Environmental Mainstreaming for SelfRegulation EMSR

Technology Applications

Environmental Mainstreaming for Self-Regulation EMSR

By: Marco Buzzo and Marco Mazzoni, Backer Hughes, a GE Company

Abstract

This paper provides an overview of PETRONAS experience in implementing Environmental Mainstreaming for SelfRegulation (EMSR) since 2016. The commitment to mainstream environment is amplified through self-regulation approach with focus on key environmental management areas such as air emissions, water and hazardous waste management. As per the Department of Environment (DOE) Environmental Mainstreaming Directive, seven (7) EMSR critical elements were applied and mapped against existing PETRONAS HSE Management System (HSE MS) with intent to facilitate implementation effectiveness. One of the key success factors achieved was the completion of specific/customised requirements to support each of the seven (7) critical elements; carried out in collaboration with DOE. The collaboration resulted in a consistent understanding between PETRONAS and DOE (as the Authority) on the elements’ interpretation for implementation. As a result, EMSR performance to-date is at satisfactory level with continuous improvements identified to sustain compliance with local regulatory requirements. This imparts PETRONAS’ commitment in upholding reputation as a responsible company in maintaining regulatory compliance on business operations, striving for operational excellence and supporting license to grow.

Introduction

Environmental sustainability is fundamental to PETRONAS’ present operations and future business growth. In order to have a proactive role to uphold environmental protection, mainstreaming of environmental matters has become the forefront in every stage of business phases starting from planning & development, throughout execution and up to decommissioning (or closure; i.e. may involve rehabilitation). In fact, environmental mainstreaming is currently used as strategic tool in achieving self-regulation1. The objectives of environmental mainstreaming are to steer and embed the integration of environmental management priorities; i.e. risks identification & mitigation, and performance monitoring to drive operational governance, into business plans, development and operations. It is intended for the mainstreaming effort to influence decision making at all levels of organisation hierarchy, and within key operational phases of the company. In the long term, environmental mainstreaming will shape the right generative culture inculcated across assets’ life cycle that add value to operational excellence and growth. The importance of mainstreaming has been recognised by DOE as the approach to instill operational discipline for regulatory compliance. In 2016, a Guided Self-Regulation (GSR) was introduced by DOE to assist regulated industries to cultivate operational self-regulation. This is achieved through application of GSR that focuses on key environmental areas such as air emissions, water and hazardous waste management. Self-regulation is a long term goal required by DOE to strengthen environmental ownership, deliver excellence through environmental commitment and strive for environmental regulatory compliance at the organization

and/or operations’ premises. With the objective to accelerate self-regulation culture, DOE had further directed GSR implementation by use of seven (7) environmental mainstreaming tool or critical elements governing environmental commitment, capability & resources; including communication to stakeholders. The seven (7) mainstreaming critical elements are: 1. Environmental Policy; 2. Environmental Budgeting; 3. Environmental Monitoring Committee; 4. Environmental Facility; 5. Environmental Competency; 6. Environmental Reporting & Communication; and 7. Environmental Transparency PETRONAS, in scoping the execution of EMSR, had adopted the expectation and tools provided by DOE in line with the Environmental Mainstreaming Directive. Additionally, PETRONAS had leveraged on the existing PETRONAS HSE MS to drive implementation effectiveness. As a prerequisite, mapping of the critical elements to the HSE MS had enable provision of technical standards whereby customisation to support EMSR was carried out for each of the seven (7) elements above. The customization of technical standards basically specified the minimum technical requirements to meet the following objectives: a.Guide PETRONAS’ Malaysia operations to implement

EMSR with clear measurements of effectiveness; b.Strengthen environmental compliance with the domestic regulations applied to Malaysia Operations; c.Standardise and/or prescriptive EMSR implementation practices (at minimum) within PETRONAS.

Overview of EMSR Implementation Journey in PETRONAS

PETRONAS had, in early 2016, initiated development of a Self-Regulation Framework by usage of HSEMS as the selfregulating tool. The intent then was to elevate the importance of environmental management through mainstreaming environment within the company. In the same year 2016, DOE introduced the GSR as the strategic supporting tool to be adopted for environmental mainstreaming. Following GSR introduction, a Guidance Document

on Implementation of Self-Regulation Initiative in Industrial Manufacturing Premises: Environmental

Mainstreaming Tools was issued by DOE in April 2016 and revised in 2017. The document emphasized on the seven (7) environmental mainstreaming tools to be applied, which PETRONAS then mapped each element with the HSEMS. The process-chain that defines self-regulation framework is depicted in the Figure 1. As results of the mapping, it was found that in principle HSEMS was adequate in meeting DOE,s environmental mainstreaming expectations. Despite the adequacy of HSEMS, it is beneficial to have a more prescriptive requirement to be defined to ensure full compliance with DOE’s environmental mainstreaming expectations. Therefore, PETRONAS’ technical standard titled

Environmental Mainstreaming for Self- Regulations

(EMSR) was established to provide clear and prescriptive requirements to be emphasised in each element during implementation as the demonstration of self-regulation. The EMSR technical standard specifies the minimum technical requirements that guide PETRONAS’ Operations to demonstrate self-regulation, and to strengthen environmental regulatory compliance within Malaysia operations. The main purpose of the standard is to drive a common Environmental Mainstreaming implementation practices (at minimum) within PETRONAS to ease measurement of effectiveness. The scope covers all phases of work activities from development project to operation and maintenance, and up to decommissioning phase (as applicable) for PETRONAS’ owned facility operated in Malaysia only. The value impact created from mapping of the seven (7) EMSR critical elements to the existing PETRONAS HSE MS had established how HSEMS could be applied to facilitate implementation effectiveness. Mapping of the two is as shown in Figure 2. Figure 2 above featured the eight (8) drivers of PETRONAS HSEMS alignment to the seven (7) critical elements, and provided associated technical standards to be used by PETRONAS’ operating units (OPUs) as guidance and measurement in the implementation, monitoring and measurement of EMSR compliance. Based on the alignment, PETRONAS’ operating units are required to demonstrate application of respective specific HSEMS drivers on-site. Ease of application is supported by an established integrated on-line system of HSEMS that would accelerate implementation and optimisation of resources. PETRONAS believe that by way of integrating EMSR requirements, backed by an established on-line system, will facilitating effectiveness in implementation, monitoring and continuous review for compliance. PETRONAS Technical Standard EMSR was completed and rolled-out in September 2016. All operating units are obligated to identify gaps against the technical standard requirements and developed the gap closure plan. In the spirit of self-regulations, OPUs conduct self-assessment

independently and self-declared the status of compliance. Effective January 2017, EMSR was officially implemented while gap closure actions were conducted in parallel. OPUs were given one (1) year to close identified gaps; primarily on administrative requirements. Gaps closure status are closely monitored by GHSSE every 6th month within the first year. By the 3rd year, which was 2018, verification of the compliance was conducted by PETRONAS using the established assurance system. It has been planned that moving forward from 2018, compliance verification will be carried out periodically. Figure 3 illustrates the EMSR implementation timeline and focused experience created. Continuous engagement with DOE as the Authority was a key activity carried out throughout the implementation of EMSR in 2016 up to 2018. The engagement focused on clarification of the expectations, concurrence on PETRONAS’ approach for compliance and progress of implementation.

Achievements and Key Success Factors

One of the key success factors experienced in the EMSR implementation was development of specific technical requirements for each critical element; carried out in collaboration with DOE. The collaboration had delivered consistent understanding between PETRONAS and DOE on the measurement of compliance. Additionally, the collaboration has also broadened insights on regulatory interpretation for compliance, and instill alignment to a common objective. This uplifts PETRONAS’ reputation as a responsible company on regulatory compliance, and support the efforts to strive towards optimum levels of operational excellence. Throughout the phases of EMSR implementation, continuous communication & engagement with affected business and operating units were carried out. These had assisted in achieving consensus at large of targeted deliverables, and made available technical advice on mitigation of noncompliance. To-date, all PETRONAS’ operating units have successfully implemented EMSR, which have assisted to identify, assess, manage and monitor risks/gaps for remedy. A verification assessment was also conducted to ensure the requirements of EMSR are fully met that otherwise the implementation gaps tracked for closure and continuous improvements. In 2018, EMSR implementation delivered a tangible success at average of 93% compliance. Improvement actions are currently being addressed involving measuring value impact of environmental monitoring committee, adequacy of environmental competency, and availability of environmental facility. Illustration on EMSR delivery as per the seven (7) critical elements and based on mapping with HSE MS are highlighted in Table 1. EMSR implementation had significantly improved operational compliance & initiatives related to pollution prevention and abatement. Performance monitoring of air pollution control system (APCS) and industrial effluent treatment system (IETS) were observed through proper management of environmental critical equipment; trending & analysis of performance data; and interval & consistent review of performance through Environmental Monitoring Committee. Waste minimisation effort in particular was tremendously observed. The success is a reflection of sustainable environmental practices in the company. Collaboration between company and DOE has also been strengthened. By promoting self-declaration, transparency on managing environmental issues within PETRONAS and to DOE has increased. OPUs are now more open in highlighting compliance issues upfront, and continue to seek clarification and consultation with GHSSE or DOE to support closure of compliance gaps. The above benefits could observed based on OPUs efforts to comply with the Environmental Quality (Clean Air) Regulation 2014, hazardous waste management and digitalisation of environmental monitoring data.

Conclusion

The integration of EMSR with PETRONAS HSEMS has proven to be a successful experience that facilitated effective EMSR implementation, monitoring and measurement within the company. PETRONAS’ commitment to self-regulate has contributed to efficient environmental performance in operations against DOE enforced regulatory requirements. Indirectly, this contributed in shaping a stronger HSSE compliance culture simply through strengthening of personal accountability. The implementation of EMSR has also strengthen collaboration with DOE in areas such as insights on regulatory requirements, opportunities to co-create improvements towards environmental sustainability and sharing of technical knowledge. Impact from these have demonstrated PETRONAS’ commitment in environmental mainstreaming that delivers long term value. As a next step, there is a plan to expand the scope of EMSR to include the broader environmental risks such as climate change and biodiversity & ecosystem services; and consider impact on social performance. The wider integration as such will facilitate value creation beyond compliance that support business growth.

REFERENCES

Department of Environment. (2016). Guidance Document on Implementation of Self-Regulation Initiative in Industrial Manufacturing Premises:

Environmental Mainstreaming Tools. Putrajaya: DOE Department of Environment. (2017). Environmental Mainstreaming Directive: Explanatory Notes on Environmental Mainstreaming. Putrajaya: DOE PETRONAS Environmental Mainstreaming for Self-Regulation (Malaysia Operations) (Revision: 2016) (Department of Environment, 2017) PETRONAS (Petroliam Nasional Berhad). (2018). Sustainability Report 2017 – Moving Forward Together. Kuala Lumpur: PETRONAS

Figure 1—Process-Chain of Self-Regulation Framework

Figure 2—Mapping of DOE Environmental Mainstreaming Tool with PETRONAS HSE MS

Figure 3—The Journey of PETRONAS EMSR

Egypt Gas,

offshore maintenance

Why offshore maintenance matters?

Offshore oil and gas structures known as floating production, storage and offloading vessels (FPSO), and fixed platforms, are usually very complex assemblies of fabricated steelwork, metalwork, pressure vessels and equipment, structural members, tanks, valves, pumps, screens and pipework, all crammed in a very tight and congested deck footprint. The most widely used material for construction for these assets is carbon steel, with lesser amounts of stainless steel (different grades), galvanized steel and some nonferrous metals. Operating around the clock in a marine environment with the continuous influence of heat, moisture, marine salts, guano (bird droppings), ultra violet (UV) light, well fluids, vibration and pressure results by time to corrosion of these materials of construction. The most common method for limiting corrosion and metal loss is the use of protective coatings.

Why Egypt Gas?

We provide a fully integrated service

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Egypt Gas Scope of work:

1.Assets integrity and preservation

(protective coating and surface preparation). 2.Helidecks (chopper landing pads) rehabilitation program. 3.Mechanical installations (Deck extensions, drainage systems, repair of production lines, riser clamps install, boat landings fabrication equipped with rubber finders, FBSO

storage tanks repair and upgrading). 4.Lighting installations for offshore facilities. 5.Polyethylene submerged pipe lines for offshore production needs. 6.Thermal insulation for production pipe lines, valves and equipment. 7.Grating (Galvanized – FRP) with all related accessories.

Interview With Mohamed Agamy

Managing Partner of Links & Gains Law Firm

Petroleum Today would like to know insights from you about the management biography and the idea behind making such a firm.

Actually, my background has rounded as being a trilingual lawyer and driven professional legal professional. I have had a long years of experience with proven track record over nowadays 16 years of leading successfully international legal transactions. In addition to that have a diverse business areas of expertise across North Africa and Middle East; particularly for Energy, Oil & Gas, and Renewables. Prior to establishing Links & Gains, I filtered the legal market to sort out a firm that work in deep experience with the industries, and to know in exactly what is the client need. I would say that what keep us different is that; we fully appreciate our clients’ necessities of being driven by time-deadlines and urgency. Our main objective is to provide our clients the best legal solutions, the competitive edge, representation available and at a reasonable cost. We pride ourselves on cementing long-term relationships with the primary focus on client success. Thus, we are proud of the high legal conduct and ethical standards that have been established by our firm policy and the tradition of excellence that we work to maintain.

We are eager to know the services and what links and gains can do for the oil and gas sector.

Links & Gains is a full services law firm provides professional legal services, qualified to provide such services under the Egyptian Law, and with outstanding track records in advising major local and international transactions in different areas of practice and business sectors as: Dispute Resolution (Arbitration & Litigation), advisory for International Foreign Investment, Corporate & Commercial laws, Merge & Acquisition, Insurance, Intellectual Property and Taxation. However, as for our specialization for the Oil & Gas; we provide top class counseling on the full range of potential legal matters and advisory on the “Upstream” onshore and offshore exploration and development projects, also the “Downstream” including transportation and storage, upgrading and refining. Our expertise also extends with deep knowledge to the Liquefied Natural GAS (LNG) and the “Midstream” projects relevant to pipelines development.

How do you see the market of the oil and gas nowadays in Egypt?

I would see that much of the oil and gas companies has survived an especially tough few years ago with a lot of legal struggles passing by finance, exploration issues, lack of corporate structure and some others faced Arbitration cases. Nowadays, I would say that the sector is like born again due to the Gas explorations in the North Mediterranean sea, plus the new Oil concession Agreements in the Red Sea as well. It has been difficult to make strategic decisions and plan for the future. However, the sector beginning to emerge from its upheaval. If there is hope on the horizon, we must, remain mindful of the legal risk. And when it comes to the future, companies will need to examine the role that digital technologies can play in improving their performance. Digitization should be a lever for innovation that improves productivity and efficiency in the field. From a management perspective, now is the time to recruit new talent from pools of highly capable men and women, casting a net in a range of global regions. Oil and gas companies need to engage with these recent gradu-

ates because they can provide the new ideas that will make the future easier to navigate. With so much innovation in the sector, and just it needs a clear and attractive story line to do so.

What are the legal problems that can occur in the oil and gas companies on their different aspects; service companies, E&P companies and contractors?

This is actually a very wide question, and answering on the aspects you described might take a very long time, however I will try to simplify with describing the most common legal issues arising under the different categories. For example when we talk about the upstream companies which are mostly foreigners and/or multinational organizations, the most common issues are under the settlements of their dues from the cost recovery under the concession agreement, also the farm in and out negotiations, some others related to the receivables and on top of it the decommissioning nowadays. For the services companies and EPCs I would conclude the legal issues parked as usual in their contracts for onshore and offshore projects; some companies has a lack of hiring a specialized lawyer who can identify the potential risks in the terms and conditions. So, they are of knowledge how to handle matters by set of procedures of force majeure, performance-related issues, indemnity insurance provisions, regimes, change orders, defaults and remedies and also termination. However, on above of all the environmental issues and HSE matters that perform the usual risks that require a very strategic and efficient persuasions.

What are the different solutions that can links and gains do for the both the local and international oil and gas companies?

We at Links & Gains usually takes alternative legal commercial approach not followed by traditional law firms or costly consultancies. We are much closed to our clients advising them not only for contracts and lawsuits but mainly for risk decisions, and identifying the legality of new opportunities as well. Our legal methodology is to clarify the pros and cons of matters with highly analytical scenarios that support the decision taker to pick the right directions based on the clarity of the risk assessment methods. We also have a deep industry knowledge to handle all legal aspects of a project from inception to completion, including but not limited to: Production Sharing Agreements, Concession agreements, Building and financing of pipelines, Developing and financing LNG projects, conventional and unconventional gas, refinery and petrochemical projects, gas-to-liquids (GTL) facilities and marine transportation, Growing and protecting intellectual property and brands, Dispute resolution in every forum, Full range of agreements with contractors and third parties, including EPC and other construction agreements, Completing strategic acquisitions and Joint venturing and also for compliance and governance issues as related to FCPA, Anti Bribery Act and European Union Conventions.

We would like to have your future plan steps for going forward into the market.

I would say that Links & Gains is taking the lead on advisory for the sustainable development goals of Egypt vision 2030 and Integrated with the

National Sustainable Energy Strat-

egy towards 2035. While, on the international base we are supporting the

conventions of the Climate Change

and the UN SDGs as well, for instance the climate change pledge agreement and Paris Convention whereas Egypt is a ratified country. The Oil & Gas Companies in Egypt should follow a certain new rules and regulation when such environmental regulations applied particularly for the energy efficiency and carbon foot print reporting scheme.

Of course, we would like to hear more about your services in other disciplines and consider this point as an open space for adding recent achievements and announcements.

We are actually delighted that we be appointed by the IR Global as an exclusive member in Egypt for the Energy law, this also happened in parallel to another selection by the Advisory Excellence, UK for 2019/2020. Whereas, I’m really confident that this global achievement step would be an extra added value to provide our clients and partnerships a top class of legal services and beyond ....

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