Recently, the Ministry of Energy proposed a draft law transposing Directive 2013/30/EU on the safety of oil and gas offshore operations into Romanian law. Both the Directive and Romanian draft law seek to establish the minimum requirements necessary to prevent major oil & gas related accidents and limit their consequences.
The most important provision of the new law creates a new regulatory authority (“Competent Authority”) responsible for regulating offshore operations. The Competent Authority will be funded from the state budget and other sources provided in the draft law, including the recovery of financial costs from holders of offshore oil agreements, operators and owners.
The current version of the draft law creates some confusion on how the Competent Authority will fit in to the existing structure because, in some respects, the draft law conflicts with the existing Government Decision on the organization and functioning of the National Agency for Mineral Resources and Oil.
A major point in need of clarification regards the overlap of duties between the Competent Authority and the National Agency for Mineral Resources (“NAMR”), the agency which currently regulates offshore operations.
It is clear that the Competent Authority will be able to advise other agencies, including NAMR, for example, NAMR must consult with the Competent Authority prior to appointing the person responsible for the execution of oil operations known as the “operator”.
However, the draft law does not clarify the role of these two entities when their duties overlap. For example, both authorities will have regulatory functions. The Competent Authority will participate in the assessment and approval of reports on major dangers; the assessment of notifications; the evaluation of notifications on well operations or combined operations and other such documents that are presented. Similarly, NAMR has general responsibility for approving the documentation regarding the execution of prospecting works, exploration and exploitation.
An additional flaw in the draft law regards its use of industry customary terms, which are not used in the primary or secondary special legislation. For example, the bill envisages the notions of onshore/offshore oil agreements, however such definitions are not currently contemplated under the Petroleum Law. To achieve a straightforward regulatory framework that is friendly to investors, all of the laws regulating offshore operations should use clear and correlated terms.
The adoption of the draft law in its current form would create the simultaneous existence of two institutions authorized to regulate offshore exploration with unclear guidance on the resulting overlap in duties. However, since the public has until 11 September to make proposals and suggestions on the draft law, amendments remain possible.