Youth Welding Campus CSR in practice in Heavy Residue Processing Complex Project - Lukoil Neftochim Bourgas

Stefano Polimeni – Project Director - Technip

Giovanni Bona – Site Manager – SICES Rome – 24 October, 2014

Youth Welding Campus CSR in practice in Heavy Residue Processing Complex Project - Lukoil Neftochim Bourgas Heavy Residue Complex Project Project CSR view and targets From values to project commitments Youth welding campus Conclusions

The Heavy Residue Complex Project The project purpose is to build a new residue hydrocracking complex inside existing Lukoil

Neftochim Bourgas refinery The EPC project award was in January 2012, construction started in April 2012, completion

is due by March 2015 The project is huge (500 pieces of equipment, 30.000 cum concrete, 14.000 Tons of piping,

14.000 Tons of structural steel,…) The construction manhours are about 9,000,000; at peak 3400 workers have been deployed Technip and SICES are executing the project in tight partnership

The HRPC project is under the local and international community spotlight

LUKOIL Neftochim Burgas, based in Burgas, Bulgaria (on the Black sea shores), is the largest oil refinery in Southeastern Europe (9,5 million Ton of crude processing capacity) and the largest industrial enterprise in Bulgaria. Owned by Russian oil giant LUKOIL, the refinery has the biggest contribution among the privately owned enterprises to the country's GDP (10%) and to the state budget revenues (from Wikipedia).

“It’s a significant investment in the Bulgarian economy, which is one of the poorer EU economies and Lukoil’s investment in Bulgaria was prior to its accession into the EU, “Given what has been the poor state of balance sheets of banks in general, it certainly was an important indication that some of these banks are willing to lend large amounts of money for projects they feel are worthwhile.” (from a press release of a law firm assisting the pool of banks involved in the financing of a portion of the project).

Lukoil President and Owner Vagit Alekperov and Prime Minister of

Bulgaria Boris Borisov at jobsite works inauguration

HRPC Project contest

The project has several different stakeholders: the client, state and local authority, local community, local subcontractors and suppliers,… Bulgaria has only recently joined EU (2007); Russia is still very

present and influencing in the country. The economical development of the country is still lagging behind the other eastern Europe nations. Country laws and practices are an original mix of former soviet and

European ones. Country technical competence and safe work competence is not yet

in line with European standards Bourgas area development is strongly focused on tourism.

Environmental impact of Bourgas refinery is important.

The stakeholders have very high expectations of this project

Project sustainability

Sustainability of projects has become the real challenge that every organization working in the contracting market shall face The local involvement and the safeguarding of local

stakeholders is intrinsic in the concept of sustainability.

Excerpt from IPMA 2014 World congress Silvius Schipper lecture

HRPC project wants to be sustainable and socially responsible Have the highest HSE standards in an environment that manages HSE issue in a

rather “bureaucratic fashion” Respect all local laws and have the highest integrity standards Provide a “state of the art” design in terms of safety of operations and prevention

of hazards Improve the environmental impact of the refinery Increase the technical and management capabilities of local companies and

workforce Provide real work opportunity for the local community Promote the welfare of all involved subjects (workers, population), create equal

opportunity respectful of gender diversity, cultural and religious differences Create a benchmark for a “different way” (on time, on budget, in quality) to perform

capital investment in former Soviet Countries (this is the first EPC contract for Lukoil and in Bulgaria)

Raise the awareness and the reputation of all stakeholders

CSR values and initiatives are key points to meet the sustainability targets of the project

CSR

Social Impact Management

Local Community/People

Project Commitment

From CSR values to Project commitment

• Transferring technology/know-how (to our local personnel and/or Clients and contractors’ personnel);

• Developing the skills of Local Personnel (Client, Technip, Suppliers and Partners);

• Promoting local / national Stakeholders involvement, with “ad hoc” initiatives (Communities, NGOs, Institutions, Municipalities, Clients, Manufacturers etc…) even not strictly related to the Project

Local community involvement is a must

SD commitment also means commitment to the advantage of

the school communitiesDonation of Computer equipment for the

Professional High School of Mechanics and Electronics (Bourgas)

The initiative foresees:

The donation to the Professional High School of Mechanics and Electronics,by Technip Italy, of 20 PC complete with printer and video.

The initiative is part of the development program of Local Content within theproject Lukoil Neftochim Burgas.

Local community involvement: actions in favor of local schools

The donation, by Technip Italy,/SICES to the Virgin Mary Hospital (Bourgas) of a pediatric tonometer to prevent, in children, cases of congenital glaucoma which leads to blindness, and a direct ophthalmoscope to detect eye diseases such as retinoblastoma and retinopathy and related assistance for the use of this equipment. The execution, by the Virgin Mary Hospital, of such tests, on 100 children each year, coming from the poorest parts of the population.

Local community involvement: action in favor of Virgin Mary Hospital of Bourgas

Meeting with students of the school Rakovsky (Burgas) to present TPIT and the project HRPC The initiative is part of the activities in favor of a policy of National Content that Technip Italy has embraced in the countries in which it is to operate with its contractual commitments. This policy seeks to achieve the objective of Technip Italy to support its economic choices along with a commitment to carry out an exchange of values with: Customers, Partners, Community and Local Stakeholders. Values related to the history, to their organizations and to the common cultural heritage, to leave a lasting testimony over time.

Local community involvement: Technip presenting the project in Bourgas Rakovsky school

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SICES and Technip launched a "direct hiring" plan for young welders SICES and Technip, jointly with local Bulgarian authorities, organized a training initiative for young welders. It consisted in a 2-month training, held in Bourgas, including theory classes and practical applications The program was offered to 30 pupils from some technical schools of Bourgas, Bulgaria, and comprised 300 hours of lessons on welding techniques, personal protection equipment and protective measures during work. The students were provided with every materials required for the training. They all showed great interest and passed their final exam successfully, getting a special certificate for welding activities and thus gaining legitimacy to be employed as welders on the project.

Local community involvement: Youth campus

Construction works local content

People involved ( turnover ) 10.000 Daily pick in the project 3.800 EXPATRIATE: 40% LOCAL: 60% STAFF- MANAGEMENT TECHNIP/SICES: 300 PERSON STAFF – MANAGEMENT SUBCONTRACTOR 100 PERSON LOCAL STAFF: 150 EXPATRIATE STAFF: 250

DIRECT WORKERS 3.400 LOCAL WORKERS 2.200 EXPATRIATE WORKERS 1.200 LOCAL SUBCONTRACTORS: 53 INVOLVED IN DISCIPLINES CIVIL MECHANICAL ELECTRICAL AND INSTRUMENTAL SERVICES

Impact on local economy

LOCAL COMPANIES SUBCONTRACTED VALUE: 200 million € MATERIALS PURCHASED FROM BULGARIAN COMPANIES: ≈10 million € LOGISTIC IMPACT AND BENEFITS VALUE:

Accommodations Transportation Living ( restaurants, amenities, etc ) General services

20 million € PERMANENT STAFF TO BE DEPLOYED BY LNB FOR THE NEW COMPLEX:

150-200

+ INDIRECT STAFF (MAINTENANCE, TURNAROUND, …): average 70-100

Nationalities involved in HRPC project

ITALIAN BULGARIAN

POLISH

ROMANIAN

PORTUGUESE TURKISH

GREEK

EGYPTIAN LITHUANIAN

BELGIAN

SPANISH

HUNGARIAN FRENCH

For the purposes of the project around 3 500 people daily enter the refinery. Different nationalities are involved, including:

The challenges: WORLD WIDE STANDARD for

employees welfare EMPLOYEES SATISFACTION to

be involved in HRPC project SINERGY AND INTEGRATION of

such differentiated multicultural environment

EDUCATION to highest standards for safe works execution and state of art construction works method

WELDING CAMPUS PROJECT

OBJECTIVES AND TARGET AUDIENCE

SICES Welding campus project will offer a thorough theoretical and hands - on 8 weeks training in welding to 30 technical school students living in Bourgas;

SICES will invest about 100.000 Euro for the set up and development of the Training Campus ( Organization – Teacher – Technical Pamphlets – Consumables and Equipments)

The expected positive outcomes of the Campus are valuable in a contribution of up to 100.000 construction manhours for the project that will be sourced from previously untrained and unemployed young people

ADMISSION REQUIREMENTS

Graduation degree in a technical school Basic knowledge of technical English

POST COURSE WORK OPPORTUNITY

At the positive completion of the training, an immediate work opportunity in the Project will be offered to successfully trained participants

CONTENTS AND DURATION

Welding Campus project will last 2 months (april/may) and will consist of 300 hours of activities, with an alternation between theory (1/3) and practice (2/3).

PROGRAM OUTCOMES Demonstrate the set-up, safe operation and fabricating processes and equipment, including a

working knowledge of Health and Safety legislation, procedures, hazard control and personal protective equipment, with focus on Project requirements;

Select, plan, and demonstrate metal fabrication operations including layout, cutting, forming and fitting for weldment manufacturing using industrial metal fabrication machinery;

Prepare welding documentation and develop a familiarity with the common welding codes and standards in the welding industry (i.e. ASME);

Explain the application of standard inspection and testing methods used to assess the quality of welds and welded fabrications;

Identify common metals, alloys, and classification systems and select the appropriate welding and fabricating techniques and consumables for adapting to the characteristics of the different types;

Interpret engineering drawings, welding symbols, bills of material;

Communicate information effectively to individuals and groups by applying communication principles and by preparing both formal and informal reports

PROGRAM CONTENT / THEORY - Technical School in Burgas:

• Work organization in plant construction and illustration of the H-OIL project;

• Health and Safety protection;

• Understanding technical drawings;

• Basics of metallurgy;

• Welding methods and their characteristics;

• Quality in welding: WPS, PQR and WPQ; materials and welding defects; tests and examinations on welds;

PRACTICE - In well equipped labs and/or in Burgas workshop:

• Practical training in manual welding (Electrode, TIG, wire welding)

At the end of the training course, a certificate will be issued by the authorized European Notified body in according to EN 287 – 1 Method 111/141. (i.e. TUV Rheiland/TUV Nord - Bulgaria).

Welding campus moments / Welding campus follow up Pupils: 30 Course completed by: 26 Recruited: 23 Resigned: 7 Working 16 as:

Junior welder: 10

Helper: 2 QC

inspector junior: 4

Conclusions

The long term prosperity of EPC companies depends in a large part on the level of awareness of sustainability of their projects Lukoil HRPC has been conceived since the beginning by the

Project Management team as a sustainable project. Technip and SICES strongly supported initiatives coherent with the CSR targets of the project.

www.technip.com

Thank you