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Industrial Safety in TNK-BP as a Prime Factor for Development of Hydrocarbon Resources. TNK-BP at a glance. A truly international player Ranking in the world’s top 10 non-state-owned oil producers* Venezuela: stakes in heavy and light oil projects
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Industrial Safety in TNK-BP as a Prime Factor for Development of Hydrocarbon Resources
TNK-BP at a glance • A truly international player • Ranking in the world’s top 10 non-state-owned oil producers* • Venezuela: stakes in heavy and light oil projects • Vietnam: stakes in offshore gas, pipeline and power plant** • Brazil: stake in exploration project • Ukraineand Belarus: downstream business • Russia’s top 3 largest oil company* • 1H 2012 production 1,824 mboe/d (2,035 mboe/d with affiliates) • Brownfield assets in West Siberia and Orenburg • Producing greenfields in Uvat and Verkhnechonskoye • Yamal: a new generation of greenfield projects • Growing gas business Russia Belarus Ukraine • World-class reserve base • 39 bn boe of PRMS 3P reserves • Reserve life of 21 years of 1P and 59 years of PRMS 3P reserves • Industry-leading F&D costs and exploration success rate Vietnam Venezuela Brazil • Strong financial profile • Investment grade credit ratings • Strong credit metrics • Robust financial performance • Fully integrated business • Five refineries (incl. one in Ukraine***) and 50% stake in YANOS refinery • Refining capacity of 769 mb/d, refining cover of 39.2% in 1H 2012 • Extensive retail network with 1,274 retail sites in Russia, Ukraine and Belarus * - based on total oil production ** - acquisition of power plant planned to be completed in 2012 *** - currently refinery in Ukraine is under mothballing
ExxonMobil 2.3 2.2 BP 2.2 1.3 PetroChina** 2.4 1.0 Shell 1.7 1.5 Chevron 1.8 0.8 Petrobras 2.2 0.5 2011 oil and gas production (incl. equity affiliates), mmboe per day Rosneft 2.4 0.2 Total 1.2 1.1 Lukoil 1.8 0.3 TNK-BP 1.7 0.2 ConocoPhilips 0.9 0.8 Statoil 0.9 0.7 ENI 0.8 0.7 Oil Gas 0.1 Gazprom Neft 1.0 Sinopec 0.9 0.2 0 1 2 3 4 5 OUR Strong competitive position Among top 10 oil producers globally World class reserve replacement and F&D costs 3Y average SEC LOF RRR (2009-2011) Best capital efficiency among Russian peers 1H12 CAPEX/ boe, USD Source: Consolidated Financial Statement, MD&A reports of companies RRR - reserve replacement ratio; F&D – finding and development Source: company reports. *PetroChina production as of 2010
Brownfield asset base highlights Samotlor field 3P Reserves: 7.7 bn boe 1H 2012 liquids production: 520 mb/d • 3P reserves of 24.7 bn boe • Currently deliver 83% of total liquids output:1,291 mb/d • West Siberia • Focus on application of innovative technology and processes • Production decline lowered by 0.9% in 1H12 v 1H11 • >90% water cut • Samotlor • Giant field, 5th largest ever discovered • More than 40 years in production • Delivers 32% of TNK-BP’s total liquids production • Will remain a reliable producer going forward • Orenburg • 60-70 years in production • Delivers 27% of TNK-BP’s total liquids production • Impressive oil & gas production growth:up 20.9% in 2007 -2011 Other West Siberia fields 3P Reserves: 5.7 bn boe 1H 2012 liquids production:193 mb/d Samotlor Moscow Nyagan Nizhnevartovsk Orenburg Orenburg fields 3P Reserves: 3.4 bn boe 1H 2012 liquids production:420 mb/d Nyagan fields 3P Reserves: 7.8 bn boe 1H 2012 liquids production: 142 mb/d
Greenfields: building for the future • Significant resource potential • 3P reserves of 14.6bn boe • Increasing share in production • From 17% currently up to 20-25% by 2015 • Yamal projects and Rospan • Major new production province • Could potentially account for over 30% of TNK-BP’s total production by 2020 Yamal projects 3P reserves:4.9 bn boe Potential start-up: 2016-2019 Uvat 3P Reserves: 1.4 bn boe Start-up: 2009 1H 2012 liquids production:126 mb/d Messoyakha* Suzunskoye Tagulskoye Verkhnechonskoye 3P Reserves: 2.4bn boe Start-up: 2008 1H 2012 liquids production:139 mb/d Russkoye Rospan Uvat Verkhnechonskoye Rospan 3P Reserves: 5.9 bn boe (liquids + gas) Potential FFD start-up: 2015 1H 2012 gas production: 1.7 bcm (59 mboe/d) 1H 2012 condensate production: 15 mb/d Legend: Greenfield projects under development Greenfield projects at phase of commercial production Gas project * Messoyakha is owned by a 50/50 JV between TNK-BP and Gazprom Neft, reserves data include 50% share of Messoyakha
Basic Indicatorsin TNK-BP Occupational Safety and Health TRIFR Производственный травматизм Comments • Since 2007 the TRIFR is registered to be reduced by 84% • TNK-BP Companyrealizes a Single Labour Concept, not dividing the employees into ins and outs(Contractor employees) • The Company HSEreport includes indicators of Contractors, the transparency meets the best world practice* Total number of fatalities and lost time injuries Company’s employees Subcontractors Total Recordable Injury Frequency Rate (12-month Rolling Average) • The reduction of Total Recordable Injury Frequency Rate (TRIFR)* by 20% • Thereduction of Days Away From Work Cases (DAFWC) by 10% * Total Recordable Injury Frequency Rate (TRIFR) comprises the total number of fatalities, lost time injuries, restricted work cases and medical treatment cases as per OSHA definitions. ** The International Association of Oil and Gas Producers
HSE: the leading Company in Russia Comments • Information on accidents and incidents is presented as per classificationof the Federal Law No. «On Industrial Safety of Hazardous Industrial Facilities» • In the period from 2006 through 2011 average number of accidents at Company’s facilities reduced by 36.4% Spills Frequency (12-month Rolling Average) • Environment Safety • The spill frequency index is improving: • The number of spills per thousand tons produced down 13% • Spilt tons per thousand tons produced down 45%
Effective Production Safety ManagementSystem – a ticket to success • Major Projects Risk Assessment • Production facilities Integrity Risk Management. • MultilevelControl of applicable requirements compliance. • Managerial Leadershipat all management levels. Direct function subordination totop managers. • Unsafe Action Intervention culture. • Single Labour Concept– the Company statistics includeContractor indicators • Reporting Disclosure and Transparency – Report on the Company sustainable developmentwith disclosure of information on А+ (report auditors – PWC) • HSE Management Systems of several Subsidiaries are certified for compliance with ISO 14001 andOHSAS 18001 standards
Hazardousfactors RISK = PROBABILITY x CONCEQUENCES “Barriers” System – An Instrument to Prevent Industrial Incidents MITIGATE REDUCE PROBABILITY 9
Risk matrix Frequently L / Н H / В HH / ОВ HH / ОВ HH / ОВ Will occur 100% Probably L / Н M / С H / В HH / ОВ HH / ОВ 1time per year Eventually Probability L / Н M / С M / С H / В HH / ОВ 1 time per 2 years Rare L / Н L / Н M / С H / В H / В 1time per 3 years Unlikely L / Н L / Н L / Н M / С M / С to 1M$ to 2 М$ to 3 М$ to 4 М$ More than 4 М$ Implications, М$ Distributionof “VST" over risk values 600 503 500 400 300 200 100 25 10 6 0 НН/ОВ Н/В М/С L/ Н Risk Identification and Assessment on Site Facilities Barrier 3 MITIGATION Barrier 2 DETECTION AND MONITORING Barrier 1 WARNING Detect accidents and monitor situation if event is evolving Various accident aspects to be mitigated as the accident develops,escalation shall not be allowed Prevent accidents Tank R Evaluation criteria of equipment condition and associated systems RISK PROBABILITY CONSEQUENCE Hazardous factors
Project management – decision making points DMP DMP DMP DMP Appraisal clarification Appraisal clarification Appraisal clarification Appraisal clarification The company internally reviews HSE project solutions at all stages of project development and implementation in order to generate efficient and timely measures to mitigate possible negative impact DMP 11
Development Strategy – transition to single operating management system(OMS) • OMS – management system with clearly formalized elements and minimal set of requirements for it. • OMS has a formal management system improvement cycle (OMS PerformanceImprovement Cycle), which is similar to PDCA cycle (Plan-Do-Control-Act). Plan OMS PerformanceImprovement Cycle Review Implement Monitor PURPOSE OF OMS: Integrate HSE requirements into daily corporate operation in order to continuously mitigate HSE risks