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Performance-based supervision

The supervisory regime on the Norwegian continental shelf (NCS) builds on the view that a regulator cannot “inspect” quality into the Norwegian petroleum sector.

Photo of offshore worker

Responsibility for operating acceptably and in compliance with the regulations rests with the industry itself. And it is up to the companies to ensure that quality is achieved and maintained.

In principle, two approaches exist for regulating safety in the petroleum sector: prescriptive or performance-based.

Over the past 20-30 years, safety regulators worldwide have moved towards an increased element of performance management. That also holds true for Norway.

This approach is based on legislation and statutory regulations which set detailed requirements for structures, technical equipment and operations to prevent hazards and accidents.

The safety regulator determines the necessary safety requirements, and checks that the companies comply with these.

A prescriptive regime of this kind has often been found to encourage passive attitudes and a lack of commitment among the companies. They wait for the safety regulator to conduct an inspection, identify faults or deficiencies, and explain how these are to be corrected.

The government accordingly ends up as the guarantor that safety in the industry is adequate, with the companies’ inherent responsibility in this area transferred to the authorities. That does not represent a very suitable way to ensure safe operation.

Performance management
With this system, the regulations are formulated to describe performance goals or functional requirements which have to be fulfilled.

The government’s job is then to describe which safety targets a company must meet, and check that it has established a management system to ensure that these goals are met.

Companies have a relatively high degree of freedom to make their own choice of good solutions for satisfying the regulatory requirements.

Internal control principle
The principle of internal control means that a company has an independent duty to comply with the requirements specified in the regulations.

This principle is applied by adopting administrative management tools which allow the company to check its own operations in a systematic manner.

The change from a prescriptive regime to more performance-oriented regulation in the Norwegian petroleum industry has been demanding for everyone concerned. But the experience gained means that the adoption of the internal control principle is regarded as a success because it permits more flexible and efficient regulatory supervision.

The internal control principle has also been introduced to the land-based petroleum plants in Norway.