…the year in reviewInternational Association of Oil & Gas Producers

Highlights of 2006

SOS revisitedOGP’s review of the year 2005 led with a story about security of supply – more commonly known within the Association as SOS. The fact this Highlights 2006 does the same is signifi-cant. The topic has been a predominant issue throughout the year – and remains so well into 2007. (In February, the Association made a comprehensive response to the European Commission’s Strategic EU Energy Review – known as SEER – published at the beginning of this year.)

Among the SOS activities that

engaged OGP during 2006 was a 20 February dinner

debate in the Euro-pean Parliament jointly

organised with the Eu-ropean Energy Forum.

More than 150 stakehold-ers attended, including

Members of the European Parliament, representatives

of the European Commission, Member States’ permanent representations and industry figures. They heard encouraging words about resources and reserves of oil and gas available for Europe from

around the world. They also learned, however, that security of supply in the decades ahead will depend on access to resources and considerable investment by producers – as much as $200 billion a year globally for the next 20 years.During the course of the year, OGP provided a consistent message to a wide variety of international audiences. These included the Council of Europe, the UK House of Lords and participants at more than 60 international conferences in places as far afield as Berlin and Kuwait. OGP also conveyed the SOS message in meetings between the EU and Russia and India. A specially-produced briefing document also had wide circulation.

Rhonda Zygocki, March 2007

In terms of membership and global reach, OGP is bigger than ever. At the end of 2006 the Association consisted of 66 members and associates, representing operat-

ing interests and activities on and around six continents. Collectively, OGP members produce more than half of the world’s oil and over a third of its gas.The scale and diversity of our membership give OGP two distinct advantages. As a committee- and task force-based organisation, it provides wider access to what we endearingly call ‘sweat equity’ – our continuing reliance on the effort and expertise of a dedicated pool of talent from throughout the industry.Just as important, OGP’s broad membership base gives the organisation significant clout in dealing with the range of issues that have an impact not just on the upstream sector but on the global economy and environment as well.Two issues in particular dominated our agenda in 2006:

Building confidence in the security of oil and gas supplies within both global and regional contextsFinding solutions to constraints on exploration and production due to concerns over potential environmental impact

This report is meant to give a flavour of what OGP achieved in 2006 – and a foretaste of the challenges and opportunities that are ahead.Fortunately, we face the future from a strong position. It’s worth noting that OGP membership has already started to grow in 2007. Moreover, the election of a new Management Committee, due to be endorsed at our Annual General Meeting in New Delhi in April, will bring fresh ideas and renewed vigour to the Association.For my part, I have very much enjoyed my period as Chair. It has been an honour to represent the upstream operators on a global stage and to help guide the future of an industry on which the world will continue to depend for decades to come.

•

•

An introduction from the Chair:

International Association of Oil & Gas Producers

Oil & gas: the bridge to a sustainable future

Facts, figures & forecasts

An assessment of current oil and gas supplies and ways to meet

future demand by the association that represents producers of

more than half of the world’s oil and over a third of its gas

…briefing paper

Focus on flare reductionOGP has joined forces with the World Bank’s Global Gas Flaring Reduction (GGFR) Initiative. Its aim: to minimize, as far as is possible within safety con-straints, the gas flares that burn around 150 billion cubic metres of valuable fuel every year – or enough gas to keep the entire world supplied for a month.To create greater awareness of this objective and to disseminate best practice, OGP and GGFR co-hosted the second global forum on the subject in Paris in December. The event attracted more than 250 oil and gas experts and interested parties representing 130 companies from more than 40 nations.OGP Chair Rhonda Zygocki opened the forum with a speech stressing that gas flaring ‘has become integral to issues such as security of supply, climate change and clean development and the economics of energy companies and producing countries alike.’Other speakers at the two-day event included Rashad Kaldany, the World Bank’s Director of Oil, Gas, Mining & Chemicals; representatives of the

governments of Equatorial Guinea, Kaza-khstan, Norway, Russia and the United States; Sonatrach Chairman Mohamed Meziane and Christophe de Mar-gerie, E&P President and Executive Vice President of the forum’s host company, Total. Claude Mandil, Executive Director of the International energy Agency also addressed the meeting. Technical presentations included sessions on flaring and venting reduction through automated process control, enhanced gas recovery and North Sea develop-ments.

Safety: improvements and innovationsThe need to improve upstream safety was one of the prime reasons for the founding of OGP more than 30 years ago. Safety remains an important focus of the Association’s agenda and the annual report on safety performance indicators has become a global industry benchmark.

The 2006 report (based on 2005 data submitted by 39 companies operating in 75 countries) showed improvements across the majority of the industry’s per-formance indicators. The fatal accident rate dropped by 33% from the previous year against a 4% increase in upstream activity. Figures for 2006 (published in 2007) will give an indication if this dramatic improvement is the start of a trend. With over 2.38 billion hours worked, there were 3.5 deaths per 100 million hours. This was the lowest rate since OGP started publishing annual safety reports in 1984.New to the report were analyses of the causes of lost work day cases and greater detail on fatalities and other significant incidents. This information is providing a greater understanding of how and why accidents occur – which will lead to more effective strategies for accident prevention.Other safety milestones in 2005 in-cluded the creation of new Diving Safety Task Force, a workshop on managing major incident risks and a presentation to the International Regulators’ Forum by Safety Committee Chair Volkert Zijlker, who was succeeded by Don Jacobsen at the end of the year.

OGP stand with Kaldany & Charles

0

1

2

3

4

5

6

7

8

Contractor

Company

Overall

20052004200320022001

2.4

6.4

5.14.8 4.9

5.2

3.5

2.8

1.3

2.02.3

6.0 6.1 6.2

4.4

Fatality rate for the 2001-2005 period

Marine sound programme makes a splashThe joint industry programme (JIP), dedi-cated to expanding knowledge about the assessment of exploration and production sounds in the marine environment, initi-ated phase 2 in 2006 with the start of tar-geted research projects. Fifteen member companies and associations signed on as participants for the first three years of re-search funding. Dr. Roger Gentry, one of the world’s foremost authorities on higher marine vertebrates, became the JIP’s Tech-nical Programme Manager in mid-year.In that role, he spoke at a workshop held as part of the 58th annual meeting of the Interna-tional Whaling Commission in St. Kitts & Nevis and also appeared at the annual conference of the American Acousti-

cal Society in Providence, Rhode Island.With up to $21 million to commit to research projects over the course of three years, the JIP is the largest ever managed by OGP. As of the end of 2006, the JIP had embarked on 19 separate research contracts, five of which were in place by year end. Some of the new projects be-ing supported will develop the upstream industry’s capability to detect the proxim-ity of marine mammals to seismic survey activity by using passive monitoring. Oth-ers will focus on monitoring the behavior

of fish exposed to repeated pulses of

sound. Some of the work being

supported is con-centrating on the characteristics of E&P sounds

themselves.

Brussels stakeholders speak out; OGP respondsTo discover what EU decision-makers and opinion formers think about OGP and its activities, OGP’s Brussels office commissioned a survey among leading figures in the European Commission, Members of the European Parliament, EU Council members and figures from the media and non-govermental organisations. Questions covered industry representation, key issues and stakeholder involvement.The survey results showed high aware-ness (90% of those polled in the Com-mission knew OGP), a fairly balanced perception of the industry and alignment with stakeholders on the issues that are most important.One of the most encouraging outcomes was evidence that OGP’s message on the future of oil and gas has had an impact. Over 75% of those who replied believe that oil and gas will last as viable fuels for 30 years or more.On the negative side, it became apparent that more work was needed to deepen stakeholders’ understanding about the upstream sector. Actions resulting from the survey findings included a new more European identity for the Brussels office, a new European

brochure and a higher European profile achieved through an increase in speak-ing engagement to relevant bodies. In the pipeline is a series of industry fact sheets specifically geared to a European audience.

Up to standardIn 2006 OGP continued to be highly active in the area of standards. As ever, the goal was global standards used locally worldwide in order to improve safety and efficiency. To that end, the Standards Committee and secretariat

worked closely with the International Organization for Standardization to improve the global standards process. In addition to publishing widely circulated standards bulletins and staging workshops in the Middle East, the Americas and Europe, OGP was instrumental in the publication of 18 new oil and gas standards during the year. In recognition of the successful develop-ment of ISO/TC67, those responsible – most of whom are members of OGP’s Standards Committee – were honoured by the ISO with the Lawrence D. Eicher Leadership Award.

Cheryl Stark receiving the Lawrence D. Eicher Leadership award

Breakthroughs on cuttings & CCSAt any one time, the upstream industry confronts a wide range of issues that could have a bearing on effective-ness – and cost – of future operations. Often, these issues can go on for years before they are resolved one way or another. But in 2006 OGP achieved a number of breakthroughs. A success with OSPAR concerned operational discharges. New restrictions would have hampered the efficiencies of offshore operations. Promotion by OGP of procedures based on sound scientific solutions resulted in permission to leave accumulated piles of drill cuttings on the seabed after installation decommission-ing – provided doing so can be demon-strated to be best environmental practice. Developments on carbon capture and storage (CCS) were positive on three fronts in 2006. Having heard that con-cerns over the nature of CO2 streams to be stored and fears over reservoir leaks were unfounded, on October 30 London

Commission’s recent report on the issue (to which OGP contributed), which encour-ages developing the concept further within the EU. A legislative framework could be proposed during the course of 2007.

Depleted oilor gas reservoirs

Deep saline aquifer

Unminablecoal beds

PipelinePipeline

Power station with CO2 capture

Convention delegates voted to allow CCS. In parallel, OSPAR is developing its policy along the same lines as that agreed in the London Protocol and the European

London office: 209-215 Blackfriars Road, London SE1 8NL, UK Tel: +44 (0)20 7633 0272 Fax: +44 (0)20 7633 2350Brussels office: 165 Bd du Souverain, B-1160 Brussels, Belgium Tel: +32 (0)2 566 9150 Fax: +32 (0)2 566 9159

Web: www.ogp.org.uk E-mail: reception@ogp.org.ukA company limited by guarantee Registered in England, No. 1832064 VAT No. 241 240 903

www.ogp.org.uk

On a rollOGP grew at an unprecedented rate in 2006, with seven new members signing on.In order of joining, they were:

Yemen LNG Company LtdDolphin EnergyInternational Association of Geophysi-cal ContractorsMarathon (a company making a welcome return to the fold)Baker HughesWintershallGas de FranceNexen

The trend continues. The first quarter of 2007 OGP welcomed two new members: Persian LNG and Petropars.

•••

•

••••

Administration Manager Janet St. John-Austen and EU Affairs Manager Norbert Liermann both retired at the end of the year.It was OGP’s good fortune to welcome Richard Hall, on secondment from Shell, as Norbert’s replacement in Brussels.

Moving on, moving inIn 2006 OGP bid fond farewells to three familiar faces. Management Committee Chair Stig Bergseth stood down when a new Statoil assignment in Calgary demanded his sole attention.

Norbert Liermann welcomes Richard Hall

EventsIn 2006 OGP staged, actively par-ticipated in or featured prominently at 23 events related to health, safety, the environment, operations and sustainable development.

CCS round table, HoustonSPE HSE Conference, Abu DhabiNATO Security Forum, PragueEast-West Institute Worldwide Security Conference, BrusselsOGP/IPIECA Middle East biodiversity workshop, Abu DhabiStandards Workshop, DohaAmerican Society of Safety Engineers Middle East Conference, BahrainEU Energy Conference, New DelhiInterspill, LondonOGP/IAGC HSE & Geophysical Forum, HoustonOGP/IPIECA arctic biodiversity workshop, Tromso

••••

•

••

•••

•

ReportsOGP produced a total of 10 reports in 2006. Most of these, as well as many of the 370 others produced published since 1974, are available from the publications section of www.ogp.org.uk.

Report on HIV/AIDSHelicopter safety reportLifting & hoisting reportManaging FPSO risks reportWorkplace stress reportBiggest ever safety reportMalaria guideEnvironmental reportHealth risk assessment roadmapSOS briefing paper

••••••••••

Stig Bergseth and Janet St.John-Austen

OGP/IAGC Global HSE Forum, GatwickManaging Major Health Risks workshop, LondonAmericas Standards workshop, Veracruz.International Standardization Seminar, CalgaryInternational Regulators’ Forum, LandgraafberSafety data workshop, LondonOffshore structures workshop, Vienna Chatham House Middle East Invest-ment Conference, LondonOccupational Health Conference, OmanWorld Junior Oil & Gas Conference, London Global Gas Flaring Reduction Forum, ParisSaudi Aramco First International Standards Forum, Jeddah

•

•

•

•

•

•••

•

•

•

•