Offshore Oil & Gas Policy Handbook 2011 - The Gulf of Mexico Oil Spill Mandates Rethinking of Health, Safety and Environment Measures

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“Offshore Oil & Gas Policy Handbook 2011 - The Gulf of Mexico Oil Spill Mandates Rethinking of Health, Safety and Environment Measures” is the latest report from GlobalData, the industry analysis specialists, that offers comprehensive information on offshore oil and gas policy initiatives taken up by countries with significant offshore oil and gas operations, globally. There has been an ongoing shift towards looking out for oil and gas resources in emerging and frontier areas across different regions globally. In the US, it is prompted by the need to increase domestic production of oil and gas in order to bring down prices, as currently, there is no real alternative to oil that can drive the US economy. In other regions like Africa, South and Central America, Asia Pacific and Europe too, there have been policy directives encouraging foreign participation for offshore oil and gas production across different countries. This is mainly because the onshore resources are depleting and the offshore areas are yet to be fully exploited.

Global Oil and Gas Companies are Continuing to Venture Deeper Into Offshore for Exploration and Production Activities

Over the past few decades, extensive oil and gas exploration has been carried out for hydrocarbon reserves onshore. Most major onshore discoveries were made during 1960 and 1980. In the recent past, very few major discoveries have been made onshore. In the last few years, the number of discoveries made offshore almost equal or at times exceed onshore discoveries.

Figure: Oil and Gas Industry, Global, Number of Oil and Gas Discoveries, 2004-2011 (April)

Source: GlobalData/ Oil & Gas eTrack Oil & Gas Discovery Database

A number of significant offshore discoveries, like the Tupi field in Brazil and Leviathan field in Israel, are encouraging oil and gas companies to explore the unexplored areas in the offshore regions.

The technological advances in the industry are making offshore exploration and production both feasible and profitable. As a result of this, global oil and gas companies are willing to venture deeper into offshore.

The Gulf of Mexico Disaster Led Countries Globally to Move Ahead with Offshore Oil and Gas Operations with Stricter, More Efficient and Accountable HSE Regimes

Following the Gulf of Mexico disaster, the US government imposed a moratorium on offshore oil and gas operations. At the same time other countries with major offshore operations such as the UK, Norway, Australia, Netherlands and so on, continued with their offshore operations citing the reason that they have good and efficient offshore safety and environment policies. The BP oil spill disaster is an incident among many of such risks faced by the oil and gas industry. A few months later, the US government too lifted the moratorium and decided to move ahead with offshore operations with a stricter, more efficient and accountable HSE regime.

The Gulf of Mexico Disaster Did Not Effect Decision-Makers’ Attitude towards BP, as It Continues to Get Deep Sea Contracts After the Disaster

In May 2011, BP along with Azerbaijan State Oil Company SOCAR received a production sharing agreement (PSA) to explore and develop the Shafag-Asiman block in the Caspian Sea, and in the same year was awarded four blocks in deepwater of Ceduna Sub Basin within the Great Australian Bight. Australian Bight, off the coast of South Australia is among the seven deepwater blocks put up for lease in offshore Australia.

Contracts awarded to BP since the recent oil spill disaster suggest that countries did not change their attitude towards BP due to the incident, but increased focus on their HSE policies and began asking operators in their regions to be more cautious in their offshore exploration and production operations.

Gulf of Mexico Disaster will Lead to Increase in Insurance Cost for Oil and Gas Companies

Following the BP oil spill disaster, the oil companies will face a steep increase in insurance premiums for insuring the oil rigs. According to one of the largest insurers of energy risks, Lancashire, the global energy premium rates have gone up by 10% to 30% since the recent oil spill incident. The disaster has also fuelled demand for insurance, as regulators are moving to a tougher stance on how much cover is needed by oil and gas companies.