MEDITERRANEAN PAPER SERIES 2014

OFFSHORE SAFETY IN THE EASTERN MEDITERRANEAN ENERGY SECTORIMPLICATIONS OF THE NEW EU DIRECTIVE

Miki Livnat

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Cover photo: A disused pipeline leading across the beach to the ocean. © robcruse/istockphoto

Offshore Safety in the Eastern Mediterranean Energy Sector

Implications of the New EU Directive

Mediterranean Paper Series

May 2014

Miki Livnat1

1 Miki Livnat is CEO of P3ehs Ltd. focusing on environmental safety and sustainability management in large high-risk capital projects for multinational companies. Earlier, Livnat held senior positions at Intel Corporation in environment, health, and safety management for global operations. He holds a master’s degree in environmental science from the Hebrew University of Jerusalem.

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

The New EU Directive on Offshore Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

International Conventions and National Regulations

on Offshore Safety in Israel and Cyprus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Comparisons and Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Offshore Safety in the Eastern Mediterranean Energy Sector 1

1 Introduction

The discovery of natural gas in the Tamar field in Israel’s Exclusive Economic Zone (EEZ) was announced on January 17, 2009. The

Tamar field, located 80 kilometers (50 miles) west of Haifa at a depth of 1,700 meters (5,600 feet), was Israel’s first large-scale hydrocarbon discovery. It was also the first gas discovery in the Levant Basin of the Eastern Mediterranean.

Since Tamar’s discovery, other large gas discov-eries were made elsewhere in the region. In 2010, the much larger Leviathan field was discovered in the Israel EEZ. A year later, the Aphrodite field was found in the Cyprus EEZ. Gas prospection is currently under way in the Levant Basin offshore Lebanon and Syria. Lebanon launched its first gas licensing round in May 2013. The Levant Basin, the Nile Delta Basin, and the Aegean Basin are expected to hold considerable reserves of oil and gas, which could transform the Eastern Mediterra-nean into an important energy producing region.

The discoveries in the Levant Basin occurred largely due to new technology that made it possible to reach deeper waters and work at higher tempera-tures and pressures. These innovations provide economic benefits to the companies and countries involved but also create new risks for the environ-ment. Following the environmental catastrophe at the Deepwater Horizon drilling rig in the Gulf of Mexico, some 15 months after the discovery of Tamar, the need for adequate safety measures to manage these risks became apparent.

In response to the catastrophe, the European Union (“EU”) adopted the Directive on Safety of Offshore Oil and Gas prospection, Exploration and Produc-tion Activities (the “Directive”) in July 2013. EU Member states including Cyprus and Greece are required to implement the Directive by July 18,

2015.1 The Directive imposes safety obligations on EU energy companies involved in offshore activities throughout the world.

For countries such as Israel and other non-EU countries in the Eastern Mediterranean that are new to the energy industry, the Directive provides a blueprint of the best international practice, which they could use when adopting their own national legislation. Any EU companies active in the region are obliged to respect the provisions of the Direc-tive. Since the consequences of offshore accidents know no borders, cooperation between countries in the Eastern Mediterranean is critical for the prevention of accidents and for rapid intervention if they occur. The drawing up of safety legislation in countries of the region is an opportunity to begin such cooperation.

The study undertaken by the EU prior to the adop-tion of the Directive found that different national safety regimes can complicate the understanding and management of risks, increase costs, and slow-down response time in the event of accidents that produce trans-boundary effects. The U.K. and the Netherlands have discovered that by working together on offshore safety, they can improve efficiency while reducing costs and environmental risks. Similar considerations will apply in the future in the Eastern Mediterranean where there is close proximity between jurisdictions in the Levant Basin (Israel, Turkey, Cyprus, Syria, Lebanon, and Egypt, as well as the Palestinian Administration). All could gain from adopting a compatible framework for safety. The Directive, which also imposes certain obligations on EU-registered vessels operating in the waters of third countries, could provide a model.

1 Directive 2013/30/EU of the European Parliament and of the Council of June 12, 2013 on safety of offshore oil and gas opera-tions and amending Directive 2004/35/EC, Official Journal of the European Union, L178/66, 28 June, 2013

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2 The New EU Directive on Offshore Safety

The past 50 years have seen a series of offshore accidents that have cost many lives. These include the capsizing of the Alexander Kiel-

land platform in the Norwegian sector of the North Sea in 1980 that killed 123 people and the explosion at the Piper Alpha platform in the North Sea in 1988 in the United Kingdom’s EEZ that killed 167 people. National regulations concerning offshore safety and the evacuation of personnel in the event of an accident were tightened in response to these accidents.

The EU decided to review safety regulations in the member states following the Deepwater Horizon accident in 2010. After almost three years of inten-sive work, the Directive was adopted.

The key objectives of the Directive are:

• to reduce the occurrence of major accidents relating to offshore oil and gas operations;

• to establish a framework for the safe explora-tion and production of oil and gas, thereby increasing protection of the marine environ-ments against pollution;

• if prevention fails, to ensure that clean-up and mitigation are carried out to limit the conse-quences; and

• to improve the response in the event of an incident.

Integrated Offshore Rules for Safety and Environmental Protection

The Directive addresses both safety and envi-ronmental risks, as they are inter-connected. This formalizes the practice that has increasingly become the norm in North Sea countries as well as in Australia, New Zealand, and Canada. The United States took a similar approach in the 2011 reorga-nization of the Bureau of Safety and Environmental Enforcement (BSEE), an agency under the Depart-ment of the Interior. The goal is to establish a single

framework that eliminates overlaps, redundancies, and inconsistencies.

Risk Based Goal-Setting Approach

The Directive adopts a risk-based goal-setting regu-latory approach. In particular, it requires owners and operators to demonstrate to the regulators that all major accident risks have been identified and assessed and that measures have been adopted to minimize risks. To achieve this goal, a “Major Hazards Report” must be submitted to the regula-tors. This goal-oriented approach should reinforce the responsibility for managing risks of the owners and operators of offshore installations.

Before the two accidents referred to above, regula-tions concerning safety on oil and gas installations in both Norway and the U.K. were prescriptive in nature. Under this approach, detailed require-ments are imposed by the regulators. Prescriptive regulation is suitable for managing “traditional” occupational safety and environmental risks as they are characterized by high frequency of occurrence and low relative impact. This has, however, proved ill-suited to an industry characterized by events of high hazard and low frequency, where technology and risks change rapidly. Following the Deepwater Horizon catastrophe, the United States is consid-ering departing from the prescriptive approach and adopting a more goal-oriented approach to the regulation of offshore safety.

One Framework and One Set of Objectives

The offshore energy industry is highly mobile with installations that operate in the EEZs of different countries and a multi-national labor force. The aim of the Directive is to achieve higher safety and to reduce risks by making rules concerning the safety of offshore installations consistent and coherent throughout the EU. In addition, it requires EU companies operating outside EU-regulated waters to i) ensure that their major accident preven-tion policies cover such operations and ii) report

Offshore Safety in the Eastern Mediterranean Energy Sector 3

any major accidents they are involved in to their country of registration.

One Independent and Objective “Competent Authority” in Each Country

The Directive requires each member state to set up an authority that is technically competent and independent. This provision is intended to avoid conflicts of interest that might otherwise arise. The competent authority will act as a single point of contact for the operators by integrating, aligning, and streamlining the requirements of the various government agencies involved in super-vising offshore oil and gas activities. It should not be responsible for the economic development of offshore natural resources or licensing of offshore oil and gas operations.

The Directive enables each EU member state to decide upon the institutional structure of its competent authority. For countries with small econ-omies and little offshore activity, where complete separation of the competent authority from other related responsibilities would be impractical, the member state concerned is required to adopt the best alternative arrangements to ensure the independence and objectivity of the competent authority.

The responsibilities of the competent authority include:

• enforcement;

• reviewing Reports of Major Hazards and providing comments;

• informing operators of the procedure they are required to follow in drawing up safety plans and, when satisfied, approving them;

• scrutinizing the technical capacity and financial liability of companies, as part of the licensing procedure; and

• requesting reports from the operators on offshore performance and sharing them with other member states.

Under the Directive, it is up to the member states to determine how the costs of the authority are met. A member state may decide that these costs are to be borne by the oil and gas industry.

Requirement for a Major Hazard Report

The Directive requires the operator to prepare a Major Hazard Report before obtaining a license. This requirement is designed to ensure that major hazards have been identified, and that a major accident prevention policy, appropriate control measures, a safety and environmental management system, and an internal emergency response plan are in place.

Other provisions of the Directive include the independent verification of the suitability of critical safety and environmental equipment, their examination and testing, and the need for opera-tors to respond to the verifier and take appropriate action. Reporting obligations are also imposed on operators in order to provide greater transparency and the sharing of experience while safeguarding commercial confidentiality.

Obligations of Owners and Operators

The Directive does not prescribe specific technical standards; existing industry and national standards will remain valid. Differences in national require-ments on technical issues such as well control, well design and integrity, emergency shutdown, and emergency response will remain, provided that they are consistent with the goals of the Directive.

The Directive requires that adequate environmental and safety management systems be in place and requires a high level of transparency. The safety and environmental management system provided for by the Directive obliges the operators to assess risks according to the Major Hazard Report. If this shows

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that there are gaps, the operators must take action to reduce risks.

The Directive is focused on safety management systems because weaknesses in these have been responsible for most major accidents. The factors contributing to past accidents include the quality of management decision-making, the competence and skills of workers and managers, coordination between owners and sub-contractors, and clarity of roles and responsibility. Changes in management systems are harder to implement than technical measures, even though their cost may be much lower, because of resistance by management and staff.

Others obligations of owners and operators include:

• Inclusion of major environmental consequences in the Report on Major Hazard;

• Obtaining approval by the regulator before beginning operations with fixed and mobile installations;

• Demonstrating that a comprehensive safety and environment management system is in place, including schemes for independent verification of critical safety elements and well plans;

• Demonstrating technical and financial capacity throughout the lifecycle of operations, starting at the licensing stage;

• Accepting liability for environmental damage;

• Submitting major accident prevention policy to the regulator;

• Drawing up an emergency plan for immediate response to major accidents, preventing escala-tion;

• Notifying regulator before starting well opera-tions;

• Submitting weekly well reports to regulator;

• Reporting on major accidents involving the operator overseas;

• Securing cooperation of the workforce and protecting whistle-blowers;

• Engaging in tripartite consultation;

• Reporting incidents and near-misses in EU standard format.

Cyprus is required to transpose the Directive into its national law by July 2015 and ensure that existing laws are amended to ensure compli-ance with the Directive. The owners/operators of planned well operations and production installa-tion are required to ensure compliance with the new rules concerning offshore safety from July 18, 2016. Existing installations will have to comply with these new rules from July 18, 2017. This gradu-ated approach gives owners/operators and member states time to ensure full implementation, but Cyprus needs to move ahead with transposition rapidly.

Offshore Safety in the Eastern Mediterranean Energy Sector 5

At present, neither Cyprus nor Israel has enacted environment and safety legisla-tion that relates specifically to offshore

installations. Both countries have occupational safety and health laws of a general nature dating from the period of British rule. These laws provide good coverage for traditional occupational safety but have limited value for offshore risks. Regula-tions concerning the safety of offshore activities are fragmented and fall under the responsibility of numerous government authorities.

Cyprus has ratified a number of international conventions and, as an EU member state, has transposed certain EU directives that are relevant to offshore activities. Israel, however, has just begun internal consultations among different government departments with a view to adopting dedicated offshore safety legislation and is not a signatory to the relevant conventions. There is little public interest in the topic despite vocal environmental campaigns about the energy industry.

Tables 1 and 2 compare the status of various conventions and laws relevant to offshore safety and environment in Israel and Cyprus.

These tables show a rather fragmented legal frame-work concerning offshore safety in both countries. This legal patchwork still enables the governments to impose safety and environmental protection requirements on companies that are awarded explo-ration and production licenses. These requirements are set out in the license operation conditions for each project. Given limited activity to date, this case-by-case approach has been deemed sufficient. In the future, however, as activities increase, both countries will need a clearer, comprehensive, and transparent framework concerning offshore safety of oil and gas operations. In any event, Cyprus will need to implement the provisions of the Directive by 2015.

3 International Conventions and National Regulations on Offshore Safety in Israel and Cyprus

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Table 1: International Conventions & Protocols

International Conventions & Protocols Israel status Cyprus status

The UN Convention on the Law of the Sea (UNCLOS)a

Not signed or ratified Some of its elements are being applied, for example, the EEZ agreement between Cyprus and Israel

Signed in 1982 and ratified in 1988

Convention for the Protection of the Mediterranean Sea Against Pollution (The Barcelona Convention)b

Madrid Protocol on offshore activities

Entered into force in 2005Signed 1994 but not ratified. Ministry of Environmental Protection is an active participant in the protocol workgroup and is imple-menting some of the protocol requirements

Entered into force in 2004Entered into force 2011. Enforced by the Ministry of Agriculture, Natural Resources and Envi-ronment

Convention on Environmental Impact Assessment in a Trans-Boundary Context (Espoo, 1991), known as the “Espoo (EIA) Convention”The Espoo Convention sets out the obligations of Parties to assess the environmental impact of certain activities at an early stage of project. It also lays down the general obligation of States to notify and consult each other on all major projects under consideration that are likely to have a significant adverse cross-border environ-mental impact.

Not signed or ratified Accession in 2000

The International Maritime Organization (IMO) has numerous international conventions. The top three with importance and relevance to hydrocarbons offshore safety are:International Convention for the Safety of Life at Sea (SOLAS)c with its Code for the Construction and Equipment of Mobile Offshore Drilling Units 2009 (MODU Code)d

International Convention for the Prevention of Pollution from Ships (MARPOL)e

International Convention on Oil Pollution Preparedness, Response, and Co-operation (OPRC)f

Membership since 1952

Ratified

Ratified

Ratified

Membership since 1973

Ratified

Ratified

Not ratified

a United Nations Convention on the Law of the Sea of December 10, 1982b Convention for the Protection of the Mediterranean Sea Against Pollution (Barcelona Convention)c International Convention for the Safety of Life at Sea (SOLAS), 1974d The Code for the Construction and Equipment of Mobile Offshore Drilling Units, 2009 (2009 MODU Code)e International Convention for the Prevention of Pollution from Ships (MARPOL)f International Convention on Oil Pollution Preparedness, Response, and Co-operation (OPRC)

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Table 2: Cypriot & Israeli national laws relating to hydrocarbon offshore environment and safety

Scope Cyprus Status Israel StatusGranting of hydrocarbon prospection, exploration, and production licenses

The Hydrocarbon Law No. 4 (I)/2007 and Hydrocarbon regulation Nos. 51/2007 and 119/2009g derived from EU directive 94/22/EC.The Ministry of Commerce, Industry, and Tourism has the authority to grant hydrocarbon licenses.

The Petroleum Law 1952h and its regulation 1953.The Ministry of National Infrastructures, Energy, and Water Resources has the authority to grant hydrocarbon licenses.

Requirement to Conduct Stra-tegic Environ-mental Assess-ment (SEA) for the EEZ

Assessment of Impact on the Environment from Certain Plans and/or Programs Law (No. 102(I)/2005), which is harmonized with Direc-tive 2001/42/EC,i better known as Strategic Environmental Assessment (SEA) Directive. The licensees are required to comply with the SEA.A Strategic Environmental Assessment (SEA)Concerning Hydrocarbon Activities within the Exclusive Economic Zone of the Republic of Cyprus was conducted in 2008 by the Ministry of Commerce, Industry, and Tourism.

There is no legal requirement to conduct Stra-tegic Environmental Assessment. Legal require-ment to conduct site specific environmental impact statement relates to the building and plan-ning law, which does not apply in the EEZ. A strategic environmental assessment in Israel’s EEZ is currently being conducted under the direc-tion control and budget of the Ministry of National Infrastructures, Energy, and Water Resources.

Provisions of the hydrocarbon laws relevant to safety and envi-ronment

The following matters are covered by current legislation: • Work practices• Protection of the environment• Contingency plan drilling practices• Well abandonment• Construction and maintenance of installation

pipelines, and related facilities

Article 82 of the Petroleum Law accords the minister discretion to develop specific regula-tions including those related to safety. Those regulations have not been adopted to date. The Petroleum Law gives the licenses granting body the authority to request from the licensee conditions to the work plan. The work plan is the instrument by which safety and environmental requirements are set individually in respect of each license. Conditions may include the require-ment to prepare an environmental impact assess-ment report, an emergency planning abandon-ment plan, etc.The Ministry of National Infrastructures, Energy, and Water Resources submitted the environ-mental guidelines in December 2013 and the safety guidelines for offshore oil and gas explora-tions in January 2014 for public consultation. These guidelines are derived from the Petroleum Law.

g Hydrocarbon (Prospection, Exploration, and Exploitation) Law of 2007 (No.4(I)/2007) and the Hydrocarbon (Prospection, Explora-tion, and Exploitation) Regulations of 2007 and 2009 (No.51/2007 and No.113/2009), in Greekh The Petroleum Law 1952i Directive 2001/42/EC of the European Parliament and of the Council of June 27, 2001 on the Assessment of the Effects of Certain Plans and Programmes on the Environmentj Strategic Environmental Assessment (SEA) concerning Hydrocarbon Activities within the Exclusive Economic Zone of the Republic of Cyprus

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Scope Cyprus Status Israel Status

Environmental regulations

Assessment of Environmental Impact from Certain Projects Law (N. 140(I)/2005) (Euro-pean Directive 85/337/EEC), for the exploration drilling requires submission of a full Environ-mental Impact Assessment (EIA) Study. Competent Authority according to this law is the Department of Environment, which examines the report and provides terms that the licensee is obliged to follow and comply. There are currently seven management plans under the environmental approval:Contingency Plan for Hydrocarbon Leakage and FireMud and Offshore Discharge PlanWaste Management PlanEmergency Response PlanShipboard Oil Pollution PlanA Safety CasePlan for the Control and Monitoring of the Environmental Parameters

Since 2012, The Prevention of Sea Pollution from Land Origins Law 1988k and Regulation 1990 have served as the main instruments for moni-toring and managing offshore environmental performance of companies involved in oil and gas explorations and production. The Ministry of Environmental Protection through its Marine and Coastal Environment Divisionl issues discharge permits, which set inter alia specific qualitative and quantitative waste and mud discharge to the sea limits. The permit requires the operator to conduct marine environment background monitoring at the sea bed and profiling of the water during operations. The permit also imposes a requirement to report in real time situations when prescribed limits were exceeded. The division is also responsible for setting the requirements reviewing the opera-tor’s emergency preparedness plan for treatment of oil spills, in accordance with Israel’s National Contingency Plan for Preparedness and Response to Combating Marine Oil Pollution.m

General Occupa-tional Health and Safety

The Drilling Requirements for Safety and Health at Work (extractive industries through drilling) Regulationn of 2002 harmonized with Directive 92/91/EECo of November 30, 1992, concerning the minimum requirements for improving the safety and health of workers in the mineral industries.The responsible office is the Department of Labor Inspection.p

Work Safety Ordinance 1970q is the main law relating to occupational safety. Drilling for extraction of petroleum is included in the list of activities governed by the law. There are no specific provisions concerning onshore and offshore drilling activities.The responsible office is the Occupational Safety and Health Administration within the Ministry of Economy.

Vessel Safety The responsible office is the Department of Merchant Shipping.

Port regulations (vessel safety) 2008.The responsible office is the Administration of Shipping and Ports within the Ministry of Trans-port and Road Safety.

k Prevention of Sea Pollution from Land-Based Sources Law 1988l Israel Ministry of Environmental protection Marine and Coastal Environment Divisionm Israel’s National Contingency Plan for Preparedness and Response to Combating Marine Oil Pollutionn The Drilling requirements for safety and health at work (extractive industries through drilling) Regulation 2002, in Greeko Council Directive 92/91/EEC of November 3, 1992 Concerning the Minimum Requirements for Improving the Safety and Health Protection of Workers in the Mineral-Extracting Industries Through Drilling (11th individual Directive within the meaning of Article 16 (1) of Directive 89/391/EEC)p Republic of Cyprus Department of Labor Inspectionq Work Safety Ordinance 1970

Offshore Safety in the Eastern Mediterranean Energy Sector 9

Comparison between the Provisions of the Directive and the Current Legislative Framework in Cyprus and Israel

The current patchwork of laws and regulations in Israel and Cyprus contains numerous over-laps and omissions. The overlaps may create

confusion, and the gaps could impose higher risks on operators.

In both countries there is one government office that has the authority for issuing licenses and that also has the major responsibility for setting safety and environmental requirements. In Cyprus it is the Ministry of Commerce, Industry, and Tourism and in Israel, the Ministry of Energy and Water. Since these ministries are not responsible for all matters concerning safety, an informal case by case consultation of the various ministries and authori-ties involved is carried out by the licensing body.

In Cyprus, the following government depart-ments are involved in the consultative process: the Cyprus Joint Rescue Coordination Center, the Department of Fisheries and Marine Research, the Department of Labor Inspection, the Depart-ment of Merchant Shipping and Civil Defense, the Department of Environment, the Cyprus Fire Service, and the Geologic Department of Cyprus. In Israel, the government departments involved are the Marine and Coast Division of the Ministry for Environmental Protection, the Ministry of Trans-port (administration of shipping and ports), the Ministry of Economy, and the Occupational Safety Administration. This dispersion of responsibility makes it difficult, in practice, to achieve the objec-tives of the Directive.

There are no specific operational standards imposed in either country on offshore oil and gas operators. Instead, it is expected that companies will implement industry best practices, as they do in other parts of the world and as required by their insurance contracts. The regulators have limited responsibilities and resources for evaluating the

quality of safety plans submitted by companies. There is no integrated risk-based approach deriving from specific legislation regulating offshore activities. The Directive was designed, in part, to remedy these shortcomings in EU member states by requiring them to appoint a single competent authority to oversee the operator’s compliance with the requirements of the Directive.

Streamlining Israel’s Safety Regulations

The Zemach Inter-Ministerial Committee appointed by the prime minister in October 2011 examined the government’s policy regarding natural gas in Israel.2 In August 2012, the committee provided its recommendations to the Israeli government, but did not discuss the safety and environmental aspects of the industry.

Offshore activity is widely perceived in Israel as remote, and some regulators even question if it falls under national jurisdiction. The concept of setting up safety management systems, which is a key element of the Directive, has only recently been accepted in Israel. Companies will be legally required to develop safety management plans in Israel starting in August 2014.

Israeli experts and officials have drawn attention to the benefits of adopting legislation along the lines of the EU Directive. InAugust 2013, the European Commission’s Technical Assistance Exchange Office (TAIEX), in cooperation with the Israeli Ministry of Transport, organized a workshop on offshore safety with participants drawn from the different government departments concerned. The Ministry of Foreign Affairs has convened inter-ministerial meetings to examine the implications of the Directive.

On October 15, 2013, the Israel State Comptroller included in his annual report a detailed chapter on “Readiness and Preparedness for the Environ-

2 The Inter-ministerial Committee to Examine the Government’s Policy Regarding Natural Gas in Israel

4 Comparisons and Implications

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mental Impact of Off-shore Oil & Gas Drilling.”3 The report criticized the lack of cooperation and coordination between the Ministry of Environ-mental Protection and the Ministry of Energy and Water on offshore safety and environmental protection. It called for a clear division of roles and responsibilities and for the drawing up of clear safety and environmental requirements for compa-nies operating in the sector.

Following these different consultations and reports, the Israel authorities seem to prefer to take the EU Directive as a basis for a code of conduct rather than for legislation. The adoption of a code of prac-tice for safety in the industry is likely to be one of the recommendations of the Public Committee set up by the Ministry of Economy in 2011 to promote occupational safety in Israel.

Multilateral and Bilateral Agreements

Israel has not ratified the UN Convention on Law of the Seas (UNCLOS). It has, however, concluded a number of bilateral and multilateral agreements that contain provisions similar to those of UNCLOS, including the 2010 Agreement with Cyprus delimitating their respective EEZs.4 Israel participates actively in the work of the 1976 Convention for the Protection of the Marine Envi-ronment and the Coastal Region of the Mediterra-nean (generally known as the “Barcelona Conven-tion”).

The Barcelona Convention and its protocols provide a broad legal framework for applying safety and environmental requirements for offshore oil and gas activities. The Barcelona Convention entered into force for Israel in 2005. Israel rati-fied the Dumping Protocol5 in 1984, signed the

3 Israel State Comptroller report, in Hebrew4 Agreement between the Government of the State of Israel and the Government of the Republic of Cyprus on the delimitation of the exclusive economic zone5 Protocol for the Prevention of Pollution in the Mediterranean Sea by Dumping from Ships and Aircraft

1976 Emergency Protocol6 in 1978, and currently uses the Land Based Sources Protocol7 to regulate discharge of waste from offshore installations. Israel has signed all other protocols to the Barcelona Conventions; however it has not yet ratified all of them.

The 1994 Barcelona Offshore Protocol8 entered into force in 2011. The EU ratified this Protocol in 2013 and has brought the Directive into line with this Protocol. Israel signed this Protocol in 1994, but has not ratified it yet.

In the Eastern Mediterranean, the Protocol has entered into force for Cyprus and Syria only.

Bilateral agreements between the EU and countries in the Eastern Mediterranean provide a framework that could facilitate the use of the Directive as a blueprint for offshore safety legislation.

6 Protocol Concerning Cooperation in Preventing Pollution from Ships and, in Cases of Emergency, Combating Pollution of the Mediterranean Sea7 Protocol for the Protection of the Mediterranean Sea against Pollution from Land-Based Sources8 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

Table 3: Barcelona Offshore Protocol

Country Signature Ratification Entry into force

Cyprus November 14, 1994 May 16, 2006 March 24,

2011European Union

December 17, 2012/AC

February 27, 2013 -

Egypt - - -

Greece October 14, 1994 - -

Israel October 14, 1994 - -

Lebanon - - -

Syria September 20, 1995

February 22, 2011

March 24, 2011

Turkey - - -

Offshore Safety in the Eastern Mediterranean Energy Sector 11

Lebanon, Israel, the Palestinian Authority, and Egypt all have association agreements with the EU including action plans as part of the European Neighborhood Policy. While these agreements do not cover offshore environment and safety in particular, they cover general topics relating to environmental protection in the Mediterranean and maritime safety. The Directive forms part of the EU acquis, which will be discussed within the frame-work of these agreements.

As a candidate for EU membership, Turkey is eventually expected to undertake commitments to implement the Directive when it is discussed under the appropriate chapter of the accession negotia-tions. In practice, the slow pace of the negotiations makes this obligation rather theoretical.

Another international platform that could serve as a way to encourage regional collaboration between the countries in the Eastern Mediterranean is the Union for the Mediterranean9 (UfM).

The bilateral relationship between Cyprus and Israel probably provides the best framework for cooperation on the adoption of the Directive as a blueprint for the regulation of off-shore safety. Since the Delimitation Agreement regarding the EEZ was signed in 2010, the two countries have signed security cooperation agreements, agree-ments for collaboration in areas of energy effi-ciency and renewable energy projects, agreements to support each other in emergencies, and most recently agreements to connect their national electricity grids. The two countries are also working on a unitization agreement for gas reservoirs that straddle their maritime borders. Conclusion and implementation of these different agreements is likely to take a considerable time. An agreement to

9 The Secretariat of the Union for the Mediterranean was created by 43 Euro-Mediterranean heads of state and govern-ment in Paris on July 13, 2008. De-pollution of the Mediterra-nean is one of its six main objectives.

cooperate on offshore safety and rapid intervention would bring clear benefits to the industry.

Implications of EU Directive for U.S. Companies Operating in the Region

The EU directive sets expectations and goals based on global best practices for accident prevention and for addressing the environmental conse-quences of a major accident. It creates a regula-tory framework, requires governments to set up a single relevant authority and imposes reporting requirements. Like the procedures under the EU Directive, the new U.S. Safety and Environment Management System focuses on elements such as the risk assessment process, transparency, training of staff, and reporting and auditing requirements.10 The EU directive does not prescribe new technical standards or impose an additional burden on U.S. companies operating to Gulf of Mexico standards.

The EU directive could actually make business easier for such companies. Should Israel decide to adopt the EU offshore directive as a regulatory framework, an informal code, a best practice, or a law, it would provide consistency that would benefit companies working on both sides of the Cyprus Israel EEZ line. It would also simplify the companies’ interactions with national authorities as it requires the latter to set up a single regulatory agency as a focal point on environmental and safety issues.

10 30 CFR 250 Subpart S Safety and Environmental Management Systems (SEMS)

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Cooperation between Cyprus and Israel should be further developed to encourage a consistent approach to regulation. One of the

areas for collaboration is in setting common opera-tional standards, including those related to safety and the environment. The Israel state comptroller’s recent report points out the gaps in offshore safety and environmental regulation and has raised public and government awareness of the issue. These developments provide a favorable climate for better regulation of offshore safety.

While the geopolitics of the region remains complex, cooperation between neighboring countries in the Eastern Mediterranean could bring benefits to all parties. These include building capabilities for rapid intervention in the case of a major accident. This effort could start by reviving agreements for cooperation on oil spill emergency response between Egypt, Cyprus, and Israel11 concluded more than a decade ago. Instruments for such cooperation include the Barcelona Convention Prevention and Emergency Protocol and its opera-tional body, Regional Marine Pollution Emergency Response Centre for the Mediterranean Sea with the collaboration of industry players.

11 Development of a Sub-Regional System for combating major marine pollution incidents affecting or likely to affect the territo-rial sea, coasts and other related interests of Cyprus, Egypt, and Israel. This effort started in January 1993 and ended in December 1995 funded by EU project LIFE-92-2/INT/02

The sharing of scientific data obtained from the Strategic Environmental Assessment (SEA), covering the EEZs of Cyprus, Lebanon, and Israel, would bring benefits to all parties. Combining the scientific data would provide a comprehensive picture of the Levant Basin and would serve as a starting point for the adoption of confidence-building measures in the region. The UfM could provide a useful framework for such cooperation.

Overall, the safety of offshore installations is a promising field for regional cooperation. It is non-political in nature and addresses common concerns of all parties in the region. Energy companies will benefit by facing a single, or at least compatible, framework for safety requirements. Companies will remain free to implement the standards specified in their licenses, within the new regulatory frame-work. Cooperation on offshore safety could also be considered a confidence-building measure in the context of long-standing conflicts. Confidence-building measures in this field should be easier to agree upon than in more sensitive political areas.

The European Union has a key role to play as a catalyst for cooperation on offshore safety. The EU needs to mobilize its different policy instruments, including technical assistance and project finance, to promote cooperation in this vital field. The United States should also support this process, as it has close relations with the countries concerned and U.S. companies are involved in exploration and production in the Eastern Mediterranean.

5 Conclusions

O F F I C E SWashington • Berlin • Paris • Brussels

Belgrade • Ankara • Bucharest • Warsaw • Tunis

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