Notes for this page
AccountAbility AA1000 Stakeholder Engagement Standard
Assists African governments to achieve long-term economic growth and transformation www.acetforafrica.org
Community Consultation and Disclosure Programme
A wholly owned Ghanaian freight forwarding and logistics company www.conshiponline.com
China National Offshore Oil Company
Civil Society Organisation
Exploration and Appraisal
Environment, Health and Safety
EHS Management System
Environmental Impact Assessment
Extractive Industries Transparency Initiative
Environmental Management System
Provider of offshore contract drilling services to the oil and gas industry www.enscoplc.com
- Eirik Raude (The)
a fifth-generation semi-submersible drilling unit
Environmental and Social Impact Assessment
the sale of a percentage of a licence interest to another company
Floating Production Storage and Offloading vessel
- FTSE 100
Equity index whose constituents are the 100 largest UK listed companies by market capitalisation
Geographic Information System
Ghana Offshore Emergency Leadership Forum
Global Reporting Initiative
Health and Safety
High Potential Incident
HiPo Frequency Rate measured in HiPos per million hours worked
International Regulators Forum
Information Management System
International Petroleum Industry Environmental Conservation Association
International Standards on Assurance Engagements
International Organization for Standardization
International Association of Oil and Gas Producers (The)
Grassroots advocacy and campaigning organisation fighting extreme poverty and preventable diseases www.one.org
Occupational Health & Safety Advisory Services
Oil Spill Response Ltd
Oil Spill Prevention and Response Advisory Group
Regional Business Manager
- Safety Case
A document or suite of documents that identifies, assesses, and documents major hazards
Senior Management Committee
Socially responsible investment
- sq km
Tullow Oil Environmental Standards
Total Recordable Injuries
TRI Frequency Rate measure in TRIs per million hours worked
Vehicle Accident Frequency Rate measured in vehicle accidents per million kms driven
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Africa's leading independent oil company
Developing new oil countries in Africa is transforming every aspect of our business and driving step changes in our responsibilities. Our entrepreneurial spirit means we embrace these challenges and bring an innovative and inclusive mindset to achieving long-term sustainable growth.
As a business we have had a wonderful year. First Oil was delivered safely in every way from the Jubilee field, making Ghana a new oil producing nation in Africa. This was a huge achievement for everyone involved and has set the industry benchmark for deepwater development. Through this project we have become a world-class deepwater operator and 2011 into 2012 will see major changes in our production, revenue and cash flow profile.
We also had prolific exploration success during the year. Offshore Ghana, Enyenra proved to be a major oil field and Tweneboa was established as a major gas-condensate and oil field. Further west along the coastline we had an important oil discovery offshore Sierra Leone.
In the East African Rift Basins we had a 10 out of 10 success rate in Uganda and we are hoping to replicate some of our exploration success there in Kenya and Ethiopia, where we acquired licences during the year.
We have a 40-well drilling programme planned in 2011 and exploration success so far has been 12 successes from 15 wells.
Creating shared prosperity is the 'big idea' we are working towards in how we will run our business. It underpins our commitment to ensuring that the success of the oil and gas industry brings meaningful benefits to local people and local and national economies.
There is undoubtedly some cynicism about the effectiveness of the corporate responsibility activities of extractive industries in Africa. As a result we know it will take time to win people's hearts and minds.
In the meantime, we have set out in this review what creating shared prosperity means in the context of our business and how we are working towards this goal.
At the end of 2010 we had 935 permanent employees; an increase of 40% in the number of people in Tullow during the year. In April 2011, this had grown to well over 1,000 permanent employees in six key global locations; four times the number of people we had just five years ago.
This level of growth has brought with it many workplace challenges and we are always mindful of passing on our unique culture. We have a strong set of core values to capture and support the way we want to do business. We focus on results. We work with integrity and respect for people and the environment. We work in a collaborative way and above all we are entrepreneurial and creative in how we develop the business and ourselves. Maintaining our culture and managing organisational capacity are both Board objectives for the year.
Overall, health and safety performance is measured by a set of leading indicators, which we performed well against. The Group KPI for health and safety is LTIFR, a lagging indicator, and our performance did not meet the International Oil & Gas Producers (OGP) benchmark and, as a result, top quartile industry safety performance.
We have restructured the Group EHS Leadership team who will now focus on developing a plan to support a significant improvement in our performance and deliver a step change to consistent top quartile industry performance.
The Board has identified health and safety, and in particular malaria awareness and prevention, as a key corporate risk for 2011. In response, an independent audit will be carried out to review all aspects of malaria management in Tullow. We are aiming to put a world-class malaria programme in place for employees and contractors, as well as building awareness and supporting prevention in our local communities.
The highlight of our EHS performance this year was the successful transition of Jubilee Phase 1 offshore Ghana, from the development phase into production. The Floating Production Storage and Offloading vessel (FPSO) has been installed and production ramp-up is underway. Gross plateau production of 120,000 bopd is expected to be achieved in the third quarter of 2011.
The blowout of the Deepwater Horizon rig in the Gulf of Mexico dramatically highlighted the potential risks associated with certain types of deepwater drilling and created an industry paradigm shift. The lessons from it are particularly relevant to us as the Jubilee deepwater development operator.
As a result, we reviewed well engineering, oil spill response and control of well insurance limits. We participated in industry initiatives and dialogues on deepwater practice and continue to do so. We also spent a lot of time talking to various stakeholders and explaining our deepwater activities, risk management and crisis preparedness.
"The reason Tullow has been so successful in Jubilee is due to its proactive attitude towards collaborating. It's quite a unique way of operating."
Our social enterprise philosophy is not about aid for Africa, it is about profit, partnership and shared prosperity. Our community social enterprise support is focused on community health initiatives, education and enterprise schemes and projects that help us manage the environmental footprint of our operations. In addition, we are developing a strategic social enterprise programme. This will target education and training to create industry employment opportunities and enterprise development to encourage the growth of local suppliers for the sector. Both activities are aimed at building capacity for the oil and gas industry in-country; at present mainly in Ghana and Uganda.
We have formed a new social enterprise committee to ensure that our social enterprise investment is aligned with our business objectives. This year we are putting the strategy, resources and organisational processes together to make our strategic social enterprise programme a reality. Engagement and consultation play a strong role in helping us to identify the right projects to undertake.
"It is very important that everything we do enhances our reputation. We see Tullow as a service company, working with governments, citizens and local communities in developing a national oil and gas industry. We play a support role and must respect the people and cultures of the countries in which we operate."
Two of the best things about Tullow, apart from its people, are that we are always willing to try something new as well as learn or adapt if we don't get it quite right at the start. As a business we combine experience with a natural curiosity and this is a great way to be. It is at the heart of our entrepreneurial culture and means we are never too established or too set in our ways to learn. This year we learnt two valuable lessons in the context of our responsibilities.
1. We have to get better at stakeholder engagement
The Board spent 20% of its time in 2010 working towards an agreement with the Government of Uganda on the Heritage deal and related transactions. This experience confirmed to us that we must think about our good reputation in everything we do and engage a lot more with external stakeholders.
We are now forging solid working relationships with the Government of Uganda and this creates a strong foundation to build on as we work together to develop the Ugandan oil and gas sector. Uganda has a great opportunity to participate in developing a better industry model for partnership and shared prosperity. Together with our new partners, CNOOC and Total, we look forward to playing our role in making that happen.
Clearly, much of our stakeholder engagement is about enhancing shareholder value and is directly related to our core business activities. Creating shared prosperity will also require wide-ranging and open consultation so that we can understand what people want, communicate our intentions and manage expectations about what we can achieve. External stakeholder engagement is part of the Board's objectives for 2011 and our plan is to roll out a stronger and more comprehensive approach to managing external stakeholder engagement this year.
2. We have to show people what we are doing
In Uganda I learnt a very important lesson about corporate responsibility. I had participated in a local town hall meeting and spoke about our desire to really do things differently as an oil company because of the unique role Tullow has in developing two new oil countries in Africa. The feedback was that it all sounded great, and that I clearly believed in it, but the local people on the ground did not. They wanted to, particularly for future generations, but they did not.
This was a disappointment to me because I passionately believe our industry can be different and make a difference. However, what I clearly see is that we must demonstrate that we can. Local people need to see real, tangible benefits and real social and economic change.
In 2010, we spent $224 million with local suppliers, mostly in Africa. However, it is not just about what Tullow spends with local suppliers, it is also about what our major international suppliers spend locally and how other goods and services develop in response to a new industry. The real benefit is the multiplier effect of these.
We also have a strong localisation commitment. Our aim is to have over 90% national permanent employees in Africa and we are supporting this through training and education as well as clear succession planning.
It is important to understand that oil and gas is a long-term business. It requires a lot of planning, investment, infrastructure and partnering to get right. There can be short-term disappointments within a long-term plan. Successful social and economic development is very much the same.
Another way we can support social and economic development is through transparency. It is the best way to give all our stakeholders confidence in our reputation and in how we run our business. Transparency around payments to governments is an important contributing factor in our commitment to high standards and creating shared prosperity. We are actively involved in EITI implementation in countries in which we have operations. At a corporate level we became a supporter of EITI in 2011.
We are fortunate to have played a pivotal role in delivering First Oil from the world-class Jubilee field. We would like everyone in Ghana to have the opportunity to be involved in the future performance of Tullow, especially as we embark upon further exciting exploration and development activities in Ghana and across our global portfolio.
With the support of the Ghana Stock Exchange, the Securities and Exchange Commission and Ghanaian advisors and banks, we are making our shares accessible to anyone in Ghana through a listing on the Ghanaian Stock Exchange and a 4,000,000 share offer.
2011 is another transformational year for the Group. Strong production growth is forecast as production ramps up in Ghana. Major development decisions are to be made beyond Jubilee and a number of significant wells with basin-opening potential in West Africa and South America are being drilled.
The completion of the Uganda transaction will enable us to accelerate the basin development plan with CNOOC and Total, and begin to realise the significant potential of the region.
Jubilee production revenues, together with the Uganda farm-down proceeds, mean that we will have a very healthy balance sheet to fund significant exploration and development programmes and deliver future growth.
"To us, being Africa's leading independent oil company means being a business that is trusted, is ultimately run by nationals and is a champion for investment in Africa."
The starting point for corporate responsibility is often a problem to solve, a compliance issue or just something that is nice to do. On Tullow's journey we are at the point where we understand that it is an essential tool in how we run every aspect of our business and is central to our continued success.
2011 key initiatives
- Roll-out of enhanced approach to external stakeholder engagement with a wider consultation programme
- New Code of Business Conduct and Group-wide compliance programme
- Drive significant improvement in EHS performance, with a specific focus on malaria awareness and prevention
Aidan Heavey, Chief Executive Officer