Dominik Wałkowski

The Commission proposes a regulation to increase the safety of offshore oil and gas operations

Exploration and mining of offshore oil and gas fields will be possible only by the operators that have appropriate technical and financial conditions, which would ensure recovery of costs associated with liability for any harm to the environment.

The oil rig disaster Deepwater Horizon last year in the Gulf of Mexico confirmed that exploration and mining in marine areas is an activity that poses specific risk to the environment. The consequence of failure are huge losses in the marine environment, irretrievable loss of natural assets, plant and animal species, and elimination of certain sectors of the economy related to tourism and the exploitation of coastal areas.

The disaster in the Gulf of Mexico was not, and certainly will not be the only ecological catastrophe associated with drilling offshore for oil and gas. Disasters of those types of installations have occurred in recent years: it is enough to mention the Montara disaster in the Timor Sea region of Australia in 2009, and the Usumacinta platform in the vicinity of Mexico in 2007.

It is estimated that more than 1,000 offshore marine installations operate in European waters, mainly in the North Sea. A study shows that there is a high risk of accidents in European waters. Different laws of separate states, not effectively enforced practices and technology standards, and inefficient legislation is not conducive to reducing environmental risk.

The European Union has developed a number of solutions concerning liability for harm to the environment, environmental impact assessments, and waste management (specifically, Directive 2004/35/EC, 85/337/EEC, 2008/98/EC). Although those solutions are supplemented by international law (such as the Espoo Convention), there is still lack of regulation of the exploration sector of industry and exploitation of gas and oil at sea.

The October 27 proposed draft regulation provides that when issuing licenses for exploration and extraction of gas or oil, it will be necessary to take into account the technical and financial condition of entities wanting to do so. Financial issues, specifically, are to be analysed as Member States will be required to assess those wanting to engage in activity that poses risk, to ensure that if there is harm to the environment costs will be recovered.

The draft regulation also provides that the public will be able to participate in granting of licences. Plant operators will also be obliged to present activity reports on the risks and contingency plans before they commence activity.

In terms of liability, the rules will apply as provided in Directive 2004/35/EC on environmental liability with regard to the prevention and remedying of environmental harm. Contractors of holders of liciences to operate an offshore facility will also be able to be held liable.

In this regard, the draft regulation also includes a proposal to amend Directive 2004/35/EC to include not only territorial waters as they are now, but all EU marine waters, including exclusive economic zones.

The proposed solutions are to contribute to better prevention of accidents and to avoid errors in installation there resulted in previous disasters, where the rescue plans failed.

Member States will have to prepare annual reports on operations of installation within the states and ensure control and supervision of activities and mining exploration. Also, adequate penalties, to deter breaches of law, are to be enforced.

Dominik Wałkowski, Environmental Law Practice Group, Wardynski & Partners