Report from the Commission to the European Parliament and the Council on liability, compensation and financial security for offshore oil and gas operations pursuant to Article 39 of Directive 2013/30/EU

This report provides an overview how liability for damage from offshore accidents in oil and gas prospection, exploration and production is addressed in the EU. In effect, it analyses how Europe deals with a series of societal dilemmas arising in relation to offshore oil and gas: first, who is liable for what kinds of damage and loss to whom; second, how to ensure that liable parties have sufficient financial capacity to provide rightful compensation for the damage and loss they are liable for; and third, how compensation should be disbursed so that it reaches legitimate claimants quickly and the risks of cascading impacts to the broader economy are minimized.

There has not been a major offshore accident in the EU since 1988 and 73% of oil and gas production in the EU comes from North Sea Member States already recognized as having the world's best performing offshore safety regimes. Despite this, the EU put in place a common regulatory framework for offshore oil and gas operations following the April 2010 Deepwater Horizon disaster in the Gulf of Mexico in order to raise the safety and environmental protection standards of all EU offshore operations further and make them consistent. Directive 2013/30/EU (the Offshore Safety Directive or OSD) defines the elements of such a comprehensive EU-wide framework for preventing major accidents and limiting their consequences. The ratification of the Offshore Protocol of the Barcelona Convention by the Council was also part of the EU response to the Deepwater Horizon disaster.

The OSD creates a harmonized EU-wide regulatory regime that establishes a goal-setting regulatory framework built around the concept of a "safety case" (a Report on Major Hazards) and enforced by offshore regulators whose competence and independence the OSD aims to ensure; it also fosters effective cooperation between such regulators. Furthermore, the OSD introduces EU-wide requirements on transparency, including the sharing of information on accidents and near misses as well as on other indicators of the safety performance of industry and regulators in the sector.

This report aims to fulfil the Commission's obligations under Article 39 of the OSD, which requires the Commission to submit reports on the following:
- An assessment of the effectiveness of the liability regimes in the Union in respect of the damage caused by offshore oil and gas operations, including an assessment of the appropriateness of broadening liability provisions;
- An examination of the appropriateness of bringing certain conduct leading to a major accident within the scope of Directive 2008/99/EC (the Environmental Crime Directive);
- A description of the availability of financial security instruments for offshore operations; and
- A description of the handling of compensation claims for offshore accidents.

These topics are very closely related and addressing them together in one report facilitates their coherent analysis. An accompanying Staff Working Document ("Liability SWD") provides additional details on the issues addressed, as well as on the analyses conducted in-house by the Commission and contracted from external experts and stakeholders in the preparation of this report.

The present report and the Liability SWD focus on the member countries of the European Economic Area (EEA) with offshore oil and gas activities. These 'Focal States' comprise (in alphabetical order) Bulgaria, Croatia, Cyprus, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Latvia, Lithuania, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Spain and the United Kingdom. Operations outside the EEA are not the primary focus.

• Primary Source

EUR-Lex: SWD(2015)167: Liability, Compensation and Financial Security for Offshore Accidents in the European Economic Area http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=SWD:2015:167:FIN

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