Petroleum Contract Compliance and Inspection

3.    Health, safety and the environment (HSE) standards and compliance

There is well-developed international practice on health, safety and environmental (HSE) standards. These standards are reflected in national legislation or regulations and are available for adoption by oil and gas companies. The HSE agency’s obligations include the recording, reporting, and assessment of hazards to promote regulatory safeguards and identify violations.

HSE regulations are enforced by issuing permits and approvals. Regulatory officers can inspect and, where necessary, confiscate or seal up, facilities that are in breach of HSE regulations. The renewal of HSE permits or approvals is subject to compliance with the terms of the expired permit. Non-compliance with HSE regulations is an offence that can result in a fine and loss of licence (for companies), and imprisonment and fine (for individuals).

The current trend in HSE regulations is to have a performance based (goal-oriented) approach instead of a set of detailed and highly prescriptive requirements. These broad regulations are often backed by mandatory guidelines. This way, governments enable companies some flexibility in the methods and equipment they choose to meet their obligations. In the field of safety, the trend has been to shift responsibility in determining what is safe in oil and gas operations to the operating companies, which routinely sub-contract to large numbers of service and supply companies for their operations.

Examples of HSE practice from Norway and the UK

In Norway, HSE regulations are enforced by a single authority, the Petroleum Safety Authority (PSA) which coordinates with other regulatory authorities. The PSA acts as the regulatory authority for technical and operational safety and for the working environment; its regulatory role covers all phases of the industry, from planning and design through construction and operation to decommissioning.

In the UK, the Health and Safety Executive's Energy Division is responsible for monitoring compliance in the offshore oil and gas industry. Inspectors assess safety cases submitted by operators, investigate accidents to and complaints from workers and the circumstances associated with any dangerous occurrence or other event that may signal the presence of a major hazard. Inspectors will inform operators and other duty holders of actions necessary to comply with the law; failure to do so may result in the matters being referred to the courts to secure either compliance with the law or to obtain justice.