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					      ANGOLA
Saipem Sustainability Talent
                C a s e   s t u d y
Angola
          Saipem Sustainability Talent
                                      C a s e   s t u d y




Saipem Companies included in this case study
                                                         INDEX
                                                                               I
                     INTRODUCTION                                          4
                     SAIPEM AT A GLANCE                                   7
                     Saipem mission statement                             7
                     Saipem activities                                    8
                     Saipem through the world                             8
                     Main Financial Results                               9
                     Saipem Human Resources                               9
                     SAIPEM SUSTAINABILITY                                10
                     Sustainability organisation                          11
                     Methodology                                          12
                     Saipem’s sustainability policy                       13
                     ANGOLA COUNTRY OVERVIEW                              14
                     The country in brief                                 15
                     Oil Sector Overview                                  15
                     Natural Gas                                          17
                     Electricity                                          17
                     Diamonds                                             18
                     Other Minerals                                       18
                     Fishing                                              18
                     Agriculture                                          18
                     Forests                                              19
                     Social Overview                                      19
                     Environmental Overview                               20
                     SAIPEM GROUP IN ANGOLA                               21
                     Petromar Lda                                         22
                     Kwanda Lda                                           23
                     Saipem 10000                                         25
                     Saibos                                               26
                     STAKEHOLDERS RELATIONS                               28
                     Matrix on Sustainable Impact                         28
                     Employees                                            29
                     Clients                                              30
                     Local Authorities                                    30
                     Partners in business activities: Sonangol            30
                     Communities                                          31
                     Subcontractors                                       32
                     PERFORMANCE INDICATORS                               33
                     Health, Safety, Quality and Environment Management   33
                     HSE Programmes in Kwanda                             34
                     Environmental Situation                              35
                     Main Environmental Impacts of Operations             36
                     ENVIRONMENTAL INDICATORS                             37
                     Waste generation                                     37
                     Energy Consumption                                   38
                     Water consumption and discharge                      38
                     ECONOMIC INDICATORS                                  38
                     Labour Costs                                         39
                     Contribution to the Local Economy                    40
                     SOCIAL INDICATORS                                    40
                     Employees distribution                               41
                     Training                                             42
                     Safety performance                                   45

      SAIPEM         GLOSSARY & KEY WORDS                                 46
3   SUSTAINABILITY
INTRODUCTION


 This report is part of Saipem’s Sustainability
 programme for the years 2005-2007. After successful
 publication of case studies on Nigeria, Kazakhstan,
 Azerbaijan and Peru, Saipem has published new
 local reports illustrating its socio-economic and
 environmental performance in Angola, in the Asia
 Pacific Region and in the Sultanate of Oman.
 Thanks to this new effort the sustainability approach is extending its coverage in the Saipem world, involving more and more

 people, projects and external environments.


                                                                                                                SAIPEM
                                                                                                          SUSTAINABILITY   4
                         LETTER BY SAIPEM SENIOR MANAGERS
                         The industrial development of the Saipem Group reflects that of the Oil and Gas industry itself in
                         many respects. This is especially true in frontier areas, where Saipem is committed not only to
                         resolving technological challenges, but to contributing to social, cultural and environmental
                         development. This also responds to the input of a growing number of stakeholders, whose interest
                         is not limited to strict economic or technological performance, but also in the concept of sustainable
                         development in our business. As clearly reflected in our Mission Statement, globally, Saipem is
                         adopting an approach that combines sustainable development with other business needs. The
                         methods are based on a simple but ambitious concept: embracing diversity; developing an ever-
                         expanding, truly international organization comprising multi-local teams working together to achieve
                         predetermined targets. The Sustainability Programme that Saipem started implementing in 2001 is
                         the result of thoughtful, comprehensive, internal assessment. The diversity of our projects and the
                         specificity of environments in which they are performed, are the reason for adopting a “Local
                         Approach to Sustainability”. Our path towards Sustainability has an over-riding objective: beneficial
                         integration of our activities within a local context, and leveraging the Company’s talents to create
                         better opportunities for local communities. We need to evaluate and present our performance to date
                         to our stakeholders, and to improve it in future.


                         Pietro Franco Tali - Chairman & C.E.O.
                         Hugh James O'Donnell - Managing Director
                         Jacques Yves Léost, Director of Saipem S.p.A. and Chairman of Saipem s.a.



                         LETTER BY THE CORPORATE QHSE MANAGER OF
                         SAIPEM S.P.A.
                         Saipem’s approach to sustainability initiatives management provides the annual commitment of external
                         communication so as to give a possibility to our stakeholders to examine closely Saipem reality. These case
                         studies belong to the commitment of transparency, clarity and assurability we took last year with all Saipem
                         stakeholders, developing a specific disclosure of the way Saipem is working in the frontiers areas. The reports
                         published last year on Saipem activity in Nigeria, Peru, Kazakhstan and Azerbaijan already achieved of spreading
                         out this commitment both at Saipem Corporate and at site level; both internally and externally; both through our
                         initiatives and upon requests. We received interesting feedbacks from our readers and we tried to positively
                         implement all suggestions within these new case studies, that represent detailed analysis supported by greater
                         experience and knowledge. The utilisation of the sustainability case studies in the contracting phase for the new
                         projects in the country suggests us to better point out the impacts Saipem has in the country on its economic,
                         environmental and social development. The distribution to the local stakeholders, on the other hand, suggested
                         us to facilitate the comprehension of the contents translating it in the country mother tongue. We translated the
                         Peru report in Spanish for our Peruvian stakeholders and we are going to do the same for these new case
                         studies. In particular the Angola case study will have a Portuguese version which is even nearer to our local
                         readers. We also asked a third part evaluation of the case studies. This measure was undertaken to identify the
                         points to be improved successfully and strong points to be included also in these new publications. The reporting
                         activity of this year focused the attention on other three Countries where Saipem is operating and is contributing
                         through its business to the local development: Angola, Asia Pacific Region and Oman. Angola represents for
                         Saipem a great commitment for the future activities, all operations are growing especially in the offshore markets
                         which involve increasingly more Saipem based locally companies and many of our vessels. Saipem considers
Saipem Corporate Milan
                         the Asia Pacific region as one of the most relevant fields in the world for the offshore projects in place and for the
                         support activities developed for the Far East as for example for the Sakhalin Island. In Oman Saipem developed
                         an interesting onshore project which characteristics and the commitment of the project staff gives us the
                         opportunity to collect and issues their socio-economic and environmental experience in a published case
                         study. Saipem external communication is expected to grow constantly supported by an accounting system of
                         these data and information that will be more and more reliable. This represents another challenge not only for
                         my staff but also for all Saipem world.

                         Sabatino De Sanctis
                         QHSE Senior Vice President

       SAIPEM
5   SUSTAINABILITY
LETTER BY ANGOLA GROUP RESIDENT AREA
MANAGER
The proposal to develop a sustainability case study for Saipem activities in Angola coincided with
my new role within Saipem group in this Country as Group Resident Area Manager (GRAM). The
idea to produce this new tool for external communication was interesting and gave me the possibility
to outline the situation and identify steps of improvement and new challenges for the companies I
was going to manage in collaboration with a well experienced staff. The local content of Petromar
and Kwanda was crystal clear since the beginning but what I decided to carry out is the consideration
of local content as a key peculiarity of Saipem reality in Angola in front of our clients, the local
authorities, the communities and the subcontractors. This means also another instrument to retain
high professional local staff and an opportunity to grow in term of knowledge. Another significant
aspect I discovered with interest from this work was the commitment of both Petromar and Kwanda
to be really part of the Country also through many social initiatives that are managed with intense
commitment, not just as a charity attitude. The long story of Petromar in Angola came with this
approach and supports the development of good relations with our stakeholder that we directly
meet. Saipem Corporate contributes to the development of this document following the methodology
already established for the analysis of other Saipem realities but Petromar and Kwanda embraced
the projects and the results and will use this publication as tool of external and internal
communication.


Philippe Frederic
Group Resident Area Manager




                                                                                                             SAIPEM
                                                                                                        SUSTAINABILITY   6
SAIPEM AT
A GLANCE
 SAIPEM’S MISSION STATEMENT
 Pursuing the satisfaction of our clients in the
 energy industry, we tackle each challenge with
 safe, reliable and innovative solutions. We entrust
 our competent and multi-local teams to provide
 sustainable development for our company and the
 communities in which we operate.
 Saipem is one of the leading companies in providing services to the Oil & Gas sector, mainly in offshore engineering and construction.

 The Company invested heavily in the past years to reinforce its offshore fleet, both in offshore construction and in offshore drilling and

 today Saipem's fleet is one of the most technically developed and efficient in the sector. With the acquisition of the French engineering

 company Bouygues Offshore in May 2002, Saipem became a leading contractor in the field of complex EPIC projects (Engineering,

 Procurement, Installation and Construction). This acquirement helped Saipem turn into a real global contractor, with significant local

 presence in strategic and emerging areas, such as Western Africa, the former Soviet Union, Central and South East Asia, North Africa

 and the Middle East.


        SAIPEM
  7   SUSTAINABILITY
E
    SAIPEM ACTIVITIES
    Saipem Group consists of six worldwide business units. It provides EPIC services to the oil and gas
    industry, with a particular focus on activities in remote areas, deepwater environments and gas
    related projects that allows the Group to enjoy a superior competitive positioning.
    • Offshore Construction: Saipem is the consolidated leader in offshore construction, with main
      activities covering engineering, construction, and installation of platforms, subsea structures,
      floating production systems, and subsea pipelines. The most powerful asset in Saipem's fleet is
      Saipem 7000, a semi-submersible vessel capable of lifting structures of up to 14,000 tons
      and laying pipelines in ultra deep waters. Other vessels include Castoro 6 and Semac 1, capable of
      laying large diameter pipelines, Saibos FDS (Field Development Ship), a specialised vessel
      used for the development of deep water fields and Saipem 3000, a vessel capable of lifting
      structures of up to 2,400 tons. The company's recent acquisitions further strengthened its engineering
      and project management expertise.
    • Drilling: Saipem's mobile offshore drilling fleet consists of one state-of-the-art drillship (Saipem
      10000), five semi-submersibles and four cantilevered jack-ups. Saipem drilling operations are
      carried out on behalf of the major corporations in the oil and gas sector. Saipem owns 23 drilling rigs
      and 15 workover rigs capable of operating at depths ranging from 2,500 to 10,000 meters at
      elevated temperatures and in high pressure environments.
    • Leased FPSO: Saipem entered this sector in 1996 as a new player offering a unique combination of the
      capabilities of a major EPCI contractor with the worldwide presence of an Owner of first class drilling and
      construction vessels. Saipem's wholly owned fleet enables the company to provide a full range of installation,
      construction and transportation services suited to the most challenging floating system installations.
    • Onshore Construction: Saipem is world leader in the onshore construction sector having laid more
      than 60,000 km of pipelines over five continents and built some 100 oil refineries, petrochemical
      plants, power plants, oil and water pumping stations and natural gas compression stations.
      The Company specialises in the laying of large diameter pipelines, above all in adverse climatic
      conditions and difficult to reach areas.
    • Liquefied Natural Gas: Saipem entered this high-potential market by establishing a new group which
      has the necessary technological capabilities to construct LNG tanks and is experienced in the construction
      of offshore and onshore LNG import and export terminals.
    • Maintenance Modification and Operation: Saipem's presence in the last link of the value chain enables the
      Company to offer end-to-end solutions to energy service providers. This kind of activity allows Saipem to
      streamline processes, increase productivity and offer clients plans of continuous improvement.



    SAIPEM THROUGH THE WORLD
    Saipem performs both onshore and offshore operations in a very large number of countries                                                            Backlog by Geographic Area
    throughout the world. As a contracting company operating in the Oil&Gas sector, Saipem's worldwide
    presence and the geographical distribution of its backlog are determined by where the Oil Companies'
    investments are in the world. At the end of 2005 the order backlog amounted to 5,513 million
    euros. Breakdown of activities by countries is as follows: 25% in West Africa, 14% Commonwealth
    of Independent States - ASIA, 12% Central and South America, about 8% in Far East, 8% Middle
    East, 8% Europe and 8% Commonwealth of Independent States - Europe.

                                                                                                                                                   West Africa 25,6%               CIS - Europe 8,1%
                                                                                                                                                   CIS - Asia 14,5%                North Sea 5,7%
                                                                                                                                                   Central - South America 12,2%   North Africa 5,7%
                                                                                                                                                   Far east 8,5%                   North America 2,2%
                                                                                                                                                   Europe 8,4%                     Italy 0,4%
                                                                                                                                                   Middle east 8,3%                Other Asia 0,4%

                                                                                                                                                Data updated at December 2005




      Principal Operating Centers    Offshore     Offshore Drilling float. Prod.     Lng & maritime works       Engineering Centers   Onshore
      Onshore Drilling     Maintenance Modification and Operation (MMO)       Yards/bases    Other Offices/Activities
                                                                                                                                                                            SAIPEM
                                                                                                                                                                   SUSTAINABILITY             8
                                                                                                                                                                                                                    S
                                                 MAIN FINANCIAL RESULTS
                                                 Operating revenues
                                                 Production costs
                                                 Idle costs
                                                 Selling expenses
                                                 Research and development costs
                                                 General and administrative expenses
                                                 NET INCOME
                                                                                                                                 2002
                                                                                                                                3,149
                                                                                                                              (2,637)
                                                                                                                                  (48)
                                                                                                                                  (56)
                                                                                                                                    (6)
                                                                                                                                (102)
                                                                                                                                   191
                                                                                                                                                        2003
                                                                                                                                                       4,231
                                                                                                                                                     (3,658)
                                                                                                                                                         (78)
                                                                                                                                                         (66)
                                                                                                                                                           (9)
                                                                                                                                                       (115)
                                                                                                                                                          196
                                                                                                                                                                               2004*
                                                                                                                                                                                4,306
                                                                                                                                                                              (3,706)
                                                                                                                                                                                 (81)
                                                                                                                                                                                 (66)
                                                                                                                                                                                   (9)
                                                                                                                                                                                (116)
                                                                                                                                                                                  235
                                                                                                                                                                                                       2005
                                                                                                                                                                                                      4,528
                                                                                                                                                                                                    (3,914)
                                                                                                                                                                                                        (57)
                                                                                                                                                                                                        (62)
                                                                                                                                                                                                          (7)
                                                                                                                                                                                                      (120)
                                                                                                                                                                                                         255
                                                                                                                                                                                                                    S
                                                 OFFSHORE CONSTRUCTION                                                          2002                   2003                     2004                  2005
                                                 PIPELINES LAID (KM)                                                           1,798                  1,409                    1,634                   833
                                                 INSTALLATION (TONS)                                                          55,960                118,211                  172,664               134,602
                                                 OFFSHORE DRILLING                                                              2002                   2003                     2004                  2005
                                                 METRES DRILLED                                                              124,761                128,839                  130,420               113,786
                                                 ONSHORE CONSTRUCTION                                                           2002                   2003                     2004                  2005
                                                 PIPELINES LAID (KM)                                                             687                    612                      465                 1,005
                                                 INSTALLATION (TONS)                                                          30,060                 23,930                   15,888                 7,112
                                                 ONSHORE DRILLING                                                               2002                   2003                     2004                  2005
                                                 METRES DRILLED                                                              348,040                385,976                  455,413               547,953
                                                 *After: FRS Reconciliation




                                                 SAIPEM'S HUMAN RESOURCES
              Saipem Group Employees             In 2005 Saipem total staff was of 25446, about 3500 employees more than in 2004. Saipem's
30000                                            interest in the social development of the areas of operations was expressed in 2004 both through
25000
                                                 the internal management and commitment, both externally, in participatory actions with local
20000
                                                 communities. This implied the adoption of procedures for selection and management of employees
15000
10000
                                                 which can be adapted to the provisions and needs of the various reference countries. The Local
5000
                                                 Content Policy requires the Local Content policy means that the relationship with local workers is
                                                 directly developed, avoiding as much as possible the use of agencies; this meant a particular
      0
          1999 2000 2001 2002 2003 2004 2005     commitment on the part of Saipem, both in terms of resources and responsibility, strongly supported
   European      Other Nationalities             by the commitment of Top Management. One result of this approach can be seen in the significant
                                                 number of nationalities (103 at December 2005) which makes up the Saipem staff worldwide.


                                                                                                    Saipem Employees by Nationality
                                               3500


                                               3000


                                               2500


                                               2000


                                               1500


                                               1000


                                               500


                                                  0
                                                                             n     n                  e         a                                           y          s                    t               o
                                                         nce eria Italy khsta baija India ussia lippin Peru ngol UK lgeria rabiaroatia nesialaysia zuelaorwa ania Statetugal urkey SpainEgyp oland iland ong ther
                                                      Fra Nig         za Azer            R hi              A       A di A C ndo a ene N Rom ed or
                                                                                                                                        M V
                                                                                                                                                                            T              P Tha        C     O
                                                                   Ka                       P
                                                                                                                    S au          I
                                                                                                                                                            U nit  P




              SAIPEM
  9       SUSTAINABILITY
SAIPEM
SUSTAINABILITY


 For the second year Saipem decided to public some
 case studies on his behaviour on sustainability.
 Following the last year approach to focus on specific
 countries of activity, this time the analysis has been
 carried out on Asia Pacific region, Angola and Oman.
 These areas together with Nigeria, Peru, Azerbaijan
 and Kazakhstan already subject of the last year reports, are particularly important for Saipem and are countries in which some positive

 contributions from a sustainable attitude have a particular value. Saipem has successfully continued the path toward a more conscious

 approach and this second step enlarges the coverage of Saipem sustainability analysis including three other significant areas.

 The analysis developed in order to produce the case studies is just the tip of the iceberg that is composed by a program of continual

 improvement that involves the HSE management, the Human Resources and the procurement approach.


                                                                                                                         SAIPEM
                                                                                                                    SUSTAINABILITY 10
                    SUSTAINABILITY ORGANISATION
                    In 2002, Saipem created a mission statement which emphasized the meaning of a proactive
                    approach to sustainability, and set up a dedicated Corporate Sustainability Team with proven
                    experience. The team belongs to the Corporate QHSE Department, which has an established
                    presence within the Saipem Group organisation, and proposes, assesses and supports the
                    growth of local level initiatives based on Saipem's mission. The team also set up the
                    Sustainability Network, which plays an essential role in sustainability management by bringing
                    together different units that aid the development of socioeconomic initiatives with their own
                    distinctive competencies. Even corporate departments like the Human Resources and
                    Administration and Finance Department, have an important role in the Sustainability Network,
                    along with Saipem Sustainability Facilitators who represent Saipem Sustainability Team in Key
                    Areas. Saipem has identified some geographical areas of business of key importance that vary
                    along with the evolution of the business activities throughout the world; this allows the Company
                    to rationalize the efforts related to the development of the Sustainability approach. In 2003, the
                    Sustainability Key Areas were: Algeria, Angola, Azerbaijan, Kazakhstan, Malaysia, Indonesia,
                    Thailand, Nigeria, Peru, Venezuela, Russia, Saudi Arabia, Oman, and UAE (United Arab
                    Emirates); they are still of interest in 2005. A Sustainability Facilitator selected by the Saipem
                    Group Resident Area Manager operates in each key area and is responsible for the co-ordination
                    of sustainability initiatives at local level. His main task is the promotion and the developing,
                    with the involvement of the local senior management, of initiatives aimed at the increase and
                    development of local content, at good relationships with the local stakeholders and at the
                    sustainability accounting.




                                                      Sustainability Facilitators




                      Nigeria
                      Peru
                      Algeria
                      Angola
                      Azerbaijan
                      Kazakhstan
                      Russia
                      Saudi Arabia, Oman, UAE
                      Malaysia, Indonesia, Thailand




      SAIPEM
11 SUSTAINABILITY
METHODOLOGY
Following the 2004 experience, these case studies have been developed with the same structure
that includes a general overview of Saipem world, a general presentation of the most peculiar
socio-economic and environmental characteristic of the country in analysis. Follow the
description of the Saipem operation in the area, the presentation of the main stakeholders and
the relative Saipem approach. An overview of the most important indicators in term of
environmental, social and economic point of view closes the case study of the country. The
information contained in this report was collected both at site and corporate level. The attempt
was to follow the same information given in the past reports and when possible to improve the
detail of information and data, following also the indications of the third part involved in the
evaluation of the previous case studies. The Angola report takes into consideration many different
Saipem realities including companies based in the country and specific projects operated by
other Saipem Group Companies. Information included in this report refers to:
• Petromar
• Kwanda
• Saibos operations in Angola – Rosa and Kizomba Projects
• Saipem 10000 drilling operations in Angola.




                                                                                                          SAIPEM
                                                                                                     SUSTAINABILITY 12
                    SAIPEM'S SUSTAINABILITY POLICY
                    Saipem's Sustainability Policy was formalised in May 2003, reflecting the senior management's
                    commitment to attaining specific targets in terms of Saipem's approach.

                    “A network where everybody's commitment contributes to the common well-being”

                    Sustainability incorporates three principles that are of particular significance within Saipem:
                    protection of environment, respect of social rights of employees and contribution to local economic
                    development. Saipem is committed to promoting Sustainable Development in all facets of its global
                    activities in a manner that is compatible with the socio-economic and environmental needs of its
                    Clients. Saipem employees should have the opportunity to develop while working in an environment
                    that is increasingly healthy and safe, whether on site or on board a vessel. Saipem's approach to
                    Corporate Sustainability is based on the creation of long term shareholder value by contributing to
                    the development of the local communities where we operate. Saipem is committed to achieving
                    such development through environmental protection, economic growth and social progress, attention
                    to local suppliers and professional training for local employees. This commitment is managed
                    through these shared Sustainability Practices:
                    • Conducting operations and relationships with integrity and honesty, valuing the richness of each
                      culture and respecting Human Rights;
                    • Managing the Health, Safety and Environmental aspects in compliance with existing HSE Policy
                      and Principles;
                    • Maintaining an open and transparent dialogue in decisions which affect stakeholders;
                    • Researching the possible impacts of activities in host countries, both prior to and during, project
                      execution;
                    • Monitoring social, economic and environmental performance with the aim of measuring Saipem's
                      impact so as to ensure compliance with legal requirements and best practice guidelines;
                    • Establishing a reliable verification system for the performance of suppliers according to Sustainability
                      Principles;
                    • Providing training to develop human capital and build competencies in the management of field
                      of Sustainable Development;
                    • Implementing an effective and transparent Sustainability communication network within the Group.
                    Saipem Sustainability Policy and Program will be constantly updated in order to achieve continuous
                    improvement. The Corporate Sustainability Team assures constant monitoring and co-ordination of
                    this Policy. The implementation of this Policy is the responsibility of all Saipem Group employees.




      SAIPEM
13 SUSTAINABILITY
ANGOLA COUNTRY
OVERVIEW
 Angola is beginning its recovery from a 27-year civil
 war that began shortly before the nation achieved its
 independence in 1975. The war destroyed much
 of Angola economy and infrastructure, displacing
 an estimated four million people. After several
 unsuccessful efforts at securing peace, the Angolan
 government and the National Union for the Total Independence of Angola (UNITA) signed an agreement in April 2002 following the

 violent death of UNITA’s founding leader, Jonas Savimbi. The agreement assured the disarmament and demobilization and the Country

 is significantly moving towards a new era. Angola is a member of the African Union (AU), the Southern African Development Community

 (SADC), and the Common Market for Eastern and Southern Africa (COMESA). The Angolan economy is highly dependent on its oil

 sector, which accounts for over 40% of gross domestic product (GDP) and almost 90% of government revenues. A sharp increase in

 oil production caused Angola real GDP to grow by 15,3% in 2002, followed by a 2003 growth rate of 4,9%. In spite of its expanding

 economy, however, Angola external debt reached $9,3 billion in 2003, and approximately 75% of Angola 11 million people live still

 in poverty. Although Angola saw 98% inflation in 2003, it was a considerable improvement over the 141% inflation rate in 2001 and

 the 325% inflation rate in 2000. Last date on inflation follows this trend and in 2005 it was 17.7%. In 2002, Angola agreed to an

 International Monetary Fund (IMF) Staff Monitored Program (SMP) to enact economic reforms, with the hope of eventually obtaining

 additional lending from the IMF and World Bank. Under the SMP, an international auditing and accounting firm began an Oil Sector

 Diagnostic Analysis on the Angolan government’s oil sector earnings and expenditures.


                                                                                                                      SAIPEM
                                                                                                                SUSTAINABILITY 14
                    THE COUNTRY IN BRIEF
                    Social Indicators
                    Population (2005 est.)                                                                                                    11,190,786
                    Age Breakdown (2005 est.)                                                                                         0-14 years: 43.4%
                                                                                                                                    15-64 years: 53.7%
                                                                                                                                65 years and over: 2.8%
                    Life expectancy (2005)                                                                                                    36.61 years
                    Population growth rate (2005 est.)                                                                                              1.9%
                    Religions (1998 est.)                                                 indigenous beliefs 47%, Roman Catholic 38%, Protestant 15%
                    Languages                                                                    Portuguese (official), Bantu and other African languages
                    Economic Indicators
                    Gross Domestic Product (GDP) (2005 est.)                                                    Purchasing power parity - $27.66 billion
                    GDP – real growth rate (2005 est.)                                                                                             14.1%
                    GDP – per capita (2005 est.)                                                                        Purchasing power parity - $2,500
                    GDP - by sector (2005 est.)                                                           agriculture: 8%; industry: 67%; services: 25%
                    Inflation rate (consumer prices)(2005 est.)                                                                                    17.7%
                    Industrial production growth rate (2005 est.)                                                                                     1%
                    Labour force (2005)                                                                                                       5.58 million
                    Labour force – by sector (2003)                                                          agriculture 85%, industry and services 15%
                    Unemployment rate (2001 est.)                                                         extensive unemployment and underemployment
                                                                                                                   affecting more than half the population
                    Environmental Indicators
                    Area                                                                                                               1,246,700 sq km
                    Land use (2001 est.)                                                                                             arable land: 2.41%
                                                                                                                               permanent crops: 0.24%
                                                                                                                                          other: 97.35%
                    Total Energy consumption (2002)                                                                                  0.13 quadrillion Btu
                    COx emissions                                                                                          15.6 million metric cubic tons
                    Source: Energy Information Administration, Country Analysis, Angola 2005 and Central Intelligence Agency (CIA)




                    OIL SECTOR OVERVIEW
                    Angola is sub-Saharan Africa’s second largest oil producer behind Nigeria. The majority of its crude
                    oil is produced offshore in Block Zero, located in the northern Cabinda province and Block 15.
                    Crude reserves also are located onshore around the city of Soyo, offshore in the Kwanza Basin
                    north of Luanda, and offshore of the northern coast. The majority of Angolan oil is medium to light
                    crude with low sulphur content. Considerable potential for growth exists in both the oil and gas
                    sectors, with nearly $23 billion in foreign direct investment (FDI) expected between 2003-2008.



                                                                              Angola Crude Oil Production and Consumption
                                                              1000



                                                               800
                                   Thousand Barrels per Day




                                                               600                                                         Net Exports



                                                               400



                                                               200



                                                                0
                                                                       1998        1999        2000        2001        2002         2003
      SAIPEM
15 SUSTAINABILITY                                                    Consumption      Production
Angola national oil company, Sonangol, was established in 1976 and made the sole concessionaire
for exploration and production in 1978. Sonangol works with foreign companies through both joint
ventures (JVs) and production sharing agreements (PSAs), funding its share of production through
oil-backed borrowing. The top foreign oil companies operating in Angola, are US-based
ChevronTexaco and ExxonMobil, Total, BP, Shell and Italian Eni E&P Oil Company. Although Angola
oil production has increased recently and will continue to increase in the future, international
observers have highlighted the importance of a government commitment to using oil revenues
specifically for social and economic improvements.


HISTORY OF THE OIL INDUSTRY IN ANGOLA
The prospecting and researching of hydrocarbons in Angola began in 1910 when the company
Canha & Formigal was granted the oil lease of an area of 114,000 km2 in the Congo Offshore
and the Kwanza Basin. The first well was drilled in 1915. Pema (Companhia de Pesquisas
Mineiras de Angola) and U.S.A. based Sinclair were, from early on, also involved in prospecting
and research activity in Angola. After a brief break, activity was resumed in 1952 with a lease
to Purfina in the same area. In 1955, the Continental Platform was added to its extension. Also
in 1955, oil was discovered in the onshore Kwanza Valley by Petrofina, which together with the
colonial government, established the jointly-owned company Fina Petroleos de Angola
(Petrangol) and constructed a refinery in Luanda to process the oil. In 1962, the first seismic
survey of Cabinda's Offshore was carried out by the Cabinda Gulf Oil Company and in September
of that same year the first discovery emerged. In 1973 oil became Angola’s principal export. By
1974 the production reached 172,000 bbl/d which was the maximum output for the colonial
period. In 1976, total production was around 100,000 bbl/d from three areas: Cabinda's
Offshore, Kwanza's Onshore and Congo's Onshore. Between 1952 and 1976, 30,500 km of
seismic surveys were carried out, 368 wells were drilled for prospecting and research and 302
wells were drilled for oil production. During this period a total of 23 sites were discovered, three
of which were offshore. Exploration in deep water began in 1991 with the leasing of Block 16,
followed by leases of Blocks 14,15,17,18 and 20. Over 200 exploration and appraisal wells
have been drilled in Angola since 1990. At the beginning of 2000, there were 29 offshore and
onshore blocks under licence to 30 companies and of these 14 were operators. The first FPSO
(Floating Production, Storage & Offloading) facility in Angola's offshore was used on Block 17.
It came online in August 2004. Projects in Blocks 17 and 18 also required the use of an FPSO.
The average production from the main blocks is the following: Block 0 - 600,000 bbl/d; Block
15 - 550,000 bbl/d; Block 17 - 200,000 bbl/d; Block 3 - 40,000 bbl/d; others 20,000 bbl/d.
To bring an end to the wasteful flaring of gas and to also enable the local production of industrial
chemicals, a gas condensate facility to produce liquefied petroleum gas (LPG) is scheduled to
come online in 2008. Numerous discoveries in the Angolan offshore have ensured that Angola
will play a major role in Africa’s oil industry for the next few decades and will be a world pioneer
in the oil industry.



PRODUCTION
Angola crude oil production has quadrupled over the past two decades, and its oil reserves
have tripled in the last seven years. Crude oil production averaged 1.25 million barrels per day
(bbl/d) in 2005, and production is predicted to reach two million bbl/d by 2008 when new
deep-water production sites are expected to operate at higher levels. Block Zero (Area A, Area B,
and Area C), located offshore of Cabinda, accounts for more than half of Angola crude oil
production (approximately 550,000 bbl/d). Cabinda Gulf Oil Company (CABGOC), a
ChevronTexaco subsidiary and the operator of the Block Zero fields since 1955, has a 39.2%
share in the JV. In May 2004, Sonangol and the Angolan Government extended CABGOC’s
current contract, set to expire in 2010, to 2030. Other partners include Sonangol (41%), Total
(10%) and Agip/ENI (9.8%). Cabinda’s largest producing oil fields are Takula (Area A), Numbi
(Area A), and Kokongo (Area B). Although Cabinda accounts for nearly all of Angolan foreign
exchange earnings, the province receives a small part of taxes paid by oil companies operating
offshore Cabinda. Many separatist groups, including the Frente para a Libertação do Enclave de
Cabinda-Renovata (FLEC-R; Front for the Liberation of the Enclave of Cabinda), have demanded
that a greater share of oil revenue remain in the poverty-stricken province, often kidnapping
foreign nationals to draw attention to their cause. The Angolan Government has categorically
ruled out plans to declare independence of Cabinda region. In June 2004, the Angolan
government announced a $370 million cash injection into Cabinda to be used for improving
infrastructure and social services.

                                                                                                            SAIPEM
                                                                                                       SUSTAINABILITY 16
                    EXPORTS
                    Angola’s largest export partners in 2004 were the United States and China, which comprised 40
                    percent and 35 percent of total exports, respectively. In January 2004, the United States made
                    Angola eligible for tariff preference under the African Growth and Opportunity Act (AGOA). Angola
                    also exports crude oil to Europe and Latin America.


                    REFINING AND DOWNSTREAM
                    The Fina Petroleos de Angola refinery in Luanda, a JV between Sonangol (36%), Total (61%)
                    and private investors (3%), has a crude oil processing capacity of 39,000 bbl/d. The refinery
                    produces almost all of Angola domestic requirements of gasoline, kerosene and jet fuel, as well
                    as a small amount of products for export. The refinery is required to meet product specifications
                    and deadlines set by (SADC), including phasing out lead and increasing the octane content in
                    gasoline, by 2005. Angola is developing plans for a new 200,000 bbl/d refinery in the coastal
                    city of Lobito. The majority of products refined at the new facility (80%) would be exported
                    regionally. Since the cessation of armed hostilities in Angola, the domestic demand for oil
                    products is rising. Sonangalp (a joint venture between Sonangol (51%) and Galp Energia
                    (49%)), estimates that Angolan demand for oil products will grow by 500% within 10-20
                    years. In early 2004, Sonangol imported oil from abroad to ease domestic shortages when the
                    Luanda refinery was unable to meet increasing demand due to ongoing problems. Angola retail
                    sector, which once boasted over 450 filling stations, has shrunk to 100 outlets. Construction of
                    120 additional stations is planned over the next several years. Potential stumbling blocks to
                    new construction include the more than $300 million expected cost and the lack of foreign
                    investment from both Sonangol and foreign firms. In July 2004, Portugal’s Galp Energia
                    announced intentions to build several stations in Angola. Sonangol, Total and Sonangalp,
                    currently provide product distribution and marketing in Angola.
                    Southern African Development Community (SADC)



                    NATURAL GAS
                    Angola has estimated natural gas reserves of 1.6 trillion cubic feet (Tcf). New discoveries could
                    push Angola proven gas reserves to 9.5 Tcf, and possibly as high as 25 Tcf. The majority
                    (approximately 85%) of natural gas produced in Angola is flared; the remainder is reinjected to
                    aid in oil recovery and processed in the production of liquefied petroleum gas (LPG). The
                    government’s Gas Master Plan to reduce natural gas flaring focuses on ending flaring at fields
                    north of the Congo River mouth in Cabinda by 2005. CABGOC has initiated two zero-flare fields,
                    Nemba and Lomba, and plans to make Kuito the third. Future plans include converting flared
                    gas to liquefied natural gas (LNG), natural gas liquids (NGLs), and LPG. ChevronTexaco and
                    Sonangol are developing a project to convert natural gas from offshore oil fields to LNG for
                    export. The facility will use flared gas from Blocks 1, 2, 3, 4, 15, 16, 17, and 18. Originally
                    planned for Luanda, the facility will now be located at Soyo. Angola proposed LNG plant will be
                    the only one in the world to use associated gas as its primary feedstock. Although the first gas
                    was originally scheduled to come online in 2005, commencement has been pushed back to
                    2007. The FEED process will take approximately a year, and a final investment decision is
                    expected in 2006.


                    ELECTRICITY
                    Information on Angola electricity sector is frequently dated and unreliable. Electricity generation
                    for the country during 2003 was 1.9 billion kilowatt hours (Bkwh), while consumption was 1.8
                    Bkwh. Only 15% of Angola population has access to electric power, and blackouts occur
                    frequently for those who do have access to electricity. The Angolan Ministry of Energy and
                    Waters has projected that $500 million is necessary to rebuild infrastructure destroyed in the
                    war. Angola electricity is supplied through three separate systems the Country. The government
                    aims to link the systems to create a national grid through the South Africa Power Pool (SAPP).
                    Hydroelectric facilities generate more than two-thirds of Angola’s electricity. The Matala dam,
                    which began operations in 2001 on the Cunene River, is the main source of electricity in
                    southwest Angola. The Cambambe dam (180 MW) on the Kwanza River, the Mabubas dam
                    (17.8 MW) on the Dande River, and diesel generators are the main sources of electricity in the
                    north of the country. A 24-MW dam is being built by a diamond company, Catoca, on the
                    Tchicapa River in north-eastern Angola. Angola intends to recover the productive capacity of the
      SAIPEM
                    Empresa Nacional de Electricidade (ENE), the state-owned electric utility, by rehabilitating its
17 SUSTAINABILITY
hydropower stations. Gove, a nonfunctioning station, is expected to be rebuilt following a
February 2003 agreement with Namibia to jointly rehabilitate the dam. Construction of a new
Cunene River dam at Epupa Falls has also been proposed. Two agreements of understanding
are poised to be signed by members of the Western Corridor Project (Angola, the Democratic
Republic of the Congo (DRC), Namibia, Botswana, and South Africa) to build an electricity
transport line from the Inga Dam (DRC) to South Africa, running through each of the nations
involved in the agreement. The project will also include the construction of a central station with
a capacity of 3,500 megawatts (MW). Odebrecht, a Brazilian construction company, has
partially completed the construction of a hydroelectric facility at Capanda on the Kwanza River.
Work on the 520-MW plant began in the mid-1980s, but was suspended due to the civil war.
The first of four planned hydraulic turbines began generating electricity in January 2004; a
second turbine is expected to be operational in April 2005. The completed Capanda project will
nearly double Angola’s electricity generating capacity.


DIAMONDS
Diamonds were first discovered in Angola in 1912, the first prospecting operations being on the
River Chicapa and its tributaries. The company Diamang was set up in 1917, producing 4,110
carats during its first year of operations, and reaching a record level of production, 2,413,021
carats, in 1971. In January 1981, the Company Endiama was established, which finally replaced
Diamang in 1988 following that company’s liquidation. Prior to 1975, Angola was the fourth largest
producer of diamonds in the world. The World Bank has calculated that official diamond exports
rose from 295,000 carats in 1993 to 517,000 carats in 1994, and that this figure has rised to two
million carats by the year 2000. Angola possesses exceptional reserves, mainly of kimberlite, and
recent estimates indicate the potential of as yet undiscovered deposits at around two hundred million
carats, of good quality. The diamond sector in Angola has been one of those most affected by the
war and subsequent instability that the country suffered.


OTHER MINERALS
Angola is extremely rich in mineral resources. It is estimated that its subsoil valuable minerals in
terms of world trade, of which the most important are oil, natural gas, diamonds, phosphates,
bituminous substances, iron, cooper, manganese, gold and ornamental stone. With its substantial
deposits of gold, iron ore, phosphates, manganese, cooper, quartz, gypsum, marble, black granite,
beryl, zinc and various metals of strategic value; Angola has been described as one of the largest
but least developed of the remaining mineral paradises on earth. The government has followed a
policy designed to stimulate investment in mineral exploitation, ending the state monopoly on
geological studies and mineral exploration and offering concessions to both national and
international investors for exploration and production.


FISHING
Although output is still below that of the immediate post-independence years, fishing is another
sector which has been more devastated by the war. Indeed, Angola’s territorial waters and its 1,650
km of coastline offer enormous potential, with an abundance of plankton. With the departure of the
colonial power, the Angolan government signed agreements with fishing fleets sailing under various
flags, in exchange for a part of their catch. Current economic policy is directed towards greater
openness and considerable efforts are being made to rehabilitate the local fishing industry with the
support of interested countries and international organisations.


AGRICULTURE
With a favourable climate in terms of variety and quality, Angola was, at the time of independence,
an agricultural paradise for tropical and semi-tropical crops, and it was the third largest coffee
producer in the world. However, agriculture was the sector that suffered most from the war, with its
infrastructure destroyed, populations displaced, and the land mined. The United Nations estimates
the potential at 5 to 8 million hectares of prime agricultural land, as well as areas suitable for
extensive agriculture.




                                                                                                             SAIPEM
                                                                                                        SUSTAINABILITY 18
                    FORESTS
                    Forests cover 43% of Angolan territory, and have as yet been little exploited. Valuable tree species
                    can be found in forests in the north, which have remained unexploited since independence. Around
                    150.000 hectares of eucalyptus, cypress and pine plantations await rehabilitation.


                    SOCIAL OVERVIEW
                    Despite substantial and varied natural resources, Angola remains one of the poorest countries in the
                    world. Although growing revenues from oil and diamonds have boosted per capita income to over
                    $2000, human development indicators are poor, reflecting the heavy toll of nearly three decades of
                    conflict that ended only in 2002:
                    • In 2003 only 38 percent of the population had improved access to water sources.
                    • Infant mortality is high and decreased only marginally, from 172 in 1995 to 154 per 1,000 in 2003.
                    • The prevalence of HIV/AIDS has increased from 2.1 percent in 1997 to 5.74 percent in 2004.
                    • Primary school enrolment is only increasing slowly, from 72 percent in 1995 to 74 percent in 2000.
                    • Female primary school enrolment was only 69 percent in 2000, while male primary school
                       enrolment was 78 percent in the same year.
                    Although Portuguese was Angola's official language, the great majority of Angolans (more than 95
                    percent of the total population) used languages of the Bantu family some closely related, others
                    remotely so that were spoken by most Africans living south of the equator and by substantial
                    numbers north of it.


                    ANGOLANIZATION
                    The law Number 10/79, of July 22, 1979, establishes that the companies covered by this law
                    should employ Angolan workers, guaranteeing them the necessary technical and professional
                    education, and that foreign workers can only be hired when qualified Angolan workers are not
                    available. The recruitment and training of Angolan personnel, will progressively facilitate the
                    application of the rule of privileging national employees across all levels of the hierarchy. The
                    gradual substitution of expatriate workers for Angolan workers is called "Angolanization".
                    Angolanization is a process occurring in all areas of national life and in particular the national oil
                    industry, since there are a large number of expatriate workers in that area. This policy was effectively
                    implemented in 1998, and has as its goal having 70% of the workers being Angolan and 30%
                    foreign. Here is a chart demonstrating this trend:


                                                           Angolanization Process
                               50



                               40



                               30
                           %




                               20



                               10



                                0
                                         1998       1999     2000       2001       2002      2003       2010



                    By 2010, the goal is to have a participation rate of 50% of the workforce in the oil industry being
                    Angolan.
      SAIPEM
19 SUSTAINABILITY
ENVIRONMENTAL OVERVIEW
Angola is a rich country in terms of both agricultural and mineral resources in addition to marine
resources. Examples include various forestry resources, high potential of fishing, minerals
(petroleum, diamond, iron, copper, gold, lead, zinc, manganese, wolfram, tin-ore, molybdenum,
sulphur, marble, etc.). Apart from that the Country has the second highest biodiversity in Africa.
Angola's rainforests, located in the north of the Country, are most threatened by subsistence
agriculture which provides food for almost 90 percent of the population. Overgrazing and cutting
forest for fuel wood is also significant causes of forest clearing and degradation. Overall, Angola
has a low deforestation rate relative to its total forest cover. Between 1990 and 2005, the Country
lost only 3 percent of its forests and the rate of forest conversion has kept fairly steady. Some areas
are reportedly showing the effects of land clearing, including severe soil erosion, heavy siltation of
rivers and dams, and desertification. More than 20 years of civil war have let much of Angola
damaged. The government, which has hired pricey mercenararies from South Africa to put down
uprisings in the resource-rich Cabinda and other areas, is heavily indebted and had sold a number
of timber concessions to foreign timber companies. Oil and minerals are also important sources of
revenue that could have an adverse impact on the environment.
Status in Climate Change Negotiations: Non-Annex I country under the United Nations Framework
Convention on Climate Change (ratified May 17, 2000). Not a signatory to the Kyoto Protocol.
Major International Environmental Agreements: A party to Conventions on Biodiversity,
Desertification, Law of the Sea, Ozone Layer Protection, and Ship Pollution.




                                                                                                               SAIPEM
                                                                                                          SUSTAINABILITY 20
SAIPEM GROUP
IN ANGOLA


 Saipem Group operates in Angola through the
 following subsidiaries: Petromar Lda. and Kwanda
 Lda. Moreover Saibos C.M.L., Saibos s.a.s. and
 Saipem 10000 operate in the off-shore activities and
 services mainly on deep-water oil field development.
       SAIPEM
 21 SUSTAINABILITY
A   PETROMAR Lda.
    PETROMAR Lda with shareholders SAIPEM SA (formerly Bouygues Offshore) (70%) and SONANGOL
    (30%) started its activity in January 1984 on the Yard fabrication at Ambriz located at 180 km
    north side of Luanda. In May 1984 the first structural tubing was cut and welded and the activities
    started and increased until 1993 when the Ambriz yard and the Soyo logistic base were destroyed
    by the civil war. Wiling to fulfil its commitment in Angola, Petromar redeployed its activities in
    Malongo and Luanda. In 1997 the Soyo base was re-build and Petromar restarted construction
    activities. At the moment Petromar is working in Malongo, Soyo and Luanda where is developing its
    activities: in Malongo routines jobs mainly for Chevron Texaco, in Soyo routines jobs, bundles
    fabrication deep water structures, fabrication and maintenance of onshore field for Association
    FST/FS, and in Luanda routines jobs, maintenance of Bloc 3 SONANGOL/TOTAL, office and residential
    building maintenance and refinery maintenance. Petromar is one of the largest contractor based in
    Angola providing services in onshore Oil&Gas facilities construction, onshore/offshore Oil&Gas
    maintenance works, deep off-shore facilities construction, off-shore decks/structure constructions.
    Petromar works for the main operators in Angola, i.e. Esso Exploration Angola Ltd., Total, Agip
    Angola, Chevron Texaco, Sonangol. Petromar commitment in developing activities in Angola has
    survived the war destruction. In 2000 Petromar won an important contract for Total for the fabrication
    of bundles pipelines associated to the development of Girassol offshore Bloc 17. This important
    project allows Petromar to survive after the war and to carry out the fabrication employing some 90%
    local workforce. This work represents also the entry of Petromar in the deep water construction business.


    PETROMAR ACTIVITIES

    Construction
    Petromar is involved in the construction of a wide range of steel structures and piping works for all        Petromar Activity Breakdown (2004)
    onshore and offshore oil & gas projects. Petromar also provides all types of deep water subsea
    structures and equipment (bundles, rising towers, manifolds, jumpers). Regarding the Oil and gas
    facilities, Petromar builds all types of turnkey oil and gas storage or production facilities, including
    civil engineering, storage tanks, loading and monitoring systems, piping, electricity, control systems
    and fire protection. The Company has an over 10 years track record of steel jackets up to 1,300
    tons and decks up to 800 tons and have been involved in important infrastructure projects such as
    the Malongo oil jetty.
                                                                                                                Offshore Structure/Piping Fabrication & Installation 72 %
                                                                                                                Offshore Maintenance 16%
    Maintenance and Routine Assignments                                                                         Onshore Maintenance 12%
    Petromar performs all types of maintenance works, including prefabrication and hook-up of piping,
    structure erection and machining shop services. Complying with tight schedules and strict budgets
    is the challenge of turnaround maintenance. Petromar prepares, plans, manages onshore and
    offshore multidiscipline shutdown works on a turnkey basis, thereby minimizing the production
    downtime and ensuring the clients of optimum quality and safety while completely respecting the
    environment.

    Global maintenance and O&M services
    In response to Company policy and oil companies requirements to achieve ambitious objectives in
    terms of safety, quality, performance and operating costs, Petromar developed comprehensive
    contracting expertise that includes maintenance engineering services, spare parts optimization,
    procurement and inventory management, global maintenance and O&M contacts. Petromar
    Specialist maintain all types of equipment, including rotating machinery, turbines, compressors,
    vessels, piping, DCS and instruments electrical equipment, etc., either onshore in refineries and
    terminals or offshore on production platforms, FSO and FPSO.




                                                                                                                                            SAIPEM
                                                                                                                                  SUSTAINABILITY 22
                    PETROMAR STAKES WITHIN THE NEAR FUTURE
                    Petromar aims at consolidating in the near future its actual business and contribute to the socio-
                    economic development of the local communities through many new initiatives and projects. Petromar
                    aims at developing Angolan industry as a motor of the socio-economic development and, at the
                    same time, to contribute to the reduction of the environmental impacts of the oil & gas sector.
                    Petromar strategies for the near future involve the following projects:
                    MALONGO: Maintain its leadership position for routine jobs for ChevronTexaco (CABGOC).
                    SOYO - Maintenance of the onshore field Association FST/FS.
                    SOYO - Development of a new yard - Taking advantage of its position in front of the major offshore
                    oil field development, Soyo should meet a large development for local fabrication but also for
                    support services to oil companies in the near future.
                    LUANDA - Maintenance Bloc 3 - SONAGOL - Petromar succeed in the process to finalize a new
                    contract for the maintenance of the block 3 with the challenge to succeed the Angolanisation within
                    the next 4 years. Evaluation of personnel has been completed last year and a full training programme
                    has been initiated.

                    LNG Project - Opportunities for sustainable development

                    LNG project development in Soyo could be an important opportunity for the Country to:
                    • Take advantage of the need of the natural gas in the US and European market using associated
                       and non associated gas on Angolan oil and gas fields,
                    • Reduce gas flaring with significant benefits for the greenhouse effect,
                    • Sustainable development of the Angolan Industry by LNG project a motor of the local industry and
                       services,
                    • Further development of the Angolanization
                    • Develop a new urban reality in Soyo.
                    The Angola LNG Project is committed to working with the local community to create open channels
                    of communications. Through informational briefings and public consultation with government
                    officials, local officials, community residents and other key stakeholders, we will better understand
                    their issues and concerns. To ensure responsible operations and environmental safety, the project is
                    conducting a comprehensive Environmental Socioeconomic and Health Impact Assessment (ESHIA) to:
                    • Ensure minimal negative environmental, socioeconomic and health impacts
                    • Solicit input and provide open channels of communications with stakeholders
                    • Meet Angolan legislative requirements for Environment Impact Assessment (EIA)
                    • Align with World Bank guidelines
                    • Ensure commitment to biodiversity
                    Petromar and Kwanda think the LNG project could be an important option of development for the future
                    of the Country and participated to the recent discussion and bids for the construction of the plant.


                    KWANDA Lda
                    Kwanda, Lda is a joint operation between Sonangol E.P. and Delong Hersent Lda, a wholly owned
                    subsidiary of Saipem S.A. Created in 1982, the Kwanda main activity is connected with the
                    management of the Kwanda base, in the Soyo municipality, Zaire province. The base is ideally
                    situated to provide an efficient logistical support to the oil and gas companies, operating both
                    onshore and offshore in Cabinda and Congo basin (north-western Angola).


                    KWANDA Lda MISSION
                     To satisfy our customers on the Petroleum Industry, solving each challenge with safe entrust and
                     innovative solutions. Ensure the leadership on the Logistics Base sector, for the services excellence
                     and the results Maximization. To trust in ours equips/teams for their competence and motivation,
                     which contribute to the sustained development of the company and for the community.




      SAIPEM
23 SUSTAINABILITY
KWANDA ACTIVITIES
Kwanda is providing services to oil and gas companies in Soyo yard. Follow the description of the
company activities and the impacts on the environmental, socio economic content.

Industrial area
"Kwanda provides customized installation solutions to the clients"
• 60 hectares of quay-side stabilized warehousing and workshops, and development land, pipe racks,
• 70 additional hectares scheduled for future development,
• Drilling fluids plants,
• Network of sealed roads,
• Electricity (5,200 Kwh) and industrial water (130 m deep well) supply,
• Street lighting facilities,
• Water drainage system,
• Fuel storage area (4,500 m3) including gas oil, jet oil, and gasoline,

Port Area
"24 hours operations"
• 3 quays (400 m + 200 m + 2 x 100 m) with a draft of 7 m,
• Access channel: 7 m draft at the lowest tide of the year,
• Access for vessels up to 8.6 m draft at high tide,
• Fuel and electricity connections,
• Bulk plants,
• Temporary storage area.

Maintenance center
"Fast and efficient reaction”
• Teams always available in case of breakdown,
• Mechanical & electrical workshop,
• Scheduled checks,
• Well-stocked store,
• Computerized equipment store

Administrative Block
"High-tech telecommunications system"
• Kwanda Lda. and SONANGOL E.P headquarters,
• Immigration and customs officers,
• Transit agent and shipping companies,
• Meeting rooms,
• Spare offices fully equipped with high-quality furniture, computers transmission equipment and
  photocopy machines

Restaurants
"3 restaurants with a total capacity of 400 persons at one time"
• Main 1,220 sqm restaurant with 300 person capacity,
• cold lunch restaurant with 90 person capacity,
• VIP restaurant with 20 person capacity,
• Fully-equipped kitchens,
• Bakery and pastry kitchen,
• Dry food and cod storage.

Heliport
• Helipad,
• Current 490 m runaway, extension planned to 600 m for Super Pumas
• Direct jet fuel supply,
• Maintenance building,
• Separate waiting room for passengers.

Residential zone
"Total accommodation capacity of 500 persons"
• 64 villas fully equipped of 144 sqm each, including 180 studios (36 sqm) and 28 apartments
  (72 sqm)
• Cleaning & laundry services,
• Planned extension: 60 additional villas,
• Four stars hotel with 27 double bedrooms, 3 luxury suites and a business centre
                                                                                                          SAIPEM
                                                                                                     SUSTAINABILITY 24
                    Sport and recreation
                    "Full facilities for sport and recreation"
                    • 3 tennis courts, 1 basketball court, 1 hand ball court, 2 squash courts
                    • 1 gymnasium,
                    • 9 hole golf course,
                    • 1 swimming pool,
                    • Bar


                    KWANDA BASE FUTURE STAKES
                    Kwanda Lda. aims at developing its activities in the near future and contributing to the sustainable
                    development of the country and of the local communities. The main new challenges are related to
                    the ANGOLA LNG Project, if approved and developed it will represent an interesting development
                    opportunity for the Country and at the same time contribute to the improvement of the quality of the
                    environment. Moreover future projects are related to the development of the blocks 18 & 31 (BP),
                    32 (TOTAL) and 33 (EXXON), industrial wastes treatment, Pipe Management Project (drilling pipes
                    & equipments concentration in Soyo), PETROMAR future fabrication projects. To fully take advantage
                    of these future developments, new specific investments will be done by the company:
                    • Quay Side Expansion,
                    • Construction of a new road and purchasing of offloading and transportation equipment for the
                       LNG project,
                    • Design and construction of the LNG Project residential complex and associated facilities.


                    SAIPEM SPA - ANGOLA BRANCH
                     MESSAGE FROM STEFANO FRANCESCONI
                     The involvement of local employees in Saipem operations is a great challenge for all of us but this
                     is particularly true in a “special reality” as our drilling ship Saipem 10000 is. Saipem 10000
                     requires high professional workers in order to successfully and safely operate on board, for this reason
                     the employment of local worker needs a particular commitment. Professional and safety training,
                     English lessons for locals, good working conditions and favourable relationship between employees
                     and the company are few of the milestones essential to achieve interesting target of local content.
                     The involvement of more than 30% of Angolans within our crew is a really positive result rewarded
                     also from our client. We are going to carry on with this approach that is going to become another
                     Saipem 10000 core peculiarity.

                     Stefano Francesconi - Drilling Area Operating Manager


                    SAIPEM 10000 OPERATIONS IN ANGOLA
                    Saipem activities in the Angola off-shore are performed by Saipem 10000 too. Saipem 10000
                    allows developing high technologies projects and developing deep water wells.
                    The Saipem 10000 ultradeepwater drillship is the latest vessel to join Saipem’s drilling fleet and
                    represents an innovative and advanced addition to oil and gas exploration and production
                    worldwide. Built by Samsung Heavy Industries in its Koje shipyard in South Korea and completed in
                    2000, Saipem 10000 is a drillship for the new challenges of the ultradeepwater operations. The
                    vessel has been designed and built to Class III Dynamic Positioning (DP) specifications making it
                    capable of worldwide, year round operations. Saipem 10000 has been built to set a new standard
                    in drilling activities. The vessel has been designed and completely outfitted to explore and develop
                    hydrocarbon reservoirs down to 30,000 ft RKB, operating in water depths in excess of 10,000 ft in
                    full DP mode. The main operational modes of the vessel in DP are the following:
                    • drilling activities (exploration/appraisal/development);
                    • early production and extensive well production/testing;
                    • crude oil storage and offloading;
                    • well completion activities.
                    All of the equipment installed onboard the vessel has been designed to meet the most stringent
                    health, safety and environmental standards. Among the chief benefits gained through operating with
                    the Saipem 10000 are the particular arrangement of drilling facilities, the high pay load capacity
                    and its Extended Well Testing facilities.
                    Actually, Saipem 10000 is operating in Angola, involved in the following operations:
                    • Angola Girassol 130; deep water 1386 in October 2005 - Work Over
      SAIPEM        • Angola Jasmine 002 I1; deep water 1381.5 in September 2005 - Work Over
25 SUSTAINABILITY   • Angola Girassol 115 deep water 1324.7 from September to October 2005 - Work Over
• Angola Girassol 117 deep water 1325.9 in October 2005 - Work Over
Saipem 10000 is operating in Angola on behalf of Total E&P Angola and activities are planned in
Angola for the next 4 years.


SAIBOS
 MESSAGE FROM STEFANO PORCARI
 Sustainability is a management approach that takes into account the long-term concerns of stakeholders,
 developing the skill of the people, improving the environment and working with the local communities.
 As Saibos s.a.s. we launched our sustainability program in early 2005 and, I believe, we made good
 progress since then. We have been focused on safety, and we were able to improve our incident frequency
 rate, in particular on board our vessel “FDS” which has been actively operating offshore Angola during the
 past year. We have successfully implemented the Malaria Control Program fostered by one of our major
 Clients in Angola and we are managing our operations in a way to minimize any environmental impact.
 We have also promoted better community relations, employing local people and transferring knowledge
 and skills in order to contribute to an appropriate economic development. In this regard, education and
 training are the areas which we consider critical in our program and although we know that it may take
 some time before the benefits to the community are fully realized, we are building a workforce that is more
 diverse and global, deepening our roots in communities and improving the environmental quality.

 Stefano Porcari - Saibos President


SAIBOS OPERATIONS IN ANGOLA
Saibos Construções Maritimas Lda and Saibos s.a.s. are Saipem Group companies based in
Madeira (Portugal) and Paris respectively. Saibos C.M. Lda and Saibos s.a.s. are operating in
Angola with two main projects: Kizomba A and B and Rosa. The Kizomba - A and B are EPIC-type
projects developed in Angola on behalf of Exxon Mobil. Project aim at developing two subsea fields
by laying flowlines, installing risers, manifolds and umbilicals at depths of up to 1,000/1,250
metres. For these projects, newly-developed engineering concepts patented by Saibos involving
deepwater risers, was utilised for the first time. Projects are being carried out by the specialised FDS
vessel, which towards 2004 started installation of several pipe-in-pipe lines. The Kizomba A
development represents the first development phase of four discovered reservoirs (Hungo, Chocalho,
Kissanje, and Dikanza) located in Block 15 offshore Angola, West Africa approximately 370 km
Northwest of Luanda and 145 km west of Soyo. Kizomba A includes the development of the Hungo
and Chocalho reservoirs located in water depths ranging from 1108 m to 1257 m. A total of
36 dry production/water Injection/gas Injection trees and 23 subsea water and gas injection trees
will be required to develop the resource base. The Kizomba A field development includes also a
surface wellhead platform (SWHP) which is connected to a floating production, storage and
offloading (FPSO) vessel. The processed crude is offloaded to shuttle tankers via a moored offloading
buoy. Subsea, umbilical, riser and flowline components are configured to provide water injection
support and gas re-injection capability. Associated gas and treated produced waters will be re-
injected into the reservoirs. Saibos has been awarded the Tieback Contract for the Kizomba A
development comprising the gas and water injection risers and flowlines, the Oil Offloading System
and the Fluid Transfer Lines connecting the surface wellhead platform (SWHP) to FPSO as well as
the installation of the items provided by EPC4 including subsea umbilicals and termination
assemblies, flying leads, manifolds, flowline jumpers and manifolds jumpers, installation and
connection of the moorings for the FPSO and CALM. The Kizomba B development represents the first
development phase of two discovered reservoirs (Kissanje, and Dikanza) located again in Block 15
offshore Angola, West Africa. Kizomba B development reservoirs are located in water depths ranging
from 1108 m to 1257 m. A total of 54 wells of which 31 dry production/water Injection/gas Injection
trees and 23 subsea water and gas injection trees will be required to develop the resource base.
The Kizomba B field development includes a (SWHP) which is connected to a floating production,
storage and offloading (FPSO) vessel. The processed crude is offloaded to shuttle tankers via a
moored offloading buoy. Subsea, umbilical, riser and flowline components are configured to provide
water injection support and gas re-injection capability. Associated gas and treated produced waters
will be re-injected into the reservoirs. Saipem sa has been awarded the Tieback Contract for the
Kizomba B development comprising the gas, and water injection risers, the production risers and
flowlines, the Oil Offloading System and the Fluid Transfer Lines connecting SWHP to FPSO as well
as the installation of the items provided by EPC4 including subsea umbilicals and termination
assemblies, flying leads, manifolds, flowline jumpers and manifolds jumpers, installation and
connection of the moorings for the FPSO and CALM. On behalf of Total Exploration & Production
Angola, Saibos s.a.s. is developing the EPIC-type contract Rosa in Angola, comprising engineering,                  SAIPEM
                                                                                                               SUSTAINABILITY 26
                    procurement, construction, installation and commissioning of subsea pipelines, umbilicals and
                    risers at water depths of approximately 1,400 metres. The Rosa field is located in Block 17,
                                                                                                                                   S
                    approximately 200 km offshore from Angola in deep water ranging from 1,250 to 1,400 m. The
                    field will be developed using a Floating Production Storage and Operation (FPSO) unit connected to
                    the seabed via an Umbilical and Flow Lines System (UFL). The Bundle Hybrid Offset Riser (BHOR)
                    which forms part of the UFL will be constructed at the Petromar yard in Soyo. The fabricated BHOR
                    will be progressively pushed out into the adjacent lagoon on an existing ramp which will be extended
                    prior to the start of fabrication. After completion of the BHOR, it will be moved away from the ramp
                    and moored in a semi-flooded state in an open area of lagoon for hydrotesting. After hydrotesting, it
                    will remain at this location until it is time for transfer to site for installation. Transfer of the BHOR to
                    Rosa field will be performed through a nearby channel to the beach, and over the beach into the
                    open sea by tow. The project has developed on PETROMAR Yard in SOYO, a permanent fabrication
                    and assembly structure for pipes and increased the launching ramp capacity in the laguna in order
                    to launch heavy bundles. All these points contribute to reinforce PETROMAR industrial potential and
                    image towards Majors Oil Companies.




      SAIPEM
27 SUSTAINABILITY
STAKEHOLDERS
RELATIONS
 MATRIX ON SUSTAINABLE IMPACT
                                                                                                 EMPLOYEES
   CLIENTS

                   Sustainability commitment                                        Training

                                                                                Angolanisation

        Client satisfaction                                                 Employees Satisfaction

                                                                              Medical Assistance



                                     SAIPEM OPERATIONS IN ANGOLA:
                                                   KWANDA
                                                  PETROMAR                     Social Project         LOCAL COMMUNITY
                                                SAIPEM 10000
                                      SAIBOS – ROSA & KIZOMBA PROJECTS



             Angolanization Target              Local Purchasing         Sustainability Commitment




 LOCAL AUTHORITY                               SUBCONTRACTORS                                   PARTNERS



                                                                                                                SAIPEM
                                                                                                           SUSTAINABILITY 28
                    PETROMAR Lda & KWANDA Lda and all projects involved in the area, have made a long-term
                    commitment to develop in Angola through its investment and implementation of its businesses.
                    In order to maintain a high level of construction activity in Angola, plus to be able to answer to
                    the needs & requirements of the oil & gas industry in general, the following long-term plans have
                    been implemented:
                    • Retain existing capable local skilled and unskilled employees by providing further skill development
                       and opportunities for advancement. Recruit and train a more capable local skilled and unskilled
                       workforce, including employees, skilled workers, specialists and engineers.
                    • Further development and improvement of existing facilities. Investment in new and “state of the art”
                       tools and equipment to meet the stringent requirements of the evolving deepwater market.
                    • Transfer of knowledge and know-how to local partners and suppliers, or to foreign partners with
                       local Angolan sub-Contractor’s and suppliers.
                    • This plan has already been implemented for the following: permanent training of all disciplines of
                       Angolan workers: Soyo Base with a welding school (permanently 10 welders and 20 fitters in
                       school) increased in early 2002 to 30 welders; Block 3 and Luanda Base with a technical school
                       (mechanics, electricians, …).
                    • An extension of Soyo Yard construction area by PETROMAR Lda (50,000 m2) consisting of sheet
                       piling and back filling in the lagoon, was completed mid 2002.
                    • Yard improvements to optimize Kizomba B construction activities in Angola.


                    EMPLOYEES
                    In 1984, approximately 20% of Petromar’s employees were Angolans. In 2004, about 85% are
                    Angolans, showing the effectiveness of Saipem commitment in the Angolanization process that
                    exceeds also the local authorities’ requirement of 70% of local employees. The achievement of this
                    challenging target was possible also thanks to the particular effort in the professional training
                    program for locals even if the average skill of local employees can be considerate quite suitable for
                    the management of Saipem operations. In 2004 the annual training budget represents 1.5% of the
                    annual net sales. Petromar have placed particular emphasis on the training of welders and pipe-
                    fitters, both at the company school and through theoretical and on-site experience. Also Petromar
                    started specific trainings for mechanical and electrical skilled technicians. Continuous Angolanization
                    program has produced very positive results, with several skilled Angolan professional workers and
                    skilled technicians now operating on company sites. Petromar also trains Angolan engineers
                    worldwide, using specialised professional school, in Saipem and Eni Group structure. Petromar
                    endorsed and adopted a specific training policy related to the Angolanization objective of the
                    Petromar employees. The training activities, made also by expatriate teachers, are focused on basic
                    mechanical, electricity and instrumental training in the training center in Soyo (operated by Kwanda
                    base). Moreover language courses (English, French and Portuguese), and software courses are
                    provided to young employees. Petromar employees are organised in a trade union and Saipem
                    management established a good relations with their members thanks to the involvement of the
                    parties in specific improvement programs as the project of social partnership between employee’s
                    savings and Company funds for a retirement complement that is going to be adopted starting from
                    2006. Another interesting effort of cooperation between Saipem and the trade union is the creation
                    of a social fund that will have the participation of the company and the workers and that have the
                    scope of facilitate loans for workers. The level of satisfaction of local employees is monitored through
                    annual assessment interviews, the periodical formal meeting between top management and
                    employees representatives and informal talks with employees either on work place. Another important
                    commitment for Petromar is the medical assistance for workers and their family, the Company is
                    responsible for employees medical care and pays for the 70% of the medical assurance that covers
                    also employees’ families. The same policy of relationship with employees is followed also by
                    Kwanda. The percentage of local employees working for Kwanda is about 93%, much higher than
                    the law requirements of 70%. Most of employees have a long term contract even if in some case a
                    spot hiring is also adopted. The training programs to increase the skills level of employees are
                    characterised by a 6-8 months training period in small groups with an alternation of theoretical and
                    practical training. Also a first aid training is organised and managed by a certified instructor. All
                    these activities are organised in a 500 sqm training centre classrooms, laboratories and shops. The
                    training involves both local employees and local students to be selected for future works for the
                    Company. In 2005, the Company spent more then 1 million $, for this kind of training, that is
                    considerate as secondary school specialised training. Again the satisfaction level of employees is
                    periodically monitored in Kwanda through an assessment interviews; periodical formal meetings
                    between top management and employees representatives; informal dialogues with employees either
                    on work place or on village. In particular a space for employees to express their feelings about
                    company is open on Kwanda-Informativo, small company newspaper published every three months.
                    Angolanization and training are also key elements of the Saipem 10000 operations in the area with
                    a percentage of local employees of about 30% in 2005 and an amount of training hours of about
      SAIPEM        4,900. The Rosa Project developed by Saibos in Angola is also characterised by a strong policy
29 SUSTAINABILITY   through the local workers and training.
CLIENTS
Petromar is a key player in construction carried out in Angola, developed on behalf of Sonangol, the
National Oil Company. Sonangol has set a strong emphasis on operators in maximizing the Angolan
content for all new developments; such requirement forces contractors to develop original technical
solutions to be adopted for a fabrication in the Country. Constructions in Angola in recent deep water
projects were significant and tend to increase.
Kwanda actual main clients are:
• Esso Exploration Angola                            • Panalpina
• Halliburton                                        • Schlumberger
• Total                                              • Bakerhughes
• Chevron                                            • Weatherford
• Agip                                               • Primepower
• Sonaid / foraid                                    • Bureau veritas
Kizomba A and B projects are developed on behalf of Exxon Mobil Development Company, while
Rosa project is developed on behalf of Total Exploration and Production Angola. Clients’ commitment
to sustainability is really evident since from websites particularly focused on the Corporate Social
Responsibility. Total, in particular, is directly involved in the management of the relationship with the
local stakeholders and is in charge to pay for the local community expenditures. Also the Saipem
10000 is operating in Angola on behalf of Total E&P Angola. Customers satisfaction analyses are
regularly carried out by S10000 quality department thought the use of specific questionnaire. It’s not
scope of this report to describe the considerable amount of client’s initiatives of corporate
responsibility that in certain cases are also related to the Saipem presence in the Country.


LOCAL AUTHORITIES
Local Authority in Angola established the law Number 10/79, of 1979, that required that the
companies covered by this law should employ Angolan workers, guaranteeing them the necessary
technical and professional education, and that foreign workers can only be hired when qualified
Angolan workers are not available. Target for Saipem companies operating in Angola are fixed in
70% of local employees.


PARTNERS IN BUSINESS ACTIVITIES: SONANGOL
Petromar and Kwanda are working in Angola in joint venture with Sonangol, the Country Oil
Company, sharing the business and the managerial goals. Sonangol also works towards providing
better conditions for the development of Angola community by supporting projects in education, the
arts, sports, science and the environment.


SONANGOL (E.P.)
Sonangol (E.P.) (Sociedade National de Combustiveis de Angola), created in 1976, has the mission
to carry out:
• Prospecting, drilling, development and production of liquid and gaseous hydrocarbons,
• Refining, distribution and commercialization of oil and derivates.
In the agreement with law 13/1978, Sonangol E.P. is the exclusive concessionaire, on the national
territory, of the mining rights of the hydrocarbons prospecting, drilling, development and production.


 SONANGOL POLICY: TRANSFORMING RESOURCES INTO SOCIAL
 WELL-BEING
 Our commitment to sustainable development and the stability of Angola is the central premise of our
 philosophy. This commitment is visible in the annual budget set aside for investment in community
 projects.

 Sonangol Vision
 • Become an integrated and competitive company
 • Maintain itself as a catalyst of national development
 • Meet its responsibilities with the State, economic partners and society overall
 • Become one of the key players in the African oil market
 • Project itself as a prestigious entity within the international market
                                                                                                                 SAIPEM
                                                                                                            SUSTAINABILITY 30
                     Sonangol Corporate Goals
                     • Sonangol’s prime objective is the prospecting, research, development, production, transportation,
                       commercialization and transformation of liquid and gaseous hydrocarbons and their derivatives,
                       including petrochemicals.
                     • Sonangol may, in terms of applicable legislation, establish in conjunction with national and/or
                       foreign entities the type of association and cooperation that is most beneficial to the fulfilment of its
                       social objective.
                     • Sonangol may, in pursuing its social objective, constitute new companies and acquire all or part of
                       the capital of an established company and whenever it detains a totality or a majority of the voting
                       capital of said companies, it will establish the coordination, economic and financial direction
                       and the business development of the said company.
                    • When establishing companies and joint ventures, Sonangol shall observe the principles of
                       specialization and vertical integration, in order that the companies thereby constituted maintain
                       their legal identities.



                    COMMUNITIES
                    Around Kwanda base there are 56 villages and 1,446 families with an average of seven people by
                    family. The local community living around Kwanda base represents approximately 10,150
                    inhabitants. The ethnic group of Bassolongo has the majority in this area.
                    Incomes generated by local activities are:
                    • traditional fishing: 60 US$/month/family;
                    • small cultivations: 10 US$/month/family;
                    • rural commerce: 10 US$/month/family.
                    The sustainable development bases its roots on the creation of value in the long term cooperation,
                    contributing to the development of the local community where the company is located. Petromar
                    has a large experience in the integration with the local community in coordination with the Saipem
                    Group policy and the Sonangol policy. Kwanda and Petromar are developing social projects in its
                    Sustainability framework. It is Petromar and Kwanda policy to identify and develop social projects
                    strictly connected with its business activities. For instance Petromar developed different schools at
                    local level for young students that could be involved in the future Company activities. At the same
                    time Kwanda shares its experience on health with local communities by providing medical services
                    and opinions to employees, their families and local communities.
                    Main Petromar Social Projects are listed below:
                    • Water supply Ambriz (construction and maintenance)
                    • Kavuge School (4 class rooms and 200 pupils)
                    • Soyo power plant and waterproviding
                    • Agrisud project for sustainable agriculture and biodiversity
                    Moreover Kwanda participated to other social projects, in cooperation with local partners, and in particular:
                    • Schools in Kitxitxi, Kintambi, Mongosoyo, Kitona, Pinda, San Jose do Cluny
                    • Maternity clinic in Kikudo
                    • Medical centre in Quimpondo
                    • Centro Emissor do Pangala
                    All Social Projects are planned and executed based on specific needs presented by Local Community
                    authorities either governmental, traditional (soba) or from church. On all phases of social projects
                    meetings and reports are performed to measure the effectiveness. Petromar spent about 272
                    thousand US$ for social projects in 2004 (Soyo project and Water project in Ambriz).


                    SUSTAINABLE DEVELOPMENT: WATER SUPPLY AMBRIZ
                    Petromar completely financed, by the involvement of local construction workforce and companies,
                    the realization of a water supply system in Ambriz for the water distribution to the town.
                    Petromar is still carrying out the maintenance of the plant.

                    Pumping Station                                                                                       35 m3/h
                    Pipeline for the water collection                                                                       12 Km
                    Water treatment plant                                                                  Filtration /Chlorination
                    Water storage                                                                                          100 m3




      SAIPEM
31 SUSTAINABILITY
TRANSMITTING OUR KNOWLEDGE TO FUTURE GENERATION:
THE SCHOOL KAVUGE PROJECT
Petromar is committed in transferring to the future generation the basic knowledge in the community
where operates. Petromar started many cooperation programmes with the local communities and
the Minister for Education to contribute to the school building. Petromar participated at many schools
construction and in particular to the school in Kavuge with 4 class rooms, one teacher facility, water
and electricity supply.


POWER PLANT IN SOYO AND WATER PROVIDING AND DISTRIBUTION
Petromar aims at contributing to the social development of the local communities by providing
electricity supply. 8 MW Power Plant for electricity supply of Soyo Region from the gas available on
Fina Congo 2 onshore field, have been financed by Petromar in cooperation with local companies
in charge of the construction.

One of the main problems of the population living close to Soyo City is the old service water system
that creates great difficulties for the local people. The rehabilitation of the water supply and
distribution network has been considered one of the best projects to be developed by Petromar and
Fina Petroleos de Angola to improving life standards of the population. The project consists in the
construction of 4 wells for the water supply and the rehabilitation of the local network for the water
distribution. The total cost for the project is about 345,000 US$ that will be jointly sponsored by
Fina and Petromar that is also responsible for the management of the project.


AGRISUD PROJECT FOR SUSTAINABLE AGRICULTURE
In 2004, Kwanda started a sustainable agriculture project providing 40 hectare in Ambriz for
agriculture production. Kwanda, through the involvement of NGO (non-governmental Organisation)
experts on sustainable agriculture (Agrisud), identified 40 families in Ambriz to learn on the
techniques for sustainable agriculture and to manage the land provided to produce different
agriculture products for personal use and to be sold to Novagest, the catering company for the
Kwanda base. The Kwanda Agrisud project is an innovative way to involve local communities to
disseminate agriculture products to be sold to the market of the oil companies in Kwanda. The
project is developed according the modern techniques to preserve biodiversity. Amriz families have
the opportunity to learn about agriculture and to have monetary return by their activities. Kwanda
spent more than 200 thousand US$ for the Agrisud project in 2004 and 2005. For 2006 the same
level of investment is forecasted for the Agrisud project, in particular for the technical assistance, the
involvement of NGO experts and the pumps and installations for water plant.


SUBCONTRACTORS
PETROMAR Lda & KWANDA Lda enjoy long-term relationships with local Subcontractor’s, Suppliers &
the local industry. Long-term agreements have been developed with selected Sub-Contractors &
Suppliers in order to develop the local industry & establish a win / win relationship with local partners.
The selection of such Sub-Contractor’s & Suppliers is based upon contractors quality procedures
and of objective criteria such as:
• Quality & Technical ability.
• Capacity.
• Performance & references.
• Financial conditions.
• Knowledge of local conditions.
• Health, Safety & Environment policy.
• Delivery.
• Price.
As internal policy both Petromar and Kwanda are exploiting the possibility to involve in their business
local subcontractors and suppliers in order to continue the process of integration in the local reality.
As a particular effort in 2005 Petromar launched an enquiry to establish local suppliers and
subcontractors register. And in 2006 it is expected a qualified local Vendor List to be established.
In parallel also Kwanda is ready to establish its local vendor list.




                                                                                                                  SAIPEM
                                                                                                             SUSTAINABILITY 32
PERFORMANCE
INDICATORS

 HEALTH, SAFETY, QUALITY AND ENVIRONMENT MANAGEMENT
 Petromar is committed to the development of Health,
 Safety, Quality and Environment programmes. In
 2005 Petromar redefined its Quality and Sustainability
 policies and specific programmes and objectives, on
 the basis of Saipem Group policies and programmes.
 The Petromar quality system is based on the
 requirements of ISO 9001/2000 and the Sustainability approach according to the international guidelines and recommendations and

 the Saipem Group Standards.


        SAIPEM
 33 SUSTAINABILITY
S
    Sustainability, as well as quality and HSE activities are managed both in the Company headquarter
    in Luanda and on the facilities. The company Sustainability team is located as staff to the General
    Director and it is strictly related to the Saipem Sustainability Team in Milan.

                                               Company Organization

                                                 GENERAL DIRECTOR


                                                                               Deputy General
                                                                                  Director



                            HSE Dept.


                              Quality
                               and
                        Sustainability Dept.




                    Financial &              Human
                    Control Dpt.          Resources Dpt.      Operation Dpt.            Sales Dpt.



    The Petromar Lda Quality Policy, signed on September 2005, is based on the following principles:
    • Attitude toward complete customer satisfaction through both the observance of the relevant
       requirements for the delivered services, and collection and analysis of feedback information;
    • Attitude toward proposal and implementation of Quality Management System and work processes
       continuous improvement plans by means of a process approach, in accordance with established
       objectives attached to the present document;
    • Attitude toward complete involvement of the whole personnel in order to ensure that everybody is
       aware of the relevance and importance of their activities, and how they contribute to the achievement
       of quality objectives.
    Petromar Lda has consequently adopted a Quality Management System, which conforms to the ISO
    9001:2000 Standard as a guide for the company management. Petromar Sustainability policy issued
    in September 2005 stated that Sustainability incorporates three principles that are of particular
    significance within Petromar:
    • Protection of environment,
    • Respect of human and social rights of employees,
    • Contribute lo the local economic development.
    Following the Corporate approach toward sustainability, Petromar approach is based on creation of long
    term shareholders value by contributing to the development of the local communities where it operates.
    Petromar is committed to achieve the development through the environmental protection, economic
    growth and social progress, attention to local suppliers and professional training for local content.
    Regarding HSE, Petromar main objective is zero accidents; preventive actions and an HSE management
    system is in place to avoid work accidents and to assure operations fully in compliance with the more
    stringent environmental strategies. A safety officer is continuously on duty at each sites, Safety Briefing on
    instructions and operating modes are provided for all new employees. The personnel are made aware of
    the risks on the job and regular safety "on the job" meetings are held on all our projects. Safety audits
    and safety drills are regularly at our sites.




                                                                                                                          SAIPEM
                                                                                                                     SUSTAINABILITY 34
                    HSE PROGRAMMES IN KWANDA
                    Key elements of the Kwanda HSE Management System and organisation are presented in the
                    following paragraphs.


                    ACTIVE PREVENTION
                    "Our objectives: zero accident and applying preventive action to avoid work accident"
                    An on-site safety officer is continuously on duty, and we provide a Safely Briefing on instructions
                    and operating modes for all new employees and clients. Our personnel are made aware of the risks
                    on the job, and safety meetings (daily, yard, post-incident or accident, of safety committee meetings)
                    are organized regularly. Safety audits (general, thematic and post safety) and safety exercises (fire
                    fighting, serious accident reaction, use performed breathing apparatus, spill response) are regularly
                    performed on Kwanda base. Whatever the sector, safety remains the foundation on which all Saipem
                    projects are built.


                    SECURITY
                    “Base Security”
                    • Peaceful and secure environment,
                    • Systematic checks at the main gates,
                    • Boundary fence around the base,
                    • Specialized security company,
                    • Base per meter patrolled by vehicle,
                    • Seaside and access channel patrolled by speed boat.
                    Fire fighting
                    • Trained firemen on call 24 hours a day,
                    • 37 fire hydrants,
                    • 5 kg carbon dioxide extinguisher


                    ENVIRONMENT PROTECTION AND SUSTAINABILITY
                    The Kwanda base is managed taking into consideration all the environmental implications.
                    “Our activities are environmental friendly”
                    The Base is managed with particular vigilance on:
                    • Hazardous-product transport and storage,
                    • Waste sorting and evacuation,
                    • Fuel and lubrificant storage to prevent runoffs,
                    • Radiography, smoke, noise,
                    • Emergency spill response.
                    Infrastructure
                    • Sewage treatment plant,
                    • Waste management system and facilities,
                    • Incinerator for domestic and industrial waste

                    The Sustainability Policy signed in 2005, is in line with the Saipem Corporate commitment and
                    defines and clarifies Kwanda principles in the business approach.
                    As Petromar, also Kwanda issued in 2005 its quality policy in which the principles and commitment
                    toward a quality management system is stated. The Sustainability Policy, again signed by the
                    General Manager in 2005, is in line with the Saipem Corporate commitment and defines and clarifies
                    Kwanda principles in the business approach.


                    MEDICAL FACILITIES
                    "In case of emergency"
                    • Expatriate doctor assisted by national doctors (on call 24 hours a day) and by 3 nurses,
                    • Fully-stocked pharmacy,
                    • Clinic (1,120 sqm),
                    • Blood testing machine,
                    • Intensive care and reanimation units,
                    • Dental cares,
      SAIPEM
                    • RX equipment,
35 SUSTAINABILITY
• Oxygen supply unit,
• Efficient evacuation procedure by helicopter.
Health
• Twice yearly employee medical control,
• Regular health and Quality audits of the catering service


ENVIRONMENTAL SITUATION
The Kwanda Base is located at Soyo, on the northern border between Angola and Democratic
Republic of Congo. The base is situated on the Congo River’s delta in an area consisting of
lagoons, mangrove and a sand beach ridge. Kwanda Base covers approximately 160 hectares,
half of which has been developed for industrial use. It is accessed from the east via a main
road which connects the base with the towns of Soyo and Quifuquena (Fina oil refinery) and
continues through the base to the commercial port area in the west. The base is presently used
as a logistics support base for the Angolan oil industry and has areas dedicated to storage and
warehousing, fuel storage, helicopter transfers, administration and accommodation. The
environment is a large area of mangrove, covering an estimated 5,000 hectares around Soyo
and extending further up the River Congo. The area of mangrove is dissected by a number of
river channels which in some cases leave isolated ‘islands’ of mangrove. The mangrove is in
relatively primary stage and in equilibrium with water and soil.


MAIN ENVIRONMENTAL IMPACTS OF OPERATIONS
The aim of this chapter is to identify Saipem operations environmental impacts in the Country.
Environmental impact assessment was performed for the bundles fabrication activities at Kwanda
Base in Soyo construction yard in Angola in 2000. In July 2005 other impacts were evaluated
in Soyo for the Rosa Project. Magnitude of the anticipated impacts of project activities on water,
soils, vegetation, fauna, biogeophysical environment, waste management and socio economic
issues were rated and mitigation measured proffered to reduce the magnitude of identified
adverse impacts. Particular attention was made on the Congo River’s delta in Soyo in an area
consisting of lagoons, mangroves and a sand beach ridge.


OPERATIONS YARD
The operations related to fabrication mainly generated the following impacts on the
environment. Operations require the use of hazardous products such as paints, oil and
diesel. In the Kwanda base, the bulk liquids stored on the fabrication area are diesel for
power generation, various types of oils and drums of paints. Potential spill of hazardous
products can contaminate soils and surface run off water including the lagoon through the
drainage ditch. The area slopes slightly to the southeast where a drainage ditch has been
dug to collect surface run off water and transfer it directly to the lagoon. An accidental spill
can cause a major impact on the lagoon and its environment. Intensity of the impact depends
on chemical spilled, volume and type. The hydraulics tests executing in storage areas mainly
use industrial water from Kwanda base (neutral pH) without any stabilizer or chemical
injection. Soils can be impacted by pollution after an accidental spill. Usual waste and litter
produced by fabrication are non hazardous wastes, potentially hazardous wastes. The
paragraph related to the waste generation shows that the majority of wastes generated by
fabrication are non-hazardous wastes.


MAIN PROJECT IMPACTS
Kizomba A:
The offshore facilities are approximately 120 km away from the coast and its inhabitants, therefore the
noise impact on the environment is negligible. Gas emission corresponding to 15,462 ton of fuel oil is
mainly made up of carbon dioxide (CO2). Nevertheless, the offshore installation is optimized to reduce
these emissions to a minimum. Manning waste corresponding to 59,298 man-days which corresponds
to the legal release of a small size town of 6,000 people during 10 days. Specific Installation operations
as the installation of suction anchors induced a volume of water and sediment displaced that is
approximately 13,621 m3. Welding operations produce a total discharge to the atmosphere that is
about 0.59 kg of welding fumes, made up of carbon dioxide (CO2, over 50%) and natural elements
such as carbonates and steel. Total discharge to sea is 2,402 m3 with initial and final concentrations of
1.33 m3 (600ppm) and 0.22 m3 (100ppm) respectively of active inhibitor.
                                                                                                                  SAIPEM
                                                                                                             SUSTAINABILITY 36
                    Kizomba B:
                    Regarding the noise generated, the offshore facilities are approximately 120 km away from the
                    coast and its inhabitants, therefore the impact on the environment is negligible. Gas emission
                    corresponding to 20,341 ton of fuel oil is mainly made up of carbon dioxide (CO2). Manning waste
                    corresponding to 99,662 man-days. Specific Installation operations should generate specific
                    impacts as the installation of suction anchors that displaced a volume of water and sediment of
                    approximately 13,111 m3. The welding activity produced a total discharge to the atmosphere of
                    about 0.118 kg of welding fumes, made up of carbon dioxide (CO2, over 50%) and natural
                    elements such as carbonates and steel. Total discharge to sea is 1,727 m3 with initial and final
                    concentrations of 0.96 m3 (600ppm) and 0.16 m3 (100ppm) respectively of active inhibitor. Dye
                    concentration will be approximately 50 ppm or 0.07m3.

                    Rosa:
                    After the construction activities that are located in the Kwanda base the Bundle Hydrid Offset Riser
                    (BHOR) will be transferred to Rosa field Block 17. This operation will be performed through a nearby
                    channel to the beach, and over the beach into the open sea by tow. Some dredging of the channel
                    will be necessary to achieve a uniform depth of around 3.6 m. The completed channel will then be
                    used to contain the complete BHOR and the lagoon end of the channel will be sealed with sand.
                    Once the channel is sealed, the 20 m stretch of beach at the ocean edge will be partially breached
                    to allow the semi-filled BHOR to be towed out of the channel into the open sea for transfer to the
                    operating site. After removal of the BHOR, the beach will be rehabilitated to its original height and
                    profile and the channel containing a mix of lagoon water and sea water, will be opened with a direct
                    communication between channel and lagoon. The expected duration of the activity from closure of
                    the channel to reinstatement of the beach is around 2 days. Dredging of the channel located in the
                    vicinity of the yard can mobilize fossil sediments which present different physicochemical
                    characteristics from current sediment. This mobilization can change water physicochemical balance
                    in the lagoon and increase turbidity. An accidental spill can cause a major impact on the lagoon
                    and its environment. Intensity of the impact depends on chemical spilled, volume and type. Water
                    required for a hydrotest is approximately 100 m3. The test uses industrial water from Kwanda base
                    (neutral pH) without any stabilizer or chemical injection. Once the BHOR is stored in the channel,
                    the channel will be sealed with sand. The channel can remain closed 20 days. The longer the
                    storage is; more water is going to stagnate and to develop an eutrophication. During the beach
                    transfer, the beach will be partially breached in order to get the BHOR out to sea. Sea water presents
                    a salinity five times as high as lagoon water. Sea water will enter in closed channel but will remain
                    in the channel without enter in the lagoon. Closure of the channel, reduces the risk of pollution of
                    the lagoon with salty water. Excavated and dredged materials are used for bunds construction. This
                    material can forms bunds with steep slopes which will become barren and quickly eroded. Excess
                    of dredging material is about 26,000 m3. Disposal of these materials in the lagoon can create
                    areas with low depth. It is going to reduce currents in the lagoon and deteriorate environmental
                    balance. By increasing acidification, it can generate indirect impacts on the vegetation with total
                    wilting of the vegetation. Soils can be impacted by pollution after an accidental spill. In an estimated
                    area of 5,000 hectares of mangrove in Soyo area, less than 1 hectare of mangrove will be impacted
                    (<0,02%). Existing channel will be extended to approximately 400 m into the lagoon. A branch of
                    lagoon will be closed. This branch of lagoon will not be completely isolated because there is another
                    small supply of water north of the branch. But this barrier is going to strongly reduce the current in
                    this branch and deteriorate the environmental balance. Lagoon water is rich in protosulphide that
                    can turn into sulphate when water is stagnating. This modification can cause an acidification and
                    damages to the mangrove forest. Wastes generated during pre-fabrication phase are expected to be
                    low in volume and non-hazardous.




      SAIPEM
37 SUSTAINABILITY
ENVIRONMENTAL INDICATORS
WASTE GENERATION
Kwanda operations generated in 2004 about 480 tons of waste, 91% of which non                                                                                 Petromar Hazardous waste 2004
hazardous waste mainly cooking waste and mixed non hazardous waste. About 42 tons of
hazardous waste were generated in 2004 mainly composed by exhausted oil from engines
and hydraulic circuits. Petromar activities in 2004 generated about 110 tons of waste; 99%
of which as mixed urban non hazardous waste. The small percentage of hazardous waste


                2004 Kwanda Hazardous waste                                                  2004 Kwanda non Hazardous waste
                                                                                                                                                                  Batteries & accumulators 58,2%
                                                                                                                                                                  Mixed hazardous waste 36,4%
                                                                                                                                                                  Oil filters 5,5%




  Exhausted oil from engines 54,5%         Oil filters 1,0%                                           Cooking organic waste 51,1%
  Exhausted oil from                       Mixed hazardous waste 0,7%                                 Mixed urban waste 47,3%
  hydraulic circuits 36,3%                 Ashes & scoriae from boilers,                              Used tyres 1,5%
  Sanitary waste 4,5%                      air treatment plants or incinerators 0,1%
  Batteries & accumulators 2,9%




was batteries and accumulators and mixed hazardous waste. All oily waste and batteries
are recycled by external certified subcontractors.
Saipem 10000 waste management is characterised by a recycling program based on two
phases. Phase I went into effect during 2002 and started with a training program for all
personnel done by an external expert. The management put in place procedures for managing
materials segregate and prepare equipments, allocate place for waste containers and bens
to collect materials. Materials are segregated in categories as follow: Paper, Plastic, Glass,
Metal, Aluminium, Organic residue, Non recyclable residue, Contaminated Residue, Medical
waste. Phase II included again the training program for all personnel, the monitoring and
improvement program for segregation. At the present the waste segregation remains in personnel
attention. The ship management continues to monitor the situation and the planned trainings for
new personnel. In 2005 Saipem 10000 waste generation was of about 1,300 tons, 59% as non
Hazardous waste composed as presented in the following graph. This data considers also operations
managed by S10000 outside Angola, in the first semester of 2005.


                    2005 S10000 Hazardous waste                                                     2005 S10000 non Hazardous waste




   Exhausted oil from engines 37%                 Other Contaminated Waste 9%                Mixed urban waste 27%             Paper and cardboard 13%
   Other chemical waste 15%                       Ashes & scoriae from boilers,              Ferrous metal refuses/waste 18%   Other non-hazardous waste 7%
   Mixed Hazardous Waste 15%                      air treatment plants or incinerators 9%    Wood 17%                          Cooking organic waste 3%
   Waste from the cleaning of tanks               Exhausted oil from hydraulic circuits 2%   Plastic 15%
   and reservoir for transport & stockage 11%     Other oils & greases 2%




                                                                                                                                                                                     SAIPEM
                                                                                                                                                                          SUSTAINABILITY 38
                    ENERGY CONSUMPTION
                    In 2004 Kwanda energy consumption was about 7,500 Toe, almost completely composed
                    by electric energy from the public network. Petromar energy consumption is mainly related
                    to the diesel consumption (about 850 tons). Saipem 10000 consumed 23,760,000 Kwh
                    of' self-generated electricity and about 10,000 tons of diesel.


                                               2004 Kwanda Energy consumption




                                                         Electric Energy 99,6%

                                                         Diesel 0,42%

                                                         Gasoline 0,002%




                    WATER CONSUMPTION AND DISCHARGE
                    In 2004, Kwanda water consumption was about 31,100 m 3 mainly underground water used
                    as service water. Small amount of non desalinated sea water was used for the roads
                    cleaning. In 2004 Petromar water consumption for general services was about 2,000 m 3 .
                    All water discharge is treated in external water treatment plants. Saipem 10000 consumed
                    in 2005 about 45,000 m 3 of water; 30% of the total as desalinated sea water.




      SAIPEM
39 SUSTAINABILITY
ECONOMIC INDICATORS
The contribution that Saipem can give to the local economy is strictly related to the company
turnover and the opportunity to spent money locally through the purchasing of local goods and
the involvement of local companies for services. Other significant aspects related to the economic
issues are the payment of the local employees compared to the average of the Country and the
total labour costs for local staff and workers. In this chapter are also included the expenditures
for health, safety and environment that contribute to the general evaluation of Saipem
commitment in these issues.


LABOUR COSTS
Petromar increased its annual turnover in the past years and in 2004 the results was about 80
M US$. Total cost for salaries of local employees was about 6 MUS$ in 2004 and about 866
thousand US$ for other benefits and contributions. The average monthly salary for Saipem Group
local employees is 575 US$ about 283% more than the average salary in the country.

                                         Petromar Annual turnover
                     80

                     70

                     60

                     50
             M US$




                     40

                     30

                     20

                     10

                      0
                          1996   1997   1998   1999   2000   2001   2002   2003   2004



Petromar costs for local employees (US$)                                                      2004
Salaries for local employees                                                             6.081.728
Social contribution for local employees                                                    866.518
Company Average annual salary for local employees                                           21.500
Company Average monthly salary in the Country for workers                                      150
Company Average monthly salary for workers                                                     575

Taking advantage of a new legal structure since December 2002, the Base of Kwanda is in
a favourable situation with controlled costs structure, and a great short-term activity
potential. With a ten years contract signed with Exxon in November 2001, the Base will
shortly take full advantage of logistical activities needed for block 15 development, and is
getting prepared to face its future stakes.
Kwanda cost for local employees was about 2 MUS$ in 2004 and about 178 thousand US$
for benefits and contributions. The average annual wage for them is more than 11.000 US$.

Kwanda cost for local employees (US$)                                                         2004
Salaries for local employees                                                             2.064.723
Social contribution for local employees                                                    177.866
Average annual salary for local employees                                                   11.645




                                                                                                          SAIPEM
                                                                                                     SUSTAINABILITY 40
                                     CONTRIBUTION TO THE LOCAL ECONOMY
 Petromar - Services subcontracted   In order to give an idea of the contribution of Saipem companies in the Country, the local
                                     cost contribution is presented through the following graphs. Petromar local costs are mainly
                                     for local services that represent the 66% of the total amount. Cost for work of local
                                     employees represents 16%, leases 8% and materials the 3%. Comparing the value of the
                                     services subcontracted by Petromar, 37% of this value is related to services that are
                                     subcontracted locally. An even more result in the integration in the local context is achieved
                                     considering the purchasing of materials; 50% of the materials bought for the Petromar
                                     operations is local materials managed by local companies. For Petromar, the amount of
      non local subcontractors 63%   services subcontracted at local level are more than 30 million US$ in 2004. Also Kwanda is
      local subcontractors 37%
                                     working to have a particular value for the local communities. For this reason the attempt to
                                     have local expenditures is one of the targets of the management. Main local costs are related
  Petromar - Material Purchasing     to services 39%, leases 16% and work 16%.


                                               Petromar - Local Costs Distribution                        Kwanda - Local Costs Distribution




      non local subcontractors 50%
      local subcontractors 50%


                                                     Services 65%   Leases 8%                                   Services 39%   Leases 16%
                                                     Work 16%       Materials 3%                                Others 17%     Raw Materials%
                                                     Others 8%                                                  Work 16%       Materials 1%




                                     HSE EXPENDITURES


                                                                             Petromar Safety Expenditures




                                                                      Personal Protective   Periodic Maintenance
                                                                      Equipment (PPE) 45%   & Control 13%
                                                                     Insurance 23%          Safety Equipment:
                                                                                            Advertising signs & posters 1%
                                                                     Safety training 17%
                                                                                            Safety Publication 1%




        SAIPEM
41 SUSTAINABILITY
SOCIAL INDICATORS
The Kwanda base at Soyo is the major employer in the area of Soyo with about 400 people.
The following paragraph underlines the possibility for Saipem companies in Angola to employ
local people and give them the possibility to grow in a professional way through the training
activity strongly sponsored in most all Saipem reality. Safety performance of Saipem operations
in the Country is also presented below.


EMPLOYEES DISTRIBUTION
Considering Kwanda employees, this is one of the major results of the attempt of the company to be
fully integrated in the country of operations. The company fixed as 70% the target of local employees,
this target, also suggested by Local Authorities has been fully achieved and exceeded. Angolans
represent almost the totality of the employees (93%), 348 employees are locals while 26 are
expatriates as monthly average in 2005. They are characterized by a quite long permanence in the
company as the 35% have from 6 to 10 years of seniority in Kwanda. The distribution of the
employees by age doesn’t give clear evidence the most of the employees are distributed within as
36 and 50 years old. About 45% of the local employees are represented by trade union
organizations. Specific logistic and catering services provided in Kwanda base are subcontracted to
local companies. In particular Novagest deals with the catering services involving about 300 local
employees and provides about 1600 meals per day. Kwanda services provided by Novagest and
other logistic local companies amounts to 8 million US$ in 2004.
Petromar employees’ data are available for 2004 and 2005. The trend shows an increase of the
number of employees from 791 to 1446, almost doubling. Also Petromar fixed as 70% the target
of local employees and this target has been achieved in 2004 with the 84% of Angolans. Most of
Petromar employees have seniority between 1 and 5 years and an average age of 31-35 years.
The company investment for health protection for employees and their families amount to 1.5 million
US$ for 2004.

                                 Kwanda Employees distribution                                                           Kwanda
                                                                                                              Employees distribution by seniority
                                                                                                         80
                                                                                                         70
                                                                                                         60
                                                                                                         50
                                                                                                         40
                                                                                                         30
                                                                                                         20
                                                                                                         10
                                                                                                          0
                                                                                                               <1      1-5    6-10    11-20   > 20
                                                                                                               year   years   years   years   years




                                     Angolan 93%        Expatriates 7%



                                   Petromar - Employees distribution
               1500



               1200



                900



                600



                300



                  0
                                 2004                                2005

                                                                                                                                 SAIPEM
                      Angolan    Expatriates                                                                              SUSTAINABILITY 42
               Rosa Project:                                                            Kwanda
        employees distribution by age
80                                                                             Employees distribution by age
70
                                                         50
60
50
40
30                                                       40
20
10
 0
      <25 26-30 31-35 36-40 41-45 54-55 47-50 >56        30
      years years years years years years years years
       old   old   old   old   old old old old



               Rosa Project:                             20
      employees distribution by seniority
120

100

80                                                       10
60

40

20                                                        0
 0
        <1       1-5       6-10      11-20     > 20
                                                              <25      26-30    31-35     36-40    41-45    54-55    47-50        >56
        year    years      years     years     years          years    years    years     years    years    years    years        years
                                                               old      old      old       old      old      old      old          old


                                                                                         Petromar
                                                                                Employees distribution by age
                                                        200




                                                        150




                                                        100




                                                        50




                                                         0
                                                               <25      26-30     31-35    36-40    41-45    54-55    47-50        >56
                                                               years    years     years    years    years    years    years        years
                                                                old      old       old      old      old      old      old          old

                                                              2004     2005

                                                                                      Petromar
                                                                           Employees distribution by seniority

                                                        300



                                                        250



                                                        200



                                                        150



                                                        100



                                                         50



                                                          0
                                                                                             6 0              20              2

                 SAIPEM
      43 SUSTAINABILITY
Saipem 10000 employees’ distribution is presented in the next graph, showing that the 31% of the
crew is composed by Angolans. This data should be considered as particular important considering the
peculiarity of the job offshore and the short term of the operations usually developed in one single
country. In addition to this Saipem has to solve languages incomprehension due to the official Saipem
10000 language that is English and the local’s mother tongue that is Portuguese.
The Angolanization attitude of the Saipem operating companies in Angola involves all projects that are
developed by the companies. This is the case of the Rosa, developed by Saibos s.a.s. in Angola, as
showed in the follow graph about 95% of the people involved in the project are locals.


                                  Drilling ship Saipem 10000
                                  Employees & Subcontractors




                                      Expatriates 69%    Locals 31%




                               Rosa Project employees distribution




                                      Locals 95%         Angolans 5%




                                                                                                              SAIPEM
                                                                                                         SUSTAINABILITY 44
                                    TRAINING
     Petromar: Participants to      In the companies’ policies, training is an important task for the improvement of the employee’s
    technical training courses
                                    knowledge and for the business competitiveness. Both Kwanda and Petromar have specific training
                                    programs for local employees. These include specific training courses, training on the job and
                                    dedicated school for Welders and Pipe fitters. Petromar registered in 2004 about 8,000 hours of
                                    technical training divided by on the job training, specific training and training developed in local
                                    technical schools. Training was followed by more than 1,100 participants, almost totally locals.
                                    HSE training hours in 2004 was more than 2,150, mainly focused on safety, with more than 1,000
                                    participants. In 2004 Kwanda spent more then 100 thousand US$ for training in the Soyo training
                                    centre. In 2004, about 1400 participants attended specialized training courses; a large part (90%)
     Specific training 92,2%
     On the job training 0,4%
                                    of the training have been addressed to local workers. More then 2,100 hours is the amount of
     Local technical schools 0,4%   training course on health safety and environment, with about 1000 participants.


                                                                 Petromar: Training hours by categories




                                                                        workers 94%         management 1%

                                                                        supervisors 5%



                                    The Key to sustainable performance improvement is providing a work environment where leaders
                                    seek out, and team members openly provide timely and accurate feedback and recommendations
                                    in support of important decisions. This applies whether the topic is safety Performance, or drilling
                                    time and cost performance. With an interpreter onboard, English lessons are organised for all crew
                                    of Saipem 10000. These have proven to be very popular with the crew and are run in two hours
                                    sessions, four days per week. Basic health & safety topics are being translated and delivered to the
                                    local crews by the local safety officer onboard. A formal training program has begun at a training
                                    centre in Soyo, covering a wide variety of topics such as hand injury prevention, safe lifting
                                    operations, manual handling, permit to work, handling dangerous substances etc. The local Safety
                                    Engineer developed a focused training for Hand injury prevention in Portuguese. Also training for
                                    “Permit to Work / SJA” program has been organised with the crews onboard. Following this training,
                                    much emphasis has been put on the practical control and application of the PTW and SJA system.
                                    The doctor onboard organised a health education program during the GSM and weekly first aid
                                    training with the catering crews. This has included basic hygiene training for catering personnel. The
                                    safety culture onboard continues to grow on a daily basis. Team leaders’ supervision of crew is of
                                    key importance and this message from the management onboard needs to continue. New crews
                                    onboard undertake training in Soyo but this should not be the end. Whilst onboard they need
                                    mentoring, encouragement and on the job training. The developing of the On-the-Job training as
                                    part of company standard procedure is in progress and will continue as per the schedule. In the
                                    long term, time spent now giving explanations and demonstration will make for a more fluid
                                    operation and competent, integrated crewmembers in the future.
                                    The relevant statistics are enclosed below:




       SAIPEM
45 SUSTAINABILITY
In the Rosa project, training hours performed in 2005 were about 66,200 with about 224
participations almost all locals. More than 1,600 hours of HSE training were registered within
the project mainly on safety and health.

                                                                 2005 Training Hours
                800

                700

                600

                500

                400

                300

                200

                100

                    0
                               Jan        Feb           Mar    Apr May     Jun   Jul   Aug   Sep   Oct   Nov    Dec

                 Advanced Safety Training Course Attendance and Topics 2004-2005
                200




                150




                100




                 50




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                                    Advanced Safety Training Course Hours 2004-2005
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                                                                                                                      SUSTAINABILITY 46
                                           in
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                          2005                 2004
                    SAFETY PERFORMANCE
                    The safety performance of the Saipem operations in Angola has been characterised in 2005 by 3
                    Lost Time Injuries with a total of 71 days lost. The worked man hours of the all activities were more
                    than 4,6 million; it follows that the LTI Frequency rate for the area in 2005 was 0.65. The 2005
                    result represents a sign of improvement in the safety management comparing to the 2004 safety
                    performance that was characterised by a LTIFR of 1.90 for the operations carried out in the area.
                    Concerning the Saipem 10000 safety performance, operations in Angola that started in October 2005,
                    didn’t register any Lost time Injury, achieving the management target of 0 LTI Frequency Rate.




                                                                       Angola Area Safety performance 2005
                                1500000                                                                                            2,5



                                1200000                                                                                            2,0



                                  900000                                                                                           1,5
                          WMH




                                                                                                                                         FR
                                  600000                                                                                           1,0



                                  300000                                                                                           0,5



                                          0                                                                                        0,0


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                                                              Pe




                                              Worked Manhours                 Frequency Rate




                                                                      Saipem 10000 - 2005 Frequency Rate
                                       25



                                       20



                                       15



                                       10



                                          5



                                          0
                                                    Jan         Feb    Mar   Apr May   Jun     Jul   Aug   Sep   Oct   Nov   Dec




      SAIPEM
47 SUSTAINABILITY
GLOSSARY & KEY WORDS
• Bbl/d: Barrel(s) per day. 1 barrel (bbl) of petroleum or related products = 42 gallons.
• Bcf: The abbreviation for billion cubic feet.
• Brundtland Commission: The United Nations World Commission on Environment and Development,
  published a report entitled Our Common Future in 1987 that defined the concept of sustainable
  development. The report was the basis for the Rio Earth Summit in 1992.
• BTu: The British thermal unit. It is the amount of energy required to raise the temperature of 1
  pound of water by 1 degree Fahrenheit when the water is at 39.2 degrees Fahrenheit.
• CO2 eq: Carbon Dioxide Equivalent. A metric measure used to compare the emissions of various
  greenhouse gases based upon their global warming potential (GWP).
• EC: European Commission. In July 2001, the Commission presented a Green Paper “Promoting
  a European Framework for Corporate Social Responsibility”. The aims of this document were firstly,
  to launch a debate about the concept of corporate social responsibility (CSR) and secondly, to
  identify how to build a partnership for the development of a European framework for the promotion
  of CSR. The consultation process on the Green Paper has supported Community action in the field
  of CSR. In the Communication “Corporate Social Responsibility: A business contribution to Sustainable
  Development” (2002), which constitutes a follow-up to the Green paper, the Commission presents
  an EU strategy to promote CSR. The Communication is addressed to the European institutions,
  Member States, Social Partners as well as business and consumer associations, individual
  enterprises and other concerned parties, as the European strategy to promote CSR can only
  be further developed and implemented through their joint efforts. The Commission invites enterprises
  and their stakeholders as well as Social Partners in candidate countries to join this initiative.
• EPC: Engineering, Procurement and Construction;
• EPIC: Engineering, Procurement, Installation and Construction.
• FPSO: Floating, Production, Storage and Offloading System
• GDP: Gross Domestic Product. The total value of goods and services produced by labor and property.
• Global Reporting Initiative: The Global Reporting Initiative is a private initiative started in 1997
  by the Boston-based coalition for Environmentally Responsible economies (CERES) and the
  United Nations Environment Program. In 2000, the GRI published voluntary Sustainability
  Reporting Guidelines. The GRI has worked in co-operation with the United Nation Environment
  Programme and the Global Compact.
• IMF: International Monetary Fund.
• Industrial production growth rate: gives the annual percentage increase in industrial production
  (includes manufacturing, mining, and construction).
• Inflation rate (consumer prices): provides the annual percent change in consumer prices
  compared with the previous years.
                                                                                                                               N°. LTI x 1,000,000
• Lost Time Injury (LTI): A LTI is any work-related injury which renders the injured person temporarily              LTIFR=
                                                                                                                              Total WorkedManHours
  unable to perform any regular Job or Restricted Work on any day/shift after the day on which the
  injury occurred. In this case “any day” includes rest day, weekend day, holiday. The day of the
  Accident is not counted when calculating Lost Workdays. Fatalities and Permanent Total Disabilities
  are included in the calculation of the total the number of the Lost Time Injuries.
• Lost Time Injury Frequency Rate (LTIFR)
• Mmst: The abbreviation for million short tons (A unit of weight equal to 2,000 pounds)
• OECD: The Organisation for Economic Co-operation and Development (OECD) groups 30 member
  countries sharing a commitment to democratic government and the market economy. With active
  relationships with some 70 other countries, NGOs and civil society, it has a global reach. Best
  known for its publications and statistics, its work covers economic and social issues from
  macroeconomics to trade, education, development and science and innovation. The OECD produces
  internationally agreed instruments, decisions and recommendations to promote rules of the game
  in areas where multilateral agreement is necessary for individual countries to make progress in a
  global economy. In 2000, OECD produced the OECD Guidelines for Multinational Enterprises. The
  Guidelines are recommendations on responsible business conduct addressed by governments to
  multinational enterprises operating in or from the 30 adhering countries.
• Tcf: The abbreviation for trillion cubic feet.
                                                     N°. LTI + Work RestrictedCases + MedicalTreatment x 1,000,000
• Total Recordable Frequency Rate (TFR) TRF=
                                                                          Total WorkedManHours
• TOE: Tonne of oil equivalent.
• WBCSD: World Business Council for Sustainable Development.
  A Joint Stock Company with Registered Office
             in San Donato Milanese (MI), Italy
Fully paid-up Share Capital Euro 440,958,400
    Fiscal Code and Milan Companies’ Register
                           No. 00825790157
                                  Other offices:
    Cortemaggiore (PC) - Via Enrico Mattei, 20


                                                               Saipem S.P.A.
                                                   Contact us: QHSE Dept.- Sustainability Team
                                                               Daniela Mauri
                                                               daniela.mauri@saipem.eni.it
                                                               Tel. +390252044452
                                                               Fax. +390252034617
                                                               via Martiri di Cefalonia, 67
                                                               20097 San Donato Milanese (MI)
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