oil and gas

International standards for the oil and gas industry dealing with the following specific issues include: 

Emergency response and prevention

In the wake of the Exxon Valdez disaster in 1989 the International Maritime Organisation (IMO) revised the requirements for oil transport. The 2003 amendment to Annex I of MARPOL requires that new oil tankers should be double-hulled, and that large single-hull tankers are to be phased out by 2010.

The IMO Protocol on Preparedness, Response and Co-operation to pollution Incidents by Hazardous and Noxious Substances, (OPRC-HNS Protocol, 2000) aims to provide a global framework for international co-operation in combating major incidents or threats of marine pollution. Parties to the HNS Protocol will be required to establish measures for dealing with pollution incidents, either nationally or in co-operation with other countries. Ships will be required to carry a shipboard pollution emergency plan to deal specifically with incidents involving HNS.

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Waste management

The Convention for the Protection of the Marine Environment of the North-East Atlantic (known as the OSPAR Convention) is the basis for national laws governing the discharge of offshore drilling wastes in the waters of the OSPAR signatory states. Norway applies an even stricter national standard for processing waste from offshore-oil production; the so-called Zero environmentally hazardous discharges standard. This standard requires the purification of the drilling mud, so that it can be re-injected in the oilfield.

One type of ‘waste' is natural gas that comes to the surface in the process of crude oil extraction. This natural gas is frequently released into the atmosphere (venting) or burned directly (flaring), and as such contribute to a significant amount of greenhouse gases and result in losses of potential energy. The Global Gas Flaring Reduction Public-Private Partnership (GGFR) developed by the World Bank has set out flaring and venting measuring guidelines, best practices and implementation guidelines, with the ultimate goal to minimise flaring and venting of associated gas.

The 2006 European directive on the management of waste from extractive industries requests from Member States to ensure that extractive waste is managed without endangering human health or the environment, and in particular water, air, soil and fauna and flora. Member States shall also take the necessary measures to prohibit the abandonment, dumping or uncontrolled depositing of extractive waste.

Closure of production facilities

Standards for decommissioning offshore oil platforms are set by regional agreements such as OSPAR Decision 98/3 on the Disposal of Disused Offshore Installations of the OSPAR Convention. Following this decision, oil companies should select the least environmentally damaging option of breaking down their facilities, and must take sufficient measures to prevent any environmental damages during the demolition process.

Marine animals

In the offshore oil and gas industry in the United Kingdom Continental Shelf, the JNCC guidelines were developed to reduce the damage done by seismic surveys to whales and other marine mammals. These guidelines include minimum standards for operators in order to reduce the damage for marine mammals by noise from construction, and collisions with ships.

Protected areas

In any of the protected areas covered by the categories I-IV of the IUCN, by the UNESCO World Heritage Convention and by the Ramsar Convention on Wetlands special measures must be taken to conserve biodiversity. To assist the industry in earlier identification of areas that are highly valuable from an ecological and social perspective, IHS Energy, the World Conservation Monitoring Centre UNEP-WCMC and WWF have developed a Biodiversity Module. This module is a tool for oil companies to recognize and preserve respect these sensitive areas.

See the issue page on Biodiversity.

Transparency and tax avoidance

The Extractive Industries Transparency Initiative (EITI), supported by a coalition of governments, companies, civil society groups and investors, is a voluntary process that has established criteria for full publication and verification of company payments and government revenues from oil and gas. 

The Publish What You Pay coalition, which includes more than 300 civil organisations, further calls for extractive industry companies to publish their tax payments, royalties, etc. It also calls on them to publish the terms of important contracts and agreements between governments and oil and gas companies and all bank investments related to resource exploitation.

This subject is also discussed on the issue page on Taxation and on the issue page on Corruption.

Good governance

To avoid or at least minimise the negative impacts of the resource curse, it is important that the development of the oil and gas industry goes hand in hand with the development of good, capable and trustworthy governance. The Extractives Industries Review (EIR) commissioned by the World Bank recommends that private investments in extractive industries should not be promoted in countries where governance is inadequate. The review also states that the quality of public governance should meet certain explicit requirements before the World Bank invests in extraction projects.

Sovereignty over resources

The legislative framework covering (the use of) natural resources varies from country to country. At the international level however, it is agreed that oil and gas companies should acknowledge the sovereignty of states over their own natural resources. This concept (Permanent Sovereignty over Natural Resources) was enshrined in a number of United Nations resolutions. The 1962 UN Declaration on Permanent Sovereignty over Natural Resources gave producing countries the right to make decisions about the management and extraction of their natural resources, and the right to expropriate or nationalise land areas, if it is in the public interest to do so and compensation is paid. Amending this declaration, the 1966 UN Resolution 2158 (XXI) dealing specifically with developing countries, recommended public-private joint ventures as the most appropriate model for development.

Respect for the national sovereignty over resources needs to be balanced with respect for the rights of indigenous peoples.

Rights of local communities and indigenous peoples

Oil and gas companies must acknowledge and respect the rights of indigenous peoples, acknowledge their sovereignty and self-determination, and allow them decide themselves on the future use of their lands. In order to do the latter, indigenous peoples should always be informed in a full and timely manner in any prospective business, this in order to obtain their Free Prior Informed Consent for any planned activity.

See the issue page on Indigenous peoples.

Human rights

Like other companies, also oil and gas companies need to respect, promote and secure the human rights of those affected by their operations, especially the rights of women. See the issue page on Human rights.

A bank's policy for the oil and gas sector needs to emphasize that the main challenge and ultimate goal for the oil and gas industry is to use its knowledge of energy technologies and markets to reinvent itself into renewable energy suppliers.

The following elements should be incorporated in the banks' oil and gas policy:

The bank will only invest in oil and gas companies that:

• Do not invest in so called unconventional oil reserves, such as tar sands, oil shale, coal to liquids or pre-salt;
• Do not extract oil or gas in protected areas and areas with a High Conservation Value (see the issue page on Biodiversity)
• Have implemented an effective emergency response and prevention policy for all their operations;
• Publicly disclose their exploration and production contracts and a full breakdown of all revenues paid to the government of each country, specified to oil, gas and minerals (see the issue page on Taxation);
• Respect the sovereignty of resources of the producing country, by promoting public-private joint ventures as the most appropriate model for development;
• Respect the (land) rights of local communities and indigenous peoples whose lives are influenced by the presence of an oil or gas extraction project (see the issue page on Indigenous peoples);
• Respect basic human rights, including the rights of women (see the issue page on Human rights);

The bank will only invest in oil and gas companies that:

• Do not invest in new oil and gas extraction and other activities that substantially contribute to climate change (see the issue page on Climate change);
• Are active in countries where governance is adequate;
• Commit to appropriate decommissioning plans - including a financial guarantee for rehabilitation and clean-up, restoration and ongoing monitoring of the natural environment - for all their operations;
• Meet the Norwegian standard for processing waste from offshore oil production and ensure minimising of gas flaring and venting;
• Ensure minimising the risk of injury and acoustic disturbance from seismic surveys to marine mammals, by requiring following the JNCC guidelines and the use of trained Marine Mammal Observers.