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ENTERING THE NEW
millennium How Norwegian industry and commerce is preparing for the future
Developments in DNA technology Bayer succeeds with integrated systems ABB leads the way in software development Nauticus on Board: DNV’s new class service concept
ONTENTS
3 4 6
8
20
22 26 28
30 32
EDITORIAL
40
New Millennium, new opportunities
VIEWPOINT – 1
Shipowners and class societies praised as maritime claims fall
Tore Sandvold and the future for oil and gas
42
MANAGEMENT
44
12 14
46
COCA-COLA relies on DNV’s Due Diligence Audits
47
DNA technology
PUBLISHER AXEL SPRINGER insists on sustainable forests
The trace tool for oil reservoir management
48
NEWS
Nauticus on Board
50
LAST WORD
DNV launches its new classification system
16
VIEWPOINT – 2 BP Amoco’s Greg Coleman believes mergers and international expansion are key to the oil majors’ success
Software engineering smooths product manufacture
A NEW LEASE OF LIFE for ships at Sembawang
How Norske Shell operates in a global scenario
TECHNOLOGY
THE PATTERN OF RISK
Rolf Saether regrets political constraints on Norwegian Shipping
BAYER succeeds with integrated management systems
PORT MANAGEMENT Fremantle adopts risk management approach
DNV Forum is the corporate magazine of Det Norske Veritas. It is published for Det Norske Veritas by Corporate Communications N-1322 Høvik, Norway. Tel:+47 67 57 99 00. Fax:+47 67 57 91 60. HEAD OF CORPORATE COMMUNICATIONS
Tore Høifødt
EXECUTIVE TALK
EDITOR-IN-CHIEF
Stuart Brewer
SIX BUSINESS LEADERS
EDITORIAL CONSULTANT
foretell their industries’ future
R.Keith Evans
NAVION BUILDS BRIDGES
PICTURE EDITOR
between offshore and shipping
June Myklatun ADMINISTRATION
NUCLEAR POWER: Reassurance at Ignalina
Gro Huseby DESIGN
DRD DM, Reklame & Design as.
THE CRUISE INDUSTRY
Stens Trykkeri, Norway
Largest ships ever: … in the Western Caribbean … and in the booming Asia-Pacific market
34
ENVIRONMENTAL CARE distinguishes Mitsubishi Motors
36
SIX STEPS TO SUCCESS Cap Gemini’s management approach
38
COVER PHOTO
Dr Carll Goodpasture No responsibility is accepted by the publishers for statements made by authors, nor for attributable comment. Reproduction permitted with acknowledgement of source. Copyright Det Norske Veritas 2000 Det Norske Veritas is an autonomous, independent foundation with the objective of safeguarding life, property and the environment. The DNV organisation comprises 300 offices in 100 countries, with a total of 5,500 employees.
INFORMATION SECURITY How to protect a company’s most important asset
VISIT OUR WEBSITE www.dnv.com
EDITORIAL
New millennium, new opportunities You cannot know where you are going unless you first know where you are and where you have been. The same could be said of business management in industry and commerce. Learning the lessons of the past and applying them to the future is essential to progressive management wishing to maintain its company at the forefront of international business. Adaptability to change is vital, too, in a world of shifting market trends and rapid technological development. But though change is continuous, the injection of fresh ideas and new thinking is an essential response to each new challenge as it arises. In this special millennium issue of DNV FORUM, we have invited leading executives to forecast what the new century has in store for their respective industries, and what initiatives they are taking to meet the challenges ahead. In the industries that DNV itself serves, I can foresee continuing demands as they contemplate potential shortages of natural resources such as fuels and metals, or as they face environmental and climate change. In our experience, companies are looking for reliable, consistent services around the world. They trust DNV to provide the same levels of service, independence and expertise wherever they operate. Furnishing that service and know-how depends on our having the right employees and the most advanced technology - two aspects of our business on which we place the greatest emphasis. As we enter the new millennium, there is no doubt in my mind that, in our business, having a truly global strategy is vital - in terms of people, services, technology and infrastructure. Through applying new technology, expanding our business activities and developing in line with market demands, DNV is well-placed to serve clients worldwide in this new era of opportunity.
Tore Høifødt, Senior vice president
VIEWPOINT - 1
GAS
The future lies with
Norway is one of the world’s major oil producers, and now that its oil and gas industry has recently been bolstered by new framework conditions, many are wondering what the future will bring. Technological developments predict a rising demand for Norwegian gas.
A
ddressing the question of what the new century has in store for the Norwegian oil and gas industry, Tore Sandvold, director
general of the Oil and Gas Department, Ministry of Petroleum and Energy, gives careful thought. He listens, contemplates the question for a while and then formulates his considered reply. At 52, Tore Sandvold probably has more experience and knowledge of the Nor wegian oil industr y and oil policy than anyone else – including the many cabinet ministers to whom he has reported. Norway’s oil history essentially started in the early 1970s. Sandvold’s career in the ministries started at around the same time. He knows the industry’s history, and can evaluate its future.
A competitive arena ‘When the first oil companies started to look at Norway’s continental shelf in the 1960s, we had, naturally enough, no Norwegian oil expertise. American and, after a while, French, oil companies were the most important at that time. Now there are around 20 foreign
‘Our gas resources will be extremely valuable in time. We’re close to the
oil companies actively involved on the Norwegian shelf,’ he says. ‘In the meantime, Norwegian companies have developed a unique
market and have already invested in
knowledge of the country’s continental shelf. Statoil and Norsk
an infrastructure that can be utilised
Hydro are the most important. This is as a result of their expertise combined with the Norwegian authorities’ framework conditions.
well into the future.’ - Tore Sandvold
They have taken it step by step over the years, and Statoil and Norsk Hydro have been very good at exploiting this. ‘But the Norwegian authorities want competition and diversity. Norway’s continental shelf is exposed to competition and we are dependent on attracting the best companies and the foremost expertise.’
Not all can survive Recent changes to the framework conditions that Sandvold is referring to include a reduction in royalties and carbon dioxide duties, alteration of licensing terms and the introduction of a technology programme.
Gas more valuable But he also points to technological developments to reduce
‘On a more optimistic note,’ he adds, ‘Norwegian gas
the costs of recovering oil and gas from the Norwegian
will be more valuable in the future than we realise.
continental shelf, when considering other, future changes.
Technological developments predict less use of oil but are positive for gas. Oil is primarily best for transport.
‘The Norwegian shelf is a high-cost area where the focus must always be on reducing costs,’ he says. ‘The simplest means of reducing costs is by developing new technological and organisational solutions. Large, complex, fixed installations will be replaced by smaller, subsea installations. Companies will find new ways of cooperation and organisation.’ Today, the order books of the large offshore yards
Now hybrid cars, in which electricity can replace some of the cars’ energy requirements, are being launched. ‘The situation is different for gas. It already has wideranging areas of application. Gas has a number of advantages. Other energy sources, such as oil and coal, pollute far more than gas. Questions about the future use of nuclear power, together with prognoses showing a rising demand for energy, are also positive for gas.’
along the Norwegian coast are almost empty. Sandvold does not believe that new development projects will solve all these yards’ many problems in the short term.
The fact that sales of Norwegian gas were lower than expected last year does not worry Sandvold. ‘That was mainly because some new customers have bought the
‘I don’t think all the major yards can continue as hitherto
minimum volume under their contracts, while possible
- at least not if they are to survive on orders from the
options have not been exercised. I don’t think this is a
Norwegian continental shelf alone. Future investment
trend. Our gas resources will be extremely valuable in
will be lower than we’ve been used to, and the type of
time. We have large reserves and new fields. We’re close
equipment will be different.’
to the market and have already invested in an infrastructure that can be utilised well into the future.’ Per Wiggo Richardsen Photo: Kim Larsen
MANAGEMENT
Tina helps internationalise
NORSKE SHELL Stavanger is the ‘oil capital’ of Norway. This is where the offshore oil industry started more than 30 years ago, with discovery of the Ekofisk oil field on the Norwegian Continental shelf. Stavanger is still the centre of the Norwegian offshore cluster, and here are the headquarters of Norske Shell - at Risavika, close to supply ship bases, the airport and heliport, and the city centre. And here managing director David Loughman explains how Shell operates in the international environment, and about its management philosophy . . . and Tina.
‘Some systems contain so many variables and so little hard data that they can be appreciated only through intuition and are best communicated through images and examples.’ -David Loughman
Photo: NTB/Gerard Fritz
MANAGEMENT
T
o the people of Shell, Tina is about scenarios, values, people, and resources. Tina - There Is No Alternative to the forces of global development and growth. Shell’s visions and values, and the company culture and future scenarios, are at the forefront of David Loughman’s thinking. ‘Scenarios assist in the understanding of complex situations, providing a useful tool for organisational learning. Some systems - the operation of refineries, for example - are well understood and can be represented by models. But others, especially those involving people, contain so many variables and so little hard data that they can be appreciated only through intuition and are best communicated through images and examples. Scenarios can be viewed as a linking tool, which integrate intuition and quantitative modelling to enhance our understanding of how a system works.’ All this, too, forms part of the company’s ‘Global Scenarios, 1998 - 2020’. ‘Two alternative models of the future help us think creatively about the future,’ says Loughman.
Says Loughman, ‘Shell group companies are finding new enthusiasm and new emphasis. The challenge of unleashing talent is engaging staff on levels, so as to respond to the customer emphasis inherent in a world of ‘‘people power’’. It is about management getting closer to the business. Getting dirt beneath the fingernails. It is about understanding how business is run and how your particular business functions. Based upon that knowledge, you can unleash talents, motivate people and transform the business.
‘The challenge of unleashing talent is engaging staff on all levels, so as to respond to the customer emphasis inherent in a world of people power.’
‘People are our most valued asset. This is the key. People are free to move across borders; we live in a highly competitive environment, where global companies are attracting employees from the same source. People know their value, where to be and how to move around. So Shell must be attractive and communicate that attractiveness. If our own employees do not have a clear view of this, how can we then attract others ? ‘ ‘‘Communicate to win’’ is a slogan we have used successfully. All of our employees have had a training programme. The objective is the process of alignment - to get the message across so that Shell can move in the right direction.’
- David Loughman Tina Above concentrates on unifying forces such as Globalisation, Liberalisation, Technology - and their interactions. Here Shell introduces The New Game, as existing institutions and organisations successfully adapt to the new and evolving Global business - all the way down complexities of Tina Above. ‘At all levels, from the local to Loughman explains, ‘Our Exploration and Production the international, people come together to solve problems, (E&P) business runs all the way down the organisation and, in the process, new strong institutions emerge, and old from the very top. Vertical business lines are strengthened, institutions are reconstructed to deal with Tina’s global and we have regional managers who are responsible for revolution.’ their business in their area. Every country is fully responsible
Transformation Recent years have seen mergers between oil majors, while smaller companies such as Norway’s Statoil struggle to become large enough to survive on a global scale. These are examples of Tina Above trends. Companies like Shell need to get best advantage from their global position in Tina Above. On the other hand Tina Below underscores Education, Wealth and Choice. Shell has labelled this People Power. ‘Significant increases in wealth, choice and education, and, for the first time in history, large numbers of people across the globe free to express their own values and to do so in unpredictable, unstructured and spontaneous ways. This flowering of diversity of individual choice undercuts authoritarianism and conformity, and appears to weaken many long-standing social institutions.’
for results, operations and management. The Shell executive in charge of the E&P business sits in the Hague in Holland. The management team consists of nine persons, seven men and two women, from six countries and three continents. ‘Top of our priorities is the issue of safety,’ says Loughman. ‘Getting offshore, talking about the safety issue. Stressing how management of the issue is crucial. There is a clear shift here from ‘‘trust me’’, the idea that we used to trust the safety and environment management of a company, to ‘‘show me’’, the systems, the competence and the efforts to manage risks. Accidents and mishaps are not acceptable.’ Magne A. Røe
BACK IN THE LAB: With a PhD. in computer-aided design and a background as professor of electronics, software engineering is close to the heart of ABB’s head of Group R&D and Technology Markus Bayegan.
TECHNOLOGY
Software development projects tend to take longer than expected, cost more than expected and often don’t function as expected. Most companies experience this, and nobody is proud of it. Manufacturing giant ABB has realised that the solution lies in software engineering.
Software Engineering SMOOTHS PRODUCT
MANUFACTURE R
ecognising that software has become increasingly important for ABB’s products, Markus Bayegan, head of R&D and Technology, states: ‘We could never maintain our leading position without also being leaders in software development.’ And action has been taken to ensure such leadership. Recently a corporate ABB contract was signed with Q-Labs, the DNV and Ericsson-owned software engineering company. Q-Labs is a supplier of professional services for large software organisations, and the concept of software engineering comprises the processes and tools a software development company needs to achieve its software quality, productivity and delivery objectives. ‘My acquaintance with Q-Labs started on a business flight,’ says Markus Bayegan. ‘It turned out that DNV’s Wiggo Smeby, who was sitting next to me, shared my interest in software quality matters.’ Their discussion resulted in several projects with Q-Labs, and now finally in a corporate contract. ABB has almost 15,000 people working with software, out of a total of 170,000 employees worldwide. Markus Bayegan has been with the company since its genesis in 1988, and for the last two he has been head of Group R&D and Technology. With a PhD. in computer-aided design and a background as professor of electronics, software engineering is very close to his heart.
‘Q-Labs helps our software developers bring out the best of the best,’ says Markus Bayegan.
Process understanding is essential ‘Software quality has always been an issue for ABB,’ he says, seeing several challenges coming up. With respect to software products the problem of inherited systems has to be solved and migration to new platforms must be easy. Today, a large proportion of the software from ABB is sold as part of the hardware delivery. ABB must move into selling more of its software as separate products, and still make sure that the software is a part of the overall system.
Software costs, quality and productivity must be increased and need for maintenance reduced. Project schedules and costs are not predictable enough, in Bayegan’s view. For this reason the ABB Software Process Initiative ASPI was recently started. Its goal is to create a common understanding of software development throughout the whole company, define common development processes where applicable, and introduce a system for learning from mistakes.
TECHNOLOGY
Q-Labs: Targeting excellence in software development The contract with Q-Labs aims for external support for software process improvement related to business goals. ‘We want to profit from the experience Q-Labs has built up in recent years in software process consulting for large, geographically diversified companies,’ Bayegan says. ‘Q-Labs staff work as a catalyst for us in transferring knowledge and contributing to lasting process improvements.’ ABB had experience of Q-Labs services before the corporate contract was signed. For eight years Q-Labs has supported ABB with software services originating from the Software Engineering Institute at Carnegie Mellon University. In 1999 Q-Labs supported five software development projects in four pilot ABB organisations, comprising 400 software developers. These covered software inspections and reviews, configuration management and software quality assurance. ‘In 2000 my goal is that experience gained from the pilot projects is collected and packaged as ‘‘best practice’’, and deployed to other software developing units in ABB,’ says Bayegan.
Software risk management He adds that risk in the development of systems and software products will be substantially reduced as ABB works on a defined process level. This means that processes must be widely shared throughout the company to reach high quality software project execution and product delivery. Not only will predictable results be achieved, but the complexity of multi-site development will be reduced as modern concepts of software engineering are implemented. ‘Our software engineering people need to have a culture of continuous improvement and that is what we’re working on now.’ Bayegan is introducing an ABB-wide framework for supporting and creating a common understanding of software development. ‘And we very much look forward to expanding our cooperation with Q-Labs.’ Eva Halvorsen Photo: Kim Larsen
Realising that software is becoming increasingly important for its clients, DNV is developing its services in line with clients’ needs. In 1998, DNV became co-owner of Q-Labs, which today is a joint venture between Ericsson and DNV. Q-Labs is a leading international provider in the software engineering industry. Acting as change facilitator, Q-Labs provides industry with state-of-the-art solutions. The concept of software engineering provides the tools competitive software development organisations need to meet stated goals for software quality, productivity and delivery. With 150 employees in Sweden, Norway, Germany, France, Holland, the U.K., Ireland and the U.S.A., Q-Labs is the world’s largest provider of software engineering services. The majority of clients are organisations developing and purchasing large, complex software-intensive systems, such as Daimler-Chrysler, Volvo, Alcatel, Siemens, and government and military users.
Q-Labs recently opened its new headquarters in the Copenhagen Airport Business Centre. From left: Wiggo Smeby (DNV), Q-Labs president and CEO Geir Fagerhus and Jorna Mobrin (Ericsson).
What is software engineering? Software engineering is the answer to the following questions: How do I get my software development under control? How do I price my software functionality? How do I retain my staff? How do I design my software for the future? When do I outsource software development? How do I select and control suppliers? How do I approve delivered software products? Q-Labs service areas Software Management Software Process Improvement Software Process Practices Software Acquisition Improvement Human Factors Reliability of Software Products (www.q-labs.com)
TECHNOLOGY
DNA technology improves
OIL RESERVOIR MANAGEMENT Traceability of materials and components has always been important to DNV’s work to safeguard life, property and the environment. Biotechnology has revolutionised this, and the latest developments in DNA technology have opened a gateway for a new line of services for DNV’s partner company ChemTAG.
T
he Norwegian government recently awarded 1.85 million NOK to ChemTAG as part of its DEMO 2000 programme, aimed at increasing
oil industry competitiveness. The focus of ChemTAG’s project, which has a total budget of 6.7 million NOK, is on improved oil reservoir management using environment-friendly, DNA-based tracers. The scope is to design, develop and qualify these tracers for use in reservoirs. Using tracers in a reservoir can provide information about its properties that is vital to optimum reser voir management. Small amounts of tracers are introduced into the reservoir through the water and gas injection wells. When the tracers are later identified in the production wells, they provide information about flow patterns in the reservoir. Combined with geological data and simulation models, a better understanding of the oil reservoir can then be obtained. Tracers have been successfully used in many oil fields worldwide.
Support from the oil industry The research, performed jointly by ChemTAG and DNV, has strong support from the oil industry. Operators realise that the use of tracers will grow in importance in enhancing oil recovery, and are searching for new cost-efficient and environment-friendly tracer molecules. ‘If the testing of DNA tracers in reservoirs is successful, this will give enormous added value to the oil industry,’ says Odd Tonby, managing director of ChemTAG. Tracers must have chemical, thermal, biological and mechanical robustness, follow the reservoir flows intimately, and be detectable in extremely small concentrations from the produced fluids, even after several years of retention time under reservoir conditions. ‘The applicability of DNA-based tracers against such criteria is the key question that the oil industry wants the Photo: Knut Vadseth
DEMO 2000 project to answer,’ says project responsible Ståle Selmer-Olsen.
Managing director of ChemTAG, Odd Tonby (left), discusses the latest developments in DNA technology with DNV's project manager Håvard Thevik and project responsible Ståle Selmer-Olsen.
No toxicity, no contamination ChemTAG’s patents utilise the four main components of the DNA molecule for alphanumeric coding. By choosing the sequence of the components, a code in words or numbers can be stored in the DNA molecules. These molecular tags can be produced in large numbers using standard laboratory equipment. Only a laboratory in possession
Motivated by environmental treaty
of the right ‘key’ can decode the information coded into
In complex reservoirs, the relatively small number of
the DNA molecule. ChemTAG has identified several
currently available tracers limits the amount of information
possible methods for adding DNA to any liquid substance:
obtainable from tracer injection. Furthermore, the
attached to solid particles, incorporated in pollen or spore
Norwegian Pollution Control Agency has urged the oil
particles, or as free (‘naked’) molecules. Free DNA
companies to develop new tracers with low environmental
molecules have been most extensively tested, but all
impact. ‘This is motivated by, and in compliance with,
methods are under consideration.
the environmental treaty PARCOM, which Norway has The DNA used is synthetically produced in laboratories,
signed,’ states Ståle Selmer-Olsen.
which means that it carries no genetic information that ‘DNA technology has a great potential in providing
can interact with living organisms, and is completely
new tracers,’ says Odd Tonby. The technology has found
harmless. DNA tracers are detectable at extremely low
application in several recent problems of water leakage,
concentrations, and do not affect the properties of the
groundwater reservoir and pollution contamination.
reser voir fluids nor pollute the environment. Says
DNA tracers have successfully traced water movements
Håvard Thevik, ‘When analysing a sample in search of
through crevices in rock. The tracers have previously not
DNA molecules, there is no need to find the ‘‘needle in
been tested under oil-reservoir conditions and could
the haystack’’. In a so-called polymerase chain reaction, a
become an alternative or a complement to conventional
DNA molecule can be duplicated a billion times. This
tracers, which often are radioactive or have global
makes it easy to extract DNA molecules for further analysis,
warming potential. Explains project manager Håvard
which in turn makes it possible to trace the displacement
Thevik, ‘In principle DNA tracers can be provided in
of large amounts of water and oil with a small number of
unlimited numbers which do not need to be qualified
DNA molecules. Typically, one mg of DNA is detectable
for field use individually, a costly limitation for convent-
even when mixed with 1 million cubic metres of water.’
ional tracers.’ Adds Pål Bergan, DNV’s member of ChemTAG’s board of directors, ‘This is an exciting technology with a great commercial potential - not only in reservoir management, but for a wide range of industrial applications. Examples include tracing of pollution, identification of food and property, and proof of origin and authenticity. One might call it forensic examination in liquid form.’ Christine Calvert
DNV and ChemTAG • ChemTAG and SND (The Norwegian Industrial and Regional Development Fund) contacted DNV in 1996 to discuss possible applications of ChemTAG’s DNA-based tracers in DNV’s services. • In 1998 DNV became the majority industrial owner of ChemTAG, and is represented on the board by Pål Bergan, DNV’s R&D co-ordinator. • ChemTAG and DNV are presently running several projects on the tracing of marine oil products by active tagging, tracing of liquid displacements in oil reservoirs, and tracing of ground water and pollution transport.
TECHNOLOGY
Nauticus on Board helps shipowners
FORESEE PROBLEMS BEFORE THEY ARISE DNV’s new classification system Nauticus on Board ushers in a new era in class notations. Extending and adapting the Nauticus ship-design and construction program introduced in 1995, the new system enables ship information to be efficiently shared between the owner and DNV through graphic, three-dimensional modelling.
A
n important goal of this work has been to streamline DNV ship-classification routines and make them more efficient. ‘Hitherto, both the shipowner and DNV record information on each ship, and it has been difficult to share this information readily,’ says DNV’s Per Marius Berrefjord. ‘But decision-making - such as maintenance planning - depends on the most up-to-date information on a ship.’
Nauticus on Board Nauticus notations are mainly based on technical inspections and condition assessments of each ship. In practice, this means that DNV surveyors measure certain parameters, such as wear and corrosion, and then use these measurements to deduce the ship’s current condition by creating statistics to model a trend over a period of time. By predefining the limit values, DNV does not need to intervene physically until these values are reached. The system is designed to follow a vessel from design to eventual scrap, with the data gathered over its lifetime being accessed through a computer-generated 3D model.
One of the main goals during the development of Nauticus on Board has been to create an efficient and user-friendly system for retrieving specific information on the ship’s entire structure and equipment. Berreford explains, ‘Many ship logs are kept for up to 25 years, which means there is a mass of accumulated information that should be available in an accessible form in order to be of real value. If we can provide all the significant information at a glance, the owner will be able to exploit our expertise in order to make the right decisions. To achieve this, a three-dimensional model has been developed. Using this, you can ‘‘go on board’’ via a PC and point to the components on which you want information.’ The IT-based information and calculation system of Nauticus is already well-proved and in use by shipowners and shipyards. Now Nauticus on Board takes a further step in providing consistency, expertise and service. ‘We must be able to solve a wide range of problems as well as comply with all the international standards and specifications,’ says Berrefjord.
Design calculations and models for re-use
Construction and equipment certification data
Design improvements
Improved construction solutions
TECHNOLOGY
‘Nauticus on Board is a new service concept, which represents the integration of DNV’s accumulated knowledge and experience with the new technology,’ says Per Marius Berrefjord.
Virtual shipyard in Poland Use of marine databases is not new, but linking them directly to the individual ship through three-dimensional, graphic presentations is an innovation. In order to do this, DNV has established a ‘virtual shipyard’, the Nauticus Modelling Centre in Gdansk, Poland. ‘The main reason for Gdansk being chosen is because it is one of the few places in Europe that has the necessary shipbuilding competence to cope with such an ambitious project,’ says Berrefjord. And with around 4,500 ships to DNV class, the work can be described as both ambitious and demanding. ‘Close cooperation has been established with the university in Gdansk, where the modelling centre is located. In addition to its able professionals, the IT infrastructure and communication lines to Norway and elsewhere are modern and effective. So far, 45 employees are working full-time on this project, and the number is expected to rise. DNV’s local staff in Poland provide assistance.’ The Gdansk project started on 1 July 1999, initially focusing on graphic presentation of tankers, to be followed by bulk carriers and container ships. DNV’s archives contain data on most types of ship, but the Nauticus modelling is mainly relevant for ships less than 15 years old. Berreford explains, ‘We’ve specified all the information we need to model each ship, and receive supplementary information from the owner as required. All the ship’s important structures are accessible from the keyboard, and other details are readily available. Once the model has been completed, we integrate it into the database. We also ensure
Tests and sea trial data
Operational data
that the customer has access to it through DNV Exchange, a program that contains all the basic information, such as the class status and specifications, certificates, recommendations, and survey planning.’ Nauticus on Board will be launched on a large scale on 15 January 2000, and will be delivered to customers during the spring. Some of the models are already operational, and the response from users has been positive.
Reducing dry-dock time An example of the direct value of Nauticus on Board is in reducing time a ship spends in dock. The way the system functions at present, unforeseen findings may arise during surveys and lead to long and costly docking. With Nauticus on Board, a virtual survey can be carried out prior to a ship’s docking. For example, a shipowner can identify what plates and plate sections need to be replaced; or can calculate coating costs, or how many tonnes of steel and metres of welding seams are necessary. The owner will thus find it easier to prepare a more precise, longterm and cost-effective plan for the ship’s future. Through Nauticus on Board, DNV is accommodating owners’ pressing need to cut down on a vessel’s time spent out of service – so providing accurate estimates of improvement cost and simplifying long-term maintenance planning.
Simen Seeberg and Stuart Brewer
Experience utilisation and decision support during the ship´s operation
The Product Model life-cycle technology gives the user access to updated information about ship condition accumulated throughout the ship’s life
Effective tests and trials
Improved operational performance
Experience feedback and model updating
CHEMICALS PRODUCTION
Bayer succeeds with
INTEGRATED
SYSTEMS Product and service quality, safety and cost-efficiency. Comprehensive environmental protection - all are factors in achieving success for chemical and pharmaceutical giant Bayer. DNV is now helping Bayer to continuously improve its HSE-management systems with a new tool – the Bayer Assessment and Improvement Tool, BAIT – which aims to make the company a worldwide leader in Health, Safety and Environmental concern.
Aspirin - Bayer’s most famous product for the past 100 years
CHEMICALS PRODUCTION
‘I
n BAIT, we’ve got a world-class system to optimise our Health, Safety and Environment Management Systems,’ states Dr Wolfgang Viefers. He heads Bayer’s Corporate Staff department for Quality, Environment and Safety Policy, Management Systems and Auditing. The Bayer Assessment and Improvement Tool is his brainchild and responsibility. Bayer is best known for having invented the Aspirin tablet, which celebrates 100 years of production in 1999. The company today has annual sales of more than US$ 30 billion from approximately 200 sites all over the world. Like other successful chemical and pharmaceutical companies, Bayer has come a long way in the steady improvement of management systems and their certification. ’But there is room for even further improvement,’ says Dr Viefers, who is based at Bayer’s Corporate Headquarters in Leverkusen, Germany. ‘We were looking for a partner that had the competence and services to assist us internationally, which we found when DNV presented its Integra audit system. We needed ways to measure and assess our worldwide performance, and wanted a customised tool to assess our HSE Management Systems for effectiveness and compliance with external and internal requirements, as well as a tool to help our sites improve HSE-management. We also wanted DNV to develop an audit procedure to use Integra for simultaneous ISO 14001 certification audits, which resulted in a customised tool called BAIT.’
‘DNV has helped Bayer introduce a world-class HSE-management tool.’ - Dr Wolfgang Viefers
Five pilot assessments In 1998 and 1999, five pilot assessments were carried out at selected Bayer locations in order to find out how Integra had to be customised and improved to fit with Bayer’s needs and requirements. The pilots included two in Germany, two in the U.S.A. and one in the Far East. With the development of BAIT, it is intended that
from 2000 onwards, most Bayer sites in the world will be offered the opportunity to apply this HSE-management systems improvement tool. Also, the pilot assessments identified many common and specific opportunities for improvement, and they stimulated the identification and sharing of Best Practices. Design details and methods for programme customisation were identified as well. ’Now, we also have a definition of Bayer-specific HSE-management expectations and a fully integrated system, including a measurement protocol, guidance for improvement and good examples to help us provide sites with practical procedures and methods for improving HSE-management systems,’ says Viefers. ‘The measurement protocol gives us the possibility to conduct simultaneous ISO 14001 certification audits. Six external programmes (Responsible Care Codes, ISO 14001, OSHA Voluntary Protection Programme, OSHA Process Safety, Seveso II, EPA Risk Management Programme), are synergistically combined in BAIT - plus DNV’s International Safety Rating System, ISRS. Another new aspect is that every element of the system is based on an explicit consideration of risk.’
A global consensus The many Bayer companies worldwide operate with a great deal of independence. So it is not up to the corporate management alone to define how HSE work is to be carried out in the future. ‘We can give directions and suggestions, but it’s up to the individual unit to accept our proposals, based on consensus,’ says Dr Viefers. Several main factors have been key to the success of BAIT: •Bayer Expectations for HSE management •Assessment questions integrated throughout 16 management elements •A management system model that assures continuous improvement • Guidance for improvement of HSE management •Good examples of specific HSE-management systems.
CHEMICALS PRODUCTION
Responsibility the driving force DNV was selected as Bayer’s partner for several reasons. In particular, it has the necessary HSE expertise, the linguistic capabilities and is located in regions similar to the Bayer Group. It was also to DNV’s advantage that it has provided services to 25% of the top Fortune 100 companies and assisted 45 companies in protocol development, thus gaining international experience in developing HSE management-system programmes and audits.
With headquarters in Leverkusen, Germany, Bayer has 145,000 employees, 295,000 shareholders, an annual turnover of US$ 30 billion and, last year, an operating profit of more than US$ 3 billion, from approximately 200 sites all over the world.
Dr Viefers continues, ‘The various production units and sites found they had a lot to learn from each other. We now have in place a common set of HSE values. These are complete, efficient, contribute to continuous improvement, and are risk-oriented. Through internal presentations, we are introducing BAIT to the individual business units and sites. Competence centres will be set up in Europe, the U.S.A. and Asia. We are creating audit teams with DNV providing both consultants and certifiers, ensuring that all rules of accreditation bodies are taken into account.’
‘Qualified consultants and auditors and a commitment from everyone in Bayer are the keys to success,’ says Dr Viefers. ‘Programmes like Responsible Care, ISO 14001, Seveso II, etc. provide the driving force, but the production units themselves must see the day- to-day benefits. We have provided them with the best tool possible, so now it’s up to us to help them best use this tool to produce the expected results.’ Harald Bråthen Photo Courtesy of Bayer
Photo: APL/NPS
Fremantle Port Authority
achieves the right balance in
RISK MANAGEMENT The Fremantle Port Authority (FPA) was the first in Australia to undertake a comprehensive Quantitative Risk Analysis and Audit of its Safety Management System. Today, the FPA has adopted an approach which sees risk management as the natural way to do business, integrating it as a part of day-to-day management. ‘Getting the right balance in the risk-management process is essential. The cost of not getting it right, or not doing anything, can be enormous,’ says Kerry Sanderson, chief executive officer, in FPA’s signal station.
PORT MANAGEMENT
F
remantle is Western Australia’s largest general cargo port and one of the fastest-growing ports in Australia.
It combines private and public-sector operations, but responsibility for all shipping movements and overall management rests with FPA. The port is a rapidly expanding, modern deepwater facility handling general cargo, including containers, break bulk, livestock and imported vehicles. Says Kerry Sanderson, the Authority’s CEO, ‘Particular issues in Fremantle are the proximity of a busy working port to business and residential areas, the threat of urban encroachment and increased tourism to the area impacting on port operations, and the relative narrowness of the channel entry to the port. Consequently, we have set broad objectives to ensure the port operates with best practice
Fremantle is one of Australia’s fastest-growing container ports.
and that management of the port environment, including hazards and risks related to port operations, reflects and meets recognised standards.’
Container traffic doubled DNV has built a risk model which is used by FPA to manage
FPA has enjoyed strong financial and trade growth over
the transport and movement of dangerous goods
recent years. Says Sanderson, ‘We’ve had very strong
through the port, to manage change and to ensure that
growth, in particular a doubling in container trade over
risk levels are acceptable. This model has been used
the past eight years. Last year alone, the increase was 19.7
extensively for land-planning issues close to the port. FPA
per cent, well above our target growth of 6.0 per cent.
has also implemented the International Safety Rating
Our customers are showing us support, but we need to
System (ISRS), and the risk model enables risks to be
work ahead of the game. So in addition to our IMS activities,
prioritised. After achieving a Level 5 in ISRS in 1997,
we’re planning for the future to ensure that the needs of
FPA saw benefit in customising the protocol to suit its
shipping continue to be met. We are preparing a com-
specific needs. The protocol is expected to be completed
prehensive 30 year Port Development Plan for Fremantle
shortly, and is being extended to include environmental
Port, with the inner harbour component nearing completion.
and quality aspects.
Construction is well advanced on new infrastructure at the bulk cargo jetty. A new interstate rail service was also
Explains Sanderson, ‘Since achieving the ISRS Level 5,
recently introduced for the transport of containers.
progress has now been made in the integration of Quality
Improvement,
Safety
and
Environmental
‘In other areas of port operations, we are introducing a
Management. Essentially, our IMS, with its three components
new information system, and restructuring operational
of safety, quality and the environment, is the means we
staff to achieve a more integrated approach.’
use to continue to improve and compete effectively. As part of our safety and quality programmes, we are analysing major hazards and risks and their consequences. It’s another step in our journey towards best practice to provide reliable, competitive and efficient port services that meet and are responsive to the needs of users.’
Stuart Brewer
EXECUTIVE TALK
Leif T. Løddesøl
Join Norway’s business leaders in
Bjørn Sund
Jon Fredrik Baksaas
Berit Kjøll
EXPLORING THE FUTURE Many questions face us at the start of the new millennium – what future challenges and changes shall we meet ? Will they be beneficial ? How will they affect our business ?
Terje Mikalsen
As a new decade and century begin, six influential business executives here explain to FORUM editor Stuart Brewer what Sverre Skogen
they believe is in store for their respective industries.
Photo: Kim Larsen
EXECUTIVE TALK
Consolidation Leif T. Løddesøl is president and group CEO of the shipping company Wilh.Wilhelmsen ASA. The shipping industry is having to consolidate, to adapt to the challenges of globalisation, growing competition and greater political and economic risks. Smaller companies may need to merge to achieve economies of scale, and to reach the critical mass necessary to compete with the major players. We have recently established a joint operating company in the Ro-Ro sector with the Swedish shipping group Wallenius, and noticeable results are anticipated, partly due to the compatibility of the two companies. Not all mergers are successful, but in this case the companies match very well. As the consolidation trend continues to sweep through virtually every industry, it is likely that more and more companies will go for strategic acquisitions, mergers and restructuring. This, in turn, will make the shipping industry stronger and benefit its customers. Shipowners and managers will need more comprehensive and fully integrated systems in order to meet competition, and to survive in the
more demanding commercial and regulatory environment. There will be increased pressure to operate safer and more efficient ships. There will be much more focus on managing the enterprise as a whole, than on individual ships; attention will concentrate on productivity and profitability. Minimising downtime and reducing costs are critical to success throughout our industry. Today, the aim of the shipowner is to be a market leader by providing the most modern, efficient, top-quality tonnage to meet the high expectations of the cargo owner and shipper. Industrial shipping is moving towards a quality culture, and each shipowner must convince both new and existing customers that he can provide transport that is safer, faster and cheaper than his competitors. Customers are looking now to forge long-term partnerships with shipowners to ensure efficiency throughout the transport chain; there will be less room for short-term players. Leif T. Løddesøl
Sustainability through innovation Bjørn Sund is director of R&D at Norsk Hydro, the largest industrial company in Norway. In addition to the obvious ethical and regulatory reasons to put environmental sustainability high on the management agenda, we see good environmental performance in production and in product design as a prerequisite for a successful business.
ment is needed on the platform, the system will increase and improve oil production levels. On the environmental side, reinjecting water into the reservoir reduces the emission of produced water.
Main focus at Hydro in the oil and gas sector is on the production process, as we try to separate oil and water in the reservoirs. I believe we will see significant developments in the near future, particularly as regards the recycling of effluents back to the reservoir, and the elimination of emissions through the use of downhole or subsea separators.
Another issue is that growing consumption of fossil fuels will continue to increase carbon dioxide emissions, which in turn could lead to climate changes. I believe that companies will have to focus more efforts on how to reduce their carbon dioxide emissions related to energy consumption.
Troll Pilot, the world’s first subsea separation and injection system, has recently been installed on the seabed at a depth of 340 metres, about a mile from the Troll C platform. Its objective is to separate water from the oil and gas well streams by means of gravitational separation, then reinject the water - even if not necessary for pressure support - directly from the seabed into the reservoir. This has never been done before on any other offshore field. Until now, water has been separated and reinjected on the offshore installation, or released to the sea. The benefits can be counted in both economic and environmental terms. Besides saving money on future field developments, since less equip-
In the future, perhaps 50 years from now, renewables such as the wind, sun, tides and geothermal heat will be the main energy sources. These will generate electricity, which will be converted to hydrogen through electrolysis, and there will emerge the ‘hydrogen society.’ In the meantime, decarbonising fossil fuels will help us to bridge the gap between today’s fuels and the next generation of renewables. This is the main reason why we are concentrating research on decarbonising fossil fuels. We must be cost-efficient in how we use resources - our business is about creating more value with less environmental impact, of doing more with less, and thus being environmentally responsible. Bjørn Sund
EXECUTIVE TALK
Mobile telecommunications Jon Fredrik Baksaas is deputy managing director of Telenor, Norway’s leading provider of telecoms services. Not too long ago, people were talking of the advent of a competence and information society. Now I feel this transition is well under way. The Winter Olympic Games were held in Norway five years ago, and at that time we believed we had the most modern telecommunications solutions in the world - even though we weren’t hooked up to the internet. Today, one third of the population of Nor way is using the internet regularly. 60 per cent of the population have mobile telephones. In a further two years time the user changes will be even more significant. In our offices of 2002, we will probably surround ourselves with new technological solutions that will be mobile and have access to the internet. Our standard telephones will disappear and we will work solely on our mobile telephones, which will be an integrated part of the fixed network. The mobile and flexible aspects then will be more visible in our everyday lives. These changes are partly due to the wave of consolidations in the market place. The Scandinavian countries, in particular, already
have a considerable penetration in these fields, and service developments will probably take place in these countries. For example, Sweden’s Ericsson, Finland’s Nokia and Norway’s Telenor are major players and world leaders in service development. We have the least costly communication services in Europe, and in turn have the highest markets for many services and products. Consumers’ purchasing strength will also continue to rise in the future. Future growth will come through mobile and internet activities. Mobile phone operators across the world are gearing up to offer a host of new services, such as high-speed internet access, online banking, shopping, share trading. Since mobile networks can already locate users within network cell areas, they will soon be able to provide tracking services, announce advertisements for stores as we pass them, or warn us of traffic jams ahead. New services that we cannot imagine today are not so far away… Jon Fredrik Baksaas
Superiority of rail NSB Gardemobanen is Norway’s first high-speed railway. Its president and CEO is Berit Kjøll. Recent years have seen remarkable growth in new air-rail links. This trend is likely to continue, as rail is fast becoming recognised as one of the easiest, least stressful, most economical and environmentally compatible means of moving people to and from airports.
There are many new air-rail link developments, especially in Europe, Australasia and North America. These may be stations on high-speed networks, high-speed dedicated links, regional links or metro-style links - or combinations of these.
The importance of air-rail links such as Gardemobanen, which already carries 34 per cent of all air passengers, is that they provide better access to airports - better from the point of view of the environment, the passengers, the neighbours, the airlines, the airport and the railway operator. Everyone gains.
High-speed rail service links have tremendous potential. In New York, a high-speed train is being built to run on tracks to JFK Airport, carried on a viaduct above the highway. New air-rail links are also being built in Kuala Lumpur and in Athens, where a new airport is under construction. Milan also has a new high-speed rail link.
Speed, comfort and safety are superior by rail. The only way to get from Oslo to Gardermoen airport in 19 minutes is aboard our new express trains on the Gardemobanen. Similarly, the Gatwick Express is the only easy way to get from London to Gatwick. Some of the new trains, such as Hong Kong’s Airport Express, Sweden’s Arlanda Express and those serving Gardemoen also reach new standards of silence.
All these are prime examples of the realisation worldwide that railways are the transport mode of the future. Berit Kjøll
EXECUTIVE TALK
Mastering change Terje Mikalsen, a leading business investor in Norway, considers IT as the future catalyst for change. The growing use of information technology is giving rise to a new industrial revolution that will lead to sweeping social and economic changes worldwide. Future society will be in constant flux, and the challenge for business leaders and politicians will be not to avoid change but to encourage people to cope with it.
The attendant globalisation of trade and the economy results in more exposure to overseas competition for individual countries. In future, companies will find that increasing their levels of expertise through making more use of information technology will give them an important competitive advantage.
Our society is changing from an industrial one to an information-based one, where knowledge is more important than labour and capital. The main reasons for these changes are globalisation and the explosive development of IT. The huge increase in functional capacity and the combination of telecommunications, electronic data and mass media at affordable prices are what makes IT so powerful. Society will be affected at the same accelerating rate as the technology.
As IT systems become better and less costly, knowledge will be developed and spread more and more rapidly throughout all technological and competence-based companies. In turn, change will take place more quickly on all fronts.
IT and telecommunications are not only bringing closer international corporations, but also transforming the way society functions at work and play.
In future, constant change will be normal, so instead of attempting to prevent this process, the challenge for companies, society and the individual will be to learn to cope with each transition and look on it as a positive opportunity for progress. This will stretch our abilities and refocus our ethical standards. Terje Mikalsen
Stay abreast of technology Sverre Skogen is president and chief executive officer of Aker Maritime, one of the world’s largest contractors to the oil and gas industry. The international oil industry is gradually recovering from a deep crisis. In the course of one year, oil prices have risen from below US$ 10 per barrel to a level of around US$ 25 per barrel. The industry is becoming more optimistic and work on new development plans is being intensified. In my view, the most important reason for the high oil prices is the effective production cuts implemented by OPEC. These production cuts apply until March, though some suggest that OPEC is likely to continue restricting output beyond this date. I believe that these reports, combined with high winter demand for oil in the U.S.A and Europe, have pushed oil prices up to a slightly artificial level over the past few weeks. But even if the oil price should slide back to the US$ 15-20 per barrel, I expect this to represent a good foundation for high activity among the oil service companies. Improved cash flow from operations and confidence that the oil price will remain at a relatively high level spur oil companies to increase spending on exploration and field development activities. A relatively significant portion of the growth is expected in deep-sea areas such as the Gulf of Mexico, West Africa and Brazil, as many oil companies see a great potential for giant discoveries in these frontier waters.
Petroleum exploration and production in deep waters require advanced solutions, including floating production systems, sophisticated processing plants and subsea technology. Our marine heritage combined with more recent achievements as deepwater solutions provider leaves us in a good position in this new market. Activity is also recovering in our traditional home markets in the North Sea region. Exploration drilling activities on the Norwegian continental shelf are expected to increase slightly this year. 25-30 wells are planned. New field development projects are likely to be sanctioned before summer. Whether 2000 will be better or worse than we expect, primarily depends on developments in the global demand for oil, and on OPEC members´ ability to cooperate. In the long term, however, I see few alternatives to increased investment in exploration and production - and in turn greater profitability particularly for players involved in technologically challenging deepwater areas. Tomorrow’s winners amongst the oil service companies will not only have to stay abreast of technology. We will also have to master change. This will require a much more flexible management and organisational culture and the ability to implement sustainable cost cuts. Sverre Skogen
OIL PRODUCTION AND TRANSPORT
• Navion is a Norwegian offshore and shipping company. • Its business areas cover offshore loading, floating production systems, shipping, drilling and technical maritime services. • Its turnkey solutions involve taking responsibility for every stage in oil production from subsea wellhead to delivery at the refinery. • The company operates a fleet of around 50 ships, and has annual operating revenues of some NOK 6 billion.
BUILDING BRIDGES Between offshore and shipping ‘The most important task for us is to combine the best of both the shipping and offshore worlds. The combination of floating production and offshore loading is especially relevant, since this contains important elements from both sectors,’ says Brit Rugland, CEO of Norwegian shipowner Navion.
B
esides its main activities, which are offshore loading and
In deeper waters
floating production systems, Navion also operates a large
‘As regards future deepwater developments, we expect that
fleet of conventional ships and two FPSOs – one in the South
between 50-60% of these will be carried out using floating
China Sea and one in the U.K. sector of the North Sea.
production. The main challenge involved in such projects is
Following a period of stagnation in the shipping market,
how to get the oil to the customer if it is not going to be used
Rugland feels there is now growing activity and optimism.
in the region where it is extracted. Floating production solutions
‘Though we’re optimistic about the future, we understand
are very advantageous when one is a long way away from existing
that it will take a long time for activity to reach the level we’d
infrastructures. As finds are gradually made in deeper waters
like. With the Asian crisis and the subsequent fall in oil prices,
and further away from existing installations, the interest in
most oil-sector operations came to a standstill. But activities in
FPSOs will increase and new offshore loading opportunities
Houston are on the increase and projects in West Africa,
will arise. The most effective method is to have a specially built
Brazil, the Gulf of Mexico and the east coast of Canada are exciting
ship collect the cargo stored on the FPSO and bring it directly to
because they incorporate elements that we know a lot about
the customer.
– extreme conditions,’ she says.
OIL PRODUCTION AND TRANSPORT
‘We believe that DNV’s expertise in the traditional shipping markets, and its knowledge of the offshore market, are of great help when we’re working between the two,’ says Brit Rugland, CEO of Navion.
Sea, Gulf of Mexico and South China Sea all have geographic and climatic extremes, and our goal is to have products that are optimal for the area in which they are to operate - based on standard components. The competition in this market is extremely stiff, but our strength lies in the fact that our products comply with our customers’ specific requirements. ‘Our solutions are often on the borderline between the offshore and shipping sectors. For example, if subsea processing becomes a reality in the future, the offshore industry may accept that FPSOs can be built and operated to ship-classification standards instead of offshore standards.’
Coordination with DNV Rugland believes that DNV’s assistance - part of a framework agreement with Navion - helps Navion to help itself. Since Navion has a high level of expertise to begin with, it turns to an external supplier, such as DNV, in order to gain additional expertise. Navion’s multipurpose shuttle tanker Navion Munin in operation on China’s Lufeng field.
‘This becomes clear when we work in areas that do not clearly come under either the shipping or offshore sectors. We believe that DNV’s expertise in the traditional shipping market, and its knowledge of the offshore market, are of great help when we’re working on the borderline between the two. DNV’s knowledge
‘We use dynamically positioned ships to do this – an interesting
can be used to find the most appropriate and long-lasting solutions,
alternative for the oil companies,’ she points out. Now that oil
which means that we can operate efficiently in both markets.’
is gradually being drilled for in more inaccessible places, Navion has noticed a growing interest in its concept that involves using fewer risers.
Large bulk carriers and tankers normally make six voyages a year – Navion’s ships average more than 50. Says Rugland, ‘We have gained unique experience of how a ship behaves in difficult
Tailor-made for the site
conditions, and this has helped in equipping our offshore loaders
Unconventional oil fields require new solutions. Navion can
and FPSOs. Our key to success is a respect for the complexity
provide the entire or individual parts of the ‘solution chain’
of our industry, and an understanding of the demands it puts
depending on the customer’s requirements. Rugland explains,
on us.’
‘Our products are often at their best in deep waters or under
Simen Seeberg
difficult climatic and geographical conditions. The North
Photos Courtesy of Navion
NUCLEAR POWER
Politics influence the future of
IGNALINA NUCLEAR
POWER PLANT Bordering Belarus, on the southern shores of Lithuania’s Lake Druksiai, is one of the world’s largest nuclear power plants. Its operators are striving to meet international safety standards to avoid another Chernobyl catastrophe.
I
gnalina is the Russian-built nuclear power plant that keeps the western public awake at night. Its two reactors, each of 1500MWe and similar in design to those at Chernobyl, are among the world’s most powerful. They are the latest generation of RBMK reactors, and were subject to essential safety improvements both during design and construction, and after the Chernobyl accident. Now Western politicians and the general public want to close the plant. Billions of dollars are being spent to enhance its safety. Its operators harbour no concerns. ‘We can operate the plant for another 20 years without any problems,’ says Yuri Saburov. He is manager of the inspection department at Ignalina, where 68 technicians are responsible for in-service inspection during technical maintenance of the reactors. ‘The Russian way of operating a nuclear plant has been abandoned,’ he says. ‘We have mixed western and eastern technology into what is considered safe nuclear power production. We make use of new non-destructive testing equipment and upgraded safety procedures, and are now being licenced by the Lithuanian authorities for continued operation.’ Western society still worries about the plant’s safety. If Lithuania is invited to begin entry negotiations into the European Union, shutting down the reactors is expected to be an important element in the discussions.
A mix of western and eastern technology in a Russian-built structure.
The reactors incorporate stacks of graphite blocks (front) penetrated with 2052 channels, 1661 of which are fuel channels, the others containing control rods and instrumentation. Each fuel channel contains enriched uranium dioxide pellets. Fuel is replenished, without shutting down the reactor, by the refuelling machine (at rear).
Manager of the inspection department at Ignalina, Yuri Saburov
NUCLEAR POWER
The risk of spreading radioactivity
Risk-based approach
The reactors at Ignalina, built in the 1980s, have been analysed by international nuclear experts, who conclude that none of the safety concerns requires immediate shutdown of the plant. ‘The risk of having a nuclear accident at Ignalina is as low as for many western reactors of similar age,’ says Aleksandr Alejev of the Lithuanian State Nuclear Power Safety Inspectorate (VATESI), responsible for licensing nuclear-related activities in Lithuania. However, the lack of full containment surrounding the reactor and its primary system might, in case of an accident, give a higher risk of radioactivity getting outside the buildings than for a western-type reactor protected by such containment.
As part of this cooperation the Swedish government has been assisting the Lithuanian authorities in building up a safety regime in Lithuania to improve the safety level at Ignalina. DNV`s newly acquired Swedish company SAQ has been commissioned by the Swedish International Project for Nuclear Safety (SiP) to support the Lithuanian authorities and technical staff at Ignalina in developing new techniques and standards.
Technicians admit that there is a safety risk due to the fact that the Russian-built structure cannot be changed. Several projects are ongoing to reduce the risks. One such is to increase the ventilation in the reactor cavity to avoid overheating, which in the worst case could threaten its structural stability. Even closing the plant poses safety risks. Problems related to decommissioning, dismantling, fuel storage and gradually stepping down production one reactor at a time are being considered.
On the international agenda The accident at Chernobyl was a reminder that nuclear power production is a matter of international concern. Safety and reliability can only be achieved if dealt with by bilateral and multilateral cooperation; they require considerable resources - financial, technical and social. It was early recognised that the safety level of reactors in the former Soviet Union and its satellite countries was not up to the standard of reactors operating in the West. International cooperation started in the 1990s, supported by EU, the International Atomic Energy Agency (IAEA), European Bank of Reconstruction & Development (EBRD) and Western countries. The goal was to improve the safety level at nuclear power plants in Eastern Europe.
‘DNV Nuclear Technology´s extensive knowledge in fracture mechanics has been a valuable contribution,’ says SiP project manager Ervin Liszka. Several training programmes have been held for technicians from the authority and the nuclear power plant, and the philosophy of risk is finding its way into Eastern Europe. ‘After Chernobyl every defect was repaired at Ignalina without thought of its consequences,’ says Aleksandr Alejev. ‘Now we make use of new ultrasonic equipment for inspection, and fracture mechanics for safety assessment of components. In this way we calculate the risks before we make any decision on repair. This risk-based approach makes us concentrate on the most important aspects; it reduces the amount of work at the same time as raising the level of safety.’
The politics of closure Lithuania’s politicians have decided in the country`s latest Energy Strategy to shut down one reactor at Ignalina in 2005. A decision about the second unit will be made in 2004. The closure scenario will create a more favourable political climate and better chances of borrowing for the state of Lithuania. It might, however, lead to some loss in the national economy, which will need international financial assistance. As a workplace the power plant will be restructured into two large enterprises carrying out decommissioning and radioactive-waste treatment over the next 50 - 80 years. Decommissioning will produce an income for the region, with many new job opportunities. If Lithuania is invited to begin EU entry negotiations, it is believed that the Union will offer economic assistance towards decommissioning and regional development. Beate Viktoria Ørbeck
After the acquisition of SAQ, DNV now provides services in: • Nuclear engineering through DNV Nuclear Technology AB and DNV Technical Consulting • Inspection and testing activities • Consulting services • Certification • Training.
THE CRUISE INDUSTRY
Largest yet: Voyager of the Seas carries 3,840 passengers. Operator RCI forecasts a continuing 10 per cent annual growth in the cruise market.
DNV Class for the world’s largest cruise ship:
VOYAGER OF THE SEAS Voyager of the Seas, at 142,000grt the world’s largest cruise vessel yet delivered, entered service on her Western Caribbean schedule in late November. On each cruise, her almost 4,000 holidaymakers can enjoy rock-climbing, ice-skating, admiring $12 million worth of art treasures … without setting foot ashore.
F
irst in a series of three DNV-classed ‘Eagle’ Class cruise vessels for Royal Caribbean International (RCI), Voyager of the Seas will be followed by Explorer of the Seas in 2000 and Adventure of the Seas in 2002. These Eagle ships are 60 per cent larger in most statistics than RCI’s previously biggest vessels – the ‘Vision’ Class typified by Splendour of the Seas. The three new sisters are part of a US$3.6 billion investment programme which anticipates a continuing ten per cent annual growth rate in the Caribbean cruise market. And the first ship sets a new trend not only in size, but in the concept of how today’s cruise passengers seek to be entertained: her opening itinerary involves only four port calls, and an unprecedented two days at sea on each of the voyage legs of her seven-night programme.
Passengers’ wish-list comes true Harri Kulovaara is RCI’s senior vice president, marine operations: ‘To fill this size of ship with passengers, some basic criteria must be met. Everyone takes safety and value-for-money for granted. So the choice of cruise operator and individual ship often depends more on the extras – interior style, wealth of facilities, and the feeling of having enjoyed a unique experience.’ Hence Voyager of the Seas and her sisters boast an ice rink, a climbing wall, swimming pools and lidos, art galleries and a revolving casino. A variety of restaurants can serve 2,100 people at the same time. And a true shoppers’ paradise is the Royal Promenade – a four-deck high, 140m long shopping mall with boutiques, bars and ‘street performers’, and punctuated by two 11-deck high atria.
THE CRUISE INDUSTRY The potential fire risks posed by such open inboard spaces have been recognised and addressed on previous vessels. Says DNV’s Per Berrefjord: ‘The Promenade and its atria extend the length of three fire zones. It is considerably larger than on preceding RCI ships; since there is no real equivalent, a formal safety assessment approach was adopted, and we applied the knowledge we have accumulated in offshore fire analysis, where smoke hazards and ventilation problems are similar.’
Challenging the class surveyor With such a large hull, and like most cruise ships a considerable volume of space within the structure – restaurants, theatres, the Promenade – a vessel of this type is structurally flexible. When this flexure is extreme, as in severe sea conditions, some ships have experienced cases of their
large panoramic windows shattering or falling out. Hence very detailed finite-element analysis of the entire hull was carried out, and kept up-to-date as design changes were introduced. Berrefjord points out also that DNV maintained strict control of hull penetrations, as holes were cut for cables, pipes and ducting. ‘So the design properties were still in place when the ship was delivered.’ DNV usually has two or three surveyors working continuously during a vessel’s construction, but on Voyager of the Seas the team at the Kvaerner Masa Yard, headed by Hans Fagerstrom, was at least six strong, and at times as many as 12. Others have been involved at subcontractors’ sites, and at DNV’s head office in Norway. Knut.A. Andersen
Hans Fagerstrom headed DNV’s survey team at the Kvaerner Masa Yard in Finland.
Speed and Manoeuvrability Voyager of the Seas has a gross tonnage of 142,000, a passenger capacity of 3,840 and a crew of 1,180. Her principal statistics match these superlatives: a length of 311m (1,020ft), breadth of 38.6m (126ft) at waterline (and 155ft over the bridge wings), and 72.3m (237ft) in height from keel to funnel top. Propulsion power is diesel-electric, with six Wartsila 12v46C main engine-generator sets producing a total power output of 75.6MW.
This is transmitted to three 14MW azipod
units, the centre one fixed, port and starboard steerable. Four 3MW bow thrusters provide even greater manoeuvrability. The ship has a service speed of 22 knots, and on trial reached 18kt astern. Not only the ship employs advanced technology: RCI is investing $50 million to upgrade facilities in its home port of Miami, including airport-style baggage-handling equipment to reduce to a maximum of 11 minutes the time between check-in and the passengers’ baggage arriving at their cabins.
Fire safety has been a major challenge for DNV on these vessels. Movable fire bulkheads have been installed in the atrium area. Photo: Knut Vadseth
THE CRUISE INDUSTRY
The new growth area: Cruising in
ASIAN WATERS
When Meyer Werft of Papenburg, Germany, delivered SuperStar Leo and SuperStar Virgo in 1998 and ’99, a further 4,000 lower berths were added to capacity in the rejuvenated cruise market of South East Asia. Both ships exemplify technology applied to the quest for safety.
DNV-classed SuperStar Virgo, 75,000grt, enters her home port of Singapore. Delivered last August, she is the newest of the Star Cruises fleet.
Photo: Knut A. Andersen
THE CRUISE INDUSTRY
P
ort Kelang, on the west coast of Malaysia, is home to Asia’s fastest-growing cruise operator, Star Cruises. Here, in his headquarters office overlooking the new cruise terminal, executive vice president Nils Nordh contemplates a profitable future for the company which in the past 15 months has placed in service the two largest cruise ships yet built for the Asia-Pacific market.
These two, SuperStar Leo and Virgo, are each of 75,000grt and carry 2,800 passengers. ‘But the really big ships are yet to come,’ says Nordh. ‘In 2001 and 2002 we shall take delivery of our two ‘Libra’ class vessels, of 91,000grt; and in the following two years the two ‘Sagittarius’ class, each of 116,000grt. All will be classified by DNV. Together, these six, plus six smaller vessels, will enable us to offer 18,000 beds in what we see as a barely-tapped market.’ The company is also building air-conditioned, 250-passenger first class tenders, similarly to DNV class, to serve the cruise liners.
Market turnaround At the time of the Asian economic crisis, and despite vigorous promotional efforts by the Japanese in particular, prospects for the Asia-Pacific cruise industry seemed bleak. Now the tide has turned, and heavy investment is under way in new cruise ships, new terminals and infrastructure, and increasingly exotic shore attractions. Port Kelang itself, home of the only dedicated cruise terminal in Malaysia – able to accommodate ships up to 1,180ft long at its four berths – also houses Star Cruises’ ship simulator centre, first in the world to be owned by an individual cruise line. All the relevant ports visited by Star Cruises’ vessels can be displayed on the simulator, mostly in South East Asia, China and Japan; the centre is also made available to train staff of other shipping companies. Star Cruises’ itineraries are tailored to the local market, entailing a high proportion of relatively short cruises. Among its other home ports is Singapore, whose three dedicated cruise berths were extended last year to handle the largest vessels likely to call; and the line plans to build its own cruise facility at Laem Chabang, Thailand, to supplement the port development currently under way there, aimed at growth in the cruise business to Thailand, Cambodia and Vietnam.
Technology for safety Ever-larger, higher-profile cruise ships deservedly attract the media limelight. Despite the industry’s exemplary safety record, it is subject to intense media scrutiny of the most minor mishap. Passenger safety must be foremost, and part of the answer to safety questions lies in new technology. One of these questions is the feasibility of evacuating in 30 minutes – as the rules require – a cruise ship carrying perhaps several thousand passengers. Such emergency evacuation is a high priority on SuperStar Leo, which was the first such vessel to be fitted with vertical evacuation chutes. Four of these can be deployed in an emergency, each free-falling to sea level and terminating in a floating platform, from which escaping passengers transfer to 50-person liferafts launched at the same time. Under test, 700 crew members successfully evacuated the ship in Force VII conditions; already in place on several ro-ro ferries, these controlleddescent chutes offer a valuable alternative to the potentially dangerous process of lowering passengers in davit-launched lifeboats. Nils Nordh also points out that at all times two officers are on bridge watch. ‘Not only are they fully certificated, but they have undergone psychological tests like those taken by military aircraft pilots. ‘Also as on aircraft, there is a “black box” recorder on the bridge, together with video cameras monitoring all activity on the bridge and in the engine room and elsewhere. The pictures can be accessed at any time, via satellite, at head office.
‘The really big ships are yet to come,’ promises Star Cruises executive vice president Nils Nordh.
‘Safety cannot be compromised,’ says Nordh. ‘We aim to be ahead of rules and requirements, and to become the world’s safest cruise line.’ Knut A. Andersen
CERTIFICATION
Environmental care in
CAR MANUFACTURE ‘To be competitive, companies must take a clear stance on environmental matters,’ says Gunnar Eik, CEO of the Motor Group representing Mitsubishi Motors in Norway. Mitsubishi’s Norwegian environmental plan will be certified to ISO 14001 by the year 2001. he authorities are constantly setting more and
this process, and has created a programme to meet the
more stringent emission standards, and we’d
company’s particular needs. The project is split into two
prefer to be ahead of these requirements,’ says Gunnar
– during the pilot phase, five dealers and MMC Norge
Eik. ‘Mitsubishi in Norway is a major supplier to several
(the vehicle import company) will take part in a preliminary
state-owned and other large firms, and these requirements
scheme that will last for one year. After this pilot phase,
can make demands on both manufacturers and individual
the work will be evaluated and a plan will be prepared to
plants. Mitsubishi Motors on a global basis wants to have
develop and implement it in the remaining part of the
environment-friendliness all the way from manufacturing to
organisation. This consists of 19 subsidiary Mitsubishi
distribution to the customer, and we’re also trying to
dealers, as well as Motor Part (equipment and spare
make Norwegian car owners more environmentally aware.’
parts) and Motor Data (EDP) companies. Finally all the
Mitsubishi does this by ‘motivating’ those buying new
remaining independent, contracted dealers are targeted
cars to drive in an environmentally friendly way through
to be certified. Mitsubishi’s quality-assurance systems will
a scheme highlighting how to best exploit the engine
also be certified to ISO 9002. ‘The pilot group will develop
‘T
characteristics, so that they use as little fuel as possible.
and implement an environmental and quality-assurance
Mitsubishi Motors in Japan is also at the forefront as
management system for its members,’ says general manager
regards the development of ‘hybrid’ cars – cars that have
Reidar A. Sten, responsible for PR, Environmental and
an internal combustion engine combined with batteries
Public Affairs in the Motor Group. ‘During this process,
and an electric motor.
the concept will be adapted to suit the entire Mitsubishi chain in Norway. The point has been to create a scheme
Environmental work
that is adapted to our needs in terms of time, practical
Mitsubishi Motors in Norway has now prepared its own
handling and, not least, costs. This will form a template
environmental plan: ‘Mitsubishi Agenda 21’. The company
for the other companies in the group.’
has stated its goal to have an initial part of the group ISO 14001-certified by the year 2001. DNV is aiding Mitsubishi in
Says Gunnar Eik, ‘Since many of our dealers have a huge workload, we must have clear goals: what do we want to do, what are our goals, how extensive must the work be to gain environmental and quality-assurance certification?’
CEO Gunnar Eik and project manager Reidar A. Sten: ‘Mitsubishi Motors wants to have worldwide environment friendliness all the way from manufacturing to distribution to the customer.’ Motivated dealers
programme we have received from DNV is very suitable
‘It hasn’t been difficult to get our dealers involved in the
for the types of company and work we are dealing with.
pilot project,’ says CEO Gunnar Eik. ‘We’re convinced
Since many of our dealers have a huge workload, we
that this will gradually become a motivating factor for the
must have clear goals: what do we want to do, what are
other dealers, once they see the advantages of being aware
our goals, how extensive must the work be to gain envi-
of quality assurance and environmental issues. Our dealers
ronmental and quality-assurance certification? We’ve
in Fredrikstad and Porsgrunn, who are in the pilot
developed a good dialogue with DNV and are sure that
group, have already won a local authority environmental
we can complete this process on time without having to
prize. This shows everyone that we place the environ-
put everything else to one side.
ment high on our agenda.’
‘Once we’ve finished the process, we’re going to make the environmental certificate a part of our profile.
Training and exchanging experience
Everything we do must demonstrate that Mitsubishi is an
The programme prepared by DNV is a combination of
environmentally aware company.’ Christine Calvert Photo: Kim Larsen
lectures, problem-solving in groups, and discussions. Between seminars, the participants get homework, in which goals, plans and routines must be verified and checked. The seminars start off with an introduction by
This is ISO 14001:
DNV, during which the concept is discussed for each in-
The standard is a framework for managing the impact of
dividual company – how to define quality and environ-
services, products and activities on the environment. It
mental criteria, and what consequences they will have for
supports the development of a systematic approach to setting
each company. The aim of the seminars is to train and
environmental objectives and targets, achieving them and
follow up the project participants, and for the project groups to exchange experiences. Says Gunnar Eik, ‘The
demonstrating that they have been carried out.
MANAGEMENT CONSULTANCY
SIX
Managing technology: STEPS TO SUCCESS
Change is the common denominator in modern business practice. Most businesses use IT in some form or another to handle their information and communications needs, but often too little thought is invested in change programmes: many IT projects are delivered too late or incomplete, or fall below original expectations, and the entire change process suffers.
‘Delivering a successful change programme is rather like trying to change the engine in your car while still driving,’ says Terry Ward, change management specialist at Cap Gemini. Photo: Kim Larsen
MANAGEMENT CONSULTANCY
‘P
robably over 80% of change programmes return insufficient value to the customer,’ according to Terry Ward, change specialist at management consultancy Cap Gemini. He believes we all too often use an over-simplistic approach to address complex challenges.
The change journey
3.The business case The entire change programme should be based on sound business issues. Too often we find there is no clear, realistic business case which has been validated and endorsed by top management. The lack of focus we see on achieving ‘quick wins’ merely underlines this, and can often result in a total lack of urgency and consequent failure.
Says Ward, ‘The change programme can be visualised as a rollercoaster ride which is basically the same for all companies. Some will be on the upward curve, starting to formulate expectations for their planned investment in new technology. Other companies might have started – or just finished - a project and be on the downward curve: they can see that their expectations were unrealistic or that the project is not so easy, or they do not have the energy or resources to complete the job properly.’
4.Performance measurement
Some of the common reasons for such disappointing results are: • Expectations exaggerated by IT providers, consultants or internal staff; • Urgency to ‘beat the clock’, for example, year 2000 compliance; • Unexpectedly high cost of maintaining inherited systems; • Eagerness to ‘jump on the bandwagon’.
5.Strategy deployment
‘What we find,’ Ward continues, ‘is that some companies, despite having implemented the IT backbone satisfactorily, often struggle to optimise the new solutions because they find it difficult to align the organisation with the new solution, or to align business processes with company strategy.’
6.Change management
Ward avers that such situations are not abnormal. ‘All companies undergo this change journey. The trick is not to try to avoid it - it is inevitable - but to try to reduce the time it takes to get through the curve, and, of course, the height of the expectations crest and the depth of the anticlimax trough.’ He admits that this is not always as easy as it might seem, and maintains that there are six specific, inter-related issues that companies must orchestrate to achieve positive results.
The new solutions must be monitored against the original expectations. ‘If you can’t measure it, you can’t manage it’. For example, you need a mileometer to tell if you are getting better petrol consumption from your new car. ‘We find that companies stick to their old ‘‘lag’’ indicators, looking to the past, rather than ‘‘lead’’ indicators which can tell them daily what is going right or wrong, and where to focus management attention.’
It is crucial to understand how the company can streamline and simplify business processes and IT solutions to better deploy its strategy - for example to achieve better customer loyalty. Management must also ask itself how to differentiate products, staff and business processes from those of competitors.
When undergoing change programmes, it is important that the company properly avoids or addresses potential barriers to success. All too often, projects are designed, managed and delivered as technical exercises: but it is vital to really get the staff involved and convince them that they can affect the change process. ‘And have fun doing so,’ says Ward. By ‘staff’ Ward means all levels in the company, because acceptance of change is crucial. ‘A company needs leaders that are willing and able to synchronise all elements of the change equation, and to take decisions quickly. Top management must understand this, be seen to be involved and demonstrate their commitment. Otherwise they will not be doing their job properly and will never achieve maximum benefits.’
1.Improving business processes Business processes determine how the company operates, how the staff spends its time and how customers and suppliers relate to the company. All too often, these processes, instead of becoming faster and simpler, become fragmented and complex. Addressing them across the IT systems is an important first stage for success. ‘At the simplest level, there are issues around the system itself, where parameters and interfaces can be adjusted and streamlined to provide a better process. A more difficult issue is to get the new solutions to work seamlessly across old functional procedures.’
Stuart Brewer
Managing risk, and the consequent need for change, are common themes throughout DNV’s activities. Various types of risks influence the customer’s business result, technical as well as management and people-related. Through its consultancy services DNV assists customers reduce their business risks by identifying areas for
2.People and training Training is commonly given a low status, bundled in with technical activities. This results in a missed opportunity to show individuals their place in the organisation’s new systems and business processes, and to change their attitudes and behaviour to address the new way of dealing with customers, suppliers and colleagues.
improvement, and in implementing the necessary changes. DNV’s contribution depends on understanding the key elements of each customer’s business, and which elements in his activity are most significant for success.
INFORMATION TECHNOLOGY
Certification of information security
PROTECT YOUR MOST IMPORTANT ASSET
It is impossible to calculate the business risk of inadequate information security; addressing this, BS 7799, the new Information Security Management System (ISMS) certification, controls the risk and enhances security. Illustration: NPS, Andrew Judd
INFORMATION TECHNOLOGY
I
ncreasingly, organisations and their information systems are faced with security threats from a wide range of sources, including computer-assisted fraud, espionage, sabotage, vandalism, fire and flood. Inger Nordin, DNV project manager for BS 7799 certification, points out that computer viruses, computer hacking and denial - of - service attacks have become more common, more ambitious and increasingly sophisticated. Passwords, hospital records, pictures of prototypes and other sensitive information are found illegally on the Internet. And not to be forgotten - your employees are moving to your competitors. No matter how a company’s data is stored or used - on paper, electronically, spoken or any other means - it should be suitably protected. There are several aspects affecting information security:
Inger Nordin
• Confidentiality - users must only have access to information they are authorised to see; • Integrity - safeguarding the accuracy and completeness of information and processing methods; • Availability - information is available, in the correct context, when required by authorised users.
BS 7799 protects information The unimaginable amount of data available today has raised the need for a comprehensive standard covering information security. Says Nordin, ‘BS 7799 was developed as a result of industry, government and commerce calling for a common framework to enable companies to develop, implement and measure effective security practice.’
1. 3. 4. 5. 6.
The following steps are needed before certification: State an Information Security Policy Define a Scope Statement Conduct a Risk Analysis Derive a Statement of Applicability Design and implement an ISMS.
‘Management has always followed up financial issues,’ continues Nordin. ‘The past years’ management systems in quality, environment and health and safety have been implemented and followed up by Occupational management since those questions have Health and Safety become more important. Now that the time for information security management Environment has come, it does not mean that the company Quality needs to create yet another management system. An integrated business manageEconomy ment system can serve.’ Information Security
Business Management System
The ISMS that the company has implemented, based on the identification of risks facing it, is audited in a similar way to other management systems such as ISO 9000 and ISO14001.
Nordin points out that a BS 7799 ISMS certificate may be of most interest to business partners who entrust information into the custody of the certificated organisation. It will also affect the management of the company itself, to demonstrate adherence to good security practice. Svein Inge Leirgulen
Premiums reduced for BS 7799 certification Gjensidige, a Norwegian insurance company, now grants premium reductions to BS 7799-certified companies that have loss-of-data insurance. Gjensidige managers know that certified companies take security seriously.
Damage to data and software that is due to viruses or hacking has up to now not been covered by normal insurance. ‘A lot of value creation is now linked to the use of electronic aids. Large amounts of stored data therefore comprise the ‘‘basic capital’’ of companies – data that is necessary for value creation and further operations,’ says John A. Elvsborg, Gjensidige’s data and telecommunications insurance manager. ‘When it comes to fire, no companies dare to be uninsured. But the irony is that viruses and hacking are much more likely to cause damage. This results in many uninsured companies being left high and dry when damage occurs. It will be much more common in future to have insurance against such incidents.’ Gjensidige is one of the few insurance companies in the world to offer insurance against data losses. It also grants premium reductions to companies certified in accordance with BS 7799.
John A. Elvsborg
Says Elvsborg, ‘The certification and the process surrounding this standard will increase awareness and strengthen procedures. Some of the most important aspects of data security are good, clear instructions and routines. This is where BS 7799 plays an important role. It also confirms every year that this awareness has been maintained.’
MARITIME RISK
Marine insurance highlights
THE CHANGING PATTERN OF RISK ‘Ship failure presents a much more optimistic picture, with a two-thirds reduction during the 1990s - the credit for which must be shared by the classification societies and shipowners.’ This is one of the leading conclusions from the recently published ten-year analysis of trends in maritime risk by the UK P&I Club. Karl Lumbers, the Club’s Manager of Ship Inspection and Loss Prevention, warns that human error still continues to be a serious challenge, accounting for 58% of major claims, and emphasises the need for education and training in loss prevention.
L
eading insurance experts point out that the application of sound risk-management principles can do much to reduce
the incidence of claims in the shipping industry. But, before a sensible risk- management plan can be drawn up, shipowners must be able to identify and prioritise the main risks. The major protection and indemnity insurer the UK P&I Club has been analysing its major claims for many years to determine and assess the nature of the risks its members are experiencing. The Club’s recently published ‘Analysis of Major Claims’ is the most comprehensive report to date and examines
‘Why are so many
those claims in excess of US $ 100,000 filed by its members between 1987
containers still being
and 1997. With the Club’s membership representing approximately 20% of
lost overboard ?’
the world’s deepwater fleet and a cross section of ship types, the report gives a representative global picture of maritime risk.
asks Karl Lumbers.
MARITIME RISK
Loss prevention service
Major sources of claims
The UK P&I Club’s more detailed
The analysis highlights the Bahamas, Cyprus, Panama
interest in claims analysis dates
and US-registered fleets as being particularly prone to
from the late 1980s, when insurance
structural failure claims. However, the statistics need to
renewal premiums jumped alarmingly.
be put in context. It is significant that a substantial proportion
The Club was handling 20,000
of the Panamanian-registered fleet consists of bulk carriers
claims a year.
Claims in excess of
and dry cargo ships. Also, the fact that the rig and supply
US $100,000 were being received at
boat figures contribute greatly to the US Flag quota of
some 300 to 400 per year. ‘We discovered
ship failure-related claims influences these registers’ positions
that 2% of our claims accounted for
in the tables. Although the number of Bahamian-flagged
72% of our outgoings and this
vessels entered in the Club is small, the report indicates
prompted the setting up of a formal
that this Register ‘exhibits a frequency trend which is
loss-prevention service for our members,’
consistently in excess of the Club ship failure trend.’
comments Lumbers. ‘As a result of examining the claims trends, now we can work with facts.’ The results are impressive. Of all the ship failure claims received by the Club since 1987 only one third have been presented since 1990. Over the same period, moreover,
In terms of claims distribution, the report identifies some significant developments. The claims performance for container ships has shown a deteriorating trend since 1993, with a sharp increase in the number of serious cargo explosions and fires. Of particular concern to insurers is the safe carriage of calcium hypochlorite, a cargo which is perplexing the scientific community.
there has been a growing acceptance that loss-prevention efforts must go beyond
Shore error is a greater problem with container-ship
technical matters and address human factors,
operations than with any other ship type, responsible for
which are the cause of the great majority
21% of all major claims compared with an all-ship Club
of claims.
average of 9%. Lumbers blames poor stowage of cargoes inside containers, and points to loss-prevention training
The Club’s broad definition of ship failure
as a means to improve the situation. ‘Too many containers
includes structural, mechanical and equipment
are being lost overboard. We will be sending copies of
failure. The analysis includes an examination
our latest video ‘‘Container Matters’’ for our shipowners
of the impact of ship failure by age of vessel,
to pass to shippers, in an effort to spread best practice in
ship type, size and Flag of registration. Ship
the industry.’
failure, it must be remembered, is also a
In recent years, the UK P&I Club has led the field in
significant factor in cargo claims, with hatchcover
the design of training materials to support loss-prevention
failures alone being implicated in US $34 million
initiatives. Lumbers says that demand for these materials
worth of claims in the ten-year study.
has been particularly strong since the advent of the
The report identifies vessels of between 14
International Safety Management Code.
and 19 years old as being at greatest risk of failure.
The publication of the UK P&I Club’s report is a significant
The most vulnerable ship type remains the bulk carrier,
milestone in the assessment of maritime risk and in the
though for this group the data shows an improving trend.
development of loss prevention. Improving claims records is
A notable concern is that structural failure in container
the obvious goal but as Lumbers concludes, ‘Our shipowners
ships is on the increase.
must feel confident that they are sharing risk with other quality operators. Mutuality is trust, trust that the system is fair.’ Eric Beech
SHIPBUILDING
Sembawang’s repair and
conversion skills offer ships A NEW LEASE OF LIFE 70 per cent of the world’s fleet of oceangoing ships are more than ten years old. As individual ships age, so the growing cost of their operation and maintenance encourages shipowners to replace them with newbuildings or younger successors. But there is an alternative: to extend their life span by judicious upgrading or conversion. A number of profitable shipyards around the world specialise in this option.
O
in capacity, and which can offer 3.5km of continuous and sheltered berthing, with comprehensive facilities to match.
Based on the one-time British Royal Navy Dockyard handed over to the Singaporean government in 1968, Sembawang was successfully developed following its new owners’ decision to concentrate on ship repair and conversion. Close to one of the world’s busiest ports, a number of repair and conversion facilities have flourished here in Singapore. Sembawang itself has grown to become a world-class shipyard whose four dry docks total 710,000dwt
Today Sembawang is one of the largest integrated repairand-conversion yards in South East Asia. General manager J. M. Koh points out its record: ‘We undertake the repair or conversion of virtually every type of vessel – from VLCCs, chemical carriers and gas tankers to luxury cruise ships.’ All these specialised designs call for particular expertise; the yard supports a continuous development programme to ensure that its technology and workforce skills remain up-to-date.
ne such yard, whose order book of sizeable ship conversions reflects the success of its policy of specialisation, is Sembawang Shipyard in Singapore.
General manager at Sembawang is J. M. Koh (centre), here with quality manager Simon Kuik and DNV’s Chan Hua Fung.
Photo Courtesy of Sembawang Shipyard
SHIPBUILDING
Adds Koh, ‘Safety and quality are vital. We recently gained the Singapore Business Excellence Award for quality, the first shipyard to do so. Maintaining competitiveness is essential: we must offer innovative solutions and technical expertise to meet demanding technical challenges. Det Norske Veritas is an important partner, helping us achieve efficiency and on-time delivery, as well as reduced costs.’
Safety Management and Loss Control At a time of rising global concern about safety and environmental protection, Sembawang managers recognise the value of a comprehensive safety-management system. Since 1992, the yard has used the loss-control management concept to improve its own safety-management activities, through DNV’s International Safety Management System. This, the ISRS, is an internationally recognised measurement and evaluation tool based on 20 critical elements found to be common to most successful health and safety programmes. The ISRS helps identify the steps to developing a losscontrol programme – setting quantifiable organisational standards, and measuring effectiveness. It provides management with an ‘early warning’ for the prevention and control of loss. Companies in more than 7,000 locations worldwide currently use the ISRS. Following DNV’s evaluation of its safety-management system, Sembawang has undergone
follow-up audits each year since 1992; it is now at Level 8 in the 10-level grades of achievement. Among the benefits of ISRS, yard managers agree, are its ability to compare a company’s safety performance against others in its industry; and to improve performance beyond legislative requirements alone. 20 elements are encompassed in an ISRS audit – including accident investigation, emergency preparedness, materials and services management, and planned inspections and maintenance. Over the years, DNV staff have made a number of recommendations to further strengthen the yard’s management system. According to Sembawang safety manager P.K. Raveendran, the yard has gained some measurable benefits from implementing the ISRS requirements: • The safety-management system has become more refined and comprehensive; • Frequency of accidents has declined; • Employees’ safety awareness has significantly improved. This is evident from the higher compliance rate observed during physical-condition inspections. Raveendran is convinced, too, that a commitment to employee training and development is vital in the yard’s continuing to attract such major shipowners and operators as BP, Esso and Shell. ‘Safety awareness is promoted throughout the company,’ he says. ‘Everyone has an active role to play in meeting our customers’ requirements in a safe working environment.’ Knut A. Andersen
Safety training at Sembawang Serving a worldwide clientele, Sembawang shipyard has a repair and ship-conversion order book covering 250 vessels annually, from some 35 countries. It started implementing DNV’s International Safety Rating System in 1992, and has been audited every year since. Today the yard is at Level 8 on a 10-level scale. The yard maintains a strict safety-training programme for all its 2000 employees. It was the first shipyard to win the Singapore Production & Standards Board’s National Training Award for its comprehensive approach to training.
Sembawang safety manager P. K. Raveendran: ‘Accidents have become less frequent since we introduced the ISRS.’
VIEWPOINT - 2
NEW OPPORTUNITIES WORLDWIDE ‘There may not be room for more mega - mergers in the private sector. The next move is more likely to be on the part of national governments and state-owned oil companies looking for opportunities to improve efficiency and value creation,’ says BP Amoco Norge general manager Greg Coleman.
C
oleman believes that in order to make more of their natural resources, countries such as Russia, China and Mexico may open up and broaden the opportunities for external participation. ‘Then oil companies will focus on these new areas, rather than each other,’ says Coleman. He emphasises that no one can draw an exact picture of how the oil industry will develop in the future, but his own background makes his forecasts worth studying more closely.
When the merger between BP and Amoco was finalised a year ago, Coleman took over as general manager of the company’s Norwegian business unit. He participated actively in the merger process as executive assistant to BP’s chief executive officer Sir John Browne. At 45, he has more than ten years’ experience of working for each of the two former companies, BP and Amoco.
‘Developing new technology, and the opportunity to participate in emerging
Managed by the state
countries, will separate the
‘China, Russia and Iraq are major players in the international oil industry,’ explains Coleman, ‘as are Mexico, Argentina and Brazil. All these are significant producers, with enormous resources. However, their most important shared feature is that the oil business in these countries is mainly owned and managed by state-owned companies, with very limited opportunities for foreign companies to participate.
winners from the losers
‘But this cannot and will not last. The state-owned companies need competition in order to further develop their technology and efficiently utilise their resources. They also need capital in order to realise major, high-cost projects. International players in the oil business – both oil companies and contractors – have the most up-to-date expertise for further developing technology at feasible cost. ‘The ability to participate in these developments and the opportunity to be present in such countries will separate the winners from the losers in terms of future opportunities in the oil industry.’
in the international oil industry,’ says Greg Coleman.
VIEWPOINT - 2
The pendulum swings Since the BP/Amoco merger, other mergers and alliances have also been created. Belgium’s Petro Fina and the two French oil companies, Elf and Total, for example, have become one company. Esso has grown even larger through its amalgamation with Mobil. ‘It’s true that we started early,’ is Coleman’s comment on these significant structural changes to the major oil companies. ‘But changes take place all the time – they always have and always will. Next time, the pendulum may swing in the opposite direction. Companies may well split into smaller units once more.’ The fact that the two former companies have become one is clearly visible in Norway’s oil capital, Stavanger. BP’s building, which was full of BP employees a few years ago, is now only partly filled by BP Amoco. Statoil rents half the building, while another almost as big has stood empty in Stavanger city centre since Amoco moved out. Both the two long-established companies brought strongly anchored and different cultures with them to the new company, which has been a challenge for the respective staff and management teams. A new, common culture must be developed, and this takes time. Ahead lie challenges for each, following over 200 job losses. From the outside, the two cultures that are now being merged into one have always appeared different – BP’s decision-oriented culture versus Amoco’s culture of consensus.
Quality more important than price The new company also represents a challenge for the two companies’ former contractors. Says Coleman, ‘We’re cutting back on our lists of suppliers. We cannot maintain relationships with all our previous contractors. The best will remain. Quality is more important than price, and safety is a prerequisite for them being considered at all. When awarding contracts, quality will count for 80% and price for 20%.’ Contractors which can refer to previous results and prove that they give priority to safety, use their best people and can cooperate well and closely with BP Amoco will be given preference. ‘I expect that between 60-80% of BP Amoco’s tasks will continue to be carried out by people other than our own employees,’ explains Coleman. ‘I predict that many of these tasks will be carried out in areas we are not in today – such as China and Mexico. The challenges for both BP Amoco and its contractors lie not in new, imminent company mergers, but in being there and applying their expertise to these new areas – where it’s happening and when it’s happening.’ Photo: NPS, Vince Streano
Per Wiggo Richardsen
ENVIRONMENT
Due Diligence Audits pave the way to
RISK-FREE PROPERTY PURCHASE ‘No documents are signed before a Due Diligence report is on the table,’ says technical operations director Halfdan Kverneland Olafssøn of Coca-Cola’s Nordic and Northern Eurasia Division. As part of the company`s environmental policy, all properties under consideration for purchase or acquisition are being assessed before any transactions take place. ‘It enables us to get the total costs on the table before any decision is made.’
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oca Cola’s environmental policy states that it is to conduct its operations in compliance with applicable environmental laws and regulations. There are no international requirements stating that a Due Diligence report has to be in place before property transactions, but many countries assume an environmental assessment as part of the application for an operating licence. Coca-Cola has made it policy to carry out environmental assessment studies at all its enterprises worldwide. The risks and liabilities identified by the environmental due diligence process are then appropriately reflected in the purchase agreement.
‘A Due Diligence Audit enables us to get total costs on the table before any decisions are made,’ says Halfdan Kverneland Olafssøn of Coca-Cola.
‘This kind of policy covers economics, resources and reputation,’ says Kverneland Olafssøn. ‘The environmental status of our real estate predicts safety and continuity in production wherever we are in the world. If deficiencies are found, this is stated in the agreement. This enables us to foresee possible business risks, clear the line for a good cooperation with local and national authorities and public, and make a good ground for a business agreement suitable for both buyer and seller.’
Investigating consequences DNV has executed Due Diligence reports on three of the latest purchases by Coca-Cola in the Nordic countries. A Due Diligence Audit is a matter of quick handling and thorough work. The decision to have such a report is often made in the final stage of a purchase, perhaps 2-3 weeks before signing the contract. The risk of buying an existing manufacturing plant can be serious if, for example, a source of pollution has been missed before closing the agreement; this could have severe economic consequences for future production.
Identifying the liabilities The purpose of an Environmental Due Diligence Audit is to identify the environmental characteristics of property which a company is considering for acquisition, sale or lease. The risk and liabilities identified through an audit are taken into account in agreeing the transaction. DNV has been carrying out Environmental Due Diligence Audits in several European countries since 1990, based on the DNV standard EDDA (Environmental Due Diligence Audit). DNV is developing EDDA as an international service, from its existing bases in Britain, Sweden and Norway.
EDDA in three phases: • Phase 1: A non-invasive evaluation of the environmental status of a property to address hydrogeological considerations, historical land use, government regulatory information, and on-site reconnaissance. • Phase 2: An evaluation involving systematic sampling and testing of environmental media to determine whether potential environmental liabilities identified in Phase 1 actually exist. • Phase 3: An analysis involving further detailed invasive investigation to determine more completely the extent of problem areas, and to provide proposed solutions. Beate Viktoria Ørbeck Photo Courtesy of Coca-Cola
PRINT PRODUCTION
IN HARMONY WITH THE ENVIRONMENT
C
laimed to be ‘the first publishing house that knows its trees’, Germany’s Axel Springer Verlag has for many years been a newsprint buyer that has set environmental standards. Even its suppliers are certified. Axel Springer Verlag publishes such newspapers and journals as Die Welt, Bild and Hörzu. The company’s environmental responsibility is regarded as twofold: on the one hand its publications must heighten their readers´ awareness of the subject. On the other, it must ensure that environmental consequences of its activities are kept to an absolute minimum. One of the first things environmental manager Florian Nehm did was to develop an environmental idea bank. His company annually invests more than 9 million U.S. dollars in environmental projects, but corporate funding is limited. ‘I have no budget, but I have the support of the whole company,’ he says. All projects are financed within the departments, which means that the respective departments get all the surplus. They feel ownership. He recommends this way of organising environmental work.
BETTER AND GREENER: Florian Nehm, environmental manager of Axel Springer Verlag: ‘I see my key objective to get the environmental aspect integrated throughout our organisation.’
Nehm works closely with internal and external experts in all ecology-relevant fields. The results are impressive, but this pioneering effort has not gone unrewarded: Axel Springer’s printing works in Ahrensburg was the first European printing centre to be certified in accordance with the European EMAS. Not long ago two Norwegian forestry-owner associations, suppliers to Axel Springer, were awarded DNV’s environmental certificates to ISO 14000. Thus they can prove that the timber they provide comes from forests run in a sustainable manner. ‘One way of documenting environmental effort is to have some independent third-party auditor to certify both the company itself and its suppliers – as DNV did for these Norwegian forestry companies’, says Florian Nehm. Eva Halvorsen Main photo Courtesy of Axel Springer Verlag
Newbuilding contract The biggest newbuilding contract ever signed in China, and the first VLCC to be built there, gives DNV a boost in the Chinese newbuilding market. Together with another 20 newbuildings ordered in China in 1999, this makes DNV the largest classification society in newbuildings, with a 30 per cent market share. Dalian New Shipyard (DNS) recently signed a contract with shipowner NITC for the construction of five VLCCs, the first VLCC order for China. DNS is the biggest shipyard in China, with continuous newbuildings to DNV class.
DNV project manager Sigvard Hedtjarn (right) with Dalian New Shipyards’s project manager Yang Hua, in front of the fourth bare deck semisubmersible Bingo No.4.
New internet homepage DNV’s Web site can now be accessed at: www.dnv.com The following is an example of our new homepage:
DNS recently completed an order for Ocean Rig of four DNVclassed bare deck semisubmersibles. The project, Bingo 9000, was the biggest offshore project for the yard and for China.
UKOOA project DNV’s Aberdeen technical consultancy has been selected as project manager for the UK Offshore Operator’s Association (UKOOA) drill cuttings initiative. This multi-million pound joint industry project aims to address the issue of drill cuttings piles in the North Sea over the next three years. The project’s goal is to identify the best environmental practice and techniques to deal with cutting piles. It will begin by sponsoring research and development to gather, review and develop current knowledge. This work will be reviewed by a group of respected scientists from throughout Europe. The second phase will involve the trials of technologies and equipment. There is currently no proven technology to deal with the piles, and there is concern that efforts to remove or treat them may cause more environmental harm than leaving them undisturbed, unless new, environmentally acceptable removal techniques are developed.
On the new Web site you will find information on DNV’s classification, certification, consultancy and software services. The Web site provides a daily news service, and regular feature articles about DNV activities and products. The site also provides users with the opportunity to subscribe to DNV newsletters, publications and selected circulars. If you have any comments on the Web site please forward them to: web.greenhouse@dnv.com
OOCL achieves safety award Hong-Kong based Orient Overseas Container Line has become the world’s first carrier to have its entire fleet audited and rated to the International Maritime Safety Rating System. The IMSRS programme is administered by DNV and has ten rating levels, which measure compliance with codes and systems such as ISM. The company achieved a Level 7 rating. OOCL began operating its Safety Management Programme in February 1993 and was the first company to register with DNV as a licensed user of IMSRS in late 1995.
Major verification contract DNV has signed a major contract for the verification of the latest floating production platform for the Norwegian continental shelf, Snorre B. According to Henrik Madsen, head of Division Nordic Countries, the operator and builder can see the advantages of using DNV as the verifier and using DNV’s traditional class-based services for hulls and marine systems. The Nor wegian Petroleum Directorate’s regulations and NORSOK standards will also be complied with. ‘DNV’s knowledge of floaters, working methodology, and international follow-up system will add value to the project,’ says Madsen. The contract covers the construction work in Scotland, Spain and Norway. Saga Petroleum is the operator, while Aker and Kværner will construct the unit in a joint-venture project. In addition to the original contract, DNV has recently won a further contract to verify the load-bearing structures on the Snorre B topsides.
ISO 9001 to Korean Air The aircraft-manufacturing division of Korean Air, which also operates an airline service business, is the first Korean planemaking firm to receive the ISO 9001 certificate from DNV. A certificateawarding ceremony was held at Korean Air’s Kimhae plant, with officials from Korean Air and DNV attending.
Karhula foundry gains IQRS The Karhula Foundry of Ahlstrøm Pumps Corporation in Finland has been awarded the International Quality Rating System (IQRS) Level 5 quality management system certificate.
ResidenSea to DNV Class After nearly four years of concept studies, in cooperation with various European yards, the ResidenSea project is about to materialise. The owner, ResidenSea AS, Oslo has entered into a contract with Norwegian shipbuilder Fosen Mekaniske Verksteder AS to build this unique vessel.
This is the first unit of Ahlstrøm Pumps Corporation to have received this level of certificate, and the first enterprise in Finland that is certified according to the requirements of the new IQRS edition 3.
The ship will represent the ultimate maritime lifestyle experience. The idea is simple, yet revolutionary: to build a ship on which the passengers own the exclusive rights to their own apartments. The vessel will be a floating palace of 250 apartments and 187 guest suites, and is to permanently circumnavigate the globe, following the best events on offer in cities and countries worldwide. Beside the class and statutory aspects, DNV has also been awarded a contract related to noise and vibration work, which includes analyses, testing and inspection during building, and comprehensive verification measurements before delivery. The hull will be built at Fosen’s hull yard in Landskrona in Sweden. Outfitting takes place at the mother yard in Rissa, Norway. The ship designer is DeltaMarin Ltd, Finland. The design and construction will take about two years, with delivery in December 2001.
From left, Karhula Foundry’s Veli-Pekka Tiittanen, Matti Haarala and Johannes Vierimaa, seen here with Torger Baardseth, acting manager of DNV East Baltic.
LAST WORD
NORWAY AT A CROSSROADS Norwegian shipping is facing a wealth of opportunities. Economic growth in most regions of the world, not least in South East Asia, is opening up a new era for sea transport. Norway, with a strong and competitive cluster of
So what will be the consequences of this political activity ?
maritime activities offering a high level of competence
‘The compromise means that new business will
and quality, is well equipped to exploit these
be established in other countries. In business ventures
opportunites, says Rolf Sæther, the internationally
involving foreign interests, it is hardly likely that
respected director of the Oslo-based Norwegian
there will be interest in establishing operations in a
Shipowners’ Association.
country where the most prominent feature of its shipping policy is its instability. Over time, this means
‘Given our sound market infrastructure, one
fewer orders for Norwegian shipyards and suppliers,
should draw the conclusion that we can look to the
less recruitment of Norwegians to maritime professions,
future with confidence. Regrettably, though, the recent
and a weakening of our international market position.
budget compromise reached by the Norwegian government and the Labour party is a setback for all of us working in the maritime industry.
‘All companies have to adapt to the market. If it is not profitable to run a business in Norway, other countries will be the gainers. The shipping industry
‘We now have a shipping policy that further
is one of the industries that traditionally has succeeded
widens the gap in competitiveness between shipping
in Norway, even though it is more expensive here
companies in Norway and those in Europe. For the
than in most other countries. But if confidence in
third time in three years, national working conditions
Norway as a credible, attractive, home port for maritime
have been changed for the worse. These changes
operations is weakened, then business will move
primarily affect our leading international shipowners
elsewhere.
- the ones which can best ensure continued growth and development in our maritime industry.’
‘At present, the Norwegian maritime industry contributes production value of some NOK 80-90 billion per year, and provides close to 5 per cent of employment in the private sector. So it is time for the politicians to remember that Norway’s maritime future rests in their hands - yet again.’
‘If it’s not profitable to run a business in Norway, other countries will gain’ - Rolf Sæther
What should they do to guarantee that future ? ‘The adverse budget aside, the biggest challenge for Nor way as a maritime nation will be to attract foreign owners here, both individually or in co-operation with Norwegian companies. We will probably see multinational alliances in shipping as in other industries. We have the experience and expertise to take part in this development - subject to a new, long-term maritime policy.’ Stuart Brewer
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w w w. d n v. c o m
STAR TRAILS AND SUNRISE Capturing
the
spirit
of
the
new
Millennium, this striking image by photographer Carll Goodpasture combines the elapse of time, as the heavens wheel serenely about the Pole Star, with the sunrise that heralds the start of a new day. What that day – a new decade, a new century – will bring is the theme of this issue of DNV FORUM. Companies’ adaptability to change is vital if they are to compete and succeed, and in our pages we consider how companies worldwide are facing and accepting new challenges in their respective industries. Without exception, there is agreement that a truly global strategy is vital – and must be matched by the espousal of new developments in tools and technology. Even our cover photograph itself is a tribute to new technology: in this case the art of digital manipulation, that has moved picture-making beyond the traditional darkroom and helped make possible photo-montages such as this. DNV FORUM too, in a modest way, pays recognition
to
the
new
millennium
with a change in its graphic profile. We believe this new cover design will help readers immediately identify articles matching their interests – and that the contents of each issue will continue to address their needs.