1. Lloyd’s Register Kazakhstan LLP Delivering Lower Risk, Improved Safety and Enhanced Business Performance Chris Renwick General Director Lloyd’s Register Kazakhstan LLP Atyrau 5 th April 2011

2. Lloyd’s Register Kazakhstan LLP The Lloyd’s Register Group today We are a non-profit distributing organisation; impartial with complete financial, political and technical independence Origins dating back to 1760 Our offer is distinct, transparent and results orientated We have 7,000 dedicated and highly competent employees worldwide, drawn from over 90 nationalities 240 offices @ > 100 countries

3. Lloyd’s Register Kazakhstan LLP The Lloyd’s Register Group today A leading international authority Our services focus on compliance, safety, integrity and risk management – Our markets are characterised by high risk capital intensive assets where independent assurance is valued we advise on ‘best practice’ for the design, management and operation of assets and systems over the life cycle We support clients in meeting their legislative and corporate responsibilities

4. Lloyd’s Register Kazakhstan LLP Focus of today’s Presentation The world today for our customers Risk and Asset Integrity How Asset Performance Management delivers on safety and business performance Final thought

5. Lloyd’s Register Kazakhstan LLP The world today; What is the situation for our customers? Turbulent times…….!

6. Lloyd’s Register Kazakhstan LLP Decision drivers have changed 2008 CAPACITY Maximise capacity & output 2009 – 2010 - 2011 FLEXIBILITY (6 months horizon) Improve cash-flow 2012 ?

7. Lloyd’s Register Kazakhstan LLP Markets respond in various ways Cost reduction programmes Focus on immediate cost over long term value Reschedule Shut-Downs Putting Projects (Green Field and Brown Field) on hold: Prioritising Projects (Brown Field) based on cash generation capability Decommissioning of production units Concentrating production at largest / newest facilities

8. Lloyd’s Register Kazakhstan LLP The question we must ask is Given the commercial pressures how can we Lower Risk Improve Safety Enhance Business Performance

9. Lloyd’s Register Kazakhstan LLP Where is the risk? Ref.:American Petroleum Institute Equipment failures costs US Refining Industry > US$4 billion/Year! 2/3 of those costs are associated with failures of static equipment! The average refinery has a risk exposure of US$25 million/Year due to failures of static equipment. 2/3 of those costs are associated with piping failures.

10. Lloyd’s Register Kazakhstan LLP Asset Integrity Integrity by Design Designed to meet corporate objectives Operability and Human Factors are considered Maintenance and Inspection needs are considered Maintaining Integrity By Inspection By training By Control and Accountability

11. Lloyd’s Register Kazakhstan LLP Asset Performance Management Starts with sound integrity management: Asset integrity System / Process integrity Operational (human) Integrity = Organisational Integrity

12. Lloyd’s Register Kazakhstan LLP Asset Performance over time Time Performance Sustained Asset Performance Complacency Changes in process Turnover of Skilled Staff Aging Equipment Asset Performance Improvement “system Fixes” APM Deep Learning “cultural changes” Asset Performance Improvement “Hardware Fixes” Natural tendency for performance to deteriorate

13. Lloyd’s Register Kazakhstan LLP Sustainable improvement in performance Organisational integrity delivers… Realistic job roles and manpower levels, Usable processes, procedures and equipment interfaces, and Reliable human performance. It accelerates the return on investment in RBMI. It sustains enhanced asset performance. It prevents organisational drift into degraded performance and failure.

14. Lloyd’s Register Kazakhstan LLP Risks in organisational drift Aging Infrastructure Loss of Experience Lack of Competency Shifts in Expectations of Employees (not my job) Lack of Management Control / Accountability (not my job either)

15. Lloyd’s Register Kazakhstan LLP Organisational drift – consequences Safety management processes degrade

16. Lloyd’s Register Kazakhstan LLP Organisational drift – consequences Commitment to technical integrity is lost

17. Lloyd’s Register Kazakhstan LLP Organisational drift – consequences Technical standards and procedures are missing or inappropriate

18. Lloyd’s Register Kazakhstan LLP Organisational drift – consequences Competence and understanding are insufficient

19. Lloyd’s Register Kazakhstan LLP Organisational drift – consequences Inability to detect and / or recognise symptoms of potential failure

20. Lloyd’s Register Kazakhstan LLP Summary We live in turbulent times and we must manage our risks and invest appropriately. Maintenance, inspection, operational and engineering tasks are all performed by people Integrating mechanical integrity with human & organisational risk management is key to preventing organisational drift. Integrated Asset Performance Management delivers Safety, Value and enhanced Business Performance

21. Lloyd’s Register Kazakhstan LLP A final thought – Safety and Business Performance, what Price, what Cost? It's unwise to pay too much, but it's worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can't be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better. The Common Law of Business Balance, this quotation has been widely attributed to JohnRuskinCommon Law of Business Balance

22. Services are provided by members of the Lloyd's Register Group. For further information visit www.lr.org/entitieswww.lr.org/entities For more information, please contact: Chris Renwick General Director Lloyd’s Register Kazakhstan LLP 1/1 Zhandozov Street Business Centre “Success”, Office 1 Almaty 050008 Kazakhstan T +7 727 2666 081/2/3 E chris.renwick@lr.org w www.lr.orgwww.lr.org