1. 1 bp c-tpat & validation experience Presentation to the ABA International Law Section 13 April 2005 Aaron Gothelf Customs Attorney BP America, Inc.

2. 2 2 bp c-tpat & validation experience About BP C-TPAT – The Right Thing To Do BP’s Experience in the Process (2003) BP’s Experience Now

3. 3 3 introduction to bp Statistics –$200+ billion Market Capitalization –$174 billion Revenues –110,000 employees in 100 countries –Well-established operations: Europe, North & South America, Asia, Australasia and Africa –In business since: Amoco 1889; ARCO 1866; BP 1909; BP Amoco 1998

4. 4 4 introduction to bp Statistics –Daily production: 1.9 million barrels of crude oil; 8.6 billion cubic feet of natural gas –Daily sales: 6.2 million barrels of refined products –Service stations: 26,800 (USA 15,500, Rest of World 11,300) –Exploration Active in 21 countries. Production activities in 22 countries –Refineries (owned or part-owned) 21 (5 in USA, 15 in rest of the world) –Refinery capacity (BP share): 3.3 million barrels of crude oil a day

5. 5 5 introduction to bp Supply Chain –BP's transport network criss-crosses the globe. Own/operate 25,700 miles of pipeline, much of it in the US. Control an international tanker fleet of more than 40 vessels, either fully owned or on long-term charter. –Once refining is completed: Different products are moved to storage terminals by ship, barge, pipeline or rail. From there they are usually delivered to customers by road tankers.

6. 6 6 bp and c-tpat History –Decision to join made by BP America’s President –Charter Member (1 of 7) –First Member to become C-TPAT certified –First to be Validated

7. 7 7 bp and c-tpat Why? –Good corporate thing to do –Access to other Customs programs ISA –Being in the Known Bucket –Ease in applying our existing position

8. 8 8 bp and c-tpat BP’s participation –Voluntary –Challenged against Customs’ overbroad use of CF-28s to push participation –BP was contacted in early January 2003 and asked if it would agree to be one of the initial C-TPAT validations. –BP volunteered to be first and asked Customs to show up the following week.

9. 9 9 the bp validation experience Customs’ team –People Michael Pfeiffer, USCS* Supervisory Inspector Jose de Jesus Lopez, USCS* Chief Inspector –Qualifications BP team –Director of Customs –Head of Tax –Customs Attorney (Tax) & Law Department –Security Department Heads and Facility Managers –HR

10. 10 bp validation process C-TPAT –Membership process already complete MOU signed (1/15/2002) Security profile reviewed Customs C-TPAT office reviewed the profile –Possible results for any participant: Accepted – acknowledgement sent Rejected – additional information is needed

11. 11 bp validation process initial meeting Opening Meeting –Held February 3, 2003 Customs and BP teams met for the afternoon Presented the company background and supply chain BP concerns explained –Compromised vessel or crew or port of unlading for bulk cargo –Compromised containers for other heavy bulk materials

12. 12 bp validation process – site visits Site visits –Purposes prove security profile is true Obtain suggestions from Customs for improvements –Process Visit 2 sites – 1 domestic and 1 foreign; tour all aspects of security –West Coast Refinery »Included Refinery, Ship Terminal and Pipeline start –Belgium chemical plant »Included plant and tours of Antwerp shipping terminals and EU Customs officers

13. 13 bp validation process – site visits Site visits –Results West Coast –Proved security profile was true »Security process and procedures found all in place »Strengths and weaknesses in Customs’ perspective discussed »Customs’ suggestions promised to be considered Belgium –Same results –Waiting on written report of findings –Customs’ verbal comments

14. 14 observations & lessons learned Positive experience overall –Spirit of partnership did exist –Validated per the submitted profile –Useful exchanges of ideas & information –Voluntary “ness” is still questionable

15. 15 observations & lessons learned Participation was not as difficult as it first seemed –Processes exist for almost every company Security Procurement HR HSE –Compare: Corporate processes vs. Customs recommendations Fill in the gaps

16. 16 observations & lessons learned Control must be clearly identified –What is in the company’s control Internal security Site security –What is not in the company’s control External area Neighbors Geography

17. 17 open issues Foreign visits –Scheduling Cost effective for Customs Cost effective for participant –Failure to obtain permission to enter Mexico & Honduras –Other companies being validated have noted several failures by Customs to obtain proper permission to enter certain countries including Honduras and Mexico, thus ending any possibility of validating those sites –No explanation given as to whether this puts the validation on hold

18. 18 the bp future with c-tpat Participation will continue –Strong belief C-TPAT is the right thing Desire to improve the program –Expressed concerns Improve C-TPAT program Aspire to participate to the fullest extent Desire to maintain program within the bounds of the law –Voluntary program – nothing to lose

19. 19 future at international level Many countries working on similar programs. World Customs Organization 161 customs agencies. –Working on advance manifest data –Development of a standardized C-TPAT type of program.

20. 20 thank you Q&A