Health Safety Environment2 0 0 1 r e p o r t

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Saipem Group - structure and activities 2

Main HSE achievements in 2001 6

The integrated Quality, Health, Safety and Environment Policy 7

Management of HSE data 10

Safeguarding health 13

Safety 18

HSE training 18

Injury statistics 19

Analysing injury statistics 22

ISM certification 23

Safety expenses 28

Commitment to environmental issues 33

Energy consumption 34

Water consumption 35

Atmospheric emissions 35

Waste production 36

Environmental expenses 37

Relative indicators 39

Verification of the report 48

C O N T E N T S

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The Health, Safety and Environment Report hasnow reached its sixth edition a clear sign of theCompanys commitment to keeping open and cleancommunication channels with its employees,clients and public authorities as concerns theprotection of workers health and respect for theenvironment.This Report aims to underline the positiveapproach taken with issues which are increasinglybecoming a major priority in Companymanagement.

In 2001 Saipem promoted many initiatives forworkers health and safety and environmentalprotection, and this Report gives full details.I would however like to highlight a few projects,which are strategic for Saipems future, wherehealth, safety and environmental issues played afundamentally important role.

In the development of the Blue Stream Project,which is now underway, an unprecedented numberof resources was involved and the technologiesused, environmental impact assessments insensitive territories and human resources workingfrom engineering up to implementation allrepresented a thorough testing ground for us intaking the best possible approach to ensuring thesafety of persons and protection of the environment.Another project concerns deep water drilling,which Saipem has invested heavily in, upgradingits vessels so that they can operate in zeropollution conditions, and with personnel fullycommitted to achieving the best results in safetymanagement.

At Saipem, we have switched from a traditionalway of handling safety, based mainly on technicalaspects, to a more modern approach which dealswith risks in a systematic and interdisciplinaryway, linking technical factors to human ones, andattributing increasing importance to workerstraining. Awareness and information programmes

are now a key part of our approach to improvesafety at worksites and the results in this Reportclearly show that we are on the right track.

The growing interest in environmental issuesshown by the public and institutions is having anever-increasing and major impact on the world ofindustry and on companies. Saipems steadfastcommitment is geared to seeking ways to minimisethe environmental impact of its activities, startingfrom the design stage and not only after projectshave been implemented.

However, despite the improvements achieved in2001, we are fully aware that we must not rest onour laurels as far as Health, Safety and theEnvironment are concerned; we must strive insteadto operate with a logic of continual improvement.For this reason, we shall continue in futures yearsto invest in training and improving thecompetencies and technologies that aim to ensureour clients are provided with a service which willalways meet their expectations.

Integrating Quality with Health, Safety and theEnvironment is, in our opinion, a fundamental stepto guaranteeing increasingly better support forperforming activities in a context of total quality.The upcoming certification of the SafetyManagement System on board offshore vessels,pursuant to the International Safety Management(ISM) Code, and the subsequent certificationprogramme for the Environmental Managementsystem in accordance with the ISO 14001 standardrepresent two further important steps in ourprocess of internal improvement.These new commitments, with the full support ofmyself and the Companys entire management,reflect Saipems culture of striving for continualimprovement.

The Chairman

Pietro Franco Tali

L E T T E R F R O M T H E C H A I R M A N

The Saipem Group is a global contractor providingservices to the oil industry in the fields of onshoreand offshore constructions, floating production andonshore and offshore drilling. The Saipem Groupoperates on national and international markets witha systematic and integrated network of operatingstructures.The parent Company Saipem SpA controls threecompanies directly and 35 indirectly and has a100% share in 26 of these. The Group alsocomprises 17 affiliates and jointly held companies(as well as firms and consortiums it has minorityholdings in).

O F F S H O R E C O N S T R U C T I O N

The Groups fleet of state-of-the art vessels, at theheart of its strategy for growth and development,have made it a world leader in the offshoreconstructions sector in both traditional activitiessuch as subsea pipeline laying and platforminstallations, and high technology used for thedeepwater sector. The groups fleet of semi subs isequipped with the most advanced technologies andfeatures: the Saipem 7000, with dynamicpositioning, a lifting capacity of 14,000 tonnes,

pipeline laying using the J system and ability tosuspend an overall load of 4,500 tonnes duringpipe-laying; apart from April and May when itoperated on North Sea projects, the vessel was usedfor preparatory activities and subsequent operationsof the Blue Stream Project; the Castoro Sei used forlaying large-sized pipelines and the FieldDevelopment Ship, a special vessel for developingsubsea fields in deep waters, equipped withdynamic positioning, a crane to lift loads of up to600 tonnes and a system for the vertical laying ofpipelines down to depths of 2,000 metres. Saipemis also prominent in the subsea sector, withtechnologically advanced equipment, such asremote controlled subsea vehicles, and workovertechnologies using specifically equipped robots foroperations on pipelines in deep waters.Besides the parent Company, the following are allinvolved in the offshore constructions sector:Saipem UK, Saipem Inc, European MarineContractors (a company jointly owned and run withHalliburton Brown & Root), for which negotiationsto acquire the remaining 50% were finalised inJanuary 2002, Saibos Construes Maritimas (a company jointly owned and run with BouyguesOffshore), Saipem Malaysia, Saipem Asia, PT

S A I P E M G R O U P - S T R U C T U R E A N D A C T I V I T I E S

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Offshore construction - Laid pipelines

2,400

1,800

600

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1,200

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Offshore construction - Installed structures

120,000

100,000

80,000

40,000

60,000

20,000

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Saipem Indonesia, Saipem Luxembourg, Saipem(Portugal) Comrcio Martimo Ltd, Sonsub, SaiClo(a company jointly owned and run with theAustralian company Clough), with whomagreements have been made for acquisition of theremaining 50% in 2002, Saipem EnergyInternational SpA (the former Sasp OffshoreEngineering SpA with the remaining 50% acquiredfrom Snamprogetti), Saipem Energy Ltd (the formerSasp Offshore Engineering Ltd with the remaining50% acquired from Snamprogetti), Moss Maritime(acquired this year) Petro-Marine (acquired thisyear), Barnett & Casbarian (acquired this year) andIntermare Sarda.

F L O A T I N G P R O D U C T I O N

After the good results achieved with its floatingproduction unit the FPSO-Firenze, the Saipemgroup decided to expand and develop this sector ofactivity, transforming its new vessel the FPSO-Jamestown, which was commissioned inDecember 2001, and constructing a new vessel theFPSO-Mystras scheduled for completion in 2003.These initiatives have all taken place through jointventures with Single Buoy Moorings.In the Floating Production sector, the FPSO unit-Firenze Produo de Petrleo (a companyjointly owned and run with Single Buoy Moorings)

Offshore drilling

160,000

120,000

80,000

40,000

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Onshore drilling

150,000

200,000

100,000

50,000

m

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and the FPSO-Mystras II Produo de Petrleo (a company jointly owned and run with Single BuoyMoorings) both operate.In order to strengthen its ability to penetrate themarket in Brazil and Angola, a new joint venturewith the Brazilian company Odebrecht was set up;the acquisition of Moss Maritime will also help theCompany to significantly expand its technicalcompetencies in this sector.

O F F S H O R E D R I L L I N G

In the offshore drilling sector, the Group operates in North Europe, particularly in Norwegianwaters, and in West Africa, North Africa, thePersian Gulf, Peru and India. Saipems fleet of drilling vessels includes the Scarabeo 5, a 4th generation semi-sub which can operate inwater depths of 1,800 metres and drill down to9,000 metres; the Saipem 10000 with dynamicpositioning which can operate in water depths of3,000 metres; the Scarabeo 7 a semi sub which canoperate down to 1,500 metres. Besides the parentCompany, Saipem Nigeria with headquarters atLagos, monitoring the strategic area of West Africa,Petrex operating in South America and Saipem(Portugal) Comrcio Martimo Ltd which managesdrilling vessels, apart from the Scarabeo 5

managed by Saipem SpA, are all active in thissector.

O N S H O R E D R I L L I N G

In the onshore drilling sector, the Group operates inItaly, Algeria, Egypt, Nigeria, Kazakhstan, Peru andSaudi Arabia, with its parent Company, SaipemNigeria, Petrex, SaiPar (company jointly owned andrun with Parker Drilling Co), Saudi ArabianSaipem, Saipem Perfuraes e ConstruesPetrolferas Amrica Do Sul all active. Saipem SpAin a consortium with Trevi SpA is also involved inslim cheap drilling in Italy and Venezuela, usingtechnologically innovative equipment.

O N S H O R E C O N S T R U C T I O N

In this sector, the Group has consolidated its presenceover the years with the development of critical projectsin difficult environments, such as laying large-sizedpipelines and constructing oil plants. It operatespermanently in the Middle East and Nigeria and isalso currently working in Kazakhstan, Oman, Irelandand Algeria. Besides the parent Company (acting aloneor with other international medical personnel), SaipemContracting Nigeria, Saudi Arabian Saipem, SaipemMalaysia and Saipem Asia work in this sector.

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Onshore construction - Laid pipelines

1,800

2,400

1,200

600

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Onshore construction - Installed structures

30,000

40,000

20,000

10,000

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S A I P E M G R O U P O R G A N I S A T I O N

S A I P E MS p A

S A I P E ML U X E M B O U R G S A

1 0 0 %

S A I P E M (P O R T U G A L )GESTO DE PARTICIPAES

SGPS SA100%

S A I P E M A S I AS d n B h d

1 0 0 %

S O N S U B I n c1 0 0 %

P . T . S A I P E M I N D O N E S I A

1 0 0 %

P E T R E XS A

1 0 0 %

S A I P E MA U S T R A L I A P t y L t d

1 0 0 %

S A I P E M E N E R G YI N T E R N A T I O N A L L t d

1 0 0 %

SAIPEM PERFURAES ECONSTRUES PETROLFERAS

AMRICA DO SUL Lda100%

P E T R O - M A R I N EE N G I N E E R I N G I n c

1 0 0 %

B A R N E T T & C A S B A R I A NE N G I N E E R I N G I n c

1 0 0 %

S O N S U BA S I A S d n B h d

1 0 0 %

S O N S U B S p A1 0 0 %

S O N S U B L t d 1 0 0 %

S O N S U B A / S 1 0 0 %

S A I P E M (P O R T U G A L )COMRCIO MARTIMO Lda

1 0 0 %

E U R O P E A N M A R I N EC O N T R A C T O R SNEDERLAND BV

1 0 0 %

S A I P A R D R I L L I N GC O M P A N Y B V

5 0 %

I N T E R M A R ES A R D A S p A

1 0 0 %

E U R O P E A N M A R I N EC O N T R A C T O R S L t d

5 0 %

S B C O N S T R U C T I O N &M A R I T I M E S E R V I C E S

B V5 0 %

S A I P E M E N E R G YI N T E R N A T I O N A L S p A

1 0 0 %

S A I P E MI n c

1 0 0 %

F P S O - F I R E N Z EP R O D U O D E P E T R L E O

Lda5 0 %

F P S O - M Y S T R A SP R O D U O D E P E T R L E O

Lda5 0 %

F P S O - M Y S T R A S( N I G E R I A )

Ltd1 0 0 %

S A I B O S( S E R V I C E S ) S A S

5 0 %

S A U D I A R A B I A NS A I P E M L t d

6 0 %

S A I B O SC O S T R U E S M A R T I M A S

L d a5 0 %

U P S T R E A MC O N S T R U C T O R S

I N T E R N A T I O N A L F Z C O5 0 %

S A I B O S F Z E1 0 0 %

M O S S A R T I CO F F S H O R E A / S

5 0 %

M O S S O F F S H O R EA / S

1 0 0 %

G L O B A L P E T R O P R O J E C TS E R V I C E S A G S A L t d

1 0 0 %

E R S E Q U I P M E N TR E N T A L & S E R V I C E S B V

1 0 0 %

S A I P E M A R G E N T I N AS . a . m . i . c . y F .

9 9 %

S A I P E MC O N T R A C T I N G

( N I G E R I A ) L t d 9 7 %

S A I P E M( N I G E R I A ) L t d

8 9 %

S O N S U BI N T E R N A T I O N A L B V

1 0 0 %

S O N S U BP t y L t d1 0 0 %

M O S S M A R I T I M EA / S

1 0 0 %

S A I P E M( M a l a y s i a ) S d n B h d

4 0 %

S A I C L OL U X E M B O U R G S A

5 0 %

S A I P E MI N T E R N A T I O N A L B V

1 0 0 %

S A I P E MU K L t d

7 5 + 2 5 %

E U R O P E A N M A R I N EI N V E S T M E N T L t d

1 0 0 %

S A I C L OP t y L t d

5 0 %

M O S S M A R I T I M EI n c

1 0 0 %

In 2001 the entire Company structure was involvedin implementing the most significant HSE relatedactivities.The activities are summarised below:

implementing and updating Saipem fleetdocumentation;continuing activities to obtain ISM (InternationalSafety Management Code) certification for theGroups companies and fleet (Saipem SpA, EMC,SB CMS BV);auditing onshore and offshore projects andoperational vessel, to identify any shortcomings,deficiencies and implement improvement actions;conducting safety training programmes formanagement and operative personnel; thisinitiative involved a large number of Saipempersonnel, both onshore and offshore;conducting audits at rigsites;continuing environmental monitoring for:- internal combustion engine exhaust fumes, by

measuring and analysing emissions;- evaluating the noise risk at offshore fields and

in drilling;- evaluating the environmental acoustic impact

for onshore drilling plants operating close tourban centres;

- survey to update data on VDU medicalpersonnel, and eye tests for personnel usingVDUs for more than 20 hrs weekly;

starting up the Strategic Health Programme(PSS), created to track direct and indirect costs

of the Groups medical division;expanding activities at the peripheral QHSE unitin Bucharest, Rumania, with recruitment andtraining of new resources to be involved inoperative projects;developing new software for environmental datamanagement; this software will provide for a moreefficient and reliable collection of informationand analysis of data in the annual Health, Safetyand Environment Report;implementing ministerial no smokingregulations in work places: no smoking noticeshave been put up at the Offices at San DonatoMilanese, special areas for smokers have beenset aside and activities to promote an awarenessof the risks of smoking introduced.

The growing importance which Saipem gives to QHSE issues has meant that safety performanceindicators have been substantially improved on,quality non-conformities reduced and preventiveactions for health increased. This in turn has put the Company in a prestigious position on theinternational market as far as quality, health, safety and environmental management at operativesites are concerned. Apart from the many letters of recognition about specific projects sent in to us by Clients, our achievements have also beenconfirmed by IPLOCA, that nominated us winners of their Safety Award for best offshore contractor in 2000.

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The Companys commitment to improve its ownHealth, Safety and Environment management systemhas gained increasing importance over the years andthis is clearly reflected by growing investments in thissector. Company management, apart from committingitself financially, has used considerable human andtechnical resources to safeguard the health of its ownemployees and an efficient and tangible change in theprocess of managing safety at work.The key factor in the system adopted by Saipem iscontinual improvement and this is based on thefollowing principles:

Safety, safeguarding Health and protecting theEnvironment have the priority on all activities;all accidents can be prevented;compliance with national and international laws isa minimum reference requirement;

respect of Health, Safety and the Environment is aresponsibility of all Saipem personnel.

The main objectives of the HSE system are therefore:the systematic and accurate management of allmethods and activities for safeguarding health,safety at work and protecting the environment;development of own projects in line with currentlaws, best technologies and practices;a continual decrease in the number of accidentswith the ultimate aim of achieving zero accidents,by adopting suitable measures for preventing orlowering professional risks;respect for the communities of the country whereoperations are carried out, guaranteeing limitedimpact on the culture and its traditions and adoptingmeasures for developing technical know-how;

T H E I N T E G R A T E D Q U A L I T Y , H E A L T H , S A F E T YA N D E N V I R O N M E N T P O L I C Y

Saipem continued its work of improving, updatingand applying HSE (Health, Safety andEnvironment) and Quality systems during 2001,and its Quality system was awarded ISO 9001:1994certification.The Quality and HSE departments were mergedduring the year to create a new area which can meet with and better satisfy the needs of a national and international market increasinglyfocussed on quality, health, safety andenvironmental issues.At the start of 2001, the International StandardsOrganisation (ISO) issued the new revision of itsinternational standard ISO 9001:2000, which hasbecome the world standard over the last fifteenyears and is used by leading customers as a qualityreference contract requirement.As a result, Saipem, with the foundation of its new QHSE department, has set itself the task of updating the certification of its own QualitySystem to the new standard by the end of 2002. The main development lines for this upgrade will be:

changing from the functions based approach, to a process based approach for business, and focus on activities for continualimprovement;extending Quality training at all levels, with alocal centre to be setup in Rumania;consolidating System Audit activities at anoperating company level, and starting up thesame planned, systematic activities at aCorporate level;introducing new systems for monitoringCustomer satisfaction and measuring supplierperformance;introducing new, evolved computermethodologies (Business Intelligence andDatawarehouse) for using measurementindicators at a process level;creating a System for managing quality costs.

The second stage of this project (July 2001 -December 2002) is now underway and is dedicatedto trying out the model in specific Pilot Projectschosen from sales job orders, as well as investmentand maintenance job orders.

Q H S E : I N T E G R A T I N G Q U A L I T Y F O R H S E I S S U E S

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limiting impact on the natural environment whereprojects take place.

To attain these goals, whilst ensuring that Health,Safety and Environment standards are uniformlyapplied in all Saipem contexts, each Group companyhas a suitable QHSE team directly reporting toCompany Management and liaising with theCorporates QHSE department. The latter isresponsible for steering, co-ordinating and controllingthe entire HSE system of the Group, mainly providingCompany policies and operative support to ensure thatthese policies are properly applied at worksites incountries around the world.

At a Project level, Saipem uses the best technologiesand resources to ensure the development of an HSEmanagement system which is suitable for the scope ofwork, host country and contract requirements.

Each new project offers the chance to capitalise ongood and bad experiences of past projects and identifynew initiatives and methods for achieving the goal ofsafeguarding workers health.Great importance is given to training the humanresources working on a project, involving personnel in the Companys HSE objectives and defining clear standards and organisational and operativeprocedures.We accomplish this by:

holding safety training programmes based on yearsof operative experience and put to the test duringnumerous projects;conducting awareness campaigns for personnel onenvironmental protection and safety at work;running incentive schemes for both managementand the workforce, based on proactive involvementin order to achieve an excellent safetyperformance.

T H E T H R E E L E V E L S O F T H E H S E S Y S T E M

CORPORATE COMPANY SITE/PROJECT

HSE POLICY

HSE GUIDELINES

HSE STANDARDS PROJECT HSEPLANS, MANUALS

POLICY

OBJECTIVES

RESPONSABILITY

STANDARD

WORK INSTRUCTION

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HSE activities and performance are monitored andcontrolled by continual auditing activity, at threelevels:

system audits: the purpose is to assess that generalprocedures involving health, safety andenvironmental protection issues, are correctly andcontinually applied;project audits: the purpose is to assess that workinstructions, safety regulations and safety andemergency plans are followed, and standards andlaws on health, safety and environmental protectioncomplied with on site;contractor audits: the purpose is to assess that

contractors correctly implement the health, safetyand environmental activities stated in the contract,and to monitor contract HSE activities rather thanintervene.

This all-round approach means that Saipemsprocedures for the HSE management system can bechecked and all personnel made aware of and involvedin these issues.To ensure the continual improvement of the health andsafety of workers and environmental protection, theHSE management system is routinely reviewed andrevised based on its results and future goals.

I M P R O V E M E N T

MANAGEMENT REVIEW

AUDIT CORRECTIVE ACTIONS

POLICY

HSE 1 ManagementCommitment

PLANNING

IMPLEMENTATION& OPERATION

HSECONTINUOUS

IMPROVEMENT

HSE 15 HSE ManagementSystem Review

HSE 14 Audit

HSE 2 Risk Management

HSE 3 Human ResourcesHSE 4 CommunicationHSE 5 Environmental ProtectionHSE 6 CommercialHSE 7 EngineeringHSE 8 PurchasingHSE 9 Operations ManagementHSE 10 SubcontractorsHSE 11 Assets ManagementHSE 12 Emergency PlansHSE 13 Incidents Management

Based on ISO 14001 and BS 8800

The HSE Report is adocument comprisingimportant information aboutHealth, Safety andEnvironmental results andperformance.The Report presents theinitiatives taken by Saipemfor Health, Safety andEnvironmental issues andreflects its commitment inthese areas. It is aimed notonly at Group employees, but also at Shareholders,Customers and Local Communities who hostSaipems worksites, Institutions and TradeAssociations.The Report has been drawn up following awell-consolidated methodology based on CorporateStandards and guidelines provided by otherauthoritative bodies involved in environmentalissues.The Report is divided into two parts:

a qualitative section describing the SaipemGroups policy on Health, Safety and theEnvironment, its main activities and particularinitiatives promoted during the year, in the areaof HSE;a quantitative section with data on theconsumption of resources (water, energy), wasteproduced, injury statistics and costs borne foractivities promoting the health and safety ofworkers and environmental protection.

The reliability of information in the Report isguaranteed by independent certification body.This certification is based on guidelines issued bythe Forum on Certification of EnvironmentalReports promoted by the Eni Enrico MatteiFoundation and its purpose is to assess thesuitability of the methodology used to prepareCompany statements in the Report, its integrity,

clarity andcomprehensibility andreliability of the datamanagement system.This guarantees theaccuracy and correctness ofdata in the Report, andprovides Saipem with usefulinformation about how itcan continually improve theclarity of data andreadability of the Report.

A new information system for collecting HSE datahas been adopted by all Group companies, sitesand peripheral projects which shows how theGroup is striving to continually improve theseissues.This tool has improved the reliability of datacollection and its processing, involving all Group contexts in HSE reporting to a greaterextent.Quantitative data is presented per type of activity(offshore constructions, onshore constructions,drilling, logistic bases/offices), so that the impactgenerated by each activity can be understood moreeasily.The sections on waste produced, environment andsafety costs and water consumption have beenenhanced, while a new section detailing the activitywhich a Site/project is focused on during eachperiod of the year has been included.The section on comments to and interpretation ofquantitative data includes some improvements tothe way indicators have been devised. Theseimprovements account for the fact thediscontinuous nature of our business (temporaryworksites) means that annual absolute data have to be weighed differently, depending on thespecific activity carried out. The indicators usedlast year were kept so that data can be comparedover time.

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OFFSHORE CONSTRUCTIONRelated activitiesBlue Stream Project - Pipe Coating (Kuantan)Blue Stream Project - Russian Onshore PipelineBlue Stream Project - Samsun QJ Base-Turkey

Offshore VesselsPearl MarineCastoro 2Castoro 8CrawlerFDS (Field Development Ship)Saipem 7000Castoro 6Castoro 10

ONSHORE CONSTRUCTIONAY-1 P/L Conversion Project - KSAFahud Sohar Gas Pipeline Project - OmanHawiyah Project - KSAKhuff Gas Project - KSARehabilitation Phase II Project - KSAHaradh GOSP Project - KSA

DRILLINGOffshore DrillingPerro Negro 2Perro Negro 3Perro Negro 4Saipem 10000Scarabeo 3Scarabeo 4Scarabeo 5Scarabeo 6Scarabeo 7

Onshore DrillingPetrex - PerRig AZ 5823Rig AZ 5825Rig AZ 5827Rig AZ 5832Rig AZ 5843

Rig AZ 5846Rig AZ 5864Rig AZ 5870Rig AZ 5889Rig AZ 5891Rig AZ 5892Rig AZ 5893Rig AZ 5894Rig AZ 5895Rig G-125Rig n. 101Rig n. 102Rig n. 2Rig n. 201Rig n. 202Rig n. 216Rig n. 230Rig n. 259

LOGISTICS BASES AND OFFICESLogistics BasesSaipem Algeria Branch - Hassi Messaud BaseSaipem SpA - Cortemaggiore - ItalySaipem Kazakhstan Branch - Drilling CampERS - Sharjah U.A.E.Saipem Contracting Nigeria - RumolumeniSaipem SpA - San Vitale - Ravenna - ItalySaudi Arabian Saipem - Dammam Base

OfficesSaipem SpA - San Donato MilaneseSaipem SpA - San GiulianoADGF Project JacartaERS - RotterdamIntermare Sarda - ArbataxSaipem Asia - Kuala Lumpur OfficeSaipem Inc - Houston OfficeSaipem Norway Branch - Stavanger OfficeSaipem Turkey Branch - Samsun OfficeSaipem UK - London OfficeSonSub Ltd - Aberdeen OfficeSonSub Inc - Houston OfficeSonSub SpA - Marghera Office

P R O D U C T I O N S I T E S I N V O L V E D I N T H E C O L L E C T I O NO F Q U A N T I T A T I V E D A T A

As for atmospheric emissions, Saipem hasconducted benchmarking with other sectorcompanies to further assess the reliability of its own calculation model in more detail. The new software application IES (Inventario Emissivo Siti - Site EmissionsInventory) produced by EniTecnologie

and Agips calculation model were the main itemsevaluated. Results were satisfactory in both caseswith a difference of just a few percent. It should be noted that data on energy consumptionand atmospheric emissions refer solely to Saipems activities and not to the work of subcontractors.

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In 2001 training and health prevention andprotection initiatives aimed at Saipem workersthroughout the world were consolidated.The contribution from medical personnel has beenfundamental, with their skills and total dedicationto their work enabling systematic and constanthealth monitoring that focusses on preventionwithout neglecting treatment and training.Besides strictly clinical aspects, medical personnelalso tackled health cost management efficiently, asan analysis of these costs shows.Two information sytems for collecting and analysingdata respectively ensure that health and economicmonitoring could take place.The medical personnel can easily use these systemsin their jobs, to obtain continually updatedinformation at all times and at the same timeintegrate and update head office with data collectedlocally from their own work stations.The systems also provide support for accuratehealth control and management planning, with aview to optimising costs and ensuring a goodquality of medical care.Initial analysis of data for 2001 highlights anincrease in preventive activities. In fact, preventivecheck-ups went up from 379 in 2000 to 1,573;

likewise the number of vaccinations rose from1,504 in 2000 to 2,340 in 2001.Analysis of current expenses and investmentsindicates a fair increase in investments and slightincrease in current expenses justified by personnelcosts going up from 60% to 66.43%.This is due to the greater number of operativeprojects during the previous year, which created 30new jobs for medical personnel.Worth noting is that costs of materials and healthstructures also had a 13.05% impact on overallcosts.

In 2001, the health prevention and protectionprogramme at Saipems operative sites worldwidewas further consolidated.In order to work properly, with univocal procedures understood by everyone and clearguidelines for Group Company managers andproject managers on how to manage health matters,it was decided to draw up Corporate Standards on Health issues.These standards are vital guide for the efficient andcareful management of health & hygiene,preventive, training and organisational aspects ofemergencies at Saipem sites.

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The Health Plan has been entirely updated andintegrated to meet new operative needs. The Plandetails the organisation of the Service, healthplanning and prevention in the workplaces, themanagement of medical emergencies andprocedures for using the units IT systems.

Special attention has been paid to MedicalReporting, with specific standards devised formedical equipment, consumables, instruments and

pharmacological products. Procedures for collectingmedical-statistics, hygiene data and informationabout health management costs for each operatingcontext are also explained.

A Standard has been set up for health checks,indicating all the protocols used. These have beenbased on the types of duties performed and specificconditions of the geographic area where the personworks.

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Non-smokers being exposed to passive smoking(passive smokers) in the work place is a problemwhich has to be carefully addressed by everycompany.Every nation has its own legislation and so theCompany simply has to follow the relevantprovisions.As Saipem SpA has its administrative offices in Italy, where no reference laws have yet been defined, it has decided to adopt its own policy.The approach which is to be taken is a graduallead-up to ban smoking inside buildings whereGroup companies are situated; this will bepreceded by a series of awareness measures andproviding support for smokers a greying grouptargeted by doctors reports, advice from familiesand remarks which are not always friendly fromcolleagues.As concerns the above, tense relations certainly donot help to solve this problem: instead they onlymake them worse: smokers are often well aware ofthe risks they are taking and this is the very reason

why they are highly sensitive.Campaign could be a chance for smokers to dealwith the issue efficiently and calmly, graduallyreducing the number of cigarettes they smoke andperhaps giving up for good.Saipem promoted many activities:

taking part in the no-smoking day with theslogan Our lungs have had more than enough;all personnel at the San Donato headofficeswere given an informative questionnaire inOctober, written by the Safety and PreventionUnit and by Workers Health and Safetyrepresentatives.The results of the survey were posted on theCompanys electronic notice-board;following this survey, a ban on smoking wasintroduced in Saipems offices at the IV Building, San Donato, and some small roomsfor smokers set aside.

Along with other future initiatives, the ban onsmoking will be extended in the future to cover allworkplaces of the Saipem group.

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All personnel living and working in areas at risk,with limited local medical support, should be givengood first aid training, in addition to extra trainingfor rescue operators; in fact the first aid given duringthe first ten minutes, known as the platinumminutes, can significantly reduce the need for urgenthospital treatment or at least prolong the time beforethe patient needs to be hospitalised.

Moreover, if medical personnel have to operate ontheir own when medical emergencies occur, it will behard for them to act effectively when managing acritical situation (with several victims andparticularly serious emergencies).

Despite being on-call around the clock at rigsitesand on vessels, medical personnel may not actuallybe present when an accident occurs.

For these reasons, personnel suitably trained in firstaid must be present during each shift, apart frommedical staff.

For this purpose, Saipems medical service, in theframework of the QHSE Division, has drawn up aFirst Aid programme:

for all employees involved in a project, withparticular focus on people who show a naturalinclination for being first aiders;to promote the characteristics of medical staffand nurses involved in the programme, definingthe records to keep and relative reporting;to define the roles of the Corporate and OperatingCompanies/Projects in defining and developingthe programme.

The aim of the above is to ensure that a trainingprogramme is carried out and that the first aidtraining programme is at the same level for thepersonnel of all Operating companies and SaipemGroup projects.

The purpose of the first-aid training programme is toprovide Group Company employees with generalinformation and to provide first aiders with in-depthinformation, especially about the techniques and

procedures to adopt in different situations wherethey may have to act.

So three first-aid training levels have beenestablished; general for all employees and especiallyfor new recruits as part of their HSE inductiontraining; basic for all personnel with managerial orcontrol tasks, and specific for first-aiders.

At the end of the latter two courses, there is apractical and written exam, with first-aid certificateissued to successful candidates.

All the certificates have an expiry date and holdersmust attend a refresher course to renew them.

First-aiders will have stickers on their helmets andwork overalls at work, so they can be easilyidentified.

The number of first aiders is based on the number ofpeople at the work site, taking into account shiftsand the average rate of absences due to holidays,sick-leave, etc., with a minimum of two first-aidersevery forty people (plus one for every additionalgroup of twenty people) per shift.

To make the courses uniform and training easier,QHSE has released a CD called Saipem medwith all programme modules available for allperipheral units.

The topics are revised and updated routinely, basedon the latest discoveries made in the field ofemergency treatment and therapy.

Headoffice is providing the peripheral units withaudiovisual material to make the courses moreinteresting, as well as posters showing the main firstaid techniques; the peripheral units will provideother organisational and technical support material.

Due to the importance and susceptibility of thisissue, a dedicated Standard (STD-COR-HSE-007)has been drawn up for the Corporate, and workinstructions for the Operating Companies.

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Another important standard concerns Health-Hygiene monitoring, which lists the requisites and routine controls to conduct in communal areas to ensure a suitable hygiene-sanitary level.The standard deals in particular with the qualityand storage of food, as well as the properties andtreatment of drinking water.

The Emergency Plan training programme aimed at

all worksite personnel, and in particular at somepositions directly involved in handling emergencieshas been updated and scheduled.

These guidelines, approved by Human ResourcesManagement, are a tool for creating better qualityand precision when working, and outline theprocedures for guaranteeing and ensuring theprotection and safeguarding of all workers healthin a professional and competent way.

Medical examination - 2001

2,500

2,000

1,500

1,000

500

no.

VaccinationsPeriodical visitsMedical fitness

19981997 200120001999

Health expenditures - 2001

6,000

5,000

3,000

2,000

4,000

1,000

thousand euro

TotalActualexpenditures

Investments

19981997 200120001999

Structure of actual healthexpenditures - 2001

Research & Dev. 1%

Consumables 1%

Medical exams 14%

Medicines 7%

Medical personnel costs 65%

Medical structures 5%

Other expenses 6%

Work environmentmonitoring 1%

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With the advent of Internet and e-mail over the lastfew years, the time spent in front of a PC during theworking day has gradually increased and it is nowquite inconceivable to think of doing most jobswithout the aid of a computer.

The VDU in itself is not a threat to our health:qualified studies have dispelled doubts aboutexcessive exposure to electro-magnetic waves as aresult of using PCs.However, incorrect use can cause a series ofpsychological-physical disorders.

The most common are muscular-skeletal related,disturbances to sight and mental fatigue.These symptoms are sometimes due to anunsuitable environment, and the legislators havetaken action over this aspect in a very clear way,issuing Guidelines for using VDUs (Decree 2October 2000).These guidelines specifically define someparameters such as the size of the work surface,position of the work station in relation to light andthe microclimate of the work place.

As part of the Saipem QHSE departmentsprevention programmes, and in accordance withapplicable laws in Italy (Legislative Decree 626/94and subsequent amendments, with the EEC law of21 December 2000) in relation to protecting thehealth of employees using VDUs at work, eye testswere conducted for all personnel at the San Donato,San Giuliano and Cortemaggiore offices, exposed tothis risk at work.Operative procedures for this programme wereagreed on with workers safety representatives, the

Manager of the Prevention and ProtectionDepartment and the Appointed Doctor.

A preventive ergonomic study was conducted byHeadoffices QHSE department, prior to these tests,at workplaces and on equipment used by personnel.

All measures (i.e. position of the VDU screen,replacing chairs with adjustable ones (height andchair-back, availability of suitable items to makethe working environment more comfortable etc.)required to ensure that equipment meets thestandards enacted by current laws have been taken.

A questionnaire was then handed out to allpersonnel using VDUs to evaluate the length oftime they used them for.

All employees systematically using VDUs for morethan 20 hours a week were included in the study.

New recruits were excluded however, as they hadtests done during their pre-employment check-up.

A surgery was set up at Headoffice, fitted out withall equipment needed to correctly evaluate theophthalmic and ergonomic status of each employee.This approach cut times for employees and morecheck-ups could be performed.

The programme also included check-ups for 530staff considered at risk; the appointed doctor willinform the workers health and safetyrepresentatives about the results and will assessthese to define the frequency of future check-upsbased on the results and legal provisions.

H E A L T H M O N I T O R I N G F O R E M P L O Y E E S U S I N G V D U S .A S H O R T G U I D E T O U S I N G V D U S P U B L I S H E D

O N T H E I N T R A N E T

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2001 was an important year for consolidating andimplementing policies and guidelines which SaipemCorporate had already defined in its ownorganisational system.The driving factor behind activities in this sectorlast year is the principle that Quality, Safety andEnvironmental problems often have a commonorigin and so a modern and integrated managementsystem can tackle and solve them.Within this type of management system, HSEinitiatives should be considered as a critical part ofthe general process of carrying out projects, whichmust permeate all stages, from planning totechnical design, procurement, construction andcommissioning.To achieve concrete results we cannot just manageproblems formally, issuing directives andregulations. Initiatives must generate involvementand the trust of everyone who works on projectdevelopment. In other words and particularly forsafety issues, a widespread safety culture must becreated.This is the very aim which 2001 training activitiesfor all workers at Headoffice and operatingcountries were based on.

H S E T R A I N I N G

One of the key goals in carrying out andmanaging a job order is suitable training andcontinuous updating for all employees, in order topromote a high level of know-how on health, safetyand the environment.

Personnel training is based on duties andprofessional roles, following guidelines and HSEstandards of the Saipem Group and often its clientsas well.

Immediately following their recruitment, employeesattend work-specific courses to ensure they cancarry out their jobs safely and to high qualitystandards.

The main topics of HSE training courses are:HSE introduction and orientation;safety supervision;safety management;communication;operative safety procedures;road safety management.

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The training hours in 2001 given by Saipem areshown in the figure, which plots the data recordedat training centres set up in some countries wheremajor activities have started in recent years. Thedata refers to formal safety programmes in line withCompany standards and does not include alltraining activities conducted at operative sites bysafety personnel assigned to projects.

I N J U R Y S T A T I S T I C S

Saipems safety management system aims to pursuebetter results and continual improvement ofCompany injury statistics in relation to operativeactivities. In setting great store by the Groups HSEpolicy and implementing the many actionsdescribed in this Report, the entire Groups safety

performance has improved considerably comparedto previous years.

The data in this Report refers to injury statisticsrecorded within the Saipem Group and arerepresentative of nearly all operating contexts,including statistics for sub-contractors involved inCompany projects. In some cases, minor, short-termactivities may not have been included in thestatistics, as they were not considered to be ofinterest.

The frequency and severity rates are internationallyrecognised indicators for injury performance inindustrial contexts. However they only partiallyrepresent the trend of safety activities in anoperating context and in particular only reflect the

Hours of training HSE courses - 2001

30,000

25,000

15,000

5,000

20,000

10,000

hours

PetrexKazakhstan(Drilling)

SaudiArabianSaipem

GPS AG(Offshore

Personnel)

NigeriaItaly

- 2 Fatal accidents

- 167 Lost time injuries

- 21 Work restricted cases

- 84 Medical treatment cases

- 4,832 First Aid Cases

- 2,579 Near Miss

- 4,204 Safety ObservationsReported

FT

LTI

WRC

MTC

FAC

NM

UER

negative side. In fact these indicators provide noinformation about the actions taken to ensureimproved safety conditions. For this reason, Saipemis taking a new approach to accounting for injuries.Besides negative events at operative sites, it alsoconsiders pro-active actions taken. This rationalemeans that over the next few years, operatingcontexts may be identified and evaluated with moreanalytical detail. With this new approach, thehealth, safety and environment managementrequirements already used by major internationalorganisations are being adopted.

A symbolic representation of events recorded in2001 is shown in the pyramid-shaped graph. Theevents indicate both injuries and suggestions/observations for improvements made by employees.

As can be seen, the system recording and analysingevents occurring in the Saipem Group is carefully

monitored. The analysis and investigation systeminvolves several organisational levels in relation toan events severity. Overall, 170 incidents wererecorded during 2001 representing all accidentalevents which caused the injured person to be absentfrom work for at least one working day. In absoluteterms, this value decreased by 11% compared to lastyears figure. Despite the many initiatives promoted,two fatal accidents occurred with Saipem personnel one on board the Castoro 6 vessel, and the other ata pipe-coating plant of a subcontractor. In additiontwo other fatal accidents occurred in relation tosubcontractor personnel however these cannot betraced to activities strictly supervised by Saipem.The diagram shows the performance of frequencyand severity rates over the last 5 years for theentire Saipem group.

The same improvement trend was also recorded foreach Business unit as discussed below.

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Saipem Group safety rates

6

5

3

F.R.

1

4

2

0.12

0.10

0.06

S.R.

0.02

0.08

0.04

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Frequency Rate

Severity Rate

Safety ratesOnshore Constructions Business Unit

2.5

2.0

1.0

F.R.

1.5

0.5

0.05

0.04

0.02

S.R.

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0.01

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Frequency Rate

Severity Rate

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Onshore Constructions Business UnitAs already mentioned, Onshore Constructionactivities mainly include the laying oflarge-diameter oil and gas pipelines, as well as theconstruction of industrial, oil, petrochemical plants,pumping and compression stations.The diagram attached shows the frequency andseverity trends for the last 5 years in this BusinessUnit, with a considerable improvement in injuryindicators. This was due mainly to the efficientawareness campaign conducted to reduce roadaccidents which still represent a major factor inonshore construction works.

Offshore Constructions Business UnitThe main activities of this Business Unit includethe design, construction and installation of offshoreplatforms, floating production systems, structuresand subsea pipelines. The Saipem Group has aneffective system of specialist companies to assist it

during the most important operative stages.The diagram attached shows the trend of frequencyand severity indexes for the last five years in theOffshore Constructions sector.

Drilling Business UnitThe unit is involved in onshore drilling, usingtraditional oil exploration systems and offshoredrilling with a fleet that can operate in all waterdepths, from shallow zones to the most hostile areas in terms of water depth and environmentalconditions, thanks to new technology. The fleet includes jack-ups, semi-subs and drillingvessels.The diagram attached shows the trend of frequencyand severity indexes for the last five years which ingeneral recorded a steady improvement.

The monitoring system allows for the in-depthanalysis of the main causes of injuries, so that the

Safety ratesOffshore Construction Business Unit

7

6

3

F.R.

5

2

1

4

0.14

0.12

S.R.

0.10

0.04

0.02

20012000199919981997

Frequency Rate

Severity Rate

0.08

0.06

Safety ratesDrilling Operations Business Unit

12

10

4

F.R.

8

2

6

0.30

0.25

0.15

S.R.

0.20

0.10

0.05

20012000199919981997

Frequency Rate

Severity Rate

The cause of the accident

Not trained for a job Vehicle breakdown

5045

105

3540

30

2025

15

%

Unexp

ected

react

ion

of to

ols

Unsaf

e work

ing

c

ondit

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Incorr

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proc

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Crushe

d with

anoth

er car

Worki

ng pl

ace

in

disor

der

Inade

quate

p

osition

Lack o

f atte

ntion

Weath

er

c

ondit

ion

Excess

ive sp

eed Other

Failure of communication

Overestimation of own forces

Type of injury

Effect of toxic substances

Balance loosing

Lifting/shifting

20

4

16

12

8

%

Conta

ct wi

th ho

t

tap

-wate

r/vap

our

Fall f

rom on

e

leve

l to an

other

Striki

ng ag

ainst/

by

oth

er ob

jects

Struc

k by t

hrow

n,

proje

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r fall

ing

objec

t

Fall o

n the

same

leve

l

fr

om sl

ipping

, tripp

ing

an

d stum

bling

Car o

ccup

ant in

juried

in

tran

sport

accid

ent

Caug

ht, cr

ushe

d,

jamme

d or p

inche

d

in or

betw

een o

bjects

F

oreign

body

or

objec

t ente

ring i

nto ey

e

Othe

r

Impr

oper

move

ment

JumpingExposure to electric transmission lines/electricalshockContact with

knife and cut machines

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right preventive actions can be identified to avoidrepeat events. The types, most exposed duties andworksite areas most at risk of injury are alsoidentified and classified.The histogram shows as widely stated bypublished sources that the main causes ofinjuries are related to human factors and soSaipems future initiatives will be focussed on thisvery aspect.

A N A L Y S I N G I N J U R Y S T A T I S T I C S

Analysis of workplace injury statistics pinpointedan aspect worth considering in more detail, in orderto properly integrate the workers health and safetytraining and prevention programme.When discussing accidents in the community atlarge, a curious yet significant piece of informationcomes to light: the high frequency of accidents inthe home: in absolute terms the number ofaccidents in the home is just below those in theworkplace and this is due to under estimating risksin a familiar and known environment and to payingless attention when performing tasks we can doeasily.The same psychological mechanism partly explainsthe injuries which occur during Sapiems activities

outside strictly operative phases. Data from the lasttwo years show a marked drop in the number ofaccidents occurring during manoeuvres which mayeven be complex but are always related to carryingout operations, while the number of events relatedto side or preparatory activities, where routineaspects dominate, is a cause for concern.Another type of injury falls into this category caused while driving vehicles because of excessspeed, distraction and at times being too sure ofones own abilities.All the different situations do have a minimumcommon denominator, i.e. the severity of theconsequences which require careful analysis ofcauses and circumstances and taking specialmeasures to effectively reduce the risk, even duringthese stages of work. As always, information andcollaboration can play a key role in the successfuloutcome of every injury-prevention campaign: forthis reason in 2001 Saipems Chairman addressedthe opening part of this Report to all managers ofthe Companys operating activities, placing thisproblem at the right level of attention.Response was forthcoming: managers interpretedthis move positively, seeing it as a sign ofmanagements awareness of and commitment tosafety issues.

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The resulting pooling of opinions and ideas furtherboosted the training and prevention activitiesscheduled by the HSE department: plans have beenmade to expand the training centres at Saipemslogistic bases where training sessions are presentlyheld on safety awareness in the workplace,induction for new recruits and instructions onsafety standards.As for offshore activities, the training sessionsalready held on board vessels will be intensifiedand integrated with specific training programmescreated by the HSE department in association withspecialist centres. Besides technical aspects forcorrectly handling emergency situations, thesecourses will focus on workers correct riskevaluation to prevent a lack of concentration orbeing too sure of abilities in order to minimise risksrelated to activities which are apparently risk-free.Special mention should be made about preventingroad accidents; this cause is still high with oftenserious results: different factors play a part,including the fact that the average driver will often

ignore the rules. In this case too, good results canbe achieved with suitable safe-driving courseswhich teach participants how to manage unexpectedand risky situations to the best of their abilities.

I S M C E R T I F I C A T I O N

Following the serious accidents at sea of manyshipping companies as well as oil tankers, withcauses mainly due to management mistakes, theInternational Maritime Organisation (IMO) thesupervisory body of all maritime legislation hasadopted the International Safety Management (ISM)Code which requires certification of the SafetyManagement System of companies managing vessels.This code is a general guideline for defining aSafety System and includes some very specificaspects: first and foremost the need to clearly andunivocally define roles and responsibilities at alllevels, for both the Company and offshore vessel.Secondly the need to create strong links betweenvessels and the Company, with an Emergency

Statistical analyses of Group data, even in view ofrecent events, show injury statistics which must bereduced. Data study has made us reflect on the natureand origin of these incidents, giving us a useful tool toprevent re-occurrence.Data show that operative phases of projects are in factcarried out with care and efficiency, while the attentionlevel is lowered during routine activities and inpreparations for operative activities, causing accidentswhich would otherwise appear avoidable.I urge therefore that everyone should take up a more

active role in emphasizing higher levels ofresponsability, awareness and attention in all jobphases, and especially in those where there may seem,at first appearance, no risk involved.It is our duty to ensure that, in the commitment withwhich we dedicate ourselves in undertaking theassignments given to us, there always be an ever-growing emphasis and attention towards Safety,Health and respect for the Environment.

Pietro Franco Tali

T H E F U L L R E S P E C T F O R H E A L T H , S A F E T YA N D T H E E N V I R O N M E N T

Saipems mission, which it embarked on several years ago, is a high value commitment

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2001 can be considered as the year of the BlueStream Project a development which cantransport 16 billion cubic metres of gas fromRussia to Turkey, connecting up the largestnatural gas field in the Russian Federation toTurkish consumers, via the Black Sea.

The offshore constructions part of the project,with a planned lifespan of 36 years, includes theBeregovaya compression station and two subseapipelines, each 380 km long, which will be laid ina maximum water depth of 2,150 metres in theBlack Sea from the Beregovaya compressionstation (Russia) to the town of Samsun (Turkey).

Det Norske Veritas (DNV) has been appointed asthe certification body for the project and willcertify compliance of the Blue Stream pipelayingsystem with DNV 1996 subsea pipelaying systemstandards. Health, safety and environmentalprotection have been and will be a key factorthroughout the Project.

Risks were identified before the start of worksand during activities, so that technical designaspects are continually reviewed during BlueStream pipelaying to ensure all safety aspectshave been considered.

More than 2,500,000 working hours, involvingaround 1,000 people, were registered for onshoreand offshore activities at all the projectsworksites and only two accidents occurred, bothonboard vessels. Considering the projectdimensions, number of worksites and personnelinvolved, this can be considered a positive result.In Russia, where activities focussed on the layingof two pipelines (subcontractors supervised bySaipem) no accidents occurred.

Around 650 employees have worked and are stillworking at Samsuns Base for Quadruple JointConstruction in Turkey the worksite where thesingle, coated joints arrive from Japan and theUnited Kingdom to be welded to form a single,quadruple joint. After the joints are coated byEUPEC at its coating plant, the 48 metre-longpipes are sent to the Saipem 7000 and then laidusing the J lay system in deep waters. TheCastoro 8 is used instead to install subsea lines inshallow waters, using the S Lay system.The Samsun Base, used for the first time as a newfacility, is a safe site where all heavy pipes arehandled by a roller-transfer system which isentirely cordoned off and fitted with acoustic andvisual alarms, as well as manual/automatic stopdevices.

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No significantaccidents wererecorded duringthe project,even though afatal accidentoccurred at thesite of asubcontractorwhere supportwork was takingplace.

An analysis ofnon-seriousinjuries (first aid and alternative work cases,medication of non-serious wounds), shows that themost common types of injury were caused by:foreign bodies in the eye, metal dust or sparks,falls from heights and slipping.

Despite the fact that the safety culture of manylocal personnel was not very strong and that manydifferent nationalities worked together, safetytraining was constant and daily inspectionshelped to significantly increase workers safetyawareness.

Another important aspect concerned safetytraining, held at all sites by the SafetyDepartment. Safety videos and brochures onsafety regulations were used during training.The local fire brigade held theoretical andpractical fire prevention courses which Saipemrequires for all its employees.An agreement with local authorities was alsoreached to check all heavy lifting equipment inuse at the base.

In compliance with Russian laws, the localauthorities held meetings to explain directives,operative and training programmes for workplaces and each type of activity. Training wasconducted on board vessels while in Russianwaters and at worksites.

New safety videos were prepared for the Saipemvessels laying derrick and all workers andvisitors could see these while on board.

Based onpreviousexperience fromother projectsand BlueStream, anincentiveprogramme topromote safetyawareness andimproveworkingconditions wasintroduced atall onshore and

offshore sites involved in operating activities.This was highly appreciated by personnel, whowere encouraged to identify potentially riskyevents.As a result, the number of safety meetings andwork safety analyses increased.

Safety managers and team leaders regularlyconducted training sessions on site, five days aweek.Environmental Impact Assessment of the BlueStream Project was conducted by ENVY-Energyand Environmental Investments Inc.The results forecast that no permanent orsignificant impact on the quality of water duringthe Projects construction and operative stageswould occur.

The impact on air quality, due to the emission ofdust from excavation, transport and constructionworks was minimum.

Noise, from construction and operative stages,was acceptable both during the daytime and atnight.

As for waste management, Saipem contactedvarious authorities in different regions of Turkeyand then organised its own collection, recyclingand/or separate waste disposal system, despiteSamsun already having this kind of system.Saipem then consigned the waste producedonshore and on board vessels to the relevantauthorities.

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Safety expenses

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10,000

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15,000

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TotalCurrentsInvestments

19981996 1997 200120001999

Safety current expenses - 2001

Safety consultancy 18%

Safety equipment 8%

Safety plants(not investment) 3%

Safety publications 1% Other actualexpenditures 3%

Periodic maintenance & control 1%

Insurance 25%Safety training 12%

Personal protective equipment (PPE) 29%

Response Team for managing emergencies atCorporate level and a new company positionDesignated Person/s Ashore (DPA) responsible forcontinual safety monitoring, liaising betweenvarious functions and Company departments. Infact guaranteeing workers safety, protecting assetsfrom damage and protecting the environment fromall possible sources of pollution is acquiring anincreasingly global dimension, which goes beyondthe competencies of each specialist to become acommon Company goal.The code underscores the following as key elementsto ensure a good level of safety: maintenance,management of safety devices, personnel training,document management, definition of Companyorganisation and communication and responsibilitylines, the carrying out of key operations such asdrilling, pipeline laying, offshore installation etc.based on Company criteria.

The integration of these disciplines is thereforevital to an efficient management system.The IMO has defined 1st July 2002 as the cut-offdata for obtaining certification of the managementof MODUs (Mobile Offshore Drilling Units) andMOUs (Mobile Offshore Units).Saipem has been committed to continuallyimproving its own management system for someyears now and has achieved excellent results in thesector of technological innovation, as well as anoutstanding performance in the field of safety andenvironmental protection. It is this very approachwhich has led the Company to seek ISMcertification for all vessels with personnel on board,and not just for self-propelled means, as requiredby the code.The ISM project for Saipem is involving a greatnumber of people at all levels and will certainlycontribute to improving and obtaining the

Saipems steady commitment to workers safety and training has led to important recognitionduring 2001.

Since its very foundation, one factorhas always made Saipem stand out its utmost efforts for safety issues and its great awareness of difficultiesrelated to this issue.Its continual focus on improvementhas enabled it to achieve goalsreceiving recognition of greatprofessional value.Receiving an award for safety is certainly

gratifying, but being recognised for anexcellent safety performance isparticularly special.

In fact Saipem received the 2000Offshore Safety Award from theInternational Pipeline and OffshoreContractors Association (IPLOCA).

This extraordinary achievement is not a reason for us to be excessivelyproud; it simply confirms that safety must be considered a key factor for all levels of

operating activities.

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Safety investments - 2001

Noise personnelprotectionsystems 0.5%

Otherinvestments 19.3%

Rescue & evacuationsystems/equipment 2.6%

Emergency communicationsystems 2.5%

Equipment/plants' safetyimprovements 29.6%

BOP 1.7%Welfare equipment/investments 12.5%

Lifting equipment/handling tools systems -equipment 10.8%

Fire fighting systems 15.0%

Gas detection systems 5.1%

Saibos was involved during 2001 and early 2002 inthe project to install the Gasoducto Cruz Del Sur, agasline crossing the Rio de La Plata, betweenArgentina and Uruguay.A 24, 55 km pipeline had to be laid in veryshallow waters, with a minimum depth of less than3 metres in the shore approach area of the two riverbanks, and a maximum depth of 12 m crossing themain shipping channel.After being connected up to coastal sections, the pipeline will transport gas from southernArgentina to Uruguay, and then in a second stage to Brazil.The Saibos 230 lay barge was considered the bestvessel for the job, because of its limited draft and so important upgrading work was carried out to meet the specific needs of crossing the Rio DeLa Plata.An Argentine shipyard was chosen for theupgrading works, conforming to Saiboss policy ofgiving the contract value a local outlook.Argentina also provided various industrialinfrastructures and a good level of technologicalstandards.The Saibos 230 left Douala, in the Cameroon, forArgentina in January 2001 and reached theAstillero Rio Santiago shipyard at Ensenada in theprovince of Buenos Aires in early February. Thevessel then underwent routine careening andmaintenance work.There was no launch line on board the barge whichcould handle and assemble pipes the size andweight of those to lay across the Rio de La Plata.Other main constraints to overcome concerned alack of space on the deck, the limitedaccommodation and insufficiency of the powersystem on board.

Works carried out required approximately 30,000man-hours at the worksite, in addition to work onboard the barge, which also directly supervisedsome specific operations.Upgrading works were very complex with a newlaunch ramp being built, the mooring systemre-designed to better meet pipelaying requirements,the structure of the transversal transportermodified, a new stinger built and newaccommodation installed to increase the bargescapacity from 88 to 124 places.During the design stage, special attention was paidto safety and protecting health.The use of space in work areas was optimised, forexample at the launch line: all piping and cablesare external so more space is left for operators tocarry out their work and possible causes ofaccidents due to workers proximity can beeliminated.Personal protection devices were installed whenpersonnel were working below suspended loads, forexample on the floating platforms for installing thestinger or on the walkways from bow to stern, belowthe transeversal transporter.Smoke extractors were installed throughout thewelding area, along with a anti-vapour fan on thelining of the installation joints.A 24 volt network powers nearly all electricallyoperated power tools used for the launch line andon the deck.A new safety plan was drawn up to take account ofthe high number of people on board and newstructures installed: safety equipment wasincreased and new muster points and escape routesidentified.Upgrading works were completed on 1st July to theagreed schedule, budget and safety terms.

T H E S A I B O S 2 3 0 U P G R A D E D I N C O M P L E T E S A F E T Y C O N D I T I O N ST H E G A S O D U C T O C R U Z D E L S U R P R O J E C T

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Sonsub is an integral part of Saipem. Its corebusiness is in the offshore oil and gas industryand international telecommunications, while itspecialises in technologically advancedengineering and construction and maintenanceservices.Its consolidated international network can providea wide range of services for international clients,including Saipem, throughout the globe.Health, safety and the environment arefundamental factors for Sonsub and itsmanagement is committed to achieving thehighest safety standards.

In 2001 Sonsub gradually prepared an integralmanagement system conforming to the BS EN ISO 9000, HS(G) standard and Groupstandards with obvious benefits.Moreover, the integral management system wasspecifically designed to meet Sonsubs operativeneeds, providing a detailed analysis of its mainand support activities.

The advantages of having an integrated systemare, according to Sonsub, economic as well asorganisational efficiency and effectiveness-related.

To achieve integration, detailed planning andexecution are vital. Review of the BS EN ISO9000 standard in 2000 took account of the greatercompatibility with other management standards

which was essential in the lead-up to consideringand implementing integration.

Recent studies on quality, safety andenvironmental management have pinpointedproblems as often having the same origins and sothey can be solved using the same measures.

Sonsub believes that excellency can be achievedby taking an integrated approach to managing thebusiness that shall include quality, safety and theenvironment.

HSE issues are rightly considered by integratedmanagement systems as a critical component fordeveloping projects which meet customerexpectations, improve performance and complywith applicable legislation.HSE responsibilities are currently integrated withSonsubs entire management process and involveall project development stages, i.e. planning,technical design, procurement, construction andcommissioning.HSE actions are aimed at preventing potentialrisk situations which could lead to injuries forSonsub personnel, visitors and the public, ordamage its property.

In its ambitious new approach, Sonsub hasadopted 8 principles which are recognised asfundamental requirements of any reliablemanagement system.

S O N S U B L T D - A N I N T E G R A L P A R T O F S A I P E M

principles clearly defined in the Company policies.Saipem aims to obtain certification for all vesselswhich must be upgraded by the cut-off date of theCode and then complete certification of theCompanys entire fleet by the end of 2003.

S A F E T Y E X P E N S E S

2001 registered a marked increase in safetyexpenses which amounted to approximately euro 22million, exceeding the figures of the last 6 years.

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Commitment & managerial abilityPolicies & goalsOrganization & ResourcesSubcontractors & management of suppliersRisk managementDesign & PlanningImplementation & monitoringEvaluation & continual improvement

Applying these principles will make it possible toevaluate and control risks during projectdevelopment. Subsequently, operative projectmanagers can be responsible for complying withHSE policy requirements and thus moreopportunities for developing methods, procedures,systems and programmes with a view to achievingcontinual improvement will be provided.

How can the Company continually improve?Sonsub believes that essential values aremanagerial ability, involvement and trust.It also believes that developing independentthinking, increasing an awareness of possiblerisks and assigning responsibility for ones ownsafety are fundamental.Ordering someone to change the way they workis not an efficient way to attain personalinvolvement; this happens because people rarelychange their opinion without understanding thereason behind the change.By providing training Sonsub intends toincrease individual awareness and assignpersonal responsibility.

Risky actions and behaviour are the cause behind80-90% of injuries, as analysis confirms. Safety

programmes based on behaviour (BSS) recogniseand address the concept that the behaviour of anemployee represents a critical role in industrialinjuries. BSS programmes are practical and focuson improving safety standards and risk awareness.Organisations such as Sonsub, within the SaipemGroup, implementing controls and safetyprogrammes, reaching an excellent level of safetyperformance, are the first candidates for theseprogrammes.

Sonsub intends to perform detailed studies on workers risk awareness, safety behaviour andcommitment in terms of safety management andthree main objectives can be obtained from this:1) designing a questionnaire (for all Sonsub

personnel) which will assess workers attitudeto safety and the degree of satisfaction and awareness concerningsafety issues within the context of their own job;

2) interviewing first line supervisors to determineroles in offshore safety management andidentify examples of best practices;

3) analysing injury reporting systems to identifythe codes used to indicate injuries caused byhuman behaviour.

The results might identify a safety climatewithin Sonsub, as well as the factors which helpto establish and maintain a good safety culture.Moreover, the results may help to improve thecoding system for human and organisationalcauses of injuries and pinpoint the actions to takefor better management of these factors.

Compared to 2000, investments and current expensesincreased maintaining more or less the same proportion,that is 43% and 57% respectively of the total.Current costs mainly refer to training, PersonalProtection Equipment (PPE), consultancy services

for safety issues, and insurance. In addition, theentry includes costs for firefighting and gasdetection equipment, improvements to theergonomics of workstations, maintenance androutine control, safety publications, etc.

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Petrex was founded on 7 February 1983specifically to provide maintenance services forOccidental Petroleum, an American companyoperating in the Peruvian jungle. In August 1986, after picking up the activities ofRio Colorado International, Saipem acquired a50% holding in Petrex and also took control of itsadministration. In July 1998, Saipem acquired the remaining50% of Petrex SA, which became a holding of theSaipem Group.

Petrex SA has its headquarters in Lima, thecapital of Peru andbases in Iquitosand Talara. Iquitos is 3,500km from the mouthof the Amazonriver wheremerchant shipsarrive directly fromthe Atlantic. From here suppliesare transported bybarge or goodsplanes to operativeareas in the jungle.Talara is in theNorth-East of thecountry, on thePacific coast. The desert-like environment is the site of thePetrex base which manages area operations.

In 1996, a Health, Safety and EnvironmentDepartment (SESMA) was set up. The department, with its team of technicians anddoctors responsible for safety and medicalservices, issued a preliminary industrial safetyand health programme.

In 1997, Petrex adopted Du Ponts Stop forsafety programme and was officially authorisedby the company to use it throughout itsorganisation. Since then, all personnel, including supervisorsand workers, have taken part in the risk

prevention programme with preventiveobservation of conditions and risky actions.

In 1998 the SESMA department approved andadopted DNV (Det Norske Veritas)s damagecontrol system. It was also authorised to manage the SCIS, asystem which identifies the fundamental causes ofinjuries, using different inspection, audit andinjury survey programmes and safety meetings toensure that production safety and management areintegrated in all operating activities.

In 1999, SaipemSpAs health,safety andenvironmentdepartmentapplied a newGroup HSEmanagementsystem in Peru,introducing newconcepts andmethodologies.This new systemhas since beenused for alloperations, alongwith Saipems HSEand drillingmanagement

system an achievement helped by the HSEpolicy being approved by Petrexs GeneralManager. A new age has arrived with greater commitmentshown by Top Management and control of theoperative lines with the aim of becoming a leaderin safety at work and quality whilst protecting thehealth of personnel involved.

As for injury statistics, the drop in figures is quiteremarkable. At the end of 1999 an index of 7.18was recorded against a figure of 3.32 for 2001. This improvement was fundamentally due to theefforts of all Petrex personnel who consideredprevention as a daily working condition. Thesignificant contribution made by Petrex to

P E T R E X S A - P E R US T O R Y O F A N E X T R A O R D I N A R Y S Y S T E M

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improving safety on site was recognised at the endof 2000 by the Saipem SpAs Director of drillingand HSE Departmental Manager.

During 2001, drilling was carried out for Repsol-YPF at the Guineayacu X-1 well, block 32, with the 5824 drilling rig. In 168 working days using this rig, no injuriesoccurred.

Petrex also completed the drilling of 16horizontal, vertical and recovery wells in thisyear, with a maximum drilling depth of 16,600

feet. 1,066 maintenance and pull-out jobs werealso carried out, with 165 of these offshore.

Four drilling rigs completed 254 transfer daysand 935 drilling days with no injuries. The injury index decreased by 20%, recording avalue of 2.60 (against a figure of 3.32 of theprevious year).

Another important result was achieved in 2001.The client Perez Companc of Peru certified theentire ISO 14001 and OSHAS 18001 managementsystem for Block X - Talara, for well workovers.This led the Argentinean company PerezCompanc to highlight Petrexs commitment and

results so they could work together to obtainfurther certification.

In addition, the international company MAPFRE,the most important risk control firm in SouthAmerica, nominated Petrex SA, from many otheroil companies, as the best contractor of 2001.Petrex SA received an exceptional safety award asrecognition of its excellent accident preventionactivities during an official, public ceremony heldon 13 February 2002 in Lima.

Current expenses do not include costs for full-timepersonnel working for the HSE and PreventionDepartment who comprise 150 persons operatingat headoffices and for various projects.As concerns investments, the greatest costs refer toimprovements to existing plants and systems tomake them safer and more reliable; other majoritems refer to the firefighting systems, plants for

lifting loads and people and all investments toimprove the wellbeing, even outside of workinghours, of people operating at the sites or on vessels.Investments were also made for evacuationequipment, gas sensors, well blow-out controlsystems and other equipment (systems to reducenoise, soundproofing, alarm systems, shut downsystems, etc.).

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Saipem is convinced that it can operatesafeguarding the environment and minimising theconsumption of natural resources.The HSE management system requires eachCompany and Operative site to systematicallycontrol environmental aspects such as wasteproduced, use of resources, noise, contamination ofthe land and sea.The goal of eliminating or minimisingenvironmental degradation and limiting the use ofresources is achieved by:

personnel training and awareness forenvironmental issues;identifying the environmental impact of activitiesand developing the Environmental ManagementPlan in the case of projects with a major impact(see insert on the project in Oman);complying with current applicable laws;

integrating international standards with basicprinciples of Company policy;seeking out and using best availabletechnologies which minimise the consumption ofresources and environmental impact;achieving the best use of raw materials;correctly running and maintaining plants;restoring original conditions on land, after thework has been developed in compliance withcontract conditions;involving local communities so that the projectssocial impact is limited, and operative skills aredeveloped.

Examples of this approach can be seen from theprojects being developed in Oman, Nigeria,Kazakhstan and Peru where promoting policies ofintegrating and developing local resources is afundamental part.

C O M M I T M E N T T O E N V I R O N M E N T A L I S S U E S

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Saipem has gone beyond the concept thatenvironmental protection equals greatermanagement costs (and greater investments);indeed it steadfastedly believes and shares with themost evolved countries that the environment andCompany profitability are not an antithesis.Efforts geared to limiting environmental impact areconsidered as useful investments for improving theCompanys competitiveness on the national andabove all international market.Despite the difficulty of calculating values, whichcannot therefore be included in the generalaccounting data, the benefits of an environmentalprotection system are real and tangible: a growth inmarket shares, fewer waste management costs,lower insurance costs, easier access to credit, fewerenvironmental and financial risks, higher turnoverand added value with an obvious decrease in theliabilities related to reimbursement forenvironmental damages, fines and penalties.

Saipem