Management Report January 2013

MANAGEMENT REPORT January 2013
INDEX 1. 2. 3. EXECUTIVE SUMMARY ......................................................................................................... 4 OVERALL SCHEDULE ............................................................................................................ 5 EPCIC ......................................................................................................................................... 6 3.1. Saipem Progress Status 25th January ........................................................................... 6 3.2. OLT assessment of EPCIC.............................................................................................. 6 3.2.1. Engineering .................................................................................................................... 6 3.2.2. Milestones....................................................................................................................... 7 3.2.3. Project Risks .................................................................................................................. 7 3.2.4. Future Variation Orders ................................................................................................ 7 3.2.5. Construction in Dubai ................................................................................................... 7 4. SRG PIPELINE .......................................................................................................................... 9 Authorization issued...................................................................................................................... 9 4.1. Administrative Procedures to be Finalized .................................................................... 9 4.2. Offshore Pipeline Schedule ............................................................................................. 9 4.3. Pipeline Commissioning Procedure ............................................................................... 9 4.4. Interfaces during terminal commissioning ..................................................................... 9 4.5. REMI Station .................................................................................................................... 10 4.6. Interconnection agreement ............................................................................................ 10 5. OPERATIONS AND MAINTENANCE .................................................................................. 10 5.1. O&M Internal Coordination Meeting ............................................................................. 10 5.2. Familiarization and Training Agreement ...................................................................... 14 5.3. Support Vessels............................................................................................................... 17 6. INSURANCE ............................................................................................................................ 17 7. PERMITTING & AUTHORIZATION ..................................................................................... 18 7.1. Background and Legal.................................................................................................... 18 7.2. Ongoing Activities ............................................................................................................ 19 7.2.1. Ongoing Authorizations related to the FSRU.......................................................... 19 8. PROJECT QHSE..................................................................................................................... 28 8.1. QA/QC ............................................................................................................................... 28 8.2. HSE ................................................................................................................................... 28 8.3. HSE Statistics .................................................................................................................. 29 9. LEGAL ACTIVITIES ................................................................................................................ 30 9.1. Contract and other activities .......................................................................................... 30 10. OLT COMPANY OPERATIONS ....................................................................................... 30 10.1. OLT Recruitment ......................................................................................................... 30 10.2. Commercial IT System ............................................................................................... 31 10.3. Data Acquisition (PIMS) ............................................................................................. 31 10.4. Integrated Management System (IMS) for the Operational Company ............... 31 10.5. Law 231 for Project Company ................................................................................... 32 10.6. PR & Communication ................................................................................................. 32 10.7. Information Technology .............................................................................................. 32 10.8. HSE ............................................................................................................................... 34 11. COMMERCIAL ACTIVITIES .............................................................................................. 35 11.1. Regulatory Issues........................................................................................................ 35 11.2. Commissioning of OLT Terminal .............................................................................. 35 12. FINANCIAL INFORMATION.............................................................................................. 35 12.1. Cash Out ....................................................................................................................... 35 2
OLT Management Report January 2013
12.2. Actual vs Budget Cash Out........................................................................................ 36 12.3. 2013 Financial Requirement...................................................................................... 36 12.4. Cash Needs.................................................................................................................. 37 12.5. OLT Financial Department ......................................................................................... 37 13. PHOTOS ............................................................................................................................... 38 14. RISK REGISTER ................................................................................................................. 39
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1. EXECUTIVE SUMMARY SRG Pipeline ntr FSRU The current January 2013 figure is 93.54%. The monthly progress is 2.25%. The vessel left drydock on 27.12.2012 and after drydock the following steps were achieved: Running of new MGO pumps Boiler restart and operation Restart of existing STG # 1 Restart of STGs# 3 and 4 Testing of Seawater system Successful start of thrusters, without any vibrations
Main Areas of Concern: Seawater System test failed, rectification of vibrations and cavitations required Lack of communication of the power management system Fatal breakdown of both STGs # 3 and 4 with significant damages on rotors , bearings and casing
Commissioning has increased the monthly progress for December of 8.23%, the total progress is 88.17%. The critical path consists of different elements: Boilers and power generation systems commissioning Main Sea water System Power management System Repair of STG # 3 and 4
Sailaway is now scheduled to take place on 15. April 2013 Installation Saipem is planning the possibility of wet storage of flexible risers in conjunction with chain removal campaign, possible hook up of risers is considered as an option. Financial Information Total cash out for the month of January amounts to 3,5 M, mainly related to SAIPEM costs ( 1,9 M) and PY Costs ( 1,1 M). Main activities of the month: closure of the 2012 Statements; AEEG tariff calculation and presentation; preparation of the audit on main O&M suppliers. Operations 4
O&M Department is involved in the day by day follow up of the ECOS and NERI activities as well relevant contracts, plus support to the various departments (Permitting, Commercial, Construction and Engineering, Insurances, now Installation and SRGI technical interfaces). Detailed list of the activities carried out by O&M dept., and OLT Subcontractors ECOS, NERI, MARSH in the following chapters. New activity on going is the verification of the compatibility of various LNGCs to the OLT Terminal.
2. OVERALL SCHEDULE
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3. EPCIC 3.1. Saipem Progress Status 25th January
3.2. OLT assessment of EPCIC 3.2.1. Engineering Engineering activities are as follows: Radio link antenna installation is complete. New GPS antenna installation is ongoing. OLT to prepare for checking the T16 documentation on site once Saipem is ready. Further process sea water tests were carried out. The problem of pulsation in the sea water discharge on T16 remains. SAI is engineering a pipe system modification to solve the issue. According to SAI the design will be backed-up by CFD simulation. OLT reiterated its concerns. Furthermore the measures against the vibration in the engine room overboard system have to be verified and the automation of the entire sea water system is still to be demonstrated to OLT. The water curtain has been working sufficiently during a test with 3 IFVs running. The MGPS system commissioning was not completed as SAI will modify the fwd system, i.e. the bio fouling analyser system which measures the free chlorine content in the sea water. The modification is required to ensure a continuous monitoring of the free chlorine content and is based on a TQ issued by OLT. Ongoing follow-up and close-out of technical queries, site queries and NCRs. Ongoing review and close out of Technical Comment Sheets (TCS) by OLT. T20 noise measurement planned for week 28 during commissioning activities. Thruster test after modifications to reduce vibrations was successfully completed. After modification of the cooling water system and running of the main diesel generator the required temperature could be maintained. OLT will follow up if this can also be achieved once the new turbo generators are running and the whole fresh water cooling system with all consumers is balanced. New MGO pumps are in service. An updated list of consumers regards the instrument air has been issued to OLT. Saipem states that no full redundancy for the aft instrument air system is specified in the contract. OLT will check and reply to SAI.
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3.2.2. Milestones
Milestone E25 - Vessel of Mechanical Completion E27 - Ready for inclining Test Completion (estimate) End of March 2012 Mid of March 2013 Amount 3.876.030 1.938.015 Cash Out (estimate) End of April 2013 Mid of May 2013
3.2.3. Project Risks Failure of STGs # 3 and 4 Seawater system vibrations and cavitation Swivel leakage
3.2.4. Future Variation Orders Fuel reimbursement offshore campaigns Rectification works on the Foam System Life boat rehooking Fuel reimbursement for onshore commissioning phase
3.2.5. Construction in Dubai January 2013: The first action after the undocking was the preparation of new MGO pumps. Both pumps were ready for service on 05.01. after pipe modifications, installation,new foundations and leak test. Boilers were fired again on 06.01. and existing turbo generator #2 was started on 07.01. to feed main switchboards. Remaining test of turbo #1 and #2 are carried out. Power management still to be shown. Vendor have difficulties to set up the system. Fuel injection pumps of diesel generator are verified by vendor and the complete load and function test was done on 30.01. Stern thrusters was successfully tested after modifications of base plate and top side fixation of electric motor. New turbo generator #4 had a trip during internal load test on 13.01. due to high vibrations. Rotor blades of stage 9 and 10 have heavy damaged. Saipem commissioning team started tubo generator #3 on 19.01. after green light from turbine manufacturer. Also TG #3 failed due to high vibrations during an internal load test. Both turbos were open and rotors removed and transported to Dresser Rand work shop in Abu Dhabi. The root cause of the failure is not yet determent. Commissioning of fire and gas detection systems is still ongoing. Bilge systems including emergency suction in engine room are checked. Only bilge system in cargo tank void space to be done. New cranes, fwd, aft and loading arm platform, are commissioned. 7
New fwd life boat load test and function test are completed. Gas detection sampling system is modified to satisfy RINA. GMDSS batteries are relocated to the bridge deck. Capacity load test was done. Verification of the CO2 system is completed. Test of foam system is still ongoing. Function test of spray water systems is partly done. Process sea water system is still not finalized. Several tests were performed without satisfying results. Italian authorities have inspected the FSRU from 29.01. to 31.01. Punch list items to be rectified before sail away. The accommodation are occupied by ECOSB. Galley is operational. e undocking took place on 27.12.2012. The unit is moored on berth #2 which allows more draft in order to be able to check process sea water system with ballast draft. Mechanical completion was completed by end of 2012. Punch items still to be cleared. Diesel generator was started for an internal test run after modifications on cooling water pipe lay out. The first impression was rather good but a complete test of diesel engine with readings of all parameters and than a load test of the generator has to be performed. Process sea water system was started again to verify vibration condition after a different set up of valve position. Cetena vibration specialist took measurements on different locations. ECOS Bcrew will be placed on board permanently after the 15.01. Fire detection and fire fighting systems have to be operational before habitation can be allowed. The foam pipe system was inspected and 21 spools were found in not acceptable condition. Spools are fabricated and all spools are re-instated with pressure test and leak test carried out.New MGO pumps are installed and boilers fired on 06.01.2013. Onshore commissioning of loading arms is completed. Tank skirt modifications are completed and all ballast tanks are closed. Modification of gas detection sampling system, requested by RINA, is under way. Commissioning of fire and gas detection system in accommodation is ongoing. All alarms and safety systems of LD and HD compressors are checked. Running test with verification of anti surge function will be done before sail away by vendor. Test run of stern thrusters is planned for the next days. Motor support is modified. The unit went into the dry dock on 29.10. for the change of chain table. The expected duration is up to 20.12.2012 New chain table has been fitted and welding is in progress Installation of new radar mast is completed Modification nof seawater system ongoing, old reducer removed, new duplex reducer under fabrication Installation of air lines for new STG under progress Tank skirt modification on tank # 4 under progress Turret NG lines reinstatement ongoing 8
MGO system piping modification are implemented T 16 cryogenic support modification necessary after cool down are in progress Chartec application on vaporisers and propane drum completed Piping system modifications for MGO pumps under progress Diesel generator is still not operational. Saipem engineering is dealing with the balancing of the fresh water after the removal of main turbine lube oil installation. Loading arm pre-commissioning and commissioning is ongoing. Electric motor of stern thrusters was checked in DWD workshop for vibration. Result was in line with shop test readings. Re-enforcement of motor base support is under way. Commissioning of fire and gas detection systems as well as fire fighting systems is very slow due to the fact that RINA is revising the earlier approvals and ask for a number of modifications. LD 1 compressor safeties, alarms and controls are tested with vendor. Vibrations of electric motor is in an acceptable level.
4. SRG PIPELINE Authorization issued NTR 4.1. Administrative Procedures to be Finalized No action for OLT. SRG are now in charge to comply with all the recommendations concerning the replanting of Posidonia seaweed. 4.2. Offshore Pipeline Schedule NTR 4.3. Pipeline Commissioning Procedure The topic has been discussed again in the recent technical meeting with SRG. OLT has received confirmation, like in the past, that the nitrogen now filling the pipeline will not represent a problem and it will be easily diluted in the grid while FSRU pressurizing the line with the first send out. SRG has also put forward the option to preliminary fill the line with gas at about 5 bars, thus removing the nitrogen, in the framework of the procedure detailed at point 4.4 below. 4.4. Interfaces during terminal commissioning Many interfaces with SRG will happen during the trial run and performance test phases, but also during offshore commission of the send-out metering system. A preliminary meeting to discuss the latter has been held on 26th April with the aim of the mutual understanding of the points to be clarified beforehand. During another meeting held on 31st May, among the other operative technical aspects, SRG and OLT have discussed of a pipeline gassing up procedure that would avoid to lose gas through FSRU cold vent thus avoiding any commercial and custom issue. This would be achieved pressuring with gas 9
both upstream and downstream parts of the Subsea Isolation Valve with valve in close position and opening it when the pressure from the two sides are equal. During the month of June SRG has informed that after internal review this procedure is for them feasible. Saipem and OLT have then technically agreed the procedure which will foresee the pressurization from onshore up to the closed block valves upstream of the turret. 4.5. REMI Station The REMI Station is officially transferred to SRG. 4.6. Interconnection agreement On 6th March a meeting was held between OLT and SRG to discuss about some interface operative point and above all the development of the interconnection agreement. This agreement is aimed to cover all the operative aspects which need to be settled before the start of the commercial activity. The IA has now been received from SRG and currently under review by OLT commercial and O&M team. A first draft of the operative manual, which will be attached to the IA, has been sent by SRG in the second half of July and is also currently under evaluation.
5. OPERATIONS AND MAINTENANCE Preamble The Terminal during its operational life will be managed by: a) O&M operator contract for the Terminal, including the FSRU and all subsea systems b) Support Vessel contracts for 1 guardian vessel, 1 crew boat and supply services using one tug when not in use for the towage services. c) OLT personnel onshore to control and manage the abovementioned contracts and to liaise with the local authorities, the terminal Users and SRG. d) Towage services to be provided to the terminal Users through a dedicated frame agreement. e) Pilotage (2 during first 6 months) and Mooring liners (2 during first 6 months) services, even if not mandatory, have been required for by the Maritime Authority by formal communication. Contractually these services could be treated as per Towage services through dedicated frame agreements. Once OLT has decided how to proceed 2 dedicated agreements can be draft. 5.1. O&M Internal Coordination Meeting In order to plan O&M team actions and follow up plans to allow a smooth transition from the EPCIC phase to the Operational phase when different subjects (from Saipem to ECOS) will manage the Terminal, from now on, bi-weekly internal coordination meetings will be held.
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Tech Superintendent now is mobilized until sail way in Dubai to follow the mechanical completion and commissioning activities in support of the Construction and Commissioning Team. Frequent trips to DDW are forecasted in order to follow the more critical phases of the commissioning (e.g Loading Arms, Regas, etc). In general the actions are divided and distributed between the various competences (Marine and Technical). Briefly the main activities carried out:
OVERVIEW
Activity Actions and pending issues
AIA: completed Safety Report: completed VIA: completed PERMITTING SUPPORT ACTIVITIES Permitting/HSEQ dept. to provide a list of actions for O&M Operator following the AIA and RdS permits prescriptions. CUSTOM/UTF: Technical Report informally presented to U.T.F. Informal acceptance has been given by UTF. Official transmission will follow
NERI IMS all documents commented, final revision issued. Activity completed
ECOS IMS 9001 approved by RINA ECOS IMS 14001 approved by RINA ECOS+NERI IMS DOCUMENTS ECOS O&M CONTRACT ACCESS CODE Access Code Technical Terminal Manuals OPERATING MANUALS FINAL DOSSIER awaiting audit for final approval by RINA completed/signed. New rev produced. O&M commented, awaiting for a coordination meeting with Commercial Final Draft completed. Awaiting only ReedSmith review
New revision issued by SAIPEM. ECOS to review, O&M to comment and coordinate. Activities on going SAIPEM is issuing FD, O&M will follow and coordinate activity, delivery and storage. With re storage, required space has been estimated following a dedicated meeting in San Giuliano Milanese, but a location has still to be found (dedicated apartment near OLT offices? Container in warehouse at Neri?) maybe together with other OLT documents (e.g. admin / fiscal requirements). To be defined
MAINTENANCE MANUALS
All the documents, including MDRB will be included in Final Dossier. ECOS commented new revision. Follow up
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PEE/PEI/RdS
Closed. Continue follow up. For all details ref to MARSH MoM for coordination meeting on 16 th Oct 2012. Follow up of Dubai activities. Support if required.
INSURANCE PLAN
ON SHORE COMMISSIONING OFFSHORE COMMISSIONING
Follow up of Commissioning Dept and support if required Offshore phase OLT+ECOS Commissioning Org Chart issued
ECOS/OLT COORDINATION
Follow up on going For all the details ref to below dedicated section
NERI/OLT COORDINATION
RINA/OLT COORDINATION
Guardian Vessel in lay up in Livorno Crew Boat in water Warehouse, Office delivered to ECOS Marine Base and security barriers ready by end of February Security Service tender closed, contract to be signed by NERI after OLT review and approval Fender Storage Onshore awaiting NERI proposal For all the details ref to below dedicated section RINA block fee contract draft received and commented by OLT+ECOS, awaiting RINA new revision Additional Class notations: - IWS: Documentation ready in Dubai, to be presented to RINA for an Approval in Principle PMS: Documentation prepared by ECOS to be presented to RINA for an Approval in Principle Green Plus: in progress in coordination with HSEQ Received letter with main concepts. Follow up on going Closing of pending CS New TQ, when required Hardware installation is completed, the systems are running and the setting is almost completed. Next step will be to install one client on a PC in order to check if the network communication is fine. After this activity all component of PIMS installation are switched off waiting the closing of reporting phase.
OPERATION ORDINANCE ENGINEERING
PIMS
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SPARE PARTS
TERMINAL VETTING
EX-REMI PARTS GAP ANALYSIS ECOS-NERI ISPS/Security Minimum Manning Radio Systems TPA /Contratto di Gestione e Armamento CTMS & RELEVANT A.C. MANUAL LNGC COMPATIBILITY STUDIES
ECOS has completed the critical assessment based on FMECA/risk based approach. Findings to be presented.. Initial Storing follow up of ECOS B team. ECOS B Team to request to Saipem to identify gaps between actual inventory and what required An Index has been prepared based on OCIMF TSMA by GOL/ECOS/MG, to insert list of applicable O&M manuals and if required EPCIC engineering documents. Preliminary draft to be completed by O&M for internal audit Contract with ELP for a third party verification signed. Target is to be vetted end of February. Remaining parts transferred to the warehouse. ECOS to insert in TASK
During week 30 meeting table updated between ECOS/OLT/NERI Table is updated , open points to be closed awaiting for the Maritime Authority Ordinance Marine base and FSRU Assessments and Plans delivered to Maritime Authority. Awaiting for Maritime Authority feedbacks after visit to the terminal Draft as discussed with the Authority delivered to Maritime Authority on Dec. Awaiting for Maritime Authority feedbacks after visit to the terminal
Support to Andrea Vallavanti when required Awaiting for Maritime Authority feedbacks after visit to the terminal ECOS as ship-manager/armatore during EPCIC contract signed.
Follow up of Intertek, all data sent. Awaiting Part B from Intertek . Manual almost closed On going Optimoor use and Principia reports analysis EPCIC Training planned on Jan/Feb 2013 for EBARA training - from 10 to 12/JAN included FMC (OTJ) training - from 15 to 17/JAN included MHI training - from 19 TO 21/JAN included Has been completed YOKOGAWA training: to be rescheduled during FSRU towing period, MARIN new training for week 12 (18 March 2013). Slot confirmed, contract closed. To prepare logistics for personnel involved Conversion works confirmed to start 12th of Feb and end 14th of March at Juriong Shipyard for manifolds to OCIMF, Crane at Manifolds, 4 no. aft springs conversion To organize an independent third party inspection and vetting by Wavespec
OPERATOR TRAINING
LNGC LEO (vessel for first gas) MODIFICATIONS
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SRGI/OLT INTERFACES
METEO
Main pending issues: - Interconnection agreement definition (in cooperation with Commercial Dept) - Offshore Commissioning send out Program (required by SRGI) - Normal Operation and Emergency Operation to include in Operating Manual to be issued by SRGI. At present time only a draft of Measurement Manual has been issued by SRGI, but a lot of gaps have to be covered: operating T, P and quality of send out gas and relevant tolerances, especially during commissioning phase, measurement equipment performance requirements - Crisis Management - O&M support to HSEQ and Detoni, a dedicated meeting has to be held with SRGI in order to identify interfaces and cover gaps - Coordination meeting to be organized urgently LAMMA Web site ready Calibration on going at max end of March Boundary data for detailed model (DEAM) ready MIS Main software developed by DEAM already delivered Server for running system to be purchased Graphical Software to be purchased
5.2. Familiarization and Training Agreement Antwerp Dubai Livorno Off-shore Milano
FTS Agreement Phase: 3 Dubai
Period: December 2012
STAFF PM / BM: Pierpaolo VINCIGUERRA PC / COM: Toon ROOSEN TC: Gennaro CALABRESE ADM: Raffaella BIONDI TM: Vincenzo PARISI TEM: Mohammed BOURYAL / Alfio SILIATO COM: Bram MASSON / Roel Van de Velde SSM : Mirko BRESCIANI PEM: Michele MINERVINI / Giacomo SCARFI REM: Moustapha SEYE / Medoune DIACK ELM: Dariusz PROSKURNICKI / Jan PALASZ INT: Domenico CENTRONE / Vito ROMANAZZI BML: Pasquale MATTERA / Egidio LOMBARDI
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GENERAL PRESENTATION Onshore commissioning Phase Dubai. GENERAL SITUATION (progress) - Onshore commissioning Phase Dubai. - Setup of IMS procedures, lists, instructions, etc. - Further development of critical equipment list: critical maintenance, spares, - Assistance of OLT with onboard inspections and commissioning, as requested. - Review of and commenting on technical, operational and commissioning EPCIC documentation, manuals, maintenance files, test procedures. - Completed rev. 3 of Terminal Vetting based on OCIMF 1994 - Baseline Inspection Criteria. - Clarifications of the comments stated in COMITATO TECNICO REGIONALE - Conclusione dell'istruttoria del rapporto definitivo di sicurezza. - Internal review of Task Assistant database (missing info, running hours list, critical equipment flagging,). TIME TABLE
OLT version Planning-FTS contract ver 15-Oct-2012.xls
SIGNIFICANT EVENTS NIL IMPACTS ON THE GENERAL TIME SCHEDULE NIL HSE - Q MANAGEMENT - Setup of ECOS IMS is ongoing: procedures/docs are being set up in accordance with ISO 9001, 14001, ISM and other Italian legal requirements. - Outcome of operational and emergency procedures GAP analysis is being included and modified in the ECOS IMS procedures.
Gap Analysis Workshop - meeting notes_28 NOV 12.xls
- Results of gap analysis between ECOS-IMS and d. Lgs. 334 foreseen for end of Feb - Letter received from RINA stating compliance with ISM of ECOS-IMS and ISO14001. O&M AGREEMENT IMPLEMENTATION -on going SUPPLIES -NIL RINA CLASS & CERTIFICATION PROGRESS -see above TECHNICAL AND CRITICAL ISSUES The ECOS ORS status overview has been discussed between ECOS and OLT Site teams. The status of each ORS has been assessed, updated and/or modified accordingly. A significant review was done of the ORS overview list taking into consideration the remaining time 15
in Dubai and which is a basis for discussion with G. Banacarotta: AMOS / TASK-ASSISTANT - Identification of critical equipment related jobs, based on available analysis of SAIPEM and OLT, as well as results from Hazops. Critical maintenance and spare parts will be identified in TaskAssistant. - Review and updating database for missing information (SHPP, newly added switchboards, PMS,). ENGINEERING - NIL CONSTRUCTION For listed mechanical completion inspections and other jobs assistance, see weekly reports. COMMISSIONNING Last version of commissioning status:
Weekly commissioning status-week 52.xls
AREA OF CONCERN (ECOS) No new areas of concern. FINANCIAL AND ECONOMICAL - Advance and fee invoice for January, actual invoice and advance credit note for November have been sent. - Preparation of actual invoice for December and advance invoice for February. VARIA - review of Garbage Management Plan by Chemical Control. - Completion of d.Lgs 271/99 manual by Chemical Control and sent to Ministry of Transport in Rome for approval. - Critical spare parts list completed. Preparation of technical note ongoing. - Employment of new COM Roel Van de Velde and mobilization done on 6-Dec including safety familiarization. - Employment of ADM Raffaella BIONDI Familiarization ongoing. - Mobilization organization for vendor and on-job training planned in January. - Finalization of Critical Spare Parts technical note. - Offshore Commissioning Organizational Chart finalized. - Visa Cancellation Plan issued in order to have all visa cancelled for general demobilization on 28/Feb.
FSRU-Presence on Board (20-12-2012)-rev67 - Start VISA Cancellation.pdf
VENDOR SERVICE LEVEL AGREEMENT LOCAL PROCUREMENT Preparation of an action plan for SLA. First draft sent to OLT for review, activity on hold awaiting for EPCIC Contractor plan PREVIEW OF NEXT MONTH Continue review of HSEQ documents, IMS procedures update in line with outcome of GAP 16
analysis. Continue review EPCIC documents. Assistance of OLT with onboard inspections (and commissioning), as requested. Review of initial storing list, critical spares and maintenance identification. Permanent verification of previously issued ORSs in order to close items that have been rectified specifically OPEN items. Issuance of action plan for SLA. Setup of Warehouse Management plan employment of additional resources.
5.3. Support Vessels LNG EXPRESS Crew Boat The unit is in the water, to be put in layup again in the water once comopleted the Class inspections, Mooring Master/Pilot ladder not required by Pilots. LNG GUARDIAN Guardian Vessel From 01.11.12 moored to Livorno harbour Darsena Pisa The unit is in layup, beached on the dock in order to reduce operating costs. No significant events.
ESCORT TUGS Costante and Corrado Agreement closed and signed. As for OLT/NERI contract 60 days notice period shall be defined in order to have the tugs available at least when the FSRU will arrive in Livorno for garbage collection services, if required. WAREHOUSE, OPERATOR OFFICE and Marine Base Agreements closed and signed, Warehouse completed, ECOS office completed, The Marine Base is foreseen to be ready at the end of Feb. 6. INSURANCE A coordination meeting with MARSH was held on 16 th October in order to have an update on the insurance in place and to plan next necessary steps. CAR & TPL This coverage will expire next June 2013. Due to further Saipem delay an extension is needed. Marsh will start checks with the market 3 months before current expiry date. P&I As required by ECOS, due their role of Armatore, P&I has been signed for the period 14th September 2012 - 20th February 2013. A same P&I will then be signed for the following period and until PAC. After PAC a new P&I, with a different structure, will be signed for Operation. Loss of Earning OLT is evaluating the possibility to sign this policy which will cover the loss of earning following loss of or damage to the vessel caused by: - Piracy - War - Terrorist act 17
Confiscation, appropriation Violent theft Capture, seizure
Main figures of this policy are: - Period of indemnity: 365 days - Sum Insured: 120,000,000 - Rate of premium: 0,2% for the period - Estimated premium 240,000 - Applicable discounts: - 50% if armed personnel on board patrol vessel dedicated to FRSU TOSCANA - 10% if Kidnap & Ransom insurance is purchased (minimum USD 5,000,000) with waver of subrogation - Warranty: Armed personnel on board escort patrol vessel - Possibility to double the period of indemnity with a double premium Kidnap & Ransom Marsh proposal included even this policy. Main coverages: Ransom payments after demand for payment is received Lost ransoms in transit (confiscated, lost, stolen or destroyed) Unlimited fees and expenses of specialist consultants Additional costs of transporting the ransom to the pirates Salaries of the victims Personal accident benefits The policy may be designed to provide a crisis management team and meet the costs of the security team that will be needed to transport the ransom to pirates. Limits available and cost indication USD 3,000,000 per Insured Event at USD 50,000 for 1 transit through the Gulf of Aden USD 5,000,000 per Insured Event at USD 70,000 for 1 transit through the Gulf of Aden
According to OLT this insurance is under Saipem responsibilities. Hull & Machinery This will be needed in Operation. Marsh will start checking the market within Christmas this year in order to have a clear scenario within February.
7. PERMITTING & AUTHORIZATION 7.1. Background and Legal NTR
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7.2. Ongoing Activities 7.2.1. Ongoing Authorizations related to the FSRU 1. Autorizzazione Integrata Ambientale (Integrated pollution prevention and control) This authorization refers the discharges from the Terminal both into the atmosphere and water. This is required before the Terminal can operate and must be in conformity with law n.152 e subsequent modifications and integrations and with EU directives 96/61/CE, relating to the integrated reduction of pollution (IPPC). On 28th October 2010 the MATTM sent to OLT a request of integrations. OLT prepared, with the support of Saipem and DAppolonia, the answers to the request, which were submitted on 7th January 2011. Following the need to implement the requirements of Prescription n. 4 (Water Monitoring System for Temperature and Chlorine) and n. 5 (Air Emissions Monitoring System - CEMS) and the requirements of the ongoing Verification of Exclusion from the VIA procedure for Prescription n. 2, OLT prepared an update of the documentation with the support of Saipem and DAppolonia. OLT took also the chance to update minor changes and some improvements. In particular, OLT requested some flexibility in terms of air and water emissions for the Commissioning phase. OLT submitted the documentation on May 16th 2012. On May 25th 2012 a meeting took place between the IPPC Investigation Group Referent (Dr. Mazzoni), the Local Authorities (Province of Livorno, Municipality of Livorno, Tuscany Region and ARPAT) and OLT during which OLT illustrated the Integrations submitted. A meeting took place between OLT, the IPPC Investigation Group and ISPRA on June 26th 2012 and some requests of integration emerged. OLT prepared the documentation and submitted it on July 24th 2012. On July 31th 2012 a meeting took place between Investigation Group and OLT to discuss about the integration submitted on July 24th 2012. The final Conferenza dei Servizi took place on December 18th 2012. All comments and observations by OLT were totally accepted and the Opinion of the IPPC Investigation Group was approved. The draft of the Decree was prepared and was sent to the other Ministries for their sentito (for 30 days they have the chance to make comments to the Decree). After February 15th 2013, if no observations by the other Ministries are submitted, the Minister of Environment can sign the Decree. 2. Approval of the Final Safety Report (Law 334/99) The final meeting of the CTR for the closure of the Safety Report procedure took place on December 11th 2012 and the Safety Report was approved. On December 12th the CTR sent to OLT the Final Opinion which formalizes the conclusion of the procedure with 12 Prescriptions. On January 16th2013 a meeting 19
was held between OLT, Saipem and RAMSE to discuss about the Prescriptions that should be implemented before the beginning of operations. 3. New Mooring System o Exclusion from the VIA procedure, art. 20 Law n. 152/06 and subsequent modifications and supplements for the New Mooring System Verification of Compliance with Prescriptions OLT submitted the request to the Environmental Ministry on June 14th 2012, in parallel the documentation was left for the public consultation in Comune di Livorno, Pisa e Collesalvetti, Provincia di Livorno and Pisa and Regione Toscana and the public notice was published on the Gazzetta Ufficiale n.70 on June 16th 2012. The Tuscany Region issued its positive Opinion on August 3 rd 2012. On August 30th 2012 the VIA Committee approved the Investigation Groups Opinion and on October 2nd 2012 the MATTM issued the VIA Exclusion Decree with 9 prescriptions. OLT submitted the Report for the Verification of compliance with all the prescriptions on November 29th 2012 to ARPAT and to the MATTM. On December 27th ARPAT sent to the MATTM its opinion about the Compliance with Prescriptions. The procedure for the Verification of Compliance with Prescriptions n. 2-3-4-8 is closed for what concerns the Verification of the documents by ARPAT (now the MATTM has to issue the Verification of Compliance to close the procedure). The procedure for Prescriptions n. 5 and 6 is ongoing since the works are not over yet. For Prescription n. 9 ARPAT suggested the MATTM to consider the data that OLT provided for the Safety Report and that were approved by the CTR on December 11th 2012. During the installation works some modifications to the mooring system had to be implemented (anchor n. 3). OLT is evaluating the procedure to be followed to inform the Authorities. The procedure is ongoing. 4. Exclusion from the VIA Decree, art. 20 Law n. 152/06 and subsequent modifications - FSRU After obtaining the original VIA authorization on the preliminary project, as Saipem continued to develop the project, some minor changes were made in the executive project. These changes had to be brought to the attention of the Ministry of the Environment by submitting a request for the Exclusion from the VIA as per art. 20 Law n. 152/06 and subsequent modifications. The Ministry of Environment issued the Exclusion from the VIA authorization prot. DVA 2010 0025280 on October 20th 2010 with 7 Prescriptions. On May 2nd 2011, OLT completed the documentation and submitted it to the MATTM and the VIA Committee to ask for a modification for Prescription n.4 a). The Committee expressed a positive opinion and the MATTM issued a Decree of modification of Prescription n. 4 on October 4th 2011. OLT must obtain the Verification of Compliance with all the Prescriptions before going into operation (see point 6 - Verification of Compliance with Prescriptions of 20
the Exclusion from the VIA procedure prot. DVA 2010 0025280 on 20th October 2010). (See point 6) 5. Exclusion from the VIA Decree, art. 20 Law n. 152/06 and subsequent modifications Prescription n. 2 OLT decided to ask for Verification of Exclusion from VIA with reference to Prescription n.2 of the Exclusion from the VIA authorization prot. DVA 2010 0025280 issued on October 20th 2010 to raise up to 59 the number of vessels with a capacity up to 155.000 m3 every year. OLT submitted the request for a Verification of Exclusion from the VIA procedure to the MATTM on October 17th, 2011. The submission of a further Integration was asked by the MATTM. A meeting took place on January 10th 2012. OLT submitted the integration on January 11th 2012. On January 2012, the MATTM asked the Tuscany Region to express its opinion and the Tuscany Region itself asked the Local Authorities to express their opinion. On February 16th 2012 a meeting took place between OLT and the VIA Committee. A meeting took place on March 9 th 2012 between OLT and the Regional VIA Committee (Nucleo VIA) in Florence to discuss about the Opinion that the Tuscany Region was asked to give about the procedure by the MATTM. The Regional Opinion n. 246 was issued on April 2nd 2012 and sent to the MATTM. On May 3rd 2012 OLT submitted a Voluntary Integration to the MATTM. On May 31st 2012 a meeting took place with the VIA Committee to discuss about the Integration submitted and another Integration was asked. The Integration is a NOx Dispersion simulation which provides a confrontation between the different scenarios authorized which was submitted on July 10th 2012. On August 3rd 2012 the VIA Committee approved the Investigation Groups Opinion and the MATTM issued the Decree of Exclusion from VIA on October 1st 2012 with 12 prescriptions. OLT sent to ARPAT and to the Capitaneria di Porto the Report for the Verification of compliance with prescriptions n. 3, 4, 5, 6, 7, 8, 9 and 10 on December 3 rd 2012. On December 27th 2012 ARPAT sent to the MATTM its Opinion, considering the Verification of Compliance closed for what concerns its competence. The final closure of the procedure has to be completed by the Capitaneria di Porto during the operational phase. 6. Verification of Compliance with Prescriptions of the Exclusion from the VIA Decree prot. DVA 2010 0025280 on 20th October 2010 o Prescription n. 1- Respect of the Capacity of 3,75 bmc/year This prescription concerns the operational phase. OLT, as agreed with the Tuscany Region and ARPAT, will prepare a draft of Report describing the fiscal metering system. OLT is preparing the documents to be submitted within the end of January 2013. Prescriptions N.1 must be verified by ARPAT with the agreement of the Tuscany Region. o Prescription n. 2 Number and capacity of Vessels
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OLT decided to ask for Verification of Exclusion from VIA with reference to Prescription n.2 (see point 5) to increase from Max. 39 vessels of 138.000 mc and 59 vessels of 40.000 up to 59 vessels with a capacity up to 155.000 m3 every year. The MATTM issued the Decree of Exclusion from VIA on October 1st 2012 with 12 prescriptions. Prescriptions N.2 must be verified by ARPAT with the agreement of the Tuscany Region. OLT is preparing a Note to be submitted to ARPAT and to the Tuscany Region to communicate that, due to the Exclusion from VIA Procedure for Prescription n. 2 concluded by the MATTM with the Exclusion from VIA Decree dated October 1st 2012, the Verification of Compliance with the new 12 Prescriptions will be done by the competent Authorities (ARPAT and Capitaneria di Porto and Tuscany Region). o Prescription n. 3 Electrical Balance This prescription concerns the operational phase. The Report was submitted on November 27th 2011 to the Tuscany Region. The procedure is concluded and the Tuscany Region issued the Verification of Compliance on January 10th 2013. o Prescription n. 4 - Water Monitoring System for Flow, Temperature and Chlorine Saipem prepared the draft of the Technical Report to be submitted for Prescription n. 4. The Authorities made some comments that OLT implemented in the Report. The Authorities specified that, concerning the Water emission limits to be respected, once in operation, it will be possible, if necessary, to ask for further flexibility. The Final Report was submitted officially on July 24th 2012 to ARPAT for the Verification of Compliance. ARPAT sent its Opinion dated October 24th 2012 (received by OLT on December 20th 2012) requesting some further technical information to complete the Verification of Compliance. The procedure is ongoing. o Prescription n. 5 - CEMS Saipem prepared the draft of the Technical Report to be submitted for Prescription n. 5 (Air Emissions Monitoring System - CEMS). As per Prescription n. 4, also for Prescription n. 5, during the meeting held on May 29th 2012 between ARPAT, Tuscany Region, OLT and Saipem, the Authorities made some comments that OLT implemented in the Report. The Authorities specified that, concerning the Air emission limits to be respected, once in operation, it will be possible, if necessary, to ask for further flexibility. The Final Report was submitted officially on July 24th 2012 to ARPAT for the Verification of Compliance. OLT will send a letter to communicate a correction to be considered in the Final Report. ARPAT sent its Opinion dated October 24th 2012 (received by OLT on December 20th 2012) with some observations. A meeting is foreseen on January 2013 to discuss about the observations with OLT and the Tuscany Region. 22
The procedure is ongoing. o Prescription n. 6 Possibility of NOx Reduction The Report was submitted on November 27th 2012 to ISPRA and the MATTM for Verification of Compliance. The MATTM transmitted the documentation to the VIA Committee and to ISPRA for the Verification of Compliance on December 20th 2012. The procedure is ongoing. o Prescription n. 7 Marine Monitoring Plan The procedure is concluded and the MATTM issued the Verification of Compliance on May 15th 2012. OLT awarded to CIBM the execution of the BIANCO (1st campaign) of the Marine Monitoring Plan. The first monitoring campaign Bianco took place during the month of August 2012. In August CIBM has carried out the field activities, which were finalized during the second week of September. The Monitoring Report will be available approximately on November 2012. Deam is preparing the part of the Monitoring Report concerning Metocean data. A meeting was held on December 14th 2012 and on January 25th 2013. 7. Environmental Compensations Prescription n. 24 of the VIA Decree In 2006 OLT defined the projects related to Prescription n. 24 - Environmental Compensations - with all the Local Authorities and submitted it to the Environmental Ministry (Total amount: 1 million ). The Municipality of Collesalvetti (with letter prot. 17209 dated 26.10.10) and the Municipality of Livorno (with Letter prot. 16243 dated 22.02.2012) asked to change the projects foreseen in 2006 because they were considered out of date after 4 years (the amount of the compensation stays the same). Also the Municipality of Pisa expressed its will to change the project. On February 24th a meeting took place between OLT and the MATTM and the MATTM asked to receive the Progetto Definitivo of the Compensations. On February 28th 2012 OLT asked a suspension of the terms of the procedure for 90 days in order to give time to the Municipalities to prepare the Progetto Definitivo. On March 26th a meeting took place between OLT, Municipality of Collesalvetti and Municipality of Pisa to illustrate their projects. A meeting took place on April 6 th with the Municipality of Livorno to discuss about their projects. The Municipalities submitted officially to OLT the Progetto Definitivo on April 24 th 2012 and some further details concerning fiscal aspects related to the payments were discussed. OLT will sign an Agreement (Convenzione) with each one of the Municipalities to define: The way SAL (Status of the works) will be submitted to OLT and related payments modalities in particular the fact that a part of the amount will be paid when the works are over; Guarantees for OLT in terms of correctness of the procedures to designate the companies that will do the works (tender). 23
The Progetti Definitivi of the Municipalities were submitted to the Tuscany Region for their approval on May 3rd 2012. On May 24th Tuscany Region expressed its positive opinion and the Projects were submitted to the MATTM on May 28 th 2012 for the Verification of Compliance with Prescription n. 24 of VIA Decree. The Verification of Compliance was issued by the MATTM on August 3rd 2012. Now OLT has to agree with the Local Authorities the above mentioned Convenzioni. A meeting is forecasted for December 6th 2012 with the Municipality of Collesalvetti to discuss about the details of the Convenzione to be signed. The final version of the Convenzione was approved by the Municipality Council of Collesalvetti on January 29th The Convenzione should be signed by the end of March 2013. 8. Extension of MSE Decree February 23rd 2006 On February 23th 2006, the MSE issued a decree of Authorization for the construction and operation of the LNG Terminal. On April 23rd 2010 the MSE issued a Decree concerning a Partial Transfer to SRG for the part of the Decree which was referred to the sealine and a 2 year Extension of the Authorization until March 1st 2012. Due to the delay in the construction of the Terminal, OLT requested on January 11 th 2012 a further 18 months extension of the Decree February 23rd 2006. A Conference of Services was called by the MSE on February 21st 2012. The MATTM and the Tuscany Region expressed their positive opinion. MSE organized a meeting with OLT and Saipem on March 19 th to receive an update on the Project status. The Decree of Extension was issued by the MSE on May 14th 2012. In particular: 1) The Decree was extended for 18 months 2) OLT should begin operations as soon as possible and should monitor constantly the works by Saipem. OLT should also send to the MSE and MATTM every 3 months a Report describing the status of the works. 3) Any further delay after 18 months will be punished with a fine 4) The continuous monitoring of the status of the works will be performed in accordance with the Industrial MSE Commissioning Committee to be nominated. The expiring date of the Decree is September 2013. The conclusion of the works is meant to be the moment of the First Gas in the Net. 9. Ordinance for the navigational safety This Ordinance is issued by the Livorno Maritime Authority and regulates all the maritime operational aspects of the Terminal and the navigational safety. This is necessary before the Terminal can operate. Some meetings took place with the Admiral in order to define all the issues still open. In particular, the main open issues are: nautical services - mooring and pilots and telecommunication systems. The Capitaneria di Porto, with Letter prot. B 0694 dated November 27th 2012, requested some further information about the operative procedures of the Terminal. OLT sent an Informative Booklet to the Capitaneria di Porto on December 10th 2012, containing information necessary for the issuance of the Ordinance. The Capitaneria sent to OLT some comments on the Informative Booklet, to pilots and 24
to other aspects related to the Ordinance on December 21 st 2012 that are being evaluated by OLT. The procedure is ongoing. 10. Fiscal Authorization OLT needs to obtain n.3 Fiscal/Custom Authorizations. On December 5th 2012 a meeting took place at the Custom Agency to discuss about the last details concerning the Technical Report. The Technical Report was submitted to the Custom Agency on December 13th 2012. On December 17th 2012 OLT sent a request to obtain the Codice Accisa and another request for authorization to use of the Officina Elettrica. On January 16th 2013 the Custom Agency asked OLT to provide further documentation. The preparation of the documentation is ongoing. The procedure is ongoing. 11. Incile Canal Project OLT signed the Agreement with the Municipality of Pisa and the province of Pisa on November 28th 2011. The signature was followed by a Press Conference in Pisa with the Major of Pisa to discuss about the Incile and another Press Conference was held in OLTs offices with the Major of Livorno to discuss about the compensations that will create an effect on the city of Livorno. The Conferenza dei servizi took place in Pisa on January 10 th 2012. During the meeting, different public entities were present. The main item regarded a new local legislation regarding operas in rivers (DM Regione Toscana n.61 del 27-12-2011) that made it necessary to obtain a Certificate of Homologation of the Incile to be issued by the Tuscany Region. To achieve this goal, following also the other prescriptions gave during the Conferenza dei servizi, OLT technical staff needed two months to prepared the new calculation and designs. After this, Pisa Municipality took about one month and half to revised all the documents prepared by OLT. Finally, Municipality of Pisa called for the closure of the Conferenza, that took place on 28th June, 2012 at Pisa Municipality palace; the Project was approved with prescriptions, obtaining the homologation certificate by Genio Civile department of Pisa. The only matter that remained open was the official permission to acquire/use the land nearby the Canal, that Pisa Municipality has to give to OLT before starting the works and the tender phase. Despite of this, the work necessary to prepare the tender documents continues in order to be able to issue a pre-qualification enquiry to potential construction subcontractors as soon as the matter concerning the land acquisition will be resolved by Pisa Municipality. 25
A preliminary work to be done before the construction of Incile canal is the reclamation of the existent part of the canal: the reclamation will consist in the removal of waters and mud present inside the canal. This operation needed an official authorization by ARPAT of Pisa, obtained on the 3rd August 2012 on the bases of a reclamation project prepared by OLT. This work will need a private tender, in which OLT will be the committee on the behalf of Pisa Municipality. Ing. Canepa was appointed as Responsible of the procedure on October 24 th 2012. OLT carried out the tender process for the cleaning of the water (phase 1 of the works), preparing the Tender along with the Technical Specifications and the Safety and Coordination Plan, following a negotiated procedure in accordance with Legislative Decree no. 163 / 2006, as amended. The invitation letters were sent to the selected companies on 7th January 2013. On January 23rd the tender process was concluded and Forti S.p.A awarded the cleaning of the water. The contract is being prepared by OLT legal department and Avv. Toscano. The works should start at the beginning of March 2013 but not before the main tender is ready to be issued. 12. Radio Frequencies o Radiolink : Before the Terminal can operate OLT must obtain from the Ministry of Economic Development - Department of Communications the approval for the allocation of a frequency band to ensure the adequate communication between the Terminal and the base. The necessary documentation to present the request was prepared and the request to obtain a frequency band was submitted to the MSE on March 23 rd 2012. The technical procedure was completed and the frequencies were awarded. The official Act was issued on July 31 st 2012 by the Ministry of Economic Development - Department of Communications. Request on MSE ( Telecommunication Dept.) for the discount on annual fee on the use of both frequencies (FSRU Monteserra and Monteserra On shore base) was sent on October 9th 2012. Sferiacom provided all the detailed HW information for the closing of the ongoing request to MSE (see Chapter IT). On December 14th the MSE granted the discount on annual fee requested by OLT. o GMDSS RADIO LICENSE On December 28th 2012 the Ministry of Defence and the Capitaneria di Porto di Livorno assigned to the FSRU Toscana the MMSI Code and the Call sign. Telemar (MSE Concessionaire) assigned to the FSRU Toscana the MMSI Code. The MSE inspector performed the site survey for the release of Licenza Radioelettrica on January 28th 2013. 26
Licenza Radioelettrica provvisoria is being released. o RADIO LICENSES Other frequencies On November 22nd 2012 OLT submitted the request for other frequencies to the MSE. The documents was been sent to MSE for approval. The procedure is ongoing. (see point 10.7) 13. Emission Trading Authorization On November 30th 2012 OLT sent to the MATTM the request to obtain authorization to emit greenhouse gases, which will be issued as per Legislative Decree 216/2006. The request was finalized on February 7 2013 with the submission of the "Monitoring Plan" prepared in accordance with Regulation (EU) n.601/2012. The procedure is in progress. 14. Trials and Testing of the Terminal Before the terminal can begin operations, it must be tested by specialized committees and authorities. This is a final step in the process and will be addressed in due course. A) Maritime Testing OLT has made a formal request to the Ministry of Infrastructure who is chairing the Intra ministerial Committee for the creation of a specialized committee to review the terminal in relation to Art. 48 of the Navigational Code. On 28th October 2010 the MIT issued the Decree for the nomination of the Commission. The Committee is formed by: 1. 2. 3. 4. 5. 6. 7. MIT Capitaneria di Porto Ministry of the Interior - Fire Department Central Office Ministry of the Interior Fire Department General Direction Tuscany Provincial Command of Fire Department. MSE Energy Department MIT Interregional Department for the Public works of Tuscany and Umbria
A visit at the Dockyard in Dubai took place from February 28th 2011 to March 3rd 2011. A meeting with the Committee took place on December 13th to discuss about several aspects of the Commissioning that needed to be clarified. OLT also provided a presentation about the progress of the project and a brief update on the project progress status. OLT is responsible of all costs concerning the 27
Commissioning and therefore OLT was responsible of the cost of the inspection in Dubai. B) Industrial Testing Before the start-up, the Terminal must be tested by a special Commission presided by the MSE for an industrial test. The Committee is constituted by the following members: 1. 2. 3. 4. MSE Costums Agency MATTM Tuscany Region
SRG is in charge of this aspect of the testing for the pipeline, since the authorization for the pipeline has been transferred from OLT to SRG. A meeting with the MSE to clarify several aspects of the Commissioning took place on January 10th 2012. Permitting and Authorisation Meetings held in October: January 8th: Meeting at MSE for Other Frequencies (Balboni) January 9th: Meeting at MSE for Guarantee Factor (Venturi) January 14th: Meeting at Custom Agency and meeting with Major of Livorno (Venturi) January 17th: Meeting in Livorno with Stelmar for Other Frequencies (Balboni) January 24th: Meeting in Livorno with Custom Agency (Venturi - Balboni) Meeting in Livorno with Capitaneria di Porto (Venturi) January 25th: Meeting in Livorno with CIBM for Monitoring Plan (Venturi Maggi Balboni) January 29th: Meeting with Major of Livorno (Venturi)
8. PROJECT QHSE 8.1. QA/QC NTR 8.2. HSE Engineering and Permitting
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For what concerns project HSE activities carried out during January to support the ongoing permitting processes, the main issues are the following: Finalization of the Monitoring Plan to be submitted within mid of February 2013 as per the Emission Trading procedure; Detailed analysis trasmetted to Saipem on ARPAT Opinion about the technical documentation submitted by OLT for the Verification of compliance of Prescription n. 5 (CEMS); Review of the Technical Report issued by CIBM with the results of the first Campaign (the so called Bianco phase) regarding the status of the marine environment in the future area of installation of the Terminal. Reviewing of HSE project documentation issued by Saipem.
8.3. HSE Statistics As per OHSAS 18001 and Saipem Management System the most relevant Health&Safety information related to personnel working on the project has been recorded by Contractor. In the following list is the Summary Status of the Key HSE Performance Indicators updated to January 2013 :
1
Total hours worked in December 2012 = 300,968 (refer to Saipem and Saipems subcontractors) Number of Lost Time Injuries (LTI) based 1 day shift - company and contractor employees = 0 LTI Frequency Rate (Cumulative Project) = 0.28 Number of Restricted Work Cases (RWC) - company and contractor employees =0 Number of Medical Treatment Case = 0 Total Recordable Cases (LTI + RWC + MTC) company and contractor employees = 0 TR Frequency Rate (Cumulative Project) = 1.70
Other Incidents/Proactive Indicators: Safety Observation = 212 First Aid Case= 0 Near miss = 1 Material Damage (< 10,000 US $)= 0
Reference Period from 09-12-2012 to 18-01-2013.
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Following a brief description of the above mentioned NM: on 27th December night onboard FSRU Toscana during the ballasting of the ship an unplanned overflow of the Ballast tank n.5 through open manhole and vent pipe on the deck had occurred. During the event some of the overflow water had entered into portside underway passage through open cable penetrations on Port side deck.
9. LEGAL ACTIVITIES 9.1. Contract and other activities The legal department assisted the company in the ordinary activities such as the extension of consultancy and labour contracts and the check of some agreements aimed to observe the prescription no. 24 of the VIA authorization. The department, with the external support of an administrative lawyer, assisted the company for the tender procedure concerning the reclamation of water and mud present in the Incile canal. In light of the incoming FSRU commissioning OLT and E.ON Ruhrgas AG have negotiated two agreements respectively to ensure to OLT the availability of the LNG carrier LEO and for the services to assist OLT in the procurement of LNG on the market. Both agreements are necessary to bring the necessary LNG to allow Saipem to complete the offshore FSRU commissioning. On January 2013 the parties have reached an agreement on the most relevant issues and the 2 agreements are now close to finalization. On January 2013 OLT brought an action before the Administrative Court of Milan to oppose the resolution of Italian Gas and Energy Authority (i.e. AEEG) n. 451/2012/R/GAS dated 31 October 2012, whereby the AEEG suspended the applicability of an industry incentive which otherwise would have potentially applicable to OLTs regasification terminal (i.e. the so-called Guarantee Factor). Considering such resolution potentially detrimental to OLTs business interests an action has been brought against it by OLT. The hearing to discuss about the pre-emptive order to suspend such Resolution of the AEEG requested by OLT is expected to be on February. Ordinary legal support has been provided to the execution of the EPCIC Contract, in particular concerning the role and responsibility of Saipem and ECOS during transportation of the FSRU to Livorno and during the offshore activities. In this regard OLT has also started a negotiation with F.lli NERI and LABROMARE respectively for the transportation and the disposal of the garbage and waste of the terminal. ECOS, in its quality of Armatore of the FSRU, is expected to sign directly such contracts, but OLT could also decide to sign them directly in light of its general responsibility as holder of the permits.
10. OLT COMPANY OPERATIONS 10.1. OLT Recruitment No activities in January.
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10.2. Commercial IT System Factory Acceptance Test (FAT) has been successfully performed from Sept. 11 to 14 in Glasgow. Current Built of ECS passed the FAT acc. contract with 0 Level I, 1 Level II, 7 Level III, 24 Level IV observations. Respective Punch List was agreed and processed by AMOR. The new release was made available to OLT on Nov. 14 and has been operated in a test- and development-environment. Additionally, Amor set up for this release the production environment in December to operate the system under real-time conditions simulating the future commercial phase of the project. Impact of the new AC on the Commercial IT System was analyzed and first set of most important changes has been specified as draft and sent to AMOR for review and cost estimation. AMOR provided cost estimates for 11 variations during January. These variations where structured by OLT in so-called Release Groups according priority and impact on the Current Build. Final review of specifications will be made together with Commercial Department for each Release Group. These work packages have to be implemented until Site Acceptance Test (SAT). AMOR provided test versions for the Accounting and the PIMS interface. Remote-Testing will be performed by OLT together with AMOR in the 2nd week of February. Meeting with Amor took place on January 16, to discuss the Amendment to the Contract drafted by OLT. Olt indicated to AMOR that SAT is planned for September 2013. Invoicing Status Fixed Price Milestone %age Initiation of contract D1 Approval D3 Approval FAT Total Date Amount ( w/o VAT) 15/03/11 96,000 01/06/11 96,000 10/08/11 96,000 27/09/12 96,000 384,000
Invoice 15076 15634 16214 20217
Status Paid Paid Paid Paid
Invoicing Status Time and Materials Milestone %age Invoice Variation 1 Password 100 Maintenance using PIN Total
Date
Amount ( w/o VAT) Status 3,042.76 Paid 3,042.76
10.3. Data Acquisition (PIMS) Installation of the on-shore part in Livorno was completed and tested in December. Yokogawa submitted a proposal for generic reports and training activity and it is approved during the month. The training activity is planned for February 2013. The installation of PIMS systems on the vessel is waiting for the laying of cables (power and networking) by SAIPEM. It should be completed during February 2013. 10.4. Integrated Management System (IMS) for the Operational Company SA8000 unannounced maintenance audit by BV was successfully performed in Livorno on January 31. Next Audit will take place mid 2013.
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10.5. Law 231 for Project Company OLTs supervisory body (OdV) recommended upgrading of the Risk Assessment, especially in respect of Environmental Crimes under Law 231, but also in respect of a better documentation of the evaluation process. This will be done together with M&IT. The project team consisting of M&IT and OLT employees started work on September 7 and continued during October and the work continued during November. The updated Risk Analysis for submitted to the OdV for their meeting on December 17. OLT is waiting for feedback to start upgrading the 231 Model. The 1 st Maintenance audit of the model that was originally planned for February 2013 was therefore postponed in agreement with BV to April 2013. 10.6. PR & Communication Extra prepared together with all internal stakeholders the communication activities in connection to the Naming Ceremony scheduled for February 5. This comprises the Press Release, creating the media list, and updating the Q&A. Video and photo material production will be done by a local supplier in Dubai, the post-production will be performed in Italy before sending the material to local TV stations. Extras contract that expired January 2013 was prolonged for 1 year under the same terms and conditions. 10.7. Information Technology IT SYSTEMS: IRON STRUCTURE F.LLI NERI The iron structure installed during November 2012, was been completed also with electrical wiring and lighting . The box in on shore base has got one cabinets installed with WAN devices and Radio link devices. Air conditioning available . OLT awaited the completion of electrical works in charge of F.lli Neri regarding the external generator just put in place close to the box . It is also awaited from Saipems outsourcer the feedback on the variation of the support of VSAT dish over the structure. Delivery of all the SAT devices is scheduled at the beginning of February . . RADIO LINK Site acceptance Test in DDW on radio link (phase 1) was been terminated with succesfull and all the part involved in this phase was been tested during the activity in DDW. Rotary joint is installed , power up of the cabinets and testing with ESD system was been performed . Electrical evaluation of the UTP connection with Satellite Saipem cabinet and PIMS cabinet. There is any evidence right now, of any further test performed by Saipem with all the other cables pulled (UTP) useful for the interconnection from RL to the FSRU. A dedicated feedback is awaited before the Sail Away . SATELLITE LINK ON SHORE BASE NewSat evaluated the iron structure in on shore base and some upgrade on the single support structure of each dishes will be put in place. Proposed modification were sent to NewSat for a proper feedback on the matter . The installation cost are included in EPCIC contract but extra cost will be in charge of OLT for the following points : Electrical wiring ; Crane use lift up - ; Delivery of the devices just scheduled in the mid of February .
ECOS IT STRUCTURE OFF/ON SHORE 32

WAN primary connection and back up connection are installed and available. Ecos can set up its network in order to have its client connected . GMDSS RADIO LICENSE The MSE inspector performed the site survey for the realease of Licenza Radioelettrica on January 28th . After the involvement of IT Manager and Com. Olcese aimed to prepare all the documentation useful for the visit, Com. Parisi (ECOS) was the OLT representative in DDW in order to follow the inspection . Licenza Radioelettrica provvisoria was been released. RADIO LICENSES Stelmar is in charge to support OLT for this specific phase and all the documents was been sent to MSE for approval First informal feedback received from MSE need more details regarding the information submitted and STELMAR was been involved on the matter . Is still pending the declaration from the constructor on the use of the sole channel frequency (12,5 Khz) for Transceiver Nessco . This information is in charge of Saipem. SAIPEM IT OFFSHORE AND ON SHORE NETWORK Technical team The definitive document is available . Detailed request on the IT security infrastructure was been sent to Saipem in order to have a clear idea on the Instrusion Detection and Prevention to put in place with our vendor but no feedback was been received yet . First feedback was been received from its outsourcer (Yokogawa) and more detailed information was been already requested. ZEROUNO SERVICES HELP DESK I II III LEVEL Contract agreement was signed during January 2013 at the same cost of 2012. Help desk Dubai Team will not be almost necessary starting from the end of March . PIMS SERVERS ON SHORE Pims servers are installed inside Livornos server room . Is still awaited alla the information from Yokogawa useful for IT OLT systems regarding Firewall configuration, Remote Access and Antivirus . Power supply correctly put in place with dedicated UPS and dedicated power line . PIMS SERVER OFF SHORE During the SAT phase 1 RL, evaluation on the PIMs cabinets was put in place. Intenal devices for GPS antenna was installed in the Radio Link cabinet . Installation of GPS antenna on Radar Mast with dedicated cable were activities not completed yet by Saipem, during SAT . UTP cables from Pims to RL were tested electrically. No certification was been realeased during the visit and no terminations available for connection . SYMANTEC DLP CSP Its an ongoing project the evaluation protection of critical Operating & Maintenance worstations with the adoption of specific solution Symantec Critical Infrastructure : stop zero-day and targeted attacks, and gain real-time visibility and control into compliance . It 33
is also under evaluation the Protection of critical Operating & Maintenance worstations
with the adoption of specific solution Symantec Critical Infrastructure : stop zero-day and targeted attacks, and gain real-time visibility and control into compliance . This because targeted attacks use customized malware and refined targeted social engineering to gain unauthorized access to sensitive information. Typically, criminals use targeted attacks to steal valuable information such as customer data for financial gain. 10.8. HSE 10.8.1. General Activities Company HSE activities during January were mainly focused on the following issues: the implementation Management System is done on 14/01/2013. The IMS documents were put on the portal for viewing to all employees. the updating of Management System related the FSRU is ongoing. The closure of the work is programmed for Q1 2013. a new training program about safety is done. It is necessary to complete a safety trainings within March 2013. The safety training for technical employees is done for 13th December in Livorno office. 10.8.2. Health The Health Surveillance system for OLT employees has been carried out with positive results. 10.8.3. HSE Statistics Starting from the month of October 2011, in compliance with the requirements of OHSAS 18001, the most relevant Safety information related to OLT personnel has been recorded. Following Table shows the Safety Indicators currently implemented:
Monitoring responsible Frequency of data detection
Processes
Indicators
jan2012
Cumulated
Total hours worked [h] LTI - Number of injuries/incidents resulting in lost time Injuries/incidents Management TLTI - Total of injuries /incidents, restricted work cases, job transfer and medical treatments cases [h]
HSEQ
Monthly
5280
72397
HSEQ
Monthly
HSEQ
Monthly
Near-miss Report
N of near-miss
HSEQ
Monthly
Incident report
N of incidents
HSEQ
Monthly
34
11. COMMERCIAL ACTIVITIES 11.1. Regulatory Issues On January 4 OLT filed the administrative appeal toward AEEGs Resolution 451/2012/R/Gas which suspends the Guarantee Factor for OLT. Such paper has been redacted by avv. Tommaso Salonico with the support of the regulatory working group. The first hearing that was scheduled by the Administrative Court on January 24 was postponed by OLT to February 7 to try to have more time to find a bilateral solution outside of the court with AEEG. On January 9 MSE sent to OLT (copy to AEEG) a letter signed by Mr Dialuce (head of the Energy Department) stating that in their view OLT should not be excluded from a possible access to the GF in case of a return to regulation, however the withdrawal from the TPA exemption would be subject to a formal approval by the MSE after a consultation with the AEEG. In this specific forum there might be the implementation of specific regulatory rules to the terminal to ensure that no excessive costs for the National gas system would arise. On January 23 OLT sent a letter asking AEEG to reconsider the criteria on which the resolution 451/2012/R/Gas is based specially taking into consideration the content of the aforementioned MSE letter. Since the terminal is next to come into operation, OLT asked AEEG to promptly solve this situation of regulatory uncertainty. 11.2. Commissioning of OLT Terminal 11.2.1. After LNG Leo charter agreement was reached between OLT and ERG in November 2012, the shareholders decided on January 15, to bring the LNG Leo into the dry dock in Singapore to start the modification works as soon as possible (expected February 13). The LNG Leo is supposed then to be again available around mid of March 2013. Since the commissioning phase has been recently postponed by Saipem (first cargo is now supposed to be unloaded on June 16) the LNG Leo should now be available long enough to allow ERG to find alternative use for it to reduce the costs for OLT in line with the contractual agreements. 11.2.2. The negotiations for the LNG supply term sheet with ERG have been almost finalized and all the previous pending issues have been finally agreed. Only the article related to the validity of the LNG purchase order should be better clarified. In the meantime OLT commercial dept is working on the downstream part of the commission process that is strongly linked to the LNG price purchase approval. The intention is to identify together with the shareholders the most convenient and less risky process for OLT in selling (directly or indirectly) gas into Italian gas market.
12. FINANCIAL INFORMATION 12.1. Cash Out Total January cash-out amounts to 3,5 M. In details the cash out is mainly made-up by the following payments: - 1,88 M (53%) SAIPEM costs 35
1,12 M 0,29 M 0,14 M
(32%) ( 8%) ( 4%)
PY costs (33% O&M; 25% Personnel; 13% IT) O&M costs Compensation costs
12.2. Actual vs Budget Cash Out In tab. 1 it is reported the main variation in details occurred during the month.
In Tab. 2 it is reported the forecasted expenditure till the end of the year. Cash Budget 2013 has still to be discussed and approved by BoD.
tab. 2
12.3. 2013 Financial Requirement As detailed in the following chart (Tab.3), Financial Requirement for 2013 amounts to 190 M (47% made up by Saipem costs; 18% Commissioning Costs; 12% made up by Financing Costs; 8% O&M costs; 2% previous year costs; 2% Personnel costs).
tab. 3
36
12.4. Cash Needs Below it is reported the potential cash need for 2013 based on the Budget 2013 that still have to be discussed:
2012 /M Jan 7 Feb 16 Mar 10 Apr 16 May 20 Jun 22 Jul 7 Aug 8 Sep 38 Oct 30 Nov 3 Dec 36 Total 213
Loan provision could be reduced in case of cash-in, from regas activity, rentals sales to SRG or in case of different financing strategy. 12.5. OLT Financial Department OLT Financial Department besides its normal activity is currently involved in further activities that are ongoing: 1. OLT Budget 2013 is ready, awaiting for internal agreement on main assumptions that could modify significantly the data (ex. Commissioning). 2. Tariff spreadsheets has been internally discussed and will be sent by the end of February. 3. OPEX forecast has been reviewed and are included in the tariff calculation. 4. Administrative and Financial support on Incile Tender and Compensation works is ongoing. Forecasted cash out starting in March 2013. 5. Statements finalization is ongoing. 6. Audit on main O&M service providers has started with an external company. 7. First cash out for compensation activities amounting to 100.000 has been paid to Comune di Collesalvetti.
37
13. PHOTOS
Picture 1: Turbo generator #4 cas.
Picture 2: Turbo generator #4
38
14. RISK REGISTER Risk review was on hold since March 2011; given that OLT has no confirmed Saipem schedule to fully verify / quantify the severity of the risk.
39

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Management Report January 2013

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MANAGEMENT REPORT January 2013

3. EPCIC 3.1. Saipem Progress Status 25th January

ON SHORE COMMISSIONING OFFSHORE COMMISSIONING

OPERATION ORDINANCE ENGINEERING

LNGC LEO (vessel for first gas) MODIFICATIONS

FTS Agreement Phase: 3 Dubai

Period: December 2012

Confiscation, appropriation Violent theft Capture, seizure

7. PERMITTING & AUTHORIZATION 7.1. Background and Legal NTR

Reference Period from 09-12-2012 to 18-01-2013.

10. OLT COMPANY OPERATIONS 10.1. OLT Recruitment No activities in January.

Invoice 15076 15634 16214 20217

Status Paid Paid Paid Paid

Amount ( w/o VAT) Status 3,042.76 Paid 3,042.76

ECOS IT STRUCTURE OFF/ON SHORE 32

1,12 M 0,29 M 0,14 M

(32%) ( 8%) ( 4%)

Picture 1: Turbo generator #4 cas.

Picture 2: Turbo generator #4

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