Saipem

COUNTRY SUSTAINABILITY REPORT
INDONESIA
ABOUT THIS INDEX
COUNTRY REPORT 1 Message from the CEO
2 Letter from the Management
This Report is part of a series of Local Sustainability 3 Overview of Saipem in Indonesia
Reports that Saipem began publishing in 2003 as Part 1
‘Sustainability Case Studies’ with the purpose of
underlining the importance the Company ascribes to 4 Introduction to Saipem
local business sustainability. 5 Saipem’s Sustainability Approach
6 Saipem at a Glance
These Reports are also submitted to the relevant
stakeholders, so they can assess the sustainability 8 Saipem in the World
approach Saipem adopts in their respective areas. Part 2
10 Indonesia
A Country Report describes the principles, activities 10 Country Overview
and performance of Saipem in relation to sustainable 10 Economy
development in the country. It is designed to provide 12 Social Overview
easy access to key indicators and information and is 13 Environment
divided into two parts: the first provides an overview 16 Saipem’s Presence in Indonesia
of Saipem and its business around the world, while the
17 Main recent projects in the country
second introduces the country, and discusses Saipem’s
17 Organisation and Management
presence, sustainability approach and sustainability
performance within it. 18 Other projects carried out
in the Karimun Yard
18 Sustainability Approach
Along with the annual Sustainability Reports and 20 Quantifying the economic value
the Project Sustainability Reports, the Country generated by Saipem’s operations
in Indonesia in the period 2011-2012
Sustainability Reports represent the main tools
22 Assessing the socio-economic value
adopted by Saipem to communicate to all stakeholders generated by the Karimun Yard
the Company’s commitment and performance with development project
regard to sustainability.
24 Sustainability Performance
24 Employees
This Report has been drafted in line with the principles 24 Recruitment
of materiality, stakeholder inclusiveness, sustainability 24 Training
context and completeness as defined in the Global 26 Health
27 Safety
Reporting Initiative (GRI) version G3.0.
28 Clients
29 Suppliers & Subcontractors
The document aims to describe Saipem’s performance 31 Environmental performance
and its engagement with stakeholders in Indonesia. 32 Installation of solar panels
in the Karimun Yard
A set of Key Performance Indicators (KPIs) was selected 32 Green Building Concept - Greenship
to bolster the information provided to stakeholders. Building
The consolidation perimeter is based on the 36 Saipem Indonesia Shuttle Bus
principles adopted for financial reporting and Programme
annual sustainability reporting and refers to all 38 Local Communities
projects conducted by Saipem SpA and its Operating 38 Stakeholder Perception Survey
in Karimun Island
Companies in Indonesia.
40 Pangke Village Schools: an Investment
Data are calculated according to the operational ‘Today’ for Our Recruitment ‘Tomorrow’
criterion, meaning that operations in which Saipem 41 Road Safety Campaign for schools in
SpA or one of its subsidiaries in Indonesia exercises Karimun
operational control are reported 100%. Data for the 41 Ambat English Course
Company’s performance reported in the document 41 Collaboration with the ‘Mechanical
Engineering’ Faculty in the University
have been drawn from the management and of Karimun
reporting systems used by the various Company 41 Health and hygiene event in Jakarta
functions involved in the reporting process. Data 42 Celebrating World Environment Day -
are reported for the 2013 financial year and, when Composting Plant Inauguration
appropriate, also for previous financial years. 42 Beach Cleaning Campaign
43 Future Challenges
44 Acronyms
Published in 2014
SAIPEM SUSTAINABILITY
MESSAGE FROM THE CEO
Pietro Franco
Umberto Vergine
Tali
Saipem is an international Oil & Gas our activities, our engagement with local
contractor with approximately 48,000 stakeholders requires a comprehensive
employees and operations in more than approach to sustainability. Furthermore,
60 countries. Saipem plays a significant the variety of projects undertaken and
role in its market sector and contributes the differences between countries where
substantially to the economic these activities are performed demand
development of the countries in which that a distinctive local approach be
it operates. developed.
We consider business sustainability to be We publish these Reports on our

an integral part of our strategy. Local Business Sustainability in order
Our commitment is to create long-term to favour open dialogue and enhance
value for all our stakeholders, especially the development of local relationships,
locally, by identifying common goals and helping us to ensure that we operate at
agreeing on specific initiatives. all times in an increasingly sustainable
Given the wide range and complexity of manner.
MISSION
Pursuing the satisfaction of our clients in the energy industry, we
tackle each challenge with safe, reliable and innovative solutions.
We entrust our competent and multi-local teams to provide
sustainable development for our Company and the communities in
which we operate.
1
LETTER FROM THE MANAGEMENT
It is hard to talk about sustainability in a country where every

day you can experience the friction between the strong economic
growth rate, on the one hand, and the need for sustainable social
development for a young and large population, on the other.
In such circumstances, where the challenges are more difficult, we
at Saipem know how to perform at our best. We have taken up the
challenge, one of the most important we face in our work, to grow
and strive to be the best, while at all times focusing on sustainability
and on the health, safety and welfare of our employees.
This characteristic has distinguished our presence in Indonesia for
or over
ve 15 years
years. It
includes training and development programmes for our young graduates, support for the
welfare of our workers, integration, and serious engagement with our partners.
An example and demonstration of commitment during our recent history in the country
is the Karimun venture, where we have been able to show what it means to merge the
COUNTRY REPORT
technological and organisational challenge of a yard with the presence of a community

far from the world of Oil&Gas platform fabrication.
Recently, Eni Indonesia has awarded a consortium led by PT Saipem Indonesia the EPCI
contract for a new built barge Floating Production Unit (FPU) for the Jangkrik Complex Project
development. The consortium is formed by Hyundai Heavy Industries Ltd (HHI) and the joint
venture between PT Saipem Indonesia, Tripatra Engineers & Constructors and Chiyoda.
The Jangkrik FPU project is carried out from the Saipem Execution Centre in Jakarta.
Topside fabrication activities will be carried out in Saipem’s Karimun Island Yard, also
located in Indonesia, while the hull will be fabricated in HHI’s offshore yard in Ulsan,
South Korea. This an extraordinary example of how Saipem’s presence in Indonesia can
lead to a significant development in the competence and skills of local employees.
Today in Indonesia our presence goes beyond Local Content for the business of the
country, and aims, rather, to establish stable and long-term prospects for the entire area
of Southeast Asia.
Carmine Ferraro
Managing Director PT Saipem Indonesia
2
Overview of Saipem
in Indonesia
2,006
local employees in 2013
Saipem has been operating in Indonesia 453 million USD

since 1995. economic output generated in Indonesia in the
Nowadays it is represented by PT Saipem period 2011-2012
Indonesia, whose head office is based
in Jakarta, with a Branch in Karimun
151 million USD
social value created in Karimun Island
Island, where a Fabrication Yard, now the associated with the investment in construction
biggest in the Southeast Asia, has been of the Fabrication Yard (value created over and
built. above Saipem’s investment)
PT Saipem Indonesia Karimun Branch (SIKB) considers sustainability as a means

to ensure long-term growth and value creation for its stakeholders in Karimun
Island and an opportunity for the Company to gain and maintain fruitful and
positive relations with local communities and local stakeholders.
It is my strong belief that a sustainable business and, especially, the maximisation
of Local Content are key success factors of our activities. In particular, the growth
of local business and the fostering of local entrepreneurship is at the top of our
agenda. Recent socio-economic studies have confirmed with figures and data the
highly positive economic return for local communities resulting from Saipem’s
presence in Karimun.
Karimun
SIKB is also privileging the employment and integration into the organisation of young, enthusiastic local
Karimun people. Massive training protocols and internships, which are part of the programme ‘Training
Today for our Recruitment Tomorrow’, have been implemented with a view to selecting, training and
recruiting resources such as welders, fitters, planners, technicians and staff needed by Saipem yard for
the execution of present and future activities.
Among these initiatives, several apprenticeship courses for young graduates are conducted inside
Saipem Fabrication Yard, in cooperation with local and nearby universities. These courses facilitate
the development of skills and competences that will reinforce and deeply root Saipem’s presence and
know-how in Karimun. As an example, the SIKB training school is operational with already 361 qualified
welders and 243 pipe and steel fitters.
Moreover, particular attention has been focused on awareness programmes in local schools and
on supporting the Pangke Village community. I consider the involvement of the surrounding local
communities as the best way to contribute to their wellbeing and development and to integrate SIKB
into the local context. New additional programmes of cooperation with the local communities will
be proposed in 2015, mainly focusing on the development of an industrial culture and reinforcing
cooperation with local authorities.
Their implementation will make us even prouder than before, aware that no boundaries exist between
Saipem and local communities.
Ernesto De Franco
Branch Manager PT Saipem Indonesia Karimun Branch
3
INTRODUCTION TO SAIPEM
Saipem is an international group with provision of engineering, procurement,

a strong bias towards Oil & Gas related project management and construction
activities in remote and deepwater services with distinctive capabilities in
areas. The Company began operations the design and execution of large-scale
in the 1950s and is now a leader in the offshore and onshore projects.
Saipem operates in the Engineering

Saipem workforce distribution by nationality (2013)
& Construction and Drilling businesses.
It enjoys a superior competitive position
19% 14% for the provision of EPC/EPCI services
2%
2% to the oil industry both onshore and
2% 12% offshore, with a particular focus on
the toughest and most technologically
3%
challenging projects – activities
3% 7%
in remote areas, deepwaters and
3% ‘difficult’ oil.
6%
3%
3% 5%
4% 4% 4% 4% The Group is a truly global contractor,
with a strong local presence in strategic
Italy India Nigeria
and emerging areas such as West Africa,
Philippines Mexico Venezuela the Americas, Central Asia, the Middle
East, North Africa and Southeast Asia.
France Indonesia Canada
Saipem is an international company
Kazakhstan Morocco Peru employing over 52,000 people from
approximately 126 nationalities (2013).
Saudi Arabia Angola United Kingdom
The majority of the Group’s human
Malaysia Brazil Other Countries resources (77% in 2013) are locally
employed.
COUNTRY REPORT
Operating Engineering Yards and Main Other Main Area

and Engineering Hubs Centres Logistic Bases and Representative Offices
4
SAIPEM’S SUSTAINABILITY
APPROACH
Saipem believes that a correct, such as access roads, and construction
open and cooperative relationship camps with facilities such as hospitals,
with all stakeholders is vital for power generators, and so forth.
the success of a project. Saipem is
present in many locations around The breadth of Saipem’s international
the world and operates with a workforce is another facet of
decentralised organisational structure sustainability: all personnel are treated
in order to respond to local needs and with dignity, and their rights, cultural
sustainability requirements. values, local customs and traditions,
diversity and identity are at all times
Wherever it works, the Company plays respected.
an active role in local communities by
offering employment opportunities and For each project, social, economic
personnel training, working effectively and environmental impacts are
with local suppliers and subcontractors, evaluated and continuously monitored
creating economic and social value and, in conjunction with the pursuit of
finally, contributing to infrastructures customer satisfaction.
5
SAIPEM AT A GLANCE
Saipem has world class engineering and Saipem has designed and built
project management expertise together numerous ‘mega’ Oil & Gas production
with a strong, technologically advanced facilities, 36 grass-roots refineries and
and highly versatile fleet. The Company more than 500 individual refining
operates in the Engineering process units, as well as more than 400
& Construction and Drilling businesses. plants worldwide for the production of
Onshore, Saipem mainly serves the chemicals from natural gas, including
Oil & Gas segments, the refining and the world’s largest ammonia/urea
petrochemical markets, as well as a complexes.
number of diversified industrial markets In particular, land pipeline design and
such as infrastructures (i.e. high speed construction has historically been one
railways, port facilities and marine of the mainstays of Saipem’s business.
terminals) and environment (especially The Company has laid a record of over
remediation of soil, ground water and 60,000 km of gas pipelines, 30,000 km
contaminated sites). of oil and product pipelines and 1,400
Saipem offers a complete range of km of water pipelines on five continents.
services, from feasibility and front-end In recent years, the Company has
studies to design, engineering, designed and constructed more than
procurement and field construction, 40 power plants (over 10,000 MW) and
most often on an EPC (Engineering, four Integrated Gasification Combined
Procurement and Construction) Cycle plants, two of which are the
and LSTK (Lump Sum Turn Key) world’s largest (power output of about
contractual basis, for complex Oil 550 MW each).
& Gas facilities, including production, The Company’s offshore activities
treatment, liquefaction, refining and include the installation of platforms,
petrochemical plants, as well as for Oil marine terminals and pipelines, as well
& Gas transportation systems, such as as the development of deepwater fields,
pipelines, pumping and compression while its experience in undertaking
stations and terminals. EPCI (Engineering, Procurement,
Saipem’s expertise focuses on the design Construction and Installation) projects
and execution of large projects with a includes trunklines, export pipelines,
high degree of complexity in terms of infield flowlines, pipe-in-pipe systems,
engineering, technology and project bundles, tie-ins and riser systems for
COUNTRY REPORT
management, with a strong bias towards the transportation of oil, gas and
challenging projects in the most difficult multi-phase products from depths in
environments and remote areas. excess of 2,000 metres.
DRILL SHIP
SEMISUBMERSIBLE
CRANE AND SEMISUBMERSIBLE J-LAYING VESSEL
PIPELAYING VESSEL PIPELAYING VESSEL
6
With a fleet of over 40 construction for the provision of floating solutions
vessels, Saipem is a leader in deepwater worldwide.
and shallow water pipelaying and As an international drilling contractor
platform installation with more than operating in some of the harshest
30,000 km of sealines and more onshore and offshore environments,
than 2.5 million tonnes of offshore Saipem is presently contracted to
structures installed. The Company has major oil companies in many of the Oil
completed more than 100 major EPCI & Gas industry’s ‘hotspots’, carrying
projects, including several challenging out important drilling programmes
large-scale integrated complexes and in Europe, the Commonwealth of
is also involved in the construction of Independent States (CIS), North and
marine terminals, mooring systems West Africa, the Middle and Far East
with conventional buoys, wharfs and and the Americas.
jetties. All of this is complemented Saipem’s vast experience in managing
by significant fabrication capabilities drilling activities, coupled with its
based in the heart of major Oil & Gas strong technological and operational
provinces such as Angola, Canada, expertise, have enabled the Company
Republic of the Congo, Kazakhstan, to build a proven capability and a
Nigeria, United Arab Emirates, the global reputation in the industry.
Mediterranean Sea, Indonesia and Brazil In Offshore Drilling, the Company
(under construction), with an aggregate boasts an extensive fleet with six
in-house fabrication capacity of over jack-ups, a Tender Assisted Drilling
250,000 tonnes per year. Barge, seven semisubmersible drilling
rigs and two drillships (the Saipem
In addition, the design, construction 10000 and the Saipem 12000) which
or conversion of floating production can operate at depths of up to 10,000
units has become one of Saipem’s and 12,000 feet, respectively, while in
main business activities since the early the onshore sector, Saipem owns in
nineties. Thanks to the development the region of 100 drill and workover
of competitive technical solutions, rigs.
relationships with key players and Over the decades, Saipem has drilled
presence in strategic markets, together more than 7,300 wells (1,800 of which
with its unique EPCI experience and offshore), totalling an overall depth
track record of four new-builds and of about 18.5 million metres, and
seven conversion projects, Saipem has has been involved in the workover of
become a reliable general contractor hundreds of wells.
DRILLING RIG
SEMISUBMERSIBLE
DRILLING RIG
JACK-UP
DRILLING RIG
REGASIFICATION PLANT
POWER PLANT
PIPELAYING
7
SAIPEM IN THE WORLD
EUROPE 2011 2012 2013
Revenues (€ million) 1,938 1,781 1,593
Investments (€ million) 78 31 34
Workforce (units) 10,410 11,133 10,364
Local Workforce (% of total) 81 75 84
Energy consumption (ktoe) 72 98 74
HSE Training (hours) 86,465 129,309 55,655
AMERICAS 2011 2012 2013

Workforce (units) 6,665 7,825 12,168
COUNTRY REPORT
CENTRAL & SOUTH AFRICA 2011 2012 2013 NORTH AFRICA

Revenues (€ million) 2,692 2,482 2,392 Revenues (€ million)
Investments (€ million) 16 8 19 Investments (€ million)
Workforce (units) 8,462 7,586 8,563 Workforce (units)
Local Workforce (% of total) 62 64 58 Local Workforce (% of total)
Energy consumption (ktoe) 107 84 112 Energy consumption (ktoe)

HSE Training (hours) 170,316 146,551 104,332 HSE Training (hours)
Additional data for investments

Further investments not allocated to a specific area amounted to €738 million in 2011, €717 million in 2012 and
€400 million in 2013.
8
CIS 2011 2012 2013
Workforce (units) 4,653 3,491 3,237
REST OF ASIA & OCEANIA 2011 2012 2013

Revenues (€ million) 667 1,241 1,211
Workforce (units) 4,011 6,699 5,679
2011 2012 2013 MIDDLE EAST 2011 2012 2013

2,531 1,494 701 Revenues (€ million) 2,047 3,211 2,721
11 3 11 Investments (€ million) - - -
4,523 4,379 3,113 Workforce (units) 5,508 7,342 9,033
83 85 83 Local Workforce (% of total) 78 82 82
73 66 27 Energy consumption (ktoe) 129 168 180
155,568 123,113 34,825 HSE Training (hours) 383,856 856,456 904,532
9
INDONESIA
COUNTRY OVERVIEW
Indonesia is a country in population. Indonesia is a Andaman and Nicobar
Southeast Asia, located republic, where the House Islands in India.
along the equator between of Representatives and Following the achievement
the Pacific and Indian the President are directly of independence at the end
Oceans. Consisting of elected. The capital city is of World War II, Indonesia
17,508 islands, Indonesia Jakarta. Indonesia shares faced several challenges
is the largest archipelago borders with Malaysia on related to the process of
country in the world. Borneo Island, with Papua democratisation and the
New Guinea on Papua period of rapid economic
With a population of 237 Island, and with East Timor change, but also instances
million people in 2010, on Timor Island. Other of corruption, separatism
Indonesia is the fourth neighbouring countries and natural disasters.
most populous country in include Singapore, the Source: Indonesia Government
the world and the country Philippines, Australia, and Official Portal – updated 2010
with the largest Muslim the union territory of the (http://indonesia.go.id/).
ECONOMY Indonesia has been active in the Oil&Gas

sector for more than 125 years after its
Indonesia has the largest economy in first oil discovery in North Sumatra in
Southeast Asia, one of the emerging 1885, and continues to be a significant
market economies of the world, and player in the international Oil&Gas
has one in the largest Oil&Gas reserves industry.
in Asia. Indonesia’s oil, gas and mining As of early 2008, the country’s proven
industries are mainly concentrated in oil reserves totalled 3.7 billion barrels
the Sumatra, Kalimantan, East Java and and potential reserves reached 4.5
Papua provinces. billion barrels. The country’s gas reserves
COUNTRY REPORT
Economic indicators (2012)

Gross Domestic Product (GDP) (current prices) (a) (trillion USD) 1.2
GDP per capita (current prices) (a) (USD) 3,557
GDP growth (b) (annual %) 6.2
GDP by sector (2011) (b): Industry (% of GDP) 47
of which manufacturing (% of GDP) 24
Agriculture (% of GDP) 15
Services (% of GDP) 38
Inflation rate (a) (%) 4.3
Export of goods and services (a) (billion USD) 187
Labour force (a) (million units) 118
Source:
(a) CIA World Fact Book 2013 (http://cia-world-fact-book.findthedata.org/l/882/Indonesia).
(b) World Bank (http://databank.worldbank.org).
10
Sunset in
Indonesia
totalled 170.07 trillion standard cubic for Upstream Oil&Gas Activities (SKK
feet (tscf) including 112.47 tscf in Migas/Satuan Kerja Khusus Pelaksana
proven reserves and 57.60 tscf in Kegiatan Usaha Hulu Minyak dan Gas
potential reserves. Most of the known Bumi, previously known as BPMigas)
Oil&Gas reserves are in the western part oversees Oil&Gas exploration and
of the country, especially Java, Sumatra exploitation. BPHMigas (Badan
and Kalimantan, although major gas Pengatur Hilir Minyak Bumi dan
reserves have been found in Papua and Gas) regulates downstream Oil&Gas
off Massela in southern Maluku. activities (processing, transport,
Two state agencies regulate the storage and commercial activities).
Oil&Gas industry. The Executive Body Exploration contracts are governed by
Energy data (2011)

Energy production (ktoe) 394,572
Electricity production (kWh) 182 billion
Electricity production from natural gas (% of total installed) 20
Electricity production from coal (% of total installed) 45
Electricity production from oil (% of total installed) 23
Electricity production from hydroelectric sources (% of total installed) 7
Electricity production from renewable sources (% of total installed) 5
Access to electricity (2010) (% of population) 73
Electric power consumption per capita (kWh per capita) 680
Energy use per capita (toe per capita) 857
Source: World Bank (http://data.worldbank.org).
11
the Production Sharing Contract (PSC) and is the largest contributor to
with production split 75% for the state revenues. However, as Oil&Gas
government and 25% for the investor, development has slowed down,
according to Presidential Decree state revenues from the sector have
No. 55/2009 and the new regulation declined. In 2011 revenues from the
issued in 2010 regarding cost recovery Oil&Gas industry contributed to more
and tax in the upstream sector than 20% of the domestic revenues,
(Government Regulation No. 79/2010). a significant increase from previous
Despite its sizeable reserves, the rising years (2009-2010) but far from the
domestic demand and the decline in 1990 period when the contribution
production due to the aging of oil fields from the upstream industry represented
have resulted in a drop in gas exports. more than 40% of total government
Nowadays, Indonesia is becoming a revenues.
net oil importer. To prevent the steady
decline in production, the government In 2009 investment levels in the Oil&Gas
is offering new exploration rights and industry decreased by almost 11% from
financial incentives. 12,096 billion US dollars (USD) in 2008
to 10,874 billion USD in 2009. Later
Indonesia’s Oil&Gas industry continues on, investments started to rise again to
to be a vital part of its economy. It is an 11,031 billion USD and 13,703 billion
important contributor to government USD in 2011. This rise is a reflection
export revenues and foreign exchange of increasing investor confidence in
Indonesia’s Oil&Gas sector. Additionally,
the number of PSCs signed by the
Population age structure government increased from 18 in 2009
6.4% to 31 in 2011.
7.6% 26.6%
Sources: An Investment Guide to Indonesia,
Canadian TCS.
Oil and Gas in Indonesia, PWC.
42.2%
17.2% SOCIAL OVERVIEW
0-14 years 15-24 years 25-54 years Stretching from Sabang to Merauke,
Indonesia consists of various ethnic,
55-64 years 65 years and over linguistic and religious diversities. The
COUNTRY REPORT
Javanese are the largest ethnic group.

Source: CIA World Fact Book 2013
(http://cia-world-fact-book.findthedata.org/l/882/Indonesia).
Indonesia’s national motto ‘Bhinneka
Social indicators (2013)

Population growth rate (a) (%) 0.99
Population density (b) (people per square km of land area) 135
Urban population (2011) (a) (% of total) 50.7
Literacy rate (a) (% of people aged 15 and above) 92.8
Life expectancy at birth (a) (years) 71.9
Mobile cellular subscriptions (2011) (a) (million units) 249.8
Fixed broadband Internet subscribers (2009) (a) (million units) 20
Source:
(a) CIA World Fact Book 2013 (http://cia-world-fact-book.findthedata.org/l/882/Indonesia).
(b) World Bank (http://databank.worldbank.org).
12
Young women
in Jakarta
Tunggal Ika’ (‘Unity in Diversity’) reflects incredible biodiversity of animal and

the country’s multi-culturality. plant life in its pristine rain forests and
its rich coastal and marine areas. Up to
Though absolute poverty is declining, 3,305 known species of amphibians,
40% of the Indonesian population birds, mammals and reptiles and at
remains highly vulnerable to sudden least 29,375 species of vascular plants
events that threaten to push them are endemic to the islands. Indonesia’s
into hardship. In 2011, 12.5% of environment is facing challenges
Indonesians lived below the national from natural phenomena (it is located
poverty line, but a large portion of in the highly seismic Pacific Ring of
the population is clustered just above Fire, which experiences 90% of the
it. The government of Indonesia has world’s earthquakes) and human
developed several household-based activity (deforestation, wildlife trade,
social assistance programmes targeting over-fishing and pollution).
the poor and near-poor. These have
provided some protection for the poor The UN FAO estimated that Indonesia lost
and vulnerable. Indonesia also has a a massive 1.87 million hectares of forest
range of complementary programmes every year between 2000 and 2005.
and policies that extend beyond the Deforestation of an area implies a range
household to ‘protect and promote’ of serious impacts, including (amongst
the poor and vulnerable, including many other things) habitat loss for
community driven development endangered species such as the Sumatran
programmes, job creation and rhino and orang-utans, loss of livelihood
employment strategies, and plans for for forest people and loss of revenues
social security. for local and central governments. One
Source: Targeting Poor and Vulnerable cause is global demand for wood pulp
Households in Indonesia, World Bank, 2012. and palm oil, and the resulting clearance
of forests for plantations. Palm oil is now
considered a major source of income
for Indonesia and for more than 3.5
ENVIRONMENT million people working in this sub-sector.
Another cause of Indonesia’s massive rate
Besides having a large population and of deforestation is global demand for
densely-populated regions, Indonesia timber.
possesses a natural area that supports
the second highest level of biodiversity Wildlife over-exploitation is severe in
in the world. Consisting of more than Indonesia. It is estimated that around
17,000 islands, Indonesia supports an 1,000 orang-utans were exported to
13
Environmental indicators
Country area (km2) 1,904,569
Protected area (% terrestrial area) 14.1
Forested area (% land area) 52
CO2 emissions (2010) (thousand tonnes CO2 eq) 433,989
CO2 emissions per capita (2010) (tonnes CO2 eq/capita) 1.8
Renewable internal freshwater resources per capita (cubic metres) 8,741
Annual freshwater withdrawals, total (% of internal resource) 6
Annual freshwater withdrawals, by sector: Agriculture (% of total) 82
Industry (% of total) 6
Domestic (% of total) 12
Source: The World Bank Data (http://data.worldbank.org).
other countries for pet trade between About 96% of Indonesians live within
1985 and 1990, while the naturally 100 km of the coast, placing huge stress
rare and endangered humphead on the country’s coastal environment.
wrasse is illegally exported to high-end Rapid economic development,
restaurants as a prized delicacy. Other particularly around major population
species are at risk because they are centres, results in large amounts
traded for traditional medicines (e.g. of sewage and industrial pollution,
tiger bone and rhinoceros horn) or for causing the decline of many reef areas,
decorative objects (e.g. scales from especially those near growing cities
hawksbill turtles). such as Jakarta, Ambon and Ujung
Pandang. There are also environmental
A large part of Indonesia’s capture problems linked to rapid urbanisation
fisheries are fully or overexploited. Bad and economic development, such as
fishery practices further increase the air pollution, traffic congestion, waste
problem. Cyanide and blast fishing on management, and reliable water and
coral reefs has not only degraded the waste water services.
ecosystems, but has also affected the
vast number of marine species that Source:
depend on them. Environmental problems in Indonesia, WWF.
COUNTRY REPORT
Indonesia consists
of more than
17,000 islands
14
Karimun Regency
Karimun Regency is an archipelago
area that consists of 250 large and
small islands, of which only 57 are
inhabited. The two largest islands
of the Regency are Karimun and
Kundur. The Regency is part of the
Riau Archipelago Province and,
due to its proximity to Singapore
and Malaysia, has become a
strategic location for national and
international trade routes. The Free
Trade Zone (FTZ) of Karimun Island is
quite influential, especially as regards
economic activity.
Based on the 2012 population

registration, the total population
of Karimun Regency is 280,949,
consisting of 145,283 men and
135,666 women. Karimun Island
accounts for about 55% of the
entire population of the Regency.
Most people live within or near
Tanjung Balai, the main town of
Karimun Island.
Fishing in Karimun in 2012 reached and 37 public health assistance
The amount of added value 25,173 tonnes. The production centres.
produced by all economic activities volume and value of fishery exports
in Karimun Regency is measured increased continuously in 2011 and Pangke Village is part of the Island’s
by using Gross Regional Domestic 2012, becoming one of the largest Meral District, with a total of 4,701
Product (GRDP) indicators. The 2011 export volumes. households. The population consists
GDRP value based on current prices In the few last years, the of 2,414 males and 2,287 females,
reached 4,813 billion Indonesian contribution of the mining sector with an average population growth
Rupiah (about 418 million USD), to GDP of Karimun Regency has of 3.6%. This limited percentage
while the constant price reached decreased due to reduction of is due to the migration of workers
2,185 billion Indonesian Rupiah granite mining and the prohibition for various industries and mining.
(about 190 million USD). In 2011, of sand export which previously With a total area of 194 km2, the
the largest economic mainstays represented one of main mining population density of Pangke Village
for the Karimun Regency were commodities in the Regency, is 25 people/km2.
agriculture (26%), trade, hotels and alongside granite and tin. Since December 2012, Pangke
restaurants (26%), transportation In 2012, the number of industries Village has been split into Pangke
and communication (13%), and was about 600, of which six Village and West Pangke Village
manufacturing (9%). medium/large manufacturing according to the plan of Karimun
In 2011, Karimun Regency’s companies (food & beverage and Regency to increase community
economic growth was 7%, mainly transportation sectors), employing services in line with the population
supported by the construction, 3,000 overall. growth, social economic
finance, manufacture and services development and health services.
sectors. The education system is well Each village will subsequently be
developed and the Regency has divided into 4 Inhabitants Groups
Most of the Island’s local population two universities, the University of (RW) and 10 Neighbourhoods
is employed in the agricultural (crop, Karimun and STIE Cakrawala, with Groups (RT).
poultry and fishery) and mining about 2,000 students overall.
industry. Some locals have been The livelihoods of the people are
working in the nearby islands, Batam In an effort to increase the quality mostly generated from industrial
and Bintan, that are relatively more of public health, the government of activities, mainly granite mining and
developed. the Regency has developed various smelting. Another potential resource
The fishing sector is the most infrastructures: there are 2 hospitals, is Pelawan Beach, a resort for
important sub-sector of agriculture. 9 public health centres (puskesmas) domestic and international tourists.
15
SAIPEM’S PRESENCE IN INDONESIA
Saipem has been operating in Indonesia PTSI is oriented mainly towards

since 1995. It is represented locally offshore EPCI projects, onshore
by PT Saipem Indonesia (PTSI), based EPC projects and offshore drilling.
in Jakarta, with a Branch in Karimun, The Company performed a number
where the Fabrication Yard is based. of major offshore EPCI projects in
PTSI has maintained a strong presence Indonesia and one offshore drilling
in the Jakarta office in the last ten years project in 2010.
with 350-450 employees. Today, PTSI is a key player in the
The Karimun Fabrication Yard is now Oil&Gas industry in Indonesia, providing
the biggest in Southeast Asia and project management, engineering,
currently employs more than 2,000 procurement, construction, fabrication,
personnel. installation and commissioning
Karimun Fabrication Yard
Construction of the new integration, fabrication of piping workshops, a fabrication

Fabrication Yard in Karimun topsides, jackets, wellheads workshop, blasting and painting
Island started in 2007 and was and ancillary structures items sheds, an administration office,
completed in 2011. and the support of marine a training centre, a medical
The functions of the Yard include transportation activities. and firefighting centre and a
fabrication for FPSO module The Yard’s main facilities include logistic base.
Karimun Yard general information

Total area (m2) 1,300,000 (approx.)
Main Office Building (3 floors) (m2) 5,500
COUNTRY REPORT
Estimated yearly production (Mt) 35,000

Estimated yearly manhours (m/hrs) 12,000,000
Estimated Manpower (pax) 5,000 (operative) + 1,000 (Yard supporting)
Additional Information
Training Facilities 4 rooms for theoretical lessons and large equipped areas for practical lessons
Clinic On 24/7 basis
Fire Fighting 2 fire-fighting trucks
Power Plant 3 power generation units totalling 11 MW
Accommodation Studio and apartments with 268 beds + recreational facilities
Marine Base and Load Out Quays

2 Quays: North-South and East-West 450 m + 450 m length
16
MAIN RECENT PROJECTS IN THE COUNTRY
Name Start date End date Client Project description
Jangkrik FPU Feb. 2014 Ongoing Eni Muara Bakau BV EPCI contract for a new built barge FPU for the Jangkrik
Complex Project development. The consortium is
formed by Hyundai Heavy Industries Ltd and the
joint venture between PT Saipem Indonesia, Tripatra
Engineers & Constructors and Chiyoda.
Abadi Gas Jan. 2013 Ongoing Inpex Masela Ltd Front End Engineering Design of Floating Liquefied
Field Natural Gas (FLNG) Facility with design capacity 2.5
Development MTPA.
- FLNG
Jangkrik Jan. 2013 Jul. 2013 Eni Muara Bakau BV Front End Engineering Design of Pipeline, Riser,
Subsea Flowline and Onshore Receiving Facilities.
& Pipelines
Jangkrik FPU Oct. 2012 Apr. 2013 Eni Muara Bakau BV Front End Engineering Design of New Built Barge
Floating Production Unit.
Ruby Field Aug. 2011 Apr. 2013 Pearl Oil (Sebuku) Ltd Transportation and Installation of Wellhead Platform
Platforms T&I and Process and Quarter Platform.
Naga Pelikan Apr. 2012 Dec. 2012 Premier Oil Detail Engineering of Two fixed wellhead platforms
Field Natuna Sea BV of Naga and Pelikan tied into Gajah Baru Central
Development Processing Platform.
Gajah Baru May 2009 Oct. 2011 Premier Oil Engineering Procurement Construction and Installation
Development Natuna Sea BV of Gajah Baru Central Processing Platform and Gajah
Project Baru Wellhead Platform bridge linked.
North Belut Jun. 2007 Jun. 2009 ConocoPhillips Transportation and installation of the North
CPP T&I Indonesia Inc Ltd Belut Central Processing Platform (CPP) Topsides and
associated works and services.
Drilling Rig Dec. 2009 Dec. 2011 Eni Bukat Ltd Provision of one Offshore Drilling Rig (Saipem 10000).
Services
& start-up assistance as well as offshore The PT Saipem Indonesia Karimun

drilling services. Branch is managed by a Branch
Manager, reporting to the PTSI
Managing Director. It has its own
ORGANISATION internal organisation reflecting that of
the Operating Company in Jakarta.
AND MANAGEMENT PT Saipem Indonesia has a Quality
Management System certified according
PT Saipem Indonesia is run by a to ISO 9001:2008 standard.
Managing Director reporting to The Health, Safety and Environment
Corporate. The MD is supported by (HSE) Management System of PT Saipem
several functions: Business Support, Indonesia is based on the Corporate
Organisation & ICT, Administration Standard and Guidelines, as well as
Finance & Control, Quality, Procurement, local regulations, and complies with the
and HSE & Sustainability. requirements of OHSAS 18001:2007 and
For Operations, PT Saipem Indonesia ISO 14001:2004 standards.
has a structure including the following The PT Saipem Indonesia HSE
functions: Tendering, Commercial, Management System was certified
Engineering, Fabrication & Post Order according to OHSAS 18001:2007 and
Services. ISO 14001:2004 standards in June 2013.
17
OTHER PROJECTS CARRIED OUT IN THE KARIMUN YARD (2010-2013)
Name Start date End date Client Project description
Zodiac Frame Aug. 19, 2013 Oct. 12, 2013 Saipem Zawtika Float over Preparation.
Fabrication Singapore PTE
for Zawtika
Float over
Preparation
P55 Infield Aug. 3, 2012 Oct. 2, 2012 Saipem SA DMA for P55 Project.
and Export SCR
S45 Barge Jun. 14, 2012 Aug. 14, 2012 Saipem UK Ltd Modification of S45 barge for PQP-HT topside.
for PQP-HT
Topside
-Biendong
Iraq Crude Oil Apr. 2012 Nov. 2013 Foster Wheeler Engineering, Procurement & Construction of Central
Export Metering & Manifold Platform and Crude Oil Export
Expansion Expansion Platform (8,270 Mt).
Project (ICOEEP)
Phase 2
FDS2 for Liwan Feb. 15, 2012 Mar. 30, 2012 Saipem (Portugal) FDS2 - Shelter & sheave system foundation.
(Fairlead Comércio
Foundation) Marítimo Lda
Al Wasit Dec. 2011 Sep. 2014 Saudi Aramco Ltd Engineering, Procurement & Construction of Arabiyah
Project & Hasbah combined Offshore and Onshore Facilities
Platform (7,800 Mt).
S45 Barge Sep. 18, 2011 Apr. 15, 2012 Saipem UK Ltd Modification of S45 barge for WHP jacket + additional
for WHP-HT1 scope. 800 Mt approx.
- Biendong
Gorgon LP Jun. 2011 Jan. 2014 KJV (Kellog Joint Engineering, Procurement & Construction of:
Project Venture - Chevron) - 4 Jacket Loading Platforms (1,248 Mt);
- 4 Super Structure Loading Platform Decks (1,608 Mt);
- Navigation Aid Piles & Pontoon Piles (1,100 Mt).
COUNTRY REPORT
SUSTAINABILITY of ensuring dialogue and cooperation

with all local stakeholders in order
APPROACH to maximise the reciprocal positive
effects.
To operate in a sustainable manner
means to create value for stakeholders Specifically, Saipem is committed
and use resources in such a way that to maximising and optimising Local
the needs of future generations are Content in terms of employment and
not compromised. All of this must supply and to facilitating the transfer
be achieved while respecting people, of knowledge and the development
the environment and society as a of professional competencies for the
whole. The sustainability approach creation of job opportunities, the
has become an important way of development of entrepreneurial skills
conducting business effectively and and the growth of local human capital.
18
In Indonesia, the maximisation of The Company is highly committed
Local Content is especially focused on to maintaining and strengthening an
the employment and development of active, open and transparent relationship
young graduates, mainly engineers, with local stakeholders, through both
in order to reinforce the engineering periodical formal meetings and frequent
and technical capabilities both in informal meetings or communications.
Jakarta and Karimun. In addition, This is especially true in Karimun,
the promotion of opportunities for where the Company is committed to
local businesses aims to develop bringing social and economic benefits
enduring relationships with local to the host communities mainly
and national companies as vendors through recruitment of local people and
and subcontractors for effective and cooperation with local authorities in the
efficient project execution. realisation of activities that contribute to
socio-economic development.
Focus on
Jangkrik Field Development Project
The Jangkrik Field is a gas discovery full offshore process and consortium leader of the EPCI
made in March 2009 by Eni Muara exporting treated gas onshore contract for a new built barge FPU
Bakau BV. It is located in the Muara near the existing Sapi plant for the Jangkrik Complex Project
Bakau permit area of the Makassar for tie-in of gas to the existing development. The consortium is
Strait, 70 km offshore Borneo of 42” pipeline to the Badak Plant formed by Hyundai Heavy Industries
Indonesia at a water depth ranging and stabilised condensate to Ltd (HHI) and the joint venture
from 250 to 500 m. Through its the existing 20” pipeline to the between PT Saipem Indonesia,
Indonesian subsidiary, Eni operates Senipah Plant. An additional Tripatra Engineers & Constructors
the Muara Bakau PSC with a 55% tie-in to an existing 20” pipeline and Chiyoda. The Jangkrik FPU
interest, in joint venture with GDF is foreseen to route part of the project is carried out from the
Suez which holds the remaining 45%. gas produced to the domestic Saipem Execution Centre in Jakarta.
To date, three exploration wells market. Topside fabrication activities
(Jangkrik-1, Jangkrik-2 and • 7 subsea wells for JKK tied back will be carried out in Saipem’s
Jangkrik-3) have been drilled. A to the FPU (EP3 and EPCI-2 Karimun Island Yard, also located
feasibility study completed in July contractor scope). in Indonesia, while the hull will be
2011 led to the identification • 4 subsea wells for JNE tied back fabricated in HHI’s offshore yard in
of the most attractive concept to the FPU (EP3 and EPCI-2 Ulsan, South Korea.
for development of the Jangkrik contractor scope). The final destination of Jangkrik gas
Field. This is based on a subsea • Export gas and condensate is the Bontang LNG plant and the
development with seven wells, full flowlines to shore (EPCI-2 local market. The final destination
treatment facilities on a spread contractor scope). of Jangkrik condensate is the
moored FPU and an export line to PT Saipem Indonesia is the Senipah Plant.
shore at the Sapi landfall.
Jangkrik North East, located at
about 25 km NNE from the Jangkrik
Field, is a gas discovery made in July
2011 through the explorative well
Jangkrik North East 1. An appraisal
well was drilled in September 2011.
A screening study for the tie-back of
Jangkrik North East to the Jangkrik
Field was completed in September
2011 for OPDS Phase Gate 2.
The concept defined during FEED
and confirmed for execution phase
includes:
• A barge shaped FPU performing
19
Quantifying the economic value generated by Saipem’s
operations in Indonesia in the period 2011-2012
To provide support and given area. This Model direct, indirect and induced
evidence of the value facilitates calculation of the impacts.
generated through its comprehensive footprint of Employment: Saipem brings an
commitment to Local Content Saipem’s operations in the important contribution to the
maximisation, Saipem has country as well as evaluation increase in local employment
quantified the economic of the effectiveness of Local through the creation of direct,
impacts generated in the Content strategies. indirect and induced jobs.
country. Indeed, measuring Human Capital Development:
the tangible benefits of The scope of the SELCE Saipem contributes to the
the Local Content strategy Model as applied in Indonesia increase of knowledge and
is key to demonstrating a included operations conducted skills of its employees in terms
sustainable business approach by PT Saipem Indonesia and of additional lifetime earning
and improving stakeholder its Karimun Branch. For the expectancy and increased
relationships at local level. purpose of the study, three key employability.
Saipem has implemented a categories of impact were
methodology – the SELCE identified and measured: An initial study was
(Saipem Externalities Local Economic output: impact of conducted for the Karimun
Content Evaluation) Model – payments made by Saipem Yard development project
to measure the externalities to finance its locally sourced considering the period 2007-
produced as a result of operations and to pay taxes. 2011. In addition, an overall
Saipem’s activities in a It is measured as the sum of study for all operations in
Quantitative Results (cumulative 2011-2012)
Category Direct impacts Multipliers Total impact

COUNTRY REPORT
Economic output 281 1.62x 453

(mln USD)
Employment
jobs (No.) 4,002 3.22x 12,874
Human Capital
Development 1.03 14.7x 15.2 (1)
(mln USD)
Note:
(1) Total impact is the Net Present Value of indirect and induced impacts over a 5-year timeframe.
20
Indonesia was conducted local economy. chain mostly benefit sectors
for the period 2011-2012. The contribution to Indonesia’s such as subcontracting,
Results of this second study are GDP from Saipem’s operations general services, catering and
reported here. accounted for the 0.03% of accommodation
the country’s GDP in 2011 and
Economic output 0.02% in 2012. Human Capital Development
The total economic impact of The investment in training
Saipem’s activities in Indonesia Employment for local employees over the
(2011-2012) was found to The cumulative employment period 2011-2012 generated
be around 453 million USD, figures for 2011-2012 add up a cumulative value of 15.2
comprising direct, indirect to 12,874 jobs overall created million USD in the country. For
and induced effects. Its directly, indirectly and induced. each dollar Saipem invested
comprehensive contribution The multiplier indicates that in Indonesia in the training of
is about 1.62 times direct for each job directly created its local employees, there was
expenditures, meaning that for by Saipem in the country, an an additional value generated
each US dollar Saipem spent in additional 2.22 jobs were in society of 13.7 dollars,
Indonesia, an additional 0.62 created as indirect or induced. calculated as increased life-time
US dollars was generated in the Jobs created along the supply earning expectancy.
21
Assessing the socio-economic value generated
by the Karimun Yard development project
To understand and measure was also considered, as were revenues, etc.). Outputs have
more effectively the impact reputed concepts, standards longer-term consequences,
generated by Saipem with the and procedures such as described as outcomes,
construction of the Fabrication the Theory of Change and intended or unintended,
Yard in the Karimun Regency, Stakeholder Engagement. The positive or negative, of which
the scope of the SELCE Model outcome was the Social Value only a part is attributable to
was broadened to assess wider Created Model, a combination Saipem. The impact tree built
social impacts by integrating of the SELCE, the SROI and the in this sequence led to the
it with a Social Return On Stakeholder Perception Survey identification of about 100
Investment (SROI) approach. (SPS), the latter of which was potential impacts (negative and
adopted to understand the positive) that Saipem generated
The internationally recognised perception of stakeholders and on local and national economy
framework developed by the the importance they attribute and society.
World Business Council on to the impacts identified.
Sustainable Development1 These impacts were then
The Social Value Created aggregated into 6 domains of
model identifies Saipem’s societal progress (enterprise
(1) World Business Council for activities as inputs which development, infrastructure
Sustainable Development
(WBCSD), Measuring Impact
generate outputs (e.g. development, governance,
Framework, 2008. number of jobs created, tax community development,
COUNTRY REPORT
22
151 MILLION USD 102 MILLION USD 15,000 JOBS
Total social value Investments attracted Created during the
created in Karimun by Karimun due to construction phase
Saipem’s presence
quality of life and ecosystem tto 2 million

illi USD ththroughh and the employment effect
conditions). The Model education opportunities and at national level, leading to
was applied to the entire small community projects; the creation of about 15,000
construction phase of the • 29 million USD were jobs and an economic impact
Fabrication Yard in Karimun generated from an improved of 451 million USD;
Island during the period quality of life related to • 96 million USD in improved
2007-2011. increased earnings through quality of life, as a
job creation and better positive consequence of
Social Value Created material living standards economic activities and
The Model was applied to from on-the-job training and the employment created in
the entire Yard construction investments in education; the national supply chain,
period 2007-2011. However, • the negative effect evaluated resulting in higher household
considering that construction at -0.1 million USD in earnings and consumption.
operations in Karimun started ecosystem conditions is
in 2008, most of the impacts associated with the perceived Social Value Perceived
were generated between reduction in fishermen’s The Stakeholder Perception
2008 and 2011. In Karimun income due to temporary Survey helped understand
Island, the construction of dredging activities during the value stakeholders
the Saipem Fabrication Yard construction phase. associate with changes in
generated impacts on broader the socio-economic context.
society estimated at 151 million The construction of the Saipem Results showed that Saipem’s
USD over and above Saipem’s Fabrication Yard also attracted contribution is appreciated
investments. investment to Karimun to the and recognised by local
The main contribution to social tune of 102 million USD, mainly stakeholders, and that it
value creation in Karimun was in the form of domestic and represents a good example for
in the domain of enterprise foreign capital (86 million USD). other companies in the region.
development, totalling 119 This set the basis for future Specifically, stakeholders
million USD, which consisted of sustainable growth and social strongly appreciated Saipem’s
business opportunities for more development. Furthermore, good business practices
than 100 direct local vendors. local infrastructure and the opportunities they
In addition: development objectives agreed created, while the main
• improved business practices with local authorities amounted concerns expressed were with
and working conditions, to 16 million USD. At national reference to the impact of
widely recognised by local level, the social value created is migrant workers on personal
stakeholders, led to savings estimated at 549 million USD. security and lifestyle, road
of 1 million USD from the The increase in value creation safety, and the increase in local
prevention of health and between local and national competition both for business
safety issues; levels is mainly due to: and jobs (more details on
• effects on community • the inclusion of a larger page 36).
development amounted portion of the supply chain
23
SUSTAINABILITY PERFORMANCE
EMPLOYEES barrier for the Yard’s development, but
rather as a challenge that will lead to
future benefits.
Recruitment
As one of the key international Oil&Gas The strategy, which has been agreed
contractors in Indonesia, Saipem is upon with the Manpower Office of
committed to supporting the recruitment Karimun, aims to employ people
and development of local employees in primarily from Pangke Village (the
both Jakarta and Karimun. In the former, closest to the Yard) and then from the
focus is on specialised engineers who, rest of Karimun Island. Subsequently,
following a specific training and tutorship resources will be recruited from the
programme, reinforce their knowledge entire Riau Islands Province and, if
not only in each area of engineering, but necessary, from other Indonesian areas.
also in supply chain management and Mobilisation of international resources
HSE. Young resources are recruited from shall be reduced progressively to the
the best universities in Indonesia and minimum level possible.
trained during their first 3 years with the
support of both local and international With this objective in mind, one of the
senior engineers. core issues is the Island’s education
system, from elementary and junior
With the construction of the new to senior high school. Specifically,
Fabrication Yard, Saipem is the primary the current system does not seem to
international Oil&Gas investor in the be sufficiently capable of supporting
Region of Riau. Given the economic the socio-economic changes that are
context, one of the major challenges expected to impact the Island, especially
the Company has to face is manpower considering the inevitable mobilisation of
recruitment and training of local resources from other areas of Indonesia
resources resident on the Island. in the initial phases of Yard activity.
In accordance with Saipem’s Local In addition, Saipem needs to improve

Content maximisation strategy, the the technical skills of local resources to
manpower recruitment target for the bring them up to international market
Karimun Yard focuses on local resources, standards in the medium- to long-term.
the development of which is not seen as For all these reasons, since the end of
COUNTRY REPORT
2010 Saipem has been working on the

Workforce project ‘Pangke Village Schools: An
(units)
Investment Today for Our Recruitment
3,000
2,735 Tomorrow’, the scope of which is the
improvement of Pangke Village schools
2,400 (see page 40).
1,797
1,800
Training
1,190
1,200 Training courses are mainly carried out
821 internally. They focus on technical and
600 484 professional skills. Programmes include
390
249 209 business English, engineering, SMART
PLANT P&ID, PHAST and SIL. In addition,
training courses are carried out on HSE
2010 2011 2012 2013
topics such as firefighting, first aid,
International Local earthquake awareness, and so forth.
24
Young Graduate Programme
In order to guarantee the enrolment Island but are willing to work in After recruitment, an individual
of highly motivated and talented Karimun. training plan is set for each Young
young resources, PT Saipem Graduate to develop:
Indonesia has set up a specific Initial screening of Young • knowledge of Saipem’s business;
young graduate programme which Graduates (YG) must meet a • basic skills: English, Project
includes recruitment and training. minimum GPA (Grade Point Management, Quality and HSE;
Average) of 3.00 out of 4.00 for • managerial skills: communication,
The selection and recruitment process bachelor degrees in engineering problem solving, etc.;
is carried out on the basis of specific but also for non-engineering • professional skills: effectiveness,
requests from departments and HR qualifications. Candidates must efficiency and successful results in
forecast planning. Presentations of demonstrate knowledge of the resource’s professional area.
Saipem are addressed to students English, pass a technical writing
in the most reputable universities, test provided by the department, This training is carried out through
such as ITB University in Bandung, ITS come through a first interview courses and on-the job-training, which
University in Surabaya and University session with Line Managers give the YGs the opportunity to be
Indonesia in Jakarta. and a subsequent one with directly involved in project execution
Human Resources and, finally, be and strengthen their expertise and
In Karimun, Saipem collaborates declared fit following a medical professional skills. Training includes
with the local Head of the Provincial examination. Once recruited, a activities carried out in other Saipem
Education Board in order to obtain specific remuneration system is offices such as Paris or Milan to
information concerning local set for YGs to motivate and retain reinforce practice abroad and
students who study outside the them. experience multicultural teamwork.
Number of Young Graduates (YG) (Jakarta and Karimun)

2010 2011 2012 2013
YG recruited yearly in Jakarta 12 19 25 22
Total number of YG employed in Jakarta 26 45 60 76
YG recruited yearly in Karimun 5 3 11 0
Total number of YG employed in Karimun 4 9 19 15
Total YG employed 30 54 79 91
Karimun Training Centre The Training Centre will help develop

Saipem is committed to the knowledge and skills and as well as
development and sharing of know-how health & safety behaviour of workers
through the formalisation and transfer in order to ensure compliance with
of knowledge and best practices to Saipem’s Policies and Standards.
employees. Training is very important
in establishing the competence and The Training Centre is equipped with:
knowledge required by individuals, • 3 classrooms holding 30
especially in the growing Oil&Gas sector. • 3 workshops for work practice
A Centre is being set up by Saipem in a • 2 administration rooms
local school in Karimun, where training • 1 canteen
in mechanical, electrical and welding • 1 prayer room
skills will be provided for new young
recruits. Saipem will work with local Training for recruitment in Karimun
educational institutions to improve both During 2012 and 2013, a series of
course structure and facilities. intensive courses were held in the
25
Training hours
2010 2011 2012 2013
Health, Safety and Environment 4,085 5,517 11,879 3,666
Information Technology and Languages 3,104 13,152 4,195 3,637
Managerial Behaviour and Skills 1,098 2,687 1,199 1,535
Technical Professional Skills 4,913 42,945 126,620 71,584
Other Professional Skills 681 4,450 4,496 2,435
Total 13,881 68,751 148,389 82,857
List of courses
No. Courses Duration Number of participants Number of hired
(until June 2013) (until June 2013)
1 FCAW/SMAW Welding 10 weeks 333 258

2 GTAW (TIG) Welding 3 months 28 16
3 Fit Up 10 weeks 243 195
4 Machine Operator 3 months 34 34
5 HSE 6 months 17 17
6 QC NDT & Inspector 6 months 13 13
7 POSE 6 months 1 1
8 PCON 6 months 6 6
9 Painting and Sandblasting 2 months (OJT) 43 43
10 Rigging and Scaffolding 6 months 279 279
11 Engineering 2 months 7 7
12 Supervisory Management 2.5 months 62 62
Total 1,066 931
Karimun Yard. Covering all fields of Health

COUNTRY REPORT
Saipem activities, the courses were

organised and run by qualified teachers The PT Saipem Indonesia Health Unit
from Saipem Corporate and skilled is deeply involved in the prevention of
trainers from production departments. cardiovascular pathologies, malaria and
Several people were recruited directly as sexually transmitted diseases, as well as
a result of the courses. their root causes. Several actions have
been taken such as the promotion of a
English Course for Employees healthy lifestyle for all workers through
Business and everyday communication training, posters, bulletins, email alerts,
are carried out in English, especially health talks, smoking programmes, food
in Saipem, which has a multicultural hygiene and blood donation.
workforce. Employees must have the
ability to use English in order to avoid Health System in Karimun
creating misunderstandings in their Health Risk Assessment takes into
everyday activities. This is why, in consideration all professional roles,
2012, three beginner courses and one including those in which local employees
pre-intermediate course commenced. will constitute the bulk of the workforce.
26
In this way all workers will be informed Safety
and instructed on how to avoid various
work related hazards, such as noise or PTSI bases its HSE Management System
welding fumes, encountered in their on OHSAS 18001 and ISO 14001
daily activity. International Standards, local regulations
The Clinic located in the Karimun Yard and Saipem Corporate Standards. The
is used for day to day care and for PTSI management system, which has
emergencies. It is also used for health been certified by BV Indonesia, a third
promotion programmes targeted at all party certification body, is based on:
employees, both local and expatriate. It • A HSE policy.
includes an emergency room for minor • Identification of occupational health
and serious cases, a stabilisation ward, & safety risks and environmental
modern medical equipment, an X-ray impacts.
device and its own laboratory. • Legal and other HSE requirements.
All local employees are examined in • Objectives, targets and programmes
the Clinic to ascertain their fitness for that ensure continual improvements.
duty and to monitor their health on an • Management activities that control
ongoing basis. In addition, they may HSE risks.
address their health-related concerns to • Engineering activities to ensure
clinic personnel, who can then propose design decisions are taken with due
solutions to preserve the health and consideration for HSE risks.
working ability of patients according to • A HSE design assurance model, with
their specific activities. the HSE department fully integrated
into the engineering disciplines.
The Cardiovascular Disease Prevention • Operational controls.
Programme is accessible to anyone who • Monitoring of HSE performance.
wants to be examined, in particular • Continual reviews, assessments and
employees whose medical profile is improvements of the system.
classified as ‘at-risk’ according to best
international preventive practices or In addition, the following key initiatives
recommendations proposed by the are now in place, making PTSI
doctor. management system more robust:
• Periodic auditing and legal
The Health function organises and holds compliance.
periodical first aid training sessions • Documentation of all PTSI associated
open to everyone. These provide risks through a risk log.
the opportunity to exercise first aid • Internal ‘HSE in design’ training for
techniques and skills which can be all HSE staff (to increase HSE skills in
useful not only at work but also in design).
everybody’s private life. • Health Risk Assessment activities.
Construction
activity in
Karimun Yard
27
Safety statistics
2010 2011 2012 2013
Man Hours Worked 7,867,984 7,143,366 6,465,306 9,298,621
Fatalities 0 0 0 0
LTIFR 0.00 0.14 0.00 0.11
TRIFR 1.02 2.66 2.32 1.72
Leading indicators
2010 2011 2012 2013
HSE training hours 13,296 25,273 18,126 15,626
SHOC Cards 7,409 14,783 8,474 10,206
Tool Box Talks 15,017 22,290 13,774 11,685
HSE meetings 1,486 3,395 328 309
Job Safety Analysis 0 12,713 3,563 1,875
HSE Inspections 5,956 12,389 3,642 2,516
The Karimun Yard achieved an according to the nature of the project

important safety record in 2010: (i.e. FEED, EPCI, T&I). Involvement
8,520,624 man hours (1,160 days) and cooperation with the Client’s
LTI free. This impressive safety record representatives from the outset ensures
was made possible by the Project fairness throughout project execution.
Director’s guidance and directions, Site Saipem also seeks feedback from Clients
Management’s support, a proactive during both commercial and project
Safety performance, and active support execution phases to asses satisfaction
from all levels of the Karimun Yard levels conducive to preserving good
project, together with the Contractor’s working relations.
contribution to maintaining a safe
workplace. Customer Satisfaction Feedback
During 2011, the Gajah Baru Project
Safety performance received Customer Satisfaction Feedback
The PTSI safety performance system for the successful completion of the
COUNTRY REPORT
measures not only reactive indicators Wellhead Platform (GBWP), the Central
but also how proactive the operational Processing Platform (GBCPP) and the
sites are in terms of the implementation Bridge and Pipeline Project. GBWP
of safety standards. and GBCPP projects received positive
feedbacks from the Client, Premier Oil
Natuna Sea BV (PONSBV). In general, the
CLIENTS Client appreciated the service in terms of
overall management. Specifically, Project
Saipem is working in Indonesia for Organisation received 7 very good and
a number of Clients in the Oil&Gas 5 good feedback questionnaires, but
industry such as Eni, Total, BP and Contract Management, Engineering and
ConocoPhillips. These Oil&Gas Planning also received positive scores.
companies are operating and producing Operational Performance received a
in Indonesia under Production Sharing very good score but received only a
Contracts (PSC) with the government. fair score with regard to management
Saipem maintains open and professional of the offshore installation fleet.
relations with all its Clients. These vary Procurement and Quality were valued
28
very positively. In particular, very good launched the Indonesia Local Content
marks were received for quality control Qualification programme for the
and for internal and external auditing. scouting, inspection and qualification of
Finally, Health, Safety & Environment Indonesian vendors. The objective was
management was valued very positively, to maximise the number of qualified
with 8 very good and 5 good feedback local vendors and identify the level of
questionnaires received. As a whole, the Local Content of each one involved with
Client was satisfied, and no negative a view to increasing the percentage of
feedback was received. local product and service procurement.
The programme, implemented for

SUPPLIERS the first time in a formal manner
in Indonesia, was developed in
& SUBCONTRACTORS consideration of local regulations as well
as future procurement requirements
In August 2012, PT Saipem Indonesia for projects in the area. 103 vendors
(PTSI), with the coordination of Saipem were involved, 76 of whom were new
Corporate Vendor Management entries and 27 previously qualified but
(VEMI) and the China Sourcing Centre, under consideration for further supplies
Focus on
Gajah Baru Project
Gajah Baru is an important expertise and building the local technical specifications, including
project carried out for Premier technical knowledge base. some critical equipment, such as
Oil Natuna Sea BV. It comprises ICS, Switchgears and E&I cables,
the development of Gajah Baru, to say nothing of the supply of
Naga and Iguana fields. The p
pressure vessels, a glycol package,
project consists of the engineering, a produced water treatment
procurement, construction and p
package, a condensate treatment
installation of a Wheel Head p
package, and mobilisation of
Platform and a Control Production b
bunkering vessels for offshore
Platform as well as pipeline laying. in
installations.
PT Saipem Indonesia, in consortium
with SMOE Pte Ltd, was awarded A Environmental Baseline Study
An
the contract in May 2009. w conducted to analyse the
was
Operations started in August 2009 p
physical, biological, chemical and
and were completed in 2011. so
socio-economic characteristics of
th project area. The study, which
the
Among the fabrication services in
included a site survey, was designed
for the facilities carried out in to record the initial environmental
Indonesia (Batam Yard), works s
status of the intended project site
included fabrication of two p
prior to any on-site operation,
jackets, two topsides, the pipeline e
exploratory programme, field
and the pipeline end manifolds. d
development or plant construction.
Approximately 250 employees,
including 160 engineering T
The results of this Environmental
specialists, were mobilised for B
Baseline Study were combined
this project. 86% of the overall w
with those emerging from the
resources were Indonesian while C
Client’s Environmental Impact
for the engineering team the A
Assessment Study (AMDAL) with a
percentage of Indonesians reached v
view to proposing and identifying
90%. In addition, 61 young The procurement of domestic all preventive and continuous
graduates were involved in the products and services was monitoring measures.
project, thereby sharing Saipem’s maximised along with the project’s
29
Meeting in the
Jakarta office
of products and services. The potential business priority and complexity of the
contribution of Local Content was qualification process. The outcome of
identified through 148 questionnaires the inspections, run by a VEMI specialist
((one per product/service), as required by and representatives of the Engineering,
Indonesian law. Specifically, 34 vendors Procurement, Post-Order, HSE and
were identified, selected and inspected Sustainability departments of PTSI, led
in Jakarta, Batam and Surabaya, to an evaluation of the vendor’s capacity
in consideration of the strategic to satisfy Saipem’s requirements.
value of their products and services, Each vendor was thus scored as
‘Opportunity’, ‘To be Monitored’ or
‘Risky’. The information gathered with
COUNTRY REPORT
Total ordered by local and non-local vendors the questionnaires and onsite audits
(%) was processed to draw up a matrix of
products and services with a major,
100
moderate and minor contribution of
Local Content.
80
Furthermore, a benchmarking process

60 was developed for vendors based on
ten requisites evaluated during the
40 inspections. It enabled each vendor to
be analysed in relation to the average
20 level of each requisite for all vendors
taken into consideration. The score
was then used to propose areas for
improvement and action in relation to
2011 2012 2013
a vendor’s capacity, with the objective
Local Non-Local of ensuring sustainable development
30
both of business and of the local undergo a qualification process and, if
economy as a whole. This work successful, are placed in the Company’s
in Indonesia aims to maximise the database and used systematically.
reliability of local vendors, and while To facilitate the growth of existing
it may incur a cost in the short term, businesses and provide incentives
it should yield fruit over a longer time for others, Saipem is also developing
period. In 2014, 1,092 local vendors medium- to long-term procurement
were registered in the Saipem Vendor relations by entering into multi-year
Database. agreements that should allow local
vendors to predict future volumes with
As regards procurement activities for a greater degree of certainty. The first
the Karimun Fabrication Yard, Saipem framework agreements were issued
places a lot of emphasis on Local in 2011 and in 2013 about 60 were
Content. Island vendors are used as in place. These also include facilitated
much as possible to supply those goods payment terms for newly registered
and services which are available locally. companies. So far this strategy has
With a view to supporting the local allowed several vendors to expand, and
economy and stimulating industrial it is reasonable to presume that it will
development, Saipem has put no small lead in the future to the opening of
amount of effort into optimising local new businesses linked with Saipem’s
vendor involvement. While it is not local operations.
yet possible to procure locally those
products classified as strategic for
Saipem, the last few years have seen a
noteworthy increase in the involvement
ENVIRONMENTAL
of local vendors and in their turnover PERFORMANCE
for goods and services supplied. In
2011, for example, volumes almost In accordance with Saipem Corporate
tripled with the placing of over 400 standards and local environmental
orders with vendors located in Karimun. laws, environmental management is
The impact of this was noteworthy, targeted at pollution prevention and
especially if one considers the Island’s the mitigation of impacts associated
limited industrial base and the rather with operational activities. A series
small size of the local population of procedures has been implemented
(about 200,000 people). Thanks to this concerning all aspects of environmental
constant commitment to Local Content management, namely, identification
on Saipem’s part, at present the most and assessment of the environmental
important general and maintenance aspects connected with the entire
services are procured on the Island, as life cycle of projects; environmental
are some consumable warehouse goods performance monitoring and reporting;
and most fabrication gases. All vendors and the definition of environmental
of interest to the Fabrication Yard management plans.
Energy Consumption
2010 2011 2012 2013
Diesel (toe) 6,857 6,621 5,028 6,098
Gasoline (toe) 47 - 0.28 128
Diesel Marine Oil (toe) 19,277 1,027 3,615 13,595
Electricity (toe) 193 694 1,007 590
Fuel Oil (toe) 20 - - -
Total (toe) 26,394 8,341 9,650 20,411
31
Installation of solar panels total amount of energy saved when the
in the Karimun Yard solar panels are in operation is 422 kWh/
day. Considering that Karimun enjoys
In 2012, 49 solar water heater (SWH) 230 days of sunshine per year, annual
panels were installed in the Saipem energy savings amount to 97,000 kWh,
Karimun Yard. The panel system uses which is a reduction of approximately 20
natural convection dynamics, known tonnes of CO2 emissions.
as the passive system. This means that
pumps are not required for cold water to Green Building Concept -
flow from the storage tank to the panel, Greenship Building
where it is heated by the sun. One of the
problems with this system is that there PT Saipem Indonesia has just moved into
is no hot water during rainy days, but a new office building, the Alamanda
the device has been modified to switch Tower, located in South Jakarta. The
automatically to electrical support. The Alamanda Tower is a GREENSHIP
Energy use Waste production

(toe) (tonne)
25,000 5,000
20,000 4,000
15,000 3,000
10,000 2,000
5,000 1,000
2010 2011 2012 2013 2010 2011 2012 2013

Electric Internal Other Hazardous Non-hazardous
Power Generator Combustion
Engine
Emissions Water
(thousand m3)
COUNTRY REPORT
1,500 240
1,200
180
900
120
600
60
300
2010 2011 2012 2013 2010 2011 2012 2013

GHG SO2 NOX Water Waste Water
(ktonne CO2eq) (tonne) (tonne) Consumption Discharged
Note. The increase in environmental performance in 2013 is mainly associated with the presence of the Castoro 8 operating on the Ruby
T&I project.
32
Waste management (2013)
Hazardous Non-hazardous Total % total waste
Recycled (tonne) 1,726 3,200 4,926 71
Disposed of (tonne) 254 1,068 1,322 19
Incinerated (tonne) 479 250 729 10
Total (tonne) 2,459 4,518 6,977 100
Water use
2010 2011 2012 2013
General Services (m3) 68,863 72,809 113,811 217,473
Concrete Production (m3) 1,600 1,233 2,005 -
Hydrotesting (m3) - 156 - 2,000
Road Watering (m3) 7,410 3,345 3,000 -
Other (m3) 169 880 - 5,208 (a)
(a) Including domestic use and irrigation.
Spills
2010 2011 2012 2013
Less than 5 l (No.) 2 1 1 -
Between 5 and 100 l (No.) 1 2 1 2 (a)
More than 100 l (No.) - - - -
(a) Note. The classification changed in 2013: 2 spills of between 10 and 160 litres were recorded.
Registered Project which falls under ensure the ability to turn off lighting
Green Building Council Indonesia’s automatically when there is no activity
Green Building Certification process. in the area; calculate energy efficiency
The building is one of several new measures with Energy Modelling
structures in line for a Gold rating for Software to achieve basic efficiency
its Green Concept. However, certain due to the properties of the building
parameters must be complied with, and envelope; install artificial lighting;
the more parameters met, the higher the guarantee vertical transportation and
rating. These parameters are as follows. COP; encourage and improve natural
lighting in the building and ventilation
Appropriate Site Development in several areas without the need
Maximise the open green area and for AC; ensure due consideration for
provide as big a rainwater absorption climate change.
area as possible; ensure open
accessibility for pedestrians and bicycle Water Conservation
parking; guarantee at least 40% Further reduce water use; install
vegetation (softscape) out of a total land water fixtures to maximise water use
area of 12,000 m2. efficiency; ensure water recycling to
achieve efficient use with regards to
Energy Efficiency and Conservation flushing, irrigation, make-up water for
Install lighting systems and other the cooling tower and landscaping;
utilities to control consumption; encourage the use of alternative water
33
Semac 1 on
the Karimun
landscape
COUNTRY REPORT
resources, rainwater harvesting and modular design; guarantee that at least

water efficient landscaping. 80% of materials are from Indonesia.
Resource Materials and Cycle Indoor Health and Comfort

Ensure that chlorofluorocarbons (CFCs) Design all rooms to allow inflows of
and halons are not used; make sure that outside air; control environmental
environmental products manufactured tobacco smoke; use low volatility
using ISO 14001 certified materials organic compounds; make sure that at
account for at least 30% of total least 75% of the net lettable area has a
materials costs; encourage non-ODS direct view of the outside; ensure visual
usage; use wood materials in accordance comfort using T 5 and install illumination
with Indonesian government regulations in accordance with SNI 03-6197-2000;
and that are LES or FSC-certified; use thermal comfort: air.
34
Environmental and Social surveys
Since 2010, environmental,

social, economic and cultural
surveys have been conducted
on a six-monthly basis around
the Saipem Karimun Fabrication
Yard. The results should provide
input for Saipem in its endeavour
to build closer ties with the local
population in order to keep to a
minimum any negative impacts
arising out of operations and to
maximise the positive effects for
the host communities. The survey
is carried out by an independent
organisation on a sample of heads
of households in the Pangke Village.
It encompasses several topics
such as demographics, economic
situation, employment, educational
level, culture and the perception of potential resource of the area is of available employment and
Saipem’s business activities. the Pelawan Beach, a resort for business opportunities; direct
domestic and international tourists. and indirect impacts from tourist
With a total population of 6,059 related construction on Pelawan
(1,248 families) in an area of The survey conducted in 2011 Beach; and the effectiveness
1,960 ha, Pangke Village is part of focused on four sub units of of the managerial approach
the Meral District in the Karimun Pangke Village and involved 103 in maximising employment
Regency. Other industries were households. Its purpose was and business opportunities for
already active in the village before to identify and evaluate local the local community. All the
the construction of the Yard, worker participation, as well as information collected goes
including granite mining and business opportunities arising to update a database to aid
smelting. Most of the villagers from Saipem’s subcontractors; the decision-making processes
are manual workers or labourers, increase in community wellbeing; within Saipem. In general, the
with additional livelihoods coming potential social conflict between results point towards the need
from fisheries, some of which have local people and Saipem resulting to continue activities on Local
been run for generations. Another from competition in the utilisation Content as per the Company’s
strategy, boost information flows
to
towards local communities and
re
reinforce cooperation with local
su
subcontractors.
Th survey was updated in 2012 by

The
in
interviewing 100 respondents of 4
R
RWs (an informal administrative sub
un of a village) in Pangke Village.
unit
Co
Compared to the previous year, the
nu
number of local people working
fo subcontractors of PT Saipem
for
In
Indonesia Karimun Branch increased
by 9%. The survey confirmed the
im
importance of prioritising local
em
employment, promoting the
en
entrepreneurial spirit of villagers
an in general supporting social
and
em
empowerment programmes.
35
Saipem Indonesia But the results are still way below
Shuttle Bus Programme expectations.
Bad air quality causes respiratory
Jakarta is a city with a metropolitan diseases to millions of residents with
area populated by 28 million people. an estimated US$ 3.8 million per year
It has 9.9 million cars, motorcycles, increase in health care costs.
trucks and other vehicles that invade PT Saipem Indonesia launched the
the capital’s streets every workday from Company Shuttle Bus Programme for
morning till late. its local employees as an additional
The number of vehicles on the road in employee benefit.
Jakarta has doubled in the previous 10 The programme aims to reduce the use
years while roads have grown by only of vehicles travelling to and from the
10%. office.
A study predicts that traffic will grind At the beginning of the Programme,
to a complete halt by 2014 if nothing is preliminary routes will consist of 7
done to improve this situation. lines covering most of Jakarta and the
Moreover, the level of emissions is surrounding areas.
growing fast. As is known, Jakarta has Other lines will be developed
the highest pollution index in Asia. according to demand. Every month
each passenger will pay around US$
The government is trying to reduce 15, much cheaper than travelling
the level of emissions with special by car.
initiatives, such as the fuel conversion The Shuttle Bus operates as follows:
programme, the vehicles emission 5 days a week (Monday to Friday).
standard programme, and so on. Scheduled time of departure from each
meeting point based on the distances
from the office.
A Saipem Bus Shelter will be located
on the north side of the PT Saipem
Indonesia office.
So far almost 100 Saipem employees
(25%) have joined up, leaving their cars
and motorbikes at home.
It is expected that the number of
participants will increase by the end of
this year.
The table below summarises the
environmental benefits of this
COUNTRY REPORT
important initiative.
Environmental benefits of the Shuttle Bus Programme

Cars Motorcycles Buses Reduction in
(50 units) (50 units) (5 units) emissions from
(kg/year) (kg/year) (kg/year) use of Shuttle Bus
NOx 1,135 135 638 -50%
CH4 35 90 4 -97%
VOC 2,730 1,843 123 -97%
CO 23,506 8,976 549 -98%
N2O 3 1 2 -46%
CO2 135,787 54,315 47,334 -75%
GHG 136,516 55,501 47,600 -75%
36
37
LOCAL COMMUNITIES construction of the Fabrication Yard
(see page 22).
The purpose of the SPS was two-fold:
Stakeholder Perception to improve Saipem’s understanding
Survey in Karimun Island of local stakeholder perceptions and
expectations; to validate the outcomes
A Stakeholder Perception Survey (SPS) (long-term impacts identified in the
was carried out in Karimun Island as SELCE-SROI study) and understand the
part of a study to quantify the social value of the changes in society that
value created by Saipem with the stakeholders have experienced due to
the construction of the Yard.
Distribution of SPS respondents by functional group
The SPS was conducted on a sample
2% 1% of 142 respondents from different
5%
1%
14% groups of local stakeholders, such
2%
as Saipem employees, vendors and
2%
subcontractors, local and national
20%
authorities, governmental bodies,
local organisations, local institutions,
media, fishermen, and citizens from
7% neighbouring communities.
42%
4%
The methodology used to design the
SPS was based on five sequential steps:
Pangke
Employees Suppliers
villagers set objectives, map stakeholders, design
Other local the survey, execute the survey, analyse
Fishermen Meral villagers
communities the survey response. The outcomes
National
Local authorities Local of the social value created were
government institutions grouped into 22 dimensions which
Local organisation Media in turn were broken down into
Local stakeholder perceptions by domain of societal progress
5 Enterprise
development
COUNTRY REPORT
Community Governance
development
Infrastructure
Importance to stakeholder
Ecosystems development
Quality of life
1
1 3 5
Appreciation of Saipem’s contribution
38
domains of social progress, namely: related with immigrant workers and
enterprise development, infrastructure the increase in competition among
development, governance, community local enterprises;
development, quality of life and the • the condition of ecosystems was
condition of ecosystems. the lowest rated domain, with
Via 40 statements and a five-range only average scoring in terms of
scale, the stakeholders were asked to appreciation and importance.
express how they appreciate Saipem’s This was due to the perception of
contribution in the various dimensions increased risks from road traffic and
identified and how important they associated noise and pollution;
consider each dimension. The SPS • some stakeholders, especially
results indicated that Saipem’s local organisations, the media and
contribution to social value creation some villagers, were more critical.
is appreciated by stakeholders, albeit They did not recognise Saipem’s
with some areas requiring further significant contribution to community
improvement. Results of the SPS development and to the improved
showed that all domains of social quality of life, and focused instead
progress appear in the ‘Strengths’ on the potential impact of migrant
quadrant (high appreciation, high workers on their personal security
importance). Main key findings were: and lifestyle, and also on risks
• stakeholders unanimously recognised associated with increased road traffic.
Saipem’s contribution to improved
working conditions and core HSE Execution of this SPS has helped
values, hence the highest rating for Saipem to:
governance; • understand and compare the social
• enterprise development and quality value actually created with the
of life, where the social value created social value as perceived by local
is highest, ranked only 3rd and stakeholders;
5th, meaning that the respondents • understand stakeholder perceptions
only partially recognised Saipem’s as well as key critical aspects in
contribution to the creation of order to define clear objectives to
business opportunities and to the facilitate leveraging of areas highly
improvement of the quality of life appreciated by stakeholders and
in the community (i.e. education, close gaps in perceptions so as
the health system, etc.). In addition, to meet local expectations more
stakeholders identified possible risks effectively.
Palawan Beach
39
Community
initiatives
P
Pangke Village Schools: housekeeping.
an Investment ‘Today’ for A second phase of the project aims
Our Recruitment ‘Tomorrow’ to boost school quality by upgrading
existing facilities, enhancing the level of
PTSI Karimun Branch has launched an instruction and education and launching
initiative mainly focused on collaboration a safety campaign for Elementary, Junior
with local schools, increasing their High and Senior High Schools, as well as
organisation, quality of education the local university. In 2011, the project
and facilities. The aim is to improve principally concerned the upgrading of
local education, increase opportunity several facilities as well as training and
for future local employment, develop awareness campaigns in the schools.
local human resources and generate These focused mainly on safety and
local entrepreneurship. The planned road accidents. Saipem also provided
actions have been shared with the local the elementary school, the junior high
authorities, in particular the Educational school and the senior high school with
Department of Karimun, and have new technology, including projectors
received positive feedback. and personal computers. In 2012,
COUNTRY REPORT
One of the targets is the vocational Saipem arranged for the refurbishment
school, especially the welder class. of the canteen (providing tables and
A rapid assessment of the current chairs and installing kitchen equipment)
vocational school graduation has been and the soccer field for the Senior High
performed. Saipem personnel worked in School.
association with the Technical Institute The ceremony to launch the project
(SMK1) to launch a new course for pipe and cooperation with local institutions
fitters (the first class had 27 pupils). was held in June 2011 at the State
The Technical Institute was provided Junior High School in Meral district.
with modern welding and pipefitting A PT Saipem Indonesia Karimun Branch
equipment. The initial focus was on (SIKB) delegation, including most of
increasing safety awareness among all the Top Management from the Yard,
students, for whom safety awareness met the Karimun Regent ‘Bupati’ and
training was organised. The training the school principal and teaching staff.
materials consisted in introducing A welcoming ceremony was conducted
proper PPE, working safely, physical by the school pupils accompanied by
welding and chemical hazards and ‘kompang’ (drums) and continued with
40
Ambat English Course
the local dance ‘persembahan’.
On May 2, 2013, National Educational From the recruitment process, it
Day of the Republic of Indonesia, the emerged that most local people failed
SIKB Branch Manager presented the the interview due to a lack of English.
authorities with the main results of the The Saipem Sustainability Team thus
initiative during an official ceremony. undertook an initiative to encourage
This programme is both short-term (to the setting up of a course for people
allow employees to come from other in Pangke Village who wish to develop
regions to relocate with their families their English language skills.
to Karimun Island) and medium- to After 3 months of preparation, the
long-term (to support local schools in English Course was launched on
their endeavour to develop young and February 2, 2012 in the Multipurpose
dedicated people to meet Saipem’s Building – Ambat Hamlet Pangke
business requirements). Village. This programme is free of
charge for the participants from the
Road Safety Campaign community. 4 volunteers from SIKB run
the courses. Saipem also provided the
for schools in Karimun conversation manual for each student
A ‘Road Safety Campaign’ was launched and is monitoring the programme’s
in 2012 to disseminate awareness effectiveness.
among students of the risks associated
with traffic and to teach them how to Collaboration with
behave safely on the road. The first part, the ‘Mechanical Engineering’
held in May, consisted in the installation Faculty in the University
of road signs, and the laying of 2
packets of zebra crossing and 2 packets of Karimun
of shock ribbon at the front of the Since February 2012, Saipem has been
elementary school and the junior high providing an opportunity to all students
school in the Pangke Village. of the Faculty of Engineering of the
The second part, held in September University of Karimun to view fabrication
2012, focused on an awareness activities with their own eyes, especially
campaign on road safety delivered to the technologies used. So far, about
the pupils of both schools by the SIKB 288 students have had the opportunity
HSE Team. In addition, a School Security to experience activities and life in the
Patrol was set up as a group of students Fabrication Yard.
selected to control traffic during peak
hours in front of the schools and to help Health and hygiene
students cross the streets on their way event in Jakarta
to school. A ceremony was organised
during which 12 sets of uniforms were On October 20, 2012, PT Saipem
distributed for the school security patrol Indonesia (PTSI) held a sustainability
of the junior high school. The ceremony initiative called ‘Food Hygiene
saw the participation of the Head of Awareness’ (Peningkatan Kesadaran
Transportation Office of Karimun, the Kesehatan Pangan programme). The
Secretary of the Pangke Village Office, event was attended by small shop
and the Principals and teachers of the owners and stallholders operating
schools involved. ‘This initiative had a near the Setiabudi building complex
really positive effect on students’, said at Kuningan, South Jakarta, where the
Mr. Cendra, Head of the Transportation Saipem Indonesia office was located,
Office. ‘While training in road safety and sometimes used by PTSI employees
they increased their courage and skills. for their lunch break. With this activity,
This is really positive because they can PTSI aimed to raise awareness of food
now help their friends in school and can handling and hygiene. The cleanliness
spread the concept of safety throughout and health of the food handler is very
society’. important because it can affect the
41
quality of the food itself. Diseases first composting plant in the village of
are transmitted more easily through Pangke. The ceremony was attended
unhealthy food handling, even when the by the Head of Agriculture & Forestry
food is in good condition. Consumers or Office of Karimun Regency, the Head
sellers are often unaware of the danger of Environmental Office of Karimun
of contamination and exposure to Regency, the Head of Pangke Village,
bacteria from improper handling. and the entire community of West
The event, coordinated by the PTSI Pangke Village.
Sustainability Facilitator and the Health
Department, was initiated by the Master In the framework of the collaboration
of Ceremonies and safety induction between SIKB and the community, a
was followed by a safety moment. The waste milling machine was installed
PT Saipem Indonesia QHSE Manager in the village, with a capacity to utilise
gave a welcome to the participants and daily organic waste generated both by
encouraged them to take measures the Company and the local community.
to improve food hygiene. The first SIKB involved 25 families who attended
session was held by the Saipem doctor a training session performed by the
who began with a video made at the Agriculture Office.
workplaces of the small shop owners The Agriculture Office of Karimun
and stallholders. It proceeded with a Regency demonstrated its appreciation
discussion of how to process, store for this initiative and took the
and present meals in a more healthy opportunity to support the programme.
way and how disease can be caused Indeed, up to a trainer will spread the
and spread by unhealthy food. The word about composting to small villages
participants were particularly keen to around Karimun Island.
learn about the effects of food not The Agricultural Office plans to provide
being processed in the proper manner. seeds to the families involved and
In the second session it was explained encourages the local community to
to participants how their profits could have a ‘self-growing organic plant’
increase if they started to pay more programme.
attention to attracting consumers
by changing their food processing Finally, a programme for waste recycling
methods. The sustainability facilitator also to produce compost has the aim of
addressed some issues that might be of increasing environmental awareness and
interest to consumers. The last part of creating small entrepreneurship in West
the session was given over to questions Pangke Village.
and answers under the guidance of the
facilitator. Some suggestions were made Beach Cleaning Campaign
COUNTRY REPORT
and assistance was requested on how to

solve a drain blockage problem. Together with the local NGO ‘Karimun
The event was livened up by games Hijau’ (‘Karimun goes green’) Saipem
and door prizes brought by the Master organised a cleaning campaign on the
of Ceremonies. The shop owners and Pelawan beach, Kecamatan Meral, on
stallholders acknowledged that their June 17, 2012.
participation had been useful for their Around 200 Saipem employees
daily activities. participated along with local
communities.
Celebrating World The purpose of this activity was not
Environment Day - simply to clean the beach but also
to educate people to care about the
Composting Plant environment.
Inauguration Twelve waste bins were installed along
the beach as was a big billboard with
On June 8, 2013, PT Saipem Indonesia a message inviting people to keep the
Karimun Branch (SIKB) opened the beach clean and differentiate waste.
42
FUTURE CHALLENGES
For Saipem, Indonesia represents an An important challenge for the Oil&Gas
important opportunity as regards the industry in general and for Saipem in
potential investments needed in the particular will be the increase of Local
coming years to sustain economic Content in the framework of the new
growth. All of Saipem’s business units regulation under approval from the new
can be involved in the development government. To achieve the increasing
of the Oil&Gas market in the country. demands for implementation of Local
The broadness of this spectrum of Content, it is paramount to engage
opportunities is the main challenge the value chain members and create
the Company faces. Saipem therefore effective cooperation along the entire
needs to be prepared both technically EPC chain, with partners, suppliers and
and organisationally to face these subcontractors. Saipem is ready to meet
complexities, in such a way as to this challenge thanks to its longstanding
execute projects with the efficiency and presence and to the investments made
sustainability that the market demands. in the country. The development of
The key to ensuring the success of the Company’s human resources and
a sustainable business lies in the its young talents, combined with the
professional growth of local resources contribution of its more experienced
and the strengthening of relations with personnel, is the foundation on which
partners and local vendors. Saipem bases its prospects for success.
‘We go where no
one else goes’
43
ACRONYMS
EPIC NGO SPS
Engineering, Procurement, Non-Governmental Stakeholder Perception Survey
Installation and Construction Organisation
SROI
EPC PSC Social Return On Investment
COUNTRY REPORT
Engineering, Procurement and Production Sharing Contract

Construction T&I
PTSI Transportation and
FEED PT Saipem Indonesia Installation
Front End Engineering Design
SELCE TRIFR
GDP Saipem Externalities Local Total Recordable Incidents
Gross Domestic Product Content Evaluation Frequency Rate
HSE SHOC USD

Health, Safety and Safety Hazard Observation United States Dollar
Environment Card
YG
LTIFR SIKB Young Graduate
Lost Time Injury Frequency PT Saipem Indonesia Karimun
Rate Branch
44
Headquarters: San Donato Milanese (Milan), Italy
Via Martiri di Cefalonia, 67
Branches:
Cortemaggiore (PC) - Via Enrico Mattei, 20
SAIPEM Società per Azioni

Capital stock: €441,410,900 fully paid
Tax identification number and Milan Companies’ Register
No. 00825790157
Feedback
What you think of this Country Report matters to us.
As we are constantly striving to improve our reporting, we would very
much welcome your feedback. We will also be pleased to answer any
questions you may have.
Contact us at: [email protected]
Special thanks to all those who contributed to the drafting of this report.
Website: www.saipem.com
Operator: +39-025201
Translation and Proofreading: TRAD Dept. - Saipem SpA

Design, layout and supervision: Studio Joly Srl - Rome - Italy
Printing: Impronta Grafica - Cantù (Como) - Italy
This document is printed on pure Fedrigoni Group FSC certified Elemental

Chlorine Free (ECF) cellulose paper, with a high content of selected
recycled material. The paper has the European mark of ecological quality
Ecolabel (Ref. No. IT/011/04), is produced at an ISO 14001 certified facility
and is fully recyclable.
Società per Azioni
Via Martiri di Cefalonia, 67
20097 San Donato Milanese (Milan) - Italy
Phone +39.02.5201 - Fax +39.02.520.54295
www.saipem.com

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COUNTRY SUSTAINABILITY REPORT

We consider business sustainability to be We publish these Reports on our

It is hard to talk about sustainability in a country where every

technological and organisational challenge of a yard with the presence of a community

Saipem has been operating in Indonesia 453 million USD

PT Saipem Indonesia Karimun Branch (SIKB) considers sustainability as a means

Saipem is an international group with provision of engineering, procurement,

Saipem operates in the Engineering

Operating Engineering Yards and Main Other Main Area

AMERICAS 2011 2012 2013

CENTRAL & SOUTH AFRICA 2011 2012 2013 NORTH AFRICA

Investments (€ million) 16 8 19 Investments (€ million)

Workforce (units) 8,462 7,586 8,563 Workforce (units)

Local Workforce (% of total) 62 64 58 Local Workforce (% of total)

Energy consumption (ktoe) 107 84 112 Energy consumption (ktoe)

Additional data for investments

REST OF ASIA & OCEANIA 2011 2012 2013

2011 2012 2013 MIDDLE EAST 2011 2012 2013

ECONOMY Indonesia has been active in the Oil&Gas

Economic indicators (2012)

Energy data (2011)

Javanese are the largest ethnic group.

Social indicators (2013)

Tunggal Ika’ (‘Unity in Diversity’) reflects incredible biodiversity of animal and

Based on the 2012 population

Saipem has been operating in Indonesia PTSI is oriented mainly towards

Karimun Fabrication Yard

Construction of the new integration, fabrication of piping workshops, a fabrication

Karimun Yard general information

Estimated yearly production (Mt) 35,000

Marine Base and Load Out Quays

Name Start date End date Client Project description

& start-up assistance as well as offshore The PT Saipem Indonesia Karimun

Name Start date End date Client Project description

SUSTAINABILITY of ensuring dialogue and cooperation

Quantitative Results (cumulative 2011-2012)

Category Direct impacts Multipliers Total impact

Economic output 281 1.62x 453

quality of life and ecosystem tto 2 million

In accordance with Saipem’s Local In addition, Saipem needs to improve

2010 Saipem has been working on the

Number of Young Graduates (YG) (Jakarta and Karimun)

Karimun Training Centre The Training Centre will help develop

1 FCAW/SMAW Welding 10 weeks 333 258

Karimun Yard. Covering all fields of Health

Saipem activities, the courses were

The Karimun Yard achieved an according to the nature of the project

The programme, implemented for

Furthermore, a benchmarking process

Energy use Waste production

2010 2011 2012 2013 2010 2011 2012 2013

2010 2011 2012 2013 2010 2011 2012 2013

resources, rainwater harvesting and modular design; guarantee that at least

Resource Materials and Cycle Indoor Health and Comfort

Since 2010, environmental,

Th survey was updated in 2012 by

Environmental benefits of the Shuttle Bus Programme

Local stakeholder perceptions by domain of societal progress