Nicolas MERY, Professional with extensive experience in Oil & Gas (FPSO) and Marine industry as

Regulatory Compliance Manager/Engineer

How to select a Classification

Society for your FPSO Project?
When it comes to floating oil and gas projects and FPSO projects in
particular (this is where my experience mainly comes from), one of the
first Purchase Orders which needs to be placed (not considering the long
lead items) is with the Classification Society. Depending on the contract,
the client, or the location of operation of the FPSO, the EPCI contractor
may or may not have the opportunity to choose the Classification Society.
Nevertheless, selecting a Classification Society does not appear as such a
simple choice when looking at the impact it may have on the execution of
the project or the design of the asset. Here are some amongst the most
important factors to take into account for the successful selection of the
right Classification Society for your FPSO Project.

Why using Classification Societies?

Historically, Classification Societies were used by Shipowners in order to have a

cold eye assessment of the seaworthiness of their ships that they would use as a
way to get better prices and coverage conditions from they insurers. This is
nowadays still the case and has become more than a common practice, a
compulsory requirements for ships above a certain size.

Now, looking at the offshore industry’s specifics, the level of maturity of the Oil
and Gas industry and all the standards available for the robust management and
execution of oil and gas project, the safe design of offshore assets and the safe
operation of oil platforms, one may question the necessity of still having a
Classification Society.

Several answers exist: If the unit is self-propelled and disconnectable, then is is

somehow a ship and therefore needs to be Classed. Also, insurance requirements
remain here again the number one reason why having an asset classed is required.
Additionally, this requirement may come from the Coastal State regulations, the
Flag State regulations, the field operator, the investors and shareholders, or the
EPCI contractor itself as part of their policies or as an inheritance of the so-called
‘stamp culture’ (we must have a stamp from an independent body to have the asset
or equipment validated and move to the next step).
On top of that, what needs to be emphasised is that contrary to what a great number
of persons (decreasing number as far as I understand) I have met in this industry
believe, Classification Societies are NOT part of your QA / QC organisation and
they are NOT one of your subcontractors. The paradox of Third Parties and
Classification Societies in particular sits in the fact that they are paid by the
company they have to evaluate. As such, they can only be considered as partners
somehow of the EPCI contractor or the shipyard but in no instance as their
contractor. Classification Societies are Third Parties and by definition they have to
stay independent in their verifications, their surveys, and shall neither provide
advice nor act on behalf of their client.

How to select your Classification Society?

First of all, as a general principle, a Classification Society should in theory be

selected for a particular FPSO Project. There are a number of parameters to
consider that would make one Classification Society more suitable than another for
a FPSO project while it would not be the best choice for another FPSO project,
both executed by the same EPCI contractor. On the Technical side, the
Classification Society has to be selected against:

• Their experience and level of maturity in the Classification

of this type of asset - They may be specialist of floating assets like
SPARs or Semi-subs and have only a very limited track record for FPSOs.
Or another case would be a Class Society with strong experience with spread
moored FPSOs but no track record of Turret moored vessels. Same stands
with newbuilts versus new constructions for instance
• Their experience and level of maturity in the particular
country of operation of the FPSO - It is very useful to have
onboard a Classification Society who know the Coastal States requirements
since some specific requirements can have a significant impact on the design
of the asset and may be antagonist to some Class or Flag requirements.
Equipment packages certification may also be of paramount importance for
the Coastal State (CE marking or INMETRO certification for instance) and
have to be fully understood and in line with the requirements from the Class
Society. In addition, local presence and experience of the Class Society there
may ease discussions and consultations of the Coastal State Authorities.

• Their ability to act as a Recognized Organization on behalf

of the Flag State - The more delegations from the Flag State of the
FPSO the Class Society has, the simpler it will be for the management of
plan approvals and inspections for issuance of Statutory Certificates.

• Their network of surveyors in the countries of execution -

This is mainly valid for countries where the construction and integration for
the FPSO will be carried out and in a lesser extent valid for the countries
where vendors packages are fabricated. When it comes to high local content
requirements, strong presence in the country of operation of the FPSO
becomes an important criteria as this implies significant activities in this
country. The local network of surveyors needs to be assessed on two main
 aspects. One aspect is the number of surveyors and their capacity of
mobilisation on your project according to your execution schedule,
particularly during the peaks of fabrication or construction activities.
Another aspect is the experience of the surveyors on FPSO projects. This
can be derived from their experience of the yards, fabricators and vendors
you have on your project, from their experience of FPSOs as opposed to
surveyors having purely ship experience, or more difficult to get, whether
the main surveyors have enough experience to make safety based judgement
(understanding what are the reasons for the requirements and their intent)
when the situation requires it instead of sticking blindly to the text of the
Rules and Regulations.

• Their plan approval performance - The process of plan approval

in itself needs to be understood however it should not vary much from one
Classification Society to the other. The main differences will be on the
systems used, the turnaround time for a given review, and their flexibility
with regards to (reasonable) changes in the document submission schedules.
Although the formats of documents tends to be now standardised across the
industry, the interfaces stay a challenge. What you need to consider here is
the compatibility of your documentation system in terms of software data
architecture and systems communication or integration. There will be
several iterations between the EPCI contractor or shipyard and the Plan
approval department in order to address all comments from the Class
Society. In parallel, the time it takes from the issuance of a document to the
final approval relies indeed on the actual time taken to perform the
 document review. Here, you have to make sure the Class Society can
maintain a satisfactory turnaround time or they may delay in some instances
your construction activities or be exposed to rework and all the subsequent
negative consequences particularly on fast track projects.

• Their project management performance - A robust Company

and Project Management Organization for the Class Society needs to be
proven efficient considering the needs and constraints of the EPCI
contractors and the different types of activities to be carried out by the Class
Society, namely Plan Approval, Surveys at Fabrication and Construction
Yards, Hook-up and Start-up surveys offshore, Certification of vendor
equipment packages, Statutory approvals. The Class Society may deal with
several FPSO projects at the time and their structure should allow the best
use of resources in order to have their priorities matching the EPCI
contractor’s priorities. Also the procedures for submission of Technical or
Operational challenges to the relevant Committees, Technical Authorities or
Senior Management need to be efficient enough to allow a reasonable
turnaround time here again. Example is for getting a decision about an
interpretation of the Class or Statutory requirements, when the EPCI or
shipyard applies for deviations, or when novel concepts are used in the
design and therefore do not fall under any existing requirement. Reactivity is
key here.

Now looking at a few commercial aspects:

 • The cost of Classification and certification for the full life-
cycle of the FPSO - This point becomes of great importance when
looking at a lease contract for the FPSO project as opposed to a turnkey
contract. In fact in this case, we have to consider the costs associated to the
surveys of the unit in service, i.e. while on site in production for a duration
of 5, 10, 15 years or so.
• The scope of the basic contract - It is not unusual that we see
significant price differences for the same supposed basic scope when
receiving offers from different Class Societies. This is where you should
have a very careful look at the contracts, the scope of work, and call your
experience of the actual required amount of effort required to execute the
full scope of Classification and subsequent Certification for your FPSO
project. You have to adopt a strategy here as you need to put in your budget
the most likely final price. You need to be able to assess what could be the
extent of extra work for plan approval or surveys that would derive from
your actual project execution as opposed to the ideal proposals you may
have received and determine where is your risk best managed: a contract that
covers most of the scope and potential overruns which will mean a high
initial price, or a much lower initial contract price that covers a limited scope
and with great potential for extra work required and significant associated
costs. This is also a question when dealing with certification of vendor
packages at their premises or items like pipe at fabrication yards: how is my
risk managed in my contract with the fabricator, my vendor, or directly the
Class Society.

As a conclusion, I would like to invite you to share your views on the

above, which is purely based on my personal experience and knowledge
from my years with a Class Society and my years as Regulatory
Compliance Manager with a FPSO EPCI contractor. In no respect this
article pretends to be exhaustive or reflect the entire FPSO industry since
it is not based on extensive research.