EU crackdown on oil firms will not extend to overseas operations

Offshore oil platform.JPG

European plans to crack down on oil companies, with orders to improve safety to prevent a spill like that in the Gulf of Mexico last year, will be unveiled on Thursday (26 October).

The European Commission has stopped short of extending the tougher new rules to the overseas operations of EU-based companies, after pressure from oil companies and the UK government.

The measures, from the European Union's energy commissioner, Guenther Oettinger, will force companies drilling in EU waters to release details of their safety procedures, place new liabilities on them in the event of an accident, and require them to prove they have the money to clean up any spills that do occur.

"Oil companies have to be fully liable," Oettinger told the Guardian. "We want to make sure that the highest standards are put in place."

At least 486 UK installations will be covered by the new rules, more than in all of the other member states combined.

The rules apply to all drilling sites within 200 miles of the coast, the first time EU regulations on oil drilling have been extended so far. Previously they were limited to 12 miles.

They would cover the boundary with international waters where the legal standing of wells is unclear, and mean virtually all offshore oil drilling operations within the EU will be covered.

Oil drillers will have to use a higher standard of equipment, and will have to prove they can pay for any damage they cause, either through an obligation to buy sufficient insurance or by paying into a fund – it will be left to member states to decide which one. Companies will also have to submit to independent third party auditing.

However, the commission will not force European companies to adhere to the same standards in their overseas operations, a step some activists had called for in order to improve the sometimes woeful safety record of European oil companies in developing countries.

For instance, this year the Guardian uncovered in Nigeria evidence of oil leaks for which Shell was partly liable, amounting to a greater volume of spillage than in the Gulf accident. If the EU had extended its rules as urged, Shell would be forced to reveal details of its practices and prove it was using the same stringent safety controls it uses in the North Sea.

Oettinger said such a sweeping change was outside the scope of the current directive, and extension would be hard to formulate in legal terms as it would involve complex areas of international law. But he vowed to put pressure on companies to pursue "best practice" and to co-operate with other countries to achieve this, particularly around the Mediterranean. If European companies did not voluntarily extend their EU safety practices to other areas, he indicated, this issue could be looked at again.

The EU will stay out of rows over where drilling should be allowed to take place. At present, several companies are seeking to explore areas near the Shetland Islands and in Greenland where their wells would be in far deeper water than normal, and potentially in environmentally sensitive areas.

Activists oppose these operations, warning of the dangers of leaks occurring where they are difficult to reach, and where they could damage pristine habitats. Greenpeace has mounted several protests against Cairn Energy this year in an attempt to stop its operations in Arctic waters.

The new energy directive may face a difficult ride through the rest of the legislative process, as the UK government is known to be wary of some of the plans. If it is accepted, it could be in force by the end of next year.

The Department of Energy and Climate Change said: "Today the UK has a robust, proven national regime with decades of experience in regulating the offshore industry. The lessons of Piper Alpha led to a dramatic improvement in the regulatory system in the UK and more generally in Europe.

"We know that the commission is considering proposals which might result in a greater regulatory burden on the UK industry. We will continue to work with the commission towards a pragmatic approach which does not reduce the standards of the very robust regulatory system which we already have here."

The proposed new rules were a direct response to the explosion last spring at BP's Deepwater Horizon drilling rig in the Gulf of Mexico, which killed 11 people and caused the biggest offshore oil spill in US history, wreaking devastation over a wide area.

On April 20, BP's Deepwater Horizon rig 50 miles off the Louisiana coast exploded, killing 11 workers and polluting the sea with 4.9 million barrels of oil. Environmental groups – and, initially, EU Energy Commissioner Gunther Oettinger – called for a moratorium on deepwater drilling.

However, faced with strong opposition from oil companies and some EU member states, the European Commission later softened its position to one of advocating a voluntary moratorium and improved safety and liability standards and procedures. 

Figures from the UK government's Health and Safety Executive show that serious accidents from rigs operating off the UK coast almost doubled from 106 per 100,000 in 2008/09 to 192 last year, while spills of hydrocarbons were up from 61 to 85.In a proposal presented on 13 October 2010, the European Commission said that for the first time, it envisaged comprehensive EU legislation on oil platforms aimed at ensuring the highest safety standards in the world.

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