No. 1, 2008

The LUKOIL Group of companies introduces an efficient emergency oil spill response system

In the early 20th century the impact of human civilization on the natural environment assumed unprecedented proportions. Oil and gas production and processing facilities have an adverse effect on the environmental components. The industrialized countries have long arrived at the awareness of the importance of and the need for environmental protection and management. Accordingly, JSC LUKOIL makes a point of building the best in environmental technologies into its production enhancement projects.

Need for working laws

In Russia, we have a multitude of regulatory and legal acts providing for measures to prevent and deal with environmental and technogenic emergencies – oil and petroleum products spills, in particular – and eliminate their effects on the environment.

An analysis of these documents shows that, unfortunately, Russia still lacks an integrated regulatory and legal framework and methodological guidelines for preventing and responding to oil and petroleum products spills (OSR) on a regional and federal scale, above all.

Russia’s only regulatory framework specifying responses to certain amounts of oil spills for various production, processing, storage and transportation facilities fails to take the following factors into account: the degree of equipment’s physical deterioration, the availability of systems blocking oil passage in the event of an accident, the availability of systems guaranteeing oil spill localization, the use of extra strong modern materials and double-hulled tankers, and the level of tanker crews’ and OSR equipment’s readiness for emergency action.

Further, we are yet to legally formalize the procedures for interaction between oil and gas producing companies and coordinating bodies of the RF executive authorities – the Ministry for Emergency Situations, the Ministry for Natural Resources, the Ministry of Transport, the executive government authorities of the subjects of the Russian Federation – in managing responses to major spills on regional and interregional scale and in drawing extra manpower and equipment to respond to transborder oil spills, and in determining personnel strength and equipment configuration required for emergency OSR operations.

Corporate security standards

Under the circumstances, LUKOIL had to create its own oil and petroleum products spill prevention and response system by drawing up the appropriate corporate documents subject to approval by government authorities.

Such being the case, the Company drew up, agreed with the RF Ministry for Emergency Situations and submitted to the Management Board for approval the Concept of improving the emergency oil spill prevention and response system of LUKOIL and the LUKOIL Group of companies operating on the territory of the Russian Federation.

The Concept establishes the requirements and procedure for interaction between the companies of the LUKOIL Group, on the one hand, and executive authorities of the subjects of the Russian Federation, territorial branches of the Ministry for Emergency Situations, the Ministry for Natural Resources and the Federal Sea and River Transport Agency, on the other hand, in localizing and responding to emergency oil spills, and the procedure for managing OSR operations on territorial, regional and transborder levels, and for mobilizing OSR teams and special equipment to deal with large spills, transborder ones included.

The Company has adopted the following corporate documents intended to step up oil spill prevention efficiency: the Statute of the oil and petroleum product spill prevention and response system, the LUKOIL Standard, Accident and emergency prevention and response plans, general requirements for composition, presentation, design and content.

The Company is improving its emergency prevention regulations based on the Agreement concluded between the Russian Federation Ministry for Emergency Situations and LUKOIL on November 15, 2005 – Concerning interaction in ensuring fire safety and oil and petroleum product spill prevention and response.

Apart from drawing up local OSR regulations, the Company is preparing relevant planning documents, such as the Action Plan for oil and petroleum product spill prevention and response by the Company and the Standard Regulations of the LUKOIL Group on response to oil and petroleum products spills not leading to emergencies.

Preventing emergencies

As part of the oil and petroleum products spill prevention and response system, there is a summary register of hazardous production facilities likely to cause oil spills fraught with emergency and heavy environmental pollution.

By now, about 1,000 such facilities have been entered in that register, and OSR plans are being drawn up for them. The plans proceed from the premise that 70 facilities of the subsidiaries of the LUKOIL Group may find themselves in territorial-, regional- and federal-level emergencies, i.e. spill over 500 tons of oil.

The oil and petroleum products spills prevention and response system focuses on planning likely spill prevention actions and keeping the company’s OSR crews and equipment ready for the localization of and response to such accidents at marine and river terminals.

The RPK-Vysotsk LUKOIL-II, LUKOIL-Nizhnevolzhsknefteprodukt and LUKOIL-Nizhegorodnefteorgsintez terminals are likely to find themselves in federal-level emergencies; hence their focus on the buildup of forces and facilities for a timely localization of such situations.

Specialists are being trained and, besides, modern OSR equipment is being purchased for emergency response teams.

The oil and petroleum products spill prevention and response systems are now adequately manned and equipped to timely localize and eliminate emergencies of local (facility) and municipal levels (spills of up to 500 tons).Within the framework of the existing spill prevention and response system, observance of spill prevention and response regulations is monitored through all-round and spot checks carried out by LUKOIL’s commissions.

Considering that river and marine terminals are particularly susceptible to major emergencies, each terminal is given prenavigation checks, and special drills are arranged for their personnel. After the closing of a navigation season, terminal crews are debriefed, and their mistakes (if any) analyzed.

Up to 60 tactical OSR drills are conducted in the companies of the LUKOIL Group annually. For example, on June 20-21, 2007, an international all-round drill in responding to a regional-level oil spill caused by a tanker accident was conducted near the RPK-Vysotsk LUKOIL-II terminal, and command team post-regional-level oil spill response exercises were conducted outside the Varandey shipping terminal now under construction. The exercises involved RPK-Vysotsk LUKOIL-II’s own rescue service as well as teams and craft of the North-Western Regional Center of the RF Ministry of Emergency Situations, the FSA Gosmorspassluzhba, JSC Transneft, Center of Emergency and Ecological Operations, special-purpose vessels from Finland, observers from regional ecological agencies, the mass media and other organizations. International exercises in oil spill response near the Varandey transshipment terminal are scheduled for 2008.

On the whole, it is noteworthy that in its activities LUKOIL adheres to the top environmental protection and industrial safety standards. The Company is aware of its responsibility to the public for keeping the environment healthy and for rational use of natural resources and seeks to enhance the standard of environmental safety, reduce technogenic pressure on the environment and ensure sustainable development and management of natural resources drawn into production and found within the regions of its operations.