The Role of Private Actors in the Offshore Energy Industry

College of Law and Public Policy – Energy Experts’ Workshop

Public-Private Approaches for Financing Energy Infrastructure Projects

April 4-5, 2018

The Role of Private Actors in the Offshore Energy Industry

Seline Trevisanut

•  Sustainable Ocean ERC Starting Grant research project

•  how can the law contribute to the sustainable use of the oceans and strike a balance between competing interests at sea?

•  Utrecht Center for Water, Oceans and Sustainability Law •  Netherlands Institute for the Law of the Sea •  Water Law •  Environmental Law •  Natural Resources Law •  Climate Change Law

My research context

Outline

1.  Who are the Private Actors in the Offshore Energy Industry

2.  The Role of Private Actors: Standard Setting / Co-Regulation

3.  The Role of Private Actors: Implementing International Obligations a) Before the beginning of the activity b) During the activity c)  After the activity has ended

4.  The Shifting Models of Participation 5.  Conclusions

•  Premise •  Montara and Deepwater horizon incidents

•  Regulatory reactions -  National Commission on the BP Deepwater

Horizon Oil Spill -  EU directive 2013/30 on safety of offshore oil

and gas operations •  International and supranational perspectives

•  (In)directly binding

Who are The Private Actors in the Offshore Energy Industry?

•  Licensees •  Operators •  Contractors /sub-contractors •  Industry •  Promoters •  Professional associations •  Certification authorities •  Insurance Companies •  Local communities / indigenous populations /

public •  Participation rights

Active participation /role in the development, operation and/or decommissioning

•  EU directive 2013/30 on safety of offshore oil and gas operations

Preamble, para. 36 Best global practice requires licensees, operators and

owners to take primary responsibility for controlling the risks they create by their operations, including operations conducted by contractors on their behalf and therefore to establish within a corporate major accident prevention policy the mechanisms and highest level of corporate ownership to implement that policy consistently

•  Art. 2 Definitions •  Operator: entity appointed by the licensee or

licensing authority to conduct offshore oil and gas operations, including planning and executing a well operation or managing and controlling the functions of a production installation

•  Art. 1(g)(ii) Barcelona Conv. Offshore Prot. Any person who does not hold an authorization within the meaning of this protocol but is de facto in control of such activities

•  Licensee: holder or joint holders of a licence •  Contractor: entity contracted by the operator or

owner to perform specific tasks on behalf of the operator or owner

•  Owner: an entity legally entitled to control the operation of a non-production installation

•  Industry: entities that are directly involved in offshore oil and gas operations covered by the directive or whose activities are closely related to those operations

•  Public: one or more entities and, in accordance with national legislations or practice, their associations, organizations or groups

•  Promoter/applicant > 2008 OSPAR Guidance on Environmental Consideration for Offshore Wind Farm Development

•  “Person” means any natural person, corporation, association, partnership, trustee, guardian, executor, administrator and a judiciary or representative of any kind.

•  Guidelines on Requirements for the Conduct of Environmental Impact Survey and the Production of Environmental Impact System to the Kuwait CS Prot.

The Role of Private Actors: Standard Setting / Co-Regulation •  UNCLOS

•  Framework convention •  States shall adopt international rules and regulations

no less effective than international rules, standards and recommended practices and procedures (art. 208 – pollution from seabed activities)

•  Removal of disused installations performed “taking into account any generally accepted international standards established in this regard by the competent international organization” (Art. 60.3)

IMO

•  Self-regulation is encouraged •  E.g. BP National Commission

•  Important supplement to government oversight •  Operators should provide funding of the agencies

regulating offshore oil and gas development •  Safety standards developed by

•  American Petroleum Institute •  Offshore Pollution Liability Association

(OPOL) •  Exchange of information and collection of data

•  International Regulators’ Forum Global Offshore Safety

•  Ocean Corporate Social Responsibility (OCSR) •  non-binding general principles of responsible

conduct and technical guidelines •  instruments can be found: those establishing

standards of conduct directly addressing business operators, and those formally addressing States with recommendations to be complied with by private operators

•  codes adopted by business professional associations •  contribute to preventing pollution and environmental

disasters, or serve as a tool in mitigating damages and compensating losses, once a disaster has occurred

The Role of Private Actors: Implementing International Obligations

a)  Before the beginning of the activity •  Procedural obligation of impact assessment

•  Customary nature •  ICJ, Pulp Mills case •  ILOS Seabed Chamber A.O.

•  The obligation to guarantee the safety of the project •  EU Dir. 2013/30 •  Art. 15 Barcelona Offshore Prot. •  Art. VIII.4 Kuwait CS Prot.

•  Art. VIII.4 Kuwait CS Prot. The respective roles and powers of the industry and the authorities shall be fully understood before an oil spill emergency, and shall be clearly defined in the operator's Contingency Plan, and in any national and local Contingency Plans.

•  Contingency plan to be prepared before the activity starts (art. VIII.1)

b) During the activity is performed •  Monitoring (risk control) and reporting

obligations •  Art. 19 EU Offshore directive

•  EU Offshore Oil and Gas Authorities Group (EUOAG)

•  Art. 20 Barcelona Offshore Protocol •  Art. VIII.3 Kuwait CS Protocol

•  Extra-territoriality

•  (…) to establish within a corporate major accident prevention policy the mechanisms and highest level of corporate ownership to implement that policy consistently throughout the organisation in the Union and outside of the Union

•  Art. 20 Offshore oil and gas operations conducted outside the Union

MS shall require companies registered in their territory and conducting, themselves or through subsidiaries, offshore oil and gas operations outside the Union, as licence holders or operators to report to them, on request, the circumstances of any major accident in which they have been involved

•  After the activity has ended •  1972 London Convention for the Prevention of

Marine Pollution by Dumping of Wastes and Other Matter / 1996 Protocol

•  Presomption: full removal, prohibition of dumping

•  Residual possibility of dumping if preferable from an environmental point of view (art. 4.1.2. 1996 Protocol)

•  Owners of structures bear the burden of proof with respect to the inevitability of the dumping.

•  They assume an important role in the decision-making process concerning the treatment of disused structures

•  Barcelona Convention for the Protection of the Mediterranean Sea against Pollution

•  1976 Dumping Protocol •  Same logic than LC/LP

•  1995 Offshore Protocol •  Plans for removal included in the application for

authorization •  Key figure: the operator

•  Art. 20 on removal Where the operator fails to comply with the provisions of this Article, the competent authority shall undertake, at the operator's expense, such action or actions as may be necessary to remedy the operator's failure to act

•  Kuwait Convention and Offshore Protocol •  permits partial removal in the interests of safety of

navigation and fishing (article XIII(1)(b)) •  contracting states shall have regard to any guidelines

issued by the regional organization

•  Helsinki Convention •  Prohibition of dumping

•  Except if dumping is preferable for human and marine life

•  Annex VI Regulation 8: Disused offshore units •  entirely removed and brought ashore under the

responsibility of the owner •  Only for oil and gas installations

•  OSPAR Decision 98/3 on the Disposal of Disused Offshore Installations

•  General rule: full removal, prohibition of in situ dumping or abandonment

•  But: Possible integral or partial re-use, recycling or disposal on land (Annex I)

•  M. M. Mbengue (2011) – Models of Participation

•  Model of surveillance: ‘non-state actors participate in the ‘sustainable development contract’ by adhering or subscribing to rules and principles of treaty law or of customary international law, that is rules and principles generated by states and international organizations’

•  E.g. UN Global Compact > implementation framework

•  Model of transparency: ‘non-state actors contribute primarily to the definition of the issues that should be dealt with at the international level, even if the last word in terms of policy orientations might often belong to states or to international organisations’

The Shifting Models of Participation

•  Model of mutuality: ‘Rules and standards adopted by non-state actors can shape international environmental law and serve as the main referential within public-private partnerships’

•  ‘accepted rules and standards’ •  Best practices •  Implementation of the Sustainable Development

Goals (SDGs) •  i.e. public-private partnership

Conclusions

1.  The impact of international environmental law on the offshore energy sector •  Offshore energy in context

2.  A business-led sector •  Self regulation / co-regulation (BP National

Commission, SW Paper No. 9) •  Annex VI EU Dir. 2013/30

3.  Need to think about which role the regulator wants for the industry •  Create the relevant institutional and regulatory

framework in order to prioritize the achievement of specific objectives

Thank you for your attention!

Questions?

The research for this presentation has been conducted thanks to the financial support of the European Research Council (grant agreement No 639070 - SUSTAINABLEOCEAN).