1. Knut Ørbeck-Nilssen, Executive Vice President OilTech Atyrau April 2011 Deepwater Horizon Update – The aftermath Likely industry consequences and preliminary results

2. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 2 Presentation outline  The Deepwater Horizon, a game-changer?  A new US regulatory regime?  Industry changes?

3. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 3 The Deepwater Horizon, a game-changer ?

4. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 4  About 21:40 local time, gas under high pressure flows uncontrolled up from the Macondo well onto DWH. The gas ignites resulting in fires and explosions. DWH is lost.  11 fatalities and 17 injured  Oil leakage: - From April 20 – July 15 (well capped) - US experts suggest initial rate was 63,000 b/d declining to 53,000 b/d (4.9m bbls in total)  Larges oil spill event in US history The event: April 20, 2010

5. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 5 The response effort: Containment and oil spill (image © BP p.l.c.)

6. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 6 Major accidents have consequences on regulations - simplified historic overview NEW REGULATORY REQUIREMENTS  Alexander Kielland – structural redundancy  Exxon Valdez – double hull tankers  Piper Alpha – “Safety Case” risk approach MACONDO BLOWOUT ?????

7. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 7 Is the Deepwater Horizon accident a game changer?  Several severe accidents the last 2 years contribute - Montara blow-out in Australia  Why? - Scale – largest oil spill ever x 2 - Location – USA + elections + mass media - Company involved (BP, a major ’foreign’ IOC) Deepwater Horizon is a game changer! we are facing a systematic shift with significant reach

8. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 8 A new US regulatory regime?

9. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 9 US-Norway, share industry learning

10. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 10 Comparing the US and Norwegian offshore drilling regulations: Key regulatory regime differences The Norwegian regulations are mainly performance-based The U.S. regulations are primarily prescriptive  The intention with a performance-based regime is to make the operator regulate own activity when it comes to safety, health and environment (SHE)  The intention with prescriptive regulations is to prevent accidents by identifying specific technical requirements that the operator must comply with. The Authorities control the operator’s activity inter alia through approvals and inspections.

11. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 11 Comparing the US and Norwegian offshore drilling regulations: Key learning points  Mainly risk-based approach, systematically identify and mitigate risks.  Separate authorities for resource management and SHE management  Agency with coordinating role in the development and supervision of SHE regulations.  Establish barriers on technical, operational and organisational levels  Latest edition of applicable regulations and referred standards for mobile units  Two independent and tested well barriers in all drilling and well operations  Recertification of blow-out-preventer (BOP) every 5 years AND one area where we are not so different  Validation of functionality and capacity of oil recovery equipment ?

12. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 12 The response effort - Regulatory issues There are 4 active investigations across the federal government i.The Presidential Commission, lead by Department of Energy ii.Joint Investigation, led by U.S. Coast Guard and the BOEMRE iii.The Department of Justice Investigating iv.National Academy of Engineering / National Research Council Committee

13. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 13 Presidential Commission Report, Jan 11: Selected recommendations http://www.oilspillcommission.gov/final-report Tasked with providing recommendations on how we can prevent – and mitigate the impact of – any future spills that result from offshore drilling.  Significantly increase the liability cap  Establish independent offshore safety agency  Risk-based regulations similar to the “safety case” approach in the North Sea  Supplement with prescriptive safety and pollution- prevention standards  Industry “best practice” standards should be applied globally  Better oil spill response  Safer well design and improved equipment

14. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 14 Investigation of BOP for US Government Report available at www.dnv.com Photo: BP plc

15. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 15 Industry changes?

16. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 16 Consequences in the US Gulf of Mexico  The drilling moratorium was lifted on October 12, 2010  New regulations and standards - Environmental NTL (Notice to Lessees), Compliance and Review NTL, Drilling Safety Rule and the Workplace Safety Rule.  13 companies may resume their drilling activities as of January 3, 2011  Some started

17. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 17 Norway, Netherlands and UK: Reactions ? ?

18. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 18 EU Reaction European Parliament requests EU action Oct 6 Potential spills with implication beyond single Member State coastlines European Commission suggests Oct 13 Apply “best practice” through EU-wide legislation and standards Extended environmental liability for offshore oil & gas Development of joint oil spill response and capability consider a “moratorium” EU Council discuss the proposals Dec 3 Some concern on EU legislation from authorities in UK and Norway Support secured to consider necessary concrete proposals EU Commission process until summer 2011 “Impact assessment” of proposals for safety/environmental response The US findings will influence how Europe will prioritise New legislative proposals are unlikely before 2012 Final decisions most probably by consensus

19. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 19 Rest of the world’s reaction - examples  Awaiting outcome of the US investigations (UK, Norway, Canada, Brazil)  Greenland required Cairn Energy to have a second rig on standby to drill a relief well  Australia reviewing their national oil spill plans, current plans are for a tanker grounding and not a long term blow out  Gabon have cancelled offshore acreage bid rounds until US investigations are complete A lot of understandable “wait and see”.

20. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 20 Oil Spill Containment System: “Design it, engineer it, and make sure it is never used!”

21. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 21 Can we manage the cold risks? SUMMING UP

22. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 22 Key take away  The Deepwater Horizon is a game-changer - we are facing a systematic shift with significant reach  A new US regulatory regime is in the making - Risk-based regulations, most likely with international impact  Industry changes will be significant - Increasing the focus on safety, environment and risk management

23. © Det Norske Veritas AS. All rights reserved. Deepwater Horizon Update – The aftermath OilTech Atyrau April 2011 23 Safeguarding life, property and the environment www.dnv.com