Analysis of the Safety Case Regulatory Approach in Safeguarding Health and Safety Standards in Oil and Gas Sector in Uganda
Author: Peter Reat Gatkuoth
Introduction
According to Lassourd, T. in his working-paper, “Fiscal Rule Options for Petroleum Revenue Management in Uganda’’ Strategies have been set in order to prepare the country for commercial production of oil and gas resources. In order to realize such goals, Legal and policy framework has been put in place and these include National Oil and Gas Policy passed by Cabinet in 2008: The Petroleum (Exploration, Development and Production) Act passed and accented in 2013 and the Public Finance Management Act (2015).
Uganda enacted the Occupational Safety and Health Act (2006) as a comprehensive framework to protect the rights, health, and safety of the workers. The Act imposes an obligation on employers to take all measures for the protection of workers and the public from the dangerous aspects of the employer’s undertakings. The Act further provides that the working environment should be kept free from any hazard due to pollution. In addition, health and safety regulations have been passed to support the existing legal and policy framework and these are; the Petroleum (Refining, Conversion Transmission and Midstream Storage), (Health, Safety and Environment) Regulations, 2016 and the Petroleum (Exploration, Development and Production), (Health, Safety and Environment) Regulation, 2016.
At the international level, the ILO conventions set out principles on how to regulate member states on issues relating to occupational safety and health in the oil and gas sector. Fundamentally, the convention sets out that ‘workers should be protected from sickness, disease, and injury arising from their employment’ (ILO, 2017). The Promotional Framework for Occupational Safety and Health Convention (No. 187) and its accompanying recommendation (No. 197) are core and fundamental in guaranteeing health and safety standards in the oil and gas sector (ILO, 2017).
The Safety Case Regulatory Approach
Essentially, the safety case regulatory approach has its origin from the United Kingdom where Lord Cullen chaired an inquiry into Health and Safety at work. This was due to the contentious issues that were raised in the Burgoyne Committee that necessitated the need to guarantee and safeguard the basic Health and safety standards at work place by the employers (Gordon et al., 2011).
The Safety Case as a regulatory approach advances that employers who create risks are responsible for controlling them. This is based on the idea that regulations should set out goals rather than prescribing solutions. Secondly, the approach is premised on the principle of “reasonable practicability.” This means that the safety standards must be reasonable and achievable (Gordon et al.,2011).
The author notes that despite the incorporation of the safety case system in Uganda’s policy and legal frame work; It’s in contention whether or not the country as an emerging oil and gas producing country will appropriately apply this approach to prevent major accidents when the commercial production of oil and gas resource commences.
The Safety Case in Uganda’s Legal and Policy Framework
The National Objectives and Directive Principles of State Policy provides that “the State is required to institute effective machinery to deal with any hazard or disaster” (Uganda Const, amended, 1995). In utilization of natural resources of Uganda, it should be managed in such a way to meet the development, environmental needs of present and future generations of Ugandans by taking all possible measures to prevent or minimize damage and to promote rational use of natural resources so as to safeguard and protect the biodiversity of Uganda. Article 244 of the constitution vests petroleum in the hands of the government and any exploration and exploitation, therefore is under the authority of the government and the right to a clean and healthy environment is also provided (Uganda Cons, amended, 1995).
The Occupational Health and Safety Act.2006
The Act imposes obligations and duties to all employers to prepare, and as often as may be appropriately revised a written statement of policy with respect to the safety and health of employees while at work. In addition, the Act requires employers to make arrangements for carrying out the statement of policy as well as ensure that the statement of policy and any revision of it, is brought to the notice of all the employees in as far as maintaining and safeguarding Health and safety standards at work is concerned.
The Petroleum Act.2013 (Exploration, Development, and Production)
The Act was enacted inter alia to regulate petroleum exploration, development, and production. Part XII thereof provides for health and safety (SS140 – 147). Under the Act, the Petroleum Authority is empowered to carry out regulatory supervision to ensure that the Act is complied with.[1]
Furthermore, the Act mandates that petroleum activities must be conducted in a manner that enables High levels of safety that conform to technological development and best industrial practices. In other jurisdictions like Canada and the United Kingdom, the operator is required to submit a safety case before the regulator approves the drill and after granting such permission, the operator reserves the right to inspect the installation. However, in Norway, the regulators are not supposed to inspect the system even after the drill has been approved. This is intended to relieve them from any liability arising from the same.
Health, Safety and Environmental Regulations 2016
The regulations were passed in exercise of powers conferred upon by the Minister in pursuance of provision 183 of the Petroleum (Exploration, Development, and Production) Act, 2013. Basically, the regulations are applicable to all Licensees, Contractors, industrial players, and all stakeholders engaged in Oil and Gas activities.
The regulations impose duties, and obligations on every license and contractor to conduct exploration and production activities concerning the extraction of oil and gas resources in a manner that guarantees the safety of employees at work. On the other hand, the regulations provide that the license of any installation facility must ensure that all normal operations are manned in a safe manner.[2]
However, the author maintains that, much as Uganda has incorporated the safety case in legal and policy framework, the country must not be more comfortable that major accident and disasters will not occur and the effectiveness of this regulatory regime shall only be tested when the country begins producing its oil and gas resource.
The National Oil and Gas Policy (NOGP)
In addition to the law discussed above, Uganda passed the National Oil and Gas Policy in 2008 with precise provisions related to the safety and health of workers in the industry. The policy recognizes Regulatory Best Practice (RBP) as the cornerstone for the Government’s institutional reform policy.
RBP is based on the principle that ‘a regulatory agency should be separated and remain independent from the entities being regulated, in this case, oil companies.’ Based on this principle, the NOG policy recommends the setting up of the three agencies including the National Oil Company (NOC) as an entity to cater to the commercial interests of the government in the oil and gas sector; a Directorate in the Ministry of Energy and Mineral Development charged with a policy-making role for the sector, and a National Petroleum Authority to regulate the sector.
Why the Safety Case is Considered to be Appropriate Regulatory Approach in Most Jurisdictions?
It has been argued that the safety case offers standards appropriate to dynamics and changes in technology, by making such additions and modifications to risks associated. The preparation of a safety case is that an operator has systematically analyzed how the installation is designed, built, and operated. Often the process of preparing the safety case has led to the improvement being identified and implemented. In this sense there is an element of self-regulation which is directly in keeping with the conclusions of the Robens Committee[3] on health and safety. The approach has been used to assess levels of safety management and residual risks with certain design options.
These improvements have taken many forms, both technical and managerial although it is usually easier to identify the specific technical improvements compared with the less tangible improvements to managerial systems or the safety culture. There is evidence that operators should rethink of the type and location of their accommodation module. However, the approach has been criticized for placing more obligations on regulators and operators where in some instances they are not interested in discharging such duties. For example, the post in the Makondo incident, the UK sector industry solution gave a pro-active measure that regulators were not interested in taking such a pro-active step because the incident had not happened in UK.
Safety case makes it possible for the regulator’s interventions to be more efficient and effective. This is because the safety case should identify the safety critical issues and the regulator can concentrate on these. Furthermore, the need to provide a good quality assessment of a safety case has led to improvements in intervention process in HSE. Regulators use a variety of different intervention techniques which vary according to the circumstances.
What Challenges is Uganda Likely to Face in Safeguarding Health and Safety Standards in Oil and Gas Sector?
Uganda’s participation in upstream activities of Oil and gas sector is crucial. However, the efforts to ensure that Uganda will effectively guarantee Health and safety standards are not adequate. Lack of funds (Insufficient Funding) is the basic challenge with substantial financial demands. This may raise problems at sector level as well as economical levels, which may leave Uganda National Oil Company (UNOC) short of funds to meet project cash calls from the private sector partner and International Oil Company (IOC).
The safety reports submitted by the International Association of Oil and Gas Producers (IOGP) reveals that ‘Africa is among continents that experienced grave fatalities in 2014 and 2015 after the North America region.[4] While there have been no fatalities in Uganda’s oil and gas exploration, the author submits that Uganda being a newly emerging oil and gas producing country must not be comfortable that such fatalities will not occur otherwise.
Secondly, the Albertine graben where large oil and gas deposits were discovered in the country is located near the Great East Africa Rift Valley which is prone to earthquake and hence this will demand high standards of Health and safety, coupled with technology and expertise which is apparently lacking in the country.
The human capital development of Uganda has not improved as shown in the nation’s Human Development Index (HDI) value. It is also worth mentioning that despite Uganda’s endowment in oil and gas resources, the country has not performed in key areas such as providing and establishing the basic oil and gas infrastructures like setting up Oil Refinery, Crude pipeline, roads to the major oil fields among other infrastructural frameworks. In an attempt to make more effect, the inadequacy and insufficiency of capital combined with a weak economy and poor governance may delay and affect the development and production of oil and gas resources which may undermine the country’s institutional setup, leading to poverty than development.
Recommendations
Financing Uganda National Oil Company (UNOC)
Raising funds to finance the Uganda National Oil Company (UNOC) may be difficult and complex especially in the early stages because the available revenues will be utilized to cover costs incurred by International Oil Companies (IOC) and other contractors that invested in exploration, development, and production of oil and gas resource.
However, the need to finance Uganda National Oil Company (UNOC) is more urgent in order to strengthen the entity’s capacity in performing its obligations and implementing its decision on behalf of the country. Secondly, the Uganda National Oil Company (UNOC) as a body, newly incorporated should start with the minimal resources available and grows slowly by learning from other jurisdictions.
Spirit of Co-operation
The relationship between the governments, International Oil Companies, and other stakeholders in the oil and gas industry should be maintained in a spirit of mutual respect, cooperation, and trust. Building mutual trust and lasting relationships between the International Oil Company and National Oil Company can be gained through mutual cooperation and constructive dialogues on other hand.
Cooperation can be extended to communities in oil and gas producing regions and pipeline corridors. It must also be noted that Royalties and other rents arising from the extraction of oil and gas resources must be shared in accordance with the constitution and petroleum act.
Thirdly; efforts must be made to avoid the development of conflicts between the government, international oil companies, and other stakeholders in order to maintain peace and security in the sector.
Transparency and Accountability of Uganda National Oil Company (UNOC)
The Uganda National Oil Company (UNOC) as a participating entity on behalf of the country must be transparent and honest in the operationalization of its duties and obligations. In addition, the company must embrace public participation in oil and gas activities and access to information pertaining to oil and gas sector.
Furthermore, the company must increase high standards of transparency and accountability in Licensing, Procurement, Exploration, Development and other significant departments of the sector. Additionally, the Production Sharing Agreements (PSA) and other Petroleum Sharing Contracts (PSC) must be accessible for public inspection and participation. The Uganda National Oil Company (UNOC) must fully disclose all revenues and payments made to the government and all costs that are accruing in the sector.
Protection of Environment and Conservation of Biodiversity
The oil and gas industry is highly risky and extremely associated with environmental damage especially during the decommissioning phase when the oil and gas resource is depleted. The environment, human development, and biodiversity should be neatly balanced for mutual benefit and survival. Essentially most of the stakeholders in the oil and gas sector specifically contractors, International oil Companies (IOC), local oil companies (LOC), and private patterns in the business, engage in activities that are harmful and adversely dangerous to eco-social flora and fauna should be held accountable. Therefore, Uganda National Oil Company (UNOC) as the participating entity in the upstream activities of the oil and gas sector on behalf of Uganda, International Oil Companies, Civil society Organizations, Environmental actors, and other initiatives must work together and put all efforts needed to preserve the environment especially in the leading oil and gas producing region.
Conclusion
Patterson observed that the “Oil and gas industry is dynamic.” Any government dealing with it must do it cautiously. Therefore, much as Uganda has incorporated the safety case in the legal and policy framework, the country must not be more comfortable that major accidents and disasters will not occur.
This calls for more efforts in order to strengthen the existing regulatory framework especially when the country embarks on commercial production of its oil and gas resource. The author concludes that Uganda being a newly emerging oil and gas producing country, must copy and learn from the developed world especially the United Kingdom on how best health and safety issues should be addressed in the oil and gas sector. This may in one way or another safeguard health and safety standards in the sector.
Footnotes
[1] S 169 the Petroleum (Exploration, Development and Production) Act 2013.
[2] Regulation 36, Health and safety (Exploration, Development and Production) (Health, Safety and Environment) Regulations, 2016.
[3] Cullen’s Report.
[4]International Labour Organisation, ‘Issues paper for discussion at the Sub-Saharan African Tripartite Workshop on Occupational Safety and Health in the Oil and Gas Industry’ [2017].
References
Amoako-Tuffour, Aubynn, Attah-Quayson, Local Content and Value Addition in Ghana’s Mineral, Oil and Gas Sectors: Is Ghana Getting It Right? (Kampala)
Baldwin, R., Cave, M., & Lodge, M, Understanding Regulation: Theory, Strategy, and Practice (Oxford University Press, 2011)
Gordon, Patterson, Oil and gas Law Current practice and emerging Trends 2nd Edition (2011). Pg 190-216.
International Labor Organization, ‘Issues paper for discussion at the Sub-Saharan African Tripartite Workshop on Occupational Safety and Health in the Oil and Gas Industry’ [2017]
International Labor Organization, ‘Occupational Safety and Health and Skills in the Oil and Gas Industry Operating in the Polar and Subarctic Climate Zones of the Northern Hemisphere’ [2016]
Kathman, J., Shannon, M, Oil Extraction and the Potential for Domestic Instability in Uganda (African Studies Quarterly, 12(3), 23,)
Lassourd, T., & Bauer, A, Fiscal Rule Options for Petroleum Revenue Management in Uganda. (Revenue Watch Institute).
Ministry of Energy and Mineral Development, ‘’the oil and gas sector in Uganda: Frequently asked questions. (December, 2014)
Author’s Bio
Gatkuoth has worked under the Minister of Petroleum in South Sudan for the last six years. He has served in various departments in Dar Petroleum Operating Company that include Section Head for Policy and Services, Section Head of Material Management, Director of Technical Services and later as the Director of General Services until October 2019. He was then re-assigned to Nile Drilling and Services as Director for General Services/Administration under Nile Petroleum Corporation. Prior to the abovementioned positions, Gatkuoth served in various organizations and institutions in Western and Central Canada before returning back home. His positions away from home included Settlement Counselor in Catholic Social Services (Edmonton), Employment Counselor in Open Door Society, and West Care Facility Services Branch Manager in the City of Regina and Saskatoon. Through his love for human dignity/values, Human Rights, Oil and Gas Policy, and the potential interest to contribute positively to communal and human rights issues, Gatkuoth has been engaged in writing on issues of concern in various fields of study in South Sudan and the world at large. He has been addressing Gender Inequality, Environmental Policy, Local Content Policies in the Oil and Gas; rampant corruption concerns in South Sudan.
Gatkuoth holds BA in Sociology (Concordia University of Edmonton), MA, Int’l Law and Human Rights (UN Mandated University for Peace), LLM Oil and Gas (Uganda Christian University) and he is currently a Candidate, pursuing Master of Public Policy (University of Juba). You can reach him at peterreat@yahoo.com or reach him on WhatsApp @211923200202
