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SAIPEM Oil Gas - Asia Pacific

SAIPEM Oil Gas - Asia Pacific

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Saipem Sustainability Talent
C a s e s t u d y

Asia Pacific

Saipem Sustainability Talent
C a s e s t u d y


INTRODUCTION SAIPEM AT A GLANCE Saipem mission statement Saipem activities Saipem through the world Main Financial Results Saipem Human Resources SAIPEM SUSTAINABILITY Sustainability organisation Methodology Saipem’s sustainability policy ASIA PACIFIC OVERVIEW Countries in the Area People’s Republic of China Republic of Indonesia Republic of Malaysia Kingdom of Thailand SAIPEM GROUP IN ASIA PACIFIC REGION Companies operating in the area Companies Organisation Projects in the Area STAKEHOLDERS RELATIONS Matrix on Sustainable Impact Human Resources Strategy Clients Satisfaction Subcontractors and local partners PERFORMANCE INDICATORS Saipem Asia Pacific Group QHSE Management System Saipem Asia Pacific Group QHSE Objectives and targets 2005 ENVIRONMENTAL INDICATORS Energy Consumption Water Consumption Waste generation Air Emissions ECONOMIC INDICATORS Contribution to the Local Economy HSE Expenditures SOCIAL INDICATORS Employees distribution Safety performance Training Health GLOSSARY & KEY WORDS

4 7 7 8 8 9 9 10 11 12 13 14 15 16 17 18 19 20 20 21 21 24 24 25 25 26 28 28 30 30 30 31 31 32 32 32 33 34 34 35 36 36 37





This report is part of Saipem’s Sustainability programme for the years 2005-2007. After successful publication of case studies on Nigeria, Kazakhstan, Azerbaijan and Peru, Saipem has published new local reports illustrating its socio-economic and environmental performance in Angola, in the Asia Pacific Region and in the Sultanate of Oman.
Thanks to this new effort the sustainability approach is extending its coverage in the Saipem world, involving more and more people, projects and external environments.




The industrial development of the Saipem Group reflects that of the Oil and Gas industry itself in many respects. This is especially true in frontier areas, where Saipem is committed not only to resolving technological challenges, but to contributing to social, cultural and environmental development. This also responds to the input of a growing number of stakeholders, whose interest is not limited to strict economic or technological performance, but also in the concept of sustainable development in our business. As clearly reflected in our Mission Statement, globally, Saipem is adopting an approach that combines sustainable development with other business needs. The methods are based on a simple but ambitious concept: embracing diversity; developing an everexpanding, truly international organization comprising multi-local teams working together to achieve predetermined targets. The Sustainability Programme that Saipem started implementing in 2001 is the result of thoughtful, comprehensive, internal assessment. The diversity of our projects and the specificity of environments in which they are performed, are the reason for adopting a “Local Approach to Sustainability”. Our path towards Sustainability has an over-riding objective: beneficial integration of our activities within a local context, and leveraging the Company’s talents to create better opportunities for local communities. We need to evaluate and present our performance to date to our stakeholders, and to improve it in future. Pietro Franco Tali Chairman & C.E.O. Hugh James O'Donnell Managing Director

Saipem’s approach to sustainability initiatives management provides the annual commitment of external communication so as to give a possibility to our stakeholders to examine closely Saipem reality. These case studies belong to the commitment of transparency, clarity and assurability we took last year with all Saipem stakeholders, developing a specific disclosure of the way Saipem is working in the frontiers areas. The reports published last year on Saipem activity in Nigeria, Peru, Kazakhstan and Azerbaijan already achieved of spreading out this commitment both at Saipem Corporate and at site level; both internally and externally; both through our initiatives and upon requests. We received interesting feedbacks from our readers and we tried to positively implement all suggestions within these new case studies, that represent detailed analysis supported by greater experience and knowledge. The utilisation of the sustainability case studies in the contracting phase for the new projects in the country suggests us to better point out the impacts Saipem has in the country on its economic, environmental and social development. The distribution to the local stakeholders, on the other hand, suggested us to facilitate the comprehension of the contents translating it in the country mother tongue. We translated the Peru report in Spanish for our Peruvian stakeholders and we are going to do the same for these new case studies. In particular the Angola case study will have a Portuguese version which is even nearer to our local readers. We also asked a third part evaluation of the case studies. This measure was undertaken to identify the points to be improved successfully and strong points to be included also in these new publications. The reporting activity of this year focused the attention on other three Countries where Saipem is operating and is contributing through its business to the local development: Angola, Asia Pacific Region and Oman. Angola represents for Saipem a great commitment for the future activities, all operations are growing especially in the offshore markets which involve increasingly more Saipem based locally companies and many of our vessels. Saipem considers the Asia Pacific region as one of the most relevant fields in the world for the offshore projects in place and for the support activities developed for the Far East as for example for the Sakhalin Island. In Oman Saipem developed an interesting onshore project which characteristics and the commitment of the project staff gives us the opportunity to collect and issues their socio-economic and environmental experience in a published case study. Saipem external communication is expected to grow constantly supported by an accounting system of these data and information that will be more and more reliable. This represents another challenge not only for my staff but also for all Saipem world. Sabatino De Sanctis QHSE Senior Vice President

Saipem Corporate Milan




Any possibility to understand the countries where we operate and to know better ourselves is an important investment to assure many kinds of improvement. This is the value I gave to the analysis that was carried out in order to prepare this report. We studied these countries from social, economic and environmental point of view and we tried to identify our points of strength and points of weakness. To this purpose we deeply investigated Saipem approach and behaviour in terms of HSE management, human resources strategy, business and operations management. I am convinced that any “Sustainable Development” could only be effective when the growth is profitable to all Parties involved, and when it is done in the respect of the people aspirations and in full respect of our planet. With this spirit, and after having gathered all information subject of this study, our next step will be for us to determine how we can improve our management of operations and the integration of our companies in the various countries under our Area with the aim of a sustainable development. The idea to share this experience with our stakeholders through the publication of this case study came out naturally. The analysis we developed embraced most of the countries involved in our both onshore and offshore operations, mainly Malaysia, Indonesia, China, Thailand and Australia. It is a very huge area with many different characteristics, social, cultural, political and religious. This diversity is one of the challenging factors when operating in such a large region, which must be seen as a stimulating parameter from which, we should take advantage by enhancing synergies and complementarities. We thought interesting to describe briefly our activities giving a better idea of Saipem contribution in this part of the world. I hope this effort will be somehow useful for our clients in order to recognised Saipem attempt to contribute to the development and the care of the people and countries where we are operating. We will distribute this document to our employees, especially the local employees, in order to give them the possibility to be more and more part of our Group and realize how Saipem is paying attention to grow in harmony with a sustainable development. Michel Lainè Group Resident Area Manager Asia Pacific






Pursuing the satisfaction of our clients in the energy industry, we tackle each challenge with safe, reliable and innovative solutions. We entrust our competent and multi-local teams to provide sustainable development for our company and the communities in which we operate.
Saipem is one of the leading companies in providing services to the Oil & Gas sector, mainly in offshore engineering and construction. The Company invested heavily in the past years to reinforce its offshore fleet, both in offshore construction and in offshore drilling and today Saipem's fleet is one of the most technically developed and efficient in the sector. With the acquisition of the French engineering company Bouygues Offshore in May 2002, Saipem became a leading contractor in the field of complex EPIC projects (Engineering, Procurement, Installation and Construction). This acquirement helped Saipem turn into a real global contractor, with significant local presence in strategic and emerging areas, such as Western Africa, the former Soviet Union, Central and South East Asia, North Africa and the Middle East.




Saipem Group consists of six worldwide business units. It provides EPIC services to the oil and gas industry, with a particular focus on activities in remote areas, deepwater environments and gas related projects that allows the Group to enjoy a superior competitive positioning. • Offshore Construction: Saipem is the consolidated leader in offshore construction, with main activities covering engineering, construction, and installation of platforms, subsea structures, floating production systems, and subsea pipelines. The most powerful asset in Saipem's fleet is Saipem 7000, a semi-submersible vessel capable of lifting structures of up to 14,000 tons and laying pipelines in ultra deep waters. Other vessels include Castoro 6 and Semac 1, capable of laying large diameter pipelines, Saibos FDS (Field Development Ship), a specialised vessel used for the development of deep water fields and Saipem 3000, a vessel capable of lifting structures of up to 2,400 tons. The company's recent acquisitions further strengthened its engineering and project management expertise. • Drilling: Saipem's mobile offshore drilling fleet consists of one state-of-the-art drillship (Saipem 10000), five semi-submersibles and four cantilevered jack-ups. Saipem drilling operations are carried out on behalf of the major corporations in the oil and gas sector. Saipem owns 23 drilling rigs and 15 workover rigs capable of operating at depths ranging from 2,500 to 10,000 meters at elevated temperatures and in high pressure environments. • Leased FPSO: Saipem entered this sector in 1996 as a new player offering a unique combination of the capabilities of a major EPCI contractor with the worldwide presence of an Owner of first class drilling and construction vessels. Saipem's wholly owned fleet enables the company to provide a full range of installation, construction and transportation services suited to the most challenging floating system installations. • Onshore Construction: Saipem is world leader in the onshore construction sector having laid more than 60,000 km of pipelines over five continents and built some 100 oil refineries, petrochemical plants, power plants, oil and water pumping stations and natural gas compression stations. The Company specialises in the laying of large diameter pipelines, above all in adverse climatic conditions and difficult to reach areas. • Liquefied Natural Gas: Saipem entered this high-potential market by establishing a new group which has the necessary technological capabilities to construct LNG tanks and is experienced in the construction of offshore and onshore LNG import and export terminals. • Maintenance Modification and Operation: Saipem's presence in the last link of the value chain enables the Company to offer end-to-end solutions to energy service providers. This kind of activity allows Saipem to streamline processes, increase productivity and offer clients plans of continuous improvement.

Saipem performs both onshore and offshore operations in a very large number of countries throughout the world. As a contracting company operating in the Oil&Gas sector, Saipem's worldwide presence and the geographical distribution of its backlog are determined by where the Oil Companies' investments are in the world. At the end of 2005 the order backlog amounted to 5,513 million euros. Breakdown of activities by countries is as follows: 25% in West Africa, 14% Commonwealth of Independent States - ASIA, 12% Central and South America, about 8% in Far East, 8% Middle East, 8% Europe and 8% Commonwealth of Independent States - Europe.
Backlog by Geographic Area

West Africa 25,6% CIS - Asia 14,5% Central - South America 12,2% Far east 8,5% Europe 8,4% Middle east 8,3%

CIS - Europe 8,1% North Sea 5,7% North Africa 5,7% North America 2,2% Italy 0,4% Other Asia 0,4%

Data updated at December 2005

Principal Operating Centers Offshore Offshore Drilling float. Prod. Lng & maritime works Engineering Centers Onshore Drilling Maintenance Modification and Operation (MMO) Yards/bases Other Offices/Activities

Onshore SAIPEM



Operating revenues Production costs Idle costs Selling expenses Research and development costs General and administrative expenses NET INCOME OFFSHORE CONSTRUCTION PIPELINES LAID (KM) INSTALLATION (TONS) OFFSHORE DRILLING METRES DRILLED ONSHORE CONSTRUCTION PIPELINES LAID (KM) INSTALLATION (TONS) ONSHORE DRILLING METRES DRILLED *After FRS Reconciliation 2002 3,149 (2,637) (48) (56) (6) (102) 191 2002 1,798 55,960 2002 124,761 2002 687 30,060 2002 348,040 2003 4,231 (3,658) (78) (66) (9) (115) 196 2003 1,409 118,211 2003 128,839 2003 612 23,930 2003 385,976 2004* 4,306 (3,706) (81) (66) (9) (116) 235 2004 1,634 172,664 2004 130,420 2004 465 15,888 2004 455,413 2005 4,528 (3,914) (57) (62) (7) (120) 255 2005 833 134,602 2005 113,786 2005 1,005 7,112 2005 547,953



Saipem Group Employees
30000 25000 20000 15000 10000 5000 0

1999 2000 2001 2002 2003 2004 2005


Other Nationalities

In 2005 Saipem total staff was of 25446, about 3500 employees more than in 2004. Saipem's interest in the social development of the areas of operations was expressed in 2004 both through the internal management and commitment, both externally, in participatory actions with local communities. This implied the adoption of procedures for selection and management of employees which can be adapted to the provisions and needs of the various reference countries. The Local Content Policy requires the Local Content policy means that the relationship with local workers is directly developed, avoiding as much as possible the use of agencies; this meant a particular commitment on the part of Saipem, both in terms of resources and responsibility, strongly supported by the commitment of Top Management. One result of this approach can be seen in the significant number of nationalities (103 at December 2005) which makes up the Saipem staff worldwide.

Saipem Employees by Nationality







e n s a t n o y nce eria Italy khsta baija India ussia lippin Peru ngol UK lgeria rabiaroatia nesialaysia zuelaorwa ania Statetugal urkey SpainEgyp oland iland ong ther O C T A R hi A di A C ndo a ene N Rom ed or Fra Nig P Tha za Azer M V P P I it u Ka Un Sa






For the second year Saipem decided to publish his sustainable approach through local case studies. Following the last year approach to focus on specific countries of activity, this time the analysis has been carried out on Asia Pacific region, Angola and Oman. These areas together with Nigeria, Peru, Azerbaijan
and Kazakhstan already subject of the last year reports, are particularly important for Saipem and are countries in which some positive contributions from a sustainable attitude have a particular value. Saipem has successfully continued the path toward a more conscious approach and this second step enlarges the coverage of Saipem sustainability analysis including three other significant areas. The analysis developed in order to produce the case studies is just the tip of the iceberg that is composed by a program of continual improvement that involves the HSE management, the Human Resources and the procurement approach.



In 2002, Saipem created a mission statement which emphasized the meaning of a proactive approach to sustainability, and set up a dedicated Corporate Sustainability Team with proven experience. The team belongs to the Corporate QHSE Department, which has an established presence within the Saipem Group organisation, and proposes, assesses and supports the growth of local level initiatives based on Saipem's mission. The team also set up the Sustainability Network, which plays an essential role in sustainability management by bringing together different units that aid the development of socioeconomic initiatives with their own distinctive competencies. Even corporate departments like the Human Resources and Administration and Finance Department, have an important role in the Sustainability Network, along with Saipem Sustainability Facilitators who represent Saipem Sustainability Team in Key Areas. Saipem has identified some geographical areas of business of key importance that vary along with the evolution of the business activities throughout the world; this allows the Company to rationalize the efforts related to the development of the Sustainability approach. In 2003, the Sustainability Key Areas were: Algeria, Angola, Azerbaijan, Kazakhstan, Malaysia, Indonesia, Thailand, Nigeria, Peru, Venezuela, Russia, Saudi Arabia, Oman, and UAE (United Arab Emirates); they are still of interest in 2005. A Sustainability Facilitator selected by the Saipem Group Resident Area Manager operates in each key area and is responsible for the co-ordination of sustainability initiatives at local level. His main task is the promotion and the developing, with the involvement of the local senior management, of initiatives aimed at the increase and development of local content, at good relationships with the local stakeholders and at the sustainability accounting.

Sustainability Facilitators

Nigeria Peru Algeria Angola Azerbaijan Kazakhstan Russia Saudi Arabia, Oman, UAE Malaysia, Indonesia, Thailand



These case studies have been developed with a structure that include a general overview of Saipem world, a general presentation of the most peculiar socio-economic and environmental characteristic of the country in analysis. It follows the description of the Saipem operation in the area, the presentation of the main stakeholders and the relative Saipem approach. The case study is then closed by an overview of the most important environmental, social and economic indicators of the analysed Country. The information contained in this report was collected both at site and corporate level. The attempt was to follow the same information given in the past reports and when possible to improve the detail of information and data, following also the indications of the third part involved in the evaluation of the previous case studies. The report on Asia Pacific Area mainly refers to 2004 data, where possible also 2005 data are included for a more exhaustive presentation of the activities. The report considers the following Saipem realities: COMPANY: • PT SAIPEM INDONESIA • Saipem (Malaysia) Sdn Bhd • Saipem Asia Sdn Bhd BRANCH: • Saipem Asia Sdn Bhd, Thailand Branch • Saipem (Portugal) Commercio Maritimo s.u., Lda., Australia Branch YARD: • BATAM PROJECT: • EPIC LAMMA • BP Tangguh • Sakhalin Top Side • TTP Project • TTM • Peciko IV • Bayu Darwin • Bongkot • TLO ASSETS: • Semac1 • CASTORO 10 • CASTORO 8 • CASTORO 2 Data was collected from the following sources: • Accounting system for HSE data • Accounting system for the management of medical expenses • Financial Accounting system for the Group • Interviews and sustainability accounting system at local level



Saipem's Sustainability Policy was formalised in May 2003, reflecting the senior management's commitment to attaining specific targets in terms of Saipem's approach. “A network where everybody's commitment contributes to the common well-being” Sustainability incorporates three principles that are of particular significance within Saipem: protection of environment, respect of social rights of employees and contribution to local economic development. Saipem is committed to promoting Sustainable Development in all facets of its global activities in a manner that is compatible with the socio-economic and environmental needs of its Clients. Saipem employees should have the opportunity to develop while working in an environment that is increasingly healthy and safe, whether on site or on board a vessel. Saipem's approach to Corporate Sustainability is based on the creation of long term shareholder value by contributing to the development of the local communities where we operate. Saipem is committed to achieving such development through environmental protection, economic growth and social progress, attention to local suppliers and professional training for local employees. This commitment is managed through these shared Sustainability Practices: • Conducting operations and relationships with integrity and honesty, valuing the richness of each culture and respecting Human Rights; • Managing the Health, Safety and Environmental aspects in compliance with existing HSE Policy and Principles; • Maintaining an open and transparent dialogue in decisions which affect stakeholders; • Researching the possible impacts of activities in host countries, both prior to and during, project execution; • Monitoring social, economic and environmental performance with the aim of measuring Saipem's impact so as to ensure compliance with legal requirements and best practice guidelines; • Establishing a reliable verification system for the performance of suppliers according to Sustainability Principles; • Providing training to develop human capital and build competencies in the management of field of Sustainable Development; • Implementing an effective and transparent Sustainability communication network within the Group. Saipem Sustainability Policy and Program will be constantly updated in order to achieve continuous improvement. The Corporate Sustainability Team assures constant monitoring and co-ordination of this Policy. The implementation of this Policy is the responsibility of all Saipem Group employees.



The Asia Pacific region is spread over a large geographic area of about 4,100,000 km2 which includes the East of India, south and south east Asia, Sakhalin, Australasia and the pacific island region. The Asia Pacific region, home to 53% of the world's population and 20% of its land area
(UN report, 2002). The Asia Pacific Region is a major contributor to world trade; more than one fifth of the entire world’s population lives within the region, one quarter of the world’s gross national income is earned by regional members, 12 of the top container ports in the world are located in the Asia Pacific Region and 3 of the 5 airports by cargo volume. Economic and population growth in Asia Pacific have resulted in rapid increases in energy consumption in recent years. In 2002, South Asia accounted for approximately 4.1% of world commercial energy consumption, up from 2.8% in 1991 (EIA, 2003). An important implication of rising energy demand in South Asia is its impact on the region’s level of carbon emissions. As of 2002, South Asia accounted for 4.8% of global carbon emissions (EIA, 2003).




Saipem is active in the Asia Pacific area, with operations in Indonesia, Malaysia, Thailand, Australia, China including Hong Kong. The following charts highlight the main economic, social and environmental features for each country, followed by a further analysis of the local oil and gas sector.

Social Indicators Population: Population growth rate: Life expectancy at birth: Ethnic groups: Religions: 20,090,437 (July 2005 est.) 0.87% (2005 est.) 80.39 years (2005 est.) Caucasian 92%, Asian 7%, aboriginal and other 1% Catholic 26.4%, Anglican 20.5%, other Christian 20.5%, Buddhist 1.9%, Muslim 1.5%, other 1.2%, unspecified 12.7%, none 15.3% (2001 Census) English 79.1%, Chinese 2.1%, Italian 1.9%, other 11.1%, unspecified 5.8% (2001 Census) $642.7 billion (2005 est.) purchasing power parity - $32,000 (2005 est.) agriculture: 3.4%, industry: 28.2% , services: 68.4% (2004 est.) 2.7% (2005 est.) 10.42 million (2005 est.) 5.2% (2005 est.) 1.6% (2005 est.)

Languages: Economic data Gross Domestic Product GDP GDP - per capita GDP - composition by sector Inflation rate (consumer prices): Labour force: Unemployment rate: Industrial production growth rate: Environmental Indicators Area:

total: 7,686,850 sq km land: 7,617,930 sq km water: 68,920 sq km Natural resources bauxite, coal, iron ore, copper, tin, gold, silver, uranium, nickel, tungsten, mineral sands, lead, zinc, diamonds, natural gas, petroleum Land use: arable land: 11.32%, permanent crops: 7.23%, other: 81.45% (2001) Total energy consumption 5.59 quadrillion Btu (2002 est.) Energy-related carbon dioxide emissions 410.38 million metric tons (2002 est.) Fuel share of carbon dioxide emissions Coal (58.5%), Oil (29.2%), Natural Gas (12.2%) (2002 est.) Status in climate change negotiations Annex I country under the United Nations Framework Convention on Climate Change (ratified December 30, 1992). Has signed, but not ratified, the Kyoto Protocol (April 29, 1998). Environment - international agreements party to: Antarctic-Environmental Protocol, Antarctic-Marine Living Resources, Antarctic Seals, Antarctic Treaty, Biodiversity, Climate Change, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping,Marine Life Conservation, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands, Whaling
Source CIA world factbook, 2005

OIL Production Reserves Consumption Pro Capita Consumption Exports Imports Natural gas Production Reserves Consumption Pro Capita Consumption Exports Imports U.M. Thousand barrels/ day Million barrels Thousand barrels/ day Barrels Thousand barrels/ day Thousand barrels/ day U.M. Billion cubic metres Billion cubic metres Billion cubic metres Cubic metres Billion cubic metres Billion cubic metres 2001 732 2895 883 16.50 521 539 2001 33.56 3,530 23.82 1,227 10.20 2002 710 3500 881 1626 474 525 2002 34.97 3,550 23.77 1,209 10.03 2003 605 3500 875 16.05 395 527 2003 36.38 3,930 25.10 1,260 10.52 2004 530 3500 893 16.16 NA NA 2004 38.58 3,930 26.10 1,294 12.17 -



Source Eni Oil&Gas review, 2005

Social Indicators Population: Population growth rate: Life expectancy at birth: Ethnic groups: Religions: Languages: 1,306,313,812 (July 2005 est.) 0.58% (2005 est.) 72.27 years (2005 est.) Han Chinese 91.9%, Zhuang, Uygur, Hui, Yi, Tibetan, Miao, Manchu, Mongol, Buyi, Korean, and other nationalities 8.1% Daoist (Taoist), Buddhist, Muslim 1%-2%, Christian 3%-4% note: officially atheist (2002 est.) Standard Chinese or Mandarin (Putonghua, based on the Beijing dialect), Yue (Cantonese), Wu (Shanghaiese), Minbei (Fuzhou), Minnan (Hokkien-Taiwanese), Xiang, Gan, Hakka dialects, minority languages $8.158 trillion (2005 est.) purchasing power parity - $6,200 (2005 est.) agriculture: 14.4%, industry and construction: 53.1%, services: 32.5% (2005 est.) 1.9% (2005 est.) 791.4 million (2005 est.) 4.2% official registered unemployment in urban areas in 2004; 27.7% (2005 est.)

Economic Indicators Gross Domestic Product GDP GDP - per capita GDP - composition by sector Inflation rate (consumer prices): Labour force: Unemployment rate: Industrial production growth rate: Environmental Indicators Area:

total: 9,596,960 sq km land: 9,326,410 sq km water: 270,550 sq km Natural resources coal, iron ore, petroleum, natural gas, mercury, tin, tungsten, antimony, manganese, molybdenum, vanadium, magnetite, aluminum, lead, zinc, uranium, hydropower potential (world's largest) Land use: arable land: 15.4%, permanent crops: 1.25%, other: 83.35% (2001) Total energy consumption (2002E): 43.2 quadrillion Btu Energy-related carbon dioxide emissions (2002E): 3,322.4 million metric tons of carbon dioxide Fuel share of carbon dioxide emissions (2002E): Oil (20.2%), Natural Gas (2.1%), Coal (77.7%) Status in climate change negotiations Non-Annex I country under the United Nations Framework Convention on Climate Change (ratified January 5th, 1993). Signatory to the Kyoto Protocol (signed May 29th, 1998 - approved August 30, 2002). Environment - international agreements party to: Antarctic-Environmental Protocol, Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands, Whaling
Source CIA world factbook, 2005

OIL Production Reserves Consumption Pro Capita Consumption Exports Imports Natural gas Production Reserves Consumption Pro Capita Consumption Exports Imports U.M. Thousand barrels/ day Million barrels Thousand barrels/ day Barrels Thousand barrels/ day Thousand barrels/ day U.M. Billion cubic metres Billion cubic metres Billion cubic metres Cubic metres Billion cubic metres Billion cubic metres 2001 3,297 24000 4,673 1.34 381 1,754 2001 33.70 1,515 30.64 24 2002 3,390 24000 4,948 1.42 413 1,938 2002 36.29 1,560 32.57 25 2003 3,409 18250 5,489 1.56 446 2,387 2003 38.91 2,600 34.85 27 2004 3,492 18250 6,379 1.79 NA NA 2004 44.59 2,600 NA NA -

Source Eni Oil&Gas review, 2005 SAIPEM


Social Indicators Population: Population growth rate: Life expectancy at birth: Ethnic groups: Religions: Languages: Economic indicators Gross Domestic Product GDP GDP - per capita GDP - composition by sector Inflation rate (consumer prices): Labour force: Unemployment rate: Industrial production growth rate: Environmental Indicators Area: 241,973,879 (July 2005 est.) 1.45% (2005 est.) 69.57 years (2005 est.) Javanese 45%, Sundanese 14%, Madurese 7.5%, coastal Malays 7.5%, other 26% Muslim 88%, Protestant 5%, Roman Catholic 3%, Hindu 2%, Buddhist 1%, other 1% (1998) Bahasa Indonesia (official), English, Dutch, local dialects, the most widely spoken of which is Javanese $899 billion (2005 est.) purchasing power parity - $3,700 (2005 est.) agriculture: 15.1%, industry: 44.5%, services: 40.4% (2005 est.) 9.3% (2005 est.) 110.4 million (2005 est.) 10% (2005 est.) 2.1% (2005 est.)

total: 1,919,440 sq km land: 1,826,440 sq km water: 93,000 sq km Natural resources petroleum, tin, natural gas, nickel, timber, bauxite, copper, fertile soils, coal, gold, Silver Land use: arable land: 11.32%, permanent crops: 7.23%, other: 81.45% (2001) Total energy consumption 4.45 quadrillion Btu* (2002est) Energy-related carbon dioxide emissions 299.8 million metric tons (2002est) Fuel share of carbon dioxide emissions Oil (52.8%), Natural Gas (25.8%), Coal (22.0%) (2002est) Status in climate change negotiations Non-Annex I country under the United Nations Framework Convention on Climate Change (ratified August 23rd, 1994). Signatory to the Kyoto Protocol (signed July 13th, 1998 - not yet ratified). Environment - international agreements A party to Conventions on Biodiversity, Climate Change, Endangered Species, Hazardous Wastes, Law of the Sea, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94 and Wetlands. Has signed, but not ratified, Desertification and Marine Life Conservation.
Source CIA world factbook, 2005

OIL Production Reserves Consumption Pro Capita Consumption Exports Imports Natural gas Production Reserves Consumption Pro Capita Consumption Exports Imports U.M. Thousand barrels/ day Million barrels Thousand barrels/ day Barrels Thousand barrels/ day Thousand barrels/ day U.M. Billion cubic metres Billion cubic metres Billion cubic metres Cubic metres Billion cubic metres Billion cubic metres 2001 1,384 4,980 1,112 1.92 782 543 2001 69.70 3,790 37.25 178 32.82 2002 1,304 5,000 1,097 1.96 744 618 2002 75.51 3,800 38.15 180 35.85 2003 1,200 5,000 1,113 1.96 664 658 2003 79.64 3,825 38.48 179 39.40 2004 1,143 4,700 1,188 2,00 NA NA 2004 80.20 3,735 NA NA 39.64 -

Source Eni Oil&Gas review, 2005



Social Indicators Population: Population growth rate: Life expectancy at birth: Ethnic groups: Religions: Languages: Economic indicators Gross Domestic Product GDP GDP - per capita GDP - composition by sector Inflation rate (consumer prices): Labour force: Unemployment rate: Industrial production growth rate: Environmental Indicators Area: 23,953,136 (July 2005 est.) 1.8% (2005 est.) 72.24 years (2005 est.) Malay and other indigenous 58%, Chinese 24%, Indian 8%, others 10% (2000) Muslim, Buddhist, Daoist, Hindu, Christian, Sikh; note - in addition, Shamanism is practiced in East Malaysia Bahasa Melayu (official), English, Chinese dialects, Tamil, Telugu, Malayalam, Panjabi, Thai $248 billion (2005 est.) purchasing power parity - $10,400 (2005 est.) agriculture: 7.2%, industry: 33.3%, services: 59.5% (2005 est.) 2.9% (2005 est.) 10.67 million (2005 est.) 3.6% (2005 est.) 4.8% (2005 est.)

total: 329,750 sq km land: 328,550 sq km water: 1,200 sq km Natural resources tin, petroleum, timber, copper, iron ore, natural gas, bauxite Land use: arable land: 5.48%, permanent crops: 17.61%, other: 76.91% (2001) Total energy consumption 2.3 quadrillion Btu* (2002est) Energy-related carbon dioxide emissions 140.6 million metric tons (2002est) Fuel share of carbon dioxide emissions Oil (49.0%), Natural Gas (39.2%), Coal (11.8%) (2002est) Status in climate change negotiations Non-Annex I country under the United Nations Framework Convention on Climate Change (ratified July 13th, 1994 ). Ratified the Kyoto Protocol on September 4, 2002 . Environment - international agreements A party to Conventions on Biodiversity, Climate Change, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Marine Life Conservation, Nuclear Test Ban, Ozone Layer Protection,Ship Pollution, Tropical Timber 83, Tropical Timber 94
Source CIA world factbook, 2005

OIL Production Reserves Consumption Pro Capita Consumption Exports Imports Natural gas Production Reserves Consumption Pro Capita Consumption Exports Imports U.M. Thousand barrels/ day Million barrels Thousand barrels/ day Barrels Thousand barrels/ day Thousand barrels/ day U.M. Billion cubic metres Billion cubic metres Billion cubic metres Cubic metres Billion cubic metres Billion cubic metres 2001 748 3900 488 7,48 548 324 2001 44.15 2337 25.87 1,087 21,17 2002 785 3000 493 7,39 535 293 2002 45.54 2390 25.71 1,058 20,46 2003 827 3000 503 7,38 576 319 2003 50.24 2478 26.15 1,054 24.97 2004 858 3000 529 7,61 NA NA 2004 55.21 2478 NA NA 29.23 -

Source Eni Oil&Gas review, 2005



Social Indicators Population: Population growth rate: Life expectancy at birth: Ethnic groups: Religions: 65,444,371 (July 2005 est.) 0.87% (2005 est.) 71.57 years (2005 est.) Thai 75%, Chinese 14%, other 11% Buddhism 95%, Muslim 3.8%, Christianity 0.5%, Hinduism 0.1%, other 0.6% Thai, English (secondary language of the elite), ethnic and regional dialects $545.8 billion (2005 est.) purchasing power parity - $8,300 (2005 est.) agriculture: 9.3%, industry: 45.1%, services: 45.6% (2005 est.) 4.8% (2005 est.) 35.36 million (2005 est.) 1.4% (September 2005) 8.2% (2005 est.) total: 514,440 sq km land: 511,770 sq km water: 2,230 sq km tin, rubber, natural gas, tungsten, tantalum, timber, lead, fish, gypsum, lignite, fluorite, arable land arable land: 29.36%, permanent crops: 6.46%, other: 64.18% (2001) 3.1 quadrillion Btu* (2002est) 188.6 million metric tons (2002est) Oil (55.9%), Natural Gas (24.7%), Coal (19.4%) Non-Annex I country under the United Nations Framework Convention on Climate Change (ratified December 28th, 1994). Signatory to the Kyoto Protocol (February 2nd, 1999 - not yet ratified) A party to Conventions on Climate Change, Endangered Species, Hazardous Wastes, Marine Life Conservation, Nuclear Test Ban, Ozone Layer Protection, Tropical Timber 83 and Tropical Timber 94. Has signed, but not ratified, Biodiversity and Law of the Sea.

Languages: Economic data Gross Domestic Product GDP GDP - per capita GDP - composition by sector Inflation rate (consumer prices): Labour force: Unemployment rate: Industrial production growth rate: Environmental Indicators Area:




Natural resources Land use: Total energy consumption Energy-related carbon dioxide emissions Fuel share of carbon dioxide emissions Status in climate change negotiations

Environment - international agreements

Source CIA world factbook, 2005

OIL Production Reserves Consumption Pro Capita Consumption Exports Imports Natural gas Production Reserves Consumption Pro Capita Consumption Exports Imports U.M. Thousand barrels/ day Million barrels Thousand barrels/ day Barrels Thousand barrels/ day Thousand barrels/ day U.M. Billion cubic metres Billion cubic metres Billion cubic metres Cubic metres Billion cubic metres Billion cubic metres 2001 123 352 728 4,35 143 694 2001 19.62 360 26.12 427 5.04 2002 139 516 766 4,54 157 717 2002 20.56 378 28.00 454 6.39 2003 169 583 798 4,69 158 763 2003 22.42 385 31.18 503 7.09 2004 255 583 951 5,55 NA NA 2004 23.45 385 NA NA 7.50

Source Eni Oil&Gas review, 2005






Saipem operates in the Asia Pacific region through the following Local Companies: PT Saipem Indonesia and PT Sofresid Engineering located in Jakarta (Indonesia); Saipem Malaysia Sdn. Bhd. and Saipem Asia Sdn. Bhd. both located in Kuala Lumpur (Malaysia); Saipem Singapore,
Saipem Asia Thailand Branch in Bangkok (Thailand) and Saipem SPCM Australia Branch in Perth. This case study focuses only on the companies which have the most significant environmental, economic and social impacts on the community, mainly PT Saipem Indonesia, PT Sofresid Engineering, Saipem Malaysia and Saipem Asia.



The following chart represents the typical organization and structures of Saipem Group Companies in Asia Pacific Region.
Managing Director

Administration, Finance and Control (AFC) Quality, Health, Safety and Environment (QHSE)

Human Resources and Information Technology (HRIT)

Assets (ASST)

Procurement and Logistics (PROC)

Offshore Operations

Commercial (COMM)

Estimating and Proposals (ESTP)

The activities for 2004 - 2005 mainly consisted in the following projects: Projects completed in 2004 • Woodside - TSEP: installation of a 42” diameter, 135km long trunkline in water depth of 120m in connection with the trunklines system expansion programme. Parallel to an existing pipeline, the new pipeline will run from the North Rankin Platform offshore the north western coast of Western Australia to the existing shore facilities on the Barrup peninsular near Dampier, Western Australia and will convey gas/condensate from the North West Shelf fields of North Rankin, Goodwyn, Wanae and Cossak. The scope include the laying of the pipeline (135km offshore, including 6km in shallow water), dredging, backfilling, shore pull, crossing and precommissioning of the pipeline. The pipelaying was carried out by the laybarge Semac 1 while the shore pull and the shallow water pipelaying was performed by laybarge Castoro 2. • Clough - Yolla: installation of a 14”, 147km long offshore pipeline in connection with the Bass Gas Project for the development of the Yolla field in the Bass Strait, offshore Victoria. The scope of work included: Installation engineering, Pre-lay and post-lay survey, Transportation of coated pipe, Installation of 14” 12/12.7mm WT, 147km offshore pipeline, Pre-commissioning of the pipeline. The installation of the pipeline was performed by the laybarge Semac 1. • Minerva: subsea development of the Minerva Field in the Bass Strait, offshore Victoria. Saipem undertook the project in Joint Venture with McConnell Dowell and was responsible for the EPIC of offshore flowline, chemical injection lines and hydraulic umbilical and control system while McConnell Dowell was responsible for the onshore gas plant. The installation of the flowlines, lines and umbilical was performed by the laybarge Semac 1. • TOTAL - PCK SR / EPSC 1: replacement of one portion of the two trunklines laid during phase 1 of the Peciko Development. The portions to be replaced consisted of approximately 12 km of 24" lines from the platform MWP-A and MWP-B to a mid point along the lines respectively. Projects signed in 2003 - 2004 • PTT TTP Offshore Platform – EPCI for Jacket, Tripods, Bridges and Platform. EPCI of 8 legs jacket offshore structure with 4 Modules Deck Platform and 1 Living Quarter, Appurtenances, Accommodations, Pedestrian & Flare Tripods, Pedestrian & Flare Bridges and all related equipment facilities and system at Erawan gas field area adjacent to the existing Erawan Riser Platform and Erawan Compression Platform. • HEC / Lamma: Lamma Power Station Extension on the reclaimed land south of the existing Lamma Power Station, Hong Kong. EPCI of 92 km 20” pipeline “Mainline” from Shenzhen



in China to Lamma Island in Hong Kong with 1x12” tee, 0.7 km pipeline “Future line” from Lamma Island to sub sea termination, 18 cable crossings on mainline, Pre-trenching & backfilling of shore approaches at Lamma (0.6 km) and Shenzhen (2.34 km), Post-trenching of entire remaining mainline, Rock dumping of 13 km offshore at Lamma navigation channel and at crossings, Natural backfill for rest of mainline, Anchor model tests to finalise required rock berm at Lamma & Shenzhen approaches, and Lamma channel, Pre-commissioning of both pipelines, and Commissioning assistance of mainline. • Sakhalin II Pipelines Project on behalf of Sakhalin Energy Investment Company Ltd. (SEIC), comprising engineering, procurement, installation and construction of a pipeline system connecting the Lunskoye and Pitun-Astkhskoye platforms to the island of Sakhalin; the onshore approach was completed in 2004 by utilising the derrick lay barge Castoro II; • the Sakhalin II Topsides project on behalf of Samsung Heavy Industries, comprising the transport and installation of topsides for the Lunskoye and Piltun-Astkhskoye B platforms, the latter being the largest platform ever installed with the float-over method Projects completed in 2005 • Conoco Phillips – Bayu Undan: gas export to shore at Wickham Point on the Middle Arm Peninsula near Darwin, Australia via a 502.3 km submarine pipeline. The Gas Export Pipeline feeds gas into a LNG facility which receives, meters and regulates the arrival pressure of the gas. The Multiplex - Saipem Joint Venture was responsible for the installation and pre-commissioning of the Construction 26” gas export pipeline. • Shell Serawak: Provide Heavy Lifting Barge (Castoro-8) and associated equipment for installation of A Jacket & Platform, location around 100km offshore North of Miri, East Malaysia. Provide Project Management with respect to the Castoro-8 vessel. Review of Installation Engineering Procedures. Provide the Castoro-8 vessel for Charter by TLO Snd Bhd, inclusive: Marine crew, permanent onboard equipment, NDT equipment & personnel, ROV, upending clamp and vessel’s consumables. • Dong Fang & Lu Feng: Provide Heavy Lifting Barge (Castoro-8) complete with Marine / Operational crews and an AHT 8000 BHP for the installation of Dong Fang WHPA (1300 MT) / WHPB (1300 MT) Jackets / CEP slug catcher. Lu Feng LF13-1 Module, and pipelaying of a 12km, infield pipeline from LF13-1 to LF13-2 Platforms (Pipe in pipe OD 16” and ID 12” ). Installation Engineering required to verify and/or study the installation requirement for C-8. PMT inclusive of Logistic & Procurement, QHSE Project Control. Supply of HLB Castoro-8 and one AHT 8000 BHP, associated equipment for installation works, marine crew, riggers, catering and installation supervision. • TOTAL - Peciko 4 / Phase 2: Peciko field is located offshore at about 25 kilometers of the Senipah terminal. PCK4/EPSC2 consists of two new platforms SWP-E and K including MP and HP facilities and associated risers. EPCI of two jackets, one TDD (127.5 MT), two decks, one boat landing, Vent Boom, one Trunkline from Senipah to SWP-E (24” OD, 24.1 km), three 20” OD HP/MP sealines 15.1 km, two 24” HP/MP sealines. One 20" oily water disposal pipeline from Senipah terminal including the diffuser. Modification of existing platforms MWP-A,B & C and SWP-G to accommodate bipression facilities and the new trunkline/sealine system. All necessary risers, piping, fittings, valves, instruments and pig receiver/ launcher for the following identified future pipelines. • PTT E&P - Bongkot Platform & Pipelines: The Bongkot Field is located in the Gulf of Thailand, 150 km off the eastern coast of Thailand, 180 km North East of the town of Songkhla. Water Depth ranges from 70 to 80 meters. LOT 1: Sour Process Platform SPP and Bridges: Saipem was responsible for transportation and installation of the LOT. Hook-up and pre-commissioning was part of SMOE Scope of Work. LOT 2: Sealines WP9 to WP13 and WP13 to SPP: The full LOT was SAIPEM Scope of Work. This included design, procurement, fabrication and installation of both pipelines. Transportation and Installation of the new flare boom on WP9 platform including the removal of the old one. LOT 3: Existing Platform Modifications: Design, procurement, fabrication, transportation and installation of the new 20” Riser on WP9 platform. • ERHA, YOHO: completion of the hull fabrication in a Singaporean shipyard, as part of the EPIC type project Erha, on behalf of Exxon Mobil, involving the engineering, procurement, construction, transport and commissioning of an FPSO installation on the Erha field in Nigeria. Projects signed in 2005 • THAI Oil: New Offshore Crude Oil Unloading Facility Project – EPCI of : Pipeline dia. 52” x 1” WT, X65, sour service, length of 14.4 km with concrete coating of 6” x 12 km and 5” on shore approach segment. • WEIZHOU & Bajiaoting Pipelines: Provide Castoro-10 complete with Marine / Operational crews and an AHT 8000 BHP for the pipelaying works of 9km 6” OD pipeline 5.6km 6” OD pipeline and 18.3km 12” OD pipeline. The optional Bajiaoting Project covers the installation of 2 lines of 8” OD pipeline at 7km each. • BP Berau / Tangguh Platforms & Pipelines: The Tangguh Gas Production Facilities Project is located in the “bird head” area of Papua, 3000 km from Jakarta. EPCI of 2 wellhead platforms and pipelines: Clad pipelines (2 nos.) and Submarine Cables (3 nos.) 19km offshore (+7km for



inter cable) & 1 km onshore. Platforms and Onshore site Facilities: 2 nos. Wellhead, 6 legs jackets (1600 MT) and 1800 MT Topsides.
Offshore Construction fleet operating in Asia Pacific Saipem 3000 Mono hull derrick pipelay ship capable of laying rigid and flexible pipes in deep waters and lifting structures of up to 2,000 tons Castoro II Derrick lay barge capable of laying pipe of up to 60’’ diameter and lifting structures of up to 1,000 tons Castoro Otto Mono-hull derrick pipelay ship capable of laying pipes of up to 60’’ diameter and lifting structures of up to 2,200 tons Castoro 10 Trench barge capable of burying pipes of up to 60’’ diameter and laying pipes in shallow waters Semac I Semi submersible pipelay vessel capable of laying large diameter pipes in deep waters S-45 heavy load transportation barge

In March 2005 Saipem won two offshore contracts in Indonesia. They cover engineering, procurement, fabrication and installation of two platforms and two pipelines for the Tangguh Liquefied Natural Gas (LNG) project, in the Berau Bay area, Papua, about 3,000 kilometres east of Jakarta. The two 20 kilometres pipelines will connect the platforms to the LNG shore facilities. Installation and laying activities are scheduled to be completed in mid 2007. The contracts have been awarded by BP Berau Ltd, operator of the Tangguh LNG Project as a PSC contractor to the Indonesian oil and gas regulatory body, BPMIGAS and are the first major EPIC awards for the region. The Tangguh project takes place in Papua, the easternmost province of Indonesia, and is based on gas reserves identified in several fields: Vorwata, Wiriagar Deep, Roabiba, Ofaweri, Wos and Ubadari. Proven combined reserves of the fields are approximately 14.4 trillion cubic feet (tcf) of gas. The project development will consist of two normally unmanned offshore gas platforms and pipelines, a gas liquefaction plant initially consisting of two liquefaction trains with combined capacity of 7 million tonnes LNG per annum (mtpa), jetties and marine facilities. Moreover, the Tangguh Project intends to adopt high standards in socially and environmentally responsible resource development. The project area (Berau-Bintuni Bay) is an area of high biodiversity, high endemism and distinctive indigenous cultures. With multiple partners, Tangguh is pursuing a progressive approach to mitigate its social and environmental impacts while promoting conservation and catalyzing sustainable development. BP Berau Ltd issued a document regarding the environmental performance standards that all the EPC contractors like Saipem should conform to with the purpose of achieving BP’s goal of no damage to the environment. It covers all the processes necessary in the carrying out of the project and for each it underlines the environmental aspects involved, pointing out the potential risks and impacts. Attention is paid also to the social implication of the activities, in order to respect and promote the safety of the local people and preserve their habits and lifestyles.



Client’s requirements
> Sustainability commitment > Time & Cost observance > HSE Performance & Targets



Environmental impact
> Using of natural resources > Air emissions > Noise and dust > Waste production

Saipem Policy
Client satisfaction

Saipem Policy
Local Purchasing

PT Saipem Indonesia PT Sofresid Engineering Saipem Malaysia Sdn. Bhd. Saipem Asia Sdn. Bhd. Saipem Singapore Thailand Branch Australia Branch

Direct economic Impact
> Wages > Local purchasing > Local Partnership


Subcontractor’s requirements
Growing Sustainability

Indirect Economic Impact
> Growing of the local market > Oil&Gas know how

> Local Content Training > Medical Allowance and treatment

Social Impact
> Moral integrity > Equity HSE commitment > Increased professionalism & Know how > Development of new business




It is Saipem strategy to create and grow local and international resources through our activities worldwide. This policy has two compatible objectives: first to develop human strengths with a Saipem Group spirit on whom we can count and rely, second to create the bases for a Sustainable Social development. This latter is achieved by offering carrier plans and opportunities enabling the employees to enrich their knowledge and better manage their family life. Saipem local employees contracts are under the rules of the countries in which Saipem is having activities. Equal treatment and opportunities, are a must and Saipem is paying a lot of attention to give same fair chances to all employees without any discrimination whatsoever. Transparency is also the main criteria adopted in the recruitment phase and in the definition of contract with workers. Saipem employees working hours and public holidays are defined by the laws of each country. As per laws every employee receives: a. Occupational safety and health protection; In order to protect the safety of worker and to realize optimal productivity, an occupational health and safety scheme is implemented and will be described in the appropriate paragraphs. b. Protection against immorality and indecency. c. Treatment that shows respect to human dignity and religious values. d. A security induction when joining the Company The Saipem wage policy includes the following principles: a. Minimum wages; b. Overtime pay; c. Medical Insurance for employees and their families d. Travelling allowance e. Maternity leave Saipem recruits his employees through the common instruments available as announcements in the local market or curriculum vitae received. Saipem does not employ children and is respectful of the Human Rights. Saipem companies in the south east area employed in 2005 about 580 spread all around the Area Onshore. In addition some 400 people were employed on our fleet offshore. About 50% of employees are considered local employees of the countries where they are working. PT Saipem Indonesia together with Pt Sofresid have the largest number of employees that is about 500, 75% of them Indonesian. Within the local employees working onshore 6% are workers, 88% staff and 6% managers of different aspects of projects. Local managers are about 27% of the total of the managers in the companies considered. Most of companies employees (about 68%) are under 40 years old and has a relatively short history in the company. Due to the quite recent presence of Saipem in Indonesia, 92% of the employees has less then 5 years of seniority in the company and about 30% has less then 1 year of seniority. Saipem activity In the area has been characterised by a lot of offshore activities for which again local and international resources have been given a lot of opportunities. Local workers represent an important part of the crew particularly on Castoro 10 where locals are about 26%. Saipem employees receive in the South east area, like in all Saipem sites, specific training on technical issues and on HSE. This has a particular meaning for local employees that can improve their professionalism and skills. During 2004, in all operations in the area about 17,000 hours of HSE training have been developed, of which 83% on safety issues, 11% on environment and 6% on health. Most of this HSE training (87%) has been developed on board of the Saipem vessels operating in the area while the professional training has been organised mainly onshore in Indonesia. Saipem employees in the area of interest are not, for the moment, organised in trade unions.



PT Saipem Indonesia certificated its quality system in 2003 according to the ISO9000 standard. The management system has been always characterised by a special care in the relation with the clients through a well organised system of measurement and monitoring of the customers satisfaction. This is carried out through the use of customer satisfaction survey at commercial phase and offshore operations. The analysis of the result of the result of the clients’ consultation through the costumer satisfaction provide interesting information and input to the senior management with the target of continued improvement of the quality of the projects developed. Saipem operations in Asia Pacific are developed for either local public companies or private international Oil&Gas companies and most of the time acting as an EPCI contractor. However in certain cases Saipem can also be working for clients who are indeed Oil and Gas Contractors like Saipem. In this latter cases Saipem is mainly acting as a simple installation contractor. The list of main Saipem Companies clients is presented below: In Indonesia: • Total, Gunanusa, Conoco Phillips, BP In Australia: • Woodside • Conoco Phillips • Clough • BHP Billiton In Thailand • TTM Ltd – Trans Thai Malaysia • PTT E&P – Public Company Limited • PTT Ltd • Thai Oil Ltd In China & Honk Hong • COOEC - China Offshore Oil Engineering Co • HEC In Malaysia • TLO In most of the cases, clients are responsible to establish and keep the relationship with the local authorities and the local communities. Usually International Oil & Gas Companies are dealing directly with local structures. In order to become a stakeholder of a Oil & Gas reservoir, to get all permits and right of ways, to construct the project and eventually operate in the country, it’s requested a lot of involvement and deals between the O&G Companies and local Authorities and Communities. So since the very beginning privilege talks and relationships are established at Client’s level. In all projects the relationships with local communities or authorities are particularly important for a smooth performance of the operations. This is now the case for the Tangguh project where as described above the Client BP Indonesia has developed a specific program for the local communities requiring the contractors to follow the same. Nevertheless in some cases the relationships with local communities are left under the Contractors responsibilities. This was the case for the previous projects in Thailand and for all the projects in Australia where Saipem had to coordinate and manage all so called “Industrial Relations”.

Whenever it is possible and besides the local communities relationships as described above Saipem always tries to promote the local services and the local industry, by giving opportunities to inside country vendors, suppliers and local fabricators. All main Saipem subcontractors are requested to follows specific requirements and questionnaire and specific audit are useful instrument not only for control but also for improvement especially for the local suppliers and subcontractors. This audit activity is also a good instrument to avoid the involvement of subcontractors that can be responsible of a not clear behaviour in term of human rights and children labor. Saipem often decided to totally subcontract to local companies the development of specific activities. Saipem represents for some local companies the only clients and they are organized in a way to fully satisfy Saipem expectation in term of quality, HSE and social management. The list of 100% local subcontractors with the relative activities is presented below.



List of 100% Local Subcontractor Indonesia Subcontractor Type of Subcontractor PT. Gunanusa Utama Fabricators. Cilegon. Fabrication, Construction, Loadout & Seafastening of Jackets & Platforms. PT. Ninda Pratama, Batam Installation Aids, Logistics base PT. Bredero Shaw, Batam Line pipe & Bends Coating works. PT. Noble Denton Utama Marine Surveyor Services PT. NACAP Indonesia HDD Offshore & Onshore Pipelay works PT. Penkonindo (Van Oord) Rock Dumping works PT. KBR / Granherne Pty. Ltd. HSE Engineering PT. Eskimo Wieraperdana HVAC Package PT. Transtel Engineering Telecommunication works PT. Fugro Indonesia. Pre-engineering Surveyor PIH Indonesia Field Joint Coating Services PT. Wide & PIN Independent Inspection Services Citra Panji Manunggal, Balikpapan Onshore Construction H & H, Balikpapan Fabrication Services PT. Inamco Field Joint Coating Services Malaysia Subcontractor MPE Lindung Sdn Bhd. Allied Marine & Equipment Sdn Bhd. Singapore Subcontractor Bredero Shaw (Singapore) Pte Ltd. Offshore Joint Services (OJS). Eastern Navigation Pte Ltd. Sonsub International Pty Ltd. Noble Denton Singapore Pte Ltd. SMOE



Type of Subcontractor Anode Supplier. Diving

Type of Subcontractor Line pipe & Bends Coating, Anode Installation. Field Joint Coating Services. Line pipe Transportation. ROV Services Marine Survey Services. Construction





The international approach and the complexity which characterize Saipem’s activities have led the Company to the development of an efficient management system. Saipem Quality, Health, Safety and Environment Management System is structured on three levels to assure a consistent
performance level throughout all the Company’s operations: • Corporate Level, which defines policies, guidelines and standards for all Saipem Operating Companies; • Operating Company Level, which defines policies, goals, procedures and work instructions to be adopted in each Operating Company; • Project Level, which defines specific plans and procedures for each project.



The System operates in compliance with both Local legislation and Clients requirements. Its effectiveness is guaranteed by the data acquisition and the performance monitoring system implemented by the Corporate Departments. The QHSE MS has reached a high level of implementation across the Company, because all the employees are involved in a communication and training process which aims at enhancing their QHSE awareness. PT Saipem Indonesia achieved the certification of its quality and environmental management system according to the international standard ISO9000 in the 2003 and ISO14001 in the 2004. PT Saipem certified also its safety system according to the OHSAS 18001:1999 standard in the 2004. The management systems are also supported by the implementation of different policies as: • PT Saipem Indonesia Quality Policy • PT Saipem Indonesia HSE Policy • PT Saipem Indonesia Environmental Policy • PT Saipem Indonesia Alcohol and Substance Abuse Policy • PT Saipem Indonesia Emergency and Crisis Policy • PT Saipem Indonesia Smoke Free Policy

The levels of the Qhse Management System

Policies Guidelines Procedures Standards

Policies Manuals Procedures Work Instructions

Policies Plans Procedures Schedules



Core Process Maintenance and Implementation of Company Quality and HSE Management Systems Objectives Continue certification to ISO 9001:2000 Quality Management System

Continual Improvement

Audits Safety quantitative targets Health targets

Continue certification to ISO 14001:2004 (Upgrading) Environmental Management System and OHSAS 18001:1999 Occupational Health & Safety Management System Integration of Quality Management System of Saipem Indonesia and Sofresid Engineering Improvement of Management system within APAC Region Promoting awareness towards the implementation of the Quality and HSE Management Systems within the Company Ensuring Company Management system document structure comply with corporate document system structure and Management Ensuring the requirements of Company are clearly defined to Projects in order to prevent disconnection/disjoint of management systems between Company and Projects Ensuring consistent implementation of the Internal System Audits Ensuring consistent implementation of the APAC Regional System Audits Achieve LTIFR target (<1.0) of APAC via HSE Proactive Indicators Assess, monitor and safeguard employees’ health through Health Performance Indicators implementation.

The accounting of the environmental data took into consideration activities related to the management of the offices Saipem has in the Asia Pacific Region and operations related to the vessels working in the area. The environmental impacts of offices are mainly related to the energy consumption and are not considered relevant in a general evaluation of projects environmental impacts. Most significant environmental aspects are related to the vessels operations in term of energy consumption and waste produced. Environmental data are not comparable within different years because in Asia Pacific Region each year is characterised by different projects developed by different vessels.

The energy consumption of the offices located in Jakarta, Kuala Lampur and Perth was about 150 tep of electric energy in 2004. More important are the energy consumption of the vessels that are considered in this analysis. The total energy consumed in 2004 was about 24,200 tep, 50.7% of which consumed as diesel, 49% as fuel oil with a low sulphur concentration and 0.2% of electric energy self generated by the vessels.

2004 Energy consumption - Assets

Diesel 50,7% Electric Energy 0,2% LSC Fuel oil%



Also concerning water, the consumption related to the activity onshore is just for office use of service water that in 2004 was about 3,200 m 3. All vessels operating in the area consumed in 2004 about 1million of m 3 of water, this data includes also water from sea and not desalinated for use as ballast water that is discharged after the use. For this reason it is better to say that the water consumption of the vessels is about 76,500 m 3 in 2004.

2004 Water Consumption - Assets

Desalinated Sea Water 6% Non Desalinated Sea Water 93% Service Water 1%

Jakarta and Kuala Lampur offices generated in 2004 about 2.15 tons of non hazardous waste, most of which composed by paper and plastic. All Saipem vessels operating in the area produced about 1,850 tons of non hazardous waste and 7,150 of hazardous waste. Concerning non hazardous waste most of them are non ferrous metal refuses (20%), ferrous metal refuses (18%), cooking organic waste (17%) and other non hazardous waste of different type. The hazardous waste from Saipem are generated by vessels in the offshore operation and are mainly oily water (94%) small percentage of oil filters and exhausted oil from engines. The total amount of hazardous waste in 2004 is about 7,160 tons.
2004 Non hazardous waste - Offices 2004 Non Hazardous waste Vessels 2004 - Hazardous waste Vessels

Paper and cardboard 84% Plastic 9% Printers Toner 7%

Ferrous metal refuses / waste 18% Non-ferrous metal refuses / waste 20% Paper and cardboard 2% Wood 3% Plastic 8% Absorbent waste 1%

Vessels hold cleaning waste 1% Mixed urban waste 11% Used tires 1% Cooking organic waste 17% Other non-hazardous waste18%

Oil Filters 3% Oily Water 94%

Exhausted oil from engines 1% Other 2%



Saipem operation is characterized by a small impact due to air emissions because the only emission generated by Saipem activities are linked to the combustion of oil products. Data on CO, NOx and SO2 are presented in the following graph and generally less then 1,000 tons in one year. Regarding the Green Houses Gases (GHG), in 2004 the emission of CO2 was about 78,000 tons; this data, as the other presented in this paragraph are calculated on the basis of energy consumption, through the formula available from the most recent literature. Again the emission considered are produced by Saipem vessels, emissions from Saipem activities within Jakarta and Kuala Lampur office are not considered because very small.

2004 Air emission Vessels


800 Ton








The evaluation of the economic impacts of the Saipem companies operating in the Asia Pacific region takes into consideration the local charge Saipem incurs in the development of its activities. Another aspect considered in this evaluation is related to the HSE expenditures.

Saipem can contribute to the country development in term of economic impact, mainly through the expenditures that are paid locally. This means the acquisition of goods and materials from local supplier and subcontractors and the payment of local employees. The following graphs present local expenditures for the Saipem companies operating in the Asia Pacific Region. In all the companies the biggest value of local cost are related to the work that means the monthly salary and all related contribution for local staff. Materials and services are the other cost elements that characterised the local cost in the Saipem companies. Other costs are also relevant as percentage of the total and they include cash expenditure difficult to describe separately (Other 19%).
Expenditures for works

Local costs 75% Non local costs 25%

2004 Local cost distribution - Saipem Asia-Pacific
Expenditures for materials

Local costs 50% Non local costs 50%

Work 54% Raw Materials 1% Materials 19%

Services 7% Other 19%



Expenditures for services

The following graphs compare the expenditures Saipem had in the Asia Pacific Region with the others costs paid outside the region. Local costs represent 75% of the expenditures Saipem companies had for work related issues. 50% of the costs for materials are local costs and 14% of the expenditures for services are local.

Local costs 14% Non local costs 86%

Saipem HSE management requires investments and current expenditures that represent another important indicator of the sustainability attitude. Main safety and environmental expenses are related to the vessels operating in the Asia Pacific region, in particular in 2004 main safety expenditures were related to the PPE (Personal Protective Equipment)that represent the 67% of the total and to the safety training as the 12% of the total. Regarding the safety investments, the more relevant value is connected to the fire fighting systems that are the 67% of the total. Saipem vessels involved in 2004 operation in the area totally spent for safety about 522,000 US$.
2004 Safety Current Expenditures - Vessels 2004 Safety Investments - Vessels

Personal Protective Equipment 67% Safety Training 12% Safety equipment: gas detention 10% Periodic Maintenance & Control 3% Safety equipment: other 3%

Safety equipment: Advertising signs & posters 2% Safety equipment: Ergonomic equipment 1% Safety equipment: Fire fighting equipment 1% Other current expenditures 1%

Fire fighting systems 67% Rescue & evacuation systems 14% Advertising signs & posters 11% Plants' Safety Improvements 8%

Regarding the environmental expenditures, in 2004 mainly were related to the management of water discharge (62%) that is a peculiar problem for the offshore operations by vessels. Another significant voice is the management of the supplying water that represent the 37%, finally the third voice of cost is the management and disposal of waste. Waste and water also determine the main environmental investments on board of Saipem vessels; especially the supplying vessels treatment plants represent almost the totally amount of the environmental investment for the 2004 that was about 230,000 US$.

2004 Environmental Expenditures - Vessels

2004 Environmental Investments - Vessels

Water discharge management 67% Supplying water treatment and management 37% Waste management and disposal 1%

Supplying water treatment plants 92% Waste treatment and disposal plants 7% Wastewater treatment plants 1%



Saipem is working to increase in each country of operations the percentage of local workers and their possibility to increase professionalism in the Oil & Gas sector. In order to represent this effort, the following graphs show the employees distribution in the offices located in Jakarta, Kuala Lampur, Perth, Bangkok and Singapore: 75% of employees in Saipem offices are locals. PT Saipem Indonesia has the biggest total number of employees that in 2005 were 284, 62% of them Indonesian, PT. Sofresid Eng. also has a large number of employees, 218 at December 2005 of which 92% locals. Saipem Malaysia has 23 employees all locals and Saipem Asia has 33 employees, 14 of which locals. PT Saipem Indonesia was characterized by an important increase in the number of employees involved between 2003 and 2005; in 2003 the workforce was of 109 employees compared to the 281 of the 2004 and the 284 of the 2005. A large number of local employees has a high position within the company; in all companies, 27% of the managers are locals. In particular Saipem Malaysia has four managers all locals while PT Sofresid has a percentage of local manager that is about 39%.
Employees distribution by age
25% 20% 15% 10% 5% 0%

<25 26-30 31-35 36-40 41-45 54-55 47-50 >56

Employees distribution by seniority
80% 70% 60% 50% 40% 30% 20% 10% 0%
<1 1-5 6-10 11-20 >21

Employees Distribution - Onshore

Employees distribution by age - vessels
25% 20% 15% 10% 5%

Local Employees 75% Internationals 25%

<25 26-30 31-35 36-40 41-45 46-50 51-55 >56

Local employees distribution by role
40% 35% 30% 25% 20% 15% 10% 5% 0%

Employees distribution by seniority






Staff 88% Workers 6% Managers 6%

The total staff in Saipem companies is characterised by mainly by people between 31 and 40 years old (48%); 16% are employees quite young between 26 and 30 years old and 13% are the workers between 41 and 45 years old. The large percentage of Saipem companies employees has a quite short seniority in the companies at local level; between 1 and 5 years. The reason of this results is to be found in the short story that characterised Saipem companies in the Region. Data regarding Saipem vessels need to be considered separately due to the peculiarity of the operations that are managed on board. About 10% of the crews of the vessels operating in the area are local employees. This percentage is particularly important for Castoro 10 where local employees represent the 26%. The average age of personnel on board is between 30 to 40 years old. While the higher percentage of the crew has between 6 to 10 years of seniority.



Saipem has in its core values for all operations the zero incident targets. This means an intense effort in organising a management system that can support the achievement of this objective. Main 2005 results are presented in the APAC (Asia Pacific) pyramid where performance indicators and proactive indicators are included. This scheme of safety and quality results is monthly presented to the top management for information and following actions. In 2005, regarding injury incidents, 3 lost time injuries were registered, one by the APAC Offshore Business Unit, one by subcontractors and one within Asset and Maintenance operations. 8 Restricted work Case were registered, 11 medical treatment case and 49 first aid cases. Non injury incidents are also included in the APAC pyramid as the proactive indicators achieved by the Saipem companies operations.

APAC QHSE Performance Indicator - summary for 2005
0 3 8 11 49 0 0 0 1 110 Fatality Lost Time Injury Restricted Work Case Medical Treatment Case First Aid Case Environmental Incident Non Conformity Notified by Client Authority or Third Parties Notification Non Conformity to Supplier/Subcontractor Nearmiss (Personnel Injury)

No. of Pro-Active Indicator: 1) HSE Training Hours 2) HSE Management Visits 3) Tool Box Talk 4) Job safety Analysis 5) HSE Meeting 6) HSE Inspection 7) SHOC Report

Jan-Dec 28766 282 8381 294 1826 1573 4192

Safety performance 2005 - Projects
1,500,000 1.0












Ta ng gu h

ng ko t











Worked Manhours

Frequency Rate












Safety performance 2005 - Assets
1,000,000 2.5



600,000 WMH

1.5 FR















Worked Manhours

Training is very important in the management of Saipem business. Both HSE training and professional training is essential in order to achieve and keep a good performance and to assure a continual improvement of Saipem management. During 2004, in all operations in the area about 17,000 hours of HSE training have been developed, of which 83% on safety issues, 11% on environment and 6% on health. Most of this HSE training (87%) has been developed on board of the Saipem vessels operating in the area while the professional training has been organised mainly onshore in Indonesia. In 2005 HSE training hours were even more than in the previous year, registering about 26,766 hours.


Frequency Rate

2004 HSE Training

Safety 83% Environment 11% Health 6%

Saipem has in its policy a special care in the assurance of the health of his employees. In Asia Pacific area, as in most of Saipem operations around the world, the health department is active to assure the good conditions of its employees with internal doctors and nurses and an internal management of the emergencies. The health care also involves Saipem subcontractors that are subjected to Saipem medical department periodic audits. The objectives of these audits are the evaluation of sites and local medical structures that includes: Medical facilities, Medical staff, Policies, Medicines and equipment, Health management (hygiene inspections, medical check-up, etc). Audits also considers the local medical structures as the hospital capability in handling emergencies, medical specialities and availability of equipment. The medical staff is also undertaken to develop health risk assessment, that includes the evaluation of the biological hazards, infectious contamination of the food, sexually transmitted diseases hazard, psychological hazards, chemical hazard etc. In 2005 a vaccination campaign has been carried out within Saipem employees. Saipem was offering the influenza vaccination to everybody, but, of course it was not compulsory. The results are: 213 Nationals (Indonesia) vaccinated; 73 expatriated vaccinated.







• Bbl/d: Barrel(s) per day. 1 barrel (bbl) of petroleum or related products = 42 gallons. • Bcf: The abbreviation for billion cubic feet. • Brundtland Commission: The United Nations World Commission on Environment and Development, published a report entitled Our Common Future in 1987 that defined the concept of sustainable development. The report was the basis for the Rio Earth Summit in 1992. • BTu: The British thermal unit. It is the amount of energy required to raise the temperature of 1 pound of water by 1 degree Fahrenheit when the water is at 39.2 degrees Fahrenheit. • CO2 eq: Carbon Dioxide Equivalent. A metric measure used to compare the emissions of various greenhouse gases based upon their global warming potential (GWP). • EC: European Commission. In July 2001, the Commission presented a Green Paper “Promoting a European Framework for Corporate Social Responsibility”. The aims of this document were firstly, to launch a debate about the concept of corporate social responsibility (CSR) and secondly, to identify how to build a partnership for the development of a European framework for the promotion of CSR. The consultation process on the Green Paper has supported Community action in the field of CSR. In the Communication “Corporate Social Responsibility: A business contribution to Sustainable Development” (2002), which constitutes a follow-up to the Green paper, the Commission presents an EU strategy to promote CSR. The Communication is addressed to the European institutions, Member States, Social Partners as well as business and consumer associations, individual enterprises and other concerned parties, as the European strategy to promote CSR can only be further developed and implemented through their joint efforts. The Commission invites enterprises and their stakeholders as well as Social Partners in candidate countries to join this initiative. • EPC: Engineering, Procurement and Construction; • EPIC: Engineering, Procurement, Installation and Construction. • FPSO: Floating, Production, Storage and Offloading System • GDP: Gross Domestic Product. The total value of goods and services produced by labor and property. • Global Reporting Initiative: The Global Reporting Initiative is a private initiative started in 1997 by the Boston-based coalition for Environmentally Responsible economies (CERES) and the United Nations Environment Program. In 2000, the GRI published voluntary Sustainability Reporting Guidelines. The GRI has worked in co-operation with the United Nation Environment Programme and the Global Compact. • IMF: International Monetary Fund. • Industrial production growth rate: gives the annual percentage increase in industrial production (includes manufacturing, mining, and construction). • Inflation rate (consumer prices): provides the annual percent change in consumer prices compared with the previous years. • Lost Time Injury (LTI): A LTI is any work-related injury which renders the injured person temporarily unable to perform any regular Job or Restricted Work on any day/shift after the day on which the injury occurred. In this case “any day” includes rest day, weekend day, holiday. The day of the Accident is not counted when calculating Lost Workdays. Fatalities and Permanent Total Disabilities are included in the calculation of the total the number of the Lost Time Injuries. • Lost Time Injury Frequency Rate (LTIFR) • Mmst: The abbreviation for million short tons (A unit of weight equal to 2,000 pounds) • OECD: The Organisation for Economic Co-operation and Development (OECD) groups 30 member countries sharing a commitment to democratic government and the market economy. With active relationships with some 70 other countries, NGOs and civil society, it has a global reach. Best known for its publications and statistics, its work covers economic and social issues from macroeconomics to trade, education, development and science and innovation. The OECD produces internationally agreed instruments, decisions and recommendations to promote rules of the game in areas where multilateral agreement is necessary for individual countries to make progress in a global economy. In 2000, OECD produced the OECD Guidelines for Multinational Enterprises. The Guidelines are recommendations on responsible business conduct addressed by governments to multinational enterprises operating in or from the 30 adhering countries. • Tcf: The abbreviation for trillion cubic feet. N°. LTI + Work RestrictedCases + MedicalTreatment x 1,000,000 • Total Recordable Frequency Rate (TFR) TRF= Total WorkedManHours • TOE: Tonne of oil equivalent. • WBCSD: World Business Council for Sustainable Development.


N°. LTI x 1,000,000 Total WorkedManHours



A Joint Stock Company with Registered Office in San Donato Milanese (MI), Italy Fully paid-up Share Capital Euro 440,958,400 Fiscal Code and Milan Companies’ Register No. 00825790157 Other offices: Cortemaggiore (PC) - Via Enrico Mattei, 20

Saipem S.P.A. Contact us: QHSE Dept.- Sustainability Team Daniela Mauri daniela.mauri@saipem.eni.it Tel. +390252044452 Fax. +390252034617 via Martiri di Cefalonia, 67 20097 San Donato Milanese (MI)

Società per Azioni Via Martiri di Cefalonia, 67 20097 San Donato Milanese (Mi) Tel +39 02520.1 Fax +39 02520.44667 www.saipem.eni.it

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