HEALTH, SAFETY AND ENVIRONMENT

I.M. Skaugen recognizes that, as a business, everything that we do has an impact on people – both within and outside the company. Our strategic objectives on corporate responsibility are to guide our operations so that social, environmental and ethical considerations are embedded into our business.

Our aim is always to make all our employees proud to be working at I.M.Skaugen and to demonstrate the highest levels of integrity and a responsible business management. We always strive to achieve continuous improvement in our operations in all areas that affect our customers, the physical environment and society as a whole through measurement, monitoring and review of our performance and by committing ourselves to continued excellence.

Nowhere is this more evident, than in the work of our Safety, Health, Environment and Quality management team. They have a pro-active approach to the safety, health and environmental requirements laid down by regulations and our own company policies. Without adherence to these standards, commercial and operational success is not possible.

The working environment throughout the Group's companies is considered satisfactory. We also have few work-related accidents. Absence due to illness for employees for the Group was 0.9 per cent (1 per cent in 2005).

SAFETY
The transportation of oil, gas and chemical products as well as marine construction can be risky businesses. But, we pride ourselves on carrying out these businesses in the safest manner we can. We recognise that the safety of our personnel, environment shall always be the predominant factor, overriding commercial interests. No deviation or short cuts in any safety measures are ever tolerated. We ensure that safety and quality improvements are an integral part of the way we conduct our operations, with a view to continuously improving the company's competitive position. Safety is the cornerstone of our business.

Our staff worked a combined 2.8 million hours during the year. In 2006 it was reported 7 lost time injury cases. The lost time injury frequency for 2006 was 2,4 per million worked hours (target 2,0). All lost time injuries are reported to SHE&Q team and investigated. All other incidents are also reported to the SHE&Q team in order to evaluate our preventive effort and continuously evaluate and further improve our safety record in the future.

There was no loss time injury case (LTIFs) reported from our lightering operations during 2006.

ENVIRONMENT
I.M. Skaugen recognizes the responsibility we have to treating the environment in which we operate with the utmost respect. To this end, reducing environmental impact is an imperative of our operations.

Our guiding principle is that accidents and environmental harm can be prevented. That is why continuous improvement and prevention of pollution is an inherent part of all areas of our activities. We will continuously evaluate the environmental risk factor of our operations.

As a major participant in the transport sector we are actively working to minimise the environmental impact of our activities and improve our energy efficiency. Our aim is to reduce the waste from our activities through efficient recycling and continuous improvement of the management of our resources.

While our environmental goals are ambitious, they are also realistically attainable. Our goals are measurable as much as possible so we can track our environmental performance and identify areas for future improvements. As an example, in 25 years of operation, SPT has safely lightered over five billion barrels of crude oil, with less than 0.00002 per cent, or about 900 barrels lost to the environment.

We are committed to complying with both national and international environmental legislation, regulations and other requirements - and in many cases we go beyond regulations and industry standards. We actively support and conduct research helping us to improve our environmental performance to ensure we always act in a responsible manner.

The most significant environmental standard today is ISO 14000, actually a series of international standards on environmental management. ISO 14001 is at the heart of the ISO 14000 series and specifies a framework of control for an Environmental Management System against which an organisation can be certified by a recognized third-party. In 2006 we continued the work on implementing the ISO 14001 standard - for our Gas Activities as further proof of our strong commitments to the protection of the environment.

One of the most important activities during the year has been our work in progressing through the various levels of the Tanker Management and Self-Assessment (TMSA) programme. Run under the auspices of the Oil Companies International Marine Forum (OCIMF), TMSA is a best practice guide to ship operations and provides the means to determine the respective quality of ship operators.