25395 - Delta Petroleum

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Environmental & Social Review Summary

Project Number

25395

Company Name

DELTA RUBIS PETROL TICARET VE SANAYI ANONIM SIRKETI

Date ESRS Disclosed

Jun 25, 2007

Country

Turkiye

Region

Central Asia and Turkiye

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Oct 11, 2007
Signed : Oct 17, 2007
Invested : Nov 29, 2007

Sector

Other Petroleum and Coal Products

Industry

Manufacturing

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

The project entails a $45 million corporate loan to Delta Petrol Urunleri Ticaret A.S (Delta). The proceeds of the loan will be used:

- to expand the company’s current 300,000 m3 Dortyol Petroleum Products Storage Terminal, through the construction of an additional 300,000m3 of capacity, in addition to a jetty with three berthing stations, with capacity to load and discharge vessels of up to 150,000 dwt; and

- to expand Delta''s petroleum products distribution network, through its “Gulf” branded service stations.

Delta engages in three related business lines:

- storage of petroleum products at its Dortyol storage facility, in Iskanderin Bay, in the eastern Meditteranean;
- trading and transport of petroleum products, primarily based on sales to, or purchases from, Iraq over the Iraq / Turkey Northern Corridor, supported by a fleet of Delta-owned LPG trailers, and a transport contracting operation; and
- distribution of petroleum products in Turkey.

Overview of IFC's Scope of Review

IFC’s review activities involved conducting site visits and interviews with operational staff at the Delta Dortoyl Terminal and a Gulf service station in Ferizli, as well as holding discussions and interviews with management and technical staff at Delta Petroleum HQ in Istanbul. We also reviewed the following documents:

- Delta Oil Terminal, Port Regulations and Information , Undated;
- Delta Petroleum Products Trading Company, Dortoyl Terminal, Oil Spill Contingency Plan, prepared by Briggs Marine & Environmental , August 2005;
- Delta Petroleum Dortoyl Terminal Expansion Project – Description of Works.

E & S Project Categorization and Applicable Standard

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

- PS1 – Social and Environmental Assessment and Management Systems
- PS2 – Labor and Working Conditions
- PS3 – Pollution Prevention and Abatement
- PS4 – Community Health and Safety.

Delta acquired additional land adjacent to the terminal expansion from a private landowner on a willing buyer/willing seller basis. Considered endangered species, Green and Loggerhead turtles are known to use Iskenderun Bay beaches as nesting sites. All sea turtles are protected under Turkish law, and Turkish national-level authorities ensure that the Bay habitat is managed so as to protect and conserve the species. There are no indigenous peoples affected by the project. It is not expected that this project will result in impacts to cultural heritage.

The project is a Category B project according to IFC’s Procedure for Environmental and Social Review of projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to the applicable performance standards, guidelines or design criteria. Delta operates its existing facilities in compliance with applicable and relevant environmental and social requirements of Turkey.

Environmental and Social Mitigation Measures

Upon implementation of specific mitigation measures identified by the company’s environmental assessment of the Dortyol Terminal expansion, as well as some additional measures identified by IFC’s appraisal (as detailed below), Delta will ensure compliance with IFC Performance Standards.

- Environmental and Social Assessment and Management Systems:

Delta is carrying out an environmental impact assessment for the expansion of the terminal and they have engaged the Turkish consultant firm Serdar Engineering to carry out the assessment on their behalf. To be submitted to the authorities for approval by the end of 2007, the EIA will take into account the relevant and applicable legislation of Turkey, and will also address the requirements of IFC’s Performance Standards. Particular areas to be covered in the EIA include: social impacts; cumulative issues with respect to the increase of industrial activity in the Iskenderun Bay area; tanker traffic and safety in the Bay; impacts to fisheries; and identification of sensitive areas in the vicinity of the jetty in regards to sea turtle activity.

The environmental impacts and risks of the service stations activities are considered during the site selection process. Delta has a number of experienced service station engineers that carry out a due diligence for each station. Site selection criteria are the same whether there is already a station in place or if a new facility is to be constructed. The location is evaluated on the basis of specific conditions that must be met according to regulatory standards in terms of layout, access and exit, fire safety and existing contamination. Any sub-standard equipment will be replaced including underground fuel storage tanks and it is a legal requirement that any existing contamination should be removed for disposal.

Delta has a Health, Safety, Security and Environmental (HSSE) policies and procedures in place to ensure a high standard of operation. The company puts a lot of emphasis on procedural review, regular supervision and maintenance of standards.

Its strong commitment to HSSE has enabled them to continue a long-term relationship with oil majors such as BP and large international trading companies such as Morgan Stanley. Going forward, the HSSE policies and procedures will be updated to include reference to compliance with IFC’s Performance Standards. This will include the preparation of written land acquisition procedures to be followed for all land acquisition activities associated with the terminal expansion.

An HSSE manual is in place containing procedures for the management of operations at the terminal site. Performance records show that HSE management at the site is very effective. The EIA will establish whether new or additional operational procedures need to be developed following terminal expansion. The company has a skilled workforce led by a strong management team. The Terminal’s HSE manager is second-in-command to the overall facility manager, has considerable experience in the operations carried out at the terminal, and understands the risks associated with the operation of the terminal. Delta put a lot of emphasis on training including mandatory HSE training. For contractors working at the terminal, Delta HSE requirements are included in their contracts. Contractors working at the terminal are under Delta supervision in terms of HSE management. At service stations Delta applies specific design and operating HSE standards and requirements for each facility in terms of their ability to respond to incidents, maintenance and housekeeping.

As well as routine inspections of road tankers and ships entering the terminal area, activities at the terminal are also routinely inspected by the HSSE manager. The quality of effluent discharges from the terminal site are routinely monitored as required by the regulator. Records are kept. Air quality and noise at the property boundary are currently monitored by the local municipality. In light of the terminal expansion and proximity of the terminal to local communities, Delta will develop an air and noise monitoring program that will measure emissions at the terminal fence line.

- Labor and Working Conditions:

Delta employs 500 staff, approximately 120 are employed at the Dortoyl terminal. Terminal expansion will add a maximum of 20 new jobs for operations. Turkey has ratified the main ILO Conventions on trade union rights, forced labor, child labor, and discrimination. The company’s labor practices comply with Turkish law, which is consistent with Performance Standard requirements. Delta has a fully fledged HR function and management structure, and HR policies are in place.
There will be no retrenchment as a result of the project.

Risk assessments are conducted for work activities as required by the HSSE manual. Safety procedures at the terminal are strictly enforced, this includes a permit-to-work system. Personal protective equipment is provided to all personnel at the terminal site and the wearing of PPE is mandatory. Safety training is also mandatory and includes an induction for all personnel. The terminal has an emergency response plan (ERP) and an emergency response team (ERT) is in place. The ERT has been established to effectively coordinate responses to emergencies, with each team member designated specific roles in the team and trained in emergency response. The provisions of the plan are tested through regular drills using varying scenarios to practice the response measures and test equipment. Going forward, the ERP will be appropriately updated and modified to reflect the Terminal expansion.

Delta has an exceptional safety record at the terminal location. Reportedly, there has not been one single Lost Time Incident (LTI) at the terminal since 1989. Delta indicated this was due to their very strict operating procedures, their permit-to-work system and good staff training. The company also has its own clinic, medical staff and ambulance available at the terminal site.

The design of the terminal conforms with API, ISGOTT and GOST standards. All tanks are designed to API standards and are equipped with fixed fire fighting systems. Loading and offloading road tanker gantries are also fitted with sprinkler systems. Additional fixed fire fighting systems are provided throughout the terminal site with mobile tenders available through neighboring third parties by agreement. The fire fighting systems include water and foam systems and have been designed for the worst case fire scenario. Fire drills, including evacuation and fire system tests are regularly carried out. Firefighting systems and equipment will be upgraded and expanded for the new facilities at the terminal.

All retail fuel stations meet regulatory standards for fire fighting equipment and provision.

- Pollution Prevention and Abatement:

Power for the terminal comes from the local grid with three back-up diesel generators. Boilers are used for steam generation used to heat stored hydrocarbon fluids as necessary. Dredging for the construction of the new jetty will not be needed.

Delta has discharge permits that allow discharge of treated drainage waters and sewage to the bay. All terminal drainage is routed through a series of oil water separators until treated sufficiently to comply with regulatory standards before discharge. There are separate drainage systems for “white” fuels such as gasoline and kerosene areas and areas where heavier “black” products such as fuel oils are stored or loaded and offloaded. Drainage from the heavier black products loading/unloading and storage areas is firstly contained in a 1,000 m3 tank for initial separation before transfer through the oil water separators and final charcoal filtration. Heavy sludge accumulations in the separators from the black products treatment system are periodically recovered, dried and sent to a dedicated hazardous waste facility in Izaydas in Turkey for disposal. The Izaydas facility meets EU standards for hazardous waste management. Drainage from the white products areras is also routed through a series of separators and final charcoal filtration. The oily water separation system will be expanded and upgraded to handle increased volumes following terminal expansion. Sewage from the terminal is treated in a biological system before discharge to the bay. Discharges are sampled and analysed to ensure that the effluent meets regulatory standards. Other general waste materials are collected by the municipality, and disposed at authorized facilities.

The terminal and port comply with ISPS (the International Code for Security of Ships and Port facilities). There are very strict port regulations for vessels entering the terminal site. All vessels must meet SOLAS and MARPOL requirements. At present the maximum allowable vessel size is 55,000 dwt, following terminal expansion one of the vessel berthing stations will be able to load and discharge vessels up to 150,000 dwt. A vessel requesting passage to the terminal must first be cleared by the local port authorities at Iskenderun port before it can be piloted into the existing berthing location of the Conventional Bouy Mooring (CBM) system used for hydrocarbon product transfer. Pilotage is compulsory. Port authority clearance is based on vetting the vessel on its capacity to comply with local maritime regulations and also for any previous international violations relating to the vessel. Once berthed the vessel is boarded by Delta personnel and an independent inspection party to assess the vessel prior to loading.

Vessels are not permitted to discharge any effluents in the bay. Sea lines from the CBM to the vessel are always kept full with fresh water after each cargo operation, this water is displaced to the vessel on cargo transfer. All vessels are informed of the line displacement method before arrival at the port and, at the pre-cargo transfer meeting onboard the vessel upon arrival. Vessels therefore must have an empty slop tank to be able to take the displaced water from the loading lines.

The terminals principal function is to store hazardous hydrocarbon products in large quantities. All storage tanks are housed inside reinforced concrete bunded areas. Secondary containment is designed to contain 110% of the largest tanks capacity in the event of a tank failure and spillage in accordance with API standards. The base of the existing bunded areas consists of hard core gravel base with asphalt underneath to prevent groundwater contamination from spills. Bunded areas for the new tanks will being constructed as part of the expansion program will be lined.

Storage of fuel at retail stations is always underground in separate 20 m3 tanks and Delta takes the additional precaution of housing all of their new underground tanks in a concrete lined excavation.

In addition to the emergency response system and fire fighting described above, Delta also has an Oil Spill Contingency Plan for the terminal. The plan is developed to international standards and takes into account spill hazards from the terminal, the nature of hydrocarbons that could be spilt from the terminal, prevailing winds and currents and environmental sensitivities of the surrounding areas. The plan covers spills on land and to the sea from land based spills (the terminal has a 600 m water front) or from vessels and is based on a three tiered response, and will be updated for the expanded facilities. The Oil Spill Contingency Plan will be modified, as necessary, to reflect the new conditions after the expansion.

- Community Health, Safety and Security:

Residential structures outside of and closest to the fence line are within the API safety limits for distance from the nearest storage tanks. Delta’s fence is also higher than API standards and there is an concrete perimeter wall boundary to contain fires and explosions. Tanker trucks use only one main access road from the terminal to the main highway and this access road does not pass through the community areas.

Per the Emergency Response Plan, arrangements are in place to evacuate the local communities in the event of a major accident at the terminal. The rural police force (the gendarmerie) is responsible for the local community in these circumstances including any required evacuation. The gendarmerie is also responsible for informing and training the community in the response measures and actions to take in the event of an accident. Delta works closely with the gendarmerie on emergency response and is required to have emergency response drills with the local communities and the gendarmerie at least once a year, however Delta try to have an exercise at least every six months. For each exercise Delta prepares a scenario which is agreed by the gendarmerie then a plan is put together to carry out each exercise. Going forward, these arrangements will be modified to accommodate the expansion, as necessary, and modifications appropriately reflected in the ERP.

Delta has engaged a security company Securenet at the terminal which employs 32 personnel. The personnel work 3 shifts and 10 security personnel are on duty at any one time. The size and make-up of the force was designed following a risk assessment conducted by Securenet managers. Arms are available to the security force at the terminal but their use would be a last resort. The security force uses trained dogs as a first response. The security manager, a retired police chief from the local area, is a Delta employee.

Stakeholder Engagement

The terminal is located in an industrial area in the district of Yesin; the nearest community is the village of Dortoyl. People in the area primarily work in the industries in the area, in particular, hydrocarbon storage and distribution including at Delta’s terminal, as well as some small business and agricultural activities. There are also a number of houses adjacent and very close to the terminal perimeter on the east and north that were built following the construction of the existing terminal. According to Delta, these are primarily holiday homes and are occupied for between four and five months of the year.

Delta has a good relationship with the local community. Interactions are generally ad hoc and as necessary, although the terminal manager meets with community members at least once a month and more regularly if they specifically request a meeting. Minutes are kept of the regular meetings. Delta has initiated discussions with the community about the terminal expansion activities and the communities were reported to be supportive. The company occasionally receives complaints from local residents regarding noise and odors. These complaints are addressed directly to the terminal manager and are immediately addressed.

Delta also assists the local communities financially following requests from the local municipality. Requests received are ad hoc; the terminal has a proportion of its budget set aside to fund these programs. Assistance to date has included painting of the local schools and providing footwear for children.

Going forward, Delta will systematize its community engagement activities. Specifically, the company will:

- develop a community engagement plan that will keep the local communities well informed of terminal activities and include provision for record keeping;
- prepare a community grievance procedure, indicating who is responsible for receiving complaints, the processes followed to respond to complaints, the processes followed for the terminal to communicate complaint closure and record keeping; and
- develop a plan to record community assistance provided and to develop future interventions.

For further information contact:

Mr. Mustafa Asur, Managing Director
Delta Petrol Urunleri Ticaret Anonim Sirketi,
Piyalepasa Bulvari Kastel Is Merkezi Delta Plaza,
34440 Kasimpasa, Istanbul, TURKEY

Telephone: 90212 253 6225
Fax: 90212 253 4966

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
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