Health, Safety and Environmental Protection

General

Odfjell’s “Corporate Quality Manual” enhanced with the “Corporate HSE Expectations” prescribes how to work in compliance with the high HSE standard we aim for.

Stringent safety and environmental requirements guide all our operations. Training of personnel working onboard, at terminals and ashore is our proactive way to ensure needed competence and awareness. Approximately 8 000 training days were held for our mariners, including 7 100 at the Odfjell Academy (Subic Bay, Philippines). The making and introduction of our new video “Understanding the Risks of Hazardous Chemicals and Burns” was a main effort in 2008.

Recorded absence rate at headquarters was 3.5%, which is less than half the average rate in Norway.

Operating units have renewed approvals to the International Safety Management (ISM) code (ship management), ISO 9001:2000 standard (terminals) and ISO 14001 environment standard. New for 2008 was that the terminal in Ulsan acquired ISO 14001 certification. The terminal in Jiangyin started operations in 2008 and is in process for both certifications.

Fleet Environmental impact and figures for the Odfjell Fleet The Odfjell fleet consumed some 640 000 metric tons bunkers in 2008, of which 4.5% were distillates and 5% were low sulphur fuel oil1. Totally the impact of SOx and CO2 were about 32 000 metric tons and 1 950 000 metric tons respectively. The figures are based on the consumption from 94 vessels. All fuel purchased by Odfjell is tested by Det Norske Veritas Petroleum Service. Test results of the bunkers purchased in 2008 states the average sulphur content was 2.43% - a small reduction from 2.47% in 2007 and 2.71% in 2006 (distillates not included). SO2 – emissions On average the Odfjell vessels emitted slightly less than 0.2 grams SO2 per ton cargo transported per kilometre. CO2 – emissions Although variances are observed within the fleet, the average Odfjell vessel emitted slightly less than 11 grams CO2 per metrical ton cargo per transported kilometre in 2008. Environmental focus Sea transportation is widely recognised as being among the most environmentally friendly ways of carriage compared to alternative modes of moving goods. However, knowing that 90% of all goods are carried at sea, we acknowledge that seaborne transportation is a major source of pollution in the transport industry. Odfjell Tankers Environmental Council – OTEC, was established autumn 2008 to map Odfjell’s environmental impact and follow-up actions. Odfjell’s activities are various and impacts will in many respects be considered as substantial. An active approach to environmental issues is necessary, and OTEC shall ensure continuous improvements. Speed/consumption reduction scheme From October 2007, 16 of our 37 000 dwt vessels were operated on reduced speed. In May 2008, 32 more vessels were included in the speed/consumption reduction scheme. In 2008 the reduction scheme generated a net fuel saving of some 35 000 mt, which gave an emission saving of approximately 104 000 mt CO2 and 1 800 mt SO2. Tank cleaning – chemical treatment For years Odfjell Tankers Operations has invested in effective tank cleaning methods to meet the high industrial standards. This includes improvement in tank cleaning operation onboard and new cleaning chemicals. In addition to this Odfjell Tankers has intensified the use of our onshore team of experts onboard for supervision and training in tank cleaning operations. The result of this effort is materialising and in 2008 we noted the following: • consumption of detergents is reduced by 15%. • reduction of pure cleaning chemicals is 44%. Energy Management Project – EMP Odfjell started the Energy Management Project - EMP in 2008. The purpose is to reduce the energy consumption of Odfjell Tankers operated vessels. Prioritized activities are: • utilization of weather routing system making advantage of wind, weather and sea currents in coastal and overseas passages. • optimal energy system scheme onboard including fine tuning of speed and fuel consumption and further effective utilization of heaters and auxiliary engines. • electronic tracking and tracing of ships. 1Fuel purchased in Brazilian ports have low sulphur content by nature, but is not included in the 5 % low sulphur quantity in this report. Odfjell purchased approximately 12 % of the fuel in such ports in 2008.

Ship recycling
Fleet renewal is necessary to improve efficiency. Demolition of ships has not been regulated and the work often find place at poor conditions. This is a concern for both Odfjell and the shipping industry. The high expectations to Odfjell Tankers mean that all vessels regardless of age must maintain a certain quality. Therefore, when a ship is to be phased out from Odfjell Tankers, it is normally in a condition which makes sale for further trading a reasonable alternative. When ships are sold for further trading, without the purpose of demolition, Odfjell may not dictate future recycling facility. However, until the announced IMO Convention of Ship Recycling enters into force, Odfjell will follow the industry’s own “Interim measures for shipowners intending to sell ships for recycling” with guidelines on yard selection, inventory of hazardous materials, gas freeing and reporting to flag state. For mapping of hazardous materials Odfjell uses the Green Passport Inventory concept developed by the classification societies. All Odfjell owned ships above 20 years of age shall have such an inventory list.

Ship Management
In 2008 there were no accidents causing death or permanent or long term disability to our seafarers. The Lost Time Injury Frequency (LTIF) decreased from 2.9 in 2007 to 2.3.

Ship Management holds the ISO 14001 certification which involves 51 ships of own management. The following technical projects reduce the environmental impact beyond the requirements in current regulations:
• implementation of an electronic lubrication system which gives up to 50% reduced lube oil consumption
(11 of 13 vessels completed by end of 2008).
• installing ballast sampling points which means improved monitoring of ballast water (11 of 23 vessels completed
by end of 2008).
dedicated tanks for water from air coolers give less bilge (nine of 16 vessels completed by end of 2008).
• installing oily water separator which reduces the oil content in bilge water overboard from 15 to 2 ppm
(30 of 36 vessels completed by end of 2008).
• replace existing CO2 based Inert Gas Plants with
Nitrogen based plants. This reduces the need for tank cleaning and corresponding emissions from power
consumption as well as reduced explosion risk (two of eight vessels completed by end of 2008).

Other measures:
• polishing of propeller is done as a part of the dry-docking scope for all ships.
• the upgrade to computer controlled main engine (E-Engine) on one ship was started in 2008 and will be
completed in 2009. This will reduce emissions due to a more efficient running main engine.
• a feasibility study on how to reduce stern tube leakages started in 2008. The result will be evaluated in 2009.

Future environmental aspects

External activities involving Tankers
Through industrial organisations and flag state administrations Odfjell has actively contributed towards three specific industrial environmental initiatives, namely:
• reduction of inadvertent cargo vapour emission from ships.
• means to stop any illegitimate practice of draining shore cargo lines back to ships on completion of loading or unloading.
• enhance safety onboard by expanding current inert gas requirement to apply to all tanks loaded with low flash cargoes, independent of tank size, age of ship or categorisation of the cargo.

The Company’s target is to actively support these initiatives and promote them to become industrial practice in the future, either through legislative changes or through new recognised industrial practice and guidelines.

Newbuilding programs
Odfjell will in the forthcoming period introduce projects related to newbuildings, which will reduce the impact on the environment. Among these are:

• hull Antifouling Project based upon smooth silicone painting with zero release of chemical compounds,
and a predicted fuel saving between 5-10% (alternative higher average speed).
• ballast Water Treatment System for non-discharge of alien micro-organisms.
• oily Water Separator with ability to reduce the oil content to 5 ppm, well below the requirements of 15 ppm.

TANK TERMINALS

Odfjell Terminals B.V. was established as per January 1st, 2008 in Rotterdam as headquarters for the terminal business. During 2008 Odfjell Terminals B.V. has increased the focus on Health, Safety and Environmental throughout our global tank terminal network by establishing a Quality Board and increasing corporate support resources.

Odfjell Terminals (Rotterdam) is certified to ISO 14001 and 9001:2000. Focus has been on environmental protection and installation of emission reduction equipment, e.g. innerfloat roof, vapour recovery system, vapor control and continued clean up of soil contamination from prior to Odfjell’s purchase of the terminal in 2000.

Odfjell Terminal (Houston) maintained the ISO 14001 and 9001:2000 certificates in 2008. They succeeded in bringing the LTIF substantially down to 3.7 in 2008. The HSE training program was improved by changing to interactive training for operations and safety. The incident investigation process was strengthened and is now conducted at the front line supervisor’s level.

Odfjell Terminals (Korea) acquired the ISO 14001 certificate in December in addition to ISO 9001:2000. In addition to the above mentioned ISO certificates, both Odfjell Terminals (Dalian) and Oiltanking Odfjell Terminals Singapore (OOTS) passed the renewal of ISO 9001:2000.

Odfjell Terminals B.V. organized and carried-out “corporate terminal audits” at all terminals owned or managed by Odfjell in order to review quality status with respect to our Corporate Quality Management Manual. Odfjell audited five terminals with a methodology that contained a Quality Management System (QMS) review together with an on-site practical terminal inspection with regard to technical/operational/safety and housekeeping items. These audits form part of our efforts to consolidate a culture of continuous improvement and will be repeated regularly.

Odfjell Terminals B.V. is making significant investments in suitable systems to meet or exceed the increasingly strict environmental regulations in areas such as vapor control and waste water management.

CORPORATE SOCIAL RESPONSIBILITY

Odfjell’s most important contribution to accepting corporate social responsibility is to conduct its business well in accordance with the international and national regulations which govern its operation. Odfjell’s corporate social responsible balances the Company’s economy, environmental and social responsibilities.

In 2008, Odfjell received the distinction “Best in Class” from Storebrand, which means that Odfjell scores among the 30% best companies on environmental and corporate social responsibility in an analysis for the marine industry.

Social Responsibility
Odfjell’s social responsibility encompasses among other things ethics and business morals, employee and organisational development as well as supporting local communities.

Internal social responsibility
Code of Conduct
Odfjell has established a Code of Conduct that is meant to enforce ethical behaviour in everyday business and is
applied by all employees, directors and representatives of the company, irrespective of their domicile.

Diversity
As a global actor with ships, terminals and offices all over the world the workforce at Odfjell is diversified when it comes to education, culture, nationality, religion, gender
and age.

Training and development
Odfjell aims at giving employees development opportunities within the organisation. Employees are encouraged as internal candidates for vacant positions. In addition a wide range of training and courses are offered to employees.

Odfjell strives to develop an inspiring and interesting work environment both at sea and ashore. Odfjell carries out employee satisfaction surveys at headquarters in Bergen and other larger offices, and do ergonomics inquiries. All employees have a yearly appraisal with their manager. Also implemented is a programme for improved health care for seafarers, with focus on exercise and a healthy diet.

Odfjell has a trainee program for onshore positions and a program for apprentice at sea. In the Philippines the Odfjell Academy trains regular crew and the Odfjell Bacolod trains cadets.

Internal communication
Focus on internal communication is essential to create a good working environment and a common Odfjell culture. The Company magazine Quarterly and the Intranet are rated as the most important communication channels within Odfjell. An internal communication survey shows that the employees are overall quite satisfied with the internal information at Odfjell.

External social responsibility
Odfjell takes social responsibility within local communities in which Odfjell is represented. Odfjell supports small organisations and in some cases, Odfjell supports local initiatives together with partners or joint ventures/alliances.