Seminario Vetting Confitarma

1. Kuwait Petroleum International Marine Safety and Vetting Seminario Vetting Confitarma Rome 07/11/2011

2. 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 Agenda 2

3. 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. KPI Markets Retail Aviation Direct Lubricants RoadDiesel 3

4. KPI European OUs & Terminals Kuwait Petroleum Italia Sundsval Halmstad Goteborg Vastervick Stochkolm Kuwait Petroleum Spain Kuwait Petroleum Aviation Arhus Aalborg Esbjerg Kuwait Petroleum Europoort Antwerp Kuwait Petroleum Belgium Avonmouth Rotterdam Kuwait Petroleum Denmark Le Havre Koper OK Q8 Venice Genova Livorno Milazzo 4

5. KPI 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 5

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

7. About OCIMF mission and objectives Helping to improve the safe and environmentally responsible operation of oil tankers and terminals since 1970 Being the foremost authority on oil tankers, terminals and offshore suport vessels Promoting 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 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 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 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 SIRE

8. Ships’Quality: The Chain of Responsibility Enforcement of Regulations is made by IMO and Flag States Responsibility to ensure compliance with national laws and regulations Implement IMO Conventions Establish an Administration to conduct surveys, casualty investigations and issue safe manning documents, seafarers’ certificates, etc.. Port State Control Provide for control procedures on ships calling at foreign ports (SOLAS 74, Loadline 66, MARPOL 73/78 Role extended to cover operational requirements in addition to some flag states’ responsibilities Port States required to inspect 25% of all ships calling at their ports (50% in Asia/Pacific Region) Classification Societies Ensure ships are built to adequate strength and maintained to meet Class Rules Increasingly delegate responsibilities from Flag States to conduct statuory surveys and issue cerfificate Adherence is made by Ship Operators Hold prime responsibility for ensuring that ships’ quality, seaworthiness, Manning levels and competence meet IMO Convention requirements

9. Reasons to go for quality and risks Why… A single pollution incident can have devastating consequences to even the largest Oil Company Public opinion Political pressure Financial liability Commercial reality Influence of tanker casualties Increase the knowledge of actual vessel condition • The Shipping risk • Owned vessels • Least risk • Greatest control • Time Chartered Vessels • Better than “spot” but fails short of owning • Voyage Spot Chartered Vessels • Most voyages • Greatest risk • Least knowledge of quality by the charterer

10. Risk management How 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 schemes Schemes vary due to company size, scope and diversity of activities, attitude to marine risks and use of real time information and the quality of analysis Some may use 3 rd party Vetting All companies input/extract reports from OCIMF database Determination of vessel utilisation is solely at each company’s discretion Liability concerns dictate how individual companies approache the vetting issue Increasing use of auto-vetting

11. Arriving at the decision Combination of some or all elements Acceptance matrix Guidelines/Minimum Marine Safety Criteria Substantiated positive information The SIRE Inspection Report A decision to utilise a particular vessel means that the risk has been analysed and deemed to be acceptable

12. Conclusion & 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? 12

13. Thank you for your attention