on 
the  implementation  of  the  present  one,  this  report  assumes  Member  States  will  be  equally 
affected by these subsequent Policy Options. 

EN 

33 

   EN 

 
 
 
 
 
1.1. 

Impact on reducing the costs of offshore accidents 

The UK Health and Safety Executive’s Offshore Division has collated statistics on offshore 
accidents  and  ill  health  from  1995/96  to  2009/10.  During  or  just  before  this  period,  several 
key  pieces  of  legislation  were  introduced  mandating  the  goal  setting  approach  to  offshore 
regulation  on  the  UK  continental  shelf.  Concurrently,  significant  changes  took  place  within 
UK offshore industry in order to effectively adapt to the demands of the new offshore safety 
regime. Safety indicators from the UK experience suggest the effectiveness of implementing 
analogous policies throughout the EU-27. 

Following  the  recommendations  of  the  public  enquiry  into  the  Piper  Alpha  disaster  led  by 
Lord  Cullen,  Safety  Case  Regulations  1992  (SCR92)  came  into  force  in  November  1993, 
requiring a demonstration that risks to people from major accident hazards had been reduced 
to  the  lowest  reasonably  practicable  level.  SCR92  was  the  key  instrument  of  the  new  goal 
setting regime for the UK offshore industry. Prior to this, the UK regime was prescriptive in 
nature. The tables below plot several offshore safety indicators for the UK continental shelf 
between  1995  and  2010,  indicating  when  SCR92  came  into  force,  along  with  other  key 
legislation supporting and/or developing further the UK’s objective-based regime.75 
Figure 2: Fatal Injury Rate for Offshore Operations on the UK Continental Shelf76 

s
r
e
k
r
o
W
0
0
0
,
0
0
1
r
e
p
s
e
t
a
R
y
r
u
n

j

I

l
a
t
a
F

SCR92

DCR

PFEER

20

18

16

14

12

10

8

6

4

2

0

SCR05

1993/1994

1994/1995

1995/1996

1996/1997

1997/1998

1998/1999

1999/ 2000

2000/2001

2001/2002

2002/2003

2003/2004

2004/2005

2005/2006

2006/2007

2007/2008

2008/2009

2009/2010

Figure 1 shows that there has been a downward trend in the fatality rate for offshore workers 
since  the  introduction  of  the  1992  Safety  Case  Regulations,  a  trend  that  the  UK  authorities 
believe the new regime has played a considerable part in.77 

75 Such as the Offshore Installations (Prevention of Fire and Explosion, and Emergency Response) Regulations 
1995 (PFEER) the Offshore Installations and Wells (Design and Construction, etc) Regulations 1996 
(DCR) and the Offshore Installations (Safety Case) Regulations 2005 (SCR05). 

76 Source: ‘Offshore Injury, Ill Health and Incident Statistics 2009/2010: HID Statistics Report HSR 2010 – 1’, 
December 2010, Health & Safety Executive, Hazardous Installations Directorate, Offshore Division, 
http://www.hse.gov.uk/offshore/statistics/hsr0910.pdf 

EN 

34 

   EN 

 
 
 
 
 
 
 
                                                 
Figure  3:  Three  Year  Rolling  Average  of  Injury  Rates  for  Offshore  Operations  on  the  UK 
Continental Shelf78 

s
r
e
k
r
o
W
0
0
0
,
0
0
1

r
e
p
s
e
t
a
R
y
r
u
n

j

I

f
o
e
g
a
r
e
v
A
g
n

i
l
l

o
R
r
a
e
Y
e
e
r
h
T

1400

1200

1000

800

600

400

200

0

SCR92

DCR

SCR05

PFEER

1992/93 - 1994/95

1993/94 - 1995/96

1994/95 - 1996/97

1995/96 - 1997/98

1996/97 - 1998/99

1997/98 - 1999/00

1998/99 - 2000/01

1999/00 - 2001/02

2000/01 - 2002/03

2001/02 - 2003/04

2002/03 - 2004/05

2003/04 - 2005/06

2004/05 - 2006/07

2005/06 - 2007/08

2006/07 - 2008/09

2007/08 - 2009/10

Fatal + major injury rate

Over-3-day injury rate

Figure 2 shows that the downward trend in fatalities is echoed by the injury rates for the UK 
continental shelf in the same period. 

Policymakers should note that while several safety indicators for the oil and gas industry on 
the UK continental shelf show improvement over time, it is difficult to wholly attribute these 
improvements to regulatory changes for a number of reasons. Industry practices may improve 
over time and some regulatory changes may reflect an already widely implemented industry 
practice. The tangible positive effects of improved regulations may only present themselves in 
the longer term, after initial challenges adapting to them have passed. And compliance levels 
may significantly vary over time.  

Because of the limitations in only using a longitudinal approach to gauge the effectiveness of 
offshore regulations, as above, it is important to also look at comparative figures to strengthen 
the analysis. In particular, we can start by looking at global trends to see if improvements to 
offshore safety in the UK were part of a broader, industry-wide tendency that was also seen 
elsewhere around the globe. 

77 ‘Assessment Principles for Offshore Safety Cases (APOSC)’, March 2006, Health & Safety Executive, 

Hazardous Installations Directorate, Offshore Division (OSD), 
http://www.hse.gov.uk/offshore/aposc190306.pdf 

78 Source: ‘Offshore Injury, Ill Health and Incident Statistics 2009/2010: HID Statistics Report HSR 2010 – 1’, 
December 2010, Health & Safety Executive, Hazardous Installations Directorate, Offshore Division, 
http://www.hse.gov.uk/offshore/statistics/hsr0910.pdf. 

EN 

35 

   EN 

 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                                         
Figure  4:  Breakdown  of  Worldwide  Fatalities  in  the  Offshore  Sector  by  Year  Period, 
1970 - 200779 

700

600

500

400

300

200

100

0

1970-1975 

1976-1980 

1981-1985 

1986-1990 

1991-1995 

1996-2000 

2000-2005 

2006-2007 

Fatal incidents 

Fatalities 

Figure  3  shows  that  there  was  a  sharp  reduction  in  both  fatalities  and  fatal  incidents 
worldwide between the 1980s and the 1990s. Nevertheless the 1990s onwards have seen these 
figures  gradually  creep  up  again.  This  was  exactly  the  period  when  the  objective-based 
offshore  safety  paradigm  was  being  implemented  in  the  UK,  and  safety  indicators  from  the 
UK Continental Shelf were strongly improving. 

Because the offshore workforce has varied over time, this chart cannot be directly compared 
with  other  charts  in  this  section  presenting  fatality  and  injury  rates  on  the  UK  continental 
shelf. However, assuming that there have not been major fluctuations in the size of the global 
offshore workforce, the chart is suggestive that the general trend of improved offshore safety 
in the UK from the 1990s onwards was not experienced globally. Since most offshore oil and 
gas operators are multinational entities, we would expect to see any advances in industry best 
practice reflected in global safety indicators during this period. Improving offshore safety in 
the  UK  is  therefore  not  likely  to  have  been  due  to  advances  in  industry  best  practice, 
supporting the UK Health and Safety Executive’s belief that improved safety in the UK can 
be credited to changes to the UK’s offshore regulatory regime that were implemented during 
the 1990s.  

79 Source: Det Norske Veritas, WOAD - Worldwide Offshore Accident Databank, v5.0.1. Summarized in ‘Risk 
Assessment Data Directory – Major Accidents’, Report No. 434-17, March 2010, International 
Association of Oil & Gas Producers. 

EN 

36 

   EN 

 
 
                                                 
A recent OGP publication80 comparing the risk of different offshore activities also found that 
offshore  operations  "of  North  Sea  standard"  (in  terms  of  equipment  used)  are  safer  than 
operations "not of North Sea standards", at least in terms of the frequency of blowouts. 

In  2010,  Det  Norske  Veritas  released  a  study  contrasting  the  Norwegian  offshore  safety 
regime  with  that  of  the  United  States.81  The  study  found  that  whereas  the  Norwegian 
regulations  are  primarily  performance-  and  risk-based,  the  US  regulations  are  dominantly 
prescriptive  and  do  not  require  the  application  of  systematic  risk  management  practices. 
Differences  in  safety  indicators  between  these  countries  may  therefore  also  hint  at  the 
effectiveness  of  mandating  the  goal  setting  approach  to  offshore  regulation  throughout  the 
EU-27. 
Table 8: Global Offshore Safety Indicators gathered by the International Regulator's Forum82 

Total 

Derived Rate 

Norway 

US 

Norway 

US 

Fatalities 

2 

19 

1.68×10-2 

4.43×10-2 

Major injuries 

96 

179 

8.06×10-1 

4.18×10-1 

147 

313 

1.23 

7.30×10-1 

273 

160 

2.29 

3.73×10-1 

Derived Rate Unit 

Per  Million  Hours 
Worked 

Per  Million  Hours 
Worked 

Per  Million  Hours 
Worked 

Per  Million  Hours 
Worked 

Fatalities 
and Injuries 

Collisions 
and Fires 

Well 
Control 

Injuries  >  3 
days  LTI  & 
RWI 

Injuries 1 > and 
<= 3 days 

Major 
Collisions 

Less than major 
Collisions 

Major fires 

Less than major 
Fires 

Major  Loss  of 
Well Control  

Less than major 
Loss  of  Well 
Control 

1 

0 

0 

0 

0 

0 

32 

29 

17 

32 

7 

13 

3.60×10-3 

2.77×10-3 

Per Installation 

0 

0 

0 

0 

0 

2.51×10-3 

Per Installation 

1.47×10-3 

Per Installation 

2.77×10-3 

Per Installation 

1.25×10-3 

Per  Well-Related 
Activity 

2.31×10-3 

Per  Well-Related 
Activity 

80 Blowout frequencies, Report no. 434-2, March 2010, http://www.ogp.org.uk/pubs/434-02.pdf 
81 ‘Summary of differences between offshore drilling regulations in Norway and U.S. Gulf of Mexico’, 
02/08/2010, Det Norske Veritas, http://www.nofo.no/stream_file.asp?iEntityId=924 

82 Source: International Regulator's Forum, IRF Country Performance Measures, 

http://www.irfoffshoresafety.com/country/performance/ 

EN 

37 

   EN 

 
 
 
 
 
 
                                                 
The  International  Regulators’  Forum  collected  and  compared  offshore  safety  incident  data 
from different countries based on a common set of criteria for the years 2007 to 2009.83 The 
results of this exercise are presented in the table above. It indicates that whilst reported injury 
rates  were  higher  in  Norway  than  in  the  United  States,  fatalities  were  around  three  times 
higher in the United States than in Norway even though many of the same companies operate 
in  both  countries.  Loss  of  well  control  was  also  more  common  in  the  United  States  than  in 
Norway. These well control statistics are supported by the SINTEF blowout database, which 
reveals  that  the  blowout  frequency  for  the  Gulf  of  Mexico  is  approximately  9  times  higher 
than  in  the  North  Sea84,  and  that  the  proportions  of  blowouts  resulting  in  large  spills  are 
almost 4 times greater in the Gulf of Mexico (0.23) than in Norway (0.088).85  

In  considering  the  comparative  statistics  presented  above,  the  policymaker  should  bear  in 
mind that different countries and regions have contextual, cultural and historical differences 
that  may  affect  offshore  safety.  Nevertheless,  given  that  both  longitudinal  and  comparative 
statistics  suggest  that  objective-based  regulation  in  the  offshore  sector  leads  to  improved 
safety, we can conclude that moving from a prescriptive to an objective-based offshore safety 
regime results in a significant reduction in accident-related costs. 

Italy  and  Spain  are  the  largest  offshore  oil  and  gas  producing  nations  in  the  European 
Economic Area who do not already have what is recognized as an objective-based regulatory 
regime  in  place,  accounting  for  408  out  of  a  total  of  6315  active  wells  in  Europe  (6.5%).86 
They  are  the  Member  States  most  likely  to  strongly  benefit  from  the  package  of  proposed 
measures in terms of improved safety. Assuming that Italy and Spain currently have similar 
offshore  accident  costs  as  other  European  countries  on  an  annualized  per-well  basis87,  and 
conservatively assuming that the economic costs caused by major offshore accidents in Italy 
and Spain halve as a result of their adoption of objective-based offshore safety regimes, then 
implementing Policy Option 1 can be expected to result in between €6.66 and €29.7 million in 
annual savings when compared with the baseline scenario. 

In estimating the likely benefits of the proposed policy option, it is also important to take into 
consideration  its  future  economic  benefits  in  the  Mediterranean  and  Black  Sea,  where  there 
are  several  countries  in  the  early  stages  of  the  development  of  their  offshore  extractive 
industries. Should these countries follow the regional trend, there is a good chance that they 
would  adopt  the  less-effective  prescriptive  regimes  hitherto  dominant  in  these  regions.  EU 
regulatory action would prevent this. Whilst these putative benefits are impossible to quantify, 
they should be qualitatively factored into any cost/benefit analysis of proposed policies. 

83 International Regulator's Forum, IRF Country Performance Measures, 
http://www.irfoffshoresafety.com/country/performance/ 

84 Det Norske Veritas, Environmental Risk Assessment of Exploration Drilling in Nordland VI, Report No. 

20/04/2010, 
http://www.olf.no/PageFiles/6525/Environmental%20risk%20assessment%20of%20exploration%20dril
ling%20in%20Nordland%20VI.pdf 

85 ‘Large spills’ defined as spills of over 1,000 bbl. ‘Risk Assessment Data Directory – Major Accidents’, Report 

No. 434-17, March 2010, International Association of Oil & Gas Producers, 
http://www.ogp.org.uk/pubs/434-17.pdf 

86 Source: European Commission questionnaire data. 
87 Although the baseline scenario has been calculated on this basis, it is likely that actual figures are higher 
because of the higher accident indicator rates associated with prescriptive offshore safety regimes. 

EN 

38 

   EN 

 
                                                 
1.2. 

Financial and administrative impacts  

In gauging the financial and administrative impact of mandating the goal-setting approach in 
the  EU  offshore  sector,  the  resources  of  national  authorities  and  compliance  costs  borne  by 
industry  were  compared  in  European  Economic  Area  Member  States  with  objective-based 
regimes and Member States with more prescriptive regimes.  

Lapses in compliance – either with regulations or good oilfield practice – have been identified 
in many audits and inspections, as well as official investigations into recent offshore accidents 
and  near  misses.88  Compliance  is  the  ultimate  responsibility  of  the  operator,  but  regulators 
play an important, indirect role in verifying compliance through inspection and enforcement 
regimes,  and  by  holding  operators  to  account  when  failures  to  comply  occur.  In  this  way, 
regulators have a responsibility to provide assurance to the public that regulated entities are 
meeting mandated requirements. 

Figure 5: National Offshore Authority Staffing Resources89 

Prescriptive 
Regime

Objective-Based Regimes

0.5

0.45

0.4

0.35

0.3

0.25

0.2

0.15

0.1

0.05

0

IT

DK 

NL

NO

UK

Staff per Active Well Staff per Installation

Regarding  the  regulatory  costs  to  public  authorities,  Figure  4  shows  that  there  are  only 
moderate differences between the staffing levels of European regulators with objective-based 
regimes (Denmark, the Netherlands, Norway and the UK) and the staffing levels of the Italian 

88 See, for example, ‘PSA seeks explanation from Statoil after Gullfaks B gas leak’, 24/03/2011, Petroleum 

Safety Authority, Norway, http://www.ptil.no/news/psa-seeks-explanation-from-statoil-after-gullfaks-b-
gas-leak-article7730-79.html. 

89 Number of staff include all management, professional (senior inspectors, inspectors and other technical staff), 

legal and administrative staff combined. Installations include all fixed, mobile and subsea production 
and drilling units. Source: European Commission questionnaire data collected from Denmark (Danish 
Energy Agency, but not including the relevant staff of the Ministry of the Environment), Italy (National 
Office for Mining, Hydrocarbons and Geothermal Resources), the Netherlands (State Supervision of 
Mines), Norway (Petroleum Safety Authority and Climate and Pollution Agency), and the UK (Health 
and Safety Executive, Department of Energy and Climate Change). 

EN 

39 

   EN 

 
 
                                                 
regulator – the largest European regulator  currently employing  a  prescriptive regime.90 This 
remains true regardless of whether viewing staffing levels in either per well or per installation 
format.  Although  the  further  comparison  of  other  indicators  of  regulatory  costs  (such  as 
annual  budgets)  was  not  possible  because  of  shortcomings  in  the  collected  data,  the  chart 
above suggests that mandating the goal-setting approach in the EU offshore sector would not 
lead  to  any  change  in  the  annual  running  costs  of  national  offshore  authorities.  One-off 
retraining costs to the staff of the Italian and Spanish Authorities, however, can be expected.  

The Spanish offshore authority – a sub-directorate of the Ministry of Industry, Tourism and 
Trade  –  has  been  excluded  from  the  above  analysis  because  economies  of  scale 
disproportionately  seem  to  affect  the  resourcing  indicators  of  smaller  regulators.  Figure  5 
illustrates that the Spanish authority has disproportionately high staffing levels compared to 
other regulators, regardless of whether these regulators follow a prescriptive regime, as Spain 
does,  or  whether  they  use  objective-based  regimes.  Spain  has  limited  offshore  operations  at 
present, with only 13 active wells and 3 production installations. However, it staffs an office 
of  5  personnel  –  likely  the  minimum  number  of  individuals  the  Spanish  authority  feels  is 
necessary  to  maintain  the  technical  competences  to  provide  effective  oversight.  Other  very 
small regulators, such as the Faroe Islands and Ireland, maintain similar regulator staff levels 
(6 and 3 respectively, although the latter all part time).91 

90 The Italian regulator was unable to supply details of its overall budget, preventing a direct comparison of other 

this indicator of regulator resources. 
91 Source: European Commission questionnaire data. 

EN 

40 

   EN 

 
                                                 
Figure 6: Regulator's Staffing Resources by Number of Wells Overseen92 

ES

l
l

e
W

r
e
p
f
f
a
t

S

0.45

0.4

0.35

0.3

0.25

0.2

0.15

0.1

0.05

0

0

IT

DK

NL

NO

UK

500

1000

1500

2000

2500

3000

3500

Active Wells

The Spanish authority’s operating budget in proportion to the number of wells or installations 
it oversees is also many times greater than those of larger regulators (see table below). 
Table  2:  Select  Offshore  Authorities'  Operating  Budgets  (€) 93,  (Corrected  for  National  Wage 
Differences)94 

Operating Budget 
Per Active Well 

Operating Budget 
Per Installation 

DK 

ES 

5,400 

310,427 

NL 

6,401 

(4,283) 

(512,120) 

(5,724) 

NO 

UK 

13,500 

9,115 

(8,981) 

24,923 

1,345,185 

15,655 

67,084 

43,849 

92 Source: European Commission questionnaire data collected from Denmark (Danish Energy Agency, but not 

including the relevant staff of the Ministry of the Environment), Italy (National Office for Mining, 
Hydrocarbons and Geothermal Resources), the Netherlands (State Supervision of Mines), Norway 
(Petroleum Safety Authority and Climate and Pollution Agency), and the UK (Health and Safety 
Executive, Department of Energy and Climate Change). 

93 Installations include all fixed, mobile and subsea production and drilling units. Source: European Commission 

questionnaire data collected from Denmark (Energi Styrelsen, but not including the relevant staff of 
Miljøministeriet), Spain (Minesterio de Industria, Turismo y Comercio), the Netherlands (Staatstoezicht 
op de Mijnen) and the UK (Health and Safety Executive, Department of Energy and Climate Change).  

94 Corrected for differences in national hourly wage rates according to Eurostat hourly labour costs, 2004, 

http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=0&language=en&pcode=tps00
173. 

EN 

41 

   EN 

 
 
 
 
 
                                                 
(19,767) 

(2,219,190) 

(13,999) 

(43,209) 

Whilst  the  proposed  policy  option  is  not  anticipated  to  entail  significant  increased  costs  to 
public  authorities,  compliance  costs  to  industry  are  likely  to  increase.  One  company 
(Company  A)  responding  to  a  European  Commission  questionnaire  on  compliance  costs  on 
the UK continental shelf last year estimates that the largest share (42%) of these costs came in 
the  category  of  significant  one-off  expenses  for  equipment  such  as  lifeboats,  and  a  capping 
device  for  use  in  case  of  a  blowout.  Running  substantive  costs,  such  as  for  independent 
verification  and  consultancy  services,  made  up  33%  of  compliance  expenditures.  Running 
administrative  burdens  made  up  18%  of  compliance  costs,  and  running  financial  costs, 
including  fixed  fees  charged  by  different  offshore  regulators,  7%.  These  expenditures  are 
shown in Figure 6, below. 

Figure  7:  Breakdown  of  Compliance  Costs  for  Offshore  Operator  Company  A  on  the  UK 
Continental Shelf95 

Administrative 
Burdens (Annual 
Running Costs)
18%

Substative Costs 
(Annual Running 
Costs)
33%

Miscellaneous One-
Off Expenditures
42%

Financial Costs 
(Annual Running 
Costs)
7%

Another company, presented in Figure 7, below, estimates that administrative burdens made 
up  42%  of  its  running  compliance  costs;  substantive  costs  35%;  and  financial  costs  16%.  It 
lists as its miscellaneous costs, mandatory training and offshore medicals. 

95 Source: European Commission questionnaire data. 

EN 

42 

   EN 

 
 
 
                                                 
Figure 8: Breakdown of Compliance Costs for Offshore Operator Company B on the UK 
Continental Shelf96 

Miscellaneous One-
Off Expenditures
7%

Financial Costs 
(Annual Running 
Costs)
16%

Administrative 
Burdens (Annual 
Running Costs)
42%

Substative Costs 
(Annual Running 
Costs)
35%

A  lack  of  any  other  detailed  questionnaire  responses,  and  potential  differences  over  how 
companies  define  ‘safety’  costs  and  separate  these  from  ‘business  as  usual’  expenditures, 
mean  that  it  is  not  possible  to  say  how  representative  these  company’s  compliance  cost 
estimates are of other operators’ costs. Nevertheless, being sensitive to the above limitation, 
we  can  use  the  detailed  figures  provided  by  Company  A  to  get  a  rough  indication  of  the 
compliance burden  borne  by companies operating in the UK: around €100,000  per well per 
year.97  

A comparison of the compliance costs of operating in the UK (objective based safety regime) 
and  Italy  (prescriptive  safety  regime)  was  made  possible  by  a  questionnaire  respondent 
operating  on  the  Italian  continental  shelf.  Figure  8  shows  that  57%  of  this  operator’s 
compliance  expenditures  when  towards  administrative  burden;  32%  was  allocated  to 
substantive costs; less than 1% of expenditures were financial costs; and 16% went towards 
miscellaneous expenses in the form of information technology safety aids. 

96 Source: European Commission questionnaire data. 
97 This figure is based on only the running costs reported by the company in question and indicated in the Figure 

6. One off expenditures have been excluded. 

EN 

43 

   EN 

 
                                                 
Figure 9: Breakdown of Compliance Costs for Offshore Operator on the Italian Continental 
Shelf98 

Miscellaneous One-
Off Expenditures
11%

Financial Costs 
(Annual Running 
Costs)
0%

Substative Costs 
(Annual Running 
Costs)
32%

Administrative 
Burdens (Annual 
Running Costs)
57%

We can use the figures provided by this operator to get a rough indication of the compliance 
burden  borne  by  companies  operating  under  the  prescriptive  Italian  offshore  safety  regime: 
around €13,000 per well per year or roughly 7.7 times less than the reported compliance costs 
in  the  UK.99  This  suggests  that  changes  to  offshore  regulation  have  the  potential  to 
significantly  increase  the  compliance  costs  of  offshore  oil  and  gas  operations  to  industry. 
Mindful  of  the  limitations  of  the  data  provided,  we  can  use  reported  compliance  cost 
differences  between  offshore  jurisdictions  to  estimate  the  possible  scale  of  the  impact  to 
industry of mandating the goal-setting approach in the EU offshore sector.  

98 Source: European Commission questionnaire data. 
99 This figure is based on only the running costs reported by the company in question and indicated in the Figure 

6. One off expenditures have been excluded. 

EN 

44 

   EN 

 
 
                                                 
Text box: Some Industry Views on the Costs Offshore Safety 

One  of  the  objectives  of  the  impact  assessment  process  is  to  give  decision  makers  the 
opportunity  to  perform  an  evidence-based  cost-benefit  analysis  of  potential  policies.  In 
the  case  of  offshore  safety,  however,  some  industry  voices  have  expressed  their  unease 
with  certain  aspects  of  this  process  –  particularly  the  quantification  of  the  costs  of 
compliance with safety regulations. They have done so on the grounds that: a) these costs 
are  practically  inseparable  from  ‘business  as  usual’  operation,  being  profoundly 
embedded  in  company  management  structures;  and  b)  the  emphasis  would  be  better 
placed on the value that effective regulation can add, rather than the burden it places. At 
least one industry representative has voiced strong support for objective based legislation, 
stating that: “the goal setting regulation structure should to the highest possible extent be 
ll

d t

ti

”

As  Policy  Option  1  involves  levelling-up  all  EU  offshore  operations  to  current  North  Sea 
standards,  Italy  and  Spain  –  the  largest  Member  States  still  operating  more  prescriptive 
regimes  –  would  be  the  Member  States  most  greatly  affected  by  the  proposed  policy. 
Assuming  that  the  compliance  costs  of  operating  in  the  UK  are  representative  of  the 
compliance costs of operating under an objective-based regime in Europe, and assuming that 
the  compliance  costs  of  operating  in  Italy  (13%  of  operating  in  the  UK,  according  to  EU 
questionnaire  data)  are  similar  to  the  compliance  costs  borne  by  all  companies  currently 
operating under prescriptive regimes in Europe, then the additional industry costs of Italy and 
Spain levelling-up to objective-based regimes would be €87,000 per well, or €35.50 million 
annually for their combined 408 wells when compared with the baseline scenario. 

As  before,  it  is  also  important  to  take  into  consideration  higher  safety  compliance  costs  to 
possible future operations in the Mediterranean and Black Sea, where offshore extraction can 
be expected to increase in the coming years. These putative costs are impossible to quantify, 
but should be qualitatively factored into any cost/benefit analysis of proposed policies. 

1.3. 

Option 1 Summary 

Benefits: €6.66-29.7 million  annually in reduced losses from offshore accidents in Italy and 
Spain  when  compared  with  the  baseline  scenario;  putative  reduced  losses  from  future 
operations in the Mediterranean and Black Sea. 

Costs:  €35.50  million   annually  in  additional  compliance  costs  to  industry  when  compared 
with  the  baseline  scenario;  significant  one-off  retraining  costs  for  the  Italian  and  Spanish 
authorities; putative additional costs to future operators in the Mediterranean and Black Sea. 

EN 

45 

   EN 

 
 
2. 

POLICY OPTION 1+: OPTION 1 COMBINED WITH INITIAL EU-WIDE  IMPROVEMENTS 
TO  UNDESIRABLE  INCONSISTENCIES  BY  CLARIFYING  EXISTING  EU  LAW  THROUGH 
SOFT LAW (NORTH SEA+ STANDARD) 

This policy option consists of five discrete measures: 1) Verifying technical capacity during 
authorizations; 2) clarifying the scope of the environmental liability directive; 3) ensuring the 
cross-border  availability  of  compatible  assets;  4)  ensuring  preparedness  for  responding  to 
major offshore accidents; and 5) extending EU standards overseas. 

2.1.  Measure: Verifying technical capacity during authorizations. 

This  measure  would  see  an  EU  licensing  requirement  that  operators  demonstrate  their 
technical  capacity  to  both  carry  out  the  activity  in  question  (seismic  survey,  exploratory 
drilling, production, etc) and take all appropriate measures to prevent and respond to critical 
events. 

2.1.1. 

Impact on reducing the costs of offshore accidents 

It  is  not  possible  to  quantify  the  potential  benefits  of  this  measure  could  bring  because 
companies often share safety data with third parties on the condition of anonymity, making it 
impossible to exhaustively examine the relationship between company technical capacity and 
these  indicators.  That  being  said,  ensuring  that  oil  and  gas  companies  have  the  technical 
capability to both carry out their operations and address any potential accident resulting from 
these operations can be expected to reduce economic losses resulting from offshore accidents 
for  self-evident  reasons.  Accordingly,  such  requirements  already  form  an  integral,  albeit 
implicit, part of the licensing process in many Member States. 

2.1.2.  Financial and administrative impacts  

Although  the  additional  burden  to  public  authorities  is  not  expected  to  be  significant, 
legislation  mandating  that  operators  demonstrate  minimum  levels  of  technical  capacity  as  a 
prerequisite  for  the  authorization  or  licensing  of  offshore  operations  may  impose 
disproportionately high costs, in terms of lost earnings, on smaller companies unable to meet 
such standards. In this way, legislation to this end may skew competition in favour of larger 
companies  with  broader  competencies  and  more  specialized  assets.  Given  that  smaller 
operators play an increasingly important role in developing/exploiting resources that may not 
be  profitable  for  companies  with  larger  overhead  costs,  losses  resulting  from  unexploited 
resources  may  also  be  incurred  by  Member  States  in  terms  of  lost  tax  revenues. 
Correspondingly,  communities  who  rely  on  the  offshore  industry  for  jobs  may  also  be 
disproportionately impacted. These impacts are difficult to quantify and depend heavily on the 
specifics of the technical requirements imposed.  

2.2.  Measure: Clarifying the scope of the environmental liability directive 

This measure would clarify the scope of the Environmental Liability Directive relating to oil 
and  gas  exploration  and  production  within  and  outside  of  the  20km/12  miles  territorial  seas 
line,  effectively  strengthening  the  ‘polluter  pays principle’  in  the  waters  where  much  of  the 
EU’s  offshore  oil  and  gas  operations  take  place.  This  is  achieved  through  soft  law 
recommendations  to  national  regulatory  authorities  to  extend  liability  provisions  to  the  200 
nm Exclusive Economic Zones. It could involve also a clarification on the applicability of the 

EN 

46 

   EN 

 
Waste Framework Directive to maritime oil spill as demonstrated by jurisprudence from the 
Court of Justice of the EU. 

2.2.1. 

Impact on reducing the costs of offshore accidents 

Any gaps in covering legislation may lead to externalities that encourage operators to under-
spend  on  safety  and  take  on  too  much  risk  in  the  anticipation  that  they  will  not  be  held 
accountable  for  all  costs  incurred  as  a  result  of  an  offshore  accident.  The  measure  aims  to 
minimize  the  possible  negative  externalities  of  offshore  activities  and  therefore  incentivize 
greater attention to safety issues by offshore operators. Although it is not possible to quantify 
the extent to which this would reduce losses form offshore accidents, ensuring that oil and gas 
companies  are  more  liable  for  the  potential  consequences  of  their  offshore  activities  can  be 
expected to reduce the risks of offshore accidents by incentivizing the allocation of adequate 
industry resources to safety. Accordingly, strengthening the polluter pays principle has been a 
key  recommendation  of  the  official  reports  into  both  the  Deepwater  Horizon  and  Montara 
blowouts.100  

2.2.2.  Financial and administrative impacts  

The financial and administrative impact of any legislative change to strengthen the ‘polluter 
pays principle’ in the liability regimes of Member States is not likely to come in terms of any 
net change in overall  economic  costs. Rather,  in the event of an accident, any legislation in 
this vein would re-assign to industry potentially large substantive costs that may otherwise be 
incurred  by  citizens  and  national  authorities.  Any  such  policy  is  therefore  likely  to 
significantly  increase  the  financial  and  administrative  impact  on  industry  stakeholders 
involved in a major accident, but benefit other affected groups at least to a comparable degree. 
This would result in little overall net change in financial costs and economic burdens, but a 
more equitable distribution of costs in the long-term.  

2.3.  Measure: Ensuring the cross-border availability of compatible assets 

This  measure  motivates  Member  States  to  develop  interoperable  assets  for  sharing  across 
boundaries and, when required, lend assistance to other Member States’ emergency responses. 
It  additionally  motivates  Member  States  to  share  available  intervention  assets  –  both  public 
assets  and  those  owned  by  industry  –  through  Guidelines  encouraging  the  collation  of 
inventories of such assets and stimulating their interoperability.  

2.3.1. 

Impact on reducing the costs of offshore accidents 

This measure will not reduce the probability of offshore accidents but may help to reduce the 
costs of those that occur in the EU by improved and coordinated emergency response. Due to 
the varied and unpredictable nature of offshore accidents, as well as the extent to and speed 
with  which  Member  States  follow  the  proposed  guidelines,  the  extent  to  which  financial 
losses are mitigated by the proposed measure is unquantifiable. 

100 ‘Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling’, National Commission on the BP 

Deepwater Horizon Oil Spill and Offshore Drilling, 01/2011, pp. 129-171, 
http://www.gpoaccess.gov/deepwater/deepwater.pdf; Report of the Montara Commission of Inquiry, 
Commissioner David Borthwick, 18/06/2010, Commonwealth of Australia. Presented to parliament on 
24 November 2010, pp. 23, 294-5, 315, 370, 
http://www.ret.gov.au/Department/Documents/MIR/Montara-Report.pdf 

EN 

47 

   EN 

 
                                                 
2.3.2.  Financial and administrative impacts  

The option is likely to only entail moderate additional costs to public authorities. Indeed, there 
is a possibility that by reducing the need for additional investments in new response capacities 
at  Member  State  level,  the  sharing  of  national  assets  might  actually  result  in  cost  savings. 
Member  States,  especially  those  with  comparatively  small-scale  offshore  operations,  may 
rely, at least partly, on the assets of neighbouring member States in times of need. Therefore, 
economies  of  scale  could  be  pursued  and  savings  secured.  Cost  efficiencies  could  be  also 
secured when deploying the assets, particularly with regards to transport. 

The costs to industry, however, may be very significant and manifest primarily in terms of the 
operating  cost  of  substantial  well-capping  and  containment  equipment  (further  examined  in 
Section 4.1.2 of this annex) 

2.4.  Measure: Ensuring preparedness for responding to major offshore accidents 

This  would  establish  Guidelines  setting  out  a  framework  for  emergency  response 
preparedness that is compatible across Member States and facilitates regional cooperation. It 
entails  the  creation  and  maintenance  of  up-to-date  emergency  plans  for  all  relevant 
installations  as  well  as  external  emergency  plans  that  are  compatible  between  different 
national authorities. The plans would need to be tested to facilitate cross-border cooperation.  

Along  with  the  measure  ensuring  the  cross-border  availability  of  compatible  assets,  it  is  in 
line with the conclusions of the Commission communication "Towards a stronger European 
disaster response: the role of civil protection and humanitarian assistance"101 which proposes 
the creation of a European Emergency Response Capacity based on pre-committed Member 
States' assets and pre-agreed contingency plans.  

2.4.1. 

Impact on reducing the costs of offshore accidents 

Better  response  capabilities  will  help  to  mitigate  the  consequences  of  accidents  (e.g.  by 
collecting the spilt oil at sea, before it reaches the coast) and may reduce their duration of a 
blowout.  Accordingly,  this  policy  measure  will  not  reduce  the  probability  of  offshore 
accidents  but  may  help  to  reduce  their  costs  by  improved  and  coordinated  emergency 
response.  

With  hindsight,  a  number  of  sources  have  highlighted  that  the  emergency  response  to  the 
Deepwater  Horizon  disaster  could  have  been  improved.  The  US  national  spill  plan  wasn’t 
aligned  with  the  natural  disaster  response  arrangements  with  which  key  State  and  local 
politicians were more familiar, and local officials complained that they were not adequately 
consulted102. However, it is not possible to quantify expected costs savings as a result of the 
measure due to the varied and unpredictable nature of offshore accidents, as well as the extent 
to and speed with which Member States follow the proposed guidelines. 

101 COM(2010) 600 final, 26.10.2010 
102 ‘Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling’, National Commission on the BP 
Deepwater  Horizon  Oil 
245-6, 
http://www.gpoaccess.gov/deepwater/deepwater.pdf;  ‘Emergency  Response,  Doctrinal  Confusion,  and 
Federalism  in  the  Deepwater  Horizon  Oil  Spill’,  Thomas  A.  Birkland  and  Sarah  E.  DeYoung,  2011, 
Publius 41(3), pp. 471-493. 

and  Offshore  Drilling, 

01/2011, 

Spill 

pp. 

EN 

48 

   EN 

 
                                                 
2.4.2.  Financial and administrative impacts  

This option focuses on the compatibility of the emergency response plans, rather than on the 
assets.  Therefore,  it  is  unlikely  to  have  significant  impacts  on  capital  costs.  The  cost  of 
preparing  and  updating  an  emergency  plan  is  relatively  modest.  Based  on  data  from  the 
sectors  covered  by  the  Seveso  Directive,  a  recent  study  estimates  that  the  updating  of  the 
internal emergency plans of an establishment (to be carried out at least every three years) cost 
around €9,300103. In the light this, as well as the considerable activity being taken jointly by 
some  MS  and  industry  on  improving  emergency  response  assets  following  lessons  learned 
from  the  Deepwater  Horizon  disaster,  no  significant  additional  costs  are  anticipated  in 
implementing this measure. 

2.5.  Measure: Extending EU standards overseas 

This measure would see the EU seeking to secure agreements on good practice standards e.g. 
with  IMO,  neighbouring  states,  and  the  governments  of  IRF  countries.  It  also  proposes  the 
creation of a voluntary code of conduct in which European companies commit to applying the 
same safety standards to their operations abroad as they do in Europe.  

2.5.1. 

Impact on reducing the costs of offshore accidents 

Given the difficulties inherent in negotiating and implementing international agreements, the 
benefits  of  propagating  of  good  practice  standards  externally  are  uncertain  and  certainly 
unquantifiable. Regarding the voluntary code of conduct, the strong public reaction to recent 
offshore incidents suggests that the increased attention such a code would bring could result 
in tangible improvements in offshore safety, even though of compliance with the code would 
be difficult to verify outside the EU.  

2.5.2.  Financial and administrative impacts  

Although  it  is  difficult  to  estimate,  any  increase  in  running  administrative  burden  to  public 
authorities  as  a  result  of  this  measure  can  be  assumed  to  be  moderate.  With  regards  to 
industry, however, strict adherence to a code committing European companies to applying the 
same safety standards to their operations abroad as they do in Europe may make a significant 
impact on their compliance costs abroad, possibly resulting in a competitive disadvantage. 

2.6. 

Option 1+ Summary 

Note:  The  benefits  and  costs  of  the  measures  in  this  policy  option  have  been  especially 
difficult  to  quantify  in  light  of  both  the  substance  of  the  measures  proposed  and  their 
implementation  primarily  by  means  of  soft-law.  In  spite  of  this,  the  passage  below  presents 
certain  estimations  as  a  tool  for  the  decision  making  process.  Readers  should  remain 
cognizant of the great uncertainty surrounding these estimations if choosing to include them 
in their evaluation of the present option. 

Benefits:  Unquantifiable  and  uncertain  benefits  in  requiring  that  EU  operators  demonstrate 
their  technical  capacity;  clarifying  the  scope  of  the  Environmental  Liability  Directive; 

103 Impact assessment study into possible options for amending the Seveso II Directive, Final Report, September 
2010, COWI, http://ec.europa.eu/environment/seveso/pdf/Seveso%20IA_Final%20report.pdf 

EN 

49 

   EN 

 
                                                 
motivating  Member  States  to  share  available  intervention  assets  and  coordinate  emergency 
response plans; and striving to extend EU standards overseas. For the sake of argument, if we 
assume that losses from offshore accidents would be reduced by a further 8.7% (€17.85-79.3 
million) when compared with Option 1 as a result of both reduced major accident probability 
and  improved  emergency  response  offered  by  Option  1+,  then  total  levelized  annual  losses 
from offshore accidents would be reduced by €24.5-109.0 million  (11.9%) as a result of the 
measures in both Option 1+ and Option 1 when compared with the baseline scenario. 

Costs:  Uncertain  costs  to  smaller  companies  unable  to  meet  proposed  technical  capacity 
requirements  in  terms  of  lost  earnings.  Also  regarding  proposed  technical  capacity 
requirements, possible lost tax revenues to Member States as a result of non-development of 
resources, and possible losses to communities reliant on the offshore sector for jobs. Modest 
additional  administrative  burdens  associated  with  motivating  Member  States  to  share 
available  intervention  assets,  coordinating  emergency  response  plans  and  striving  to  extend 
EU standards overseas. For the sake of argument, if we assume that offshore authorities have 
to  increase  their  overall  budgets  by  3%  to  account  for  increased  assessment  and  inspection 
burdens imposed by the present option, then this would result in an additional €2.53 million in 
running  costs.  If  annual  compliance  costs  to  industry  are  increased  by  2.5%  as  a  result  of 
measures  introduced,  this  would  result  in  an  additional  €15.79  million  in  running  costs104, 
giving a total figure of €18.32 of additional running costs to implement Option 1+. Combined 
with the €35.50 million in running costs for Option 1, this brings us to a total figure of €53.82 
million  in  additional  running  costs  to  implement  Option  1  and  Option  1+  when  compared 
with the baseline scenario. 

3. 

POLICY  OPTION  2:  COMPREHENSIVE  OFFSHORE  REFORM  IMPROVING  THROUGH 
NEW  LAW  THE  NORTH  SEA  STANDARD  UP  TO  CURRENT  BEST  PRACTICES  AND 
INDUSTRY  AND 
PROVIDING  GREATER  TRANSPARENCY  OF  PERFORNCE  OF 
REGULATORS ("EU BEST PRACTICE")  

For  the  purposes  of  this  exercise,  this  policy  option  can  be  broken  down  into  four  discrete 
measures  1)  Extending  MHRs  to  cover  environmental  risk;  2)  establishing  a  competent 
authority;  3)  establishing  an  EU-wide  regulatory  dialogue;  and  4)  ensuring  information 
sharing and transparency. 

3.1.  Measure: Extending major accident hazard reports to cover environmental risk 

In  most  North  Sea  authorities  currently,  the  formal  risk  assessment  performed  for  MHRs 
tends  to  be  focused  on  human  health  and  safety.  The  proposed  measure  would  see  the  risk 
assessment performed for offshore operations in Europe expanded to more rigorously address 
environment damage and the limitation of major accidents in light of recent events. As such, 
this  section  builds  on  the  analysis  in  Section  1.1  of  this  Annex  examining  the  impact  of 
implementing the goal-setting approach to offshore safety throughout Europe. The proposed 
measure  would  also  allow  the  development  of  more  effective  internal  (industry)  emergency 
plans  that  must  be  approved  by  public  authorities  within  the  envelope  of  the  MHR.  This 
would  effectively  enhance  emergency  response  beyond  what  is  proposed  in  Option  1+  by 
improving coherence between industry countermeasures national arrangements.  

104  After  levelling-up  to  North Sea  standards,  the  running  safety  compliance  costs  to  industry  are  estimated  at 
€100,000  per  well  per  year,  as  the  reader  will  recall  from  Section  1.2  of  this  annex.  There  are  6,315 
operational wells in Europe. 

EN 

50 

   EN 

 
                                                 
3.1.1. 

Impact on reducing the costs of offshore accidents 

Section  1.1  of  this  Annex  demonstrated  that  regulatory  changes  may  benefit  safety 
performance  over  time,  and  that  the  introduction  of  systematic  risk  management  can  bring 
significant improvements to offshore safety levels. Whilst the reader will recall that the UK 
has experienced clear reductions in death and major injury rates since the introduction of the 
‘safety  case’  regime,  the  figure  below  shows  that  for  hydrocarbon  releases  –  an  indicator 
closely linked to environmental risk and major incidents – the downward trend has been less 
consistent. 

Figure 10: Reported Hydrocarbon Releases on the UK Continental Shelf by Severity 

SCR92

DCR

SCR05

PFEER

s
e
s
a
e
l
e
R
n
o
b
r
a
c
o
r
d
y
H
d
e
t
r
o
p
e
R

250

200

150

100

50

0

1993/1994

1994/1995

1995/1996

1996/1997

1997/1998

1998/1999

1999/ 2000

2000/2001

2001/2002

2002/2003

2003/2004

2004/2005

2005/2006

2006/2007

2007/2008

2008/2009

2009/2010

2010/2011*

Minor

Significant

Major

Hydrocarbon releases can be regarded as potential precursors to major incidents.105 Figure 9 
illustrates  that  there  has  been  no  consistent  trend  in  the  number  of  ‘minor’  hydrocarbon 
releases  since  the  introduction  of  the  UK’s  objective-based  regime,  and  that  the  fall  in  the 
number  of  ‘major’  and  ‘significant’  hydrocarbon  releases  seems  to  have  plateaued  as  of 
2006/2007,  and  may  even  be  creeping  up  again.106  This  is  consistent  with  systematic  risk 
management  efforts  being  predominantly  focused  on  human  health  and  safety:  More 
commonly occurring trips, slips and falls are effectively addressed, but it becomes difficult for 
operators  to  justify  outlays  on  effective  measures  to  reduce  well-control  incidents  because 
their  potential  costs  in  terms  of  human  health  and  safety  are  comparable  to  other  types  of 

105  ‘Press  Release:  Offshore  industry  warned  over  ‘not  good  enough’  safety  statistics’,  24/08/2010,  Health  & 

Safety Executive, http://www.hse.gov.uk/press/2010/hse-offshorestats.htm 

106  UK  data  on  dangerous  occurrences,  which  can  also  be  seen  as  an  indicator  of  the  likely  risk  of  a  major 
incident, does not go back long enough to be able draw any conclusions from it (2003/04). This data 
has, therefore, not been presented. 

EN 

51 

   EN 

 
 
 
 
                                                 
offshore accident, such as capsizes and helicopter  crashes, even though they can  potentially 
result in the most severe environmental costs. 

Other  evidence  from  the  North  Sea  suggests  that  there  is  still  a  clear  potential  for 
improvement in well-control, and hence major accident risk. The figure below shows average 
frequency of hydrocarbon releases per installation per year for 10 anonymous operators on the 
Norwegian  continental  shelf  between  2006  and  2010.  The  frequency  of  releases  shows 
considerable  variation  between  operators.  If  the  5  worst  performing  operators  on  this  chart 
reduced their release frequency to the average level of the 5 best performing operators, then 
the total number of releases would fall by around 95%. 
Figure 11: Average frequency of hydrocarbon releases over 0.1kgs, per installation year, 2006-10107 

L
e
a
k
s
p
e
r

i

n
s
t
a

l
l

a
t
i
o
n
y
e
a
r
s

0,3

0,2

0,1

0,0

> 1 kg/s

0,1 - 1 kg/s

1 

2 

3 

4 

5
6
Operator

7

8

9

10 

Because of its unprecedented nature, little data exist that can be used as a direct benchmark 
for the effectiveness of the policy measure addressed here. Nevertheless, based on the above 
data illustrating where safety can be still be significantly improved in Europe, and building on 
the conclusions of Section 1.1 of this Annex highlighting the strength of the objective-based 
approach,  the  Commission  estimates  that  implementing  the  proposed  measure  may  reduce 
economic  losses  from  major  offshore  accidents  in  EU  waters  by  a  further  37.5%  –  an 
additional  €76.9-343.1  million  in  savings  –  beyond  the  benefits  offered  by  Option  1  and 
Option 1+ combined. Taking all options together, this would effectively halve major accident 
losses  from  €205-915  million  annually  in  the  baseline  scenario,  to  €101.4-452.1  million 
annually. 

To  this  figure  must  be  added  the  gains  of  further  improving  emergency  response  beyond 
Option 1+ that come through mandating the approval of industry plans within the envelope of 
the  MHR.  Whilst  these  gains  are  unquantifiable  with  certainty,  the  practice  of  linking  the 
preparation  of  national  emergency  plans  to  the  risk  assessments  performed  by  the  operators 
will lead to a greater level of coherence between industry and public authority response. Such 
consistency has been found lacking in recent major accidents (see Section 2.3 and Section 2.4 
of this Annex). 

107 Source: ‘Trends in Risk Level – Summary report 2010’, 29/04/2011, Petroleum Safety Authority, Norway, 
http://www.ptil.no/getfile.php/PDF/RNNP%202010/Summary_Report_2010_rev1a1.pdf. 

EN 

52 

   EN 

 
 
                                                 
3.1.2.  Financial and administrative impacts  

In  order  to  estimate  the  additional  regulatory  costs  of  any  new  EU  legislation  covering 
systematic  risk  management  for  major  accidents,  it  is  important  to  have  an  idea  of  the  way 
different  EU  regulators  currently  allocate  their  resources.  Figure  11  shows  that  European 
offshore authorities currently allocate between 40-75% of their resources to the compliance-
related activities of inspection, enforcement, and investigation. The assessment of health and 
safety documents (MHRs) takes up between 25-40% of their resources. 
Figure 12: Allocation of Regulators' Resources108 

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Technical Control
and Environmental
Analysis

Assessment of
Health and Safety
Documents and
other Applications

Investigation of
Incidents and Near
Misses

Enforcement of
Legislation

Inspection of
Offshore Facilities

IT

NL

UK

Although it is widely acknowledged that effective oversight plays an essential part in offshore 
safety, regulators typically find it difficult to “prove” or quantify this fact due to the influence 
of external factors. Nevertheless, some national offshore authorities have pledged to increase 
inspections  in  the  wake  of  the  Deepwater  Horizon  disaster.  If  national  offshore  authorities 
increase  certain  activities  without  a  reduction  in  competing  activities,  this  almost  inevitably 
entails increases in running regulatory costs.  

For  national  authorities,  the  Commission  estimates  that  the  proposed  policy  measure  will 
result in a 15% increase in the resourcing of the compliance-related activities of inspection, 
enforcement,  and  investigation,  and  a  10%  increase  in  the  assessment  of  MHRs.  This  is  to 
account for evaluating and verifying the more complete MHRs that are proposed, as well as 
the updated internal response plans. Given that the annual budgets of EEA offshore regulators 
come  in  at  around  €85  million  in  total,  the  proposed  measure  would  result  in  an  estimated 

108 Source: European Commission questionnaire data collected from Italy (Ufficio Nazionale Minerario per gli 

Idrocarburi e le Georisorse), the Netherlands (Staatstoezicht op de Mijnen), and the UK (Health and 
Safety Executive, Department of Energy and Climate Change). 

EN 

53 

   EN 

 
                                                 
€7.21-12.93  million  in  additional  running  costs  to  public  authorities  annually,  if  fully 
implemented by all EEA regulators.109 

Estimating  the  impact  on  industry  is  considerably  more  difficult,  given  the  poverty  of  the 
collected  industry  data  (already  discussed  in  Section  1.2  of  this  annex)  and  the  potentially 
large differences in industry compliance highlighted in Figure 10. After levelling-up to North 
Sea standards, the running safety compliance costs to industry are estimated at €100,000 per 
well  per  year,  as  the  reader  will  recall  from  Section  1.2  of  this  annex.  The  Commission 
estimates that the proposed policy measure will result in a 10% increase in these compliance 
costs  (administrative  costs,  financial  costs  and  substantive  costs,  equally),  resulting  in  an 
estimated  €63.2  million  in  additional  running  costs  to  industry  annually  for  all  the  EEA’s 
6,315 reported offshore wells.  

Finally, this policy measure would likely see expert group(s) convened to develop operational 
models for industry and for regulators. Member States, industry and the Commission can all 
be  expected  to  incur  additional  administrative  burdens  associated  with  the  development  of 
such  models  and  in  order  to  attend  meetings  to  exchange  ideas.  Assuming  that  the  expert 
group consist of 30 individuals, that these individuals have an average wage rate of €150 per 
hour,  and  that  this  wage  rate  is  inflated  by  50%  rather  than  30%  to  reflect  travel  and 
accommodation  costs  for  these  participants,  the  EU  Standard  Cost  Model  estimates  one-off 
costs of just over €250,000 for a 5 day (37.5 hour) programme of meetings held to draft and 
agree an initial document, and then running costs of just over €100,000 per year for 2 day (15 
hour) annual meetings to keep this document up to date with state-of-the-art developments.  

3.2.  Measure: Establishing a competent authority 

In order to more effectively and efficiently incorporate environmental damage into the formal 
risk assessment process, a number of Member States’ authorities may have to reorganize into 
a single national competent authority. 

3.2.1. 

Impact on reducing the costs of offshore accidents 

Establishing  a  competent  authority  is  an  essential  component  of  more  thoroughly 
incorporating environmental risk into the systematic risk management performed for offshore 
operations.  As  such,  this  proposed  policy  measure’s  impact  on  reducing  the  cost  of  major 
accidents is principally addressed in Section 3.1.1 above. However, the measure would also 
result in other benefits that must also be added to the abovementioned savings, most notably, 
the  benefits  associated  with  the  institutional  principles  of  independence  that  national 
supervisory bodies would adhere to under the proposed measure.  

Institutionally  separating  offshore  regulators  from  the  resource  management  and/or  revenue 
collection functions in national governments would strengthen the regulators by ensuring they 
are  free  from  conflicts  of  interest  in  their  oversight  functions,  thereby  improving  their 
performance and reducing losses from offshore accidents. Similar  principles of bureaucratic 

109 Assuming a linear relationship between activity levels and resources devoted to activities. Source: European 
Commission questionnaire data collected from Denmark, Italy, the Netherlands, Norway, Spain and the 
UK.  Figure  does  not  include  the  budgets  of  the  regulators  of  Germany,  the  Faroe  Islands,  Ireland  or 
Malta. 

EN 

54 

   EN 

 
                                                 
separation accordingly form the basis of internationally agreed nuclear safety standards,110 as 
well as a Directive proposed by the Commission in 2010 addressing the nuclear sector in the 
EU-27.111 On top of this, many organizations, including the International Regulators’ Forum, 
have argued that regulatory regimes function most effectively when a single entity has broad 
safety  and  pollution  prevention  responsibility,  as  regulatory  gaps  and  overlap  reduce  both 
safety and efficiency.112 

Whilst it is impossible to quantify the benefits brought in terms of more effective regulation, 
policymakers  should  qualitatively  include  this  factor  in  any  cost-benefit  analysis  of  the 
proposed measure. 

3.2.2.  Financial and administrative impacts  

Although the European Economic Area’s two largest offshore regulators – the UK Health and 
Safety Executive’s Offshore Division, and the Norwegian Petroleum Safety Authority – both 
already fulfil the proposed requirements of functional separation, several others may not do. 
In  particular,  relevant  elements  of  Italy’s  National  Office  for  Mining,  Hydrocarbons  and 
Geothermal Resources, the Netherlands’ State Supervision of Mines, the UK’s Department of 
Energy and Climate Change, and Denmark’s Energy Agency may have to reorganize in order 
to fulfil the proposed requirements. Moreover, most EEA Member States divide, to a certain 
degree, their core regulatory activities between two or more authorities. 

Depending  on  how  Member  States  choose  to  implement  the  proposed  measure,  significant 
one-off administrative burdens can be expected to public authorities in meeting the proposed 
requirements.  There  are  currently  over  a  dozen  national  authorities  involved  in  offshore 
regulation  in  the  European  Economic  Area  with  over  500  staff,  and  significant  change  may 
affect up to a dozen of these authorities and a total of around 170 staff.113 This is assuming 
that  these  bodies  have  to  merge  with  larger  independent  authorities,  or  enact  significant 
managerial changes to meet independence criteria themselves. Together with the adjustment 
necessary to adapt to the strengthened risk assessment regimen examined in Section 3.1 and 
new  data  sharing  requirements  that  will  be  examined  in  Section  3.4,  the  Commission 
estimates  that  proposed  measure  will  result  in  an  additional  one-off  costs  amounting  to  20-
50% of EEA regulators’ usual annual budgets in the first year of implementation i.e. €17.5-
43.9 million.114  

Following  this  initial  outlay,  however,  national  authorities  may  experience  modest  gains  in 
operating  efficiency,  as  moving  regulatory  activities  ‘under  one  roof’  allows  managers  to 
streamline  operations  and  better  capitalize  on  economies  of  scale  in  compliance-related 
activities, and the assessment of applications. If a modest 1.5-3% in regulatory cost savings at 
the  European  level  can  be  achieved  through  the  exercise,  the  measure  would  result  in 
economic benefits of around €1.3-2.6 million annually. 

110 ‘The principle of Radioactive Waste Management’, 1995, IAEA Publications, http://www-pub.iaea.org/-

MTCD/publications/PDF/Pub989e_scr.pdf. 

111 ‘Proposal for a COUNCIL DIRECTIVE on the management of spent fuel and radioactive waste’, 

COM/2010/0618 final - NLE 2010/0306  

112 ‘Conference Summary: 3rd International Regulators’ Offshore Safety Conference’, 20/10/2010, International 

Regulators’ Forum, http://www.irfoffshoresafety.com/conferences/2010conference/summary.aspx. 

113 Source: European Commission questionnaire data. 
114 The figure used for the total combined budget was €87.7 million. 

EN 

55 

   EN 

 
                                                 
3.3.  Measure: Establishing an EU-wide regulatory dialogue 

Supporting the inculcation and maintenance of regulatory best practices would be the setting 
up of a Commission-led EU Offshore Operators Group that would also enhance the efficacy 
of  existing  regional  groups  such  as  NSOAF  and  the  fledgling  Mediterranean  MS  forum. 
Along with EMSA and other EU resources, this group would additionally play an important 
role  facilitating  periodical  cross  border  exercises  to  verify  the  effectiveness  of  internal 
(industry) response plans approved within the envelope of the MHR. 

3.3.1. 

Impact on reducing the costs of offshore accidents 

An  EU-wide  regulatory  dialogue  is  key  to  realizing  the  benefits  of  the  new  major  accident 
hazard regime introduced in Section 3.1 of this annex. The impacts of the proposed measure 
are therefore examined in 3.1.1. The economic benefits of periodical cross border exercises to 
verify the effectiveness of internal (industry) response plans are also covered in Section 3.1.1. 

3.3.2.  Financial and administrative impacts 

In  order  to  estimate  the  additional  costs  of  the  creation  of  a  Commission-led  EU  Offshore 
Operators  Group,  we  can  start  by  looking  at  the  resources  that  current  NSOAF  members 
allocate  to  international  cooperation.  The  Danish  offshore  health  and  safety  authority 
indicates  that  it  currently  spends  around  €60,000  on  international  and  other  cooperation 
annually. Assuming that the Bulgaria, Romania and Malta begin programmes of comparable 
cost, this would entail additional running public authority expenditures of €180,000 annually.  

With  a  staff  of  22,  the  Danish  offshore  health  and  safety  authority’s  expenditure  on 
international  cooperation  works  out  at  around  €2,730  per  staff  member  per  year.  Further 
assuming  that  the  remaining  EEA  Member  States  with  offshore  operations  –  Germany, 
Denmark, Spain, the Faroe Islands, Ireland, Italy, the Netherlands, Norway and the UK – have 
similar international cooperation budgets to Denmark’s on a per staff member basis, and have 
to  increase  these  resources  by  30%  in  order  to  fully  participate  in  the  activities  of  the  EU 
Offshore Operators Group, then this would result in an additional €414,000 in annual running 
costs to public authorities at the European level.115 

This gives a total estimated €594,000 in annual running costs to implement the recommended 
policy measure. 

3.4.  Measure: Ensuring information sharing and transparency 

Legislation  mandating  increased  transparency  can  be  expected  to  address  the  current 
shortcomings  in  the  information-sharing  practices  of  European  regulators,  and  add  further 
value to the EU-wide regulatory dialogue. 

115 Total offshore authority staff for the aforementioned EEA Member States is 506. Source: European 

Commission questionnaire data collected from Denmark (Danish Energy Agency, but not including the 
relevant staff of the Ministry of the Environment), Italy (National Office for Mining, Hydrocarbons and 
Geothermal Resources), the Netherlands (State Supervision of Mines), Norway (Petroleum Safety 
Authority and Climate and Pollution Agency), and the UK (Health and Safety Executive, Department of 
Energy and Climate Change). 

EN 

56 

   EN 

 
                                                 
3.4.1. 

Impact on reducing the costs of offshore accidents 

On top of freedom of information requests, many regulators already provide the public with 
significant amounts of easily accessible information, including facts about their programmes, 
initiatives relating to the Deepwater Horizon accident, the results of inspection projects, and 
industry targeted health and safety bulletins. They do so as part of their strategy to improve 
offshore safety in their jurisdictions. Resources devoted to information sharing are justified by 
the benefits the exercise can be expected to bring.  

Over and above this, however, it may be difficult for regulators to justify the collection and 
compilation of further data if this imposes significant additional costs, or if this data may be 
important to others but does not have a direct bearing on the conditions in their jurisdiction. 
The publication of some information may not be welcome because of concerns that this may 
result in increased public pressure to address issues that regulators feel would not be the best 
use  of  their  limited  resources.  Certain  national  institutions  may  judge  that  the  “naming  and 
shaming”  of  non-compliant  companies  may  unnecessarily  strain  relations  with  a  sector  that 
provides a significant source of employment and tax revenue. And finally, it is understandable 
that some regulators may be reluctant to disclose data that could reveal shortcomings in their 
own work.  

The abovementioned policy proposal would address the limits of purely voluntary information 
sharing,  and  thereby  ensure  that  the  added-value  of  sharing  comparable  information  at  the 
transnational  level  is  realized  to  the  full  extent  within  the  EU.  Although  it  is  difficult  to 
quantify the  extent of these  benefits in terms of reduced losses from offshore accidents, the 
Commission believes that the availability of reliable and directly comparable data on offshore 
safety  is  key  to  identifying  and  understanding  hazard  trends  in  this  technologically  fast-
moving sector. They will also make it possible to benchmark and monitor the effectiveness of 
any  proposed  policy  changes  enacted.  These  significant  but  unquantifiable  benefits  must  be 
included in any cost-benefit analysis of the proposed measure. 

3.4.2.  Financial and administrative impacts  

Currently, Norway’s offshore regulators devote the greatest resources to collecting, compiling 
and  making  offshore  safety  data  publicly  available  in  the  European  Economic  Area  in  total 
term.  However,  the  Netherlands  devotes  greater  resources  to  this  end  as  a  proportion  of  its 
operating budget. 

Table 3: Regulator resources allocated to collecting, compiling and making offshore safety data 
publicly available116 

ES 

NL 

NO 

UK 

Total Amount (€)  Less than 20,000 

260,000-300,000  700,000 

220,000-340,000 

116 Source: European Commission questionnaire data collected from Spain (Ministry of Industry, Tourism and 

Trade), the Netherlands (State Supervision of Mines), Norway (Petroleum Safety Authority and Climate 
and Pollution Agency), and the UK (Health and Safety Executive, Department of Energy and Climate 
Change). 

EN 

57 

   EN 

 
 
                                                 
As  Percentage  of 
Operating 
Budget 

Less than 0.5% 

4.5-5.2% 

2.46% 

0.79-1.22% 

Both  the  Norwegian  and  UK  regulators  collect  and  publish  offshore  safety  statistics  on 
hydrocarbon releases, accidents, incidents, and near misses. Much of this data is directly and 
easily  accessible  from  their  websites,  which  are  the  mainstays  of  both  the  Norwegian 
Petroleum  Safety  Authority  and  the  UK  Health  and  Safety  Executive’s  information 
dissemination programmes. Trend monitoring is carried out on this data, either in-house or by 
a  third-party,  and  the  resulting  publications  are  also  made  available  online.  The  current 
indicators monitored in Norway and the UK are focused mainly on the human health aspect of 
offshore safety. 

Assuming  that  the  Netherlands,  Norway  and  the  UK  currently  collect  and  share  adequate 
levels of information on the human health aspects of offshore safety, but need to increase their 
information  sharing  resources  by  75%  in  order  to  meet  EU  requirements  to  compile  and 
publish new indicators covering major accident hazard in order to safeguard the environment, 
this  would  result  in  additional  costs  of  €195,000-225,000  to  the  Netherlands,  €525,000  to 
Norway  and  €165,000-€255,000  to  the  UK.  Further  assuming  that  the  remaining  offshore 
authorities in Europe have to increase their total annual operating budgets by 3.5% in order 
meet  new  information  sharing  requirements  (conservatively  estimated  from  Norwegian  and 
UK figures in Table 3), this would result in an additional €900,000, roughly. This comes to a 
total increase of around €1.8-€1.9 million in annual running administrative burdens to public 
authorities at the European level.117 

Additional  one-off  administrative  costs  may  be  incurred  as  public  authorities  and  industry 
align  themselves  with  obligations  aimed  at  streamlining  information  sharing  (for  example 
though a new, commonly agreed accident reporting format). Decision-makers should bear in 
mind,  however,  that  certain  measures  introduced  by  the  process  may  result  in  decreasing 
financial costs and administrative burdens over the long run, as the introduction of a common 
European format for collected safety data, for example, may allow regulators to collectively 
perform data analysis and thereby save costs. 

Regarding  increases  in  the  costs  to  industry,  one  company  responding  to  a  European 
Commission survey on safety compliance costs in the UK estimates its administrative burden 
for safety (in terms of man hours of its offshore installation managers and management teams) 
to be €2,762 (£2,350) per well per year. Adjusting this figure by 30% to represent overheads, 
this gives a figure of €3,591 per well per year. Assuming this is a representative figure for all 
of  Europe’s  6,315  active  wells  (including  Norway),  and  that  the  workload  of  offshore 
installation  managers  and  management  teams  is  increased  by  30%  as  a  result  of  new  EU 
reporting requirements, then the policy would entail €6,802,392 of additional administrative 
burdens to industry each year at the European level. To this figure must be added the initial 
one-off  administrative  burden  to  companies  in  terms  of  reading  and  understanding  new 
requirements, and adjusting reporting practices as necessary 

3.5. 

Option 2 Summary 

117 This estimation does not include Bulgaria, Germany, Ireland, Malta or Romania. 

EN 

58 

   EN 

 
 
                                                 
Benefits:  €76.9-343.1  million  in  additional  savings  annually  in  extending  MHRs  to  cover 
environmental  risk  as  well  as  the  creation  of  competent  authorities  free  from  conflicts  of 
interest;  and  €1.3-2.6  million  in  efficiency  gains  to  regulators  in  the  creation  of  a  single 
authority  for  offshore  safety.  Implementing  Policy  Option  2  is  thus  estimated  to  provide  a 
total of €102.7-454.7 million  (49.8%) in benefits annually together with Option 1 and Option 
1+ when compared with the baseline scenario. 

To  this  figure  should  be  added  unquantifiable  benefits  to  emergency  response  that  are 
anticipated to come through mandating the approval of industry plans within the envelope of 
the  MHR;  the  benefits  of  more  effective  oversight  through  the  creation  of  competent 
authorities free from conflicts of interest; and the benefits that come with a greater awareness 
of hazard trends through improved transparency and information-sharing practices. 

Costs:  €7.21-12.93  million  in  additional  running  costs  to  public  authorities  annually  and 
€63.2 million to industry to extend MHRs to cover environmental risk; one-off costs of just 
over €250,000 and then  running costs of €100,000  per year to Member States, industry  and 
the  Commission  for  the  expert  group  meetings  necessary  to  incorporate  environmental  risk 
into the MHRs; one-off costs of €17.5-43.9 million for the creation of competent authorities 
free from conflicts of interest; €594,000 in annual running costs to set up a Commission-led 
EU  Offshore  Operators  Group;  and  €1.8-€1.9  million  in  running  administrative  burdens  to 
public  authorities  and  €6,802,392  in  compliance  costs  to  industry  annually  to  improve 
transparency and information-sharing practices. This gives a total of €17.75-44.15 million in 
one-off costs and €79.61-85.33 million in annual running costs to implement Policy Option 2. 
Combined with the costs of implementing Option 1 and Option 1+, this makes a cumulative 
€17.75-44.15  million  in  one-off  costs   and  €133.43-139.15  million  in  running  costs   when 
compared with the baseline scenario. 

4. 

POLICY OPTION 3: CONSOLIDATING OFFSHORE REFORM  BY  ESTABLISHING  AN EU 
INTERVENTION  AND  OVERSIGHT  CAPABILITY  THROUGH  EU  OFFSHORE  SAFETY 
AGENCY 

This policy option consists of two measures: 1) Establishing an EU intervention capacity; and 
2) establishing an EU regulatory body for offshore oil and gas operations.  

4.1.  Measure: Establishing an EU intervention capacity 

4.1.1. 

Impact on reducing the costs of offshore accidents 

This  Option  adds  to  the  intervention  capacities  currently  available  by  industry  and  Member 
States. Although improved emergency response is likely to reduce the cost of major offshore 
accidents that occur, it is uncertain as to whether an EU intervention capacity would represent 
the  best  use  of  resources  to  this  end.  Establishing  an  EU  intervention  capacity  would  most 
likely  involve  an  expansion  of  the  mandate  of  the  European  Maritime  Safety  Agency 
(EMSA),  which  already  has  significant  expertise  and  equipment,  and  whose  assets  – 
particularly  satellite  imagery  –  are  already  drawn  upon  by  national  offshore  authorities. 
EMSA  has  the  capacity  to  respond  to  oil  spills,  but  for  it  to  also  tackle  offshore  safety,  it 
would likely also have to acquire a well-capping and containment capability. Because this has 
been  the  strong  focus  of  industry  since  the  Deepwater  Horizon  disaster,  this  may  result  in 
EMSA’s  expanded  assets  may  result  in  little  overall  impact  in  practice,  and  a  wasteful 
duplication of resources. 

EN 

59 

   EN 

 
4.1.2.  Financial and administrative impacts  

In  order  to  estimate  the  additional  costs  of  the  creation  of  an  EU  intervention  capacity  it  is 
instructive to look at the extent of well-capping and containment equipment for the equipment 
costs necessary (industry has so far not fully-specified the costs of a capping and containment 
system), and EMSA staffing resources to get an idea of building the expertise required.  

A  recent  OGP  report  illustrated  the  equipment  necessary  for  a  flexible  capping  and 
containment system that could be deployed in most scenarios118. This includes capture devices 
(hard  seal,  soft  seal,  or  no  seal)  with  diverter  spools  that  fit  over  a  subsea  well,  the  subsea 
systems  and  relevant  surface  systems  and/or  vessels  for  handling,  flaring,  storing,  and 
shipping  to  facilities  that  can  effectively  dispose  of  the  liquid  hydrocarbons  and  associated 
contaminated water. Given the amount of equipment necessary, it can be estimated that one-
off costs to acquire a similar system may run into many tens of millions of euros, and that the 
annual costs of maintaining the equipment may run into the millions. Furthermore, it is likely 
that more than one such system would have to be acquired in order to have response resources 
within proximity of operations in both the North Sea and the Mediterranean. 

The  staffing  budget  of  EMSA  stood  at  roughly  €20  million.119  Assuming  this  needs  to  be 
increased by 50% in order to bring in the necessary expertise, this would entail €10 million in 
additional running costs annually. To this should be added increased operational running costs 
resulting  from  the  expanded  mandate  of  EMSA,  and  the  maintenance  and  storage  of  well 
control and containment equipment. Assuming EMSA’s current operating expenditures of €32 
million have to be increased by 30%, this would result in an additional €9.6 million, giving a 
total of €19.6 million in running costs to implement the policy measure examined here. 

4.2.  Measure: Establishing EU regulatory body for offshore oil and gas operations 

4.2.1. 

Impact on reducing the costs of offshore accidents 

Rather than introducing any new policy action per se, this option would consolidate benefits 
of Option 2 by seeing a European body created to perform, in addition to national competent 
authorities, certain policy measures in Option 2, such as assessing, the technical capacity of 
operators, assessing certain MHRs, offshore inspections, and the management of a database of 
safety indicators. By adding an specific EU wide oversight function of national regulators, 3rd 
party  verifiers  it  would  to  a  certain  degree  improve  the  coherent  implementation  of  and 
compliance with EU legislation. 

Although  it  is  impossible  to  quantify  the  extent  to  which  this  would  reduce  the  losses  from 
offshore  accidents,  a  single  EU  regulatory  body  can  be  expected  to  allow  the  EU  to  better 
extend  its  practices  to  overseas  operations  as  a  result  of  enhanced  collective  bargaining  it 
affords. The assessment of license applications by a single EU body, completely independent 
of  Member  States,  would  also  ensure  EU-wide  coherence  and  a  level  playing  field  across 
European  jurisdictions.  Similar  but  less  significant  converging  impact  could  be  expected 
where the EU body would provide technical assistance, coordination, training or information 
sharing services to new or evolving national regimes.  

118 ‘Capping and Containment: Global Industry Response Group Recommendations’, Report No. 464, May 2011, 

International Association of Oil & Gas Producers, http://www.ogp.org.uk/pubs/464.pdf. 

119 ‘EMSA 2011 Budget’, European Maritime Safety Agency, 

http://www.emsa.europa.eu/component/flexicontent/download/966/214/23.html. 

EN 

60 

   EN 

 
                                                 
On  other  dimensions,  however,    consultations  show  that  regulatory  authorities  in  mature 
offshore regions fear that  the creation of an EU regulatory body could risk destabilising their 
existing  regimes  and  lead  to  fewer  benefits  than  in  Options  1  to  2  by  introducing  standards 
based  on  the  lowest  common  denominator  in  the  EU  and  aggravating  staffing  shortage  of 
qualified  personnel  such  as  inspectors.  In  case  of  unclear  roles,  the  quality  of  regulatory 
oversight in Europe could suffer, either as a result of a unnecessary duplication of measures 
already  taken  by  national  authorities  or  as  a  result  of  uncertainty  about  the  effectiveness  of  
the EU body in the extreme case that it would have sole responsibility for them. Specifically, 
the EU body could turn to the Member States for non-compliance with EU law but would not 
be able to effectively enforce sanctions given MS jurisdictions for criminal investigation and 
prosecution. This limitation could potentially undermine the effectiveness of existing regimes 
and the EU goal-setting approach.  

Other anticipated challenges include, cost recovery mechanisms: the relationship between MS 
and  the  agency  in  respect  of  non  major  hazard  regulation  (eg  under  the  Drilling  Extractive 
Industries  and  the  Safety  and  Health  of  workers  Directives);  the  relationship  with  licensing 
authorities; the handling of MHRs by the regulator, leading to consents; and the agreement of 
emergency  plans.  The  new  organisation  will  have  to  build  up  the  required  expertise  for 
assessment  of  license  applications;  and  local  circumstances  (language  and  geology,  for 
example) may mean that many responsibilities are better performed at the national level.  

Moreover,  the  scope  of  action  of  the  body  could  be  limited  by  the  guarantees  given  to 
Member States in existing EU legislation in respect of sovereign assets (Art 194 of TFEU and 
Directive 94/22). 

4.2.2.  Financial and administrative impacts  

Existing European agencies, such as EMSA and EURATOM, are not entirely suitable for the 
nature  of  the  offshore  oil  and  gas  industry,  which  is  essentially  non-maritime  and  has  very 
different risk profiles to the nuclear sector. As such, an EU regulatory body would have to be 
established from scratch and not as an extension of a pre-existing institution. In spite of this, 
the running costs of such agencies can give us a benchmark against which the additional costs 
of an EU regulator can be estimated.  

The total operating budget of EMSA, with over 200 staff at its offices in Lisbon, stood at just 
over  €56  million  in  2011:  roughly  €20  million  for  staffing  costs;  just  over  €4  million  for 
buildings, equipment and miscellaneous expenditure; and just over €32 million for operating 
expenditure.120 Assuming that the size of the EU regulatory agency in terms of total staffing 
resources  is  1/5th  of  the  current  506  staff  working  in  all  national  offshore  authorities 
combined,121 then the EMSA budget figures would indicate roughly €10 million for staffing 
costs.  As  offshore  regulators  do  not  require  the  purchase,  maintenance  or  storage  of 
equipment, other categories of cost in the EMSA budget would not reliably apply to an EU 
offshore regulator. Instead, we can add an additional 40% onto staffing costs to account for 

120 ‘EMSA 2011 Budget’, European Maritime Safety Agency, 

http://www.emsa.europa.eu/component/flexicontent/download/966/214/23.html. 

121 Source: European Commission questionnaire data collected from Denmark (Danish Energy Agency, but not 

including the relevant staff of the Ministry of the Environment), Italy (National Office for Mining, 
Hydrocarbons and Geothermal Resources), the Netherlands (State Supervision of Mines), Norway 
(Petroleum Safety Authority and Climate and Pollution Agency), and the UK (Health and Safety 
Executive, Department of Energy and Climate Change). 

EN 

61 

   EN 

 
                                                 
overhead costs, such as buildings, heating, etc., as well as an international travel allowance. 
This gives an estimated total of €14 million in additional running costs to public authorities to 
implement the policy measure. 

Compliance costs to industry would not be increased. 

4.3. 

Option 3 Summary 

Benefits:  Uncertain  benefits  to  emergency  response  resulting  from  an  EU  intervention 
capacity; reduced losses from offshore accidents as a result of more effective extension of EU 
practices  to  overseas  operations,  and  better  assessment  of  license  applications  by  an  EU 
regulatory body. 

Costs: Tens of millions of euros for the purchase of well capping and control equipment and 
€19.6 million in additional annual running costs to expand EMSA’s mandate and establish an 
EU intervention capacity; and €14 million in additional running costs in establishing an EU 
regulatory body. This comes to tens of millions of euros in on-off costs and €33.6 million of 
running  costs  to  implement  Policy  Option  3.  Combined  with  the  costs  of  implementing 
Option  1,  Option  1+  and  Option  2,  this  makes  a  cumulative  €167.03-172.75  million  in 
running costs when compared with the baseline scenario, and well over €17.75-44.15 million 
in one-off costs. 

To this must be added the unquantifiable costs in terms of an increase in the likelihood of an 
offshore accident associated with a possible degradation in the quality of regulatory oversight 
in  Europe  caused  by  the  shift  of  competencies  away  from  national  authorities  to  an  EU 
regulatory body. 

5. 

OTHER ENVIRONMENTAL, SOCIAL, ECONOMIC AND EXTERNAL IMPACTS 

5.1. 

Environmental impacts 

Offshore  accidents  obviously  can  have  a  profound  impact  on  the  environment  and  the 
environmental  impacts  of  the  policy  options  have  been  already  analysed  in  the  previous 
sections of this annex.  

5.2. 

Social impacts 

Considering  the  multifaceted  role  that  offshore  oil  and  gas  operations  play  in  the  European 
economy,  the  impacts  of  the  various  policy  options  are  not  restricted  to  particular  social 
groups  although  some  of  those,  e.g.  workers  of  the  offshore  oil  and  gas  sector  will  be 
obviously more affected than others.  

Reducing the risk of offshore accidents will lead to improvements in the health and safety of 
the workers employed in the sector. As already demonstrated in this annex, countries which 
already  adopted  some  of  the  measures  proposed  above  have  experienced  decreasing  fatality 
and injury rates. 

A serious accident would have a direct impact on those working on the installation but may 
also have repercussions to the whole sector. If the safety of offshore operations in general was 
questioned,  this  would  set  back  new  explorations  and  even  ongoing  operations  could  be 
hampered, probably leading to a decreasing employment in the offshore sector (as seen in the 

EN 

62 

   EN 

 
Gulf  of  Mexico  since  April  2010).  Therefore,  an  option  reducing  the  risks  of  offshore 
accidents will also contribute to the sustained employment in the sector. The same can be said 
about  other  sectors  like  fisheries  and  tourism  which  would  be  also  negatively  affected  by  a 
large-scale oil spill, or for communities, such as some in Scotland, who rely on the offshore 
oil and gas industry. 

5.3. 

Economic impacts 

Some  economic  impacts  have  been  presented  in  the  previous  sections  of  this  annex;  this 
section will cover various additional relevant aspects. 

As  many  sections  of  this  annex  have  already  highlighted,  a  harmonization  of  the  rules, 
standards and best practices applicable to the offshore sector in different Member States will 
help the functioning of the internal market and enhance competition. Companies operating in 
multiple  jurisdictions  will  have  to  conform  to  more  homogenous  regulatory  requirements, 
leading to lower compliance costs. 

A  serious  accident  could  check  the  exploitation  of  offshore  resources.  As  a  result  of  the 
growing significance of offshore oil production, shortfalls in supply may have an impact on 
oil prices. Therefore, any policy reducing the risks of offshore accidents will also contribute – 
indirectly – to the reduced risk of such price developments.  

5.4. 

External impacts 

Apart  from  the  direct  external  impact  of  proposed  policies,  it  should  be  noted  that  several 
countries in the European Economic Area are recognized as being world leaders in offshore 
safety.  By  virtue  of  this,  European  leadership  in  initiatives  such  as  the  codification  of  best 
practices, the development of product and safety standards, and the conception of a common 
reporting format for offshore safety statistics all have the potential to set a precedent for other 
regions and, thereby, to generate ancillary benefits to offshore safety globally. 

EN 

63 

   EN 

 
 
ANNEX V: SUMMARY OF EU ACQUIS APPLICABLE TO OFFSHORE OIL AND GAS ACTIVITIES  

EU treaties and general policies 

The Treaty on the Functioning of the European Union (TFEU) establishes a new provision on 
energy  policy122.  The  Treaty  contains  provisions  for  the  protection  of  workers'  safety  and 
health, allowing the adoption of minimum requirements in this field123 and for the protection 
of the environment, including the precautionary principle and the polluter pays principle124. 

Besides primary legislation, the EU's Integrated Maritime Policy (IMP) sets the objective for 
the EU to develop a coherent policy approach to the oceans, seas and coastal areas, aiming at 
a comprehensive understanding and taking into account economic, environmental and social 
aspects. One of the tools developed in the context of the IMP is Maritime Spatial Planning 
(MSP)125  which  is  a  key  tool  with  regard  to  good  governance  of  the  marine  space  and  its 
resources. Another relevant policy instrument developed under the IMP is Marine Knowledge 
2020126  which  aims  at  improving  the  quality  of  public  decision-making  at  all  levels  by 
providing wider access to quality-checked, rapidly available coherent marine data.  

EU legislation on the authorization of offshore activities 

In line with the provision of the TFEU about Member States’ right to determine the conditions 
for  exploiting  their  energy  resources,  their  choice  between  different  energy  sources  and  the 
general structure of their energy supply, it is up to each Member State to issue licences and 
other approvals necessary for the exploration and production of hydrocarbon resources within 
its  territory  and  in  waters  falling  under  its  jurisdiction.  Each  Member  States  sets  its  own 
conditions  and  requirements  to  be  met  for  license  awards.  In  fact,  Member  States  have 
adopted a diverse set of national licensing/permitting requirements on key issues like financial 
and technical capacity of applicants.  

Directive  94/22/EC  of  the  European  Parliament  and  of  the  Council  of  30  May  1994  on  the 
conditions  for  granting  and  using  authorizations  for  the  prospection,  exploration  and 
production of hydrocarbons does not impose specific requirements on the applicants as it was 
designed  to  deal  only  with  competitive  aspects  of  Member  States'  licensing  procedures, 
ensuring equal access to national bidding rounds for entities from the entire EU.  

EU legislation on equipment 

EU  product  safety  legislation  has  been  making  already  for  many  years  an  important 
contribution to the safety of equipment used in the oil and gas sector. Several product safety 
directives  have  a  bearing  on  the  sector,  namely  Directive  2006/42/EC  of  the  European 
Parliament  and  of  the  Council  of  17  May  2006  on  machinery,  and  amending  Directive 
95/16/EC (Machinery Directive), Directive 97/23/EC of the European Parliament and of the 
Council of 29 May 1997 on the approximation of the laws of the Member States concerning 
pressure  equipment  (Pressure  Equipment  Directive)  and  Directive  94/9/EC  of  the  European 
Parliament  and  the  Council  of  23  March  1994  on  the  approximation  of  the  laws  of  the 

122 Article 194 
123 Article 153(1) and (2) 
124 Article 191(2), first indent 
125 See COM(2008) 791 final of 25.11.2008 and COM(2010) 771 of 17.12.2010 
126 COM(2010) 461 final of 8.9.2010 

EN 

64 

   EN 

 
                                                 
Member States concerning equipment and  protective systems intended  for use in potentially 
explosive atmospheres (ATEX Directive). 

The legislation sets out the essential requirements applicable to the equipment concerned and 
the conformity assessment procedures to be followed by manufacturers before the equipment 
in placed on the market and put into service. Detailed technical specifications are provided by 
harmonized  European  standards  developed  by  the  European  Committee  for  Standardization 
(CEN)  and  the  European  Committee  for  Electrotechnical  Standardization  (CENELEC).  In 
addition  to  general  standards,  there  is  currently  a  harmonized  standard  for  some  specific 
equipment  (offshore  cranes)  and  other  specific  standards  are  being  developed  for  casing 
elevators and other offshore drilling equipment.  

It should be noted that this EU legislation excludes from its scope mobile offshore units and 
equipment  installed  thereon.  Mobile  offshore  units  are  considered  as  seagoing  vessels  and 
their safety is subject to rules established by the International Maritime Organization (IMO) in 
the  IMO  Code  for  the  Construction  and  Equipment  of  Mobile  Offshore  Drilling  Units 
(MODU Code). However, the MODU Code does not cover drilling operations. 

This  situation  leads  to  fragmented  regulation  where  at  present  the  same  equipment  can  fall 
within or outside the scope of EU product safety legislation depending whether it is used on 
fixed or mobile installation. Some of the EU and EEA Coastal States consider that it would be 
useful to apply EU legislation to equipment installed and used on mobile offshore units. The 
distinction between mobile and fixed units has indeed been overtaken by current technology, 
since  mobile  units  nowadays  frequently  remain  in  place  for  the  lifetime  of  a  well  and  the 
equipment of these units is often the same as that used on fixed offshore units. 

Further  action  may  be  appropriate  as  regards  the  standards  for  well  control  equipment.  At 
present, the Pressure Equipment Directive excludes blow-out preventers from its scope as its 
provisions  are  not  considered  appropriate  or  adequate  for  equipment  designed  for  specific 
applications in particularly severe environments, including undersea wells. Consequently, the 
design, construction, use and inspections of well control equipments are currently covered by 
the national regulations of EU and EEA Coastal States.  

EU legislation on the health and safety of workers 

In  the  field  of  the  protection  of  the  health  and  safety  of  workers,  there  exists  an  extensive 
body  of  EU  legislation  laying  down  minimum  requirements.  Currently,  nineteen  EU 
Directives  relate  to  workers'  safety  and  health  protection  in  all  areas  including  offshore 
drilling  platforms.  The  Framework  Council  Directive  89/391/EEC  of  12  June  1989  on  the 
introduction  of  measures  to  encourage  improvements  in  the  safety  and  health  of  workers  at 
work  is  complemented  by  the  sector-specific  individual  Council  Directive  92/91/EEC  of  3 
November  1992  concerning  the  minimum  requirements  for  improving  the  safety  and  health 
protection of workers in the mineral-extracting industries through drilling. 

Council  Directive  92/91/EEC  outlines  a  number  of  minimum  requirements  in  the  area  of 
health and safety, including some basic well control requirements. In its annex, Part C of the 
directive sets special minimum requirements applicable to the offshore sector. The Directive 
was  last  reviewed  in  2009.  It  should  be  noted  however  that  occupational  safety  and  health 
defects are not the primary consideration from the Deepwater Horizon disaster where the lack 
of  control  of  the  major  accident  risks  is  the  key  concern.  Where  countries  introduce 

EN 

65 

   EN 

 
regulations specifically against major hazard events, the regulations will  focus  on the  major 
hazards aspects (blow-outs, platform loss, process safety failures).  

Specific  provisions  regarding  work  equipment  used  at  work  are  laid  down  in  Directive 
2009/104/EC  of  the  European  Parliament  and  of  the  Council  of  16  September  2009 
concerning  the  minimum  safety  and  health  requirements  for  the  use  of  work  equipment  by 
workers  at  work.  Other  directives  in  the  field  of  workers'  safety  and  health  protection  also 
apply  to  workers  in  the  offshore  sector,  such  as  those  addressing  noise,  vibration, 
electromagnetic fields, chemical agents, carcinogens, manual handling of loads, safety signs, 
personal  protective  equipment  etc.  The  directives  in  the  field  of  health  and  safety  at  work 
contain  minimum  requirements  and  Member  States  are  allowed  to  adopt  or  maintain  more 
stringent protective measures.  

EU legislation on environmental protection 

There  is  at  present  a  whole  system  of  legislative  measures  within  the  EU  environmental 
legislation aimed at pollution prevention. Built on the precautionary principle enshrined in the 
primary  legislation,  it  consists  mainly  of  Directive  2008/1/EC  of  the  European  Parliament 
and  of  the  Council  of  15  January  2008  concerning  integrated  pollution  prevention  and 
control  (IPPC  Directive)  and  Council  Directive  85/337/EEC  of  27  June  1985  on  the 
assessment  of  the  effects  of  certain  public  and  private  projects  on  the  environment 
(Environmental  Impact  Assessment  Directive),  as  amended  by  Directive  97/11/EC, 
2003/35/EC and 2009/31/EC. 

The  IPPC  Directive  requires  industrial  and  agricultural  activities  with  a  high  pollution 
potential to have a permit. This permit needs to include conditions, based on the application of 
the Best Available Techniques (BAT), to prevent and reduce the pollution they may cause and 
to  achieve  a  high  level  of  protection  for  the  environment  as  a  whole.  The  extraction  of 
petroleum  and  natural  gas  does  not  fall  under  the  scope  of  the  directive,  except  where  it 
involves  the  operation  of  combustion  plants  with  a  rated  thermal  input  exceeding  50  MW. 
Under the Environmental Impact  Assessment  Directive, proposed  projects' likely  significant 
effects on the environment have to be assessed and the necessary measures to prevent, reduce 
and – where possible – offset any significant adverse effects identified prior to authorisation. 
The extraction of petroleum and natural gas falls under the scope of the directive.  

In addition, Directive 2008/56/EC of the European Parliament and of the Council of 17 June 
2008  establishing  a  framework  for  community  action  in  the  field  of  marine  environmental 
policy (Marine Strategy Framework Directive) establishes a process through which Member 
States have to develop strategies to reach the objective of Good Environmental Status in 2020. 
The  assessment  of  the  present  situation  by  each  Member  State  is  required  in  2012;  the 
necessary  measures  for  reaching  the  objective  must  be  in  place  by  2015.  Measures  are 
expected  to  address  the  cumulative  impacts  of  specific  sectors  offshore  (including fisheries, 
shipping,  dredging,  offshore  renewables,  bio-prospecting)  and  land-based  (agriculture, 
industry,  waste  management,  wastewater  treatment)  that  may  have  an  impact  on  the  marine 
environment. 

EU legislation on waste and on environmental liability 

As  regards  the  responsibility  for  the  clean-up  of  any  oil  spill  and  the  liability  for  damages 
caused  by  it,  EU  legislation  is  based  on  the  "polluter  pays"  principle.  This  principle  is 
reflected  in  secondary  legislation  that  may  apply  to  offshore  accidents,  mainly  in  Directive 

EN 

66 

   EN 

 
2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste 
and repealing certain Directives (Waste Framework Directive) and in Directive 2004/35/EC 
of  the  European  Parliament  and  of  the  Council  of  21  April  2004  on  environmental  liability 
with  regard  to  the  prevention  and  remedying  of  environmental  damage  (Environmental 
Liability Directive). 

The Waste Framework Directive applies fully to oil spills, as upheld by the Court of Justice of 
the  European  Union.  Thus,  oil  escaping  from  an  offshore  installation  is  covered  by  the  EU 
definition of waste and the qualification of oil spilled into sea as waste suffices for imposing 
the  obligation  to  the  polluter  of  cleaning  up.  No  demonstration  of  fault  is  needed;  the  mere 
fact that oil has been released into the marine environment may lead to imposing obligations 
on the producer of the waste. In case of oil escaping from offshore installations, the operator 
would  be  regarded  as  the  producer  or  holder  of  waste  and  would,  in  accordance  with  the 
polluter pays principle, bear the costs of waste management. The applicability of the Waste 
Framework Directive to the maritime oil spills is not explicit in EU legislation and is based, as 
mentioned,  on  the  jurisprudence  from  the  Court  of  Justice  of  the  EU127.  According  to  case 
law, the legal  qualification of "producer  of  waste or holder of waste" also  relates to  mother 
companies, i.e. subcontracting would not constitute a mean to escape liability.128 

Besides  the  obligations  of  waste  management,  including  the  clean-up  of  oil  spills,  EU 
environmental legislation also addresses the issue of liability for damages to the environment 
that can result from an accident or other critical events in offshore activities. The basic legal 
instrument  governing  environmental  liability  at  EU  level  is  the  Environmental  Liability 
Directive. 

The main objective of the Environmental Liability Directive is the prevention and remediation 
of  environmental  damage.  As  such,  it  aims  at  restoring  the  environmental  damage  to  the 
baseline  conditions  which  would  have  existed  had  the  damage  to  the  environment  not 
occurred. The scope of environmental damage under the directive is defined as (a) damage to 
protected species and natural habitats (under the Habitat and Bird Directives), (b) damage to 
water (under the Water Framework Directive), and (c) damage to land.  

The  Environmental  Liability  Directive  contains  a  scope  of  strict  liability  for  operators  who 
carry out specific activities and a scope of fault-based liability (i.e. requiring a proof of intent 
or  negligence)  for  damage  caused  to  protected  species  and  natural  habitats  (but  not  for 
damage to water or to land) by any other occupational activity. The regime which will apply 
to  offshore  hydrocarbon  installations  and  rigs  in  case  of  an  accident  is  the  strict  liability 
regime, i.e. without the need of the proof of fault.  

While  the  Environmental  Liability  Directive  applies  to  all  the  marine  waters  under  the 
jurisdiction  of  Member  States  for  the  specific  purpose  of  environmental  damage  to  the 
"protected  species  and  natural  habitats"  under  Directive  2009/147/EC  of  the  European 
Parliament and of the Council of 30 November 2009 on the conservation of wild birds (Birds 

127 ECJ case C-188/07 (Commune de Mesquer v Total France SA and Total International Ltd.) provides 

important jurisprudence. The ECJ in the abovementioned case concerning maritime transport (Erika 
tanker accident) came to the conclusion that oil accidentally spilled at sea following a shipwreck, mixed 
with water and sediment and drifting along or being washed at the coast of a Member States constitutes 
waste within the meaning of the Waste Framework Directive. 

128 See for instance the Van de Walle case (C-1/03) with Texaco being considered as holder of waste or Mesquer 

case (C-187/03) with Total being potential holder of waste. 

EN 

67 

   EN 

 
                                                 
Directive) and Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural 
habitats and of wild fauna and flora (Habitats Directive), its coverage of the damage to water 
only applies to the waters covered by Directive 2000/60/EC of the European Parliament and 
of the Council of 23 October 2000 establishing a framework for Community action in the field 
of water policy (Water Framework Directive) and therefore does not extend beyond a narrow 
scope of coastal waters. This gap in the applicability in the Environmental Liability Directive 
as  regards  damage  to  water  is  worrying  in  light  of  the  recent  experience  in  the  Gulf  of 
Mexico, where environmental damage to marine waters was clearly not limited to the coastal 
strip and the territorial sea. The gap should hence be closed to address all the marine waters as 
defined in the Marine Strategy Framework Directive. 

EU legislation on emergency intervention 

The  EU  disposes  of  various  instruments  to  complement  the  emergency  response/civil 
protection  mechanisms  of  Member  States  and  industry.  The  Community  Civil  Protection 
Mechanism  was  established  by  Council  Decision  2001/792/EC  of  23  October  2001 
establishing a Community mechanism to facilitate reinforced cooperation in civil protection 
assistance  interventions.  It  provides  support,  on  request, in  the  event  of  a  major  emergency 
and  facilitates  improved  co-ordination  of  assistance  intervention.  It  covers  both  civil 
protection  and  marine  pollution  and  allows  responding  to  any  major  disaster  inside  and 
outside the EU.  

The Civil Protection Mechanism's Monitoring and Information Centre (MIC) is operated by 
the European Commission and is available on a 24/7 basis. The MIC has 24/7 contact points 
in both the civil protection and the marine pollution authorities in all the Participating States 
and  coordinates  requests  and  offers  for  assistance  from  31  Participating  States:  the  EU  27, 
Croatia  and  the  three  European  Economic  Area  (EEA)  countries  -  Norway,  Iceland  and 
Liechtenstein.  During  marine  pollution  emergencies,  the  MIC  coordinates  national  marine 
pollution and civil protection authorities and cooperates with  the European Maritime Safety 
Agency (EMSA). 

EMSA  was  established  in  the  aftermath  of  the  Erika  (1999)  and  Prestige  (2002)  tanker 
disasters by Regulation 1406/2002/EC of the European Parliament and of the Council of 27 
June  2002  establishing  a  European  Maritime  Safety  Agency  for  the  purpose  of  ensuring  a 
high,  uniform  and  effective  level  of  maritime  safety,  maritime  security,  prevention  of 
pollution and response to pollution by ships. 

EMSA focuses on marine pollution and emergency preparedness activities related to vessels. 
EMSA can already meaningfully intervene in case of oil spills from offshore oil facilities as 
its  capacities  can  cope  with  an  oil  spill  irrespective  of  its  source  (see  Commission  proposal 
COM(2010)611 dated 28/10/2010).  

EMSA operates a state-of-the-art maritime transport monitoring centre around the clock. The 
agency's  CleanSeaNet  service  is  a  satellite  based  monitoring  system  for  marine  oil  spill 
detection and surveillance in European waters. EMSA has also built a network of stand-by oil 
pollution response vessels that covers the whole of the European coastline. 

Some  of  EMSA's  pollution  response  capabilities  are  applicable  to  the  offshore  industry 
without  major  adjustments  (such  as  the  response  vessels  or  the  satellite  systems).  However, 
operating  response  vessels  close  to  platforms  with  spills  of  oil  and  gas  mixture  requires 
additional  safety  conditions  for  crew  and  equipment.  The  location  of  response  vessels  in 

EN 

68 

   EN 

 
Europe should take into consideration also the location of offshore installations and the time 
requirements of response operations. Other activities would necessitate significant changes for 
EMSA  as  they  would  require  a  new  legal  basis  as  well  as  additional  staff,  expertise, 
procedures  and  equipment.  These  increased  requirements  concern  especially  any  potential 
expansion of EMSA's preventive activities to offshore oil and gas activities. 

EN 

69 

   EN 

 
ANNEX VI:  PUBLIC CONSULTATION QUESTIONNAIRE  

PUBLIC CONSULTATION 

Improving offshore safety, health and environment in Europe  

Questions for the public 

Please use this response form for your replies. Thank you for respecting the maximum length 
for the replies as indicated after each question. This will ensure that your responses are taken 
into account in their entirety.  

Please send the filled response form to the ENER-CONSULT-OFFSHORE mailbox 

Authorisations 

As  described  in  the  consultation  document,  the  competent  authorities  of  the  EU  Member 
States  define  the  concrete  regulatory  requirements  and  conditions  for  starting,  pursuing  and 
terminating  offshore  activities  within  the  broader  boundaries  of  EU  legislation.  These 
authorities govern also the authorisations for offshore activities in a given area (both in terms 
of access to exploit a certain geographical area, and in terms of approval to perform concrete 
activities), regulatory requirements on ongoing activities and closing of operations.  

1.  Which changes, if any, would you recommend to the authorisation conditions for 
offshore prospection or exploration or production activities? Please specify which 
authorisations  your  recommendations  concern  (all  authorisations,  those  in  a 
specific  country,  those  authorising  only  a  certain  stage(s)  such  as  prospection, 
exploration or production etc) 
(Please  limit  your  response  to  maximum  1000 
words) 

2.  European law  129foresees that the competent national authorities shall ensure that 
authorisations are granted on the basis of selection criteria which consider, among 
other  things,  the  financial  and  technical  capability  of  the  companies  wishing  to 
carry  out  offshore  oil  or  gas  operations.  a)  What  key  elements130  should  this 
technical capacity requirement include in your view? (Please  limit your response 
to  maximum  500  words.)  b)  Similarly,  what  key  elements  should  the  financial 
capability  requirement  include  in  your  view?  (Please  limit  your  response  to 
maximum 500 words) 

3.  How  (such  as  through  legislation  or  voluntary  measures  at  international,  EU  or 
national levels or by industry) should the adoption of state-of-the-art authorisation 

129 

130 

 Directive 94/22/EC of the European Parliament and of the Council of 30 May 1994 on the conditions 
for granting and using authorizations for the prospection, exploration and production of hydrocarbons 
 Focus is only on the main elements of this capability as opposed to detailed requirements which vary 
according to the different geological, geophysical, technical and other circumstances of each individual 
case. 

EN 

70 

   EN 

 
 
 
 
                                                 
practices be best achieved throughout the EU? Should neighbouring EU Member 
your 
States be consulted on the award of authorisations? 
response to maximum 1000 words) 

(Please 

limit 

Prevention of accidents 

4.  Please  describe  here  any  recommendations  or  changes  (to  the  current  regulatory 
framework  or  practices)  -  if  any  -  that    you  consider  important  to  improve  the 
prevention  of  accidents  affecting  the  health  or  safety  of  workers  on  offshore  oil 
and  gas  installations  in  the  EU:    (Please  limit  your  response  to  maximum  1000 
words) 

5.  Please  describe  here  any  recommendations  or  changes  (to  the  current  regulatory 
framework  or  practices)  –  if  any  –  that you consider important in order to better 
prevent damage to the natural environment from accidents on offshore oil and gas 
installations: 

(Please limit your response to maximum 1000 words) 

Verification of compliance and liability for damages 

The  enforcement  of  offshore  health  and  safety  regulations  is  the  general  responsibility  of 
national public  authorities. The  enforcement measures include various activities such as on-
site  inspections,  safety  audits  and  reporting  requirements  for  companies.  The  organisation, 
scope  and  frequency  of  these  measures  vary  in  the  different  Member  States  depending  on 
national practices, laws and the local conditions.  

While focus on compliance should prevent accidents, a robust liability regime needs also to be 
in  place  as  accidents  resulting  in  major  oil  spills  may  cause  extensive  environmental, 
economic and social damage. The financial consequences on the entities found liable for the 
accident may be significant. EU legislation defines the common principles (e.g. 'polluter pays 
-  principle')  and  goals  for  ensuring  liability  for  environmental  damages  while  national  laws 
and  courts  put  them  in  practice.  Concerning  environmental  liability,  the  applicable  EU  law 
(Directive 2004/35/EC)  addresses  pure ecological damage  in terms of  protected  species and 
natural habitats (biodiversity damage), water pollution damage and land damage. As regards 
affected  waters,  the  ELD  covers  the  territorial  waters  (up  to  12  nautical  miles  off  the 
shoreline), but not all marine waters under the jurisdiction of EU Member States (up to 200 or 
370 nautical miles).  

Responsibilities  for  traditional  damage  (such  as  loss  of  life;  personal  injury,  health  defects; 
damage  to  property  and  economic  loss  affecting  for  example  fishermen)  are  usually 
determined  by  civil  courts  or  tribunals  in  accordance  with  national  laws  and/or  case  law 
following goals and principles defined at national level. 

Closely linked with the liability is the competence of the liable parties to actually stand up to 
their obligations. Insurance coverage in the offshore oil and gas sector is partial, with some 
companies  insuring  risks  to  a  certain  degree  and  others  not.  The  insurance  market  does  not 
currently  provide  products  sufficient  to  cover  damages  of  the  magnitude  seen  in  the 
Deepwater Horizon accident.  

EN 

71 

   EN 

 
 
 
 
Moreover, there are no international or EU-wide funds similar to those in maritime transport 
that would cover environmental or traditional liability. 

6.   Please describe here any recommendations you would like to make on how to 
improve  compliance  of  the  offshore  oil  and  gas  industry  with  applicable 
offshore  safety  legislation  and  other  regulatory  measures  in  the  EU.  (Please 
limit your response to maximum 1000 words) 

7.  In your view, which are the key measures to supervise and verify compliance 
of the industry with offshore health, safety and environmental rules and who 
should  do  the  supervision  and  verification?  (Please  limit  your  response  to 
maximum 1000 words) 

8.  In  your  view,  should  the  existing  environmental  liability  legislation  (Directive 
2004/35/EC)  be  extended  to  cover  environmental  damage  to  all  marine  waters 
under the jurisdiction of the EU Member States? (Please  limit  your  response  to 
maximum 1000 words) 

9.  In  your  view,  is  the  current  legislative  framework  sufficient  for  treating 
compensation  or  remedial  claims  for  traditional  damage  caused  by  accidents  on 
offshore  installations?  If  not,  how  would  you  recommend  improving  it?

(Please limit your response to maximum 1000 words) 

10. In  your  view  what  would  be  the  best  way(s)  to  make  sure  that  the  costs  for 
remedying  and  compensating  for  the  environmental  damages  of  an  oil  spill  are 
paid  even  if  those  costs  exceed  the  financial  capacity  of  the  responsible  party? 
(Please limit your response to maximum 1000 words) 

Transparency, sharing of information and state-of-the-art practices  

Transparency  of  an  offshore  regulatory  regime  means  the  policy  and  practices  on  how  the 
regulatory authorities and offshore industry share information with each other, between peers 
or  with  the  civil  society.  The  degree  of  transparency  affects  the  awareness  of  the  public 
authorities,  the  industry  and  the  civil  society,  i.e.  on  offshore  oil  and  gas  activities  and  the 
way  they  are  managed  and  controlled.  It  may  also  affect  the  nature  of  communication, 
commercial  interests  of  companies,  spreading  of  technologies,  lessons  learned  and  cross-
border cooperation. An example of transparency in the offshore sector is the practice of some 
EU  national  regulatory  authorities  to  publish  information  such  as  accident  statistics  and 
license award decisions concerning offshore operations.  

11. What  information  on  offshore  oil  and  gas  activities  do  you  consider  most 
important  to  make  available  to  citizens  and  how?  (Please  limit  your  response  to 
maximum 1000 words) 

EN 

72 

   EN 

 
 
 
 
 
 
 
 
12. What  is  the  most  relevant  information  on  offshore  oil  and  gas  activities  that  the 
offshore  companies  should  in  your  view  share  with  each  other  and/or  with  the 
regulators in order to improve offshore safety across the EU? How should it best 
be shared? (Please limit your response to maximum 1000 words) 

13. What information should the national regulators share with each other and how to 
improve offshore safety across the EU? (Please limit your response to maximum 
1000 words) 

14. Which means, if any, would you recommend using to promote, across the EU, the 
use  of  state  of  the  art  practices  to  protect  occupational  health  and  safety  during 
offshore oil and gas operations?  (Please  limit  your  response  to  maximum  1000 
words) 

15. Which means, if any, would you recommend using to promote, across the EU, the 
use of state of the art practices to protect the environment against accidents caused 
by offshore oil and gas operations? 
(Please  limit  your  response  to  maximum 
1000 words) 

Emergency response and International activities 

The emergency  response  capacity at present consists of resources and contingency plans on 
the level of the industry, national administrations and of the EU. In general, contingency plans 
are  required  for  all  offshore  installations  and  are  complemented  by  national  and  EU 
contingency  plans  to  respond  to  large  scale  accidents.  Adequacy  of  resources  and  their 
coordination,  both  affect  the  effectiveness  of  response  to  offshore  accident.  In  response  to 
recent  accidents,  particularly  the  one  of  the  Deepwater  Horizon  drilling  rig  in  the  Gulf  of 
Mexico, the emergency capacities are being strengthened. For instance, new response devices 
are being developed for use in deepwater conditions.  

In the Mediterranean and the Black Sea offshore, oil and gas activities are underway both on 
EU and adjacent non-EU waters. This causes a risk for cross-border environmental damages 
from a possible offshore accident, not only across internal EU borders, but also across EU's 
external  border.  Apart  from  an  interest  in  promoting  high  offshore  safety  practices  also  in 
adjacent regions, the EU participates in international activities to increase safety of offshore 
activities. 

In  response  to  the  differing  regulatory  requirements  both  within  the  EU  and  internationally, 
some oil and gas companies have adopted company practices or standards that they apply to 
their activities in the EU and outside. Others adjust their practices more substantially to suit 
local conditions in the given country. 

16. In  your  view  what  should  be  the  role  of  the  EU  in  emergency  response  to 
(Please limit your response to 

offshore oil and gas accidents within the EU? 
maximum 1000 words) 

EN 

73 

   EN 

 
 
 
 
 
 
17. Please  describe  any  recommendations  you  may  have  concerning  cooperation 
with  non-EU  countries  to  increase  occupational  safety  and/or  environmental 
protection in offshore oil and gas operations internationally? (Please limit your 
response to maximum 1000 words) 

18. Please  describe  here  any  recommendations  you  may  have  on  how  to 
incentivise  oil  and  gas  companies  with  headquarters  in  the  EU  to  apply 
European  offshore  safety  standards  and  practices  in  all  their  operations 
worldwide: (Please limit your response to maximum 1000 words) 

EN 

74 

   EN 

 
 
ANNEX  VII:  RESULTS  OF  THE  PUBLIC  CONSULTATION  ON  IMPROVING  OFFSHORE  SAFETY, 
HEALTH AND ENVIRONMENT 

EUROPEAN COMMISSION 

Brussels, XXX 
[…](2011) XXX draft 

COMMISSION STAFF WORKING PAPER 

Improving offshore safety, health and environment 
results of public consultation 

Accompanying the document 

Regulation (EU) No .../..  

of the European Parliament and of the Council of [...] on [safety of offshore oil and gas 
prospection, exploration and production activities] 

EN 

75 

   EN 

 
 
 
  
 
COMMISSION STAFF WORKING PAPER 

Improving offshore safety, health and environment 
results of public consultation 

Accompanying the document 

Regulation (EU) No .../..  

of the European Parliament and of the Council of [...] on [safety of offshore oil and gas 
prospection, exploration and production activities] 

In spring 2011, between 16 March and 20 May 2011, the Commission organised an on-line 
public  consultation  on  the  possible  improvement  of  offshore  safety  in  Europe,  providing 
stakeholders with the opportunity to submit their views before the Commission develops any 
legislative  or  non-legislative  proposals  in  the  various  policy  fields.  The  consultation  was 
based  on  a  document  that  gave  the  background  to  the  regulatory  framework  for  offshore 
safety  in  the  EU.  The  consultation  outlined  the  key  issues  that  need  to  be  addressed  and 
included 18 open questions, arranged in the following five topics: 

1. 

2. 

3. 

4. 

5. 

Authorisations. 
Under this topic, the public was requested to give their views on the authorisation 
practices and conditions for offshore prospection, exploration or production 
activities. 

Prevention of accidents. 
This section requested the public's opinion on prevention of accidents, affecting both 
the health and safety of workers as well as damage to the environment. 

Verification of compliance and liability for damages. 
In this section the public was presented with questions regarding compliance by 
industry with applicable offshore legislation, regarding the supervision and 
compliance verification of the industry by competent authorities and on liability for 
environmental and traditional damage caused by offshore accidents. 

Transparency, sharing of information and state-of-the-art practices. 
This section requested the public's opinion on what information on offshore oil and 
gas activities should be made available to the public, what information should be 
shared amongst the industry and amongst regulators and on the use of state of the art 
practices to protect health and safety of offshore oil and gas operations and damage 
to the environment cause by these operations. 

Emergency response and international activities. 
This section presented questions on emergency response to offshore oil and gas 
accidents, cooperation with non-EU countries regarding oil and gas operations and 
on the application of EU standards by oil and gas companies in their activities 
outside the EU. 

EN 

76 

   EN 

 
 
In  total,  64  contributions  were  received  from  all  segments  of  the  stakeholder  community: 
Member State authorities, industry, NGOs, insurers and citizens. In addition to the oil and gas 
industry,  companies  and  industry  associations  from  other,  related  sectors  (e.g.  shipping, 
classification  societies)  also  submitted  replies.  Taking  into  account  the  member  companies 
that  each  industry  body/association  represents,  the  Commission  has  received  well  over  350 
disaggregated replies from stakeholders. The table below shows the composition of the direct 
respondents. 

Oil and gas industry 

Other industry 

Public authorities 

NGOs 

Insurers 

Citizens 

Others 

17 

11 

11 

14 

4 

5 

2 

In  the  following  paragraphs,  an  analysis  is  provided  of  the  contributions  received.  All 
responses  were  carefully  reviewed  by  the  Commission,  which  included  an  assessment 
whether the content of the responses reflected the actual questions and/or had a bearing on the 
policy topic of the question. During this process, similar responses were combined and some 
of the responses – although valuable in a broader context – were regarded as having limited 
bearing on the specific policy topic; these responses were either re-allocated to the appropriate 
policy  topic  and  combined  with  other  responses  or  otherwise  set  aside.  The  analysis  below 
shows the responses for each of the policy topic listed in the consultation document, for each 
of  the  respondents  category  listed  above.  If  a  category  of  respondents  did  not  have  any 
comments on one of the policy topics, these respondents are not included under the specific 
policy topic.   

Authorisations 

Oil and gas industry 

The  industry  is  of  the  opinion  that  the  authorisation  processes  currently  applied  in  certain 
Member  States  are  considered  to  be  sound,  ensuring  the  application  of  state-of-the-art 
technology  and  procedures.  It  was  mentioned  that  Directive  94/22/EC  already  requires  the 
demonstration  of  technical  and  financial  capability  before  a  licence  can  be  obtained.  Most 
respondents  in  this  category  do  not  recommend  any  changes  to  the  authorisation  conditions 
for  offshore  prospection,  exploration  and  production  activities,  citing  stringent  licensing 
procedures  and  safety  case  legislation  in  place  in  most  member  states.  The  safety  case 
approach  must  however  be  combined  with  robust  inspections  and  auditing  of  those  cases, 
combined with an independent review by an external party or independent function within the 
company. It is however recognised that in countries with less experience in offshore oil and 
gas operations, there could be less solid safety case regulations in place. The EU should work 
with  those  countries  individually,  to  bring  standards  up  to  those  of  the  best  performing 
countries. Most respondents also agree that the EU should promote setting up a consultative 

EN 

77 

   EN 

 
and  advisory  body  of  national  regulators,  e.g.  modelled  on  NSOAF,  in  which  best  practises 
are shared and to ensure MS with less experience in offshore oil and gas activities apply same 
high  standards  as  more  experienced  ones.  An  industry  association  stated  that,  while 
authorisation  should  account  for  full  liability  for  damages,  it  should  also  balance  particular 
MS needs e.g. to not discourage smaller players. It as also emphasised as essential to secure 
independence  of  expert  safety  regulation  from  the  licensing  function.  Whilst  in  favour  of 
financial capability criteria, industry and industry associations stated emphatically that these 
should not preclude companies of different sizes from entering the market. There is also broad 
agreement  amongst  industry  respondents  that  neighbouring  Member  States  should  be 
informed  of  any  authorisation  decisions,  however  there  is  no  need  to  actively  consult  those 
countries during the authorisation process. It is also felt that most legislation is best placed at 
the  national  level,  as  national  authorities  are  best  placed  to  judge  applications  for  permits 
based on local conditions. 

There were two industry respondents that mentioned areas where current legislation/ practises 
could be improved: 1) some national licensing systems are extremely cumbersome and should 
be simplified, 2) there is a benefit in a more standardised approach in the EU which should be 
promoted,  i.e.  the  harmonisation  of  procedures  and  standards  and  equipment  taking  into 
account  current  best  practises.  For  example  a  drilling  contractor  should  then  be  granted  a 
certificate  to  operate  in  all  EU  waters.  There  are  also  still  different  local  certification  and 
authorisation processes for use of equipment and machineries, making it difficult to employ 
them cross border. The definition of a general EU framework could be useful to assess and 
ensure  both  technically  and  organisationally  relevant  HSE  standards.  Another  company 
highlighted  that  a  licensing  process  that  separates  responsibility  for  authorising  drilling 
permits from rig safety and well operations oversight should be viewed as best practise and 
where not yet the case, separate regulators for licensing and safety should be established. 

Other industry 

There  is  a  general  view,  that  the  current  system  for  licensing  is  adequate,  with  sufficient 
information  publicly  available  on  operational  techniques.  Respondents  were  of  the  opinion 
that other criteria of the technical assessment of a licensee were e.g. the implementation of a 
safety  management  system,  the  field  development  plan,  contingency  measures,  primary 
measures on accident prevention and asset integrity and environmental assessments. Another 
respondent recommended considering other parameters in the licensing process, e.g. location 
(of the installation), lifecycle stage (prospection/ exploration/ production), type of company/ 
operation/  asset.  The  respondent  also  suggested  considering  limitations  on  license,  e.g. 
duration  and  scope  of  the  license,  options  to  revoke  a  license  and  options  for  a  temporary 
license.  

On the consultation of other MS during the licensing process, opinions in this category varied. 
Some  respondents  felt  that  with  consistent  high  standards  applied  in  the  authorisation 
processes, there was limited benefit of international consultations on authorisations with such 
a  requirement  introducing  additional  bureaucratic  burden.  Another  respondent  was  of  the 
opinion  that  existing  arrangements  and  contacts  between  neighbouring  states  would  already 
ensure effective authorisation structures. 

Public authorities 

Two regulators state that more information is available once programmes have started than at 
the  time  of  applying  for  exploration  licences,  so  it  would  be  best  to  assess  information  at  a 

EN 

78 

   EN 

 
later  stage  too.  In  addition,  companies  should  undergo  regulator  checks  (including  financial 
provisions)  before  key  activities  start  at  each  stage  of  the  operation.  These  checks  should 
include safety, environmental control, and technical and financial capability. Two regulators 
feel that authorisations should be approved by two different regulators e.g. environment and 
health. One regulator requested that there should not be an additional layer of EU regulation 
as this could divert scarce human resources away from core tasks. A blanket approach to all 
MS  is  not  advisable  due  to  different  national  circumstances  e.g.  cultural,  legal  and  geological. 
National  regulators  especially  argued  that  the  international  global  framework  which  is 
applicable now and any new EU legislation must be compatible. There is concern that the EU, 
through its actions, might inadvertently undermine the effectiveness of the existing regulatory 
and  supervisory  regimes  in  the  oil-producing  countries,  especially  around  the  North  Sea. 
Their view is that safety regulations will continue to be handled most effectively on a national 
state level.  

For  technical  capacity,  the  main  comments  concerned  staff  qualifications  and  experience 
(especially that of management), lines of responsibility, company experience, management of 
contractors,  and  staff  audits.  Additionally,  health  and  safety,  equipment  certificates,  and 
environmental  protection  were  mentioned.  For  financial  capability,  balance  sheets  for  three 
years should be provided, along with guarantees, warranties, and proof of sufficient funds or 
indemnity  provisions  to  meet  any  kind  of  incident.  With  regard  to  state-of-the-art 
authorisation practices, best practice, health and safety, and environmental concerns should be 
advised  to  the  EU  with  a  view  to  modifying  legislation.  Many  regulators  stated  that 
neighbouring MS should be informed but not involved in authorisation decisions. Regulators 
expressed concern with respect to Member States that are just beginning to develop offshore 
oil and gas activities. A permanent working group of national regulators could be established, 
based on the North Sea Offshore Authorities Forum (NSOAF).   

NGOs 

Several NGOs commented that loopholes in regulatory regimes need to be closed. Whilst UK 
legislation is held up as a good example, it is considered by some that it is not robust enough. 
Authorisation  processes  should  be  transparent,  including  environmental  impact  assessment 
with  possibility  of  public  consultation.  One  NGO  specifically  stated  that  adoption  of  safety 
case  legislation  as  a  possible  minimum  standard  for  the  EU  is  in  itself  not  sufficient,  citing 
various  incidents  in  the  UK  sector  of  the  North  Sea.  One  NGO  requested  that  the  regulator 
should be separate from any authority that handles energy development/security of supply. All 
NGOs  requested  that  companies  be  required  to  cover  all  accident  costs,  without  which  no 
licence would be given. The majority of NGOs respondents would only like authorisations to 
go  to  companies  that  can  carry  full  financial  liability  for  any  incident,  including  future 
decommissioning  of  systems.  Failing  that,  there  were  suggestions  to  replicate  the  Offshore 
Pollution  Liability  Association  (OPOL)  agreement,  or  to  have  an  industry-led  mutualisation 
scheme  or  an  EU-wide  compensation  fund.  Licences  should  comply  with  EU-monitored 
minimum binding standards; it was suggested by many that the remit of European Maritime 
Safety  Agency  (EMSA)  could  be  extended  in  this  respect.  Several  NGOs  felt  that 
neighbouring countries should be consulted and should also be involved in the authorisation. 
Some  NGOs  requested  the  implementation  of  best  available  techniques  (BAT)  e.g.  regular 
maintenance including requirements for upgrading installations as technology evolves. 

Citizens 

EN 

79 

   EN 

 
Citizens in general felt that if a company can't afford to clean up after an accident, it shouldn't 
be drilling. All citizen respondents would only like authorisations to go to companies that can 
carry full financial liability for any incident. Strong legislation should ensure that companies 
are  held  liable,  with  mandatory  requirements  to  provide  necessary  financial  security  in  the 
event  of  an  accident.  One  respondent  felt  that  on  granting  authorisations,  a  company's  past 
record  on  health  and  safety  and  environmental  impacts,  both  within  and  outside  the  EU, 
should  be  taken  into  account.  Oil  and  gas  projects  should  follow  public  deliberations  on 
permit  application.  Citizen  stakeholders  generally  suggested  that  there  is  a  need  to  involve 
other countries in authorisation, where cross-border issues are at stake.  

Others 

One respondent urged that there should be a clear separation between the authority that grants 
and  issues  granting  instruments  and  the  authority  that  regulates  the  operations  of  those 
instruments,  in  view  of  conflicting  demands  on  officials  charged  with  those  separate  tasks. 
However,  the  respondent  cautions  that  there  should  not  be  multiple  separations  of  those 
authorities. On the issue of the financial capability, the respondent felt that the current system 
is functioning well, albeit guidance from the Commission could be appropriate and useful on 
criteria for assessment of financial capability. The respondent also feels that any consultation 
provisions of other neighbouring MS on authorisations would require careful consideration.  

Prevention of accidents 

Oil and gas industry 

The  good  historical  record  of  the  sector  was  highlighted  in  this  respect;  nevertheless,  even 
industry  stakeholders  admit  that  there  is  a  need  to  challenge  the  industry  to  do  better. 
Companies  in  general  support  the  Commission's  review  of  the  current  EU  framework 
governing  offshore  operations.  They  are  equally  supportive  of 
the  Commission's 
recommendations  for  reviews  of  current  safety  cases  by  operators  and  MS  and  updates  as 
necessary.  Most  companies  agree  that  for  the  protection  of  the  environment  a  robust  and 
interlocking network of international, EU and national rules is in place, e.g. SEA Directive, 
EIA  Directive,  ESPOO  Convention,  Barcelona  Convention,  Black  Sea  convention  etc.  Any 
changes  to  this  system  risk  being  sub-optimal  and  creating  a  gap  in  currently  applied 
legislation. Furthermore, such a change should not result in reduced safety standards in those 
Member  States  which  already  have  a  strong  offshore  regulatory  regime.  Most  respondents 
urge  the  Commission  to  avoid  adopting  detailed  prescriptive  legislation  or  regulation  at  EU 
level,  but  instead  promote  the  implementation  of  a  goal-setting  regime,  including 
dissemination of relevant international standards. One industry association suggested a 'safety 
case' regime that is goal-setting and includes formal acceptance by the regulator. On product 
safety,  industry  is  of  the  opinion  that  any  proposals  for  action  need  to  be  done  in  close 
cooperation  between  the  Commission,  individual  MS/national  regulators,  industry  and  the 
relevant  standardisation  bodies.  Most  respondents  are  against  setting-up  a  centralised  EU 
enforcement/control  authority.  In  order  to  make  improvements  in  this  area  at  least  2 
companies  clearly  stated  that  this  will  not  be  achieved  by  new  regulations,  but  by  better 
application  of  existing  standards  and  best  practise.  It  is  felt  by  most  operators  that  the 
‘ALARP’131  concept  represents  a  robust  regulatory  tool  to  ensure  that  adequate  prevention 

131 ALARP refers to 'risks as low as reasonably practicable'. It is at the centre of UK health and safety law and as 
such is referred to by a number of respondents. For a risk to be ALARP it must be demonstrated that the cost 

EN 

80 

   EN 

 
                                                 
measures  are  in  place.  One  suggestion  made  was  that  drilling  equipment  and  other  safety 
critical  infrastructure  be  inspected  by  insurance  providers.  Also,  the  performance  of  the 
national regulator should in turn be assessed by another national auditing body.  

Other Industry 

Some  respondents  recommended  the  application  of  goal-setting  regulations  combined  with 
the Safety Case regime (including third party verification), identical to the one used in the UK 
and Norway, to all jurisdictions. This would include approval or acceptance of the safety case 
by the regulator. Respondents are of the opinion that the Safety Case approach can provide a 
useful tool in addressing  some  of  the  areas of weakness in offshore regulation identified by 
the Commission. In this context it was recommended that future European regulations should 
require  all  offshore  installations  (including  rigs)  to  develop  and  have  approved  an  EU 
compliant integrated Safety & Environment Case (which would include IPPC requirements) 
prior to commencing operations in EU waters. On approval of a safety & environmental case, 
the  respondent  suggested  that  strict  regulator  guidance  should  be  made  available,  aiming  to 
deliver harmonisation between regulators so that a safety & environmental case approved in 
one  state  would  likely  receive  approval  in  another  MS,  should  the  installation  move  across 
borders. Respondents highlighted the requirement for awareness structures and for training in 
all levels in organisations, to focus on prevention of accidents. Health and safety issues should 
become  a  natural  element  of  the  offshore  industry  and  must  not  be  perceived  as  being 
overbearing  or  unnecessary.  One  respondent  mentioned  the  requirement  that  not  only 
companies  that  purchase  and  apply  equipment  to  ensure  that  environmental  damage  is 
prevented  (e.g.  BOP  systems)  is  subject  to  a  regulatory  framework,  but  also  the  companies 
that  are  manufacturing  and  selling  the  components  are  subject  to  a  similar  framework.  This 
should  prevent  companies  from  buying  cheaper  and  more  unsafe  components.  Another 
respondent suggested that the EU may enhance or propose directives which the industry can 
use as basis of their performance standards, on pressure equipment, electrical devices used in 
explosive environments, lifting equipment and well control equipment. 

Public authorities 

For health or safety of workers, there should be a rigorous safety culture with robust training 
for  disaster  management  involving  all  staff/subcontractors.  It  was  recommended  that 
legislation  proposals  should  include  elements  on  well  design,  well  construction  well  and 
control,  as  these  issues  are  not  or  only  very  limited  addressed  in  Directive  92/91/EC.  In 
addition, it was suggested to introduce goal-setting elements on safety culture in legislation. 
EU  legislation  should  be  based  on  best  practice  in  NSOAF  countries.  Others  expressed  the 
view that there is a need to take steps to improve the safety culture offshore and ensure that 
the knowledge and experience of the offshore workforce is effectively used by operators when 
addressing  health  and  safety.  One  stakeholder  cautioned  against  a  rush  to  adopt  new 
legislation before lessons emerge from the investigations into the Deepwater Horizon incident 
that  indicate  a  need  for  change.  Another  stated  that  using  worldwide  standards  in  the  EU 
would make it easier for multinationals. With regard to the equipment, this should be certified 
by  the  manufacturer  or  another  body,  as  should  safety  systems.  The  UK  system  includes 
Safety  Cases  which  are  submitted  before  operations  start,  and  Notifications  are  sent  to  the 

involved  in  reducing  the  risk  further  would  be  grossly  disproportionate  to  the  benefit  gained.  In  its  most 
general  (European  wide)  sense  it  is  a  best  common  practice  of  judgement  of  the  balance  between  risk  in 
absolute terms, and societal benefit - deciding at which point further expenditure to reduce the residual risk is 
unreasonable  

EN 

81 

   EN 

 
                                                                                                                                                         
regulator  at  various  operational  stages.  Finally,  there  was  a  request  to  implement  ILO 
guidelines  on  occupational  safety  and  health  management  systems  (OSH).  In  terms  of  the 
natural  environment,  best  practice,  incident  reporting  and  lessons  learned  in  other  industrial 
activities could be replicated.  

NGO's 

Additional  training  is  considered  necessary  by  several  NGOs,  and  worker  rights  should  be 
strengthened to avoid harassment in the event of whistle blowing. Respondent mentioned the 
need to raise standards in the EU, with the highest safety and environmental standards applied 
to industrial activities. One respondent feels that industry should invest more on research and 
development for preventing oil spills. Sanctions could be taken by competent authorities were 
worker rights are not respected. There could also be an independent regulator to examine and 
approve  well  design  etc,  while  some  NGOs  recommended  stress  tests  of  installations, 
equipment and procedures. Ratification of the Barcelona Convention was mentioned by a few 
NGOs,  as  was  the  extension  of  Seveso  II  and  the  Industrial  Emissions  Directive  (IED)  to 
cover offshore drilling. Two NGOs requested specific funding for R&D, and the EU should 
monitor abandoned wells.  

Citizens 

Citizens  commented  that  existing  regulations  should  be  strengthened  and  extended  to  cover 
all drilling operations in EU waters. A respondent mentioned that the track record of industry 
on incidents did not show any improvement in recent years and felt that EU standards should 
be  established  to  prevent  environmental  disasters  like  Deepwater  Horizon.  Respondents  felt 
that the use of highest standards for equipment should be made mandatory in EU legislation. 
Old  platforms  must  be  updated  to  the  best  environmental  standards  or  stop  production.  A 
respondent recommended that when drilling a well, a back-up rig should be available within 1 
– 2 days travel of the exploration time, should a relief well be required. The respondent also 
suggested  that  abandoned  wells  should  be  regularly  monitored  by  national  and/or  EU 
regulators,  and  that  companies  be  required  to  reduce  their  discharges  and  spills  of 
hydrocarbons.  

Others 

One respondent is of the opinion that the most appropriate approach for the offshore industry 
is a goal-setting approach and the safety case. It is precisely this approach that makes best use 
of  the  expertise  within  the  industry  and  that  significantly  frees  up  the  regulator  to  see  the 
bigger  picture  and  emerging  problems.  Based  on  experiences  in  the  UK,  the  respondent 
cautions  for  any  move  toward  greater  prescription  in  either  EC  Directive  92/91/EEC  or  in 
entirely new EU legislation. Any greater specificity driven by the Deepwater Horizon disaster 
may  be  solely  applicable  to  that  incident  and  thus  reduce  the  openness  of  the  industry  and 
regulators  to  the  need  for  vigilance  with  respect  to  other  scenarios.  On  the  prevention  of 
damage to the environment, the respondent feels that the best approach is to continue to work 
to reduce accidents on a safety case basis. 

Verification of compliance and liability for damages 

Oil and gas industry 

EN 

82 

   EN 

 
Industry  representatives  argued  that  compliance  is  an  issue  to  which  companies  devote 
significant efforts and resources and constantly strive to improve. They are also of the opinion 
that the current system of inspections is working well. Any proposed changes to the current 
system  should  demonstrate  how  they  would  ensure  the  necessary  competence  and 
coordination to the rigorous and proven systems that are in place today. Industry cites strong, 
expert  regulators  with  adequate  resources  as  essential  for  securing  compliance.  Regarding 
potential liability, most respondents do not support a mandated industry-wide pre-loss mutual 
fund, but rather allow companies to make their own differentiated decisions how to meet their 
financial  obligations.  Voluntary  compensation  schemes  like  OPOL  should  be  taken  as  a 
model. This and similar schemes should be promoted by the Commission. Any EU initiative 
seeking  to  improve  on  national  verification  systems  must  demonstrate  thoroughly  how  this 
would be achieved. The industry stresses that a voluntary financial security scheme is more 
appropriate  for  the  development  of  market-driven  solutions  in  which  a  certain  level  of 
insurance  capacity  can  be  maintained  and  developed.  The  industry  also  pointed  out  that  the 
creation  of  a  further  liability  regime  could  create  unnecessary  duplication  and  legal 
uncertainty  over  which  regime  is  immediately  applicable.  It  was  highlighted  by  one 
respondent  that  in  order  to  assess  any  damage  caused  by  an  oil  spill  incident,  a  baseline 
condition  must  first  be  established  against  which  changes  can  then  be  measured.  Such 
baseline metrics are currently not available to all marine waters. Any extension of the current 
ELD  is  thus  difficult  to  envisage.  One  of  the  companies  suggested  that  a  supranational  EU 
safety  agency  with  directive  functions,  similar  to  EMSA,  could  be  a  useful  step  forward.  A 
very  useful  measure  would  be  to  ensure  there  are  consistent  methods  for  calculating 
compensation awards across Europe. 

Other industry 

Respondents are of the opinion that the current goal-setting regime including the safety case 
mechanism, as is the current practice in the UK, is the desired framework and best suited for 
the  future.  Respondents  further  mention  that  the  framework  should  be  supported  by 
inspections and assessments by regulators and by third party verification against performance 
standards, and recommend that the EU establish such a process incorporating the fundamental 
elements  of  the  UK  process  for  major  accident  hazards  and  extends  this  to  health  and 
environmental issues. One respondent felt there should also be a qualification process in place 
for the independent third parties. In the context of performance standards, one respondent felt 
that these should also include standards on behavioural aspects; this would require additional 
competencies of the independent verification bodies in human factors, management of change 
and organisational behaviour. It was also suggested that the verification process included the 
possibility for direct feedback from the verification body to the regulator, in stead of only to 
the owner / operator of the installation. One respondent is in favour of one regulatory body for 
offshore oil and gas activities in MS; in countries where more regulatory bodies are involved 
the  respondent  feels  that  a  single  'umbrella'  body  for  offshore  E&P  activities  should  be 
established, which would draw on expertise from the existing regulatory bodies. Respondents 
further  urge  that  regulators  have  adequate  enforcement  methods  and  authority  to  ensure 
compliance of legislation or permit conditions.  

Respondents feel that responsible parties should be able to meet the costs of an incident, as 
part  of  their  initial  license  application.  Some  respondents  commented  that  the  current 
application  of  the  ELD  (in  the  UK)  is  appropriate  to  its  intended  role  and  should  only  be 
extended  if  robustly  justified;  others  felt  that  environmental  liability  should  cover 
environmental damage to all marine waters. Some respondents in this category cautioned that, 
when extending the ELD, the current exceptions in this Directive on pollution damage arising 

EN 

83 

   EN 

 
from  ships  should  remain  unchanged,  as  it  would  otherwise  cause  serious  disruption  in  the 
international  regime  and  create  legal  uncertainty.  On  liability  for  traditional  damage,  one 
respondent  is  of  the  opinion  that  a  more  stringent  legal  framework  is  required  owing  to  the 
increased  risk  (in  the  UK)  as  a  result  of  smaller  operators  with  limited  financial  strength 
buying  and  operating  mature  assets  than  the  larger  operators.  In  this  context,  it  was 
recommended that a system like OPOL is developed within the EU to ensure that operators 
have  access  to  adequate  funds  to  cover  remedial  damages  as  a  result  of  an  accident.  Other 
suggestions  included  establishing  an  EU  Emergency  Response  Fund,  in  which  all  operators 
should contribute.  

Public authorities 

With regard to compliance, minimum standards and best practice should be shared in the EU 
with  strong  cooperation  between  trade  associations  and  operators.  There  are  requests  for 
greater  sharing  of  information  between  the  different  stakeholder  groups  (regulators, 
companies,  works  councils).  Respondents  mentioned  the  need  to  improve  safety  culture 
offshore and ensure that worker knowledge and experience of health and safety must be used 
by  the  companies,  while  internal  audits  and  reporting  should  be  part  of  an  environmental 
management  system.  One  MS  requires  companies  to  provide  annual  public  statements  on 
operations and environmental performance. Respondents also stressed the need to ensure that 
an appropriate regulator is in place, with sufficient resources, well trained and competent staff 
and  with  adequate  powers  to  intervene.  Key  measures  proposed  to  monitor  compliance 
include  an  independent,  regular  inspection  system  with  sharing  of  well-educated  inspectors 
between  MS.  One  respondent  mentioned  that  regulators  should  also  focus  on  a  company's 
implementation  and  adherence  to  its  own  management  system.  It  was  also  suggested  that 
there  could  be  a  dedicated  and  qualified  company  employee  working  on  site  with  close 
supervision  from  the  authorities.  One  regulator  suggested  that  individual  MS  regulators 
should  be  introduced  that  would  share  information  with  the  EU.  MS  with  considerable 
experience of offshore operations should support those that are now starting to develop these 
activities.  

One respondent suggested that costs for environmental assessments and inspections could be 
borne  by  the  applicants.  If  environmental  liability  legislation  is  to  be  extended  to  cover  all 
marine waters under EU jurisdiction, the polluter pays principle could be extended to offshore 
oil and gas industry. Yet this might encourage some companies to move away from the EU. 
With  regard  to  handling  claims  for  traditional  damage,  the  legislative  framework  could  be 
improved according to one regulator, while another says that it is sufficient. It is important, 
however, to ensure that small companies with a skilled workforce are not discouraged from 
operating in the market. Costs for covering the environmental damages of an oil spill should 
include mandatory insurance linked to risk of operation. There could also be a communal fund 
like the Offshore Pollution Liability Organisation (OPOL), which could be extended to cover 
other seas.  

NGO's 

On  compliance  with  regulations,  one  respondent  suggested  that  MS  consider  adopting  of 
strengthening  disincentives  for  negligence  such  as  fines,  removal  of  licenses  and  individual 
criminal  liability.  Respondents  felt  that  companies  must  be  liable  for  all  damages,  both 
environmental  and  traditional  damages.  EU-wide  compliance  should  be  mandatory,  and  the 
Environmental Liability Directive should be extended to cover environmental damage to all 
marine waters under MS' jurisdiction. One respondent recommended exploring arrangements 

EN 

84 

   EN 

 
for  compulsory  third  party  insurance,  to  ensure  financial  guarantees.  In  this  context,  the 
respondent expressed doubts if the current insurance level under OPOL would be sufficient to 
compensate  for  the  full  range  of  environmental  damage  and  remediation  costs.  Some 
respondents  recommended  a  supra-national  regulator  to  oversee  national  regulators,  with 
powers  to  ban  operators  temporarily.  Inspections  should  be  regular  and  unannounced.  In 
terms of individuals, criminal liability is considered essential, as is the need to strengthen the 
rights of victims impacted by an incident. Finally, finances should be mobilised quickly after 
a disaster to assist those affected. 

Insurers 

One respondent felt that when extending the scope of the Environmental Liability Directive 
(ELD),  the  current  exceptions  with  respect  to  maritime  transport/shipping  should  not  be 
affected in any way, and that the proposed extension of the ELD to cover all marine waters 
under jurisdiction of EU Member States should be concerned only with the offshore oil and 
gas  sector.  The  insurance  industry  further  stated  that  oil  and  gas  companies  are  in  the  best 
position to assess their own needs for insurance. The insurers alone cannot provide the sole 
solution to protect the EU against offshore oil spills. Insurance companies do not feel that the 
Environmental  Liability  Directive  should  be  modified  to  cover  all  EU  waters.  Instead,  the 
geographical  scope  of  the  guarantee  system  for  offshore  oil  spills  should  be  worldwide  and 
not  resolved  through  EU  law.  Respondents  point  out  that  several  international  liability 
regimes  are  already  in  place  for  losses  caused  by  oil  pollution.  It  is  considered  more 
appropriate to focus on these existing treaties and international legislation before introducing 
an  EU-wide  mandatory  insurance  scheme  or  revising  the  ELD.  One  respondent  pointed  out 
that  European  insurance  solvency  law  requires  insurance  companies  to  charge  adequate 
premiums to build up sufficient capital reserves. In the context of offshore oil/gas insurance, a 
small  and  specialised  insurance  market,  it  is  very  difficult  for  the  industry  to  build  up 
sufficient capital reserves. This is already very challenging to achieve in a worldwide context, 
and  even  more  so  if  the  geographical  scope  is  Europe  only.  Moreover,  many  offshore  oil 
companies have as much, if not more, financial capacity than insurers due to the amount of 
capital they regularly generate through their businesses. Their own ability to cover these risks 
independently of any financial security instruments should be one of the options considered. 
In this context, respondents refer to OPOL developed by the industry, from which claims for 
pollution damage are met and the cost of remedial measures are reimbursed.  

Citizens 

A respondent felt that regulators should be adequate resourced and staffed, to ensure adequate 
monitoring to guarantee compliance with health, safety and environmental rules by industry. 
If  EU  countries  cannot  ensure  this,  EU  monitors  should  assist.  Citizens  feel  that  legislation 
should cover all EU waters, not only within the 12 mile zone as most platforms are outside 
this zone, thus including all platforms and pipelines. Polluters should also pay for (methane) 
gas  leaks  which  might  occur  when  a  well  is  not  properly  abandoned.  To  compensate  for 
traditional  damages,  a  respondent  suggested  that  industry  be  required  to  make  contributions 
and commitments to a Joint Fund as a condition for drilling in the region. Additional costs for 
recovery  and  compensation  beyond  the  financial  capability  of  the  responsible  party  should 
then be covered by the Fund. The joint Fund should encourage the collective improvement of 
best practice and efforts to minimise damage.  

Others 

EN 

85 

   EN 

 
One  respondent  feels  that  regulatory  regimes  should  provide  for  both  the  reward  and  the 
punishment of operators in the offshore environment. This would encourage good operators to 
continually  implement  best  practices  and  would  discourage  bad  operators  from  unsafe 
practices.  Operators  should  be  required  to  demonstrate  that  it  is  implementing  industry  best 
practices in conjunction with an on-going inspection regime administered by the regulator. It 
should be done on a safety case basis rather than use a prescriptive formula. The respondent 
also  feels  that  consistent  environmental  liability  is  required  in  all  marine  waters  under  the 
jurisdiction  of  EU  Member  States,  so  that  operators  have  clear  standards  to  meet.  The 
respondent cautions against a strict liability system which would only allow companies with 
the balance sheets to pay for any potential risk. Smaller and less financially strong companies 
should  still  be  allowed  to  operate  in  existing  areas  of  operation  where  the  risks  are  well 
known and more easily managed.  

Transparency, sharing of information and state-of-the-art practices 

Oil and gas industry 

Industry  feels  it  is  not  in  their remit  to  judge  what  information  would  be  most  important  to 
citizens. However, the majority of respondents from the oil and gas industry have expressed 
an interest to work with national authorities and the EU to examine the most appropriate ways 
of  sharing  information  provided  that  this  does  not  impose  requirements  on  companies  to 
disclose  commercially  sensitive  information.  Industry  is  pointing  to  the  exchange  of 
information that is currently taking place in forums like NSOAF and IRF. Via SEA and EIA 
Directives, Espoo etc. a lot of data is already shared today. One respondent mentioned that the 
information  most  relevant  to  be  shared  is  standards  applied  by  operators  to  prevent  major 
accidents  and  lessons  learned  from  previous  accidents  and  near  misses.  One  respondent 
believed  the  reporting  should  also  include  positive  aspects,  e.g.  industry's  contribution  to 
research, technology and economy in the EU. Industry supports establishing an advisory body 
of national experts, to exchange information between regulators and to promote the state-of-
the-art practices across all MS to protect health and safety of workers and the environment. 

Other industry 

Respondents  suggested  that  information  like  incident  statistics,  near  misses  and  hazardous 
observations  should  become  public.  One  respondent  suggested  that  operators  should  be 
obliged to produce an annual HSE Public Statement which should communicate key elements 
of an operator's activities to the public in clear layman's terms. Complete transparency should 
be particularly the case in the event of an environmental disaster or a genuine public fear of 
one. Respondents from the UK pointed out that an industry network for sharing statistics and 
best  practices  was  already  in  place.  Respondents  also  referred  to  NSOAF  and  IRF  as  good 
platforms  for  sharing  information  to  improve  safety  across  the  EU  and  worldwide,  which 
could also be useful for countries with an emerging oil and gas sector. Others recommended 
that  there  should  also  be  cross-referencing  between  the  oil  and  gas  industry  and  other 
industries,  on  safety 
lifting  equipment  etc.)  and 
environmental issues (usage of chemical and effect on water etc.). Respondents are also of the 
opinion  that  national  regulators  should  share  the  emergency  response  plans,  to  enable 
coordination of international response plans. One respondent suggested establishing industry 
state-of  the-art  practices  in  a  publicly  available  register.  On  environmental  protection,  one 
respondent  recommended  that  EMSA's  role  should  be  extended  to  cover  water  pollution  in 
general, air pollution, soil pollution and utilisation of chemicals. 

issues  (e.g.  pressure  equipment, 

EN 

86 

   EN 

 
Public authorities 

Citizens  should  be  provided  with  information  including,  inter  alia,  pollution  detection, 
emergency  plans,  risks,  common  indicators,  operators,  and  timing.  Views  were  split  as  to 
whether  these  data  should  be  published  by  the  EU  or  by  individual  MS.  One  respondent 
suggested the EU should take the initiative to define a common set of indicators, to be used by 
all MS, giving information on the outcome of safety and environmental effort in a particular 
MS. It was suggested that companies should be sharing information on, inter alia, emergency 
operating technologies, occurrence of H2S, best practice, lessons learned from incidents and 
equipment  failure.  This  information  should  also  be  shared  with  regulators  and  trade  and 
industry  associations  to  encourage  industry  buy-in.  Workers  should  have  access  to 
occupational  and  safety-related  documentation  (OSH,  responsibilities,  hazards,  risks,  work-
related  injuries,  health,  incidents  etc.).  In  addition,  regulators  should  share  best  practice 
(regulation, standards, procedures and incidents), company-related HSE statistics and critical 
equipment  failure.  Forums  like  NSOAF,  the  International  Regulators  Forum,  OSPAR,  the 
Offshore Industries Committee and those that exist for Baltic and Mediterranean states could 
be used for sharing details of accidents, incidents, updates, national legislation etc.  

For protecting occupational health and safety, best practice (regulation, standards, procedures, 
incidents)  should  be  introduced,  and  information  shared  via  a  web-based  EU  database.  
Forums like NSOAF could be used, but its scope would need widening to allow new entrants. 

Goal-setting regimes are best suited to state-of-the-art practices, while an effective regulator 
should support a robust regulatory framework. Comments on protecting the environment are 
identical  to  those  for  health  and  safety;  in  addition  the  Regional  Seas  Conventions  could 
collect data etc. as currently done by OSPAR. 

NGOs 

NGOs  requested  that  citizens  be  advised  of,  inter  alia,  all  offshore  rig  incidents, 
environmental  impact  assessments  (EIA),  inspection  reports,  payments  to  governments  and 
officials,  and  accident  records.  Companies  should  share  information  on  accidents,  safety 
measures, equipment, and conduct affecting health and safety. Regulators are asked to share 
details  of  EIA  criteria,  inspection  processes,  regulatory  initiatives,  training,  sanctions, 
accidents,  risks  etc.  Health  and  safety  recommendations  included  comparison  with  other 
sectors, while environmental support included, inter alia, monitoring of the sea-bed and sub-
surface waters. 

Citizens 

A respondent suggested that a wide variety of information be made available to the public by 
oil  and  gas  companies,  e.g.  plans  for  any  offshore  infrastructure,  volume  of  oil  and  gas 
extracted, reports on environmental monitoring, health and safety records, accident statistics, 
number  of  wells  (active  and  abandoned),  emergency  response  plans,  demonstration  of  the 
companies technical ability etc. The respondent was also of the opinion that offshore workers 
should be able to raise concerns about dangerous practices or safety failures, without fear of 
intimidation. 

Others 

EN 

87 

   EN 

 
A respondent cautions that the need of the public to access information needs to be balanced 
against the need to ensure security of the facilities. Public information should thus focus on 
knowing  what  developments  will  impact  the  public  and  what  measures  have  been  taken  to 
ensure  the  safety  and  protection  of  the  environment,  the  workers  and  the  public.  The 
respondent  is  of  the  opinion  that  companies  should  share  information  in  on  on-going, 
consistent  and  uniform  manner,  on  e.g.  safety-related  incidents,  measures  taken  to  prevent 
recurrence and best practice developed by companies. In the context the respondents refers to 
current  practice  of  sharing  information  by  OGP,  on  sharing  of  information  in  industry,  and 
IRF and OSPAR, on sharing of information between regulators.  

Emergency response and international activities 

Oil and gas industry 

Industry  responded  by  highlighting  that  the  Operators  Co-operative  Emergency  Services 
(OCES) Agreement is the organisational framework employed in the North Sea and adjacent 
waters and that it works very well. Together with the Global Response Network (GRN), the 
OPRC convention of 1990, and the capping device currently being developed by OSPRAG, 
all  critical  elements  are  being  covered  by  industry.  Most  respondents  feel  that  rather  than 
fundamentally  changing  the  scope  of  EMSA,  the  EU  could  focus  on  strengthening  the 
existing  network  of  Regional  Seas  Conventions,  to  which  non-EU  countries  are  also 
contracting  parties.  Two  companies  stated  that  what  is  missing  currently  at  EU  level  is  a 
coordinated  EU  emergency  response  strategy  that  integrates  different  technologies  and 
strategies adopted by individual countries. In this process it would be important to harmonise 
the authorisation procedures for use of product and technologies required to combat oil spills 
(especially for use of dispersants and in-situ burning). One  respondent saw  value in  the EU 
promoting the creation of an integrated Emergency Agency at EU level, making participation 
of oil and gas companies mandatory. An industry association agreed that EMSA could help 
clean up but that its remit should not be formally extended. 

On  the  issue  of  international  activities,  numerous  operators  in  the  oil  and  gas  industry 
highlighted  that  they  use  the  same  high  standards  of  safety  and  accident  prevention 
worldwide.  However,  it  is  important  to  note  that  host  governments  may  require  changes  in 
line  with  natural,  legal  or  other  local  circumstances.  One  respondent  saw  this  as  an 
unattainable goal of the EU. 

Other industry 

Some respondents felt that emergency response is the primary responsibility of operators and 
national  governments.  Local  knowledge  and  expertise,  as  well  as  understanding  response 
capabilities are most relevant at this level and will be far more conducive to swift, decisive 
and effective mitigation of the consequences of an incident. Others suggested that initiatives 
like OSPRAG in the UK are extended to other areas in the EU. On transboundary response, 
some respondent feel that joint working and coordination arrangement between neighbouring 
countries already exist. Other respondents were of the opinion that the EU should have a more 
active role on emergency response e.g. on planning, coordination and funding for managing 
emergency  responses,  and  have  agreements  in  place  with  EU  countries  and  also  non-EU 
countries. In this context it was also suggested to extend the remit for EMSA to also include 
offshore  installations.  Some  recommend  that  EU  response  arrangements  are  reviewed 
(including  onshore  response)  to  ensure  that  they  are  adequate  to  protect  to  environment  in 
light of a serious environmental incident.  

EN 

88 

   EN 

 
Some respondents are of the opinion that the oil and gas industry already apply EU standards 
elsewhere in the world. They stress that any fiscal or punitive measure which might seek to 
ensure this would disadvantage EU-based companies when attempting to operate outside the 
EU. A more appropriate approach would be to ensure the existence of high quality standards 
within Europe, the core principle of these are then likely to be taken up by operators where 
possible without the need for coercion. Others feel that when a company applies for a license 
in the EU, that company's worldwide experience, asset integrity management and track record 
in safety and environmental protection should be taken into account. 

Public authorities 

EMSA was mentioned by various regulators for (i) keeping inventories of response resources 
in  each  EU  sea  area,  and  (ii)  helping  to  clean  up  pollution  if  asked  for  help  by  a  MS.  One 
regulator  considers  that  emergency  response  is  the  responsibility  of  the  operator  and  MS 
concerned. An emergency response centre could be financed by MS and companies working 
in  EU  waters;  neighbouring  countries  could  be  invited  to  participate.  For  cooperation  with 
non-EU  countries,  forums  such  as  NSOAF  would  be  useful,  especially  for  MS  with  limited 
offshore  experience.  The  International  Regulators  Forum  was  also  mentioned  as  good  for 
sharing experience. One comment was that EU law should promote exchange of best practice 
on offshore health and safety with international organisations, especially the ILO. Legislation 
should be standardised using best practice from MS that have robust regulatory regimes e.g. 
North Sea area. Any new EU legislation must be compatible with United Nations Convention 
on the Law of the Sea. For companies operating worldwide, it will be difficult but advisable 
to make  them apply  EU  offshore  safety standards and practices  elsewhere, but perhaps API 
standards could be used. Alternatively global state-of-the-art standards could be introduced. 

NGOs 

One  NGO  requested  that  there  should  be  economic  incentives  to  operators  to  act  rationally 
with  regard  to  emergency  response,  and  another  requested  that  the  EU  should  have  a  co-
ordinating  role.  One  respondent  was  of  the  opinion,  that  the  public  should  be  given  the 
opportunity  to  participate  in  the  decision-making  process  concerning  prevention  and 
preparedness  measures.  The  respondent  also  cautioned  against  the  use  of  dispersants  for  oil 
spills  and  urged  that  more  study  on  their  environment  and  health  impacts  should  be  done. 
NGOs see potential in the significant experience of EMSA for also dealing with prevention. 
Most  NGOs  require  that  EU  standards  be  applied  wherever  a  company  operates  outside  the 
EU, in transgression of which the EU could take sanctions e.g. revoking of  licences.  NGOs 
often mentioned that company structure should be changed so parent companies are liable for 
activities  of  subsidiaries  and/or  subcontractors.  One  NGO  stresses  the  role  of  the  Regional 
Seas  Convention  to  foster  cooperation  emergency  situations,  in  particular  OSPAR  which  is 
well advanced in this regard. 

Citizens 

A  respondent  felt  that  oil  and  gas  companies  should  be  compelled  to  produce  site-specific 
response plans to deal with oil spills and other major incident, taking specific local conditions 
into account (temperature, winds, sea state etc.), in stead of the current generic response plans. 
Some citizens expressed the view that EU should sign agreements ensuring that no oil and gas 
operations are conducted at weaker-than-EU standards in bodies of water shared with non-EU 
countries. Oil and gas companies registered in the EU should apply EU standards when they 
operate  abroad.  Any  party  should  be  able  to  raise  violations  of  EU  standards  by  such 

EN 

89 

   EN 

 
companies in EU courts. Companies that do not adhere to EU standards outside the EU should 
not be awarded exploration or extraction licences within the EU. In other words, companies 
that apply one set of principles extra-EU and another set within the EU are not implementing 
comprehensive best practice. 

Others 

A  respondent  mentioned  that  oil  and  gas  companies  must  first  comply  with  laws  and 
regulations in which they operate. The respondent feels that when companies have operations 
in another jurisdiction, they will naturally gravitate to applying the standards and practices of 
their  originating  jurisdiction  since  this  are  the  one  with  which  they  are  most  familiar. 
However,  in  the  event  of  a  conflict  between  the  standards  and  practices  in  their  originating 
jurisdiction and their operating jurisdiction, the companies are obliged to apply the latter. The 
respondent urges that offshore jurisdiction should harmonise as much of their standards and 
practices as possible.  

EN 

90 

   EN 

 
ANNEX VIII:  QUESTIONNAIRE TO OFFSHORE SAFETY  

EUROPEAN COMMISSION 

Industry 

Offshore Safety Cost of 
Compliance Questionnaire  

United Kingdom 

EN 

91 

   EN 

Version 1.0 
[Date published] 

 
 
Presented by: 
Directorate-General for Energy, Unit B3 Coal and Oil 

EN 

92 

   EN 

 
 
Cost of Compliance Questionnaire 

Introduction 

This questionnaire aims at gathering information from industry for the purposes of 
calculating the potential cost of proposed EU policies. Please fill it out as comprehensively 
and as accurately as practicable.  

If you feel that the format of a question counterproductively restricts your response, 
please use the comments section to provide a more complete response in accordance 
with what you believe the question’s intended objective is. 

Name 

Name of company 

Country of origin 

Size of your operations in the UK 

[In the table below, list the following information relating to the scale of your operations 
in the UK.] 

Number of active wells in the UK with an indication of 
type (oil or gas, etc). 
Number of fixed offshore installations in the UK with an 
indication of type(exploration or production), size etc. 
Number of floatable or floating offshore installations in 
the UK with an indication of type (exploration or 
production), size etc. 
Number of other offshore installations in the UK 
including subsea installations with an indication of type 
(exploration or production), size etc. 
Annual production in the UK, either in barrels or tonnes 
of oil equivalent. 

Comments: 

EN 

93 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Responsibility for costs 

[Indicate the extent to which you bear the ultimate costs of safety compliance for your 
operations in the UK. If you do not ultimately bear all costs, indicate the extent to which 
sub-contractors or partners in your joint venture bear these costs. 

Example: ‘All compliance costs are ultimately billed to us, except for the costs 
related to the inspection of leased equipment. We currently lease 2 MODUs in the 
UK.’] 

Administrative burden 

[In the following table, list the main administrative burdens of compliance for your 
operations in the waters of the UK on a per annum basis, as well as the resources you 
allocate to these burdens. If you are unable to provide figures for all your operations in 
the UK at the national level, then kindly estimate these costs per well or other unit, 
appropriately indicating this in the comments section below. 

Administrative burdens are the costs on businesses of complying with the information 
obligations resulting from legislation and regulations. An example of administrative 
burdens in the offshore sector may be the preparation of safety and health documents, 

the notification of dangerous occurrences, inspections, and reading guidance 

material. 

Use either finances or man-hours. If using man-hours, please indicate the wage rate of 
the personnel used to carry out the work.] 

Category of work 

Finances/man-hours 

Wage rate 

Comments: 

EN 

94 

   EN 

 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Substantive costs 

[In the following table, list main substantive compliance costs of your operations in the 
waters of the UK. If you are unable to provide figures for all your operations in the UK at 
the national level, then kindly estimate these costs per well or other unit, appropriately 
indicating this in the comments section below. 

Substantive compliance costs are the costs that businesses incur in order to comply with 
the content obligations that legislation and regulations require of a production process or 
a product. In the offshore sector these include the costs of additional equipment or 
machinery to ensure compliance, or the costs of hiring consultants to help with 
compliance. 

It is important to only include expenses over and above ‘business as usual’ operating 
costs: that means to say safety expenditures you would not have otherwise judged 
necessary or worthwhile if not for the formal or informal requirements of the offshore 
authorities in the UK.] 

Category of expense 

Cost 

Comments: 

Financial costs of compliance 

[In the following table, list the main financial costs of compliance of your operations in 
the waters of the UK. If you are unable to provide figures for all your operations in the 
UK at the national level, then kindly estimate these costs per well or other unit, 
appropriately indicating this in the comments section below. 

Financial costs are the result of a concrete and direct obligation to transfer a sum of 
money to the Government or the competent authority. An example of a financial cost in 
the offshore sector is the fee for notification charged by national regulators.] 

Category of expense 

Cost 

EN 

95 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comments: 

Other compliance costs 

[In the following table, list any other compliance costs associated with your operations in 
the waters of the UK that you feel do not fall into the categories mentioned above i.e. 
that are neither administrative burdens, substantive costs, nor financial costs. If you are 
unable to provide figures for all your operations in the UK at the national level, then 
kindly estimate these costs per well or other unit, appropriately indicating this in the 
comments section below.] 

Category of expense 

Cost 

Comments: 

EN 

96 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International comparison 

[In the following table, indicate how your compliance costs in the UK compare with 
compliance costs in other countries you operate in. 

If possible, use a percentage scale to indicate.] 

Name of country 1 

Administrative burden 

Substantive costs 

Financial costs 

Other costs 

Comments: 

Name of country 2 

Administrative burden 

Substantive costs 

Financial costs 

Other costs 

Comments: 

Name of country 3 

EN 

97 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Administrative burden 

Substantive costs 

Financial costs 

Other costs 

Comments: 

Scaling 

[In order to scale the costs of compliance of your operations, list the following 
information in the table below.] 

Annual revenue of your offshore operations in the UK 

Annual operating expenditure in the UK 

Annual pre-tax profits of your offshore operations in 
the UK  

Comments: 

EN 

98 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX IX:  LIST OF STUDIES TAKEN INTO ACCOUNT  

The disaster of Deepwater Horizon oil rig triggered a wave of reviews and studies aimed at 
assessment and review of various regulatory frameworks applicable to the offshore oil and gas 
activities. Many of the reports took strong advantage of the resources that were recently put 
forward  to  respond  to  accident  and  present  a  very  solid,  labour  intensive,  argumentation, 
pooling  together  contributions  form  various  relevant  areas.  The  considerable  efforts  by 
independent experts, national regulators and the industry provided for valuable sources of data 
and  recommendations  for  change  of  practice  that  served  as  a  crucial  input  for  the  Impact 
Assessment report.  

As  the  conclusions  of  many  studies  show  strong  similarities,  there  is  a  solid  basis  for 
proposals for policy action. In this context, the range of reports listed in this annex, along with 
targeted  consultations  with  stakeholders  and  the  public  consultations,  made  it  possible  for 
Commission services to identify crucial areas where improvements should be made to ensure 
that  EU's  regulatory  framework  and  practices  are  based  on  the  available  state  of  the  art 
practices.  It  is  worth  noting,  that  despite  that  up  to  date  studies  and  reports  are  directly 
connected  with  the  event  in  the  Gulf  of  Mexico,  they  often  present  much  wider  analysis  of 
relevant regulation and practices in general context of offshore oil and gas. 

1. 

US STUDIES AND REPORTS FOLLOWING THE EVENTS IN THE GULF OF MEXICO 

1.1.  Final  Report  of  the  National  Commission  on  the  Deepwater  Horizon  Oil  Spill  and 

Offshore Drilling (January 2011) 

1.2. 

Staff Working Papers of the National Commission on the Deepwater Horizon Oil Spill 
and  Offshore  Drilling  (about  30  papers,  e.  g.  Economists'  Perspectives  on  Liability 
Insurance, Ishan Nath, March 2011) 

1.3.  Deepwater Horizon Joint Investigation Team preliminary report covering issues under  
Coast  Guard  jurisdiction  (April  2011,  Final  report  scheduled  for  July  2011,  but 
publication has been delayed) 

1.4.  Report  of  the  National  Academy  of  Engineering  and  National  Research  Council 

commissioned by UK Department of the Interior (November 2010) 

EN 

99 

   EN 

 
 
 
 
2. 

ACTIVITIES OF THE MEMBER STATES AND THIRD COUNTRIES 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

UK  House  of  Commons  Energy  and  Climate  Change  Select  Committee:  Special 
Report  "UK  Deepwater  Drilling—Implications  of  the  Gulf  of  Mexico  Oil  Spill" 
(January 2011), UK government response to the report 

UK  Oil  Spill  Prevention  and  Response  Advisory  Group  progress  reports  (last, 
Second Interim Report, August 2011) 

Dutch  State  Supervision  of  the  Mines  (SSM)  conclusions  on  the  review  of  the 
drilling practises and procedures (September 2010) 

Norway: The Deepwater Horizon accident – Assessments and recommendations for 
the Norwegian petroleum industry (Petroleum Safety Authority, June 2011) 

Australia's  Report  of  the  Montara  Commission  of  Inquiry  and  a  draft  Government 
response (November 2010) 

3. 

REPORT BY INTERNATIONAL ORGANISATIONS 

3.1. 

3.2. 

G-20 Global Marine Environment Protection Working Group Draft report: "Review 
of  International  Regulation  of  Offshore  Oil  and  Gas  Exploration,  Production  and 
Transport with Respect to Marine Environmental Protection" (March 2011) 

OSPAR  Draft  internal  Draft  report  on  national  legal  framework  and  practices  of 
contracting parties ("Drillex" activity) (March 2011) 

4. 

REPORTS BY THE INDUSTRY 

4.1. 

4.2. 

4.3. 

BP's  Deepwater  Horizon  Accident  Investigation  Report  ("Bly  report",  September 
2010) 

UK  Oil  Spill  Prevention  and  Response  Advisory  Group  (OSPRAG)  –  OSPRAG 
Second Interim Report (April 2011) 

Global Industry Response Group (GIRG, established by International Association of 
Oil  and  Gas  Producers  –  OGP)  report:  International  recommendations  on  well 
incident prevention, intervention and response (May 2011) 

4.4. 

Transocean: Macondo Well Incident – Transocean Investigation Report (June 2011) 

EN 

100 

   EN 

 
 
 
 
 
 
 
5. 

STUDIES AND REPORTS BY INDEPENDENT PARTIES 

5.1. 

5.2. 

5.3. 

5.4. 

The forensic examination of the Deepwater Horizon blowout preventer (BOP) by Det 
Norske Veritas (DNV) (March 2011) 

DNV Position paper on Effective Offshore Regulatory Regime (July 2010) 

DNV  Report  commissioned  by  OLF/NOFO  -  Summary  of  differences  between 
offshore drilling regulations in Norway and U.S. Gulf of Mexico (August 2010) 

ClientEarth  (an  NGO)  report:  International  and  EU  regulation  of  offshore  drilling 
Analysis and proposals for reform (September 2010)  

EN 

101 

   EN 

 
 
 
ANNEX X: 
92/91/EEC AND 96/82/EC) 

ISSUES AMENDING CURRENT LEGISLATION (DIRECTIVES 2004/35/EC, 

This  Annex  provides  supporting  information  for  the  reason  amending  the  Environmental 
Liability  Directive  2004/35/EC  as  proposed  in  this  Impact  Assessment,  as  well  as  the 
rationale  for  not  amending  Directive  92/91/EEC  on  the  minimum  safety  and  health 
requirements  for  workers  in  the  mineral  extracting  industry  and  Directive  96/82/EC  on  the 
control of major-accident hazards involving dangerous substances ('Seveso 2 Directive 1996'). 
The  following  sections  have  been  developed  in  close  corporation  with  DG  ENV  and  DG 
EMPL. 

A. 

Amending Environmental Liability Directive 2004/35/EC 

Problem definition 

•  The ELD (2004) was adopted after the entry into force of the Waste Framework Directive 
(WFD 2000), which applies in coastal and territorial waters, but before the adoption of the 
Marine Strategy Framework Directive (MSFD 2008), which covered then all marine 
waters under sovereignty or jurisdiction of EU MS.  

•  As a consequence, the ELD used the water definition applicable at time of its adoption, 

i.e. the WFD definition. Thus, one specific problem identified is that, under the currently 
applicable EU law, "water damage" only applies to waters defined under the WFD, but 
not to all EU marine waters.  

•  Since the common goods to be protected under EU law have been extended as from 2008, 
this situation raises a question of whether there is a need for updating the ELD to the 
progress and to the gradual extension of the EU environmental acquis.  

•  This specific problem, which relates to the problem of an overall fragmented legislative 

framework that may not be adjusted to the concerns identified by the Deepwater Horizon 
incident, requires the identification of options and a decision on the best way forward.  

Options 

In relation to the geographical scope of the ELD, there are basically two options:  

•  The first option is maintaining the status quo. The consequence of this baseline option is 
that the EU law on environmental liability would not be adapted to the gradual extension 
of EU environmental policy, which since 2008 moved on to protect all marine waters 
under MSFD and not just coastal/territorial waters under WFD. This option may be 
maintained, but raises a question on the legislative coherence of EU policy, to the extent 
that the ELD was designed to protect the common goods under EU law (biodiversity, 
water, etc.), which are now more comprehensive.  

•  The second option relates to adjusting the ELD, in terms of geographical scope, to the 

objectives of EU law, as gradually developed. The 6th Environmental Action Plan (2002-
2010), adopted by co-decision by Parliament and Council, requested a thematic strategy 
be developed for the protection of European seas, having identified a gap in the common 
goods to be protected at EU level. This request led to a Commission proposal in 2005 for 
a Marine Strategy Framework Directive, adopted by legislators in 2008. To the extent that 
EU policy evolves in accordance with the directions by Parliament and Council, the 
question is raised on whether it is appropriate to partially adjust partially existing 
instruments (such as the ELD) to such a gradual policy evolution, or whether it is 
preferable to keep them in their original form, irrespective from overall progress in policy.  

EN 

102 

   EN 

 
Impacts  

•  Now that the problem of the limited geographical scope of the ELD for marine waters has 
been specifically identified by the European Parliament resolution, one question to be 
considered is whether keeping the status quo would be acceptable, having regard to the 
experience from Deepwater Horizon. 

•  The status quo would perpetuate a framework where some of the consequences of 

accidents on marine waters from operations are not adequately internalised (which is a 
major purpose of the environmental liability framework), in accordance with the polluter 
pays principle.  

•  One specific case at stake is the remedial action that may be taken by MS to control on the 
spot the possible consequences of a major accident once it occurs. After the Deepwater 
horizon incident, the US carried out a major deployment of US military and civil means of 
contention, which prevented a serious aggravation of the environmental disaster.  

•  However, in the EU, in the current legislative situation, the water damage at the place of 

• 

origin of the accident would not be covered by the ELD, and therefore it is not certain that 
some of the key consequences sought by the ELD would apply either (e.g. ensuring that 
the operator remains responsible for the containment costs by public authorities and/or 
third parties to prevent the spread of the oil spill at the source of the offshore accident).  
In terms of impacts, any partial adjustments of existing instruments (such as ELD) to 
policy progress (such as MSFD) need to take into consideration potential impacts, 
including distributional impacts. One important question is whether the potential impacts 
from the adjustment would be of a separate nature of those considered by legislators at the 
time of the adoption of the ELD, or whether there is a logical policy continuation of the 
intervention logic decided at the time, which aims at making the polluter pays principle in 
terms of prevention and reaction.  

•  The adjustment of the geographical coverage of the ELD to cover all the waters currently 
subject to environmental protection under EU law (i.e. not only the waters under the WFD 
from 2000, which predated the ELD from 2004, but also the MSFD from 2008) could 
potentially affect a number of operators as well as the public.  
In distributional terms, having regard to specific economic sectors, the shipping industry 
would not be affected by any change in the geographical coverage of the ELD, since the 
sector is currently subject to a broad sectoral derogation "ratione materiae" contained in 
the ELD itself (it is a sector already subject to sectoral international regimes, under IMO 
agreements). There is no proposal to address this issue now.  

• 

•  The specific sector that would be affected by an extension of the definition of "water 
damage" would be the offshore hydrocarbons industry. The basic consequence of a 
legislative adjustment would be to promote the internationalisation of costs, not only in 
case that an accident occurs (polluter pays), but also in terms of preventive measures to 
reduce such risk. The operators would be made more explicitly responsible for any 
damage of the public goods currently identified by EU law, and notably all marine waters 
since the MSFD came into force in 2008.  

•  By contrast, one consequence of the legislative adjustment is that there would be positive 
impacts on other sectors potentially affected negatively by any offshore accident. This 
applies to fisheries, coastal tourism (and recreation) and possibly shipping (since major 
accidents affect navigation routes, as shown by the Deepwater horizon incident), as well 
as the European public in general.  

EN 

103 

   EN 

 
 
• 

In other terms, the consequences of an amendment in geographical scope of the ELD to 
address marine waters would be above all distributional, as opposed to incremental. In 
accordance with the polluter pays principle, the sector in charge of potential damage to the 
common goods identified in current EU law (marine waters) would take expressly 
enhanced responsibility.  

• 

•  Therefore, any geographical extension of the ELD to address water damage for marine 
waters would be after all a direct extension of the intervention logic inherent of the 
existing ELD, as already agreed by the legislators, updating it to the current geographical 
coverage of EU environmental law.  
It should be further noted that the extension of the scope of "water damage" to marine 
waters would concern the water quality in case of significant damage. By contrast, 
significant damage to protected species and natural habitats is already covered at present 
by another provision of the ELD, reaching out to all marine waters (the exclusive 
economic zone and the continental shelf, where Member States may exercise jurisdiction). 
Thus, the significance of any geographical adjustment would only address water damage 
and not damage to protected habitats and species (already covered). 
In addition, experience on the application of the ELD shows that very few cases have 
occurred so far across the EU where Member States had to apply their legislation 
transposing the ELD. This is mainly due to the fact that ELD is applicable in the case of a 
significant environmental damage and it is a general perception by Member States' experts 
that the ELD brings in fact a positive change to business attitude, by forcing operators to 
take a more environmentally precautionary attitude to their activities. This is the 
preventive effect of the Directive. In other terms, the main consequence of any 
geographical extension of the ELD to water damage at sea is above all a matter of 
prevention, which is coherent with the overall logic of intervention on this issue, and 
would in fact close a gap in an otherwise comprehensive consistent structure.  

• 

B. 

Issues regarding Directive 92/91/EEC and Directive 96/82/EC 

As  discussed  in  chapter  4  of  this  Impact  Assessment  document,  options  for  implementing 
measures  proposed  in  this  document  concerned  the  amendment  of  the  following  EU 
Directives: 

(1) 

Directive 92/91/EEC on the minimum safety and health requirements for workers in 
the mineral extracting industries through drilling.  

In  order  to  improve  the  prevention  of  major  hazards  accidents  and  minimize  risks  for  the 
environment  in  the  oil  and  gas  industry,  amendments  to  92/91/EEC  have  been  considered. 
These amendments would concern the following issues: 

•  Incorporating  environmental  risks  in  the  risk  assessment  and  in  the  report  documenting 
the results of this risk assessment performed on installations (in 92/91/EEC this report is 
referred to as the 'safety and health document') 

•  Submission of the report to the Competent Authority in Member States. 

•  Competent Authority in Member States to conduct a verification of the report. 

EN 

104 

   EN 

 
 
(2) 

Directive  96/82/EC  on  the  control  of  major-accident  hazards  involving  dangerous 
substances ('Seveso 2 Directive 1996') 

The  amendment  considered  was  to  extend  the  scope  of  the  Seveso  2  Directive  to  include 
offshore installations.  

After  consultation  with  representatives  from  DG  EMPL  and  DG  ENV  respectively,  it  was 
concluded that amendments to these Directives was not considered possible or advisable. The 
preferred  method  for  implementing  of  the  measures  suggested  is  by  a  separate  legislative 
proposal, which is consequently reviewed and endorsed in this Impact Assessment.  

The following paragraphs provide a further clarification on the problems and difficulties that 
would be encountered when amending the respective Directives. The text of these paragraphs 
has been drafted with the support of representatives from DG EMPL and DG ENV. 

1  The  Minimum  safety  and  health  requirements  for  workers  at  work  Directive 
89/391/EEC  (the  Framework  Directive)  and  the  Mineral  extraction  by  drilling 
Directive 92/91/EEC (the Directive) 

The Framework Directive and the Directive derive from Article 153 of TFEU. The Directive 
provides  a  number  of  key  provisions  that  are  relevant  to  the  aims  arising  from  the 
Commission's  review  of  offshore  major  hazard  prevention.  The  Directive  is  an  established, 
widely  respected  and  comprehensive  instrument  concerning  the  minimum  requirements  for 
improving  the  safety  and  health  protection  of  workers  in  the  mineral  extracting  industries 
through  drilling,  pursuant  to  Art.16  of  the  Framework  Directive;  as  such  it  potentially 
provides  the  following  model  clauses  for  some  key  aspects  of  offshore  safety  and 
environment protection: 

•  General obligations, especially the requirement for making and updating a safety and 

health document 

•  Well control 
•  Prevention of risks of explosion 
•  Special minimum requirements applicable to the offshore sector, particularly: special 

hazards; management system; remote control in emergencies; means of evacuation and 
escape; helicopter operations; and installations stability. 

In considering the application of the Directive to offshore oil and gas operations it was seen 
that a new provision - aside from, but building on the Directive- could satisfy the objectives of 
Article153  2.(a)  TFEU  should  the  aim  be  limited  to  implementing  a  risk  assessment  report 
system  similar  in  effect  to  that  utilised  in  various  forms  by  North  Sea  Member  States.  This 
would need a separate provision from the Directive to require the safety and health document 
prepared  by  the  operator  pursuant  to  the  Directive  to  be  sent  to  Member  States  for 
verification. In addition, for the system to be workable, the form of the submitted document 
and  the  regulatory  procedures  would  need  to  be  specified  in  detail  as  it  is  in  the  North  Sea 
(safety and health document in NL; safety case in the UK). In this region, Member States put 
into  national  regulation  detailed  specifications  which  focus  on  assessment  of  major  hazard 
potential, and publish detailed guidance on their verification procedures).  

Going beyond the minimum standards defined in the Directive for Member States to adopt a 
fully risk based safety regime for offshore major hazards would entail three further provisions 

EN 

105 

   EN 

 
 
to complement the Directive. First a requirement for Member States to develop a system of 
inspection, investigation and penalties that supports such a regime and focuses on the offshore 
major  hazards  measures  described  in  the  safety  and  health  document.  Second,  clarification 
that the revised requirements apply to certain installations and significant infrastructure where 
there  could  be  doubt  as  to  the  scope  of  the  Directive  (e.g.  subsea  facilities  and  connecting 
pipelines).  Third, a requirement for the operator to send pre-drilling well notifications to the 
regulator specifying well design and operating plans. 

These additional requirements could also be achieved by amendments to national law without 
infringing the original design intent of the Directive.  

Difficulties arise from this point if it is intended to develop a holistic system centred on the 
Directive that includes: environmental risk and prevention assessments; an integrated process 
incorporating  risk  assessment  verification,  inspection  and  enforcement  by  safety  and 
environment  regulators;  stable  reporting  requirements  by  operators  to  Member  States;  and 
preparation  of    internal  and  external  emergency  plans  (the  former  being  required  within  the 
safety  and  health  document  to  minimise  escalation  of  an  incipient  major  hazard  event,  the 
latter being the planned national response to a major event should the internal emergency plan 
not work). 

It  was  concluded  that  separate  provisions  are  necessary  to  implement  comprehensive 
safeguards in EU offshore operations because it is not feasible to develop an offshore major 
hazards  and  response  regime  centred  on  the  Directive  whilst  remaining  within  its  original 
design  intent.  There  are  currently  no  plans  to  amend  the  Directive  but  a  review  of  the 
Directive has been set up and this is welcomed. That review will not be completed before the 
current overhaul of offshore safety is finished. 

2 

Seveso 2 Directive 1996 (Seveso) 

Seveso  provides  a  number  of  solutions  to  achieving  desired  regulatory  outcomes  for 
preventing  major  offshore  incidents  and  limiting  the  consequences  should  nonetheless  an 
incident occur. The Seveso model is a respected system for joined up regulation by EU major 
hazards safety and environment inspectors, a quality mostly lacking offshore notwithstanding 
the  potential  major  impact  on  the  environment  arising  from  safety-related  events.  The 
applicable model clauses are found in Seveso Articles relating to: 

•  Notifications 
•  Major accident prevention policy 
•  Safety report 
•  Modification of an installation… 
•  Emergency plans 
• 

• 

• 

• 
•  Competent authority 
•  Prohibition of use 
• 

Inspections 
Information system and exchanges 

Information on safety measures 
Information (major hazards) to be supplied by operators 
Information supplied by EUMS to the COM 

Because the measures arising from the review of offshore safety bear close association to to 
the objectives of Seveso , the possibility, advantages and disadvantages of applying Seveso to 
offshore installations needs to be assessed.   

EN 

106 

   EN 

 
Seveso  covers  already  around  10.000  high-risk  establishments  onshore.  The  inclusion  of  a 
further 1.000 offshore installations would extend but not dominate Seveso's scope. Seveso is a 
goal setting directive, meaning that most of the Seveso provisions are designed for different 
industrial  sectors  and  are  therefore  sufficiently  flexible  to  fit  offshore  installations.  A  good 
portion of the Seveso provisions could be applied, as the list above clearly shows.  

However,  offshore  oil  and  gas  is  a  unique  industrial  sector  –  essentially  comprising  large 
industrial sites set into the sea - with very different stages of exploration and exploitation for 
which  more  specific  provisions  should  and  more  detailed  provisions  could  be  designed. 
Offshore  installations  have  relatively  minor  inventories  of  hydrocarbons  on  the  facilities 
themselves, therefore the Seveso approach - "high quantities = major hazards" - does not fit.  
More  precisely,  the  Seveso  scope  is  defined  by  amounts  of  dangerous  substances  above 
specified  threshold  quantities,  which  is  not  a  feasible  criterion  for  offshore  installations. 
Therefore  the  design  of  Seveso  does  not  allow  an  easy  inclusion  of  offshore  installations 
without introducing changes that may create difficulties in other sectors for which Seveso was 
designed (for example by lowering threshold quantities of flammable substances).  

In  terms  of  specific  legal  duties,  Seveso  provisions  that  arise  from  having  residential 
populations  and  other  hazardous  installations  adjacent  to  the  Seveso  site  are  irrelevant  to 
offshore oil and gas. Further Seveso, by its nature, does not provide for consideration of the 
evacuation,  escape  and  rescue  of  a  marooned  offshore  workforce,  which  is  a  primary 
consideration in offshore risk assessments. Finally and importantly, Seveso does not provide 
for formal acceptance of Seveso safety reports (referred to in the offshore impact assessment 
as  major  hazard  reports)  by  the  regulator.  This  function  has  been  identified  in  recent  EU 
legislation addressing safety and pollution control as a key requirement (e.g. in the Directives 
for  Waste  from  Extractive  Industries,  and  CCS),  and  has  been  assessed,  equally,  as  a  key 
requirement in the overhaul of offshore safety. Therefore it is undesirable to rule out such a 
provision for offshore at this stage.  

Therefore  it  is  concluded  that  whereas  substantial  aspects  of  Seveso  can  and  should  be 
incorporated  into  the  draft  offshore  legal  instrument,  amending  Seveso  to  bring  offshore 
installations  into  scope  is  unlikely  to  be  effective,  and  moreover  risks  damaging  Seveso's 
applies.
to 
coherence 

currently 

sectors 

which 

with 

the 

it 

EN 

107 

   EN 

 
ANNEX XI:  DESCRIPTION AND EVALUATION OF THE IMPLEMENTATION OPTIONS FOR INDIVIDUAL MEASURES 

Each of the 11 measures retained for further analysis in Chapter 3 has several possible means of implementation ("implementation options"). These are 
summarised in the following table and described in details in the individual tables attached at the end of this Annex. 

No
. 

1 

2 

3 

Table  

How measures may be differently implemented within the policy options 

Measure 

Sub options for implementation of the measures 

A 

B 

C 

D 

Detailed  verification  of 
the  technical  capacity  of 
potential operator 

Guidelines 
94/22/EC 

to 

Directive 

Setting 
EU 
criteria 
legislation  for  verification  by 
MS 

in 

Assessing technical capacity by an EU body 
(agency) 

N/A 

Establishing 
inspections 
penalties regime 

regular 
a 

and 

(Option 2) 

(Option 3) 

(Option 1+) 

Guidelines 
sanctions 

on 

inspections/ 

Setting  minimum  requirements 
in EU legislation 

Inspections by EU body (agency) 

N/A 

(Options 1, 1+, 2) 

(Option 3) 

Submission  of 
formal 
safety  assessments  for 
the 
acceptance 
regulator 

by 

Guidelines 
92/91/EEC 

to 

Directive 

Utilising 92/91 for inclusion of 
MAH 
by 
regulator 

acceptance 

+ 

EU  legislation  separate  from  92/91  to  cover 
MAH 

Assessing MHRs by EU body (agency) 

(Option 1, 1+, 2) 

(Option 3) 

EN 

108 

EN 

 
  
 
 
 
 
 
 
 
 
No
. 

4 

5 

6 

Measure 

Sub options for implementation of the measures 

A 

B 

C 

D 

Extension of MHR into a 
risk 
comprehensive 
management model 

Guidelines 
92/91/EEC 

to 

Directive 

Amending  92/91  to  MAH  + 
environment 

EU  legislation  separate  from  92/91  to  cover 
MAH + environment 

Include  offshore  oil  and  gas  under  Seveso 
Directive 

(Options 2,3) 

Extending  EU  practices 
to overseas operations 

Positive incentives (voluntary) 

Negative 
publication 

(Options 1+, 2) 

Establishing 
Competent Authority 

a 

Adopting EU recommendations 
or guidelines 

Amending 
legislation 

incentives: 

Mandate global industry practice 

Enforce consistency x-EU 

(Option 3) 

existing 

EU 

Adopting new/ specific EU legislation 

Establishing EU body (agency) 

(Option 2) 

(Option 3) 

7 

Establishing  a  platform 
for regulatory dialogue 

Promoting 
arrangements 

voluntary 

Mandating  Commission- 
regulatory dialogue 

led 

Establishing EU-wide regulatory agency 

N/A 

(Option 2)  

(Option 3) 

9 

Comprehensive 
information  sharing  and 
transparency 

Voluntary  information  sharing/ 
publication 

EU  mandating 
publishing of information 

sharing 

/ 

Establish  EU  database  (Commission  or 
agency) 

N/A 

(Options 2, 3) 

EN 

109 

EN 

 
  
 
 
 
 
 
 
No
. 

10 

Measure 

Sub options for implementation of the measures 

A 

B 

C 

D 

Preparedness 
effective 
response 
offshore accidents 

for 
emergency 
to  major 

Industry  to  provide  suitable  / 
sufficient emergency plans 

Enhance 
preparedness 
agreement 

(Option 1+) 

cross-border 
through  MS 

EU  mandating  requirements  and  coordinate 
exercises 

N/A 

11 

Ensuring 
availability 
compatibility 
intervention assets 

cross-border 
and 
of 

Industry  ensuring  availability 
and sharing of assets 

Voluntary agreement by MS to 
share assets and expertise 

EU mandating option B 

N/A 

(Options 2,3) 

(Option 1+) 

(Options 2, 3) 

12 

Clarifying  the  scope  of 
environmental liability 

Guidance on the applications of 
the Waste Directive 

Extending 
2004/35/CE (ELD) 

scope 

of 

Sector-specific  EU  liability  legislation  for 
environmental damage 

International/ global solution 

(Options 1+, 2, 3) 

The table distinguishes between implementation options that are considered feasible (the un-shaded options), options that are feasible but with some 
disadvantages or negative consequences (mainly some of the institutionalising options, the yellow shading) and finally those that are not considered 
feasible (the grey-shaded options). As can be seen, some measures can be implemented through alternative means which often differ by the degree of 
their complexity or policy ambition. The measures alone also differ in the degree of change to the present rules and practices which they would entail. 
The rest of this annex sets out the detailed analysis which the table above summarises. 

Analysis of possible implementation means for individual measures 

EN 

110 

EN 

 
  
 
 
 
 
 
1. Detailed verification of the technical capacity of potential operator 

Option A  Adopting EU guidelines for Art. 5.1a of Directive 94/22/EC 

Option B  Defining  detailed  binding  criteria  in  EU  legislation  (amending  94/22/EC  or 

separately) 

Option C  Assessing technical capacity at EU level (e.g. through a dedicated body such as 

EMSA) 

Even if the preparation of the guidelines envisaged under Option  A  achieved  setting more  than just basic and low-level common standards for the 
licensing process in the EU, the guidelines would not be mandatory for both the applicant and the licensing authorities, potentially resulting in little 
change  in  the  licensing  processes  of  Member  States.  This  would  to  a  large  extent  not  fulfil  the  purpose  of  the  objective,  as  it  gives  insufficient 
possibilities for a comprehensive strengthening of the licensing process of all Member States. Based on this analysis, A is not supported. 

Option B is endorsed as it provides the highest likelihood of ensuring changes to the licensing processes of Member States. It will provide for clear 
criteria, targeted  at the critical operations  of  license applicants.  This  option  is  regarded  as  the  minimum  requirement  for  ensuring that the licensing 
process is conducted professionally, with equal screening criteria for all applicants. Authorisation is a key provision to guarantee that all measures to 
prevent accidents and to limit their consequences are taken, and best available techniques are applied.  Further measures like the risk assessment, safety 
management systems or internal emergency response to be provided by an applicant are prerequisites for granting an authorisation. 

Option  C  has  the  advantage  that  assessment  of  license  applications  is  performed  by  a  single  EU  body,  completely  independent  of  Member  States, 
issuing some form of clearance ("health check") to companies wishing to operate in any European jurisdiction. This would ensure EU-wide coherence 
and level playing field across European jurisdictions. It is not, however, evident that it would necessarily lead to a more robust assessment than under 
B as it also presents several drawbacks: (1) the new organisation will have to build up the required expertise for assessment of license applications; (2) 
Member States may have specific requirements for screening criteria (because of local circumstances) which could complicate the work processes of 
the  new  organisation.  The  scope  of  action  of  the  body  could  be  limited  by  consideration  of  the  guarantees  given  to  Member  States  in  existing  EU 
legislation in respect of sovereign assets (Art 194 of TFEU and Directive 94/22/EC). 

EN 

111 

EN 

 
  
2. Establishing regular inspections and a penalties regime 

Option A  Guidelines on inspections/sanctions and support to regulatory cooperation 

Option B  Mandating minimum requirements for inspections/sanctions 

Option C 

Inspections to be carried out by an EU agency 

Non-mandatory guidance under Option A could only be high level due to the wide differences in EU civil and criminal regimes. Experience in the EU 
shows  that,  where  Member  States  already  have  major  hazard  regimes  involving  some  kind  of  approval  system,  non-statutory  approaches  are  not 
sufficient  to  ensure  that  regulatory  authority  contains  the  necessary  costly  resources  and  expertise.  Voluntary  mechanisms  are  also  unreliable  for 
securing high performance from the industry, particularly where the industry is rapidly evolving, which is the case in the offshore industry where the 
shift  towards  diversification  amongst  both  contractors  and  operators  is  set  to  continue.  It  is  unlikely  that  Member  States  can  achieve  effective 
intervention approaches that will bring the least capable regimes to the level of the best performing ones without a firm EU mandate on the minimum 
requirements. In addition, the absence of an EU mandate is unlikely to deliver a consistent enforcement and sanction regime that would act effectively 
across the EU in a similar and effective way. Overall, we therefore discard Option A.  

Option B is endorsed as the most likely means to achieve consistent and effective regulatory oversight across the EU by: 

• 

• 

• 

Enabling Member States to identify and pursue the resources necessary to establish a high performance regulatory agency 

Clarifying and mandating the key priorities for EU regulators' practical interventions 

Having minimum requirements for enforcement and sanctions to drive consistent performance by industry throughout EU waters 

This option would allow for the key principles that an effective oversight system should comprise be spelled out in a legislative text already now while 
the detailed parameters of the key priorities could be adopted subsequently through delegated or implementing acts prepared in cooperation with an 
expert committee of Member States' representatives.  

Option C could deliver a consistency of inspection regimes but the EU body would not be able to extend its action to the enforcement of sanctions; 
this would have to remain reserved to Member States in view of the interlink with national criminal regimes and frameworks for the pursuit of legal 

EN 

112 

EN 

 
  
enforcement. This limitation could potentially undermine the effectiveness of existing regimes in some Member States; its implementation would thus 
require safeguards that the efficacy of current EU goal-setting regimes would not be diminished. 

EN 

113 

EN 

 
  
3. Submission of formal safety assessments for acceptance by the regulator prior to operations with major hazards potential 

Option A  Adopting EU guidelines to Directive 92/91/EEC 

Option B  Utilising  Directive  92/91/EEC  for  the  inclusion  of  major  accident  hazard 

(MAH) aspects and submission to/acceptance by the regulator 

Option C  Adopting  a  specific  legislative  instrument  separate  from  Directive  92/91/EEC 
for issues not related to health and safety of workers, extending the goal-setting 
approach to cover major hazard impacts  

Option D  Assessing major hazards reports at EU level (e.g. through a dedicated body such 

as EMSA) 

A  drawback  of  Option  A  is  that  the  guidelines  are  not  mandatory.  This  gives  insufficient  assurance  that  the  required  change  in  control  of  major 
accident hazards is indeed established.  

For Option B, the planned review of the effectiveness of Directive 92/91/EEC in consultation with social partners could provide an opportunity for an 
improved and better focused legal framework on major hazard risk prevention, with minimum disturbance to current good practices and endorsement 
of the provisions already available for risk assessments in the Directive. 

Option C would be suitable should a solution complementary, but entirely legally separate, to Directive 92/91/EEC would need to be sought.   

For Option D, the analysis of strengths and weaknesses outlined for Option C under the previous measure can be applied by analogy. 

EN 

114 

EN 

 
  
4. Extension of the major hazards report into a comprehensive risk management model for EU offshore 

Option A  Adopting EU guidelines to Directive 92/91/EEC 

Option B  Amending Directive 92/91/EEC to extend its scope to MAH and environmental 

risks 

Option C  Adopting  a  specific  legislative  instrument  separate  from  Directive  92/91/EEC 
for issues not related to health and safety of workers, extending the goal-setting 
approach to cover major hazard impacts and environmental risks 

Option D 

Including offshore oil and gas industry in the Seveso regime 

The  main  drawback  of  Option  A  is  the  likely  and  undesirable  infringement  of  the  original  design  intent  of  Directive  92/91/EEC,  thus  risking 
undermining the efficacy of the instrument. The planned review of the effectiveness of the Directive in consultation with social partners is, however, 
supported and encouraged as we say above. 

Option B, although appealing at an intuitive level, is not within the scope of the Directive, which is to set minimum requirements for the protection for 
safety  and  health  of  workers,  pursuant  to  the  framework  Directive.  This  renders  unfeasible  the  introduction  of  different  sectoral  requirements  into 
Directive 92/91/EEC irrespective of the outcome of the pending review.   

Option  C  is  endorsed  as  providing  an  effective  framework  for  better  preventing  a  major  accident.  The  extension  of  the  existing  formal  safety 
assessment process to focus on the controls necessary to prevent a major hazard, combined with the actions to be taken following a major accident and 
the  resulting  impacts  are  complementary  to  Directive  92/91/EEC.  This  would  enable  important  reforms  to  proceed  without  disturbing  existing 
legislation.  This  specific  framework  regulation  guarantees  the  same  level  of  safety  as  provided  by  Seveso  for  human  Extending  EU  practices  to 
overseas  operations  health  and  the  environment  for  on-shore  installations  and  is  preferred  to  an  amendment  of  the  Seveso  legislation  to  extend  its 
scope, which would not be appropriate given the specific characteristics of offshore oil and gas installations. 

Option D is not recommendable because the design of Seveso does not allow an easy inclusion of offshore installations without introducing changes 
that may create difficulties in other sectors for which Seveso was designed (for example by lowering threshold quantities of flammable substances). 
Offshore installations have relatively minor inventories of hydrocarbons on the facilities themselves, therefore the Seveso approach - "high quantities = 

EN 

115 

EN 

 
  
major hazards" - does not fit.  The Seveso scope is defined by amounts of dangerous substances above specified threshold quantities, which is not a 
feasible criterion for offshore installations. 

In  view  of  the  necessary  special  consideration  given  to  both  the  Drilling  Extractive  Industries  and  Seveso  Directives,  we  provide  at  Annex  X  more 
detailed considerations. 

5. Extending EU practices to overseas operations 

Option A 

Positive incentives (voluntary code of conduct) 

Option B 

Negative  incentives  -  publicise  lax  standards  of  EU  companies'  operations 
outside EU 

Option C  Mandate global industry practice for companies headquartered in EU 

Option A is endorsed as the likely most suitable means by which the EU would gain a reputation for high standards through the conduct of its flagship 
companies.  EU  companies  are  unlikely  to  refrain  from  signing  up  to  an  appropriate  code  of  responsible  conduct  to  convincingly  establish  their 
commitment to international best practices. 

EU and Member States have no statutory insight beyond the EU it would be very difficult to identify industry practices which are not in line with the 
European legislative framework. The policy of pursuing EU level intervention in EU companies' lax performance overseas is not supported. Where a 
company is already in a poor public light (e.g. as was BP after Deepwater Horizon), an expression of EU disapproval is considered to add little value in 
those circumstances. Option B is rejected in view of its difficulties and uncertain value (and potential legal complications). 

In Option C, there would be foreseeable difficulty in setting up the legal framework to enforce the obligation. Questions such as who would enforce it, 
how should 'EU company' be defined, what would be the requisite level of evidence and where is the rationale for public interest are all potentially 
insoluble  challenges.  These  measures  at  worse  could  drive  companies  to  establish  their  status  outside  the  EU.  Option  C  is  rejected  as  unlikely  to 
achieve. 

EN 

116 

EN 

 
  
6. Establishing a Competent Authority in each jurisdiction 

Option A  Adopting EU recommendation or guidelines to Member States 

Option B  Amending existing EU legislation  

Option C  Adopting a new/specific legislative instrument  

Option D  Establishing EU-wide competent authority (through existing or new EU body) 

The main drawback of Options A and B is the absence of suitable EU legislation at present. Using any of the relevant existing pieces of legislation 
(e.g. Directives 94/22/EC or 92/91/EEC) would inevitably limited the scope of action of the Competent Authorities only to the field covered by the 
respective legislative text. Alas, as outlined in chapter 3, the Competent Authorities should be in the position to act on a full range of issues related to 
the management of risks in the offshore sector. 

Option  C  appears  best  suited  for  the  purpose.  As  the  need  for  Competent  Authority132  is  directly  linked  to  the  creation  of  a  comprehensive  risk 
management model for the offshore sector, which in turn would be most effectively achieved through a specific new legislative initiative (see 4.1.3), 
the provisions on Competent Authorities could and should be an integral part of such an initiative. 

Option D would be hampered by the same considerations as similar options considered in 4.1.1 and 4.1.2. The arguments against this option provided 
in those parts, and notably related to guarantees given to Member States in existing EU legislation in respect of sovereign assets (Art 194 of TFEU and 
Directive 94/22/EC), would apply by analogy. 

132 Refer to S. 3.3.2 (6) for clarification of the term Competent Authority, which is related to law and not to skill 

EN 

117 

EN 

 
  
                                                 
7. Establishing a platform for regulatory dialogue and information sharing amongst jurisdictions 

Option A  Promoting  voluntary  arrangements  amongst  regulators  (extend  NSOAF133 

model) 

Option B  Mandating regulatory dialogue led by the Commission 

Option C  Creating an EU wide regulatory agency 

Option A carries the weakness that the aim of levelling up the effectiveness of all EU Member States intervention programmes to the level of the most 
effective regimes in the North Sea cannot be expected through voluntary means. Whereas an expanded NSOAF would bring benefits to less resourced 
regimes,  it  can  be  argued  there  is  little  gain  evident  for  existing  NSOAF  members.  Further,  NSOAF  works  well  precisely  because  it  is  comprises 
members who already have high performance regulatory regimes, although with some disparities and weaknesses amongst them. Therefore it is not 
coincidence  that  an  equivalent  to  NSOAF  has  not  started  up  in  other  EU  regions  (nor  that  NSOAF  members  UK  and  Norway  were  the  founder 
members of IRF). Therefore we discard this option of having no likelihood of achieving a benefit that outweighs the cost of it.   

Option B means setting up a Commission-led group of all EU offshore regulators and shaping for this group an agenda that supports the inculcation 
and maintenance of regulatory best practices and that would also enhance the efficacy of existing regional groups such as NSOAF, and the fledgling 
Mediterranean MS forum. In order to establish such an EU-wide platform, the SLIC Directive134 provides an obvious and well tried model.  Overall, 
this option is endorsed as the most effective and efficient means to support MS' adoption of a consistent approach to best regulatory practice. 

Option C would be meaningful to consider alongside other strong options for implementing the measures that, in effect, institutionalise the offshore 
reform package, particularly: 

• 

Assessing technical capacity at EU level (e.g. through a dedicated body such as EMSA) (4.1.1) 

133 NSOAF stands for the North Sea Offshore Authorities Forum, a voluntary grouping of offshore regulatory authorities from the North Sea area used by them for exchange of 
information  and views on issues of common interest. 
134 Explanatory reference 

EN 

118 

EN 

 
  
 
                                                 
• 

• 

• 

• 

Inspections to be carried out by an EU agency (4.1.2) 

Assessing major hazards reports at EU level (e.g. through a dedicated body such as EMSA) (4.1.3) 

Establishing EU-wide competent authority (through existing or new EU body) (4.1.6) 

A database managed at EU level (Commission or an agency) with centralized publication of information (4.1.8 – below) 

Option  C  would  be  the  implementing  option  for  this  measure  should  the  listed  options  come  to  be  the  preferred  means  for  implementing  those 
measures to which they relate. 

8. Achieving consistency of product safety standards across the sector 

Not develop[ped further in this impact assessment. 

9. Comprehensive information sharing and transparency 

Option A  Encouraging 
information 

information  sharing  and  voluntary  publication  of  relevant 

Option B  An obligation on Member States to publish information in a common format 

Option C  A  database  managed  at  EU  level  (Commission  or  an  agency)  with  centralized 

publication of information 

Option A is discarded because it is unlikely to attain the goal of consistency and hence comparability of performance data. It would fail to remedy 
existing problems of comparing data between all EU jurisdictions. Even in more evolved regimes such as the UK and Norway, the comparison of data 
is costly and time consuming because of differences in reporting criteria and classifications.  

Option B provides for an EU level solution, thus it will avoid inconsistency of requirements and unnecessary burdens on industry. It presents the best 
and least burdensome means to: 

EN 

119 

EN 

 
  
 
• 

• 

• 

• 

• 

• 

Extract data from industry 

Share information that is reliably consistent 

Improve the metrics available to Member States to better position regulators' interventions and give better public assurance of validity 

Encourage transparency by replacing voluntary systems with formal data collection 

Incorporate environmental impact reporting 

Cover accident reporting and lessons learned 

This approach would enshrine better regulation principles by levelling up the requirements between the EU national systems, without the imposition of 
an additional layer of reporting. While the general principles and obligations could be spelled in a general legislative text, the metrics to be collected 
and data formats would be specified through implementing or delegated acts. It would be helpful to involve Norway in the formulation of any such acts 
as Norway has an outstanding record for data publication. 

Option  C  is  discarded  for  a  lack  of  evidence  that  all  relevant  Member  States  could  not  reach  a  similar  level  of  transparency  based  on  common 
requirements and common data format, thus attaining high levels of collaboration without EU control over the process. It would be overly burdensome 
on  Member  States  and  unnecessarily  costly  to  the  EU.  Data  verification  would  become  more  complex  and  costly,  and  may  result  in  delayed 
publication, rendering the information of diminishing value. This option could be reviewed in due course if the collective output of Member States 
were shown to be unreliable. 

10. Preparedness for effective emergency response to major offshore accidents 

Option A 

Industry  to  demonstrate  the  existence  of  suitable  and  sufficient  emergency 
response plans 

Option B  Securing MS agreement to enhance cross border preparedness for responding to 

offshore major accidents 

Option C  EU to mandate the minimum requirements for offshore emergency response 

plans amongst Member States and to coordinate periodic multi-agency 

EN 

120 

EN 

 
  
emergency exercises to test the plans     

In  Option  A,  operators  would  have  to  take  responsibility  as  the  lead  providers  of  plans  and  resources.  However,  the  Deepwater  Horizon  disaster 
showed  that  amongst  even  the  super-major  oil  companies  operating  in  the  Gulf  of  Mexico  (all  of  whom  also  operate  in  EU  waters),  there  was  a 
tendency  to  replicate  between  themselves  the  same  inadequate  environmental  risk  assessments  for  the  purposes  of  planned  response.  Option  1  is 
discarded as it is considered that this level of EU action for emergency response would be both unlikely to gain public confidence and would only 
partly achieve the objective. The important part currently played by industry in emergency preparedness and response should, however, be emphasised, 
especially as it is envisaged that it will not only continue but further develop. 

Option B builds on Option A. It establishes the basis of emergency preparedness for MS – in effect sets a planning template for national emergency 
response plans - such that plans can be shared and resources allocated on a collaborative basis between MS in the same region, but also to open up the 
potential for helping other regions combat extreme emergencies. It also motivates MS to develop interoperable assets for sharing across boundaries 
when it is required to lend assistance to other MS emergency responses. As a natural corollary to this measure, MS would collate industry inventories 
and stimulate interoperability of industry and national assets, which then opens up the whole of the EU to transferring equipment and expertise should 
this be necessary to bring a major incident under control.On balance Option B could go a long way towards meeting the aim of consistent preparedness 
across  all  EU  areas,  but  recognising  that    it  does  not  give  assurance  that  other  Member  States  would  be  in  a  position  to  lend  all  assistance  to  the 
affected country. Depending on the package of measures that are preferred (see below, under Option C), Option B may be suitable.  

Option C goes further than Option B and provides for EU level minimum requirements for offshore emergency response plans and the preparation of 
standard operating procedures for Member States to put into practice in collaboration with the oil and gas operators and other Member States in their 
region.  The  minimum  requirements  would  be  formulated  in  cooperation  with  Member  State  experts.  Among  other  things,  they  would  establish  the 
principle of Member States sharing assets, and therefore of sharing planning. Emergency plans should always be tested, therefore under this option 
periodic  transboundary  exercises  would  be  conducted  with  EU  oversight  and  the  lessons  learned  would  be  used  to  review  the  standard  operating 
procedures generally. We propose this option as being the best available means to: 

• 

• 

• 

• 

EN 

Ensure consistent and meaningful contributions to emergency response by industry across the EU 

Facilitate sharing of emergency plans between neighbouring Member States 

Securing all necessary assistance to the affected Member State(s) 

Ensuring compatibility of coordinated response, and 

121 

EN 

 
  
• 

Continually improving knowledge and provision of effective emergency response in EU waters by periodic exercises 

However this implementation is only feasible should environment impact and emergency preparedness be included in the major hazards report (see 
4.1.4). Otherwise this option for implementing the measure would be unworkable. 

EN 

122 

EN 

 
  
11. Ensuring cross-border availability and compatibility of intervention assets 

Option A 

Industry  to  ensure  availability  of  their  emergency  response  equipment  and 
materials, sharing as necessary and possible 

Option B  Member States to enter voluntary agreements to make available national assets 

for emergency response, including expertise 

Option C 

In addition to Option 2, the EU to mandate transboundary sharing of emergency 
response assets and expertise, and from other EU areas where appropriate 

Option A is necessary but does not go far enough to ensure that compatible assets can be made available at the time and point of need. The work to 
date by the industry135 should certainly not be dismissed, rather they should be commended, built upon and extended. 

Provisions under Option B go further than Option A and would be expected to work best in local regions of the EU because, under such an agreement, 
and  subject  to  EU  minimum  requirements  for  offshore  emergency  plans  (under  the  previous  objective),  all  regions  would  make  the  necessary 
provisions based on local risk assessments136 and marine environmental data from monitoring.  In addition, under this option Member States would be 
expected to ensure inventories are formally collated and periodically updated. 

It follows that an interdependency of assets requires interoperability of equipment and compatibility of fittings and couplings etc. This provision would 
support  that  objective,  particularly  over  time,  as  response  equipment  is  replaced.  Going  further,  more  consistent  expertise  would  be  expected  to 
develop in response to greater standardisation  that  would  facilitate  the  transfer  of  expert  personnel  across  the  EU.  Possible  links  with  the  EU  Civil 
Protection Mechanism should be explored. The EU itself also offers, through EMSA and on request from the affected State, additional marine pollution 
response assets. 

It  is  considered  that  these  desirable  outcomes  are  achievable  by  suitable  arrangements  between  Member  States  under  broad  guidance  that  could  be 
prepared at EU level with Member States' agreement. 

135  International  groups  like  OGP,  and  national  ones  like  OLF  (Norway)  and  Oil  and  Gas  UK  work  intensively  with  national  agencies  on  hardware  and  operational  solutions  to 
respond to deepwater drilling incidents. 
136 Such as those developed for the Baltic Sea under the Helsinki Convention (http://www.helcom.fi/). 

EN 

123 

EN 

 
  
                                                 
A combination of Options A and B are most likely to secure the best available emergency response to offshore major incidents through: 

• 

• 

• 

• 

• 

• 

• 

Building on the technical progress made by industry and its experience gained in responding to challenging offshore incidents 

Facilitating the sharing of compatible resources at both industry and national level where a Member State may be overwhelmed by the 

scale of the incident and ensuring the local inventories are accurately recorded and available 

Concentrating expertise and inventories on a regional basis, suitable to regional risks 

Agreeing interoperability of hardware 

Agreeing the transferability of key dispersants and other materials between Member States 

Collating key environmental data for all EU areas to make full assessment of the most effective responses feasible 

Deploying current EU resources in broad support of regional responses. 

Option  C  is  not  endorsed.  Currently,  most  Member  States  have  well-established  and  apparently  effective  arrangements  for  offshore  emergency 
response  that  are  being  reviewed  and  probably  upgraded.  There  is  no  indication  that  Member  States  would  not  readily  lend  all  assistance  to  other 
Member States stricken by an emergency as is the case in the framework of the EU Civil Protection Mechanism. Furthermore, the EU level framework 
for  sharing  plans  and  for  coordination  of  periodic  exercises  (proposed  in  10.)  will  give  assurance  or  otherwise  test  that  voluntary  agreements  will 
suffice. 

EN 

124 

EN 

 
  
12. Clarifying the scope of environmental liability 

Option A 

Issuing  guidance  on  the  applications  of  the  Waste  Directive  to  oil  and  gas 
accidents 

Option B  Extending  the  scope  of  the  Environmental  Liability  Directive137  to  water 

damage in all marine waters 

Option C  EU to develop sector-specific liability legislation for environmen11tal damage 

Option D 

International/global solution (e.g. IMO liability convention) 

Option A assuming the provision of EU guidance to help disseminate actively the interpretation by the Court of Justice of the European Union and 
national courts of existing waste legislation is discarded because it would address only some of the present problems arising in the analysis of liability 
regimes in offshore oil and gas operations. While it could clarify the assignation of environmental liability to the polluter for all water damage to all 
marine  waters  of  Member  States,  with  the  corresponding  obligation  to  remedy  all  environmental  damage,  and  provide  clarity  regarding  the 
unconditional  consideration  of  oil  or  gas  leaked  from  an  offshore  operation  as  waste,  it  cannot  close  the  gap  which  exists  with  regard  to  primary, 
complementary and compensatory remediation of damage to marine waters beyond coastal and territorial waters.   

Option B is endorsed as providing the necessary change to the regulatory regime. The change of the scope to the Environmental Liability Directive, by 
extending  the  current  scope  of  water  damage  based  on  the  Water  Framework  Directive  (WFD)138  to  include  also  the  Marine  Strategy  Framework 
Directive  (MSFD)139  would  make  all  significant  damage  (including  immediate  threat  of  significant  damage,  thus  launching  preventive  action)  to 

137 Directive 2004/35/CE of the European Parliament and of the Council of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental 
damage 

138 Directive 2000/60/EC 
139  Directive 2008/56/EC 

EN 

125 

EN 

 
  
 
                                                 
 
marine waters in Member States' jurisdiction beyond territorial waters (exclusive economic zone and the continental shelf where applicable) subject to 
the EU framework for full environmental liability. 

Option  C  is  discarded  because  it  would  have  far-reaching  effects  that  would  undermine  the  general  policy  of  broadly  applicable  frameworks  for 
various types of liabilities, without achieving significant additional benefits over and above those resulting from Option 1. Such an approach would 
further fragment the existing EU-wide environmental liability framework and be at odds with the broad aims of the Commission (and duty holders) 
towards joined-up systems of regulation and liability.  

A drawback of Option D is that it would likely be a very long time in gestation and would bring no immediate remedy to the observed limitations in 
current EU legislation. An obvious benefit would be the global nature of this solution. 

13. Ensuring financial capacity of operators to cover liability 

Not developed further in this impact assessment. 

14. Establishing compensation regimes for traditional damage 

Not developed further in this impact assessment. 

EN 

126 

EN 

 
  
Annex XI – table 1 

Option 

Option A: Adopting 
EU guidelines for 
Art. 5.1a of 
Directive 94/22 

Option B: Defining 
detailed binding 
criteria in EU 
legislation 
(amending Directive 
94/22 or separately) 

Option C: Assessing 
technical capacity at 
EU level (e.g. 
through a dedicated 
body such as 
EMSA) 

Measure 1: Detailed verification of the technical capacity of potential operator  

Description 

Under Option A, the EU would provide guidelines for Article 5.1a of Directive 94/22/EC on hydrocarbon licensing. These guidelines would specify 
the (minimum) required information that an applicant for a license should provide to the licensing authority of the Member State. This should assist 
the licensing authorities of the Member State in designing their model (criteria, procedures) for assessment of the adequacy of the technical capacity 
of the applicant and the operating procedures for the implementation of the model.  

Option B takes a step beyond Option A. Under Option B the EU would specify in legislation the criteria for the licensing process in sufficient detail 
to secure the goal of a consistent level of technical capability amongst all companies operating offshore license in the EU. This could be done by 
amending  Directive  94/22/EC  or  through  separate  legislation.  It  would  be  important  to  ensure  the  involvement  of  industry  and  Member  State 
authorities in the process of the designing of the criteria and also allow for their dynamic evolution over time. The latter point in particular points to 
the inclusion of comitology provisions in any legislative solution. In any case, the criteria should include a specification of the critical operations for 
which demonstration of technical capacity is required. The types of critical operations covered should include well design, drilling, well control and 
process  safety  engineering.  In  addition,  a  demonstration  of  adequate  provision  for  response  to  emergency  scenarios  should  be  provided. 
Consideration could be given to a requirement that the information provided by an applicant is verified and assessed by a third party. Such legislation 
should  also define  criteria  for  the  licensing  authorities  on  how  information provided by  the  applicant  to  demonstrate  its  fulfilment  of  the required 
technical capacity should be assessed. 

Option C makes provision for the assessment of the technical capacity of license applicants at EU level through a dedicated body, e.g. EMSA.  

EN 

127 

EN 

 
  
Annex XI – table 2 

Option 

Option A: 
Guidelines 
on 
inspections/s
anctions and 
support to 
regulatory 
cooperation 

Option B: 
Mandating 
minimum 
requirements 
for 
inspections/s
anctions 
Option C: 
Inspections 
to be carried 
out by an EU 
agency 

Measure 2: Establishing regular inspections and a penalties regime 

Description 

Option  A  deals  with  the  concern  that  the  approach  to  assessment  of  safety  reports,  site  inspection  and  enforcement  of  defects  is  variable  between  all 
countries that practice such regimes. . In terms of achieving consistency of enforcement and sanction, non mandatory guidance would need to acknowledge 
there are wide differences in EU civil and criminal regimes.  
Guidelines would comprise a broad generic framework of necessary measures, leaving Member States to determine the appropriate level of detail. Measures 
would include verification of: issues raised in the operator's safety report; well design; safety critical elements relating to major hazards prevention (e.g. well 
control  and  production  systems);  maintenance  of  safety  integrity  levels;  management  of  change  of  major  hazards  systems;  mitigation  systems  against 
incident escalation, evacuation and rescue, and environmental impact; appropriate enforcement measures to deal with any failure by operators to maintain 
suitable standards.  Preparing the guidelines would be an opportunity for exploring gaps in the framework of EU responses to Deepwater Horizon where an 
EU level coordination function would be helpful. For example in coordinating lessons learned from some major incident investigations (but subordinate to 
any  criminal  investigation  being  conducted  by  the  national  authority);  providing  leadership  and/or  secretariat  functions  to  regional  groups  (based  on  the 
NSOAF model); publication of EU reports into performance of the offshore sector based on EU Member State submissions could also be considered. 
Option B effectively places the development of guidance under Option A into a mandatory framework. Experience in the EU shows that where Member 
States  already  have  major  hazard  regimes  involving  some  kind  of  approval  system,  non-statutory  approaches  are  not  sufficient  to  ensure  that  regulatory 
authority contains the necessary costly resources and expertise. Voluntary mechanisms are also unreliable for securing high performance from the industry, 
particularly where the industry is rapidly evolving, which is the case in the offshore industry where the shift towards diversification amongst both contractors 
and operators is set to continue. It is unlikely that Member States can achieve effective intervention approaches that will bring the least capable regimes to 
the level of the best performing ones without a firm EU mandate on the minimum requirements. Whereas all aspects of safety and environmental protection 
offshore are important, an EU mandate will give focus to the major hazard priorities. 
Option C makes provision for an EU-level supervisory body. This is a logical consideration for the establishment of absolute consistency in the oversight 
and  supervision  of  a  modified  regime  across  the  EU,  including  in  the  application  of  sanctions.  EU-level  supervision  of  national  jurisdictions  is  likely  to 
require the creation of new major hazards instruments (as discussed under measure 4.1.1, 'Detailed verification of the technical capacity of potential operator, 
Section 4.1.1 of the Impact Assessment report). 
There  are  a  number  of  models  that  could  be  adopted  for  EU  level  intervention.  The  model  of  the  International  Atomic  Energy  Authority  (IAEA)  is  an 
example where there is an obvious public mandate for a UN-based intervention policy. International air safety. The International Civil Aviation Organisation 
(ICAO) is another model which has safety as a key strategic objective and gives oversight to national civil aviation regulators. 
Within the EU, the European Maritime Safety Agency (EMSA) monitors over 20,000 vessels across Europe and inspects classification societies etc. On the 
environment side, EMSA provides pollution response vessels to help Europe better respond to major oil spills. EMSA has no current expertise in drilling and 
production operations. 

EN 

128 

EN 

 
  
Annex XI – table 1.3 

Measure 3: Submission of formal safety assessments for acceptance by the regulator prior to operations with major hazards potential 

Option 

Option 1: Drafting of 
EU guidelines to 
Directive 92/91/EEC 

Option B: Utilising 
Directive 92/91 for 
inclusion of MAH 
aspects and submission 
to / acceptance by the 
regulator 

Option C: Adopting a 
specific legislative 
instrument separate 
from Directive 92/91 
for issues not related to 
health and safety of 
workers, extending the 
goal-setting approach 
to cover major hazard 
impacts 
Option D: Assessing 
major hazards report at 
EU level (e.g. through a 
dedicated body such as 
EMSA) 

Description 

Option A makes provision for the specification of guidelines, for the application of measures for occupational safety and health, and for measures 
for the control of major accident hazards (MAH), presented in a major hazards report (MHR), including submission of the report to and acceptance 
of the report by the regulator. The guidelines should specify how and when they should be applied during the various stages and operations during 
the life cycle of the installation140.  

Option B builds on option A by extending Directive 92/91/EEC, mandating the elements of major hazards control including the requirement to 
submit the major hazard report (MHR) to the regulator for acceptance. This would retain the authority of the well understood Directive but at the 
same time would extend it beyond its present scope.  

The  option  proposes  a  potential  strengthening of  the  measures for  offshore  safety  through  the  forthcoming  review of  Directive  92/91/EEC  and 
update of the safety and health documents, in line with the Commission's communication on this subject in October 2010. 

In Option C new measures are proposed to secure better regulation of major accident prevention. Whilst it is recognised that existing legislation 
(particularly  in  the  provisions  of  Annex  C  to  Directive  92/91/EEC)  acknowledges  the  stringency  of  provisions  needed  for  major  accident 
prevention and response, Option C proposes separate but aligned legislative provisions that place specific duties on industry and the regulator to 
take the measures necessary to cover the impact of major offshore accidents in EU waters that can lead to a large number of casualties and/or total 
loss of the installation. This also includes submission of the major hazard report (MHR) to and acceptance by the regulator. Any resulting reforms 
across  the  EU  would  be  those  that  are  specifically  necessary  for  major  offshore  hazard  control  and  would  be  complementary  to  Directive 
92/91/EEC, which adopts the goal setting approach.  

As in the previous measure, Option C makes provision for an EU-level body for assessments of the major hazard reports (MHR) submitted by 
industry. This is a logical consideration for the establishment of absolute consistency in the review and acceptance process of MHR's, including in 
the application of sanctions. 

140 Lifecyle stages: Design options, construction and commissioning; operations and maintenance; modification and decommissioning 

EN 

129 

EN 

 
  
                                                 
Annex XI – table 1.4 

Option 

Option A: Adopting 
EU guidelines to 
Directive 92/91/EEC 

Option B: Amending 
Directive 92/91 to 
include MAH and 
environmental risks  

Measure 4: Extension of the major hazards report into a comprehensive risk management model for EU offshore 

Description 

Option A makes provision for the specification of guidelines, for the application of measures for occupational safety and health, and for measures for 
the control of major accident hazards (MAH) including to the environment, presentation of these measures and the emergency plans in a major hazard 
report (MHR) and submission of the report to and acceptance of the report by the regulator. The guidelines141 should specify how and when they 
should be applied during the various stages and operations during the life cycle of the installation.  

Option B builds on option A by extending Directive 92/91/EEC mandating the elements of major hazards control and to incorporate environmental 
aspects and emergency plans in the major hazards report (MHR). It would follow the globally recognised model for major hazard risk control and 
apply  to  the  lifecycle  of  the  project142:  Identification  of  major  hazard  scenarios  for  specific  operations,  Derivation  of  the  risks  arising  from  the 
scenarios by evaluating consequence and likelihoods of occurrence, Development of suitable control measures according to the risks, including to the 
environment, and that will secure a good prospect of recovery of stranded workers, Development of appropriate management systems to ensure that 
control measures are functional and subject to continuous improvement, Independent verification of the critical safety elements, specifically including 
well design. This would retain the authority of the well understood Directive but at the same time would extend it beyond its present scope.  

The option proposes a potential strengthening of the measures for offshore safety through the forthcoming review of Directive 92/91/EEC and update 
of the safety and health documents, in line with the Commission's communication on this subject in October 2010. 

Option C: Adopting 
a specific legislative 
instrument separate 
from Directive 92/91 
for issues not related 
to health and safety 
of workers, 
extending the goal-
setting approach to 
cover major hazard 

In Option C new measures are proposed to secure better regulation of major accident prevention and the impacts for e.g. the environment. Whilst it is 
recognised  that  existing  legislation  (particularly  in  the provisions of Annex  C  to Directive  92/91/EEC)  acknowledges  the  stringency  of provisions 
needed  for  major  accident  prevention  and  response,  Option  C  proposes  separate  but  aligned  legislative  provisions  that  place  specific  duties  on 
industry and the regulator to take the measures necessary to cover the impact of major offshore accidents in EU waters that can lead to total loss of 
the  installation  and  major  damage  to  the  environment.  This  also  includes  submission  of  the  major hazard  report  (MHR)  to  and acceptance by  the 
regulator.  Any  resulting  reforms  across  the  EU  would  be  those  that  are  specifically  necessary  for  major  offshore  hazard  control,  including 
environmental impact prevention, and would be complementary to Directive 92/91/EEC, which adopts the goal setting approach. The priority areas 
where  detailed  rules  would  be  set  out  at  EU  level  include  inherent  safety,  maintaining  primary  containment  of  the  oil  and  gas  (process  safety), 
emergency  plant  and  equipment  to  mitigate  and  contain  drilling  and  production  incidents,  and  wider-scale  emergency  response  in  the  event  of  an 
incident escalating into a full emergency. Because of the complex nature of major hazard prevention in the offshore context, and because of the need 

141 This would include aspects like good practices for major hazards control; revised technical standards in, for example, well control and process safety, well capping and emergency 

response; and establishment of cooperative associations for sharing assets for tackling major pollution events. 

142 Lifecyle stages: Design options, construction and commissioning; operations and maintenance; modification and decommissioning 

EN 

130 

EN 

 
  
                                                 
impacts and 
environmental risks 

to  tackle  environmental  as  well  as  safety  issues,  it  is  not reasonable  to  anticipate  the  development  of  new  or  amended  standards and guidance  by 
existing standards bodies (such as CEN) or authorities (such as IPPC) acting alone. A coordinated approach by industry, regulators, standards bodies 
and other key stakeholders would be essential under this option. It would require the adoption of a legal instrument laying down the main principles 
and themes while making recourse to comitology and expert groups to elaborate detailed implementing provisions for individual themes/principles. 

Option C would set an agenda, preferably with a clear timeline, for improvements in safety critical areas in line with the development of necessary 
standards and guidance that could be incorporated forthwith into the inspection and enforcement programmes of Member States. This would ensure 
that objective focus is maintained, and would reduce the chance of a drift in industry and regulatory attention from the top priority improvements, 
some of which will be challenging to deliver. 

Option D: Include 
offshore oil and gas 
industry in the 
Seveso regime 

Option D is introduced to extend the scope of Directive 96/82/EC (Seveso II Directive 1996) to incorporate offshore oil and gas installations. This 
would  ensure  that  provision  for  the  control  of  major-accident  hazards  under  this  Directive  would  also  be  required  for  the  oil  and  gas  facilities 
offshore.  The  Directive  specifies  requirements  for:  a  written  and  implemented  major  accident  prevention  policy;  a  safety  management  system;  a 
safety  report  for  the  facility;  establishment  of  a  Competent  Authority;  inspections  to  be  conducted  by  the  Competent  Authority;  reporting  by  the 
operator  of  relevant  information  regarding  the  facility  and  availability  of  emergency  plans  for  the  facility.  Extending  the  scope  of  the  Seveso 
Directive  would  be  a  considerable  change,  as  the  current  scope  is  defined  by  the  inventory  of  dangerous  substances  (which  determine  the  major 
hazard scenarios) and currently limited to facilities on land (with prominent issues regarding external safety and land-use planning).  

EN 

131 

EN 

 
  
Annex XI – table 1.5 

Measure 5: Extending EU practices to overseas operations 

Description 

Option A would encourage European companies to make a voluntary commitment (code of conduct) to apply the same standards and procedures 
which  are  used  in  EU  waters.  The  majority  of  relevant  EU  companies  claim  that  they  already  follow  strict  EU  standards  during  their  global 
operations, yet information from stakeholders suggests that there is still significant inconsistency in this approach.  There are "softer" options that 
could  effectively  contribute  to  the  use  of  EU  standards  in  third  countries,  especially  in  connection  with  the  importance  that  offshore  companies 
typically attach to their good reputation. For example, this opens up opportunities for measures built on increased transparency and publication of 
relevant data. Ultimately, companies would not want it to become apparent, following an incident or criminal prosecution in a non-EU country, that 
they disregard their EU commitments to maintaining high standards worldwide. 

Option B would report on those companies which demonstrably apply laxer standards outside Europe. The EU would have to carefully verify what it 
publishes as it may have the potential to damage the reputation of the company concerned. The effort required to verify the legality of any potentially 
harmful reporting would need to be tested against the value of the diluted report that may result. Obvious lapses, such as BP's Deepwater Horizon 
disaster, result in losses of shareholder value with severe consequences for the company.   

Option  C  would  mandate  global  industry  practices  for  companies  headquartered  in  the  EU.  The  challenge  of  effectively  overseeing  extra-EU 
operations  would  still  exist.  There  are  examples  of  similar  obligations,  for  example  in  the  legislation  restricting  the  shipment  of  waste  to  third 
countries143. 

Option 

Option A: Positive 
incentives 
(voluntary code of 
conduct) 

Option B: Negative 
incentives - 
publicise lax 
standards of EU 
companies' 
operations outside 
EU 
Option C: Mandate 
global industry 
practice for 
companies 
headquartered in EU 

143 Regulation (EC) No 1013/2006 of the European Parliament and of the Council of 14 June 2006 on shipments of waste 

EN 

132 

EN 

 
  
 
 
                                                 
Annex XI – table 6 

Option 

Description 

Measure 6: Establishing a Competent Authority in each jurisdiction 

Option A: Adopting 
EU  
recommendations or 
guidelines to MS 

Option  A  must  recognize  that  even  in  the  absence  of  policy  action  at  EU  level,  some  changes  in  the  industry  will  take  place  because  industry 
organisations, individual companies and a number of member states are already examining necessary changes to operational practices and technical 
standards in the light of the latest developments and events in the sector. Under this option, the EU could support such processes by issuing guidelines 
or  other  non-legislative  supporting  instruments.  Company  and  industry  actions,  self-initiated  or  incentivised/required  by  national  authorities,  have 
indicated areas and directions in which improvements are, will be, or could be forthcoming144. 

Option B: Amending 
existing EU 
legislation 

Option B would seek to amend existing EU legislation to establish Competent Authorities for the oil and gas industry in Member States. The existing 
legislation relevant for the oil and gas industry are e.g. Directives 94/22/EC or 92/91/EEC. The amendments would also need to specify minimum 
requirements and/or best practices for Competent Authorities, thus extending the current scope of the Directives.  

Option C: Adopting 
a new/specific 
legislative 
instrument 

Option D: 
Establishing EU-
wide competent 
authority (through 
existing or new EU 
body) 

Option C makes provision for an EU mandate to achieve throughout the region the best regulatory arrangements for delivery of the key elements of 
this  measure.  In  major  hazards  industries  –  e.g.  hazardous  chemicals  and  nuclear  –  industry-wide  conformity  has  been  accepted  as  vital  to  the 
integrity and continued operation of the industry, giving it a legitimate social license to operate. Where environmental regulation is separated from 
safety, the Seveso Directive, for example, has established jointly competent authorities. It is realistic to assume that only under the encouragement 
and  protection  of  an  EU  mandate  could  Member  States  introduce  relatively  quickly  the  statutory  requirements  that  would  act  effectively  on  the 
industry and equally on themselves.  
Option  D  assumes  the  establishment  of  a  new  regulatory  body  at  European  level.  An  EU-level  supervisory  body  is  a  logical  consideration  for 
establishing absolute consistency in the oversight and supervision of a modified regime across the EU. However, the concept could not, however, 
replace all the activities of the national regulators because of the differences in legal regimes. 
There are a number of models that could be adopted for an EU-level regulatory body. The European Nuclear Safety Regulator's Group is an example 
but may not suit the type of risk inherent to the offshore oil sector, and has not been designed for the large number of companies in the industry. 
Another  example  is  the  European  Maritime  Safety  Agency  (EMSA),  which  inspects  classification  societies,  safeguards  the  standards  of  on-board 
equipment and provides pollution response vessels to help Europe to respond better to major oil spills, and more. EMSA has no acquired expertise in 
drilling and production operations. However, EMSA is fully involved in oil spill response arrangements and will therefore have a role to play in any 
development of EU safety standards for offshore oil and gas. 

144 These include: guidance on good practices for major hazards control; revised technical standards in, for example, well control and process safety, well capping and emergency 

response; and establishment of cooperative associations for sharing assets for tackling major pollution events. 

EN 

133 

EN 

 
  
                                                 
Annex XI – table 7 

Option 

Option A: 
Promoting voluntary 
arrangements 
amongst regulators 

Option B: 
Mandating 
regulatory dialogue 
led by the 
Commission 

Option C: Creating 
an EU wide 
regulatory agency 

Measure 7: Establishing a platform for regulatory dialogue and information sharing amongst jurisdictions 

Description 

Option A aims for the voluntary establishment of a platform (or platforms) for exchange of information between regulators in Member States with 
offshore  oil  and  gas  operations.  This  exchange  could  include  discussions  on  topics  like  best  practices  (both  in  industry  as  well  as  for  regulators), 
lessons  learned  from  incident  and  accident investigations,  industry performance  statistics,  transboundary  issues, development  in  regulation  etc. As 
such, these voluntary arrangements could draw on the experience gained by NSOAF (and IRF) and could even be extended to include other offshore 
areas than the North Sea.  

Option B would build on Option A, by mandating the (voluntary) arrangements for exchange between regulators in EU legislation. A similar body 
already exists for the Senior Labour Inspectors Committee (SLIC), which is well established and authorised by EU acquis.145 The SLIC-model could 
serve as a template for establishing the corresponding body of regulators for the oil and gas industry.   

Option C is in fact identical to option D in the previous measure (4.1.6), to establish an EU-wide Competent Authority. Such a Competent Authority 
would also serve as a platform for information exchange between Member States.  

145 Commission Decision 95/319/EC 

EN 

134 

EN 

 
  
 
                                                 
Annex XI – table 8 

Option 

Option A: Encouraging 
information sharing and 
voluntary publication of 
relevant information 

Option B: An obligation 
on Member States to 
publish information in a 
common format 

Option C: A database 
managed at EU level 
with centralized 
publication of 
information 

Measure 8.: Comprehensive information sharing and transparency 

Description 

Option  A  relies  on  soft  measures  to  promote  information  sharing  and  public  disclosure.  It  encourages  voluntary  publication  of  relevant 
information.  Currently,  EU  members  collect  data  and  some  (e.g.  UK,  Norway  and  other  members  of  NSOAF)  share  data  and  perform 
approximations to produce comparative reports on safety performance. 

Option B aims to reconcile differences in EU national classifications by introducing an EU reporting template and a standardised EU reporting 
system  for  incidents  which  would  capture  most  of  the  currently  collected  data.  Securing  agreement  for  the  scope  of  such  a  database  amongst 
Member States and the involvement of MS experts (via comitology) in the preparation of the data template provides an added opportunity to adopt 
some performance measures – or metrics – that could provide more information than is currently collected on the global databases of IADC or 
OGP.  To  date,  such  information  has  only  been  available  when  researchers  have  been  given  access  to  data  held  by  national  regulators  and  oil 
companies.  In addition to current standard reporting criteria (incidents and accidents), consideration could be given to capturing other important 
data.  For  example:  well  instability;  hydrocarbon  leaks;  total  platform  shutdowns;  environmental  infringements;  and  personnel  musters.  It  is 
envisaged that the system could go further than some Member State systems but be at the level of reporting of some of the more rigorous regimes. 
It would be the responsibility of Member States to collect the data under this option and to prepare national reports. Having established the system 
it would be straightforward for groups of countries to publish regional reports of performance and to collate this into an EU report in due course 
once the system is proven. 

There would be further scope for countries to attach to their websites, or otherwise publish, more detailed reports on investigations of the more 
serious and instructive incidents and to provide links to further information as the system develops. Interaction in this  manner would facilitate 
Member States collaboration, following the example of NSOAF.  

Option C envisages a database managed at EU level (by the European Commission, or an agency of the European Commission) with centralised 
publication  of  information;  this  option  would  bring  the  highest  level  of  reliability  and  consistency  attainable.  This  option  would  shift  the 
responsibility  for  management  of  data  –  its  quality,  and  consistency  -  from  the  Member  States  to  the  Commission.  There  would  be  added 
reliability in data quality and consistency compared to the sum of national approaches to data verification. 

EN 

135 

EN 

 
  
Annex XI – table 9 

Option 

Option A: Industry 
to demonstrate the 
existence of suitable 
and sufficient 
emergency response 
plans 
Option B: Securing 
Member States 
agreement to 
enhance cross border 
preparedness for 
responding to 
offshore major 
incidents 

Option C: EU to 
mandate the 
minimum 
requirements for 
offshore emergency 
response plans 
amongst Member 
States and to 
coordinate periodic 
multi-agency 
emergency exercises 
to test the plans  

Measure 9: Preparedness for effective emergency response to major offshore accidents 

Description 

Option A takes as its point of departure the fact that industry activity provides both the benefit and the risk in exploiting the offshore reservoirs. In 
Option 1, operators would act as the sole providers of plans and resources which would have to be demonstrated to Member State authorities.  

Option B notes that onshore, under the Seveso Directive, operators must prepare internal (on-site) emergency response plans within the formal safety 
report that is assessed by the regulator. These on-site plans generally form  the basis of external (off-site) emergency response plans used by local 
planning  authorities  to  coordinate  response  to  a  major  and  escalating  incident.  This  may  include  drawing  on  the  national  civil  contingencies 
provision.  

Under this option, EU Member States take the lead in formulating national (external) emergency response plans in collaboration with industry, whilst 
retaining the emergency command and control function. Such plans would include the rescue of large populations, potentially exceeding 200 people, 
and the prevention of marine pollution. In doing so, Member States should formulate the external emergency plans in cooperation with neighbouring 
states,  to  align  their  respective  plans,  assets  and procedures  to  the  best  possible  extend.  This  would  ensure  efficient  corporation between  Member 
States in the event of a major accident. In addition, the external emergency plan should be thoroughly tested through exercises, include cross-border 
ones. 

Option  C  goes  a  step  beyond  Option  B  by  mandating  a  framework  for  emergency  response  preparedness  that  is  compatible  across  EU  Member 
States,  and  particularly  in  a  regional  context.  An  example  would  be  the  Northwest  European  deep  water  environments,  which  pose  significantly 
different emergency scenarios to the Mediterranean or Black Sea areas. Such a framework would set out the necessary components of an emergency 
response plan but emphasising the transboundary cooperation and the necessary level of obligations to ensure that Member States do indeed lend all 
assistance  where  this  is  necessary  to  avert  catastrophe.  Seveso  offers  a  useful  model  for  emergency  planning  guidelines.  EU  surveys  of  the 
functioning of the Seveso requirement for off- and on-site emergency response plans have shown significant lapses amongst Member States, despite 
the provisions being mandatory. This suggests that an EU legal requirement for Member States to review and periodically test offshore emergency 
response plans is the minimum necessary to secure consistency. To be fully effective, testing of plans should be transboundary; such exercises enable 
several exercises to be condensed into one multinational activity, adding value to all the Member States concerned. 

EN 

136 

EN 

 
  
Annex XI – table 10 

Option 

Option A: Industry to 
ensure availability of 
their emergency 
response equipment 
and materials, sharing 
as necessary and 
possible 
Option B: Member 
States to enter 
voluntary agreements 
to make available 
national assets for 
emergency response, 
including expertise 

Option C: In addition 
to Option 2, EU to 
mandate 
transboundary sharing 
of emergency 
response assets and 
expertise, and from 
other EU areas where 
appropriate 

EN 

Measure 10.: Ensuring cross-border availability and compatibility of intervention assets 

Description 

Option  A  involves  endorsing  the  industry  and  Member  States  to  develop  the  expertise  and  hardware,  and  site  it  conveniently  in  relation  to  the 
assessed risks.  

Option B provides for an understanding between Member States to share all available assets, both national and privately owned by industry, with 
other Member States at the time and point of need. As stated, offshore emergency response requires all that the industry can furnish, plus that which 
national civil contingency can provide.  

The current regional arrangements for risk based response planning across the EU may need improving to ensure oil and gas activity is properly 
considered. In the Baltic region, the BRISK project has demonstrated an effective model for such risk based planning. Other regions such as the 
Mediterranean  and  the  North  Sea  are  also  developing  a  similar  approach.  At  present,  there  are  EU-wide  coordination  schemes  and  EU-level 
instruments like the Civil Protection Mechanism which play an important role in the coordination of emergency response and provide information 
on the availability of public resources for emergency response. A similar overview is missing for industrial resources at the transboundary level.  

It  is  also  essential  to  coordinate  the  essential  environmental  sensitivity  data  relating  to  the  state  of  the  water  column  and  the  seabed  so  that  the 
correct response can be planned if an emergency arises. At present, these data are not consistently collected and collated throughout the EU.  

On the matter  of compatibility of the response equipment and services, only the immediate response tools need to be available at the site of the 
accident, or in close proximity. Other necessary equipment may be available at a distance, even if it is in a different continent. The identified need is 
for the rapid transportation of equipment that can be connected to locally available equipment and which may be handled using available lifting and 
transport systems. 

Option C assumes that major incidents need to be addressed by a coordinated response led by the EU. In its communication of October 2010, the 
Commission outlined its vision of how to transform the EU's current ad hoc response into one that is pre-planned, predictable and immediate. This 
relates, in particular, to oil spills that may overwhelm a single jurisdiction and may, in addition, seriously affect adjacent Member States' waters. 
Option  C proposes  that  the  EU  takes  the  lead  in  coordinating  major  incident responses,  deploying  mainly  national assets  supplemented by  other 
resources as necessary, either at a national or EU (e.g. EMSA) level. 

137 

EN 

 
  
 
Annex XI – table 1.11 

Measure 11.: Clarifying the scope of environmental liability  

Description 

Option  A  seeks  to  build  on  existing  legislation  without  making  radical  changes.  It  aims  to  simultaneously  circumvent  some  common  problems 
relating to a lack of clarity of what is covered by law, but without making new law. It is envisaged this would be particularly beneficial in applying 
the General Waste Directive to offshore oil spills, where currently some EU case law exists but definitive clarification has not been made.  

Option 

Option A: Issuing 
guidance on the 
application of the 
Waste Directive to 
oil and gas accidents 

Option B: Extending 
the scope of ELD to 
water damage in all 
marine waters 

Option  B  involved  change  to  the  scope  of  the  Environmental  Liability  Directive  which  for  water  damage  is  currently  limited  by  reference  to  the 
definition  of  EU  waters  under  the  Water  Framework  Directive.  It  is  acknowledged  amongst  key  stakeholders,  and  supported  by  resolution  of  the 
European  Parliament,  that  this  is  not  helpful  or  logical.  Accordingly,  this  option  seeks  the  extension  of  the  scope  of  the  Environmental  Liability 
Directive to address geographical gaps, and to cover all marine waters under Member States' jurisdiction. 

Option C: EU to 
develop sector-
specific liability 
legislation for 
environmental 
damage 

Option D: 
International/global 
solution (e.g. IMO 
liability convention) 

Under  Option  C,  the  EU  would  develop  sector-specific  liability  legislation  to  bring  complete  clarity  to  a  relatively  self-contained  corporate 
community.  This  solution  could  additionally  be  expanded  to  cover  traditional  damage  (such  as  damage  to  economic  activities,  such  as  fishing  or 
tourism, and the resources needed to support them) but related specifically to offshore accidents.  

Option D represents the international solution, in which an international body such as IMO would develop a convention on off-shore accidents and 
pollution and to address remedy of environmental damages. This would apply equally within the EU and to shared jurisdictions where offshore oil 
and gas activity can be intensive.  

EN 

138 

EN 

 
  
 
 
 
 
ANNEX XII 

 OVERVIEW OF INDUSTRY INITIATIVES: GIRG AND OSPRAG 

This Annex provides information on two important initiatives, which have been developed by 
the oil and gas industry shortly after the accident on the Macondo well in the Gulf of Mexico 
in  April  2010.  Although  both  initiatives  diverged  to  a  certain  degree  during  their 
development,  both  had  the  common  goal  to  improve  well  incident  prevention  and 
intervention, and to improve response capability in the event a well incident does occur. The 
initiatives are: 

(1)  Establishment  of  the  Global  Industry  Response  Group  (GIRG)  by 

OGP146; 

(2) 

Establishment of the Oil Spill Prevention and Response Advisory Group 

(OSPRAG) in the UK. 

Both initiatives will be discussed in more detail in the following paragraphs.  

1 

Global Industry Response Group (OGP) 

The International Association of Oil & Gas Producers (OGP) encompasses most of the 
world’s oil & gas companies, associations and upstream service companies. An essential part 
of OGP’s mission is to represent the interests of the upstream industry before international 
regulators and legislators. OGP also helps members achieve continuous improvements in 
safety, health and environmental performance and in the engineering and operation of 
upstream ventures.  

In  July  2010,  OGP  established  the  Global  Industry  Response  Group  (GIRG).  The  initial 
purpose of this group was to identify, learn and implement lessons learned from the Macondo, 
Montara en similar well incidents. Furthermore, the work of the group was divided into three 
core areas, with a dedicated team assigned to each of these areas to identify possible actions 
for OGP and the industry. These areas are: 

(a)  Prevention: to reduce the likelihood of well incidents, by development of 
better  capabilities  and  practice  in  well  engineering  design  and  well 
operations management.  

(b) 

Intervention:  to  improve  well  capping  response  readiness  and  to  investigate 
containment solutions.  

(c)  Response: to deliver effective and fit-for-purpose oil spill response preparedness and 

capability.  

During the course of 2010 and 2011, work in each of these areas has progressed with results, 
conclusions and recommendations for each area communicated in May 2011147. In addition, 
OGP  briefed  the  Commission  on  their  progress  regarding  the  initiatives  in  May,  June  and 
August 2011. The initiatives are summarized in the following paragraphs.  

1.1  Well engineering design / well operations management (prevention) 

146 International Association of Oil and Gas Producers, http://www.ogp.org.uk/ 
147 Global Industry Response Group recommendations – OGP Reports 463, 464 and 465, May 2011 

EN 

139 

   EN 

 
                                                 
To  reduce  the  likelihood  of  well  control  incidents  and  share  lessons  learned,  the  well 
engineering  team  working  under  the  GIRG  remit  has  recommended  creating  a  new  and 
permanent Wells Expert Committee (WEC). Under the governance of OGP, it is intended that 
the WEC take forward the following actions: 

•  Introduction of a three-tier review process on well design and operations management, 
encouraging  companies  (1)  to  execute  meaningful  self-audits,  (2)  to  incorporate 
independent technical oversight and (3) to comply with local regulatory framework. 

•  Encourage  companies  to  share  data  and  lessons  learned  from  all  well  incidents  and 

establish a database for this information. 

•  Promotion  of  a  human  competence  management  system  to  ensure  staff  and 

management teams have the required skills (e.g. on well control). 

•  Identify  new  and  improved  technical  and  operational  practices  for  the  overall 

governance of well construction. 

•  Recommend  to  industry  that  a  'two  (independent  and  physical)  barrier'  policy  is  in 

place during the life of the well. 

•  Recognition  of  existing  internationally  and  nationally  agreed  standards  as  a  baseline 

for industry improvements. 

OGP  has  reported  that  the  Well  Expert  Committee  (WEC)  is  now  operational,  with  a 
Chairman nominated. The committee members have met, addressing the key issues on which 
the WEC will be working during the coming months. Work in the WEC has been allocated 
into five work streams, concerning several issues e.g. development of a well control incident 
database,  BOP's,  training  and  competency,  international  standards  and  dissemination  across 
industry of the recommendations in the GIRG report.  

1.2 

Capping and containment (intervention) 

The primary tasks of the group working on the intervention issue, was to determine whether a 
single, worldwide, standardised capping and/or containment system for deepwater wells could 
and should be designed and deployed. To take this initiative forward, the group recommended 
the  establishment  of  a  consortium,  to  further  investigate  and  deliver  improved  capping 
response.  At  the  time  of  reporting,  eight  major  companies  in  the  oil  and  gas  industry  have 
signed the Interim Joint Development Agreement (IJDA) to create the consortium. The aim of 
the response consortium is to address the following issues: 

•  Manage the selection and design of caps and associated equipment. 

•  Manage the selection and design of subsea dispersant hardware. 

•  Study the need for and feasibility of global containment solutions. 

• 

Investigate  and  develop  procedures  for  specific  operational  issues  related  to  the 
capping and containment of hydrocarbons released during a blowout. 

The  activities  of  the  consortium  will  be  coordinated  with  other,  similar  initiatives  that  are 
currently  underway  in  this  field,  e.g.  by  the  Oil  Spill  Prevention  and  Response  Advisory 
Group (OSPRAG, see further) in the UK. OGP has reported that the efforts of the consortium 
are  well  underway.  The  consortium  expects  to  have  identified  possible  capping  and 
containment  designs  and  the  need  for  and  feasibility  of  containment  solutions  by  the  third 
quarter of 2011. 

EN 

140 

   EN 

 
1.3 

Oil spill preparedness and response 

Regarding  effective  and  fit-for-purpose  oil  spill  response  preparedness  and  capability,  the 
group  working  in  this  issue  recommended  that  OGP  and  IPIECA148  form  a  joint  industry 
project (JIP, funded by industry). The aim of this project is to improve coordination between 
key international stakeholders, e.g. response organisations, governments and companies. The 
following list provides a summary of the issues on which the project will conduct work: 

•  Establish principles on dispersants use with key stakeholders. 

•  Promote  research  that  advances  understanding  and  response  methodologies  and  risk 

assessment models. 

•  Enhance or develop recommended practices on e.g. in-situ burning, response exercise, 

surveillance methods and technologies for tracking oil spills. 

Funds and resources have been allocated for the project, which is estimated to cover a three 
year period. A total of 19 work streams have been identified, which will be allocated to five 
workgroups. 

2 

Oil Spill Prevention and Response Advisory Group (UK) 

The  Oil  Spill  Prevention  and  Response  Advisory  Group  was  established  in  the  UK  in  May 
2010 to identify and  address  emerging cross industry issues arising  from the Macondo well 
incident in the Gulf of Mexico. The group is formed of senior representatives from operator 
and contractor companies as well as participants from government agencies (e.g. regulators) 
and oil spill response companies. Technical, administrative and secretariat support is provided 
by Oil & Gas UK, the trade organisation of the UK oil & gas industry. OSPRAG's work has 
been structured according to four priorities: 

(1)  Preventing the possibility of an escape of hydrocarbons from a well. 

(2) 

(3) 

(4) 

Minimising  the  length  of  time  and  volume  of  any  escape  of  well 

hydrocarbons. 

Ensuring effective spill response strategies. 

Ensuring  sufficient  financial  arrangements  are  in  place  to  cover  the 

response to any spill. 

The  work  in  OSPRAG  has  been  carried  out  through  four  subsidiary  review  groups:  the 
Technical  Review  Group,  the  Oil  Spill  and  Emergency  Response  Review  Group,  the 
Indemnity and Insurance Review Group and the European and International Issues Group. 
In the following paragraphs, the results of each of the review groups will be summarised149.  

2.1 

Technical Review Group 

This group consists of representatives from the industry, contractors, regulators and offshore 
unions  and  its  role  is  to  review  key  processes  for  well  control  and  containment  provision. 
Sub-group are formed to review specific areas, including: 

148 International Petroleum Industry Environmental Conservation Association: the global oil and gas industry 

association for environmental and social issues – www.ipieca.org 

149 OSPRAG Second Interim Report – April 2011. 

EN 

141 

   EN 

 
                                                 
•  Well capping and containment options. 

•  Well examination, verification and well control. 

•  Competency, behaviours and human factors. 
•  BOP150 inventory en recommendations for improvement. 

•  Flowing well status. 

The  work  of  the  Technical  Review  Group  led  to  two  key  industry  initiatives  which  are 
corresponding to and carrying forward the group's recommendations. These are: 

(1)  Development of a new Well Life Cycle Practices Forum (WLCPF). 

(2) 

Design and manufacture of the OSPRAG well cap. 

2.1.1  The Well Life Cycle Practices Forum (WLCPF) 

The WLCPF has been established in December 2010, under the stewardship and governance 
of Oil & Gas UK. The forum meets every two months and will serve as the permanent forum 
for  the  UK  upstream  oil  and  gas  industry  to  address  well  life-cycle  related  issues.  The 
WLCPF  consist  of  members  and  observers  from  oil  and  gas  operators  and  the  forum 
interfaces with drilling and well services contractors and regulators in the UK. The purpose of 
the forum is to provide an active body through which its members can: 

• 

• 

Implement the recommendations from the Technical Review Group. 

Indentify and review well life cycle cross industry issues. 

•  Share best practices. 

•  Create and resource workgroup to work through well-related issues. 

• 

Interface with other industry stakeholders. 

•  Prepare a series of recommendations and guidelines for consideration. 

(3)  Workgroups  have  been  created  under  the  forum  dealing  with  specific 
topics,  like:  BOP  issues,  relief  well  planning,  well  life  cycle  integrity, 
competency  and  well  examination.  It  is  anticipated  that  work  of  the 
Technical  Review  Group  will  be  taken  forward  by  the  WLCPF,  when 
OSPRAG's  work  will  come  to  a  natural  conclusion  in  the  summer  of 
2011 and the group is disbanded. 

(4)  2.1.2 

The OSPRAG cap 

(5)  The primary solution identified by OSPRAG is a capping device in order 
to  seal  off  or  'cap'  the  flow  of  oil  and  prevent  is  from  entering  into  the 
marine  environment.  The  device  can  be  deployed  from  a  multi  service 
vessel  of  drilling  rig  and  can  be  attached  to  various  parts  of  the  subsea 
BOP stack. Manufacture of the OSPRAG cap is now in progress and is 
designed to become a key element of the UK industry's oil spill response 
contingency plans. Completion of the device is due in summer 2011.  

150 BOP: Blow-Out Preventer: safety device to close-in or seal off a (flowing) well. 

EN 

142 

   EN 

 
                                                 
2.2 

Oil Spill Emergency Response Review Group 

The  Oil  Spill  Emergency  Review  Group  was  established  to  deliver  an  assessment  of  the 
capability of the UK to respond to a significant and ongoing release of oil from exploration or 
production  operations  on  the  UK  Continental  Shelf.  To  this  effect,  a  systematic  review  was 
undertaken, consisting of the following elements: 

•  Assessment of the threat (e.g. geographical, quantities). 

•  Assessment of the UK response strategy and an assessment of the ability to deliver the 

response. 

•  An exercise of the response capability. 

•  Confirmation that the response capability is fit for purpose. 

•  Reflection  of  the  strategy  in  individual  operator  Oil  Pollution  Emergency  Plans 

(OPEP) and the National Contingency Plan. 

In order for the industry to be fully prepared in its response capability, ten work streams have 
been  initiated  by  OSPRAG  under  this  review  group.  Some  of  these  work  streams  are: 
development  of  a  counter  pollution  'toolkit',  subsea  dispersant  injection  and  dispersant 
stockpile, integrated shoreline response, OPEP work group and response exercises. 

Work  under  this  review  group  will  probably  not  be  completely  resolved  before  OSPRAG 
concludes, which is anticipated in the summer of 2011. OSPRAG has agreed to recommend 
that  an  Oil  Spill  Forum  be  established  under  Oil  &  Gas  UK  governance,  to  ensure  that  an 
effective,  robust  and  sustainable  spill  response  capability  is  maintained  for  upstream 
operations on the UK Continental Shelf. Draft Terms of Reference and potential membership 
for this forum are in preparation.  

2.3 

Indemnity and Insurance Review Group 

This  group  was  established  to  assess  the  potential  remediation  and  compensation  costs 
associated  with  a  large  oil  spill  in  the  UK  Continental  Shelf,  determine  how  these  are 
provided  for  and  if  these  provision  require  improving.  Work  in  the  group  began  with  an 
understanding of the provisions currently in place in the UK, such as OPOL151, the financial 
checks  carried  out  by  the  regulator  (DECC)  and  operators'  own  insurance  provisions.  This 
phase is now complete and work now focuses on five areas: 

•  Reviewing protection for third party costs above the OPOL limit. 

•  Oil Spill Modelling. 

•  Reviewing OPOL processes. 

•  Wider financial responsibility. 
•  OCES152 arrangement and exercise. 

2.4 

European and International Issues Review Group 

151 Offshore Pollution Liability Association Ltd. A voluntary, industry mutual agreement to settle claims as a 

result of an oil spill. Current limit for claims is set at $ 250 million per occurrence. 

152 Operators Co-operative Emergency Service, provides a framework around which an operator may acquire 
equipment from another operator in an emergency, even across international boundaries. 

EN 

143 

   EN 

 
                                                 
This group acts as a communications focal point to ensure other relevant bodies are informed 
about  the  work  of  OSPRAG,  and  visa  versa.  The  group  does  not  act  as  a  decision  making 
body  or  seek  to  work  technical  issues.  The  group  ensures  that  work  in  OSPRAG  is 
coordinated with activities taking place elsewhere in the world. As such, the group has links 
with  European  National  Oil  Industry  Associations  as  well  as  OGP,  IPIECA,  API  and  UK 
regulatory authorities (DECC, HSE and MCA).  

3 

GIRG and OSPRAG initiatives vs. the Commissions' proposals 

When the initiatives under the GIRG and OSPRAG remits are matured and implemented by 
the oil and gas companies, they should result in enhanced prevention of blow-outs and better 
provision  for  containment  and  emergency  response  in  the  event  a  blow-out  did  occur.  As 
such, the initiatives are welcomed by the Commission.  

When viewed in the traditional qualitative risk analysis method ('BowTie' method, see figure 
below),  the  initiatives  will  result  in  barriers  for  prevention  of  an  incident  (in  this  case  the 
uncontrolled release of hydrocarbons from a well) and barriers for limitation after an incident 
did occur: 

Hardware 
barrier 

Organisational
barrier 

Hardware
barrier 

Organisational 
barrier 

H 

A 

Z 

A 

R 

D 

S 

(I 

N 

T 

/ 

E 

X 

T) 

Loss of 
integrity 

Unsafe
act 

Undesirable

event 

Uncontrolled 
release of 
hydrocarbons 

Unsafe
act 

C 

O 

N 

S 

E 

Q 

U 

E 

N 

C 

E 

S 

Prevention 

Limitation & Recovery 

The  majority  of  the  initiatives  however  will  impact  on  the  right  hand  side  of  the  bow-tie 
model,  i.e.  to  limit  the  consequences  of  an  incident  and  to  aid  recovery  after  the  incident. 
These include the initiatives for e.g. well capping and containment of hydrocarbon releases, 
the use and deployment of dispersants etc.  

In all, the initiatives developed by OGP and in the UK are in line with the following measures 
discussed in chapters 3 en 4 of this Impact Assessment document: 

EN 

144 

   EN 

 
 
 
 
•  Establishing a goal setting (MHR) regime (measure under options 1 & 1+). 

•  Establishing a comprehensive risk management model of EU offshore (measure under 

option 2). 

•  Ensuring information sharing and transparency (measure under option 2). 

•  Ensuring  preparedness  for  responding  to  major  offshore  accident  (measure  under 

option 1+) 

•  Ensuring financial capacity of operators to cover liability (stand-alone case II) 

•  Establishing compensation regimes for traditional damage (stand-alone case II).  

It should however be noted, that the measures proposed under the OSPRAG initiative in the 
UK have a regional or even a national drive. The results and outcome of the proposals (e.g. 
capping and containment equipment) may not be (made) available outside the North Sea area 
or even UK waters. As such, the option packages proposed by the Commission should have 
the  effect  that  results  and  lessons  learned  from  the  UK  initiatives  will  be  disseminated 
throughout  the  EU,  which  could  also  benefit  regions  bordering  the  EU.  In  addition,  the 
measures proposed in this Impact Assessment document should serve to retain the momentum 
in  the  development  of  the  proposals  both  in  OGP  and  in  the  UK.  Of  particular  note  in  this 
respect is that the capping and containment equipment proposed is currently being designed 
and  constructed.  Field  test  and  exercises  will  be  required  to  demonstrate  suitability  and 
adequacy, for deployment and operation of the equipment.  

The  option  packages  proposed  by  the  Commission  in  this  Impact  Assessment  document 
should  have  the  effect  that  the  initiatives  underway  in  both  OGP  and  the  UK  are  further 
developed and executed, in order to ensure: 

•  The proposals and measures will be completed, with a reasonable timeframe. 

•  New equipment designed and constructed as a result of the proposals is field tested.  

•  Measures resulting from the proposals are implemented in the oil and gas companies. 

•  Regular exercises to be conducted with all stakeholders involved, to test effectiveness 

of equipment, plans and procedures. 

EN 

145 

   EN 

 
ANNEX XIII:  BENCHMARKING BETWEEN INDUSTRY SECTORS AND 

COUNTRIES 

1. 
In the context of this report, benchmarking relates to comparative safety performance 
of the oil and gas sector. Indicators of industry safety performance are commonly regarded as 
either leading or lagging.  

Lagging indicators 

2. 
Lagging  indicators  are  data  that  are  most  likely  to  be  compared;  they    are  normally 
related to accidents that have occurred, and in EU mostly characterised as fatal, major injury 
(e.g. amputation,  loss of an eye), lost  time injury  or  LTI  (absent  from  work  for  over  3  or  4 
days),  occupational  diseases  (legionella,  occupational  cancer)  or  dangerous  occurrence 
(explosion,  well  blowout).  Member  States  have  their  own  comprehensive  provisions  (in  the 
UK  the Reporting  of Injuries, Disease  and Dangerous Occurrences  Regulations153); and  DG 
Sanco also publishes injury statistics periodically for the EU154 .  

3. 
With  the  exception  of  hydrocarbon  releases,  data  of  this  kind  do  not  show  up  the 
incidents  that  are  related  to  major  hazard  near  misses,  compared  to  occupational  situations 
that are localised to the work-site and mainly affect individuals (slips and trips, and manual 
handling  injuries).  The  International  Association  of  Oil  and  Gas  Producers  (OGP:  the 
independent  oil  companies  trade  association)  publishes  in  its  annual  safety  report155  a 
catalogue of 'high potential incidents', some of which are clearly major hazards related (like 
well barrier failures), some are less clearly so, but otherwise potentially serious (like falls to 
the sea, and electrical burns) 

Nevertheless there is a value in the relationship of injury rates between countries and 
4. 
sectors  as  a  crude  indicator  of  control  of  workplace  safety  because  there  is  a  linear  if 
unquantifiable relationship between these data and reliability of control systems (i.e. it would 
not be expected that a worst-in-class occupational safety performance would be accompanied 
by  a  best-in-class  major  hazard  control  performance).  However,  it  is  definitely  not  the  case 
that  an  upward  trend  in  occupational  safety  performance  indicates  a  similar  trend  in  major 
hazard precursors. We return to this below under 'leading indicators'.    

All  Member  states  have  their  own  classification  systems  for  lagging  indicators  of 
4. 
injury  and  occupational  types  which  make  it  infamously  difficult  to  compare  injury  rates 
between  countries.  Also,  most  systems  do  not  facilitate  comparing  offshore  oil  and  gas 
industry  performance  with  onshore  industries  due  to  different  ways  of  counting  data.  The 
latest EU report on injuries advises that statistics are not completely comparable156. Visiting 
country  websites  for  national  comparative  injury  data  is  a  challenging  –  often  fruitless  – 
exercise. 

153 UK:-  http://www.hse.gov.uk/pubns/priced/l73.pdf   
154 DG SANCO:-  https://webgate.ec.europa.eu/idb/documents/2009-IDB-Report_screen.pdf    
155 OGP 2010 report Appendix D. http://www.ogp.org.uk/pubs/455.pdf  There are 11 reports from Europe in the 

latest report: 1 each from Denmark and NL, and 9 from Greenland.  

156 Sanco report says "Please note that despite the harmonisation efforts undertaken by the respective data centres and data 
providers in the member states, the injury statistics may not always be completely comparable and the differentiation 
in sections of injury surveillance is not always clear-cut. There are many reasons for this ranging from differences in 
the organisation of the national health care systems to cultural differences in the reporting of injury causes". 

EN 

146 

   EN 

 
                                                 
5. 
Cross EU benchmarking for the oil sector between MS or between sectors cannot be 
taken  beyond  saying  that  the  offshore  sector  compares  favourably  with  construction  and 
agriculture,  is  on  a  par  with  manufacturing  and  chemicals  manufacturing,  and  is  less 
favourable than refining and nuclear power generation.  

6. 
However  there  is  apparent  significant  variation  between  different  industry  sectors  in 
different EU countries, but the extent to which this is caused by the way data is collected is a 
matter  for  conjecture.  For  example,  NL  reports  4,100  lost  time  injuries/100,000  workers  in 
construction compared to UK's 792/100k. However NL collects lost time reports for >24hours 
off-work,  and  the  UK  for  >72  hours.  The  NL  chemicals  sector  is  reported  to  have  493  lost 
time injuries/100k workers, compared to the UK's 543/100k – which is comparable.  

Some  countries  –  Norway  and  the  Netherlands  -  are  taking  steps  to  normalise  their 
7. 
data  against  other  regulators.  For  example  Norway  has  indicated  it  may  harmonise  its 
classification  for  'serious  injury'  to  bring  it  into  line  with  the  IRF  classification  of  'major 
injury'.  Regulator  groups  –  IRF  and  NSOAF  –  are  putting  renewed  efforts  into  the  work  of 
comparing incident data. Whereas NSOAF do not publish comparative data, IRF157  compare 
Europe members (UK, NL, Nor) unfavourably with the USA for major injury and time-off-
work  incidents,  but  the  USA  has  a  higher  fatal  incident  rate.  Europe  compares  favourably 
with Australia for major and time-off-work rates. 

Country illustration 

Incident data 

8. 
The  UK's  HSE  is  the  independent  national  regulator  for  health  and  safety  in  all 
industries and hence has a rare capability amongst regulators to compare incident data across 
sectors158.  In  some  sectors,  special  analysis  is  made  of  performance  trends,  including  the 
upstream  oil  and  gas  sector159  which,  unlike  the  Netherlands,  is  largely  offshore.  The 
following  table  is  based  on  HSE  data  compiled  under  the  2003  standard  industry 
classifications (SIC codes) 

157 IRF data sheet 2009: 
http://www.irfoffshoresafety.com/country/performance/IRF_CountryPublicationData_2009.xls   
158 For entry to the data bank: http://www.hse.gov.uk/statistics/index.htm  
159 Latest (to 2010) is at: http://www.hse.gov.uk/offshore/statistics/hsr0910.pdf ; see also a quick synopsis (to 2011) at: 

http://www.hse.gov.uk/offshore/statistics/stat1011.htm  

EN 

147 

   EN 

 
                                                 
UK 3 year average 2007/08-2009/10 (/100,000 workers/yr) 

Industry 
2003) 

(SIC 

Fatal  injury  rate 
(a) 

Major  injury  rate 
(b) 

Over-3-day 
injury rate (c) 

Total  non-fatal 
injury  rate  (b)  + 
(c)  

Offshore 
(sector report) 

Construction 
(SIC 45) 

Agriculture 
(SIC 01-05) 

Manufacturing 
(SIC 15-37) 

Chemicals  (SIC 
24) 

Coke 
mfr 
Refining  petrol/ 
Nuclear 
(SIC 
23) 

0 

2.7 

8.0 

1.0 

0.4 

2 

150 

242 

213 

173 

143 

479 

550 

442 

677 

543 

629 

792* 

655* 

850 

686 

72 

307 

379 

Table 1 

Using  green  shading  to  define  the  offshore  data  and  other  sectors  of  roughly 
9. 
comparable  accident  performance,  red  to  illustrate  worse  and  yellow  the  better  performing 
sectors, we can make rough comparisons between sectors in occupational injury and ill health. 
It  must  be  remembered  however  that  these  data  do  not  compare  major  hazard  precursors 
except  in  the  very  loose  sense  we  allude  to  in  paragraph  3.  Finally,  construction  and 
agriculture  are  surveyed  annually  for  an  anonymised  full-reporting  check.  Results  suggest 
there may be as much as 65% under-reporting of non-fatal accidents in agriculture, and 50% 
in construction (both marked with * on the table). 

Enforcement data – compliance with duties 

It is relatively straightforward to obtain enforcement data from the UK databases held 
10. 
by HSE. These show a broadly consistent record of enforcement since 2001/02. Whereas the 
annual number of prosecutions shows a marked decline since 2004/05, the total enforcement 
data  for  breaches  of  offshore  duty  including  statutory  improvement  and  prohibition  notices 
has been relatively steady since the start of table 2 below: 

EN 

148 

   EN 

 
 
Year 

Improvement 

Prohibition 

Prosecutions 

Total 

Notices 

Notices 

2001/02 

2002/03 

2003/04 

2004/05 

2005/06 

2006/07 

2007/08 

2008/09 

2009/10 

20010/11 

33 

46 

42 

27 

37 

53 

28 

48 

30 

41 

11 

7 

6 

2 

9 

8 

5 

4 

2 

3 

Average/yr 

38.5 

5.7 

11 

6 

13 

5 

3 

3 

2 

4 

0 

3 

5 

55 

59 

61 

34 

49 

64 

35 

56 

32 

47 

49.2 

Table 2 – offshore enforcement in the UK 

Green: average enforcement benchmark; red years above average; yellow years below average. 
Improvement notices are statutory instructions to remedy serious identified defects within a stated period 
Prohibition  notices  are  statutory  instructions  to  cease  a  specified  activity  immediately  on  grounds  of  clear, 
imminent danger  
Prosecutions are for criminal breaches of duty under UK safety law 
All enforcement action may be appealed by the recipient. The 2009/10 and 2011 data exclude actions which are 
under legal appeal. 

11.  Whilst care is needed in ascribing meaning to the record of enforcement for a given 
sector, it can be assumed that enforcement is taken only after considerable reflection, and (in 
the  case  of  most  if  not  all  EU  countries  that  undertake  enforcement)  with  due  regard  to 
enforcement policy. In the UK enforcement action is subject to public accountability tests that 
the action by the regulator is, in response to the risk or consequences created by initial breach 
of duty, proportionate, targeted, transparent and consistent. Therefore enforcement data trends 
are  a  guide  to  the  general  levels  of  significant  breaches  of  compliance,  over  time,  by  duty 
holders in a given industrial sector in a given country.  

North Sea 

12. 
Norway and the UK make special reports to compare occupational and major hazards 
data  twice  yearly  (under  the  auspices  of  the  UK/Norway  Special  Working  Group.  This  is 
particularly useful because both countries share particular risk potential in the northern North 
Sea (north of 59o) – large, heavily manned, deepwater platforms (>100m sea depth) producing 
oil, gas and condensate, some at very high pressures and temperatures. Exploration drilling is 

EN 

149 

   EN 

 
 
 
 
mostly  carried  out  by  floating  type  rigs.  The  Netherlands  and  Denmark  both  have  large 
numbers  of  production  platforms,  but  in  contrast  to  Norway  and  the  northern  UK,  they  are 
sited in relatively shallow water (<20m sea depth), lightly manned, and producing mainly dry 
gas at normal  pressures. Drilling is by jack-up rigs that stand on the sea floor. Therefore the 
major hazard risk profiles are significantly lower in the southern North Sea region than farther 
north.   

13. 
The  UK  and  Norway  data  show  broadly  comparable  injury  performance  in  each 
country. In terms of results, the injury rates are more or less flat over the period 2007 – 2010. 
However there are some differences in significant and major hydrocarbon releases: they are 
higher in Norway, and apparently increasing; in the UK releases (significant and major) are 
broadly  flat  lining.  In  Norway  there  have  been  no  ignitions  of  hydrocarbon  releases  since 
1992; in the UK 1.5% of releases since 1992 are ignited. That both countries go to the length 
of striving to compare data is itself a leading and  positive indicator of the strength of those 
risk based regimes, and in the North Sea region in general. Table 3, below, is an abstract of 
the kind of data-sharing in which the UK and Norway invest to benchmark the performance of 
their offshore sectors and to assist developing strategic priorities.  

d
n
a
l
a
t
a
F

s
r
u
o
h
n
o

i
l
l
i

m

r
e
p
s
e
i
r
u
n

j

i

r
o
j
a
M

1,4

1,2

1

0,8

0,6

0,4

0,2

0

Jan.2004 - Jun.2005
Jul.2004 - Dec. 2005
Jan.2005 - Jun.2006
Jan.2006 - Jun.2007
Jul.2005 - Dec.2006
Jul.2006 - Dec.2007
Jul.2007 - Dec.2008
Jul.2008 - Dec.2009
Jul.2009 - Dec.2010
Jan.2007 - Jun.2008
Jan.2008 - Jun.2009
Jan.2009 - Jun 2010

18-month rolling average

PSA Injury
Rates

OSD Injury
Rates

EN 

150 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
)
s
r
u
o
h
n
o

i
l
l
i

m

r
e
p
(
e
t
a
R

y
r
u
n

j

I

6

5

4

3

2

1

0

)
s
r
u
o
h
n
o

i
l
l
i

m

r
e
p
(

e
t
a
R
y
r
u
n

j

I

30

25

20

15

10

5

0

Ja n-

Ju l-

Ja n-

Ju l-

Ja n -

J u l -

J an  -

Ju l -

J an  -

Ju l -

Ja n  -

Ju l -

J un
05

Dec
0 5

J un
06

Dec
0 6

J u n
0 7

De c
07

Ju n
08

De c
08

Ju n
0 9

De c
09

Ju n
1 0

D ec
10

Jan-

Jun 05

Jul -

Dec
05

Jan-

Jun  06

Jul-

Dec
06

Jan-

Jun 07

Jul-

Dec
07

Jan-

Jun  08

Jul -

Dec
08

Jan-

Jun  09

Jul-

Dec
09

Jan-

Jun 10

Jul-

Dec
10

      UK Over 3 day trends 2005/10   

Norway minor injury trends 2005/10 

45

40

35

30

25

20

15

10

5

0

Jan05-
Jun05

Jul05-
Dec05

Jan06-
Jun06

Jul06-
Dec06

Jan07-
Jun07

Jul07-
Dec07

Jan08-
Jun08

Jul08-
Dec08

Jan09-
Jun09

Jul09-
Dec09

Jan10-
Jun10

Jul10-
Dec10

Significant

Major

33

4

39

2

37

1

36

3

32

2

39

2

25

2

27

0

41

1

40

2

33

1

38

3

s
k
a
e

l

f
o

r
e
b
m
u
N

50

45

40

35

30

25

20

15

10

5

0

>10 kg/s

1-10 kg/s

0.1-1 kg/s

Significant Major

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

UK & Norway hydrocarbon releases – 'major & significant' 

Table 3 

14. 
All NSOAF members apply a goal setting regime based on risk assessment, following 
the essentials in the Drilling Hazardous Industries Directive 92/91/EC. The NSOAF plenary 
meetings  provide  for  discussions  and  comparisons  of  safety  performance  trends  and 
significant  incidents.  Harmonisation  of  data  does  require  some  interpretation,  and  only  the 
UK and Norway appear to process their data in a bilateral exercise.  

Mediterranean region 

15. 
The  2009  report  from  Italy's  Ministry  of  Economic  Development  (D.G.  for  Mining 
and  Energy  Resources)160  shows  that  lagging  indicators  for  occupational  health  and  safety 
performance  is decreasing at a  faster rate than  the  decline  in  production.  Whilst  this  can  be 
attributable  partly  to  a  low  level  of  drilling  activity  overall,  it  is  characteristic  of  the 
improvement  globally  in  occupational  safety  performance.  There  were  no  reported 
occurrences  of  (potential)  major  hazards  in  the  categories  'fires  and  explosions',  'ionising 
radiations'  and  'loss  of  containment'    The  greater  part  of  Italy's  oil  production  (88%)  is 

160  Ministero  dello  Sviluppo  Economico/  Dipartimento  per  l'Energia  /  Direzione  Generale  per  le  Risorse 
Minerale ed Energetiche 2009: http://unmig.sviluppoeconomico.gov.it/unmig/stat/ra2009.pdf  

EN 

151 

   EN 

 
 
 
 
 
         
 
 
 
 
 
 
 
        
 
 
 
 
 
                                                 
onshore, whereas 75% of gas production is from offshore areas. No offshore exploration wells 
were drilled in 2009, but 20 production and 'other' wells (e.g. for storage of gas) were drilled 
offshore. 

Industry illustration 

16. 
Industry  associations  have  their  own  reporting  systems  for  non  governmental 
companies.  These  systems  are  obviously  unable  to  enforce  full  or  accurate  reporting  of 
injuries  by  making  non-reporting  a  statutory  offence.  The  Association  of  Oil  and  Gas 
Producers (OGP, comprising 42 major oil companies) produce the most respected statistics161 

OGP data 2009 

Europe 

Best world 
comparator 

Average 

injury 
time 
Lost 
frequency  (per  1m 
hours worked) 

1.31 – worst 

0.26  

0.45 

(Middle East) 

(Africa 0.42 -nearest) 

(Italy worst 

Germany best) 

Total 
recorded 
injury  rate  (per  1m 
hours worked) 

Fatal 
rate* 
hours worked)  

accident 
(per  100m 

Fatal 
accidents/fatal 
incident** 

3.05 – worst 

0.92  

1.75 

(Middle East) 

(Africa 1.25 -nearest) 

4.0 - worst 

2.1  

3.2 

(Asia/Australasia) 

(N & S America – 3.1 & 
3.3 resp. – nearest)  

3.5 - worst 

1.0  

1.9 

(Asia/Australasia) 

(N  America  2.0  – 
nearest) 

Table 4 

* FAR is 5 year rolling average to even out spikes 
** Average of number of persons killed in a single incident 
That Europe should have the worst of all injury rates is not explained. Some of the major companies themselves 
report that Europe is not their best performing region. Another interpretation is that Europe has above average 
reporting rates, although this will not apply to fatal accidents. The North Sea region is prone to spikes of data 
arising from helicopter crashes because helicopters are the only mode of personnel transport – there were 21 fatal 
accidents reported in Europe in 2009, 16 as a result of a single helicopter incident. As a result, in 2009 Europe 
had a FAR of 6.58/100m hours worked – world's worst. Figures for 2010 for Europe were 0.97 – world's best. 
Last  year's  highest  fatal  accident  rate  was  North  America  (Deepwater  Horizon).    When  comparing  OGP  data 
with national data it should be noted that fatalities arising from helicopters in transit in Europe are counted as 
aviation incidents and not counted in the national authorities offshore sector databases  

161 http://www.ogp.org.uk/pubs/455.pdf  

EN 

152 

   EN 

 
 
 
 
                                                 
 
17. 
Comparing  national  (EU)  data  with  OGP  data  we  observe  a  common  deficit,  where 
OGP  rates  tend  to  be  significantly  lower  than  data  collected  under  EU  national  statutory 
reporting schemes. For example both Netherlands, Norway (removing minor injury rates) and 
the UK report a lost time injury frequency of c. 4 / 1m hours worked for 2009, whereas the 
OGP  reported  rate  for  Europe  (where  the  most  significant  proportion  of  the  working 
population is in NL, No, UK) is 1.31.   

18. 
Companies collect their  own data, but generally do not  publish specific  information, 
tending instead to publish relative analysis (trends over time, normalised against industry. In 
general,  companies  show  a  steady  improvement  in  occupational  safety  and  health  incident 
performance,  reflecting  the  trends  in  the  OGP  data.  Not  all  companies  record  accidents 
occurring  to  contractors  that  aren't  in  their  direct  employment.  The  accident  rate  amongst 
contractors is around twice the rate to oil company employees. 

Environmental incident reporting 

19.  With the apparent exception of the Dutch regulator (State Supervision of Mines, SSM) 
reports  of  offshore  environmental  management  data  appears  to  be  prepared  by  industry  – 
either by companies, local trade associations, or OGP162 . Such reports may be coordinated by 
environmental  regulators  and  accessible  via  the  relevant  Government  agency  website  (for 
example,  the  Department  of  energy  and  Climate  change,  UK163).  Most  EU  environment 
regulators provide access to policy information and departmental guidance for environmental 
impact  assessments  and  environmental  supervision164.    However,  details  of  sector  spill 
performance  and  other  failures  of  primary  or  secondary  containment  offshore  related  to 
potential accidents to the environment are somewhat more elusive than safety reports.  

Leading indicators 

20. 
Leading indicators focus on the process system not on incidents and injuries that have 
occurred. In major hazards sectors they comprise functions such as deep root cause analysis, 
application  of  risk  assessment,  levels  of  training  and  skills  acquisition,  and  measurement  of 
critical  functions  relating  to  potential  failure  of  safety  systems  (such  as  barrier  failures,  and 
overpressure in closed systems). Their greatest value is where they are installation specific – 
i.e. they are selected for relevance to the prevailing circumstances – so they are less easy or 
useful to compare between different companies/countries/regions.  

The value of well chosen leading indicators is in signalling an early warning of loss of 
21. 
integrity  in  the  process  control  system,  enabling  remedy  prior  to  failure  occurring.  The 
collection  of  site  specific  leading  indicators  is  a  positive  indicator  of  a  'high  reliability 
organisation'  -  a  company  with  a  strong  safety  culture,  whose  organisational  arrangements 
and systems give a very high likelihood of outstanding safety and operational efficiency over 

portal 

for  OSPAR 

162 OGP 2009 environmental report: http://www.ogp.org.uk/pubs/442.pdf  
163  DECC 

at: 
https://www.og.decc.gov.uk/environment/ospar_eems_recomm_opers.htm    ;  environmental  emissions 
management system, operated by O&G UK is at: https://www.og.decc.gov.uk/EEMS/index.htm   
164  Danish  Energy  Agency  annual  report  2010  pp  35-42:  http://www.ens.dk/Documents/Netboghandel%20-
%20publikationer/2011/Denmarks_oil_and_gas_production_2010.pdf  ;  see  also  DECC  policy  and 
guidance at: https://www.og.decc.gov.uk/  

environmental  management 

statements 

agreed 

is 

EN 

153 

   EN 

 
 
                                                 
the long term.  Two European countries – Norway and UK - are recognised as leaders in the 
development and application of leading performance indicators165. In addition, a current pilot 
NSOAF  project  is  underway  (with  SSM  chairing)  to  identify  leading  and  lagging  key 
indicators of safety performance (KPI's) in the oil and gas sector. 

22. 
Looking  back  30  years  before  Deepwater  Horizon,  there  have  been  a  number  of 
offshore  disasters  in  EU  waters  beginning  with  123  deaths  from  the  loss  of  Norway's 
Alexander Kielland in 1980. Whilst reliable data are hard to find, especially where disasters 
occurred in the pre-internet era, the North Sea has experienced a number of major hazard-type 
incidents  in  which  lives  were  lost.  Although  not  usually  escalating  to  total  platform  and 
population loss (such as in the loss of Piper Alpha and 167 lives in 1988), these lesser events 
were nonetheless potential major disasters. We list some notable blowouts and other offshore 
disasters  in  Appendix  1  to  this  annex.  Although  not  all  of  these  incidents  have  been 
investigated in great depth, their frequency and scale are rough indicators that both likelihood 
and consequences of major offshore incidents are significant.  

23. 
The development of goal setting regulation spreading out from Norway (1985) and the 
UK  (1991)  caused  a  significant  reduction  in  major  accidents  involving  loss  of  life  due  to 
process  safety  failures  and  blowouts  during  the  1990's.  However  during  the  2000's  major 
hazard  incidents  (well  control  incidents)  and  their  precursor  tell-tales  (hydrocarbon  leaks) 
have  plateaued  or  begun  to  increase,  whilst  injury  rates  (which  are  mainly  occupational  in 
nature)  have  mostly  fallen  continuously.  We  are  able  to  identify  the  favourable  trends  in 
occupational health and safety injury on a global scale from OGP data, but only in the North 
Sea and in some IRF countries (but not USA) can we look at major hazards indicators166 such 
as well incidents and hydrocarbon leaks and note the downward trend in this data category has 
stopped or is reversing.      

24. 
The best available benchmarks of leading indicators are from the UK and Norway who 
have both published sequences of reports on major hazard risk indicators 3,167 that indicate flat 
or upward trends in a number of major hazard risk indicators in the North Sea.  

25. 
The  latest  Norwegian  report  is  unequivocal  in  its  risk  trend  report,  concerning 
hydrocarbon  leaks:  "…a  comparison  of  leak  frequency  on  the  Norwegian  and  British  Continental 
Shelf shows there is potential for reduction on the Norwegian Continental Shelf". In other words, the 
targets  for  the  period  2008  –  2010  have  not  been  met  and  the  trend  is  not  one  of  continuous 
improvement. More directed, and not least continuous, effort is required to reverse the trend." 

26. 
Norway  has  just  published  a  hard-hitting  report  of  its  evaluation  of  the  state  of  the 
offshore industry in the light of the Deepwater Horizon incident168. In noting that the failures 
leading  to  that  incident  are  familiar  (and  therefore  implying  that  by  now  they  should  be 
effectively under control) Norway feels the Gulf of Mexico incident reflects unfavourably on 

165 Developing process safety key performance indicators http://www.hse.gov.uk/pubns/priced/hsg254.pdf ; 

Norway: Trends in risk level in the petroleum activity 2010:  
http://www.ptil.no/getfile.php/PDF/RNNP%202010/Summary_Report_2010_rev1a1.pdf  

166 The UK trade body, Oil & Gas UK, has recently initiated a voluntary arrangement amongst its members to 
report on 2 leading indicators of safety – non compliances with the independent verification scheme; 
and safety critical maintenance backlogs   

167 UK KP3 report update 2009: http://www.hse.gov.uk/offshore/kp3review.pdf   
Norway Safety – status & signals 2010 http://www.ptil.no/getfile.php/PDF/SAFETY%202010.pdf  
168 English summary of PSA's evaluation of DwH disaster: 

http://www.ptil.no/getfile.php/PDF/DwH_PSA_summary.pdf  

EN 

154 

   EN 

 
                                                 
the entire offshore community, including regulators and international processes. Norway also 
observes the Deepwater Horizon incident is symptomatic of inadequate safety culture going 
back  40  years.  In  looking  at  recent  major  incidents  that  include  the  Australia  Montara 
incident, Norway further concludes there is significant diversity in the ways in which a major 
incident  can  occur  (i.e.  the  incident  shows  the  risk  of  incidents  is  higher  than  previously 
thought), and because Norway has a diverse environment, it must exercise increased vigilance 
on  a  number  of  risk  fronts  in  its  own  offshore industry: areas such as technology, expertise 
and  management.  Norway  also  assesses  that  a  goal  setting  and  risk  based  approach  to 
regulation  is  encouraged  by  the  Deepwater  Horizon  incident  (with  which  the  US  National 
Commission agrees). Norway concludes that it has more to do and sets out an early blueprint. 

27. 
A 2009 report by the UK reported progress of industry on meeting the challenges in 
the  UK  Government's  2007  'KP3'  report  which  found  significant  shortcomings  in  safety 
control in the UK sector. This report was widely hailed as a global indicator of the state of the 
global offshore oil sector. It is clear from the recent update report that progress has been made 
since  2007  but  equally  clear  to  the  UK  regulator  that  more  effort  and  more  consistency  is 
necessary:  "Asset  integrity/process  safety  management:  The  review  found  evidence  of  considerably 
raised  awareness  of  the  need  for  effective  process  safety  management  and  major  hazard  risk 
controls.  It  is  clear,  however,  that  further  progress  in  the  management  of  asset  integrity  is  required. 
The  industry  must  also  focus  effort  on  greater  reduction  of  significant  hydrocarbon  releases  to  build 
upon progress already made." 

28. 
In these two countries, both of whom have experienced offshore disasters on a terrible 
scale, there are robust, risk based regimes, diligent data collection and analysis, and objective, 
goal based intervention programmes. It is because of these characteristics that both countries 
are  able  to  identify  where  efforts  need  to  be  made,  and  at  the  same  time  target  expert 
resources to the key problems. Other North Sea countries - Netherlands, Denmark - exercise 
similar  diligence  and  meet  regularly  to  ensure  cross-communication.  Whereas  it  is  not 
possible to quantitatively assess the risk everywhere of an offshore major incident, the view of 
those  countries  that  are  most  penetrating  in  their  oversight  and  assessment  is  that  offshore 
risks are significant and can be reduced further.  

29. 
The  Netherlands  regulator  (SSM)  currently chairs  NSOAF's  main  committee.  In  this 
role, SSM has been actively encouraging the development of key performance indicators of 
major hazard risk controls. We include at Appendix 3 a recent letter sent on NSOAF's behalf 
to  industry  following  a  workshop  on  KPI's.  The  Netherlands  is  also  active  within  its  own 
regulatory frontier. For  example SSM has requested  its sector operators exceed the national 
reporting arrangement by recording process safety related incidents – near misses. These are 
not  available  for  public  examination,  presumably  because  of  the  voluntary  and  therefore 
unenforceable  nature  of  the  data  collection.  The  SSM  is  also  active  in  IRF  and  NSOAF  in 
pursuing the means to more usefully compare incident data between different jurisdictions – 
and acknowledges the difficulties in so doing. 

30. 
It is clear that risk based regimes are doing most of the tightening of regulatory impact 
in response to their heightened sense of risk from their internal reviews. It is equally clear that 
other  regimes  are  less  able  in  this  regard  precisely  because  they  are  not  organised  as  risk 
based major hazards regimes. 

31. 
The  overall  and  inevitable  conclusion  is  that  without  a  standard  format  for  statutory 
reporting  of  offshore  safety  and  near  miss  data  –  at  least  amongst  regulators  in  the  same 
region - there is little likelihood of any confidence in benchmarking any safety data – except 
fatal accident rates - between countries. 

EN 

155 

   EN 

 
32. 
This  conclusion  is  reflected  in  the  ambition  of  members  of  NSOAF  and  IRF  (both 
groups have members with first hand experience of offshore disasters – see Appendix 1) for 
achieving  consistent  reporting  standards  within  their  membership,  and  for  developing  better 
leading  and  lagging  measures  for  process  safety.  The  report  of  the  National  Commission 
inquiring  into  the  Deepwater  Horizon  disaster  finds,  amongst  its  recommendations  for 
improving  the  efficacy  of  its  regulation  of  offshore,  the  need  for  "detailed  requirements  for 
incident and data concerning incidents and "near misses"" .  

In  Appendix  2  we  reproduce  an  initial  draft  scoping  list  of  potential  indicators  for 
33. 
standardised  reporting.  In  Appendix  3  we  show  some  of  the  work  currently  available  or  in 
development  amongst  EU  countries  on  key  performance  indicators.  The  keys  to  good  data 
transfer  between  jurisdictions  will  be  in  having  relevant  data  to  share,  and  in  having  this 
consistently defined and reliably reported by industry. 

EN 

156 

   EN 

 
Appendix 1 

Serious offshore incidents 

Countries in red are non European IRF members 

Countries in blue are European IRF members 

1. 

Major offshore blow-outs causing big pollution/destruction since 1977 

Norway Ekofisk (1977),  

Mexico Ixtoc (1979/80),  

UK Ocean Odyssey (1988)  

USA Timbalier Bay (1992)  

Egypt Temsah field (2004)  

USA Deepwater Horizon (2010) 

2. 

Offshore disasters in 30 years leading to Deepwater Horizon 

Mexico Ixtoc - blowout 1979; 0 fatalities, 71 evacuees; oil flowed for 9 months 

Norway Alexander Kielland – structural failure and capsize 1980; 123 killed 

Canada Ocean Ranger 1982 - loss of buoyancy; 84 killed 

China Glomar Java Sea – overwhelmed in storm1983; 81 killed 

UK Piper Alpha – process plant explosion and fires 1988; 167 killed 

Brazil Enchova – well blowout 1984; 42 killed (and rig totally destroyed in 1988) 

Thailand Sea Crest – lost in storm 1989; 84-91 killed (8 of the dead were from the EU) 

Brazil P.36 – explosions in process system 2001; 11 killed 

India Mumbai High - fractured export riser and fires 2005; 22 killed 

Mexico Usumacinta – gas leak then blowout of production wells 2007; 22 killed 

USA Deepwater Horizon – blowout and fires 2010; 11 killed 

EN 

157 

   EN 

 
 
Appendix 2 

Scope of leading/lagging indicators for standardised reporting 

1.Major incidents – occurrences & near misses 

Major incidents are: 

1. 

collapse, overturning or failure of load-bearing parts of lifts, lifting equipment and other (temporary) structures 

(like scaffolds) 

failure of any freight container in any of its load-bearing parts  

2.  explosion, collapse or bursting of any closed vessel or associated pipework  
3. 
4.  electrical short circuit or overload causing fire or explosion  
5.  any unintentional explosion of explosives  
6.  accidental release of a biological agent likely to cause severe human illness  
7. 

failure of industrial radiography or irradiation equipment to de-energise or return to its safe position after the 
intended exposure period  

8.  malfunction of breathing apparatus while in use or during testing immediately before use  
9. 

failure or endangering of diving equipment, the trapping of a diver, an explosion near a diver, or an uncontrolled 
ascent  

10.  collapse or partial collapse of a scaffold over 5 metres high, or erected near water where there could be a risk of 

drowning after a fall  

11.  incidents in relation to a well (e.g. uncontrolled release or diverted flow from a well) 
12.  incidents in relation to a pipeline or pipeline works  
13.  release of petroleum hydrocarbon on or from an offshore installation  
14.  fire or explosion at an offshore installation, other than one to which the previous paragraph applies or not reported 

under the previous paragraph 

15.  release or escape of a dangerous or toxic substance other than petroleum hydrocarbon on or from an offshore 

installation (e.g. H2S release) 

16.  collapse of an offshore installation or its plant  
17.  failure of equipment required to maintain a floating offshore installation on station 
18.  dropped objects on an offshore installation or on an attendant vessel or into water nearby 
19.  damage to or on an offshore installation caused by adverse weather conditions  
20.  (unauthorized) infringement of the safety zone around an offshore installation, including actual collision 
21.  vessel on collision course towards an offshore installation 
22.  subsidence or local collapse of the seabed near an offshore installation  
23.  loss of stability or buoyancy of a floating offshore installation  
24.  precautionary and emergency evacuation (not otherwise reportable) of an offshore installation, in the interests of 

safety  

25.  any person falling into water ('man overboard') 

2. Major incident – release to the marine environment (MATTE) 

These are (unauthorized) release or spills of liquids and/or solids into the sea, over 1000 litre or 1000 kg. Examples: 

1.  spills of liquid hydrocarbons (oil, diesel, OBM) 
2.  chemicals, other than intended and/or permitted discharge 
3.  waste 

Notes 

Injuries  –  fatal  /  major  /  over  3  day  –  reportable  under  domestic  arrangements  for  occupational  injury  reporting  – 
essential to harmonise N Sea criteria: Norway, UK/RIDDOR, and Netherlands (under Dir/92/91/EEC) 

Where  injuries  result  from  major  incident  occurring,  or  consequential  release  to  the  marine  environment,  a  major 
incident report must be submitted in addition to the occupational injury report 

EN 

158 

   EN 

 
 
Appendix 3 

Key Performance indicators 

1. NSOAF report to industry  

EN 

159 

   EN 

 
 
EN 

160 

   EN 

 
 
EN 

161 

   EN 

 
2. HSE leaflet on Key Performance Indicators  

EN 

162 

   EN