HSE in OIL and GAS. Russia and CIS

YURY LIPATOV'S WELCOMING LETTER (STATE DUMA, RF ENERGY COMMITTEE)

We are very grateful to all the dedicated speakers, delegates, sponsors, and journalists for their participation in our recent "HSE IN OIL & GAS 2011" Conference in Moscow!

Every day we hear about new possibilities in Russia's European North, its Arctic and Subarctic regions, and in the Black and Caspian Seas. We observe how oil and gas giants form strategic alliances. Their development of new deposits, especially deep-water offshore deposits, provides rich opportunities. BUT:

• Are national and international oil and gas companies able to work effectively in Russia's climate? Do we know how to take care of the people who risk their lives in such harsh conditions every day? Do we know how to train professional HSE managers?
• Are we equipped to extract more resources without harming the fragile ecosystems and environment?
• Do operators in Russia and the CIS have enough knowledge and experience not just to have, but to constantly improve their HSE processes?
• Which international operators and contractors can their Russian counterparts learn from?
• To what extent should the State influence the HSE industry?

All of these topics were fervently discussed in Moscow!

MANAGEMENT PERSPECTIVES:

The insights of MIKE WEST, Group Head of Safety at BP Plc, were hotly anticipated, and his presentation lived up to participants' expectations. Mike gave us BP's views on recent tragic events, and mentioned which important lessons BP and the global oil and gas industry has learned from them. It should be mentioned that at its peak 60% of the company's employees (around 45,000 people) were actively involved in trying to mitigate the adverse effects. 6,500 vessels were in operation (by comparison, the D-Day campaign in Normandy had 5,000 vessels).

To learn more, download Mike West's presentation from our website: www.oil-gas-safety.com

At the conference, ANTONINA SULKHOVA, Global HSE Manager at Talisman Energy, asked the very important question "Which unique HSE challenges does Russia pose?"

Her question was put to SIMON DURKIN, CEO of Salym Petroleum Development N.V., MIKE WEST of BP Plc and BOB SALEM, General Director of Rosha LLC and California HSE Group. Their responses mentioned:

• Harsh climatic conditions (extreme cold or heat)
• Contractor’s mindset (that “HSE is purely an operator’s responsibility”)

It was also mentioned that individual commitment to HSE issues from HSE managers in Russia are commendable, but that the mindset of top management is not always as positive. They (top managers) do not always understand that safety means making money. This mindset needs to change.

The obvious next question was "How do we change that attitude?". Bob Salem said that our behaviour is based on 2 principles: greed and fear. There are certain specific ways to influence the behaviour of managers. We need to remember 3 facts that determine behaviour: 

• Type of work
• Organisational factor (leadership and prioritising (“what is more important: safety or profit?”)
• Individual factors (health, general perception of risk, etc.)

ELENA GAUPTMAN, Environmental Supervisor at Exxon Neftegas Limited, gave a very interesting speech. It focussed on Sakhalin-1 achievements, but also underlined important issues that prevent many operators from improving their HSE processes. Elena touched upon the issue of STATE ECOLOGICAL EXPERTISE, which is often needlessly carried out twice, by both regulatory bodies and state organs.

During our research, working with contractors was identified as the most important HSE issue. In his presentation, SERGEY SAVENKOV, HSE Manager at TNK BP Gas stream, outlined the 3 stages of managing such work: 

• Pre-qualifying choice (historical statistics, contractor’s policies, etc.), working out conditions of the agreement between the operator and contractor.
• Evaluation of competing offers, examining and checking whether what is written in tender offers corresponds to reality.
• Monitoring and quality control.

PEOPLE’S SAFETY: 

AZAT GUMEROV, Acting HSE Manager, SCHLUMBERGER RUSSIA, in his presentation talked about traffic safety. Driving is amongst the activities with the highest risk when working at the oil and gas deposits. Azat described 5 main elements of traffic safety management. 28% of accidents occur due to speeding, e.g. human factor. According to the statistics by OGP 33% of all the accidents happen due to human fatigue. Azat then presented fatigue management methods used by Schlumberger to successfully help drivers and contribute to the road safety. More details in Azat's presentation here on our website...

DUNCAN LLOYD, HSE Manager of Northsea Operations at Schlumberger shared his experience and talked about human factors: fatigue patterns and PRESSURE-RELATED INCIDENTS (which have proved to be the most dangerous and difficult to forecast).

PAVEL ZAKHAROV, HSE Director for the FSU Region at Weatherford, focused his presentation on employees' health, and challenges specific to Russia. Pavel shared worrying statistics: the annual level of alcohol consumption is increasing (18 litres per person). More than 2 million alcoholics - 10% of the Russian population - are being treated. 2 million people use drugs. 

The death rate is very high as well, at 1,416 per 100,000 people. 2 million people per year die and more than half of them die from heart diseases, many of which are work-related.

Pavel then concentrated on measures that are implemented at his company to fight that, and achieve high targets and maintaining employees' health and safety. More information can be found in Pavel’s presentation, available online.

DENIS SAVKIN of SAP mentioned that economic losses connected to industrial injuries and accidents equal 2% of Russia's annual GDP. He quoted research showing that 70-80% of incidents could be avoided if labour was properly organised. 

SERGEY MOISEEV, General Director of Aktiv – Bezopasnost, summarised the mood with a very relevant saying: “LEARN AS IF YOU WILL LIVE FOREVER!”.

REGULATORY ISSUES:

On Day Two participants discussed regulatory issues. One of the most vital questions was:

"To what extend does the State influences HSE in operator companies in the UK?" – This was asked by DANILA LOGOFET, Senior Associate with Herbert Smith, to GRAHAM FREETH, Business Manager at JP Kenny, Duncan Lloyd, Schlumberger and others. The answer was “Tremendously!”.

Mr. Freeth added: “Especially when the majority of the employees are national employees. Quite often we do have contradictions between what State says and what State does. It happens all over the world. It only highlights the importance of the State on HSE issues”. 

MASTER CLASS led by Senior Executives from DUPON: 

OPERATIONAL RISK MANAGEMENT SYSTEMS: This Master Class included recommendations on improving the safety culture - as well as implementation of mechanisms - that ensure sustainability. It discussed specific actions and processes based on DuPont's best practices that can be implemented by oil and gas companies to reduce risk and streamline operations.  Benefits of this system extend beyond the avoidance of catastrophic events and their associated costs.  It has been shown that process safety management contributes to INCREASED PRODUCTIVITY, HIGHER QUALITY, REDUCED WASTE and LOWER OPERATIONAL COSTS.

ECOLOGICAL RISKS - speakers: 

STANISLAV KRAVCHENKO, HSE and Corporate Security Advisor, Sakhalin Energy Investment Company Ltd. 

JEFFREY JETER, Senior Environmental Advisor, EBRD

OLEG SERGEEV, General Director, PeterGaz

ANDREY PANOV, Vice–President, Chartis Insurance

PAUL WOODASON, Director of HSE & Risk Management Operations, RPS Group

Jeffrey Jeter mentioned that the organisation looks at several factors when deciding on a loan, including:

• Venting and flaring
• Waste management
• Releases to soil and surface water
• Induced access (habitat fragmentiation and biodiversity)
• Traffic safety
• EIA (Environmental impact assessment)

Paul Woodason summarised years of marine surveys in the Arctic area and noted that the following issues are important in planning your work in Northern conditions:

• Timing of the project (seasonal)
• Environmental impact
• Social impact
• Vessels
• People
• Equipment
• Emergency responce

All presentations are available online. 

Much has been recommended to the organisers, the Adam Smith Institute, about what to include into the agenda next year. We will focus our programme for 2012 on:

1. Bringing more presentations from the top management of leading oil and gas project operators in Russia and the CIS
2. Learning from leading contractors' best practices
3. International experience
4. Dialogue between the Government and oil and gas operators (case studies on safety approaches)
5. Dialogue between operators and contractors
6. Waste management
7. People's health
8. Transportation safety

Thank you for your lively discussions, questions, opinions, debates and round table discussions! We are very grateful for your participation, and your passion for improving HSE at your company.

If you have comments or suggestions, please call + 44 20 7017 7451 or write to Aya Nazarova at aya@adamsmithconferences.com