European Economic and Social Committee
CCMI/135
European offshore industry
Brussels, 5 June 2015
PRELIMINARY DRAFT OPINION
of the
Consultative Commission on Industrial Change (CCMI)
on
Prospects for long-term smart, sustainable development of European offshore industry and its
relations with the EU's maritime sectors
(own-initiative opinion)
_____________
Rapporteur: Marian Krzaklewski
Co-rapporteur: José Custódio Leirião
_____________
To the members of the Study Group on European offshore industry
(Consultative Commission on Industrial Change (CCMI))
N.B.:
This document will be discussed at the meeting on 11 June 2015 from 8.30 a.m. to 12 noon.
Document submitted for translation: 29 May 2015
Administrator: Adam Plezer
CCMI/135 – EESC-2015-01459-00-01-APA-TRA (PL) 1/13
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EN
Study Group on
European offshore
industry
President:
Brendan Burns (UK-I) (Rule 62(3) – David Sears)
Rapporteur:
Marian Krzaklewski (PL-Gr. II)
Co-rapporteur:
José Custódio Leirião (PT-Cat 3)
Members:
Mr/Ms
Seamus Boland (IE-Gr. III) (Rule 62 (3) – Jirovec)
Brian Curtis (UK-Gr. II)
Panagiotis Gkofas (EL-Gr. III)
George Traill Lyon (UK-Gr. I) (Rule 62 (3) – Van Iersel)
Jerzy Bieliński (PL-Cat. 2)
Hilde Van Laere (BE-Cat. 1) (Rule 62 (2) – Gay)
Marius Eugen Opran (RO-Cat. 1)
Ion Pop (RO-Cat. 3)
Nico Wennmacher (LU-Cat. 2)
Experts:
Ms Lanara-Tzotze (for Group II)
Mr Piorek (for the rapporteur)
CCMI/135 – EESC-2015-01459-00-01-APA-TRA (PL) 2/13
On 22 January 2015, the European Economic and Social Committee, acting under Rule 29(2) of the
Rules of Procedure, decided to draw up an own-initiative opinion on
Prospects for long-term smart, sustainable development of European offshore
industry and its relations with the EU's maritime sectors.
The Consultative Commission on Industrial Change (CCMI), which was responsible for preparing the
Committee's work on the subject, adopted its opinion on... The rapporteur was Marian Krzaklewski
and the co-rapporteur was José Leirião Custódio.
At its ... plenary session, held on … (meeting of ...), the European Economic and Social Committee
adopted the following opinion by ... votes to ... with ... abstentions.
*
*
*
1.
Conclusions and recommendations
1.1
The offshore industry mainly comprises offshore energy production, together with the gas, oil
and minerals extraction sectors. Taking account of the supply and services chain, the industry
is linked with the following offshore sectors: shipbuilding, ship repairs, maintenance and
conversion as well as shipping equipment and supplies and offshore industrial installations.
1.2
The EESC is convinced that, in order to ensure the sustainable development of the offshore
industry, a framework is needed for a coherent European strategic vision, providing advanced
technologies and innovative solutions for this industry. Technologies are at the core of such a
strategic framework.
1.3
The EESC considers that one of the dimensions of the Europeanisation of the offshore
extractive sector should be the Commission's involvement in a broad programme of
geological surveys using ICT to provide data for more sustainable - current and future exploitation of marine resources.
1.4
The Committee considers that, in the light of the ongoing process of implementing the Safety
of Offshore Oil and Gas Operations Directive, the European Commission, in cooperation with
the Member States, should organise a system of verification and indicate ways of increasing
the financing capacity of economic operators in the sector to cover remedial measures taken
in response to accidents.
CCMI/135 – EESC-2015-01459-00-01-APA-TRA (PL) 3/13
1.4.1
A "safety culture" programme should be prepared and implemented and action taken to
promote and support the accreditation of training institutions by offshore industrial firms to
carry out more extensive training in the field of safety. The EESC notes that achieving a high
level of safety in offshore industry also depends on ensuring good working conditions at sea.
1.5
The EESC proposes that the Commission and the Member States concerned, in cooperation
with the ILO and the social partners, take steps to assess the possibility of extending the
Maritime Labour Convention (MLC) to workers employed in the offshore oil and gas and
offshore wind energy sectors in the EU and the EEA.
1.6
The Committee believes that the Commission and the European sectoral social partners
representing the offshore industry should use the good example of the 2008 Directive
implementing the Agreement concluded by the European Community Shipowners'
Associations (ECSA) and the European Transport Workers' Federation (ETF) on the Maritime
Labour Convention.
1.7
In view of the forecast shortage of qualified workers and skills in offshore industry in the EU
and the EEA, the EESC considers that this problem should be addressed by ensuring good
working conditions (enforcement of MLC regulations) and applying policies for adapting
skills and training and encouraging young people to work at sea.
1.8
In connection with offshore industry, the Commission and the Member States should promote
cooperation and public-private partnership (PPP), including: joint ventures, guarantees,
arrangements for sharing production and concessions. Coordination should cover the legal
framework, spatial planning and geological surveys in relation to the question of sufficiency
of energy resources.
1.9
The EESC believes that the major challenges for offshore industry in the face of global and
European competition are:
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1.10
extraction in deep waters, and - in the offshore wind energy sector - the move towards
siting installations at greater distances from shore and in deeper open waters;
procedures for horizontal drilling and hydraulic fracturing in offshore mining;
management of ageing offshore installation infrastructure;
discovery, inventory and exploitation of resources in the Arctic areas;
response to the green impetus of the Marpol Convention, the Ballast Water Management
Convention and the Ship Recycling Regulation.
The EESC encourages the networking of offshore sectors, coastal regions and businesses in
the supply chain with research centres and universities in the framework of the Horizon 2020
programme and projects in the area of "smart specialisation". Cooperation on innovation and
environmental issues should be strengthened, as should the exploitation by offshore industry
CCMI/135 – EESC-2015-01459-00-01-APA-TRA (PL) 4/13
of the opportunities offered by the European Fund for Strategic Investments (EFSI or the
"Juncker Fund"), which is now in operation.
1.11
The Committee considers that there is a need to update the Europe 2020 strategy (review) to
meet the Union requirements relating to maritime activities, projects, resources, a skilled
workforce, financing and promoting sustainable development. The Commission should bear
in mind the wide range and variety of the types of work and skills needed in the area of
offshore activities.
1.12
The collection of best practices for North Sea coastal activities should be updated and
promoted in the framework of a European approach in this field. The key to successful
cooperation between the fishing sector and offshore industry should be striking a reasonable
compromise between the two sectors by means of cooperation and mutual assistance.
2.
Background
2.1
The offshore industry comprises the sectors of energy production, and extraction of gas, oil
and minerals from the sea. Some of the most rapidly developing markets are linked to these
sectors, offering potential for long-term, sustainable and smart growth.
2.2
Linked to offshore sectors, the European maritime industry, together with the sectors it
comprises such as shipbuilding, ship repairs, maintenance and conversion as well as
production of ship equipment and maritime supplies, have both specialist expertise and the
requisite human potential to enable them to effectively reap the benefits of participating in
markets associated with offshore sectors.
2.3
The opinion presents:
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the situation of the offshore oil and gas industry in the global context and the challenges
and driving factors;
general characteristics of the offshore wind power sector in the EU;
economic relations and interactions between the European maritime industry and offshore
industries;
analysis of the need for innovation and sustainable development in the context of current
challenges and potential areas for development of European offshore industries;
proposals for overcoming the difficulties in ensuring that there is a social, sustainable
development dimension in employment matters in offshore industry;
the EU regulatory framework for European offshore industry.
CCMI/135 – EESC-2015-01459-00-01-APA-TRA (PL) 5/13
3.
The European offshore oil and gas extraction industry: current situation of the sector
3.1
Petroleum products and gas accounted for 26 % of Europe's energy mix in 2012; the largest
contribution came from nuclear energy - representing 29 % - and renewables, including
hydroelectric power, at 22 %.
3.1.1
The EU is the world's largest energy importer, importing 53 % of its energy at an annual cost
of EUR 400 billion. 88% of oil and 66% of gas is imported, mainly from Russia.
3.2
The main problem for the offshore oil and gas sector in Europe is the question of whether the
traditional European oil and gas industry will grow, against a background of diversification
and the challenges arising from the development of renewables and the efficient management
of these changes in the sector.
3.3
The offshore oil and gas industry in Europe is characterised by:
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3.4
Current challenges facing the European offshore oil and gas industry include:

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3.4.1
the fall in oil prices and competition from new, cheap, related raw materials;
issues related to entrepreneurship and government support for new businesses;
boosting growth through innovation and internationalisation of the industry;
question of growth driven by the "green economy".
The European offshore oil and gas industry deserves the designation "sustainable", as:

1
the need for seismic surveys in order to update the maps of geological deposits;
pressure from producer countries on the discovery of new deposits;
problems with tenders for extraction involving national and international companies;
management
of
the
sector's
lifecycle
in
successive
stages:
1
prospecting/discovery/FEED /production/decomposition.
New challenges for the industry include:
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3.5
high operating costs;
high environmental risks and a high level of regulation;
the need to operate at greater depths;
tax risks - low prices leading to high investment risks;
potential problems with cheap products from the USA.
it exhibits the characteristics of a sustainable industry;
FEED - Front-End Engineering Design.
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it provides, directly or indirectly, almost 600 000 jobs (including Norway);
it contributes to positive social transformation in the regions;
it makes a significant contribution to the budgetary revenue of the Member States;
it plays a leading role in innovation and technological progress in engineering;
it is characterised by substantial and growing exports from companies in the supply chain,
which should more than compensate for any loss of revenue from the production of fuels.
3.6
At the hearing in Aberdeen2 the results of a SWOT analysis of the offshore oil and gas
industry were presented:
3.6.1
Strengths:
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3.6.2
Weaknesses:
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3.6.3

a sensible and realistic adjustment of remuneration levels;
new discoveries with lower development and operating costs;
cooperation in the areas of: common design/standardisation, use of infrastructure and
knowledge exchange;
transfer of knowledge and products to new markets.
Threats:
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2
high production costs;
low production efficiency;
uncertain tax position;
ageing infrastructure;
poor cooperation.
Opportunities:
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
3.6.4
experience gained in difficult operating conditions;
globally acknowledged know-how;
50 years' experience of operating in deep waters;
highly skilled workers, experienced in working throughout the world;
clustered nature of the industry.
fall in global oil prices;
North America/tar sands/falling fracking prices;
global growth slowdown in China/India;
OPEC approach to production limits.
Liam Smyth - Aberdeen & Grampian Chamber of Commerce.
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4.
Offshore wind power market in the EU - General characteristics and trends
4.1
Approximately 2500 turbines have been installed and linked up to networks in EU seas, with
a total capacity of over 8 GW in 74 wind farms in 11 countries. The EU's share in global
production is almost 90 %. After 12 projects that are currently under construction are
completed, the installed capacity in EU waters will rise to 10.9 GW. Wind power currently
provides 7 % of the EU's energy, and offshore wind energy around 1%.
4.2
Almost 80 % of turbines in the EU have been installed on a monopile foundation and 10 % on
a gravity-based foundation. In recent years there has been increased demand for jacket
foundations which are used at greater depths, even up to 50m. Two full-sized floating turbines
are also in operation.
4.3
Current development and innovation trends in this sector concern: turbines, foundations and
installations at greater depths and greater distances from shore.
4.4
Financial planning is becoming increasingly important in financing offshore wind power
stations. In 2014, this industry took out non-recourse loans of EUR 3.14 billion3, which is the
largest amount received in the history of this industry. Financial partnerships are increasingly
the key to success.
4.5
Market prospects for 2015 appear stable and we can expect an increase in the installed
capacity. A decline in the market is expected in 2016, which is connected with the low level
of turbine deliveries. As for the more distant future, the European Wind Energy Association
(EWEA) estimates that construction is already authorised for new farms with a total capacity
of 26.4 GW and future plans refer to an increase in the current capacity of 98 GW.
4.6
According to EWEA data, at the end of 2011, 192 thousand people were employed in the
wind power sector in Europe. 30 - 40 000 jobs currently depend on offshore wind energy.
5.
Scope of economic relations and interactions between the European maritime industry
and offshore industries
5.1
The needs of the offshore oil and gas extraction and offshore wind energy sectors, as well as
transfer of production to deep seas and Arctic areas, are generating new demand for products
and services provided by the European offshore industry.
5.2
Melting in Arctic areas is creating the possibility for oil and gas extraction and waterways
(although this is not a particularly "green" driving force). This trend is linked, among other
3
The European offshore wind industry – key trends and statistics 2014.
CCMI/135 – EESC-2015-01459-00-01-APA-TRA (PL) 8/13
things, to the anticipated demand for construction of ice-breaking vessels and icestrengthened transport and service ships.
5.3
The total global potential related to offshore wind power is estimated at over EUR 19 billion
in 2012-2022 (approximately EUR 2 billion per year). These estimates are based on the
number of ships and equipment required to build and use the planned wind farms.
5.4
This "green" driving force translates to real demand for: installation ships, cable-laying
vessels, support ships (maintenance and accommodation and transport of crews), repair
vessels, and floating craft used for installing the foundations of wind towers (jackets, for
which there is most demand) and platforms, as well as transport ships. Wind farm towers and
elements of foundations are also often built in EU shipyards. Given that similar initiatives will
be undertaken in Asia and North America, the potential market related to offshore energy
could still grow.
5.5
The increase in deep-water extraction and the growing number of underwater operations at all
depths leads to greater demand for:

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RMI vessels4 and multifunctional support vessels (MSV),
remotely operated underwater vehicles (ROV) which are a key factor enabling
construction works,
autonomous underwater vehicles (AUV) which are entering the commercial sphere of the
gas and oil sector.
The amount of offshore drilling needs to be increased significantly to ensure future supplies
of oil and gas. This will lead to further orders for floating towers and drilling equipment,
which is also a result of the excessive accumulation of the old extraction fleet. This is linked
to the significant demand for repair and conversion of different types of installations and
offshore drilling towers.
5.6
A new specialist area in shipbuilding is bringing interesting prospects - specialised ships not
only for transporting floating liquefied natural gas (FLNG) but also providing various
services for the offshore oil and gas industry, including replacing LNG land terminals. This
concerns the FPSO LNG (floating production, storage and offloading of liquefied natural gas
support vessels) and FSRU (floating storage and regasification unit) versions.
5.7
European ports can also use the "green" driving force that is offshore. This applies to port
activities of handling general cargo and components for wind turbines: segments of towers,
generators and rotor blades and other elements related to the whole offshore industry. Some
ports in the EU have already started to specialise in handling this type of cargo.
4
Repair, maintenance and inspection.
CCMI/135 – EESC-2015-01459-00-01-APA-TRA (PL) 9/13
6.
The need for innovation and sustainable development in the context of current
challenges and potential fields for development of European offshore industries
6.1
European investment in innovation has continued to lag behind its larger competitors (the
USA) in the past decade. This impacts all industrial sectors, including offshore oil and gas.
6.2
One of the main challenges for the oil and gas sector is to ensure the safe exploitation of its
ageing assets. On average 30 % of platforms in the world have been in operation for more
than 20 years and many of them have exceeded their original planned lifespan.
6.3
The main areas requiring action in the context of ageing assets in the offshore oil and gas
sector are:
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monitoring and understanding of the integrity of materials;
understanding of corrosion under insulation;
inspection, repair and maintenance issues in the context of the management of ageing.
6.4
Growth of the sector depends on innovative technologies to support extraction, making it
possible to "squeeze" as much as possible out of ageing installations and extend the lives of
some production fields.
6.4.1
New technologies also play a key role in deep-sea prospection and production, which require
billions in investment. There is a need to develop new technologies, in order to reduce costs
and operational risks, and the exploitation of higher-temperature and pressure wells.
6.5
The EESC believes that the Commission should consider making adjustments to the
Structural Funds and/or the Juncker plan to support investment in innovation in the offshore
industry, mainly in the areas of:
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ageing infrastructure and ensuring continuity of production;
new technologies for "squeezing" production out of old oil and gas fields;
addressing the increasing complexity of production wells.
New areas of development
6.6
The development of shale gas is becoming an increasingly attractive prospect for the offshore
oil and gas sector too. This is due to significant improvements in the technology for hydraulic
fracturing of underwater rock.
Sequestration of CO2 at sea is another potential growth factor for the offshore industry in the
race to develop a low-carbon economy.
CCMI/135 – EESC-2015-01459-00-01-APA-TRA (PL) 10/13
6.6.1
A good example is the UK's National Grid, which is drawing up plans for offshore storage of
CO2 in saline aquifers and depleted oil and gas deposits.
The challenge for EU policymakers is to harness the potential of Horizon 2020 to maximise
innovation and promote market-friendly activity within European industry, including the
offshore oil and gas sector.
7.
The EU regulatory framework for European offshore industry
7.1
Europe's offshore industry operates against a background of continuously increasing
regulation. The main provisions affecting these industries include:
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the EU Industrial Emissions Directive (IED) on integrated pollution prevention and
control (IPPC) and the Directive on the limitation of emissions of certain pollutants into
the air from large combustion plants (LCP Directive);
the Directive on the limitation of emissions of certain pollutants into the air from medium
combustion plants (MCP Directive), which affects the production of oil and gas;
the EU Emissions Trading System (ETS);
the directive on maritime safety.
7.2
The Directive on safety of offshore oil and gas operations entered into force in 2013 and is to
be incorporated into national legal systems by July 2015; the industry must adapt to new
standards by July 2016.
7.2.1
In order to have a global impact and be able to monitor major accidents in Europe and further
afield, there must be cooperation between the Commission, Member States and specialised
companies in the following areas:
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7.3
publication of a guide to the impact on risk;
creation of a safety culture in this area;
accreditation of training institutions by mining companies to provide more extensive
training;
drawing-up of a code of best practice;
promotion of partnership between investors and Member States;
cooperation between Member States and investors in sensitive strategic areas and in
offshore projects promoting PPPs for sustainable development.
Representatives of the industry currently consider the work on the reference document
(BREF) on the exploration and production of hydrocarbons in the EU using high-volume
hydraulic fracturing to be a sensitive regulatory issue.
CCMI/135 – EESC-2015-01459-00-01-APA-TRA (PL) 11/13
7.4
Also in the context of the impact of regulation on the development of all sectors of the
offshore industry, compliance is required with the most recent (July 2014) Directive
establishing a framework for maritime spatial planning.
7.5
Communication COM(2008) 699 on raw materials policy, which maps out a path to greater
international cooperation between national geological surveys with the aim of increasing the
EU’s knowledge base, should also have an indirect impact on the offshore extractive industry.
7.6
The following are also no less important regulatory and political issues with an impact on the
entire European offshore industry:
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
the anticipated opportunities for offshore industry arising from the launch of the
European Fund for Strategic Investments;
the impact of the Maritime Labour Convention;
the impact of the MARPOL Convention (SO2 and NO2 limits) and the Ballast Water
Management Convention.
8.
How can the difficulties in ensuring that there is a social, sustainable development
dimension in employment matters in the offshore industry be overcome?
8.1
The great diversity of the European offshore industry and the significant impact of
globalisation on this sector of the economy, as well as the still unresolved problems with
social dumping and achieving a level playing field in this industry, have resulted in a complex
situation with regard to labour issues. This is compounded by problems in the areas of social
dialogue, collective labour relations and social standards.
8.1.1
These issues could be addressed comprehensively on the basis of the 2006 Maritime Labour
Convention (MLC), which is currently entering into force, and the EU Regulation
implementing it.
8.1.2
Unfortunately, opportunities for the broad application of this Convention in the offshore
industry are still limited. This results both from the lack of precise provisions in the MLC
relating to offshore workers, and the attitude of governments, operators, owners and
employers. This situation is further compounded by the existing problems in the EU with the
registers of vessels and floating industrial equipment.
8.1.3
The provisions of the MLC defining groups of workers and the concept of the ship refer the
matter, in the event of doubt, to the authorities of the Member State after consultation with the
shipowners' and seafarers' organisations concerned.
8.2
The EESC believes that the Commission and the European sectoral social partners
representing the offshore industry should use the good example of the 2008 Directive
CCMI/135 – EESC-2015-01459-00-01-APA-TRA (PL) 12/13
implementing the Agreement concluded by the ECSA and the ETF on the Maritime Labour
Convention.
8.2.1
A model for such an agreement could be the collective agreement of the International
Transport Workers' Federation (ITF) for the offshore industry. Currently, its implementation
is hampered by a lack of willingness on the part of national authorities, the situation regarding
the registers of ships, the unsatisfactory state of social dialogue and the high rate of
participation in the labour market of people employed on "junk" contracts and the bogus selfemployed.
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CCMI/135 – EESC-2015-01459-00-01-APA-TRA (PL) 13/13