The future of LNG shipping

PIONEER SEPTEMBER 2006. ISSUE NO. 109 THE A newsletter for the employees of Qatargas Operating Company Limited Q-Max: The future of LNG shipping Scorecard July 2006 Field Condensate Production 2006 Net LNG Production 2006 50000 45000 600000 20000 20000 18000 ( K B B l S ) ( T b t u ) 40000 35000 30000 25000 20000 15000 10000 5000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 500000 1600 16000 14000 400000 1200 12000 10000 C u m u l a t i v e M o n t h l y M o n t h l y 300000 800 8000 6000 200000 100000 400 4000 2000 0 0 Jan Feb Mar Budget Actual Apr May Jun Jul Aug Sep Oct Nov Dec 0 Budget Actual Cumulative Budget Cumulative Actual Cumulative Budget Cumulative Actual Qatargas SEQ Monthly Safety Statistics Event Description Date of last LTA Days worked since last Lost Time Accident Personnel hours worked since last Lost Time Injury Qatargas 1-Jul-02 1,491 1,4 9,382,840 14,897,732 Contractors 26-Apr-03 1,192 7,291,121 Our aim is to create an “Incident and Injury Free” site at Qatargas. However, for statistical purposes, targets for motor vehicle incidents and medical treatments are based on Year 2002 actual figures. Hours worked since last Lost Time Injury (04-26-03) Event Description Qatargas Current Month Year to Date 0 1 0 4 2 0 2 0 0 2 20 106 1338 0 182,512 1,189,208 1, 1 0 0 0 2 0 0 100 QG 2006 Business Plan Targets 0 0 0 0 Contractors Current Month 0 0 0 1 0 Year to Date 0 3 0 5 Except for Near Miss Reports, we encourage reporting of all near misses so that the hazardous conditions can be eradicated as soon as possible, through corrective actions. Total near miss cases also include those derived from different catego- Number of Lost Time Accidents (LTA) Number of Medical Treatment Cases (MTC) Number of Occupational Illnesses (OI) Number of First Aid Cases (FAC) Number of Off the Job Injuries (OJI) Number of Major Fires Number of Minor Fires Number of Vehicle Incidents Number of Env. Releases Number of Env. Spills Number of Moderate to High Risk Potential Incidents Number of Incident Notification Number of STOP cards Days Lost due to LTA Hours Worked this Month Hours Worked this Year Hours Worked combined (QG/Contractor) 0 0 0 1 0 0 0 0 0 0 2 11 161 0 N/A N/A N/A 1 N/A N/A N/A >500 >7000 0 62,640 400,192 1,589,400 0 N/A 0 0 N/A ries of incidents/accidents reported such as medical treatment, first aid, minor/major fire, vehicle incidents, spill/release etc. These derived near misses were also included in the “Total NearMiss reports” due to their potential to escalate into more serious incidents. Please note the attached graphs Year to Date LTA Frequency Rate LTA Severity Rate 0.00 0.00 Industry Benchmark 0.26 3.12 Year to Date 0.00 0.00 giving an annualized overview of KPI statistics Published by: The Public Relations Department, Qatargas Operating Company Limited., P O. Box 22666, Doha, Qatar . Tel: (974) 4736 000, Fax: 4736 666, Website: www.qatargas.com All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise without the prior permission of the Public Relations Department, Qatargas Operating Company Limited. C u m u l a t i v e ( K B B l s ) ( T b t u ) CEO Address The future is exciting but holds many challenges Background In December 1996, the first of the 10 Q-Fleet vessels was delivered to Qatargas and the final link in the chain was about to be forged. The Al Zubarah loaded her first cargo at Ras Laffan and safely delivered a cargo of Liquefied Natural Gas (LNG) to Chubu Electric at their Chita Terminal in Japan. Since that time over 1100 cargoes have been delivered safely to our Japanese customers. supports the shipowners during the routine drydock maintenance periods and plays a major role in the final cost negotiations. We are constantly searching for new ideas to make the operation more cost effective and environmentally friendly. We were the first LNG company to change to an innovative silicone hull paint in line with our Direction Statement. This paint is biocide free and emits no chemicals to the sea, unlike conventional hull coatings. The initial cost was high, but the long term benefits have more than compensated for this investment with savings of between 26% on fuel recorded. design will be required for the planned expansion. To cope with this unprecedented ship building program, Qatargas has set up a highly qualified site team in each of the three Korean yards, Hyundai, Samsung and Daewoo. These teams will oversee the construction of all the required vessels, including around 14 vessels for RasGas. The port of Ras Laffan is also undergoing a huge change in order to accommodate the arrival of these vessels. LNG Berth #3 is already completed and capable of accepting the larger dimensions of the Q-Flex and Q-Max vessels. A further LNG berth is being constructed within the existing harbour, with the remaining five berths forming part of the on-going expansion project. The receiving terminal in South Hook, Milford Haven is also well underway and on track to be ready to receive the first shipments during the winter of 2007/2008. Qatargas is fast approaching its 10th anniversary of LNG production, with the first cargo loaded onto the Al Zubarah in December 1996. There have been many changes during this relatively short period, but the changes that lie ahead are enormous, and will require the commitment and experience of all Qatargas employees to navigate through to a successful conclusion. Finally I’d like to thank all those involved in the expansion projects whether they be on land or at sea, for their tireless efforts to achieve the aim of our Direction Statement – To be the best ! Today To maintain a safe and reliable transportation link, requires the support, commitment and cooperation of many other parties, as well as an experienced well-organised group of marine experts. It is imperative, as in all Qatargas departments, that we maintain and encourage our teams to ensure maximum output and high morale. The Shipping Department’s close relationship with QG Operations department is fundamental to achieving our goal of maximizing utilization, and preventing any unnecessary shut down of our plant due to non-availability of shipping. To date I am happy to report that we have been successful in this goal. We maintain a close relationship with our consortium of shipowners, Mitsui OSK Lines, NYK and K-Line, and monitor carefully the annual budgets. We have to look ahead and anticipate any major replacement works that may require attention, and plan accordingly. Qatargas Future The future is exciting but holds many challenges. We have embarked on an extensive ship building program in South Korea which will see the delivery of eight Q-Flex LNG vessels by early 2008. These vessels are capable of transporting up to 216,000 m3 of LNG, compared to the 135,000 m3 capacity of the existing Qatargas fleet. This is not the only difference. The new vessels will have redundancy in all critical equipment, including two diesel engines, two propellers and two rudders. This will make them safer and more maneuverable, and also allow routine engine maintenance to be carried out in port, whilst always having one engine on stand-by in case the vessel has to leave quickly. In addition to the eight Q-Flex vessels identified for Qatargas 2 Train 4, a further 25 vessels of both the Q-Flex and Q-Max Faisal M. Al Suwaidi Chairman and Chief Executive Officer www.qatargas.com September 2006 - Issue No. 109 | The Pioneer | 3 PIONEERING A step change in ship design Qatargas is pioneering the development of a new breed of Liquefied Natural Gas (LNG) Richardson from Qatargas 2 , have made a quantum leap in the capacities of LNG carriers. LNG ships have been in service for 40 years and their size and designs were very much standardised. Until 2002, the size of plant, production and shipment of LNG was based on geography and Sales and Purchase Agreements (SPAs). Geography dictated the market in terms of source of supply and customers’ demand. Indonesian, Malaysian and Australian sources supplied the Far East. Algeria and Nigeria were the bed-rock of LNG exporters west of Suez and supplied to North America and Europe. The volumes of ships matched the size of the production trains and the requirements of the SPAs, which were based in part on customers’ predicted need of gas. As the customers for the gas were primarily power generation companies these numbers were rather easy to calculate and long term forecasts of demand could be accurately predicted as could the schedule of supply volumes. In short, the symbiotic relationship between the SPA, the plant size, the proximity to the market and the conventionally accepted design and size tankers. Referred to as Q-Max, the ships, designed by a team of first class engineers led by Andy 4 | The Pioneer| September 2006 - Issue No. 109 www.qatargas.com PIONEERING Four primary considerations were the key to the development of the ships design. These were Safety, Quality, Reliability and the capability to be constructed in almost any major shipyard worldwide. of the ship, resulted in a very logical and tight set of drivers that was ripe for a catalyst to bring a new order. In the early nineties Qatar, with its vast reserves of non-associated natural gas, entered the market when Qatargas signed SPAs with a total of eight Japanese power companies to supply six million tonnes per annum (MTPA) of LNG for 25 years. The gas was to be supplied from Qatargas 1’s three LNG trains that each had a design capacity of 2 MTPA. These agreements were established in a similar way to that in which the industry had established itself elsewhere and so ship capacities in the order of 135,000 cubic metres where built to match the plant capacities of 2-3 MTPA per liquefaction train and SPA requirements. A fleet of 10 LNG tankers were commissioned in the “conventional” size of 135,000 cubic metres using five spherical aluminium tanks to contain the cargo. The vessels each had a single rudder and screw that was driven by a steam turbine capable of being powered by either heavy fuel oil or “boil-off “gas from the cargo. the size of the existing plant and vessels currently in service. It was clear that only the benefits of increased economies of scale available from bigger production plants and vessels would make these markets competitively feasible. In June 2002 those new horizons beckoned when a Heads of Agreement (HOA) document was signed between Qatar Petroleum (QP) and ExxonMobil to supply LNG to the United Kingdom (UK) by the winter of 2007/2008. The project and venture agreements were signed in late 2004 and called for the development of two LNG trains to supply 15.6 MTPA of LNG from Qatar to the UK and North Europe for 25 years. Known as the Qatargas 2 project it was, at almost US$ 13 billion, the biggest deal in the history of the hydrocarbon industry. This triggered the start of feasibility studies by the QGII teams which soon resulted in the conceptual designs for the large capacity trains and new large ships. Later, in July 2003, QP and US-based ConocoPhillips signed an agreement for Qatargas 3, a development that called for delivery of LNG to primarily the USA. The partners decided to base this, US$ 5 billion scheme, on the QG 2 train and ship designs, with a single new train to be built at Ras Laffan, additional shipping capacity and a receiving terminal in America. This was followed in February 2005 when QP and Royal Dutch Shell signed an agreement for the development of yet another 7.8 MTPA A new era But Qatar not only had reserves in abundance, its geographic location meant that markets in Europe and even North America were potentially available as were those in the Far East. The economics of profitably doing business in these markets would require serious consideration given www.qatargas.com September 2006 - Issue No. 109 | The Pioneer | 5 PIONEERING Wherever possible new technologies were considered and used with the goal of not only improving safety and efficiency but also with a mind on the environment. project called Qatargas 4 that would also primarily supply the growing North American gas market, and which would also be based on the same designs. turned the question upside down and asked “how big could they be?” and quickly developed some basic parameters as a target. The largest size of ship that could be accommodated safely at its home loading port of Ras Laffan was taken as the logical limiting factor. Thus the target physical dimensions of the ship were derived as being 345 metres long by 55 metres wide with a draft of 12 metres. Given that envelope, it was also suspected that cargo volume should be maximized by using membrane containment technology instead of spherical aluminum containers. In broad brush strokes the result was the “plan” for a ship with a capacity of 250 - 265,000 cubic metres, almost 80% more than the largest LNG tankers built to date and a swathe of technical and commercial challenges to be met. Rethink of the status quo With the signing of the QG 2 HOA, the catalyst to rethink the status quo had arrived. The new production trains would be almost four times the size of the original nameplate capacity of the first three QG trains. The new voyages were now to more distant western markets and the customers were no longer solely power companies with predictable demand. The time for a new breed of ships had dawned. The current fleet of 135,000 cubic metre capacity ships chartered by Qatargas were configured in what had become the standard specification with a single screw and steam turbine driven power train. To take advantage of the new market opportunities and demands, Qatargas realised that the ships needed to become bigger and more efficient – in order to dramatically lower transport costs. In mid 2002 a team of marine experts from ExxonMobil and Qatargas was formed within the Qatargas 2 project to deliver this step change. Radical thinking was employed by this Shipping Team, under the leadership of Andy Richardson. Instead of starting with how big the vessels needed to be to deliver the cargoes contracted for, the engineers 6 | The Pioneer| September 2006 - Issue No. 109 www.qatargas.com PIONEERING Questions and the quest for answers Bigger ships would mean less frequent sailings, but to ensure they would be feasible the ships must be welcomed and capable of docking at their target customer ports. Would the ship sizes and mooring loads be manageable at the ports of destination? Four primary considerations were the key to the development of the ship designs. These were safety, quality, reliability, and the capability to be constructed in almost any major shipyard worldwide. A fundamental goal was to provide a ship which was equal to or better than the existing steam turbine vessels. If they could be built, would the logic and economics of using some of the cargo for propulsion remain valid? The voyages would be longer and the ships bigger. The gas would still boil off, so to retain the shipped volume would require additional plant onboard to re-liquefy it. In ships with spherical tanks the strength and integrity of the vessel’s hull is unrelated to the static and hydrodynamic loads induced by the liquid cargo. The spherical tanks alone accommodate the loads and mechanical stresses imposed by the cargo. With membrane tanks, the internal hull provides the load bearing strength for the containment system and the membrane containment system and its integral insulation system would need to transfer the internal stresses created by the liquid cargo without deformation or damage. It was critical to design and qualify membrane containment systems to ensure all shipyards could compete in later bidding (many shipyards are licensed for only spherical systems). Could the membrane systems already in service on other vessels be scaled up for service in such large vessels? These and many other technical questions were responded to by the team with support from shareholder experts. Many months of hard work were put into answering these questions, developing the specifications, and qualifying the results. “We really had to re-think established practices and in some instances break long held beliefs. Thinking “outside the box” had to replace “it’s done that way because that’s the way it’s done”, this was not always easy but we never lost sight of our goal – bigger, better, and more economic ships for Qatar with the highest possible safety and quality;” said Andy Richardson. At each new hurdle new solutions were developed and each was examined under the rigorous Technology Qualification Management System (TQMS) from ExxonMobil. “Gradually our hard work began to pay off and the design of the ships, systems compliance and abilities were clarified and proven to be “build-able”; commented Andy on how they overcame the challenges. The ships would have multiple redundancies in all critical areas. They would have five separate membrane tanks www.qatargas.com September 2006 - Issue No. 109 | The Pioneer | 7 PIONEERING encased in a double hull with primary and secondary membrane barriers for LNG containment. Twin screws and twin rudders would ensure both increased maneuverability and continued propulsion should one drive train be unserviceable. After detailed consideration the method of propulsion selected was slow speed diesel engines. These are more thermally efficient than steam turbines and therefore burn less fuel resulting in approximately a 30% reduction in overall emissions. In order for the full original cargo to be retained it was necessary to include on-board re-liquefaction plant. The specification also called for 100% redundancy in this equipment. Crew security was improved by designing a ship that would more readily meet the expectations of the International Ship and Port Security code (ISPS) and meet the highest requirements of the International Maritime Organization (IMO). Additional to improving safety and efficiency, preservation of the environment was considered and the latest thinking, methods and technologies to support that goal were employed. Oil and other waste tanks would not be located adjacent to the outer hull, and toxin free silicon-based antifouling coatings were specified. Fire fighting specification on the new ships was also upgraded using combinations of Hi-Ex foam, Hi-fog water systems and safer and cleaner fire extinguishing agents to eliminate the need for CO2 – a first for LNG ships. To maintain the economies of scale but allow access to other discharge terminals unable to accommodate the Q-Max vessel, smaller version of the Q-Max has also been developed, and in fact the specifications and testing for this version were completed first. Q-Flex, as it is known, is 30 metres shorter at 315 metres and 5 metres narrower at 50 metres, with the same draft of 12 metres. Q-Flex has a capacity of around 215,000 cubic metres. “The team has done an amazing job, always persevering, always finding solutions, overcoming every challenge. They have taken LNG ship design and construction in a new direction and to a new level – they have changed the industry and reduced our transport costs by over 30%. I can’t say enough about the hard work, endless hours, and innovation these guys have put into this. And of course it’s not over yet. Andy and his team are now in the middle of building the ships they pioneered – they should launch the first Q-Flex in September with another 40 plus ships to follow;” said James Adams, Chief Operating Officer – QG 2 Venture. The Ships in Operation LNG tankers, with no major accidents or events during the past 40 years, are arguably amongst the safest vessels afloat. Their design and useful service life is in the order of 40 years. That period and their continued safe operation is dependant upon a high level of competence of the officers and crew, and a high standard of vessel maintenance and operation. The Qatargas 8 | The Pioneer| September 2006 - Issue No. 109 www.qatargas.com PIONEERING Each time an LNG vessel docks at its home port in Ras Laffan to receive a new cargo, routine safety checks are conducted Operating Company Shipping Department has a major role to play in this regard. Each time an LNG vessel docks at its home port in Ras Laffan to receive a new cargo, routine safety checks are conducted. Later, during the loading operation a representative of the Shipping Department is assigned to the vessel to ensure that the loading operation is completed safely and efficiently. During the ships’ voyages, the shipping department is aware of the location and condition of each vessel in real time and is also able to provide voyage instructions to the ships during their transit. The existing fleet of conventional ships, built to service the needs of the original Qatargas SPAs, is owned and operated by a group of Japanese companies with the financial support for the capital cost from Japanese banks. The terms of the SPAs dictate that these vessels are on a 25 year charter to Qatargas for the purpose of delivering cargoes of LNG to Japan. For that period of 25 years from the commencement of the charter, Qatargas pays for the services of each vessel on a “Cost Pass Through” basis. This means that the owner/operators are not confined to a fixed cost for the daily operating costs, but are recompensed for all expenditure incurred during the normal running of the vessel. This contractual arrangement requires a high level of oversight from Qatargas (the chartering company), but results in a very well operated and maintained vessel. This is a win-win situation as a ship in good and safe condition will operate without unplanned stops at its peak ability and efficiency. Qatar Gas Transport Company (QGTC) will have up to 100% equity interest in the new vessels which will be chartered to Qatargas to deliver the cargo to various buyers under different Sales and Purchase Agreements. Other owners including OSG and Pronav will also have interests in some ships. The Charter Party between QGTC and Qatargas will involve a fixed daily sum to be paid by the chartering company (Qatargas) to the owner (QGTC) during on-hire periods. While QGTC is continuing to establish itself as a bona fide ship owner and operator, the ship management will initially be contracted out to a third party. The use and condition of the vessels will continue to be monitored by Qatargas Shipping Department as will the voyages and schedules of the ships. The commercial terms will also allow more flexibility regarding the destination of the new vessels and provide greater freedom to change or re-route consignments during transit. Although the new contracts for the new ships are more flexible, the focus on management remains the same: “Manage the fleet - Manage the asset”. Ports at which the new fleet can visit need to be approved. Currently Q-Max and Q-Flex vessels are confirmed for US-Golden Pass on the Sabine River in the U.S. and South Hook in Milford Haven UK. The Adriatic Terminal off Italy is confirmed for the Q-Flex vessels. The number of ports accepting the new class of ship is growing. This process involves several different stakeholders and is based on compatibility, not only with the port but also the safe handling systems and downstream storage capacity for the huge volumes of LNG to be delivered. Currently ports in the USA, Europe, Japan and Korea are in the process of detailed work for approval leading to confirmation. The arrival of Q-Max and Q-Flex is a sea change in the shipping world .The first eight vessels are due to be delivered during the winter of 2007/2008 and the fleet will grow significantly over the next few years. Qatar is a leader in the LNG industry and is taking full advantage of the opportunity to provide experience and training to Qatari graduates with the commitment and focus to achieve senior positions in shipbuilding, ship safety and maintenance as well as ship management through Qatargas’ Shipping Project and Shipping Departments. Next edition – QFlex/QMax Shipping Acquisition – how Qatargas pioneered a new means for acquiring in one pass, the world's largest commercial ship order since World War II. www.qatargas.com September 2006 - Issue No. 109 | The Pioneer | 9 CUSTOMERS First “Lean” LNG delivery to the Japanese Market recently Qatargas haswhen LNGachieved a major milestone vessel Maersk Qatar unloaded the first Qatari lean LNG to Chita Terminal in central Japan on 26 June 2006. Qatargas 1 Trains 1-3 produce “rich” LNG and all the LNG cargoes delivered by Qatargas 1 since the first delivery in 1997 have been “rich” LNG. “Lean LNG is a mixture of hydrocarbon gases in a cryogenic liquid state and contains mainly methane, ethane, trace amount of propane and heavier. It has less heating value and density relative to rich LNG” explains Mr. Mahmoud Kassem, Chief Chemist of Qatargas. Qatargas 2 Trains 4 and 5 and Qatargas 3 & 4 Trains 6 and 7 will produce lean LNG in order to meet market requirements. Typically the Far East market such as Japan and Korea takes rich LNG and the European and US markets take lean LNG. The lean LNG cargo onboard Maersk Qatar was delivered as one of the additional cargoes sold to Japan to meet their strong demand this year on top of Long Term Sales and Purchase Agreement quantity. As Qatargas 1’s LNG trains were already running at full capacity, some of the additional cargoes were supplied by RasGas whose Train 4 already produces lean LNG. This first delivery of Qatari lean LNG to Japan was successful thanks to the efforts and coordination made by both Qatargas and its customer. In order to receive a different grade of LNG, Chita terminal, which handles cargoes for both Chubu Electric and Toho Gas, needed careful scheduling and tank operation. There was also intensive exchange of information on the specification of the lean LNG. By delivering lean LNG to Japan, Qatargas is now in a position to offer a diversified portfolio of LNG to meet the needs of its long term Japanese buyers. 10 | The Pioneer | September 2006 - Issue No. 109 www.qatargas.com CUSTOMERS Another milestone for Qatargas-Gas Natural's long term relationship: Ceremony for Buyer-Transported LNG Sales Agreement cargo delivery onboard the A ceremony was held on 24 May 2006 vessel “Methane Polar” to mark the start up of cargo deliveries under Qatargas 1’s Sales and Purchase Agreement (SPA) with Spain’s Gas Natural. The SPA was signed on 1st July 2004 and first cargo was loaded to the LNG vessel Norman Lady on 7 May 2006 at Ras Laffan. The SPA will be effective until 2025 and approximately 0.74 million tonnes of LNG will be delivered annually. Gas Natural and Qatargas 1 have four Liquefied Natural Gas (LNG) SPAs in place (including this SPA) and in total approximately three million tons of LNG is delivered to Gas Natural annually, which makes Gas Natural the second largest LNG customer for Qatargas1 by quantity after Chubu Electric. A delegation of four senior executives from Gas Natural, Mr. Francisco F. Santamaría, Deputy Chief Executive Officer of Repsol-Gas Natural LNG, Mr. Alberto Gonzalez the Trading Director, Mr. Carlos Humphrey the LNG Supply Manager and Mrs. Concha Ramos the LNG Logistics Manager attended this ceremony. Attendees from Qatargas included COO-Operations, A Sales Administration Manager, Shipping Manager and Business Scheduling Manager. Mr. Jacques Azibert, on behalf of Qatargas conveyed his appreciation to Gas Natural for their great cooperation in making this deal successful, while Mr. Santamaria, replied that this will help further the relationship between the two companies . The Gas Natural Group is an energy services multinational whose activities focus on the supply, distribution and commercialisation of natural gas in Spain, Latin America and Italy, where it has almost 10 million customers. At 31 December 2005, the number of gas distribution customers in Spain was 5,134,000, and the Group's distribution network in Spain increased by almost 2,100 kilometres during 2005 to a total of 39,611 kilometres. Gas Natural also has over 475,000 residential customers for electricity sales in Spain. On 17 May 2006, H.E. Masahiko Horie, the Ambassador of Japan to Qatar (3rd right in the picture), witnessed the LNG loading operation at Ras Laffan Port and visited a Qatargas 1 chartered LNG vessel “Dukhan”. Mr. Joseph Angelil from Ras Laffan Industrial City and representatives from Mitsui OSK Line (operator of the vessel) also joined the visit. The guests were welcomed by the Captain’s warm hospitality. www.qatargas.com September 2006 - Issue No. 109 | The Pioneer | 11 ENVIRONMENT The first Cooling Water Conference held in Doha “Qatargas is one link in a chain of industrial partners who are all focused on environmental stewardship and responsible industrial development in this region” -Jacques Azibert, Chief Operating Officer - Operations The first International Cooling Seawater Specialists and Operators Conference was held in Qatar recently with delegates from around the world present to discuss the issues facing a variety of industries. The conference organized by Qatargas under the auspices of Supreme Council for the Environment and Nature Reserves and coordinated by KEMA was held over two days at the InterContinental Hotel in Doha. Jacques Azibert, Chief Operating Officer from Operations at Qatargas opened the conference on behalf of Mr Faisal Al Sudwaidi. In opening the conference Mr Azibert said; “Qatargas sees conferences held under the auspices of the Supreme Council in conjunction with industry as a prime example of the leadership role that industry and regulators working together can play in advancing responsible development;” “Qatargas is one link in a chain of industrial partners who are all focused on environmental stewardship and responsible industrial development in this region. Qatargas for its part, is focus on continually improving its environmental performance with respect to cooling seawater.” Industrial seawater is a vital part of modern life in the Gulf States. The petro-chemical, power and water desalination industries rely on the marine environment. Minimizing the environmental footprint of these industries is critical to sustainable development in the region. Delegates from industry in the United Kingdom, United States , Europe and other Gulf States participated in the conference. 12 | The Pioneer| September 2006 - Issue No. 109 www.qatargas.com PEOPLE QATARGAS AT CNAQ Q atargas participated in the College of the North Atlantic (Qatar) prospects in the Company and about the LNG industry in general. The Company has been an active supporter of the College and its programs since its establishment. Qatargas employees are members of various subject committees and advisory boards at the College and a number of young nationals are currently pursuing various CNAQ certificate and diploma programs under the Company’s sponsorship. Career Fair. The Qatargas stand manned by Company employees was kept busy addressing requests for information from enthusiastic students about career Internal Audit Training S EQ Department conducted an internal audit course which covers ISO 9K, ISO 14K and OHASA 18K at Alwaha club in July. The course was conducted by DNV and there were 15 participants from different groups in Qatargas. Participants become certified internal auditors and they will conduct the ISO internal audit at Qatargas plus support their departments in audit preparation and future improvements in the system. www.qatargas.com September 2006 - Issue No. 109 | The Pioneer | 13 PEOPLE  CEO Convocations for National Trainees and Graduates on Development ‘My career is my responsibility’ Once again this year in accordance with established Qatargas tradition, Qatargas Chief Executive Officer (CEO), Mr Faisal Al-Suwaidi, convened separate Convocations for national trainees and graduates on development. The Convocations are an integral part of the Company’s Quality Qatarization strategy. They are aimed at reviewing the status of the various programs designed to support the smooth integration of nationals into the organization, at identifying any issues arising, and exchanging suggestions on how to enhance current programs. The Convocations are held as collaborative forums for the open exchange of information between senior management and nationals on training or development towards target positions. As in previous Convocations, the CEO reiterated the Company’s relentless commitment to national development. Established employees who support the development of nationals are valued by the Company and will not be disadvantaged in any way by the progress of their national colleagues. Encouraging young nationals to speak up and provide their comments and suggestions regarding their programs, Mr Al-Suwaidi also stressed that despite whatever the Company provides in terms of support, each individual is ultimately responsible for his or her own career. Any national demonstrating their competence to do the job would be placed in the position. It had to be understood that development programs are competency-based and are flexible with regard to duration. It really depends on the individual’s own efforts how long, or short, his or her program will be. Although the Company will provide all necessary training courses to support people’s development, it must also be understood that the best and most effective learning is “on the job” , in the workplace itself. The workplace provides numerous learning opportunities. It was up to individuals to take advantage of these and move ahead with their career. The process of national development at Qatargas is guided by the Development Committee for Nationals (DCFN) which comprises the CEO, all Group Managers, the Human Resources Manager, and the Head of Training & Development. The 14 | The Pioneer| September 2006 - Issue No. 109 www.qatargas.com PEOPLE DCFN mandates an annual confidential audit whereby perceptions of national trainees and graduates regarding the quality and consistency of their programs are solicited through a series of confidential interviews. This year, as in previous Convocations, the results of the audits were presented and remedial actions agreed. In a wide-ranging presentation, Mrs Aida Al-Shahri the Human Resources Manager, reported on actions taken as a result of last year’s events and details of other planned activities in support of employee development. Each of the Company’s Group Managers reported on what their departments had done during the year to further the localization process and questions and recommendations from the participants were addressed. Proceedings were enlivened by the motivational contributions of established Qatari employees: - Sheikh Ahmad Al Thani (Offshore Manager) - Hassan Abu Khamis (Fire Chief) - Mashael Al-Muhannadi (P&P Coordinator) - Faraj N. Mubarak (Organization Advisor, Southhook Terminal) These volunteer speakers recounted their own personal career histories and advised younger participants on personal strategies to adopt for future career success. In addition to discussing programs and plans, it is equally important to recognize the significant contributions of people in the Company who helped to move the Quality Qatarization process forward. In this regard, the CEO distributed awards to trainees and graduates who excelled in their development programs, and also to coaches and mentors whose outstanding contributions merited special recognition. The CEO also presented special department awards to three departments which had exhibited exemplary dedication to the development of their nationals during the preceding year: Plant Operations, Plant Maintenance, and Commercial & Shipping. As a result of the Convocations, action plans were drawn up to address key issues identified by participants. www.qatargas.com September 2006 - Issue No. 109 | The Pioneer | 15 UPDATES Qatargas 2 Project marches on... Qatargas 2 2) Project TheTrains 4 and (QG Qatargas isfor LNG 5 at made up of several subprojects namely, Drilling, Offshore, Onshore, Common Facilities, Shipping, and South Hook LNG Terminal. Engineering, Procurement and Construction (EPC) activities on all subprojects are well underway and progressing at a pace required to deliver the first Liquefied Natural Gas (LNG) cargo in Quarter 2, 2008. With approximately 21,000 contractors and company personnel currently working at various worldwide project locations, QG 2 project has, since its inception, worked approximately 48 million man-hours. Drilling on two of the three platforms has been completed and completions on Wellhead-4 and Wellhead-5 are underway while the batch drilling at Wellhead-6 continues. The overall drilling program is ahead of schedule. The Wellhead-5 Production deck has been successfully lifted and set on legs in the Abu Dhabi fabrication yard and work is proceeding in parallel for the Wellhead-6 Production deck. The offshore topsides and the offshore pipelines are on schedule for installation and start-up in late 2007. As engineering and procurement activities on the Onshore Project near completion, construction activities at Ras Laffan site have been ramping up at a rapid pace. Significant progress has been achieved by CTJV in the areas of foundations, buildings, structural steel, undergrounds and piping. Train 4 machinery from GE/Nuevo-Pignone, major liquefaction equipment by APCI as well as many vessels and heat exchangers have been delivered to the Ras Laffan construction site and installed. The Common Facilities Projects include Common Lean LNG Storage and Loading facilities, Common Sulfur, and Common Single Point Mooring (SPM) subprojects – are progressing on schedule to support the QG 2 startup dates. The five Lean LNG Tanks (Nos. 1, 2, 3, 4 and 5) are at various stages of construction with the roof of Tank 1 successfully air-lifted on August 14. Detailed design for Berth 5 marine structure has commenced and pre-FEED studies for Berth 6 are underway. With the engineering on the Common Sulfur well advanced, the construction activities at site have picked up. Construction of foundations for the Sulfur Storage building have commenced and site offices will be opened in the near future. Contracts for the Common SPM Project have been awarded and works have been initiated for the new offshore condensate offloading system, which will ease ship traffic in the port and allow more efficient loading of LNG ships. All eight Q-Flex LNG ships are currently in various stages of fabrication in Korea and orders have been placed for six Q-Max ships to handle LNG from Train 5. At the South Hook Receiving Terminal in Wales, work is well underway on Berth facilities, LNG tanks and the balance of the reliquefaction plant. With the connection to the UK gas grid also being progressed in parallel, all elements of the supply chain are being put in place for the planned delivery of gas to the UK grid during the winter of 2007-2008. 16 | The Pioneer | September 2006 - Issue No. 109 www.qatargas.com UPDATES Development on track for Qatargas 3&4 T he Qatargas 3&4 project, ainsafe conjunction with embedding working culture for all its employees, is making good progress in the construction of its onshore and offshore facilities. In June 2006 the Joint Asset Development Team (JADT) celebrated 2.5 million man hours without a Lost Time Injury (LTI). The Incident and Injury Free (IIF) campaign has been initiated and all of the integrated project team will attend an orientation session. As well members of the JADT will attend a Safety Commitment Workshop and some will become Orientation Session Leaders who will then lead the orientation sessions. In addition to the achievement of the JADT, one of the JADT’s contractors also celebrated a significant safety milestone. The Noble Chuck Syring drilling rig achieved 10 years without an LTI during its six well drilling campaign offshore. The appraisal drilling campaign, which will finish in September 2006, has been successful and provided important subsurface data to the JADT as it prepares for the drilling of its development wells starting in January 2007. Three drilling rigs will be operating simultaneously to develop the Qatargas 3&4 block. Construction of offshore jackets by J. R. McDermott in Dubai is progressing on schedule with the first two jackets loaded onto barges for installation in August 2006. The third and final jacket construction is well advanced and will be ready to be installed in October 2006. The jackets form the base for the new offshore platforms required for the development of Qatargas 3&4. In addition to the jacket construction McDermott was awarded the multimillion dollar contract to build and install the topsides for the three platforms. The topsides will be fabricated at the McDermott facility in Dubai. The installation of the topsides is scheduled for fourth quarter 2008. Work is also progressing well on the pipelines, Mitsui was awarded the contract to supply the line and fittings required for the work scope. WorleyParsons was awarded the contract to perform Detailed Engineering for the pipeline system. Onshore, early works and site preparation work are underway. This work includes the installation of fresh cooling water lines and preparations for the labour camps. www.qatargas.com September 2006 - Issue No. 109 | The Pioneer | 17 UPDATES Laffan Refinery taking shape at One of the four major projectsnow well Qatargas, the Laffan Refinery is underway. There are three key areas of activity for the Refinery – the process facilities, the interconnection pipeline corridor and the storage and loading facilities. Construction in the Tank Farm area is progressing well. The Refinery is constructing five new storage tanks of 80,000 cubic meters capacity each. The second shell on the first tank is now completed with work on the other tanks going well. The target date for completion of the Tank Farm is Quarter 3, 2007. The Refinery will also be refurbishing six existing RasGas and four Qatargas tanks in order to store the refined products; Naphtha, Kerojet and Gasoil. The condensate and product tanks will be interconnected to the Refinery via piping At the Refinery site, the foundations for heavy equipment are being put in place for equipment arrivals in October. Progress on the buildings is on track to meet the on a 12.5 kilometer pipeline corridor. Work has started on laying the “sleepers” for these pipelines. There are five to six tonnes of pipe currently on site, awaiting work prior to installation at the pipe fabrication yard located within the Refinery project boundaries. Pipeline installation is expected to begin in October 2006. Work is also being carried out in the jetty area where two 28” lines are being installed on the Lee Breakwaters to berth 2B which will be the dedicated Refinery berth. The existing 12'’ loading arms will be replaced by 16” arms for cope with the increased product export loading rates. Quarter 4 2006 target completion date. The Concrete Batch Plant is currently being commissioned and will supply directly to site all of the Refinery’s concrete requirements. There are many Refinery interfaces for the project with Qatargas 1 and RasGas which are being managed by a special Management of Change Committee. The results of the Committee’s work will be seen shortly during the September shutdown of Qatargas Train 1, when all the tie-ins for the Amine Regeneration Unit will be completed. The utilization of the shutdown is a good example of the synergies and efficiencies created through the Committee. In September the final Steering Committee meeting will be held prior to the official establishment of the Laffan Refinery Company’s Board. STEER Club launched A new club has been started by the AlKhor Toastmasters within the “Qatargas Pursuit of Safety Excellence” program which is focused on encouraging good driving habits and bringing about Safe Traffic Ethics on Every Road (STEER) in Qatar. Anyone with Qatar Driving License can join the club. Membership is free and your contribution is the collection of safe driving miles. The club hopes to enroll as many members as possible who will all accrue safe driving miles, the ultimate goal being to collect enough safe driving miles to have reached collectively the distance to the Sun; some 150,000,000 kilometers away. This will promote our team spirit and unique identity. Each member is asked to provide initial and subsequent kilometers of the vehicle(s) on six-monthly intervals. Members of the club will have the opportunity to take part in periodic fabulous raffle draws and foster a safer driving culture in Qatar. Encourage your family and friends to join as well. Details are available from STEER Club Managing Committee representatives below. To sign up as a member you will need to send details* on: - Name - Contact telephone number & e-mail - Vehicle plate number - Initial kilometer reading - Date of reading * These are for club’s internal purposes. Once you have these details, they can be sent to the Qatargas STEER Club Data Logger at MJacob@qatargas.com.qa (Managing Committee Contacts: QG 4736544/ 5529205; 4737322 / 5805409; 4736404 / 4932572 / 5879171; 5865984; 4736845/ 5883749; 4736549/ 5848042; 4736745/5323857; 4737885/5941787/86; RG 4732811/ 5839638; 4738913/5272542; School 4734301/5611916) 18 | The Pioneer| September 2006 - Issue No. 109 www.qatargas.com TEAMWORK Ras Laffan Teambuilding and Alignment Initiative the dramatic Based onprojects being pace of the in expansion implemented Qatar currently, Qatargas management recently organized a series of teambuilding and alignment workshops between Qatargas, RasGas and Ras Laffan City. It is seen as critical to ensure that the three organizations are fully aligned as they move forward, in order to meet the increased demands of the extra facilities being constructed. Ras Laffan City is the organization accountable for managing and administering Ras Laffan Industrial City on behalf of Qatar Petroleum. RLC’s overall purpose is to mature into a thriving industrial complex based on the gas and associated liquids derived from the development of Qatar’s massive North Field and the LNG and other expansion projects under construction. RLC will accomplish this by providing world-class infrastructure, services and support facilities. These support services include the port expansion, construction camps, logistics, associates’ utilities and power. Elements covered in the joint sessions for managers and key interface personnel included: • A review of progress since last year’s inaugural teambuilding sessions • The identification of recurrent and emerging issues, challenges and opportunities • Clarification and alignment on the expectations each party had of the other in a rapidly changing environment • Development and commitment to action plans to resolve issues and seize opportunities • Provision of support to participants in delivering on commitments Prior to the sessions, outside consultants met individually in hour-long interview sessions with senior managers from each of the three organizations to ascertain perceptions as to where their organizations stood with regard to project performance to date and future challenges and opportunities. Data from the interviews was collated and presented at the workshops as a spur to constructive dialogue and as a basis for generating alignment. During the sessions, sub-committees worked on areas of mutual interest, concern and opportunity and arrived at a set of mutually agreed follow-up actions and interventions. In concluding the discussions, CEOs and senior management from all three organizations, Qatargas, RasGas and Ras Laffan City, declared their commitment to maintaining an atmosphere of transparency and shared understanding. The group also gave full support to all the efforts aimed at ensuring that commitments made at the workshops would become embedded in the organizations and in their future working relationships. www.qatargas.com September 2006 - Issue No. 109 | The Pioneer | 19 OPCO OPCO Implementation Project: Roadmap to 1st November 2006 Anxiety from the unknown The greatest challenge in SAP implementation is not the software itself but the people. SAP brings about far-reaching changes in the way we work. People may be getting anxious, wondering when everyone in the company will really get to know how it will affect them. Our case in QG is different as we have already been managing our business using SAP and are just now migrating to the Oil & Gas Industry Solution called SAP Joint Venture Accounting. In this edition of The Pioneer, we will share the overall roadmap to that date in November 2006 when QG OPCO will switch the business to the OPCO JVA environment to signal the Go-Live of Stage 2 of the OPCO Implementation Project. agreements and best business practices, have been identified and documented. As key drivers of the solution, the IT team has done a tremendous job of redesigning all of our cost structures and identifying system solutions for the business changes. They have equally developed a robust system migration strategy, defining system test conditions and executing intensive integration tests cycles to ensure a seamless cutover. three cycles were primarily conducted by the IT Team to ensure a functioning integrated system. As of August 2006, we started the Cycle Four round of Integration Testing. This will be followed in September 2006 by Cycle Five: User Acceptance Testing (UAT.) The UAT will be done by users hands-on using live converted data. It is instructive to note that the Business (through Business Process Leads) defines the scope of what it wishes to test in what are called ‘Business Test Scenarios’ - a description of real life business activities that fall within the scope of SAP in order that the eventual sign-off can represent the Business saying that it believes that the system meets its requirements. Reaching the grassroots: Role of Business Process Leads & IT Team In the last edition of The Pioneer, we focused on helping us see the reason for the OPCO PROJECT, and the drivers of the various arms of the project organisation – the OPCO Project core team, the Steering Committee, the Sponsors, Process Owners, and Business Process Leads. The Business Process Leads have the mandate to lead their respective departments to a successful implementation. Through their efforts, revised business processes, in accordance with current Integration Testing & User Acceptance Testing (UAT) Since the various component parts of SAP (modules) must work together seamlessly, integration testing is carried out to assure this. We had previously concluded the first three of five planned Integration Test Cycles with commendable results as most known issues were resolved. The first QG OPCO EDCOM Strategy As part of the OPCO Implementation 20 | The Pioneer | September 2006 - Issue No. 109 www.qatargas.com OPCO Project preparation for go live, a detailed EDCOM (EDucation and COMmunication) strategy has been developed. A key objective of the strategy is to support the OPCO Implementation Project delivery through information sharing about the project in various media such as Emails, OPCO intranet site, poster campaigns, information cascade sessions with staff, user training, etc. OPCO Implementation Project Quiz 1. What do you consider the greatest challenge in SAP implementation? a) b) c) d) 2. The software The people Both (a) and (b) The budget The Training Plan End User training will commence in October 2006 and will be conducted by the Business Process Leads. The training will focus mainly on key process changes such as the new cost structures (e.g. company codes, cost centres, account codes, etc.) and a central Qatargas OPCO Warehouse. There will be three levels of training: • Level One: Basic Training - Target: all managers and prerequisite for those going for Levels Two and Three • Level Two is Business Process Training targeting end-users. • Level Three is Joint Venture Accounting training for Accounting General Ledger staff. A training schedule will be issued in September for you to register. What is the key mandate of the Business Process Leads in the OPCO Implementation Project? a) To write Business Processes b) To lead their respective departments to a successful implementation c) To write Business Test Scenarios d) All of the above 3. What keys roles have the IT Team played in the OPCO Implementation Project? a) b) c) d) Redesigned all cost structures and identified system solution Developed a system migration strategy Defined system test conditions and executed integration tests All of the above 4. TRUE OR FALSE a) The purpose of integration tests is to ensure that the various parts of SAP work together seamlessly. True or False b) A total of five Integration Tests Cycles were planned for the OPCO Implementation Project. True or False c) The scope of Integration Tests is defined in Business Test Scenarios. True or False d) User Acceptance Testing will be carried out by Business Process Leads. True or False e) End user training will start in September 2006. True or False 5. What is the main thrust of the OPCO EDCOM Strategy a) To run end user training b) To effect information sharing about the OPCO Project in various media c) To cover the three levels of training d) None of the above Send your Feedback/ Comments/Suggestions on the OPCO Implementation Project to OPCOProject@qatargas. com.qa Send your answers on theabove quiz to: OPCOProject@qatargas.com.qa www.qatargas.com September 2006 - Issue No. 109 | The Pioneer | 21 SPORTING EVENTS Qatargas Football Team Secures Third Place in the Chairman's Cup Qatargas management honored its for the outstanding attitude shown during the competition which played an important role in winning the third place. He also wish them good luck in the future. Mr. Yousif Saif, the famous announcer at ART, drew the attention of all attendees during his speech with his large international experience in the sports field. On this occasion, the Qatargas football team would like to thank the management for their continuous support which is on of the vital ingredients for their success. football team for securing the third place in Chairman's Cup Tournament. In his speech, Mr Abdullah Hijji-Public Relations Manager- thanked the team for playing exceedingly well during the tournament and Mr Abdullah Hijji – Public Relations Manager receiving the cup from the Second Deputy Premier   The Best Goalkeeper Award  Awards distribution ceremony Group photo of Qatargas football team  22 | The Pioneer | September 2006 - Issue No. 109 www.qatargas.com