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Naples, 24 th October 2011

Drilling Contracts Who has the last words in emergency situations? Pietro Galizzi – Saipem S.p.A. General Counsel. Naples, 24 th October 2011. Agenda. Few words on Saipem Deepwater Horizon Case- Coast Guard Report Italian Legislation Saipem Internal Procedures Conclusions.

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Naples, 24 th October 2011

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  1. Drilling Contracts Who has the last words in emergency situations? Pietro Galizzi – Saipem S.p.A. General Counsel Naples, 24th October 2011

  2. Agenda • Few words on Saipem • Deepwater Horizon Case- Coast Guard Report • Italian Legislation • Saipem Internal Procedures • Conclusions

  3. Few words on Saipem Offshore Drilling Onshore Drilling Saipem Two Global Business Units Engineering and Construction Powerful EPC, Mega Projects Engineering and Project Management Services Leader in Deepwater, Large EPIC Projects • Oil & Gas Upstream • Gas Processing, Liquefaction, GTL, GTS • LNG Import/Export Terminals • Pipelines and Oil &Gas Transport Systems • Downstream – Chemical Plants, Refineries, Heavy Oils Conversion • Pipelines • Field Development • Platforms • FPSO • Subsea works Drilling Offshore high quality niche player & Onshore frontier focus

  4. Few words on Saipem Project Execution Centres Legal Departments Human Resources – Legal Departments • 124 Nationalities • 38,700 people* • @ August 31st, 2010 Paris Milan Other Main Areas and Rep. Offices Singapore Engineering Centres

  5. Few words on Saipem - Ten largest Italian companies (18th April 2011) By market capitalization - data in Billion € approx.

  6. ( Mln € ) Onshore Drilling Offshore Offshore Onshore FY 2010 Financial Results Few words on Saipem Revenues EBITDA EBIT Net Profit Adjusted 11160 % on Revenues 1836 1319 10292 % on Revenues % on Revenues 1596 1156 % on Revenues 409 (7.8%) 828 370 (7.1%) 5236 338 732 (7.0%) 290 (6.0%) 4831 (28.1%) 193 (11.3%) 78 (29.1%) 161 (10.6%) 59 402 258 (34.4%) (53.6%) 688 287 192 (33.9%) (50.7%) 554 750 566 613 832 (13.7%) 615 4486 (18.5%) 810 (14.2%) (18.7%) 4341 2009 2009 2009 2009 2010 2010 2010 2010 6

  7. Agenda • Few words on Saipem • Deepwater Horizon Case- Coast Guard Report • Italian Legislation • Saipem Internal Procedures • Conclusions 7

  8. Deepwater Horizon Case – Extract Coast Guard Report

  9. Deepwater Horizon Case • United States Coast Guard- Report of investigation into the Circumstances Surroundings the Explosion, Fire, Sinking and Loss of Eleven Crew Members Aboard the Mobile Offshore Drilling Unit – Deepwater Horizon in the Gulf of Mexico _April 20-22, 2010 • the dual –command organizational structure as a “clerical error” • OIM authority when the vessel was latched onthe well • Master authority when the unit is in navigation or in emergency situations • lack of transfer of authority from OIM to the Master during emergency situation • Master asked permission form OIM to activate the Vessel emergency procedure

  10. Agenda • Few words on Saipem • Deepwater Horizon Case- Coast Guard Report • Italian Legislation • Saipem Internal Procedures • Conclusions 10

  11. Italian Legislation • National Regulations: d.p.r. n.886 dated 24/05/1979andd.P.R. 9 aprile 1959, n. 128 “Prevenzione degli infortuni sul lavoro - Lavoro nelle miniere e nelle cave”. • Art. 8 “Responsabilità del Capo Piattaforma” -Responsibility of the Offshore Installation Manager/Superintendent-OIM • Art. 9 “Responsabilità del Comandante”- Responsibility of the Master • Art. 74 “Emergenza”- Emergency

  12. The OIM- Offshore Installation Manager responsibilities when the platform/unit is moored (almost full) authority during drilling activities; compliance with the security regulations and training of the personnel on board; inform the Master of any circumstance that may cause danger to the unit; Implement all the necessary measures to face emergency situations; The Master responsibilities: Full authority during navigation; Responsibility for maritime risks damages to the platform/vessel and personnel on board during drilling operations when the unit is moored; Implement all the necessary measures to face emergency situations; Italian Legislation – OIM & Master Responsibilities In case of conflicts between the OIM and the Master the final decision is on the Master

  13. Italian Legislation- Extracts

  14. Agenda • Few words on Saipem • Deepwater Horizon Case- Coast Guard Report • Italian Legislation • Saipem Internal Procedures • Conclusions 14

  15. Saipem Internal Procedures • The Master is all times ultimately responsible for the safety and integrity of the ship and all personnel on board and therefore in emergency situations the command chain rest with him in accordance with Maritime Laws and Regulations • The Drilling Superintendent is in charge of all drilling and associated operations and reports directly to the Platform Manager (PLMR); • The Drilling Superintendent (DRSU) has a reporting responsibility to the Master when emergency situations in drilling and associated operations arise that may affect the safety and the integrity of the Unit and of the Personnel on board. • [Safety Management Manual Saipem 10000 Rev.02 dated 4.08.2011] Irrespective of the hierarchical relation between the Master and the OIM, in case of emergency situation the last words are on the Master

  16. Saipem Internal Procedures –Sample of Ship Organization Chart Legenda: PLMR: Platform Manager DRSU: Drilling Superintendent

  17. Agenda • Few words on Saipem • Deepwater Horizon Case- Coast Guard Report • Italian Legislation • Saipem Internal Procedures • Conclusions 17

  18. Back to Deepwater Horizon Case – Extract Coast Guard Report 1

  19. Although a mobile offshore drilling unit (MODU) is generally classified as a vessel, when a MODU is drilling a well it is usually classified as something different, i.e. as an offshore facility. As a consequence, there generally are different perspective, the maritime perspective and the operational (organizational/hierarchical) perspective; In our opinion, as a general rule, we deem correct the following approach: In emergency situations either the OIM and the Master shall have the right to take initiatives in order to reduce the danger; In all the cases, including in case of disagreement between the OIM and the Master (or if the OIM has not taken any action), the Master shall have the last words in emergency situations Conclusions

  20. The end Thank you for your attention! Any question? Pietro Galizzi – Saipem S.p.A. General Counsel Naples, 24th October 2011

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