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I.  Introduction

The main offshore oil and gas producing area in the UK is in the North Sea.  The oil fields in the North Sea were discovered in the 1970s, and during the last decade production appears to have reached its peak although recent surveys indicate that it is continuing to increase.

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II.  Oil Spill Liability and Liability Caps

Liability for oil spills in the UK is on a strict liability basis, under the “polluter pays” principle.  There are a number of means of redress for liability, including tort claims, and the operator of the offshore installation has unlimited legal liability for the full costs associated with any incidents of pollution.[1]

Special rules have been imposed for pollution that is caused by an offshore installation by the Offshore Pollution Liability Agreement of 1975.  The OPOL Agreement was introduced as an interim measure during the negotiation phase of the Convention of Civil Liability for Oil Pollution Damage resulting from Exploration for and Exploitation of Seabed Mineral Resources.  Negotiations with this Convention were ultimately unsuccessful and it was never ratified.  However, the UK considered the OPOL Agreement to be a satisfactory means of providing for a strict liability regime in case an operator should default on providing the clean up costs associated with an incident.[2]  The OPOL agreement thus goes into effect if any operator defaults on paying clean up costs, with a current cap of US$120 million.

The OPOL Agreement is a voluntary oil pollution compensation scheme that provides guarantees of payment for claims up to US$120 million for all members of OPOL to “provide an orderly means for compensating and reimbursing any Person who sustains Pollution Damage and any Public Authority which incurs costs for taking Remedial Measures as a result of a Discharge of Oil from any Offshore Facility.”[3]  As noted, membership in this organization is voluntary, however, it is a license requirement to either be a member [4] or have the same liability coverage provided for by OPOL.[5]  Currently all operators in the UK are members of OPOL.[6] 

Under the OPOL Agreement, member operators accept strict liability for pollution damage and remedial measures, up to US$120 million per incident and US $240 million in the annual aggregate.[7]  This money is apportioned equally in the sums of $60 million for pollution damage and $60 million for remedial measures, however, if one fund is exhausted, any surplus money can be taken from the other.[8]  The operators must show evidence of financial responsibility for this amount, either through insurance, self insurance or other means.[9]  The liability amount of this agreement is currently under review by the Department of Energy and Climate Control (DECC) in light of the 2010 BP oil spill.[10] 

The agreement, while limiting liability to $120 million, does not prevent additional claims from being sought in court.  The OPOL agreement merely guarantees payments of claims up to the maximum amount of US$120 million in case of default by the operator.[11]  This amount also does not extend to any costs that are incurred for measures taken to protect, repair or replace  facilities damaged by  pollution.[12]

The aims of OPOL are:

  • 1.  To provide an orderly means for the expeditious settlement of claims arising out of an escape or discharge of oil from offshore exploration and production operations.
  • 2.  To encourage immediate remedial action by the parties.
  • 3.  To ensure the financial responsibility of the parties to meet their obligations;
  • 4.  To provide a mechanism for ensuring that claims are met up to the maximum liability under OPOL.
  • 5.  To avoid complicated jurisdictional problems.[13]

Claimants under OPOL include Public Authorities who can make a claim for any remedial measures taken to “prevent, mitigate or eliminate pollution damage, or to remove or neutralize the oil following an escape or discharge.”[14]  Anyone damaged by pollution from the oil spill may also file a claim for compensation if they have suffered: “direct loss or damage caused by contamination.”[15]

There are exceptions to the operation of strict liability, which include if the incident of pollution is a result of war, hostilities, an exceptional natural phenomenon, an act or omission of a claimant, or a third party that intended to cause the damage; negligence or a wrongful act from the state or authority; if it resulted from compliance with instructions or conditions from the licensing state.[16]

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III.  Offshore Petroleum Regulatory Regime

A.  Regulatory Distinctions Between Shallow and Deep Water

There is no distinction in regulations between shallow and deep water in the UK. However, the depth of the water is taken into account during the approval process for any license to explore for or obtain oil, which takes into account the “area, conditions, sensitivities and operations being conducted.”[17]

B.  Roles of Regulatory Agencies

In the UK there is a distinction in between those responsible for regulating offshore exploration and production activities and those that become involved in the instance of an offshore oil disaster.  The Department of Energy and Climate Change (DECC) has responsibility for licensing exploration and regulating the development of the UK’s oil and gas resources and the Health and Safety Executive has responsibility for enforcing health and safety legislation.[18]  However, both of these authorities have “no remit with regard to the implementation of any counter pollution measures.”[19]  In oil pollution incidents, the lead government authority is the Maritime and Coastguard Agency (MCA) and their Counter Pollution and Response Branch,[20] who respond in accordance with the National Contingency Plan,[21] when necessary. 

The current policy is that the operator accountable for the spill is responsible for all associated clean up costs and counter measures to minimize the impact any oil spill may have in accordance with the “polluter pays” principle.  The operators are responsible for implementing their oil spill contingency plans, which are a detailed set of responses to an offshore pollution incident  that has been approved in advance by the DECC and MCA.[22]  

The Offshore Installations (Emergency Pollution Control) Regulations 2002 also provide the Secretary of State for Energy and Climate Change with the power to intervene in cases where there may be or is a significant risk or pollution.  In these cases, the power is undertaken by the Secretary of State’s Representative (SOSREP), who is a single representative that acts on behalf of the Secretaries of State for the Department of Transport (for ships) and the Department of Energy and Climate Change (for offshore installations).  As noted above, the MCA leads the government response for any oil spills and the SOSREP monitors this and the operators’ response to any pollution, and may make high level decisions without consulting higher authorities if the UK’s public interest is at stake.[23] 

The SOSREP becomes involved and may intervene when:

  • there has been any occurrence causing material damage or a threat of material damage to an offshore installation; and
  • in the opinion of the SOSREP the occurrence may or will cause significant pollution; and
  • in the opinion of the SOSREP use of the powers is urgently needed.[24]

The SOSREP achieves this intervention through Directions that are issued to the operators, either verbally or in writing.  They can be wide-ranging and vary from remedial measures that should be taken to prevent an incident, to closing down a specific pipeline.[25]  If the Directions are not successful in preventing or reducing pollution, the SOSREP can take further action as he feels is necessary, which include:

  • sinking or destroying all, or any part of, an offshore installation; or
  • taking control of the offshore installation (which includes either boarding the installation or taking control at the response centre); or
  • any other action necessary.[26]

Local Authorities (the local government) do not have a specific statutory duty to plan or clean up shores in cases of oil pollution, however, they do have a general duty provided for in section 2 of the Civil Contingencies Act 2004 to assess, plan and advise the public on the risk of an emergency occurring.[27]


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Prepared by Clare Feikert-Ahalt
Senior Foreign Law Specialist
June 2010


[1] Email to author from Craig Bunyan, Senior Manager, Offshore Environmental Inspectorate, Department of Energy and Climate Change, June 17, 2010 (on file with author).  Additional information and links provided by Mr. Bunyan on oil spill liability and the UK’s regulatory regime is attached as Appendix 1.

[2] Offshore Pollution Liability Association Limited, Home, http://www.opol.org.uk/ (last visited June 17, 2010); Email from Craig Bunyan, supra note 1.

[3] Offshore Pollution Liability Association Limited, Offshore Pollution Liability Agreement, May 1, 1975, Preamble, http://www.opol.org.uk/agreement.htm (last visited June 17, 2010).

[4] DECC, Licensing: License Assignments, https://www.og.decc.gov.uk/upstream/licensing/licassign.htm (last visited June 17, 2010).

[5] Petroleum Act 1998, c.17; see also Maritime and Coastguard Agency, National Contingency Plan for Marine Pollution From Shipping and Offshore Installations, app. M, http://www.mcga.gov.uk/c4mca/mcga-contin.pdf (last visited June 15, 2010).

[6] Offshore Pollution Liability Association Limited, Home, supra note 2.

[7] Offshore Pollution Liability Association Limited, Offshore Pollution Liability Agreement, May 1, 1975, clause IV, http://www.opol.org.uk/agreement.htm (last visited June 17, 2010); see also Maritime and Coastguard Agency, National Contingency Plan for Marine Pollution From Shipping and Offshore Installations ) (hereinafter National Contingency Plan), app. M, http://www.mcga.gov.uk/c4mca/mcga-contin.pdf (last visited June 15, 2010).

[8] Offshore Pollution Liability Association Limited, Liability Under OPOL, http://www.opol.org.uk/about-2.htm (last visited June 17, 2010).

[9] Offshore Pollution Liability Association Limited, About OPOL, http://www.opol.org.uk/about.htm (last visited June 17, 2010).

[10] Email from Craig Bunyan, supra note 1.

[11] National Contingency Plan, supra note 7, at app. M, ¶ M.34.

[12] Offshore Pollution Liability Association Limited, The Offshore Pollution Liability Agreement (OPOL), http://www.opol.org.uk/about-1.htm (last visited June 17, 2010).

[13] Offshore Pollution Liability Association Limited, About OPOL, http://www.opol.org.uk/about.htm (last visited June 17, 2010).

[14] Id.

[15] Id.

[16] Id.

[17] Email from Craig Bunyan, supra note 1.

[18] The Offshore Division of the Health and Safety Executive was created as direct result of the tragic Piper Alpha disaster in 1987, where 167 people lost their lives.  A government report, commonly referred to as the Cullen Report, made a number of recommendations, one of which was transferring responsibility for offshore health and safety to the HSE.  

[19] Email from Craig Bunyan, supra note 1.

[20] The MCA was formed in 1998 when HM Coastguard (HMCG) and the Marine Safety Agency (MSA) merged .

[21] National Contingency Plan, supra note 7.

[22] Email from Craig Bunyan, supra note 1; Offshore Installations (Emergency Pollution Control) Regulations 2002, S.I. 2002/1861 ¶ 2.  See also Department of Energy and Climate Change, Guidance Notes to Operators of UK Offshore Oil and Gas Installations on the Offshore Installations (Emergency Pollution Control) Regulations 2002 (hereinafter, Guidance Notes), 2009, ¶ 6.1, https://www.og.decc.gov.uk/ environment/EPC_Guidance.doc.

[23] Email from Craig Bunyan, supra note 1.

[24] Guidance notes, supra note 22, at 5.1.1; see also Offshore Installations (Emergency Pollution Control) Regulations 2002, SI 2002/1861 ¶ 3.

[25] Guidance Notes, supra note 22, at 5.1.1; Offshore Installations (Emergency Pollution Control) Regulations 2002, SI 2002/1861 ¶ 3. 

[26] Guidance Notes, supra note 22, at 5.1.6; Offshore Installations (Emergency Pollution Control) Regulations 2002, SI 2002/1861 ¶ 3. 

[27] Civil Contingencies Act, 2004, c. 36 § 2.

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Last Updated: 11/03/2014