Oil explorers will need cover for clean-up cost of an Irish Deepwater-scale disaster
Companies hunting for oil off Ireland's coast will soon have to make sure they can cover the huge clean-up cost that would mount up if a catastrophe such as the Deepwater Horizon disaster was to unfold.
The Government is fleshing out how much insurance cover explorers will need to meet the likely costs of such a potential disaster. It also wants procedures put in place to make sure that compensation would be paid promptly.
The Department of Communications, Climate Action and the Environment is introducing the new measures on foot of an EU directive introduced following the 2010 Deepwater Horizon disaster in the US.
The Deepwater Horizon rig was owned by BP. A blowout there caused 11 deaths and saw three million barrels of crude oil pour into the Gulf of Mexico. The disaster cost BP about $62bn (€59bn) in clean-up costs, compensation and fines.
Following the disaster, the European Union found that the regulatory framework applying to the safety of offshore oil and gas operations in Europe didn't provide adequate assurance that risks from offshore accidents in the EU were minimised.
A new directive included financial liability indemnity and insurance requirements that must now be adhered to by petroleum undertakings, operators and owners.
"The Deepwater Horizon incident demonstrated that the costs of responding to, and economic recovery from, extreme-scale offshore accidents have the potential to overwhelm the resources of the liable party," the Department noted in a document it prepared as it seeks a consultant to determine how much insurance cover operators around Ireland will require.