Quality Assurance and Risk Management

in BP

Catherine Hall

2

HSSE

BP Group HSSE Goals are simple…

No Accidents

No Harm to People

No Damage to the Environment

Wherever BP have control or influence we will work with others, our partners, suppliers, competitors and regulators to raise the standards of our industry.

Environment is an area that we (BP Group) have chosen

to be distinctive in.

BP Shipping is the centre of shipping expertise for BP group

• providing safe, environmentally responsible marine and shipping solutions in support of BP Group Strategy

• providing assurance on ‘all that floats’• value adding through commercial operation of oil

tanker assets, using a combination of spot, time charter and BP operated vessels.

• technical operation of group controlled assets

the people

594 shore staff1280 officers120 cadets960 ratings

BP ShippingClean Seas, Safe Ships, Commercial Success

SUEZMAX3-1990’S BUILT H CLASSBP operated

4 x VLCCs1 x Shuttle Tanker8 x LNG4 x LPG20 x 100kdwt12 x 47kdwt7 x 37kdwt21 Regional Vessels

(US Flag, UK Coastersand East Med Fleet)

time chartered101 Vessels

Current Fleet

BP Shipping carries 50% of group cargoes

Total: 178 vessels

HYDROCARBON ON WATER

Total cargo volume shipped: 283 m tons

Total number of voyages: 7,502

Utilization of OTC fleet on BP business 50% (2000) to 82% (2008)

Value of Owned Fleet:US$5.5bln (est.)

Apprec. >30%

Average Age of Vessels (>9k dwt)

15 yrs (2000)

2.5 yrs (2006)

45% of Group Cargo carried on Operated or TC tonnage

target Approx 50% of group cargocarried on operated and T/C vessels

objectiveno accidents, no harm to people no damage to the environment

Operated & Time chartered Spot

BP’s controls tanker industry improve global tanker standards by influencing through

pool of vessels used by BPimprove quality by

12,000 ships in database

2000-3000 ships

acceptable forBP business

tankers used by BP

It is all about reducing the risk to BP

•oil majors•Ship owners•legislation

•setting standards– age– double hull policy– operational requirements– operating procedures– manning training

•confirmed by– inspection– management audit– structural review

•design•build•operation•procedures•maintenance•people•deployment•Disposal•Tc assurance

• PROCEDURES - Management Systems and Guidance. E.g. ISM Code, SOLAS, MARPOL, ISGOTT, Company operating procedures (Procedural Risk Control)

• PEOPLE - Experienced & Motivated staff committed to the management systems - both onboard the ship and ashore. (Active Risk Control)

• SHORE MANAGEMENT - Providing self regulating audit and support functions. Ensuring adequate design and maintenance. (Procedural + Active + Inherent Risk Control).

Risk Management on a good Ship…

Control quality to minimise risk

StrategicOperational Influencing

IMOIMO

TSCFTSCFOCIMFOCIMF

Flag/PortState

Flag/PortState

LegislationLegislation

Owned

Set standards-Audit-Vetting

Design-Operation-Audit

Shipping

policies

Balance riskreward

Voyage chartered

Time Chartered

Set standards-Operations-Audit

Raise standards soBP quality control not req’d

Control of Shipping Risk

• To provide Assurance to the BP Group that the risk involved in moving oil/gas/dry bulk around the Globe has been minimised as much as possible.

• To constantly improve that level of Assurance ahead of public expectations.

• To work with the BP Group to facilitate business in a safe and proper manner by working with “owners” to develop their understanding and appreciation of our goals.

• To work with the industry to raise standards.

Assurance Team - Role

Raising The Bar

• A ship is considered unacceptable unless positively identified as otherwise.

• The ship vetting team assesses ships for suitability for BP business, based on a range of criteria including management, operations, crewing and structural standards, using its own inspection reports combined with those shared across the industry.

• BP Shipping conducts time charter executive CEO forums to improve the safety performance and standardize the reporting of the time chartered fleet

BP - Direction on Double Hull

The following changes to the BP Group shipping policy will apply to all sea-going movements which are subject to be vetted(1).

From January 2008, all vessels greater than 600 dwt carrying hydrocarbons (i.e. including non-persistent or 'clean' oils) shall be double hulled.

Notes:(1) The policy applies to all vessels carrying hydrocarbons in bulk except barges (being vessels which are trading exclusively in inland waters, harbours and estuaries)

(2) In brief this will cover all crude oils, residual fuel oils, vacuum gas oil, atmospheric and vacuum residues, lubricating oil and lubricating base oils, but please consult the BP Shipping Assurance team for further detail.

BP - Direction on Age

The following changes to the BP Group shipping policy will apply to all sea-going movements which are subject to be vetted(1).

From January 2008, all vessels greater than 5,000 dwt shall be less than 20 years of age, and all vessels below 5,000 dwt shall be less than 25 years of age.

Notes:(1) The policy applies to all vessels carrying hydrocarbons in bulk except barges (being vessels which are trading exclusively in inland waters, harbours and estuaries)

(2) This date applies to the date on which the vessel is vetted, and not the date on which the voyage takes place.

(3) Excluding LNG carriers where the age limit will be 40 years, and all other gas carriers where the age limit will be 25 years, both age limits applying up to and beyond 2008.

Other BP Requirements

Vessels (ex. LNG) > 15 years of age and > 20,000 dwt

The vessel should hold a Condition Assessment Programme (CAP) rating of 1 or 2, issued under an acceptable scheme. This should be obtained by the first dry dock after the vessel’s 15th anniversary of delivery date, and should include a hull fatigue analysis. The CAP certificate will be acceptable to BP Shipping for three years. A three month period is allowed after the relevant dry dock to allow the Classification Society to produce the documentation. An extension to four months may be permitted on production of a Class attestation.

Tanker Management Self Assessment (TMSA)

Vessel manager must have submitted a TMSA to OCIMF to be considered for BP business.

OWNER REPUTATION

SHIP INSPECTIONS

SIRE REPORTS

CDI REPORTS

TERMINAL FEEDBACKS

CHARTER FEEDBACKS

CASUALTY DATA

FLAG CHANGES

MANNING/MANAGEMENT CHANGES

CLASSIFICATION SOCIETY CHANGE

MARKET INTELLIGENCE

OWNER AUDITS

The Vetting Decision

YES

NO

More infoRequired

STRUCTURAL ASSURANCE

Making the decision

Positive Information MUST be available on a vessel to allow an assessment to be carried out.

Does Vetting Work ?Does Vetting Work ?

Ship Vetting Casualty Ratio Jan 1994 to Date

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100%

Jan-94

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Jan-95

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Jan-98

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Jan-99

Jul-99

Jan-00

Jul-00

Jan-01

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Jul-03

Jan-04

Running 12 Monthly Vetting Ratio Worst Best

Vetting Ratio