Constantly better

1

Seminario Vetting Confitarma Marine Safety and Vetting

Rome 07/11/2011

Kuwait Petroleum InternationalKuwait Petroleum International

Constantly better

2

Agenda Agenda

• About Kuwait Petroleum International• KPI Vetting Department• OCIMF objectives and guidelines• Ship quality chain of responsibility and reasons to go for quality• Management of an increasing risk• How the risk is evaluated• How Oil Majors vet• Where are the shipping risks• Arriving at the decision• Conclusions & Questions

Constantly better

3

About Kuwait Petroleum International About Kuwait Petroleum International

Kuwait Petroleum International is the international marketing arm of Kuwait Petroleum Corporation.

Our business encompasses the marketing and sales, research, refining and manufacturing of petroleum products, predominantly in Europe and the Far East.

Our activities are underpinned by strong ethical values that demonstrate the greatest concern for safety and care of the environment.

Kuwait Petroleum International is the international marketing arm of Kuwait Petroleum Corporation.

Our business encompasses the marketing and sales, research, refining and manufacturing of petroleum products, predominantly in Europe and the Far East.

Our activities are underpinned by strong ethical values that demonstrate the greatest concern for safety and care of the environment.

KPI MarketsKPI Markets

AviationAviation

Road DieselRoad Diesel

RetailRetail

DirectDirect

LubricantsLubricants

Constantly better

4

KPI European OUs & TerminalsKPI European OUs & Terminals

Kuwait Petroleum ItaliaKuwait Petroleum Italia

Kuwait Petroleum SpainKuwait Petroleum Spain

Kuwait Petroleum AviationKuwait Petroleum Aviation

Kuwait Petroleum EuropoortKuwait Petroleum Europoort

Kuwait Petroleum BelgiumKuwait Petroleum Belgium

Kuwait Petroleum DenmarkKuwait Petroleum Denmark

OK Q8OK Q8GenovaGenova

LivornoLivorno

MilazzoMilazzo

VeniceVenice

KoperKoperLe HavreLe Havre

AvonmouthAvonmouth RotterdamRotterdam

Sundsval

Halmstad

Goteborg

Vastervick

Stochkolm

Sundsval

Halmstad

Goteborg

Vastervick

StochkolmAntwerpAntwerp

Arhus

Aalborg

Esbjerg

Arhus

Aalborg

Esbjerg

Constantly better

5

KPI Vetting DepartmentKPI Vetting Department

All vessels offered to KPI Affiliates for loading or discharging of crude oils, feedstocks, intermediates, products and any hazarous chemicals are required to be in compliance with the KPI Vessel Acceptance Policy (and Marine Minimum Safety Criteria)

KPI has elected to provide centralised vetting activities on behalf of its Affiliates. Operating guidelines in the Vessel acceptance procedure to ensure that such objective is met in the most effective way by ensuring that all vessels calling at a of KPI terminal, including the ones on behalf of third parties, always meet the standards of quality and safety laid down by KPI

All vessels offered to KPI Affiliates for loading or discharging of crude oils, feedstocks, intermediates, products and any hazarous chemicals are required to be in compliance with the KPI Vessel Acceptance Policy (and Marine Minimum Safety Criteria)

KPI has elected to provide centralised vetting activities on behalf of its Affiliates. Operating guidelines in the Vessel acceptance procedure to ensure that such objective is met in the most effective way by ensuring that all vessels calling at a of KPI terminal, including the ones on behalf of third parties, always meet the standards of quality and safety laid down by KPI

Constantly better

Vessel screening process Vessel screening process

A vessel screening is a process of examination and evaluation referring to the performance background of the vessel as resulting from following databases:A vessel screening is a process of examination and evaluation referring to the performance background of the vessel as resulting from following databases:

Ship Inspection REport (SIRE) system. Oil Companies being part of OCIMF (Oil Companies International Marine Forum) share via the joint database reports of inspections carried out on vessels. Such inspections are performed by OCIMF accredited inspectors and are carried out according to a standard format and a uniform inspection procedure developed by the Organisation and periodically reviewd. Such standards are settled in the Vessel Inspection Questionnaire (VIQ)

Ship Inspection REport (SIRE) system. Oil Companies being part of OCIMF (Oil Companies International Marine Forum) share via the joint database reports of inspections carried out on vessels. Such inspections are performed by OCIMF accredited inspectors and are carried out according to a standard format and a uniform inspection procedure developed by the Organisation and periodically reviewd. Such standards are settled in the Vessel Inspection Questionnaire (VIQ)

Cemical Distribution Institute reports database (for Chemical and gas carriers)Cemical Distribution Institute reports database (for Chemical and gas carriers)

Lloyds List. An intelligence online service offering information on vessels, Companies, Port State Controls, vessel incidents, casualties, detentions as well as credit reports Lloyds List. An intelligence online service offering information on vessels, Companies, Port State Controls, vessel incidents, casualties, detentions as well as credit reports

KPI Vetting database. History of performance records with the KPI AffiliatesKPI Vetting database. History of performance records with the KPI Affiliates

Being Kuwait Petroleum member of OCIMF, the evaluation process is based on a mixed approach: screenings + inspections performed by our contracted inspectorsBeing Kuwait Petroleum member of OCIMF, the evaluation process is based on a mixed approach: screenings + inspections performed by our contracted inspectors

Constantly better

About OCIMF mission and objectivesAbout OCIMF mission and objectives

Helping to improve the safe and environmentally responsible operation of oil tankers and terminals since 1970Being the foremost authority on oil tankers, terminals and offshore suport vesselsPromoting continuous improvement in standards of design and operation

Helping to improve the safe and environmentally responsible operation of oil tankers and terminals since 1970Being the foremost authority on oil tankers, terminals and offshore suport vesselsPromoting continuous improvement in standards of design and operation

Standards. To identify safety and environmental issues facing oil tanker, barge, terminal and offshore marine operations and develop and publish recommended standards that will serve as technical benchmarks

Standards. To identify safety and environmental issues facing oil tanker, barge, terminal and offshore marine operations and develop and publish recommended standards that will serve as technical benchmarks

Regulatory. To contribute to the developoment of international conventions and regulations that enhance the safe construction and operation of oil tankers, barges, offshore support vessels and terminals, working with the IMO and other regulatory bodies, both regional and national

Regulatory. To contribute to the developoment of international conventions and regulations that enhance the safe construction and operation of oil tankers, barges, offshore support vessels and terminals, working with the IMO and other regulatory bodies, both regional and national

Enforcement and Consultation. To encourage Flag States, Port States and Classification Societies in their nforcement of international conventions and regulationsEnforcement and Consultation. To encourage Flag States, Port States and Classification Societies in their nforcement of international conventions and regulations

Promotion. To actively promote OCIMF’s role in the development of safety and environmental guidelines and recommendations, harmessing the skills and experience of OCIMF members and holding industry events addressing the issues

Promotion. To actively promote OCIMF’s role in the development of safety and environmental guidelines and recommendations, harmessing the skills and experience of OCIMF members and holding industry events addressing the issues

Promulgation. To facilitate access by charterers and authorities to data on tankers, barges and offshore support vessels relating to safety and pollution prevention, through the SIREPromulgation. To facilitate access by charterers and authorities to data on tankers, barges and offshore support vessels relating to safety and pollution prevention, through the SIRE

Constantly better

Ships’Quality: The Chain of ResponsibilityShips’Quality: The Chain of Responsibility

Enforcement of Regulations is made by IMO andFlag StatesResponsibility to ensure compliance with national laws and regulationsImplement IMO ConventionsEstablish an Administration to conduct surveys, casualty investigations and issue safe manning documents, seafarers’ certificates, etc..Port State ControlProvide for control procedures on ships calling at foreign ports (SOLAS 74, Loadline 66, MARPOL 73/78Role extended to cover operational requirements in addition to some flag states’ responsibilitiesPort States required to inspect 25% of all ships calling at their ports (50% in Asia/Pacific Region)Classification SocietiesEnsure ships are built to adequate strength and maintained to meet Class RulesIncreasingly delegate responsibilities from Flag States to conduct statuory surveys and issue cerfificateAdherence is made byShip OperatorsHold prime responsibility for ensuring that ships’ quality, seaworthiness, Manning levels and competence meet IMO Convention requirements

Enforcement of Regulations is made by IMO andFlag StatesResponsibility to ensure compliance with national laws and regulationsImplement IMO ConventionsEstablish an Administration to conduct surveys, casualty investigations and issue safe manning documents, seafarers’ certificates, etc..Port State ControlProvide for control procedures on ships calling at foreign ports (SOLAS 74, Loadline 66, MARPOL 73/78Role extended to cover operational requirements in addition to some flag states’ responsibilitiesPort States required to inspect 25% of all ships calling at their ports (50% in Asia/Pacific Region)Classification SocietiesEnsure ships are built to adequate strength and maintained to meet Class RulesIncreasingly delegate responsibilities from Flag States to conduct statuory surveys and issue cerfificateAdherence is made byShip OperatorsHold prime responsibility for ensuring that ships’ quality, seaworthiness, Manning levels and competence meet IMO Convention requirements

Constantly better

Reasons to go for quality and risksReasons to go for quality and risks

Why…A single pollution incident can have devastating consequences to even the largest Oil CompanyPublic opinionPolitical pressure Financial liabilityCommercial realityInfluence of tanker casualtiesIncrease the knowledge of actual vessel condition

Why…A single pollution incident can have devastating consequences to even the largest Oil CompanyPublic opinionPolitical pressure Financial liabilityCommercial realityInfluence of tanker casualtiesIncrease the knowledge of actual vessel condition

The Shipping riskOwned vessels- Least risk- Greatest controlTime Chartered Vessels- Better than “spot” but fails short of owningVoyage Spot Chartered Vessels- Most voyages- Greatest risk- Least knowledge of quality by the charterer

The Shipping riskOwned vessels- Least risk- Greatest controlTime Chartered Vessels- Better than “spot” but fails short of owningVoyage Spot Chartered Vessels- Most voyages- Greatest risk- Least knowledge of quality by the charterer

Constantly better

Risk managementRisk management

How do Oil Majors evaluate the risk? Through proper risk assessment teams: Vetting departmentsHow do Oil Majors evaluate the risk? Through proper risk assessment teams: Vetting departments

How do Oil Majors evaluate vet? All Oil Majors have theri own quality assurance schemesSchemes vary due to company size, scope and diversity of activities, attitude to marine risks and use of real time information and the quality of analysisSome may use 3 rd party VettingAll companies input/extract reports from OCIMF databaseDetermination of vessel utilisation is solely at each company’s discretionLiability concerns dictate how individual companies approache the vetting issueIncreasing use of auto-vetting

How do Oil Majors evaluate vet? All Oil Majors have theri own quality assurance schemesSchemes vary due to company size, scope and diversity of activities, attitude to marine risks and use of real time information and the quality of analysisSome may use 3 rd party VettingAll companies input/extract reports from OCIMF databaseDetermination of vessel utilisation is solely at each company’s discretionLiability concerns dictate how individual companies approache the vetting issueIncreasing use of auto-vetting

Constantly better

Arriving at the decisionArriving at the decision

Combination of some or all elementsAcceptance matrixGuidelines/Minimum Marine Safety CriteriaSubstantiated positive informationThe SIRE Inspection Report

Combination of some or all elementsAcceptance matrixGuidelines/Minimum Marine Safety CriteriaSubstantiated positive informationThe SIRE Inspection Report

A decision to utilise a particular vessel means that the risk has been analysed and deemed to be acceptableA decision to utilise a particular vessel means that the risk has been analysed and deemed to be acceptable

Constantly better

12

Conclusion & QuestionsConclusion & Questions

What is a suitable SIRE report (age, conditions, product)?

Do you access CDI?

Do you compare with other Majors’ vetting policy?

How often do you inspect T/C or COA vessels?

Do you consider INCOTERMS in your evaluation process?

Do you screen vessels each and every time they are nominated for employment?

Do you rate vessels’ performance?

Is other Majors’ approval needed for your vessel approval?

What is a suitable SIRE report (age, conditions, product)?

Do you access CDI?

Do you compare with other Majors’ vetting policy?

How often do you inspect T/C or COA vessels?

Do you consider INCOTERMS in your evaluation process?

Do you screen vessels each and every time they are nominated for employment?

Do you rate vessels’ performance?

Is other Majors’ approval needed for your vessel approval?

Constantly better

Thank you for your attention