It is almost exactly two years since the Offshore Safety Directive 2013 (the Directive) was adopted by the EU, a move which stems from the European Commission’s concern following the Deepwater Horizon incident in April 2010 that the existing regulatory framework for offshore safety in the EU was “divergent and fragmented”.
Further, the Commission was concerned that it did not provide adequate assurance that risks from offshore accidents were minimised throughout the Union. As a result, the Directive now includes requirements on member states to ensure that operators of existing and future offshore oil & gas operations in the EU are appointed by licensees or licensing authorities.
They must also take all suitable measures to prevent major accidents in offshore oil & gas operations and prepare safety documents, including emergency response plans, corporate accident prevention policies and safety and environmental management system documents, and submit them to the relevant national competent authority.
In spite of the UK regime being held up as among the best in the industry, the UK has nonetheless been required to review and make some significant amendments to the regulatory framework in order to comply with the Directive, which is binding upon EU members.
The July 19, 2015, deadline by which the UK is required to implement the Directive via its national legislative framework is now fast approaching and in anticipation of that, three existing UK regulations are to be amended and three additional pieces of legislation are to be introduced.
The Offshore Installations (Offshore Safety Directive) (Safety Case etc) Regulations 2015
Many of the Directive’s requirements are matched by similar requirements of the existing Offshore Installations (Safety Case Regulations) 2005 (SCR 2005).
Safety cases have of course been around now in the industry for quite some time as a result of Lord Cullen’s recommendations following the Piper Alpha disaster, however, the new regulations now bring about a number of important changes, including for the first time a requirement to integrate the management of both safety and environmental risks, and the introduction of independent verification for environmentally critical elements (as has for some time been the case for safety critical elements).
Companies are now also required to produce a “corporate major accident policy” and there will be new duties on operators to report a range of new incidents and dangerous occurrences to the newly created Offshore Safety Directive Regulator, otherwise known as the OSDR.
The Offshore Petroleum Licensing (Offshore Safety Directive) Regulations 2015
Important new changes will also be brought about on the licensing front, with the introduction of The Offshore Petroleum Licensing (Offshore Safety Directive) Regulations 2015.
These new regulations will place a requirement on the new licensing authority, the Oil & Gas Authority, to take account of certain considerations before granting or consenting to the transfer of a licence to search, bore for or get petroleum granted under the Petroleum Act 1998.
The OGA, in conjunction with the OSDR, will be required to consider the safety and environmental performance and the safety and environmental management systems and structure in respect of any licence applicant. Where details can’t be provided at application stage, commitments will be checked prior to commencement of operations, including Financial Responsibility submissions relating to well operations.
The OSDR will assess the capacity of operators to undertake their duties, and notify OGA if the performance of the operator is considered unacceptable, in which case their appointment as operator may be terminated. Where an operator’s appointment is terminated, the licensee(s) become responsible for carrying out the operator’s functions, and must propose a new operator.
Draft guidance on the safety and environmental requirements for licence applications and the appointment of operators is expected to be circulated shortly.
The Merchant Shipping (Oil Pollution Preparedness, Response and Co-operation Convention) (Amendment) Regulations 2015
The Merchant Shipping (Oil Pollution Preparedness, Response and Co-operation Convention) (Amendment) Regulations 2015 amend the existing requirements in the Merchant Shipping (Oil Pollution Preparedness, Response and Co-operation Convention) Regulations 1998 to have an oil pollution emergency plan.
The 1998 Regulations require the submission of an oil pollution emergency plan (OPEP) which covers the response that an offshore installation or oil handling facility will make in the event of certain releases, including of oil. In order to meet the Directive’s requirements the matters which need to be considered before the Secretary of State will approve an OPEP and the circumstances which will trigger a review of an approved OPEP have been expanded.
The above implementing Regulations are set to come into force on July 19, 2015. At a recent industry meeting on May 19, the overall message from the regulators was that this is a question of “fine tuning”, that the changes “embed existing principals” and there is “no fundamental business change” as a result.
However, those within the industry have already highlighted the challenges being met and the flurry of activity is set to continue as the publication of official Guidance is in the final stages. Meanwhile, one month into the task of reviewing transitional Safety Cases, coming in at approximately 10 per month over the next three years, the regulators have their hands full.
Penelope Warne is senior partner & head of energy at international law firm CMS Cameron McKenna
