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A price worth paying

The alleged cost of Norway’s petroleum regulations has been much debated for many years. With a few exceptions, however, nobody has managed to identify special Norwegian rules which boost charges.

Photo of life boat

Discussions on the cost/benefit of safety regulations arise at regular intervals in the national arena, and are recurring issue at an international level. Strong views have been expressed in Norway during recent years in connection with two official inquiries – the Åm commission of 2010 and the “rig report” in 2012.

This debate has flared up again last year in connection with the specification of requirements for lifeboats and other evacuation systems on the NCS.

The lifeboat controversy, in other words, has not just been a technical discussion on the acceptable solution from a safety perspective. It has also focused on the financial consequences.

These have been slated as excessive by the industry – represented by the Norwegian Oil and Gas Association and the Norwegian Shipowners Association.

The PSA has submitted its recommended guidelines for escape equipment to the Ministry of Labour and Social Affairs, and these are expected to be circulated for consultation in early 2014.

A basic assumption in Norway is that safety of people and protection of the environment will take precedence over financial considerations.

Nevertheless, social and economic aspects must be incorporated in the technical assessments and discretionary judgements made when taking decisions on petroleum industry safety.

Norway’s offshore regulations are constantly being challenged in cost/benefit terms. Since the present rules came into force in 2001, however, nobody has been able to identify which of them might make operations more expensive. The only exception is certain provisions which regulate rest and restitution for petroleum workers.

Not has it been possible to demonstrate that any significant difference exists between the regulations and those in the UK –which Norway often compares itself with, for natural reasons.

Anne Vatten, director of legal and regulator affairs at the PSA, is concerned both with its defined duties and with identifying good examples which can expose distortions and differences.

“Our social responsibility is to contribute to the highest possible level for HSE in Norway’s petroleum sector. The country’s express ambition is to be a world leader in this area.

“That goal underlies the way we shape our role and how we approach safety developments in the industry, which shares the ambition of being a world leader.

“We’re concerned to enforce the regulations we’ve been charged with administering – also with regard to the financial and administrative consequences.”

Vatten notes that White Paper no 7 (2001-02) summed up the issue of HSE and economics in detail, and referred to the Lenning and Ognedal commissions. The first of these was appointed to identify Norwegian safety requirements which differed from those on the UK continental shelf (UKCS), while the other sought to find differences in regulatory interpretation and practice.

“Both commissions concluded that no significant variations existed between regulations on the NCS and the UKCS, and that possible differences were often attributable to enforcement and practice,” Vatten points out.

“By and large, no major regulatory changes have been made for the NCS since then. So it’s still important to include the findings of these inquiries in the debate – both for us and for the others involved in the sector.

“We’ve asked the industry on several occasions since 2002 to provide specific examples of cost-enhancing requirements which haven’t already been identified.

“We haven’t received any response so far. Nevertheless, I believe the view prevails in parts of the industry that Norway has regulations which make things more expensive.”

“Apart from a few adjustments to offshore conditions, requirements in the working environment regulations for the NCS are the same as those for land-based industry in Norway,” Vatten notes.

“Any discussion of a possible relaxation in these standards for the petroleum sector must therefore be related to the provisions for the whole of Norwegian working life.

“Alternatively, we must ask whether the critics believe that working environment requirements should be less stringent for offshore workers than for employees on land.”

Welcome proposals
Vatten is concerned over the cost/benefit debate in general, and would welcome further well-considered proposals from the industry and the unions.

“We want a continuous dialogue on the regulations, and would like to have new perspectives from the various sides – not just in connection with studies and major processes.

“Good arenas for discussion have been established. The regulations are debated and revised regularly together with the industry.”

That happens in both the Regulatory Forum and the Safety Forum, she points out. Both companies and unions are represented in these bodies.

“Regulatory development in Norway is a continuous process,” Vatten emphasises. “More substantial changes are circulated for consultation, allowing the sides to give considered responses.

“As a regulator, we’re a specialist agency. We apply the best technical understanding, and use the regulations as a tool to help ensure that necessary safety standards are maintained.

“But it’s also very important that the industry is well informed about the regulations and devotes time to becoming familiar both with the requirements and with any amendments made.

“A basic principle in Norway is that the companies must adopt new knowledge and make sure that the level of safety in their business is continuously developed and improved.

“That’s a requirement on our part – not simply and expectation.”

Dealing with value
A closer look at how the petroleum industry handles financial analyses when deciding on safety and the working environment will be taken by a project launched by the PSA in 2014. This work will study how such analysis tools function. Without broader assessments, describing the cost/benefit aspect of solutions chosen by the companies today becomes challenging.

The main aims are to help make full use of the analysis tools, so that safety investment is also identified in detail, and to develop models which better illustrate the value of safety. Identifying how the industry puts a value on safety and how existing concepts of value either drive or hinder safety-related work represent the primary goals.

The project will also look at the possible consequences of failing to weight safety as a value which cannot be expressed in numbers.