New EU rules seek to avoid repeat of BP oil spill

Thu Oct 27, 2011 6:30am EDT

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By Barbara Lewis

BRUSSELS, Oct 27 (Reuters) - The European Union on Thursday unveiled draft plans to regulate offshore oil and gas across the bloc and guard against a repeat of BP's catastrophic Gulf of Mexico spill as oil firms drill deeper to tap remaining reserves.

Environmentalists welcomed the plans but said they did not go far enough.

Oil and gas firms have said national legislation is already adequate and the BP disaster was a result of safety lapses within the company, not across the industry.

The cost of implementing the new laws, which would be mostly met by industry, is estimated at more than 130 million euros per year ($179 million) in a draft text.

Potentially, the cost of accidents is far higher.

BP's accident in the Gulf of Mexico last year, which killed 11 workers and led to the biggest oil spill in U.S. history, is estimated to have cost more than $40 billion.

"Securing best industry operations in all our offshore operations is an indisputable must. Today's proposal is a crucial step forward," Energy Commissioner Guenther Oettinger said in a statement.

Only this week, BP was granted its first permit following its accident to drill a new well in the U.S. Gulf after it passed a series of U.S. regulatory hurdles.

EMERGENCY RESPONSE PLANS

The new EU regulation would require all EU countries to enforce much stricter standards before awarding offshore operating licences and would enforce a regime of independent checks. Companies would have to draw up detailed safety reports and emergency response plans.

The draft legislation is the EU's first specific attempt to legislate on offshore oil and gas drilling, although it complements an existing directive on environmental liability under which the polluter pays.

The new draft proposals aim to expand the reach of that legislation from 12 nautical miles offshore (22 kilometres) to 200 nautical miles (370 kilometres).

Oil and gas companies would only be subject to the EU rules within Europe, and although the Commission said it hoped European companies would follow best practice world-wide, it said it could not enforce that.

"While there is agreement on the principle that EU-based companies should not lower standards when operating outside the EU, enforcement would not be feasible," said a draft text.

Some legal experts shared the view of the oil companies that national governments were already dealing competently with offshore oil and gas.

"Further, only a minority of member states have offshore activities going on, so why should the EU get involved?" asked Lucas Bergkamp, a partner at Hunton & Williams in Brussels.

Already the European Commission has softened its stance.

In the immediate aftermath of the Deepwater Horizon accident, the Commission floated the idea of a moratorium on new deepwater drilling operations.

Previous plans also showed the Commission had considered proposing that oil and gas multinationals headquartered in Europe be forced to apply EU standards wherever they operated.

Rebecca Harms, president of the Greens group in the European Parliament, said the new draft law was "certainly an improvement", but the Commission should be going further.

"Drilling in environmentally sensitive areas like the Arctic should be banned," she said in a statement.

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