What are the key features of the environmental and health and safety regime that applies to upstream oil and gas activities?
Oil & Gas
The main provisions applicable to environmental, health and safety for oil and gas activities come from:
- the Federal Constitution.
- the Labour Code and Law No. 5,811/19720
- Ministry of Labour and Employment guidelines.
- ANP regulations.
- National Environmental Council (CONAMA) regulations.
- National Environmental Policy (Law No. 6,938/1981).
The CONAMA Resolution No. 01/1986 regulates the performance of activities deemed to cause significant harm to the environment (including oil and gas exploration and production). Such activities are subject to a prior environmental licensing procedure.
The IBAMA is in charge of the environmental licensing for the following projects and activities, amongst others:
- in Brazil and a neighbouring country.
- in the Brazilian territorial waters, continental shelf or exclusive economic zone;
- in indigenous lands;
- in conservation units established by the Brazilian government, except in Environmental Protection Areas (APAs); and
- in two or more states of the federation.
Notwithstanding the above, the states are responsible for promoting the environmental licensing of onshore upstream activities.
The performance of upstream activities requires an environmental impact assessment (EIA) and an environmental impact report, which must be reviewed and approved by the appropriate environmental authorities.
The exploration and production of oil and gas require three types of licence:
- Preliminary licence;
- Installation licence; and
- Operation licence.
Such licences provide for the rules, obligations, conditions, and restrictions applicable to the activities to be performed by the interested party, and any compliance measures to be taken to mitigate and control environmental impact.
Law No. 12,305/2010 (which established the National Policy for Solid Waste) states that concessionaires are responsible for the disposal of solid waste from oil or gas exploration and production activities. Concessionaires must also comply with the CONAMA Resolution No. 313/02, which provides for the National Inventory of Industrial Waste.
Finally, concerning flares and vents, gas flares shall be authorised by the ANP in accordance with ANP Ordinance No. 249/2000.
Special evaluations, assessing the environmental impact of the planned exploration or exploitation of hydrocarbons must be made and approved. High health, safety and environmental standards are expected and enforced in building and maintaining of oil and gas fields and rigs, with mandatory participation of qualified personnel accredited by the Ministry. Croatia's regular OSHA regime applies to workers on oil and gas rigs, specifically the more rigorous subset of rules, which refers to workers dealing with dangerous equipment and substances. These regulatory requirements are on par with EU standards.
A concessionaire who intends to proceed with the exploration and exploitation of hydrocarbons in Greece, both onshore and offshore has to be compliant with hazardous activity srules and the provisions of environmental protection in accordance with European and international practices (Directive 2004/35/EU and 2013/30/EU). HHRM, is responsible for monitoring compliance with the European Directive 2013/30/EC on safety in offshore hydrocarbon exploration and exploitation, as incorporated into Greek law by Law 4409/2016.
Exploration permits and production licences must be preceded by Environmental Impact Assessments for which the MATTM and the competent Region are responsible.
For production licences, the extraction activities must be carried out and the plants must be operated in compliance with the technical regulations laid down by the competent bodies in the document approving the Environmental Impact Assessment.
The main bodies responsible for checking the environmental area are the ARPA (Agenzia Regionale per la Protezione dell’Ambiente – Regional Agency for the Protection of the Environment), which are technical bodies present in every Region of Italy which specifically deal with checking that the chemical and physical parameters of the plants comply with the limit values laid down by environmental legislation (the most important one being Legislative Decree no. 152/2006 and subsequent amendments) and the limits laid down by the licences authorising each specific facility.
The MiSE has a chemical laboratory which carries out checks connected to the workers’ health, and on the emissions arising from the treatment of the gas and oil. Should the above parameters be exceeded, in relation, for example, to water discharges or emissions into the air, on the basis of specific provisions of law, the plant operator will incur criminal and administrative sanctions and the closure of the production facility may also be ordered until functioning conditions are returned to below the parameters.
Companies engaged in upstream activities must comply with the following legislation:
- Environmental Protection and Ecologic Balance General Law and its Regulations.
- Hydrocarbons Law.
- Environmental Responsibility Federal Law and its Regulations.
- Hazardous Management and Prevention General Law.
The main purpose of these laws and regulations is to develop the hydrocarbons industry in a sustainable manner. Prior to the energy reform of 2013, the state-owned oil company PEMEX, through its environmental protection division, implemented several programmes and issued specific internal regulations regarding environmental and industrial safety applicable to its upstream infrastructure. PEMEX infrastructure is, therefore, subject not only to the new regulations but also its internal rules.
One of the main requirements to participate in and pre-qualify for the tender procedures to award exploration and extraction contracts is to present documents evidencing experience in industrial safety and environmental protection for at least five years prior to the tender procedure. These requirements can vary depending on the tender procedure and the type of block to be tendered (i.e. whether it relates to ultra-deep waters or shallow waters).
All matters related to safety and environmental in upstream activities are regulated by the SEMARNAT, through the created special agency, ASEA. The ASEA Law, states that it has, among others, the obligation to prevent and attend emergency situations in the industry, as well as to issue regulations in connection with environmental and industrial protection.
The award of reconnaissance authorizations, exploration permits and exploitation concessions does not waive health, safety and environmental laws and regulations.
In this respect, article 32 of Hydrocarbon Decree provides that the holder of a reconnaissance authorisation, exploration permit or concession must:
- Comply with hygiene and health and safety requirements applicable to its employees and neighbouring habitants.
- Minimise social and ecological burdens.
- Avoid injury or damage to public or private properties.
In particular, the holder must take precautions to ensure the protection of:
- Vehicular traffic and shipping navigation.
- Aquatic resources and the prevention of pollution of seas, lakes, beaches, rivers and groundwater.
- Forests, farmlands and plantations.
The holder must also take out insurance against any damage caused to the environment.
Article 35 of the Hydrocarbon Law also sets out a general obligation for the holder of a reconnaissance authorisation, exploration permit or concession to repair damages caused to the owners of the relevant lands (for onshore activities) and/or to other companies undertaking exploration or production works in the vicinity of the holder's activities.
Furthermore, other laws and regulations related to environmental protection apply to hydrocarbon exploration and exploitation activities, including:
- Law No 12-03 on environmental impact assessment promulgated by the Dahir No 1-03-60 dated 12 May 2003 which requires certain project that could have adverse effects for the biophysical and social environment to be subject to an environmental impact assessment and an environmental acceptability decision;
- Dahir dated 25 August 1914 on establishments classified as unhealthy, unpleasant or dangerous under which the opening and operation of facilities contemplating the carrying out of dangerous activities are subject to either a prior authorisation of the Ministry or the Wali or a declaration receipt delivered by the local authorities.
The Constitution of the Republic of Mozambique specifically addresses matters relating to the environment and quality of life, and grants the people of Mozambique the right to live in a balanced environment. It commits the State and local authorities, in collaboration with other appropriate partners, to adopt policies for the protection of the environment and to care for the rational utilisation of natural resources.
In light of the above, environmental impact assessments, including impact reduction measures, shall be carried out in all areas that may be affected before commencing a major petroleum project. In addition, all environmental aspects influenced by the petroleum operations shall be recorded in a registry to be maintained during all phases.
For purposes of the categorisation of petroleum operations, activities are classified as follows:
- Category A – activities subject to an environmental impact study (“EIS”), including oil, gas or mineral pipelines and submarine cables more than 5 km long;
- Category B – activities subject to a simplified environmental study (“SES”); and
- Category C – activities subject to compliance with the standards of good environmental management.
As a rule, any activity that may affect the environment is subject to evaluation of the potential impact, through an EIS, to determine its environmental feasibility, and concludes with the issuance of an Environmental Licence.
Activities in areas and ecosystems meriting special protection under national or international law, such as coral reefs, are specifically classified as Category A activities under the environmental legislation, and therefore require a full EIS and the issuance of an Environmental Licence as a prerequisite for the issuance of any other licence or permit that may be legally required.
The EIS initiates with the submission of an application to the Ministry for Co-ordination of Environmental Affairs (or the Provincial Delegation) and follows various stages, including a pre-assessment, drafting of terms of reference, a public consultation process and an environmental impact report.
In accordance with maritime legislation, the MIREME may introduce other requirements related to the performance of petroleum activities by floating facilities or by vessels, independent of whether they are registered in Mozambique or in a foreign state.
The holder of rights under the Petroleum Law shall act in petroleum operations in a safe and efficient manner, with the aim of ensuring that the polluted waters and waste materials are disposed of in accordance with approved methods, and ensuring the safe closure and decommission of all holes and wells before abandonment.
There are no specific rules that apply to offshore development and for that reason, the internationally accepted marine standards shall apply to the floating or fixed facilities used offshore, which shall be designed and equipped in such a manner as to ensure the stability or foundation necessary for their safe operation and the capacity to withstand the projected loads.
The docking gear, anchorage system and dynamic positioning system for ships or floating facilities used offshore shall be sized and operated in accordance with Mozambican legislation in force and with good oil field practices and internationally accepted marine standards.
The Minister of Petroleum Resources is responsible for making regulations on matters relating to upstream oil and gas activities including matters relating to safe working, enquiries into accidents and the prevention of pollution of water courses and the atmosphere. Same can be summarised in the following order in line with legislation which has been enacted:
i. Mineral Oils (Safety) Regulations 1963 - This prescribes standard safety measures and imposes duties relating to safety of operations on holders of OPLs and OMLs.
ii. Oil in Navigable Waters Act 1968 - This prohibits polluting the navigable waters of Nigeria with crude oil, fuel oil, lubricating oil, heavy diesel oil and any mixture of oil. It further requires ships and vessels to be fitted with equipment to prevent oil pollution.
iii. Oil Pipelines Act - This prohibits a pipeline licensee from constructing any works within fifty yards of any public roads, dam, reservoir or building or over any water course required for domestic or irrigational use.
iv. Environmental Guidelines and Standards for the Petroleum Industry (EGASPIN) - Issued by the Department of Petroleum Resources (DPR), these guidelines and standards set out monitoring programmes and schedules to ensure environmental quality control for the oil and gas industry.
v. Petroleum Refining Regulations 1974 - These require measures be taken to prevent and control environmental pollution and to ensure that all on-site personnel have suitable protective clothing, equipment and appliances as approved by the DPR.
vi. National Oil Spill Detection and Response Agency (Establishment) Act 2006 - This prescribes regulations for dealing with waste emanating from oil production and exploration and its potential effect on the environment.
vii. Environmental Impact Assessment Act - This makes it mandatory for an EIA study to precede every oil and gas project as a safety measure for determining the impact of the project on the environment.
viii. Associated Gas Re-Injection Act - It seeks to restrict and regulated the flaring of associate gas.
ix. Harmful Waste (Special Criminal Provisions, etc.) Act - prohibits the carrying, depositing and dumping of harmful waste on any land or territorial waters.
x. National Environmental Standards & Regulations Enforcement Agency Act generally empowers the NESREA to preserve and maintain public health and welfare and prohibit the discharge of hazardous substances into the air, land and waters of Nigeria.
In addition, the various states have enacted their own environmental protection laws.
The Offshore Safety Directive was implemented in Bulgaria in 2016. The new regulations have already been applied in practice successfully more than once for offshore drilling. The Minister of Energy is again the central competent authority.
Other than that, there is no codified HSE regime for oil and gas operations in the country. Applicable requirements and regulations derive from various legal sources.
The exploration and production plans, as well as exploration and production drillings are subject to EIA clearance in advance. In some cases full environmental impact assessment procedure is required. Good and diligent practice in planning and communication with authorities often result in early clearance and permission without conducting the entire EIA process. In Natura 2000 zones a compatibility assessment procedure must be followed too.
Environmental regulations in Bulgaria are based on the principle of “the pollutant pays the damages”. No significant damaging events have occurred in Bulgaria.
Various authorities may be responsible to act in case of emergencies and HSE risks and events.
New-generation PSCs expressly oblige the PSC Contractor to, among other things, (i) implement occupational health, safety and environmental protection standards applicable in the oil and gas industry, take all reasonable and necessary precautions to prevent injury to or death of persons and damage to the environment and property, and comply with all applicable safety and environmental laws and regulations; (ii) conduct an environmental baseline assessment at the beginning of the PSC Contractor’s activities and thereafter fulfil all obligations pursuant to applicable legal requirements; (iii) take necessary precautions to protect ecological systems, navigation and fishing, and to prevent extensive pollution of the area, sea, rivers and others as the direct result of the petroleum activities; and (iv) carry out abandonment and site restoration (“ASR”) upon the abandonment of an oil and gas field or the relinquishment of any part of the contract area. The Oil and Gas Law also mandates post-operation obligations as a means of ensuring environmental management and protection, and GR 35 obligates Contractors to allocate funds for post-operation activities.
Under Law No. 32 of 2009 regarding Environmental Management and Protection (the “Environmental Law”), business actors must take steps to prevent environmental pollution and/or damage as a result of any business activity. To determine the existence of pollution, implementing regulations of the Environmental Law stipulate industry-specific quality standards for various environmental elements such as water, ambient air and emissions).
The Director General of Oil and Gas (“DGOG”), which is in the Ministry of Energy and Mineral Resources, is responsible for supervising the implementation of health, safety and environment (“HSE”) regulations in the oil and gas sector and imposing sanctions for non-compliance. The DGOG designates Mining Inspection Enforcement teams to examine work safety compliance at oil and gas businesses. If the facilities and techniques satisfy work health and safety standards, the DGOG will issue certifications for installations and equipment. Non-compliance with applicable HSE rules subjects the company to administrative sanctions up to the revocation of its licence.
The UK has a highly developed and stringent regulatory regime aimed at protecting the environment, and maintaining health and safety. The environmental regime is set out in a large number of different Acts and statutory instruments. Since the Deepwater Horizon disaster, one key area of focus has been the prevention of offshore oil spills. The UK already had an existing regime for the prevention of and dealing with environmental pollution, in the form of the Merchant Shipping (Oil Pollution Preparedness, Response Co-operation Convention) Regulations 1998, and the Offshore Installations (Emergency Pollution Control) Regulations 2002, under which the UK Government regulates potential environmental incidents involving offshore installations, with a view to ensuring that preventative measures are in place to limit pollution. The Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2005 supplement the emergency planning requirements by imposing a permitting system for oil discharges from an offshore installation. However, new requirements were imposed when the EU enacted the Offshore Safety Directive of 2013, which was implemented in the UK by the Offshore Petroleum Licensing (Offshore Safety Directive) Regulations 2015 and other regulations.
Separate controls apply to onshore oil and gas operations. Local authorities and other government departments, such as the Environment Agency, play a role in overseeing and enforcing planning and environmental consents relating to onshore exploration and production.
The health and safety regime applicable to oil and gas activities is well established and was first subject to a detailed review three decades ago, in response to the Alpha Piper disaster. A key component of the health and safety framework is the "safety case" regime, currently set out under the Offshore Installations (Safety Case) Regulations 2005 and the Offshore Installations (Offshore Safety Directive) (Safety Case etc) Regulations 2015. One of the main requirements is that written safety cases and risk assessments be prepared by the operator, and then approved by the safety regulator, for all fixed and mobile offshore installations before such installations are brought into use on the UKCS.
License holders with respect to upstream oil and gas activities are required to perform their activities without (i) obstructing the life of residents living within the vicinity of the relevant facility, (ii) endangering human life and (iii) causing any damage to the environment and to cultural property under the Petroleum Law and its secondary legislation.
Entities performing upstream oil and gas activities are also required to obtain an environment licence and environment permit from the Ministry of Environment and Urban Planning (“MEUP”) as they fall in the scope of the list of entities in the annex to the Environmental Permit and Licence Regulation published in the Official Gazette dated 10 September 2014, No. 29115. In general, these permits and licences are granted for the following issues: (i) Emissions (ii) Discharges (iii) Dangerous material discharges (iv)Waste collection (v) Recycling matters. It should be noted that these environment permits and licences must be obtained before commencing the activities.
In line with the Environmental Permit and License Regulation mentioned above, Regulation on Handling of Waste Oils and Regulation on Handling of Dangerous Waste requires producers of waste to take the necessary measures to prevent wastes to cause harm to the environment and minimise waste production in the oil and gas industry. A positive duty imposed on the entities is to report to MEUP on an annual basis regarding the waste produced from extraction and processing of oil and gas.
With respect to the health and safety of the employees of the entities in oil and gas industry, employers must take all necessary measures and provide all necessary equipment to ensure safety at their workplaces subject to Labour Act No. 4857 published in the Official Gazette No. 25134, dated 10 June 2003 (“LA 4857”). Employers operating oil and gas activities are also obliged to (i) provide health and safety related services and training to their employees (ii) establish a workplace health and safety department. Employers are always required to ensure the safety of their employees and take the required measures to protect the environment according to the Occupational Health and Safety Act No. 6331 and its secondary legislation on occupational health and safety.
Israel’s oil and gas operations are subject to a complex and varied body of health, safety and environmental laws, regulations and other requirements, which address, inter alia, (1) the generation, handling, use, storage, transportation, disposal and remediation of hazardous or regulated materials and waste, including petroleum and its by-products; (2) climate change; (3) the discharge and emission of such waste and materials into the environment; (4) the protection of natural resources; (5) human health and safety; and (6) noise pollution.
These laws are enforced through various sanctions, such as fines, suspension of operations
and revocation or delayed renewal of permits.
Under the Petroleum Law and the Petroleum Regulations, drilling activities are to be carried out with due caution in order to prevent the uncontrollable release of gases and liquids, leakage into the ground, and penetration from one geological layer to another. In addition, it is forbidden to abandon a well before it has been properly sealed and marked.
Companies conducting gas and oil exploration drilling or gas production under the Petroleum Law and the Petroleum Regulations are required to submit an environmental report, which includes a background monitoring program for the marine environment, and an emergency preparedness plan for the treatment of oil pollution events. The Ministry of Environmental Protection continuously supervises the implementation of the submitted plans, by reviewing environmental management reports, as well as determining conditions to be included in permits and licenses that will ensure that the public and the environment will not be harmed as a result of the operations.
In addition to the environmental guidelines of the Ministry of Energy and the Ministry of Environmental Protection, holders of petroleum rights may be subject to environment-related requirements issued from time to time on behalf of other governmental bodies, including, inter alia, the Israel Lands Administration, the Ministry of the Interior (regional committees for planning and construction), the Water Authority and the Nature and Parks Authority. Certain permits for the dumping and flowing of sewage and waste into the sea, which is otherwise prohibited, can be granted by the Committee for the Grant of Licenses, pursuant to the Israeli Prevention of Sea Pollution from Land-Based Sources Law 1988 and in accordance with the terms of such permits. According to the Hazardous Substances Law 1993, a holder of petroleum rights must obtain a permit from the Ministry
of Environmental Protection to work with certain hazardous materials. In addition, a holder of petroleum rights must obtain an Emission Permit According to the Clean Air Law 2008.
It should be noted that local activists, namely communities in the Haifa Region, took steps to halt activities from the Leviathan rig, including demonstrations and seeking a court injunction. On December 17, 2019, a district judge in Jerusalem issued a temporary order halting the commencement of the production phase from Leviathan as he assessed environmental and health concerns raised by activists. Ultimately, the judge decided that not enough evidence was provided to refute claims that production would cause a serious health and environmental hazard and the injunction was overturned the following day. The court, however, left open the possibility for further injunctions and as a result, it appears that the courts may take a more active role in reviewing public health and environmental concerns as they relate to the oil and gas industry in Israel.
The Barcelona Convention deals with the exploration and production of natural gas and oil in a dedicated protocol called "The Protocol for the Protection of the Mediterranean Sea against Pollution Resulting from Exploration and Exploitation of the Continental Shelf and the Seabed and its Subsoil", 1994. The protocol came into force in March 2011. Israel has signed this protocol on October 1994 however the government of Israel has yet to ratify the protocol.
In the U.S., the key features of the environmental regime involve federal legislation and federal regulatory bodies. The Environmental Protection Agency (EPA), a key regulatory body, is primarily responsible for enforcing many of the environmental statutes and regulations in the U.S. In addition to the EPA, the U.S. federal government enacted the National Environmental Policy Act of 1969 (NEPA), which established the common use of environmental assessments (EAs). An EA is an environmental review and analysis of a proposed oil and gas project. The scope of each EA varies and will depend on the location of the activities (i.e private property, local, state or federally owned property, Native American tribal lands, or offshore production in the Outer Continental Shelf (OCS)). State regulatory bodies can also help establish specific health and safety protocols for issues unique to their regulatory jurisdiction, including the Federal Regulatory Energy Commission (FERC) safety measures for the construction and use of pipelines or the Bureau of Safety and Environmental Enforcement (BSEE) regulations relating to the operation of an offshore drilling or production platform.
As for the health and safety regime, the U.S. has developed a federal agency called the Occupational Safety and Health Administration (OSHA), with comparable state agencies that also help regulate workplace health and safety in various industries, including oil and gas. OSHA requires that there be comprehensive recordkeeping and reporting requirements in order to promote regulatory safety measures and to record and assess workplace hazards.