1. Proposal to Implement a HSE Letter of Assurance Process for Contractors from 1 January 2010 “Must Win” Project: Contractor HSE

2. The HSE Letter of Assurance Process: HSE Letter of Assurance pro-forma will be issued to (all/some) contractors by PDO each January. –Developed by MSE –Issued by FPM Contractors will complete the HSE Letter of Assurance, and submit to PDO (FPM) by end December, using the pro-forma released in January of that calendar year. –Contractors complete a Contractor HSE Capability Questionnaire (PR 1171 Appendix B) and lodge it with the HSE Letter of Assurance PDO (MSE) will conduct a focused verification of some HSE Letters of Assurance in Jan / Feb of each year. PDO (FPM) will issue a PDO HSE Verification Certificate to the contractor at completion of the verification exercise, valid for 12 months from the date of issue. Proposal: HSE Letter of Assurance

3. Verification Process : Verification process involves a brief (2 days), focused exercise (based on a small, yet representative, sample of the PDO contracts held by the contractor): –Review specific statements in the Letter of Assurance and confirm that they are supported by evidence –Review specific remarks in the Contractor HSE Capability Questionnaire and confirm that they are supported by evidence Verification team (4 people) includes representatives from MSE, FPM (Contract Engineer) and Contract Holder/Owner Verification process includes : –a presentation about the HSE Letter of Assurance by contractor CEO to the PDO verification team –visits to contractor offices and contractor work-site(s) –presentation of verification outcomes to the contractor, by PDO verification team Proposal: HSE Letter of Assurance

4. Verification Process Outcomes: The verification process has two deliverables: PDO HSE Verification Certificate. This certificate will: –Be shared with Shell EP Middle East Region (hence the contractor’s HSE capability will be recognised by other Shell EP operations in the Region) –Be submitted by the contractor to support technical bids relating to new PDO contracts, and used by PDO in the technical evaluation phase (thereby streamlining this process for both PDO and the contractor) –Contain factual statements arising from the verification process: “The Letter of Assurance (is / is not) qualified. If qualified, a summary of qualifications will be provided” “The contractor (unconditionally / conditionally / does not) meet PDO HSE requirements” “The contractor (has / has not) agreed to a formal action plan (if applicable)” A formal action plan containing a few (no more than 5) actions for the contractor to complete in the calendar year to: Address Letter of Assurance qualifications, and/or Progress toward unconditionally meeting PDO’s HSE requirements Proposal: HSE Letter of Assurance

5. Actions in 2009: Obtain approval for proposed HSE Letter of Assurance process (by April 8) Present HSE Letter of Assurance process to Contractor CEO forum (April 13) Develop HSE Letter of Assurance pro-forma. ONP will issue to 11 HSE critical contractors (by end April). This will relate to the 12 month period prior to the date that the Letter was issued Contractors complete the HSE Letter of Assurance and the Contractor HSE Capability Questionnaire and return to ONP (by end May) MSE facilitates verification exercise (June - September). This will involve: –A presentation about the HSE Letter of Assurance by the Contractor CEO to the PDO MDC. –Visits to contractor offices and sites by a team of 4 people over 2 days. Sample a representative contract in order to: Review specific statements in the Letter of Assurance and confirm that they are supported by evidence Review specific remarks in the Contractor HSE Capability Questionnaire and confirm that they are supported by evidence – Presenting verification outcomes to the contractor and the MDC, by PDO verification team ONP issues PDO HSE Verification Certificates to Contractors, valid until February 2011, within 1 month of completing the verification. The HSE Letter of Assurance Process (including lessons learnt from the 2009 pilot) will be embedded in modifications to PR 1233 Contracting and Procurement Procedure, and PR 1171 Contractor HSE Management (September), ready for 1 January 2010 commencement Proposal: HSE Letter of Assurance Pilot 2009