On 10 June 2013 the Council of the European Union adopted a new directive on the safety of offshore oil and gas operations (the "Directive"; 2013/30/EU). The Directive was published in the Official Journal of the European Union on 28 June 2013 and entered into force on the twentieth day following its publication. EU Member States with offshore waters must transpose the provisions of the Directive into national legislation within two years of that date, i.e. by 18 July 2015. However, existing installations will have until 19 July 2018 to comply with the new requirements.
Aim and subject
The Directive is a direct response to the 2010 Gulf of Mexico disaster. The Directive's aim is to reduce the occurrence of major accidents relating to offshore oil and gas operations, and to limit the consequences of such accidents. To achieve this, it sets out the principle that EU Member States must require operators to ensure that all suitable measures are taken to prevent major accidents. It establishes minimum conditions for safe offshore exploration and exploitation, and improves the response mechanisms in the event of such an accident. Consequently, the Directive is expected to increase the protection of the marine environment and coastal economies against pollution.
Scope of applicability
All of the Directive's provisions must be transposed in full by Member States with offshore waters and an existing offshore oil and gas industry. Landlocked Member States, and Member States with offshore waters but no existing oil and gas industry, will only have to transpose a limited number of provisions, in particular those relating to operations outside the EU (see below).
Licensing
At the time of an application for the granting or transfer of a licence to carry out offshore oil and gas operations, the applicant's technical and financial capabilities – in particular, its financial capability to cover liabilities potentially arising from its operations must be assessed. If the applicant cannot show that the required measures to cover potential liabilities have already been or will be taken, it will not be granted a licence. The licensing authority must, where appropriate, consult the competent authority (more on the latter shortly). Operators have to be appointed or approved by the relevant national licensing authority.
Submission of documents
The Directive specifies several documents that must be submitted to the national competent authority by an operator, or by an owner in the case of a non-production installation. For example, an operator must submit an emergency response plan, a report on major hazards, a safety and environmental management system applicable to the relevant installation and a corporate major accident prevention plan. All of these documents together should ensure that operations are conducted in a responsible manner. The details of the requirements regarding the policies and reports that must be submitted to the competent authority are set out in the Directive.
Liability for environmental damage
The Directive requires Member States to ensure that licensees are financially liable for the prevention and remediation of environmental damage, as defined under the Environmental Liability Directive (ELD), caused by offshore oil and gas activities carried out by, or on behalf of, the licensee or the operator. This means that a licensee that is not the operator is still liable under the ELD. The Directive contains an amendment to the ELD under which the ELD provisions dealing with water damage now also apply to the marine waters of Member States. Consequently, liability under the ELD has been extended.
The Directive does not contain any provisions on civil liability on the part of licensees for loss or damage suffered by third parties. However, in 2012 the European Commission ordered a study into issues relating to such liability, so this topic may very well be covered by EU legislation in the near future.
Competent authority
The Directive requires each Member State to appoint a competent authority to be responsible for regulatory functions such as assessing and accepting reports, overseeing compliance by operators with the requirements set out in the Directive, producing reports and making annual plans.
The Directive contains provisions aimed at ensuring the competent authority's independence and objectivity. Member States must at all times prevent conflicts of interest between, on the one hand, the competent authority's regulatory functions relating to offshore safety and the environment and, on the other hand, regulatory functions relating to the economic development of offshore natural resources (including licensing and revenue management). To prevent such conflicts of interest, Member States should ensure a clear separation between the two types of functions.
Transparency and information sharing
Under the Directive, Member States must ensure that operators (or owners) provide the relevant competent authority with the information described in Annex IX to the Directive. This includes information relating to any unintended release of oil or gas, any failure of a safety and environmental critical element, any fatal accident, any evacuation of personnel, helicopter accidents, etc. Member States are also required to make such information publicly available.
When reporting the requisite information, operators and owners must do so using a common data reporting format, to be drawn up by the Commission. Member States must submit annual reports to the Commission on offshore safety and environmental impact based on the information provided by operators.
Cooperation between Member States
The Directive requires Member States to play an active role in planning and information sharing with each other. Each Member State must ensure that its competent authority exchanges knowledge, information and experience with the competent authorities of other Member States.
In addition, the Directive sets out rules on transboundary emergency preparedness and response. Member States are required to prepare external emergency response plans covering all offshore oil and gas installations (or connected infrastructure) and potentially affected areas within their jurisdiction.
Operations outside the European Union
Each Member State must require companies registered in its territory and conducting, themselves or through subsidiaries, offshore oil and gas operations outside the EU as licensees or operators, to report any major accident in which they have been involved to the competent authority in that Member State.
Impact in the Netherlands
We expect that the implementation of the Directive will have an impact on the organisation of the supervision of offshore oil and gas operations in the Netherlands. At present the SodM (Staatstoezicht op de Mijnen) oversees compliance with the statutory regulations applicable to offshore oil and gas operations, focusing on the aspects of health, safety, the environment and effective extraction. As the SodM is a department of the Ministry of Economic Affairs, which is responsible for the economic development of offshore natural resources (including licensing and revenue management), this structure may be inconsistent with the Directive. This is because the latter provides that the competent authority is required to carry out its regulatory functions under the Directive independently of any of the regulatory functions under purely national law relating to the economic development of offshore natural resources, licensing and revenue management.
In addition, licensees in the Netherlands (and elsewhere in the EU) will potentially face greater liability under the ELD.
Finally, the Directive will affect operations outside the EU by Dutch licensees.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
