Who are the players in the petroleum sector, and how are responsibilities divided between them? What is the difference between a licensee and an operator? What is the “see to it” duty, why does the PSA’s responsibility for a rig not apply everywhere, and why does the authority report to the Ministry of Labour and Social Affairs (ASD)? Find the answers in this section.
Who takes care of safety?
Rests with the companies
A fundamental principle of Norway’s petroleum regulations is that each company is responsible for the safety of its own operations.
That is because the necessary detailed knowledge and decision-making authority – and not least the resources to ensure compliance with the regulations – lies with the individual player.
This principle can be compared with driving a car. A driver is ultimately liable for observing the rules of the road, adapting speed to the conditions and ensuring that the vehicle meets an acceptable technical standard.
Who can conduct activities?
All companies wanting to pursue petroleum operations on the NCS must qualify as a licensee or an operator. They must demonstrate the ability to help boost offshore value creation and the HSE expertise required to strengthen safety.
What is a licensee?
A licensee is a company holding an interest in a production licence issued under the Norwegian Petroleum Act. Each licence usually has several licensees, with one appointed as operator.
All licensees undertake to contribute actively to the licence, in part by monitoring that the operator has activities in it under good control.
What is an operator?
The operator is the licensee who handles day-to-day management of activity in a production licence on behalf of the whole partnership.
It has overall responsibility for acting in a prudent manner and pursuant to the regulations, and for seeing to it that everyone working for it complies with the HSE requirements.
What is a contractor?
Contractors provide services in various areas, such as drilling, well service and maintenance. They are responsible for the safety of their own operations, and must have a management system able to fulfil that liability.
What is the “see to it” duty?
This Norwegian legal concept means that the operator has a special obligation to ensure that the activity as a whole is conducted in a prudent manner and pursuant to the regulations.
That includes seeing to it that everyone working for the operator complies with official HSE requirements.
The duty is a general overall responsibility to supervise which supplements the obligation resting on all companies to comply with the regulations.
How this requirement is to be met must be specified in the operator’s management system.
The see to it duty also applies to the licensees, who must facilitate the operator’s ability to do its work and monitor that the latter is fulfilling the regulatory requirements.
A licensee has a responsibility to act if it identifies conditions which fail to accord with the regulations.
What are the PSA’s responsibilities?
Put briefly, the PSA establishes parameters for the petroleum industry and supervises that activities in this sector are pursued in a prudent manner.
That involves developing regulations, checking that the companies comply with these, and taking enforcement action (such as issuing orders) if the rules are broken.
The government must ensure that an integrated approach is taking to regulating the industry, and that regulatory revisions keep pace with general development in the sector.
In addition, the PSA is responsible for assessing whether the standards referenced in the regulations are suitable for their purpose.
Experience transfer and enhancing accountability among players are important goals for overall follow-up of HSE in the petroleum sector, and the PSA puts great emphasis on communicating knowledge about risk.
At the same time, a fundamental principle is that the government cannot inspect safety into the industry. The latter bears sole responsibility for acting prudently and in compliance with the regulations.
The authorities cannot manage the industry in detail. Nor is it desirable for the government to do so, since would undermine the companies’ own liability.
A crystal-clear division of responsibility is applied in Norway’s petroleum sector – whoever owns the risk also owns the duty to deal with it.
One unit – several regulators
Mobile units such as rigs come under three different regulators, depending on where they are located and what they are doing. A drilling rig, for example, is regulated as follows.
The PSA has authority when the unit is on location and conducting petroleum operations. This overall responsibility covers the rig and all activity within a surrounding 500-metre-wide safety zone.
The Norwegian Maritime Authority (NMA) is responsible for the same unit (providing it flies the Norwegian flag) when it is moving between two location – on its way to land, for example, or to a new drilling assignment.
Travelling under its own steam, the rig is not conducting petroleum operations and is therefore to be regarded as a vessel.
The Norwegian Labour Inspection Authority has regulatory authority over work with and on the unit when berthed for such purposes as construction, repairs or modifications. The rig is then a land-based workplace and would not be subject to the Petroleum Act.
THE PSA’S VIEW: A high level of safety in the petroleum industry is a collective responsibility. The companies are responsible for managing risk in their own activities, while the PSA’s duty is to develop the regulations and to check that the companies are complying with these.
What are the employee’s responsibilities?
Employees have an obligation to contribute to prudent operations, and therefore play an important role in safety work – one which both confers rights and imposes duties.
Worker participation is a regulatory requirement in Norway, on the grounds that those exposed to risk must be involved in decisions related to HSE.
Such involvement is partly intended to draw on the overall knowledge and experience of personnel to ensure that matters have been adequately assessed before HSE-related decisions are taken.
Elected safety delegates and employee members of a company’s working environment committee have a particular responsibility in this respect.
Since Norway’s petroleum industry regulations are largely performance-based (functional), they specify what level of safety is to achieved but not how to do so.
The companies have great freedom to decide how to meet the regulatory requirements, which means that many solutions are adopted at local level. That underlines the importance of ensuring that everyone involved has a chance to be heard.
Why does the PSA report to the ASD?
From its inception in 1972, the Norwegian Petroleum Directorate (NPD) reported to the Ministry of Industry – which became the Ministry of Petroleum and Energy (MPE) in 1978.
Constitutional responsibility for safety, the working environment and emergency preparedness was transferred to the ASD in 1979, while the MPE retained resource management.
The most important reason why the NPD was required to report to different ministries – an unusual solution in Norwegian government practice – was to avoid conflicts of interest between resource and safety concerns.
When the PSA was established in 2004, this arrangement continued and became more manifest.
Interfaces between regulators
Ensuring that the industry does not face conflicting demands from different regulators is important, and the PSA collaborates with a number of other government agencies.
Formal cooperation is accordingly in place with the Norwegian Environment Agency (NEA), which enforces the Pollution Control Act, and the health authorities. The latter supervise compliance with relevant legislation in the petroleum sector.
Specific agreements detail the practical management of interfaces between these agencies, and they meet regularly to discuss collaboration.
Deals have been struck on support from government agencies with no independent authority in the petroleum sector to cover areas where duplicating expertise would be inappropriate.The PSA can thereby draw on technical assistance from such bodies as the Norwegian Maritime Authority, the Norwegian Civil Aviation Authority and the Norwegian Meteorological Institute.
The PSA has also entered into collaboration agreements covering agencies which have clear interfaces with it in terms of authority and responsibility. These include the NPD, the Norwegian Labour Inspection Authority and the police.
What is required to qualify?
New players seeking to work the NCS must document to the government that they have the necessary resources and expertise.
Knowledge of the regulations, particularly those relating to HSE management, can be a challenge for such arrivals. So the government provides a prequalification process.
This seeks to assess that newcomers meet the requirements, helps them to get going off Norway and gives them a good grasp of official expectations for both licensees and operators.
Applicants wanting to participate on the NCS are assessed by the PSA and the Norwegian Petroleum Directorate (NPD) on behalf of the ASD and the Ministry of Petroleum and Energy respectively.
The prequalification scheme was introduced in 2000 to ensure a predictable process, but does not guarantee that a company completing it will secure interests in production licences.
Such holdings are primarily issued by the Ministry of Petroleum and Energy through the annual awards in predefined areas (APA) or in the regular numbered licensing rounds.
Recipients must meet various criteria, such as geological understanding, technical expertise, financial capacity and HSE capability.