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bp c-tpat & validation experiencePresentation to the ABA International Law Section

13 April 2005

Aaron GothelfCustoms AttorneyBP America, Inc.

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bp c-tpat & validation experience

• About BP

• C-TPAT – The Right Thing To Do

• BP’s Experience in the Process (2003)

• BP’s Experience Now

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introduction to bp

• Statistics

– $200+ billion Market Capitalization

– $174 billion Revenues

– 110,000 employees in 100 countries

– Well-established operations:

• Europe, North & South America, Asia, Australasia and Africa

– In business since:

• Amoco 1889;

• ARCO 1866;

• BP 1909;

• BP Amoco 1998

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introduction to bp

• Statistics

– Daily production: 1.9 million barrels of crude oil; 8.6 billion cubic feet of natural gas

– Daily sales: 6.2 million barrels of refined products

– Service stations: 26,800 (USA 15,500, Rest of World 11,300)

– Exploration Active in 21 countries. Production activities in 22 countries

– Refineries (owned or part-owned) 21 (5 in USA, 15 in rest of the world)

– Refinery capacity (BP share): 3.3 million barrels of crude oil a day

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introduction to bp

• Supply Chain

– BP's transport network criss-crosses the globe.

• Own/operate 25,700 miles of pipeline, much of it in the US.

• Control an international tanker fleet of more than 40 vessels, either fully owned or on long-term charter.

– Once refining is completed:

• Different products are moved to storage terminals by ship, barge, pipeline or rail.

• From there they are usually delivered to customers by road tankers.

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bp and c-tpat

• History

– Decision to join made by BP America’s President

– Charter Member (1 of 7)

– First Member to become C-TPAT certified

– First to be Validated

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bp and c-tpat

• Why?

– Good corporate thing to do

– Access to other Customs programs

• ISA

– Being in the Known Bucket

– Ease in applying our existing position

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bp and c-tpat

• BP’s participation

– Voluntary

– Challenged against Customs’ overbroad use of CF-28s to push participation

– BP was contacted in early January 2003 and asked if it would agree to be one of the initial C-TPAT validations.

– BP volunteered to be first and asked Customs to show up the following week.

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the bp validation experience

• Customs’ team

– People

• Michael Pfeiffer, USCS* Supervisory Inspector

• Jose de Jesus Lopez, USCS* Chief Inspector

– Qualifications

• BP team

– Director of Customs

– Head of Tax

– Customs Attorney (Tax) & Law Department

– Security Department Heads and Facility Managers

– HR

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bp validation process

• C-TPAT

– Membership process already complete

• MOU signed (1/15/2002)

• Security profile reviewed

• Customs C-TPAT office reviewed the profile

– Possible results for any participant:

• Accepted – acknowledgement sent

• Rejected – additional information is needed

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bp validation process initial meeting

• Opening Meeting

– Held February 3, 2003

• Customs and BP teams met for the afternoon

• Presented the company background and supply chain

• BP concerns explained

– Compromised vessel or crew or port of unlading for bulk cargo

– Compromised containers for other heavy bulk materials

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bp validation process – site visits

• Site visits

– Purposes

• prove security profile is true

• Obtain suggestions from Customs for improvements

– Process

• Visit 2 sites – 1 domestic and 1 foreign; tour all aspects of security

– West Coast Refinery» Included Refinery, Ship Terminal and Pipeline start

– Belgium chemical plant » Included plant and tours of Antwerp shipping

terminals and EU Customs officers

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bp validation process – site visits

• Site visits

– Results

• West Coast

– Proved security profile was true» Security process and procedures found all in place» Strengths and weaknesses in Customs’ perspective

discussed» Customs’ suggestions promised to be considered

• Belgium

– Same results– Waiting on written report of findings

– Customs’ verbal comments

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observations & lessons learned

• Positive experience overall

– Spirit of partnership did exist

– Validated per the submitted profile

– Useful exchanges of ideas & information

– Voluntary “ness” is still questionable

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observations & lessons learned

• Participation was not as difficult as it first seemed

– Processes exist for almost every company

• Security

• Procurement

• HR

• HSE

– Compare:

• Corporate processes vs. Customs recommendations

• Fill in the gaps

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observations & lessons learned

• Control must be clearly identified

– What is in the company’s control

• Internal security

• Site security

– What is not in the company’s control

• External area

• Neighbors

• Geography

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open issues

• Foreign visits

– Scheduling

• Cost effective for Customs

• Cost effective for participant

– Failure to obtain permission to enter

• Mexico & Honduras

– Other companies being validated have noted several failures by Customs to obtain proper permission to enter certain countries including Honduras and Mexico, thus ending any possibility of validating those sites

– No explanation given as to whether this puts the validation on hold

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the bp future with c-tpat

• Participation will continue

– Strong belief C-TPAT is the right thing

• Desire to improve the program

– Expressed concerns

• Improve C-TPAT program

• Aspire to participate to the fullest extent

• Desire to maintain program within the bounds of the law

– Voluntary program – nothing to lose

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future at international level

• Many countries working on similar programs.

• World Customs Organization 161 customs agencies.

– Working on advance manifest data

– Development of a standardized C-TPAT type of program.

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thank youQ&A