Interview with Oleg Nikolaenko, Head of the HSE department, Gazprom Neft
The concept of “industrial safety” (or Health, Safety and the Environment (HSE)) is multifaceted in terms of its remit, and the areas of activity it covers: the identification, evaluation and elimination of multifarious risks to the life and health of every employee; safety in handling tools and equipment; and environmental security. Head of the HSE department, Oleg Nikolaenko, talked to us about precisely what falls within the remit of Gazprom Neft’s HSE department.
— Last year Gazprom Neft was part of a genuine breakthrough in helping to introducing the concept of a risk-based approach* to legislation on health and safety. Are results, as yet, evident?
— Probably, although it’s a bit early to talk about specific data. Financial outcomes will be most marked in capital construction: expert analysis suggests that projects implemented under the framework of this revised legislation could, across Russia as a whole, benefit the Russian economy to the tune of about one trillion rubles. But legislative changes have had a complex impact — not just in terms of economics. Working under outdated regulation, people began to think about how to get round this — developing special technical facilities, and negotiating with officials. How far these decisions were based on health and safety principles, nobody could say. Now we have the opportunity of either working within the remit of existing standards, or adopting advanced technologies that allow the development of a safe model, based on mathematical calculations.
— And this hasn’t led to complete chaos?
— Chaos was what we had before, when we were using outdated schemes, and decisions were adopted on the basis of one official’s subjective judgement. And mathematics — this is, as is well known, a very precise science. Knowing areas of potential vulnerability in an emergency situation and available protection strategies, you can always develop a safe project. A simple example: last year we came up against new safety regulation in oil production, pursuant to which local residents had to be located at least 500 metres from a well — although previous regulation stipulated half this. This change added a further RUB500 million to the cost of each well pad (roads, power lines and other infrastructure). It became clear that nobody what the new regulation was based on — there hadn’t been any problems under the previous regime. But it has now been passed and, while this mistake can be corrected, the business will bear colossal costs — we simply have to drill. Using a risk-based approach we did some calculations and designed some models, which showed that, in a worst-case scenario, the area at risk does not exceed 250 metres — something that’s since been confirmed by independent experts: so that’s an immediate saving. Added to which, Rostechnadzor is now, on the basis of our calculations, changing the rules.
— Has that notorious human factor — the Russian mentality — been taken into account in the new approach?
— We’re trying to automate processes as far as possible, using computerised control and protection systems. Although, of course, eliminating the human factor completely is not possible — 95 percent of incidents are caused by precisely this.
— So fighting this evil is impossible?
— Of course it’s possible. Coaching, training, regular workshops — all this is in place, and all of it is working. There is a control system but, obviously, assigning a controller to every employee isn’t possible. So we are now working hard to make sure that the development of a safety culture is inculcated, as a priority, among managers at all levels; they are at production facilities every day, and should not be tolerating any transgression.
Generally though, I don’t believe all this talk about mentality. Are we to believe that Russians are indifferent to their own survival, and that of their families? It’s impossible to support a family on disability benefit in this country. I doubt think this is in any way to do with mentality — it’s just acquired habits. The Soviet Union developed Western Siberia from scratch — and you won’t find any mass graves there. A health and safety system was put in place, but that all fell apart together with the country.
— Incidentally, since every briefing by the CEO starts with the topic of health and safety — should this be taken to demonstrate the process of involving management?
— This is best practice among all leading international companies, and something we’ve started implementing successfully at Gazprom Neft. Such an approach highlights the importance of the issue, and sets the right tone. If everything is aligned correctly at this level, then it follows that production processes will be too.
— So far as I understand, you are currently developing another programme, under the auspices of the Russian Union of Industrialists and Entrepreneurs’ Committee for Industrial Safety, as it happens, directed at assessing workplace safety industry-wide, and benchmarking against the best ...
— In order to develop a system for workplace safety, it is vital to understand where you currently stand — which means benchmarking against other companies is essential. Obviously, we conduct our own statistical analysis, but understanding whether the situation is good or deplorable is difficult if you don’t compare yourself against your peers. We exchange information with several oil companies, other information we uncover from sources in the public domain, but that’s not enough. So representatives from the oil and metal companies decided to develop a benchmarking system similar to that used by the International Association of Oil and Gas Producers (IOGP)**. The Russian Union of Industrialists and Entrepreneurs’ Committee for Industrial Safety has become the forum for this.
— So business has taken the initiative in establishing a non-governmental system?
— And participation, moreover, is completely voluntary. It’s not going to affect a company’s commercial interests, since benchmarking will be undertaken on the basis of statistical trend information, rather than actual data — nothing confidential. The government also wants to launch a similar system, but has been considering this for ages, expecting the data collection cycle to take several years. And it’s by no means the case, of course, that all companies are prepared to hand over their data to government authorities, concerned that this might end in some kind of crackdown. In any case, these two systems are not going to be in any kind of competition, but will, rather, complement one another.
— So is there a similar system in operation abroad?
— Two, in fact. That operated by the IOGP, and its American counterpart. We took the IOGP system as a model since it is, in the first place, closer to our own in terms of data management. Also, as an international association, we hope, in the future to facilitate the exchange — and deeper analysis of — information about incidents: the kind of incidents that occur, the nature of these, and their causes; on the basis of which it will be possible to predict the development of a situation, and prepare some kind of preventative measures, as well as developing industry-wide standards. But what’s important at the moment is starting the process.
— How good are the metrics that make up the system?
— As regards injuries — more than good enough. At the same time, in order to evaluate how safe a company’s production process is (including in comparison with competitors), there’s enough data on incidents resulting in temporary incapacitation or death. The results just become apparent, allowing any trend to be identified. If some company bucks the trend, then it’s not difficult to determine the reason: inadequate protective clothing, footwear, working conditions, or regulation.
— Does the fact that other companies have come together to set up a system suggest a fundamental change in business philosophy and attitudes to workplace safety?
— Without any false modesty I can say that this is, to some extent, the result of businessmen being won over by the Russian Union of Industrialists and Entrepreneurs’ Committee for Industrial Safety. When we introduced a risk-based approach under Federal Law No.
— So workplace safety, in other words, is something that preoccupies big business, predominantly?
— Workplace safety costs money. We spend more than RUB 10 billion a year on the direct costs of workplace safety alone. But any initiative in modernising production has an enormously positive impact here, since modern technologies, as a rule, tend to be safe technologies. Smaller companies often cannot justify that sort of investment in a non-profit-generating area. Although that’s no excuse, of course, and there are some fundamental things that everybody should be doing.
— And what is the payback on such major investments?
— We saw a reduction of more than 20 percent in injury levels last year. The number of fatal incidents was also down. Look at the reports — road traffic accidents (RTAs), still happen, of course, under all sorts of circumstances — but almost all of them occur without injury. Because we’ve been able to persuade passengers to use their seatbelts (although there’s still much to do here). But how do you value a human life, in monetary terms? What other sort of return do you need?
— I think, even without a new benchmarking system, we know where we are in terms of workplace safety and, accordingly, what the priorities are in terms of developing this trend?
— Our main task is to change people’s perception of the problem. And, ideally, to do this in such a way as to do away with the need for people like me — so that everyone becomes their own HSE manager. So that any individual, at what ever level, has thought about the consequences before doing something. This is, at its simplest, what a safety culture is about. Although, unfortunately, that is a distant prospect. More immediately, we’ve the same task — promoting eight key safety rules, breach of which is the cause of most accidents. Internationally, these are known as the “golden rules for safety” — rules understood by everyone. For example, “buckle up when driving”; “don’t smoke on the shop floor”; “don’t drink on duty”; and “make sure you use protective clothing and equipment at work”. Obviously, there are many more, but we’re moving from the simple to the complex. The main thing is that our employees understand that those at home want them back alive and well, and that following safety regulations — well these rules have been put in place to save lives.
* In 2013, at the initiative of oil and gas companies, Federal L:aw No.
** IOGP — The International Oil and Gas Producers Association is a global forum, facilitating the exchange of cutting-edge experience in health, safety and environmental protection. Members of the IOGP include more than 70 major oil companies including BP, ExxonMobil, Shell, and Total.