Hill+Knowlton Strategies

The answer will very much depend on the quality of the industry’s communications.

The environmental consequences of the Gulf of Mexico oil spill have led to the most critical political and media focus on the offshore drilling industry in recent years, on either side of the Atlantic. Last week, the American administration announced that it would not allow offshore oil drilling in the Gulf of Mexico or off the Atlantic and Pacific coasts as part of its next five-year drilling plan.

For Europe the problem is no less critical, given that almost as much as 90% of European Economic Area oil production originates offshore. On one hand, the Gulf of Mexico’s natural conditions and the US regulatory framework present quite a different set of circumstances to that in European waters, meaning that the response will probably not be as radical on this side of the Atlantic.

However, the European offshore industry is facing new challenges such as ageing installations and infrastructures and the necessity to shift operations into more complex environments and weather conditions, meaning that the EU will feel the need for action to ensure the continued safety of offshore operations as these challenges are met.

Not surprisingly then, last week EU Energy ministers agreed in Brussels that more safety rules should be put in place and asked the European Commission to come up with new legislative proposals at the beginning of 2011. They judged at the same time – not without the pressure of some Member States – that a moratorium on offshore oil drilling in EU waters would be an excessive measure at this point in time.

The Energy Commissioner Günther Oettinger and his team therefore received a green light to act, though their appetite was slightly hampered by reduced terms of reference. They will now focus on developing an EU-wide legal framework, which will probably mean stricter licensing criteria and greater control over the safety of drilling activities. 

It goes without saying that the industry needs to further engage in the dialogue with the European Commission and national governments to ensure that Europe comes up with the best possible solutions in terms of safety requirements, while leaving enough space for the industry to further develop and remain competitive. 

The willingness of policymakers to listen to the industry will very much depend on trust built through timely communication and transparency. Indeed, Commissioner Oettinger has now obtained the first evidence in favour of stricter regulations – the BBC has revealed that a Transocean oil rig – the same company that was operating BP’s Deepwater Horizon – “narrowly avoided a similar accident in the North Sea, four months earlier”.  

Experts are already divided on whether such a headline is correct or not, given that the procedures worked and the accident had been avoided. The bottom line is, however, that uncertainty and questions are already there. And as the BBC reported: “We asked Transocean for an interview. Sadly no one was available to comment, but in a statement the company stressed the importance of safety and well control on all its installations”. Is it now time for the industry to become more proactive in its communication efforts?

This post was written by Malgorzata Figwer, Consultant, Hill & Knowlton Brussels