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UPDATE 3-EU energy chief plans deepwater drilling ban
October 7, 2010 / 11:28 AM / in 7 years

UPDATE 3-EU energy chief plans deepwater drilling ban

* EU to propose temporary ban on complex oil, gas drilling

* Energy chief wants liability, licensing rules overhauled

* Wants proof of financial resources to deal with spill

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By Pete Harrison

BRUSSELS, Oct 7 (Reuters) - Europe’s energy chief will next week call for a temporary ban on new deepwater drilling for oil until a probe is completed into the causes of BP’s (BP.L) spill in the Gulf of Mexico, a draft document shows.

Oil-drilling countries questioned whether Brussels authorities should intrude for the first time in a sector that has traditionally been controlled at a national level.

Guenther Oettinger will propose on Oct. 13 a regulatory clampdown on the offshore oil industry, following the Deepwater Horizon accident, his spokeswoman confirmed.

“The EU has a vital interest in preventing a similar disaster,” said a draft of the proposal seen by Reuters on Thursday.

“The Commission reiterates its call upon the member states to suspend the licensing of complex oil or gas exploration operations until technical investigations to the causes of the Deepwater Horizon accident are completed and the European offshore safety regime has been reviewed,” it adds.

In a separate vote at the European Parliament, politicians narrowly rejected a moratorium on new drilling, which carried no legal weight but shed light on how they might react to Oettinger’s future proposal.

“This vote will be seen as a rebuke for those who want to see the European Commission gain powers over oil and gas resources,” said Ian Hudghton of the Scottish National Party.

“It was ridiculous to suggest that Scotland’s oil industry, with its first-rate safety record, should be jeopardised by such a knee-jerk reaction,” he added.

Oettinger, the bloc’s energy commissioner, is expected to say next week that Europe’s myriad regulations for offshore exploration are too fragmented to cope with an industry that is drilling further and further offshore in deep, rough waters as “easy oil” runs out.

LIABILITY REGIME

The draft observes there are more than 1,000 installations in the northeast Atlantic, over 100 in the Mediterranean and plans for new exploration off the coasts of Cyprus and Malta.

“Licensing stands out as the first key tool to ensure the safety of new drillings in complex environments,” says the draft proposal, which would need the approval of the parliament and the EU’s 27 member countries before taking effect.

“The licensing regime needs to be backed up by an unequivocal liability regime,” it adds.

Britain does not see a case for any ban or moratorium on deepwater drilling, a government spokeswoman said.

“Our regulatory regime for oil and gas activities is already among the most robust in the world, and all drilling programmes are considered on a case-by-case basis,” she added.

“UK deep water oil and gas production is necessary during the UK’s transition to a low carbon economy.”

Oettinger’s draft said that during licensing, companies would have to prove the “safety case” for each operation and demonstrate the company’s ability to prevent and deal with crises.

They might also have to prove their financial ability to handle the consequences of unforeseen events, possibly via insurance schemes or risk-coverage instruments.

The Commission will also look at bringing drilling ships under the same rules as offshore drilling rigs. (Editing by James Jukwey and Anthony Barker)

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