25781 - QGOG Rigs

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Environmental & Social Review Summary

Project Number

25781

Company Name

Eiffel Ridge Group C.V.

Date ESRS Disclosed

Mar 12, 2007

Country

Brazil

Region

Latin America and the Caribbean

Last Updated Date

Jun 3, 2021

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 27, 2007
Signed : Jul 30, 2007
Invested : Sep 26, 2007

Sector

Oilfield Services

Industry

Metals and Mining

Department

Gbl Infrastructure & Natural Resources

Project Description

QGOG has been awarded separate contracts to build and operate two dynamically positioned semi-submersible offshore drilling rigs capable of working in water depths of up to 2,000 m and 2,400 m respectively.

QGOG, the oil and gas subsidiary of Queiroz Galvão S.A. (QG), will operate these rigs for Petrobras in Brazil. The rigs will have the latest, well established designs and equipment and are to be built separately under:

- EPC contract with Single Buoy Moorings Inc., a subsidiary of SBM Offshore N.V. at the Gulf Piping shipyard in Abu Dhabi (owned by International Management and Construction Company which is well known in the region), and
- another shipbuilding contract with Keppel at its shipyard in Singapore.

The rig designs are well established and many similar rigs are in use worldwide. The rigs are expected to be built, mobilized and placed under contracts to Petrobras. QGOG already operates two shallow water semi-submersible rigs acquired in the mid-1990s for Petrobras. It will use its existing onshore base in Macae to support rig operations.

IFC has been invited to join a group of lenders to finance this project.

Overview of IFC's Scope of Review

Queiroz Galvão Óleo e Gás S.A. (QGOG or the company) is a Brazilian company engaged in providing drilling services to Petrobras and other operators. In 2003 IFC provided corporate financial support to QGOG for its investments in developing its oil and gas business. A review of QGOG’s existing technical, environmental and social documentation submitted by the Company and the Mandated Lead Arranger was conducted for the new loan, along with the information obtained from a recent IFC supervision mission carried out in April 2006 to monitor performance under the existing loan. Additional information about management of the project was obtained by interview with QGOG’s Environmental Health and Safety (EHS) manager.

E & S Project Categorization and Applicable Standard

PS1: Social and Environmental Assessment and Management Systems
PS2: Labor and Working Conditions
PS3: Pollution Prevention and Abatement
PS4: Community Health, Safety and Security
PS6: Biodiversity Conservation and Sustainable Natural Resources Management

The project appraisal also assessed the applicability of:

PS5: Land Acquisition and Involuntary Resettlement
PS7: Indigenous peoples
PS8: Cultural Heritage

No significant impacts related to PS 5, 7 and 8 are foreseen as operation of the rigs will be offshore; in addition the operational base for these rigs will be at an existing support site. Construction of both rigs will be at existing shipyard construction facilities, the SBM yard in Abu Dhabi and the Keppel yard in Singapore.

The QGOG project to build and operate two dynamically positioned semi-submersible offshore drilling rigs 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 and design criteria.

Environmental and Social Mitigation Measures

The company has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations and the World Bank/IFC environment and social policies and the environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the company/project is summarized in the paragraphs that follow and in the attached document.

QGOG has been working as offshore drilling contractor for Petrobras since 1990 and has consistently demonstrated good environmental, health and safety (EHS) performance. IFC has been assessing its EHS and social (EHS&S) performance since 2003 (when QGOG signed a loan agreement with IFC) through their Annual Monitoring Reports and supervision missions. QGOG has so far complied with IFC standards. QGOG has been working on the implementation of its own EHS&S management system (EHS&S-MS) that would be integrated with an existing ISO 9001 certified Quality Management System. The new management system was designed according to the following standards: ISO 14001, OHSAS 18001, and SA 8000 and expected to be so certified by June 2007. Relevant tools regarding EHS&S management are already applied and the company needs to add some other management elements required by the above mentioned standards.

Key environmental and social issues relating to the project are summarized below along with specific information about how potential impacts will be addressed by the company.

Upon implementation of the featured mitigation measures described below and in the attached Environmental, Health, Safety and Social Action Plan, the project will comply with environmental and social requirements, namely the law and regulations of Brazil, IFC’s Policy and Performance Standards on Social and Environmental Sustainability and applicable World Bank/IFC environment, health and safety guidelines.

PS1 Social and Environmental Assessment and Management System:

Before QGOG can start any offshore drilling activity, Petrobras as the operator must obtain an environmental license from the Brazilian Federal Environmental Agency (IBAMA). As part of the licensing process an EIA is required and IBAMA requires that environmental and social management practices are included, containing specific management measures such as waste and effluent management procedures, and emergency response including spill response and workforce training requirements. IBAMA usually inspects the rig prior to issuing the license, to ensure that operational control elements on the rig adequately satisfy the environmental agency''s standards.

As noted above, QGOG continues to develop its EHS&S procedures in accordance with international standards and has developed an implementation plan to fully integrate all of their existing procedures, monitoring programs and management components into a single integrated EHS&S-MS. The anticipated schedule for full integration is by mid 2007. As a Petrobras contractor, QGOG is contractually obliged to comply with Petrobras’ EHS requirements. Petrobras has a certified ISO 14001 and OHSAS 18001 EHS&S-MS and each contractor’s compliance with their EHS&S procedures is regularly audited. It should also be noted that Petrobras has also signed the U.N. Global Compact and last year joined the Dow Jones Sustainability Index group. QGOG already complies with Petrobras’ requirements through the implementation of their existing procedures. The Company has a dedicated EHS manager that assists and coordinates the implementation of the EHS management measures supported by a team of environmental consultant services. QGOG EHS representatives are based offshore to monitor performance and provide advice during activities and operations.

At the construction shipyards, Keppel FELS in Singapore has an existing EHS- MS in place and operates under a strong safety culture. For achieving excellent safety records, Keppel Offshore & Marine yards received thirteen Silver awards and 11 Certificates of Merit at the Annual Safety Performance Awards organized by the Ministry of Manpower of Singapore. The other shipbuilder, SBM Offshore Group, has developed a corporate quality and EHS (“QEHS”) management system that is reported to meet the international standards of ISO 9001, ISO 14001, OHSAS 18001, the ISPS Code for ship safety and, the ISM Code for the safe management and operation of ships and pollution prevention. According to SBM Offshore Group’s QEHS-MS, its facility in Abu Dhabi has a series of procedures to comply with its standards. QGOG will make available a QEHS manual during the construction of two dynamically positioned semi-submersible offshore drilling rigs, with QEHS practices that must be complied at the shipyard.

PS2 Labor and Working Conditions:

Currently the Company has about 500 employees and plans to expand its workforce to about 800 as a result of the project and the increase in the number of rigs. Workers are subject to a corporate labor policy compliance with the local laws and Human Resources function in the company is shared between company headquarters and local operations.

QGOG’s workers are provided with appropriate personal protective equipment (PPE). QGOG’s employees and its contractors receive training related to all the requirements necessary for offshore activities, and the EHS representative on board, together with the rig’s Offshore Installation Manager, will be responsible for ensuring implementation of the EHS Procedures. Health and safety inspections take place to assure compliance with the standards. These inspections are carried by QGOG internal auditors and by Petrobras. Monthly QEHS meetings take place in the onshore base in Macaé to verify and act upon health and safety issues.

The rig units and their associated equipment will be designed with controls in place to ensure that there are no significant risks to personnel health and safety. Rig specifications ensure safe operations in marine environments like those in Brazil. In addition, QGOG are required by legislation to have in place plans for PPE and an occupational health and medical control program. A plan for setting up of an accident prevention group is also required (the Accident Prevention Internal Commission). This group identifies health and safety risks, identifies awareness and training needs and investigates incidents.

PS3 Pollution Prevention and Abatement:

Low levels of routine air emissions will be generated during offshore drilling activities but will be of a relatively short duration and will result in minimal impact.

A waste management plan for all hazardous and non-hazardous wastes generated offshore has been developed. Excluding drilling wastes and waste waters, all other wastes generated on the rigs offshore will be transported to shore for disposal by licensed and approved waste management contractors. Drilling muds and drilled cuttings treatment and disposal procedures will follow Petrobras requirements which are previously approved by the IBAMA. For water based muds in offshore environmentally sensitive areas no overboard disposal of muds and cuttings is usually allowed if the water depth is shallower than 1,000 meters. In all other areas overboard discharge of water-based muds and cuttings is allowed provided that toxicity testing demonstrates no harm to the marine environment. Water quality campaigns are usually held by Petrobras as agreed with IBAMA. For drilling projects that need to use non-water based drilling muds, the cuttings must be treated under specified conditions to remove the drilling fluid to an acceptable and approved concentration before its disposal overboard. All offshore discharges will meet the toxicity testing and discharge requirements contained in the IFC Oil and Gas (Offshore) Guidelines, 2000 as well as MARPOL requirements. A marine sanitation device for sewage treatment prior to discharge will be installed on the each drilling rig. A comprehensive monitoring procedure (including waste waters, drainage water, sewage, noise, and toxicity tests among other environmental parameters) has been consistently applied by QGOG for its offshore drilling operations.

Potential impacts related to the delivery of the rigs from the shipyards in Abu Dhabi and Singapore to QGOG base in Brazil will be regulated by standard operational practices and the risks are relatively low. The Company will prepare an EHS management plan specific for this phase addressing the requirements of MARPOL 73/78, ISPS code for ship safety, the Brazilian regulations related to pollution control and emergency preparedness and Petrobras’ EHS procedures. In this way the Company will ensure that all EHS risks are avoided or minimized.

PS4 Community Health, Safety and Security:

As noted above the operational base camp at Macae is an existing QGOG facility and specific procedures to manage hazardous substances and fuels stored at the base are applied by QGOG.

The company has established emergency response plans for its offshore operations that contain the procedures to follow in the event of an offshore emergency. These emergency response plans will be adapted to apply to the new rigs. Emergency response arrangements cover natural hazards, man overboard, fire and explosion, well blowouts as well as the response to spills onboard. The operator has contingency arrangements in place to respond to oil spills to the sea.

PS6 Biodiversity Conservation and Sustainable Natural Resource Management:

Operations in potentially sensitive locations are identified during the EIA process carried out for each drilling program. Projects in environmentally sensitive areas are subject to additional environmental management measures and monitoring programs that are approved by IBAMA. When necessary, QGOG is able to adapt their existing procedures and plans to satisfy any additional requirements.

Stakeholder Engagement

As a part of mandated licensing process with IBAMA in sensitive environments, the operator is involved in public consultations, organizes public hearings for the local stakeholders (including fishermen potentially affected by its operations). Interactions with communities are managed according to the local regulatory requirements (in cases when the company is an operator of the field) or according to the instructions of Petrobras (in cases when the company is a service provider to Petrobras). The company has established a telephone hotline for submitting inquiries concerning its activities.

The company implements a range of community engagement programs and sponsors a number of social programs that benefit its workers and the communities where it operates. These include an anti-drug education program for young people, and contributions to AIDS-related program. The company is currently in the process of establishing a Social Department which will be responsible for the development of the company-wide social responsibility program and integration of the existing community engagement and support programs under an umbrella of an integrated corporate strategy.

Client Documentation

File Name	Actions
QGOG Rigs 25781 Action Plan.pdf

**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.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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Environmental & Social Review Summary

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Overview of IFC's Scope of Review

E & S Project Categorization and Applicable Standard

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Environmental and Social Categorization and Rationale

Environmental and Social Mitigation Measures

Environmental and Social Mitigation Measures

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Stakeholder Engagement

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