New Horizons Company Profile 2016 Sustainability Dragon Oil is a highly responsible company that understands the value of corporate citizenship and knows that business has an important social role to play above and beyond the generation of wealth.

Dragon Oil 24 Company Profile 2016 Dragon Oil Company Profile 2016 25 TheSustainability Company’s mission is to safely explore and develop oil and gas resources by leveraging technology and a talented workforce. Dragon Oil is a dependable, ethical partner with strong environmental awareness.

Overview Dragon Oil’s business is the exploration and development of oil and gas resources. Safety & In order to do this sustainably, we need Environment appropriate technology and a talented workforce – both of which we have. Teamwork People We want to be able to demonstrate to all of our stakeholders that Dragon Oil is a dependable, ethical partner, capable of efficient operations, with strong environmental awareness and a commitment to the communities in which we work. Integrity & Excellence Therefore, we do our utmost to provide Transparency a balance of both short- and long-term economic, ecological and social inputs to benefit local populations, host countries, employees and shareholders.

Our primary production activity is in Social Stakeholder . We are there for the Responsibility Value long term and make a significant contribution to the social and economic development of the country as a result of the direct and indirect employment opportunities we have created.

We now have initial production in and have commenced exploration activities in , , and , which are expected to ramp Corporate values importance. The stakeholder value we up over the next two to three years. generate must be sustainable. Integrity We have seven corporate values: and transparency, as well as high We have every intention of replicating • Safety and the environment standards of governance, are part of the standards of performance and • People our corporate culture. We adhere to an internal Code of Conduct and ask responsible behavior that we have • Integrity and transparency already demonstrated in Turkmenistan. our contractors to do likewise. • Stakeholder value • Social responsibility Through internal audits and the • Excellence involvement of third-party consultants the Group regularly reviews its policies • Teamwork and procedures to ensure their adequacy and robustness. We believe that by introducing simple and easily understandable values, we Accountability for key areas of will win employees’ and stakeholders’ our business and sustainability is support for what we do and how we do divided amongst the senior members it and define for everyone concerned of the company’s management, who how we seek to achieve our goals. in turn report to the CEO, who holds overall responsibility. For example, the safety of our workforce and the communities in which we operate are considered to be of paramount

Dragon Oil 26 Company Profile 2016 RETENTION RATE

People Our HR strategy We have a clearly defined HR strategy 98% Our People are our main asset, and our to enable the ongoing expansion of Human Resources (HR) Strategy is not the group and our growth into a multi- Retention rate maintained in top-decile only focused on our current operations asset company. scores as a testament to our human but also designed to accommodate the resources strategy future expansion of our business by The HR strategy focuses on a number recruiting and retaining the best talent of areas, which include: while training and developing our existing employees. Development • fine-tuning our policies and initiating of our people and the success of the new ones, to cope with emerging company go hand-in-hand. This is challenges and market trends; one of the key elements of Dragon Oil’s • hiring and retaining the best possible approach to sustainability. pool of qualified candidates; • providing platforms for innovative ideas Our objective is always to strengthen and schemes for the overall betterment our levels of expertise and our cultural of employees and the business; diversity. Dragon Oil is already a • developing and empowering our collection of more than 40 nationalities workforce with a particular focus on and we welcome the rich variety of Turkmen national employees, aiming cultures and perspectives that this brings. to make them an independent and skilled workforce; Our guiding principle of People First • promoting and supporting further continues to drive our focus on training, We have appropriate education for our most talented empowering and putting our trust in people; and technology and a talented our workforce. In particular, we want to enhance career development • seeking ways to extend our workforce to explore and opportunities for our national educational reach to local develop oil and gas resources employees in Turkmenistan and the UAE. communities through scholarships. in a sustainable way.

Dragon Oil Company Profile 2016 27 Sustainability Continued

Our HR department is fully compliant We have continued to focus on the Internship with the ISO 9001:2008 quality development of a group of over 50 The Company is committed to hiring management standard, and our HR Turkmen employees, first identified high-potential junior and senior strategy incorporates the ISO 18001 in 2014 as being of high potential. university students or graduates framework for providing a safe and The long-term objective is that they and providing them with training healthy working environment. will eventually replace expatriates. assignments that will enhance their ability to immediately add value to the Training In 2015, we launched a thorough organization should they be offered We rely on skilled staff and invest in Competency Framework that defined a full-time job. Specifically in 2015, training programs to promote their the skills and knowledge required for we awarded seven internships at professional development. For many these high-potential employees. Dragon Oil’s headquarters in Dubai. years Dragon Oil has had a policy In the course of the project we tested of creating jobs for people in their current levels of competence, The objectives of the program are to: Turkmenistan, and today 93% of our interviewed them and their line • create a pipeline of potential employees employees in the country are local. managers and, based on the findings, by identifying high-achieving students tailored plans will be offered that in their academic careers; Programs for the training of local staff, ensure that each individual has clear • help the communities where Dragon which we have developed, are being milestones and defined training Oil operates and give opportunities delivered at the Group’s Center of objectives that will close competency to students to gain experience; Excellence in Hazar. This has enabled gaps and ensure they are 100% hundreds of Turkmen employees to competent in their prospective roles. • make use of challenging work acquire new skills. assignments to help develop students Work in 2015 also included the while bringing value to the Company; In 2015, we invested US$1.8 million creation of Individual Development • reduce the training periods required for in providing such skill-development Plans designed for each identified new graduates in full-time roles; and programs. Our Training and Development high-potential employee, which • provide the opportunity to evaluate department conducted approximately provide an opportunity to: a student’s on-the-job performance 140 training courses, where over 5,000 • work on a specific assignment or before offering them regular local employees were trained – with a project within their department employment. many attending more than one course. or in other departments; • have on-the-job training in our head Scholarship The training courses covered HSE, office in Dubai or on-site; and Developing the citizens of the countries focused technical training, specialized where we operate into world-class • be given access to external training. development and soft skills. And while professionals reflects one of our core the majority of these courses were Corporate Values: People. In 2015, In recent years, this program has conducted within Turkmenistan, some in Dubai, we enrolled six engineering successfully led to an increasing of the training was delivered outside students under Dragon Oil’s scholarship number of our national employees of the country. sponsorship scheme, while in reaching management positions Turkmenistan we enrolled 10 students as superintendents and supervisors HSE training continues to be designed to study oil and gas engineering and the in Turkmenistan. to further improve and strengthen a automation of technological processes. safety culture among our employees and develop their competences.

As we also believe in diverse training, the HR department offers not only the Case study classical classroom training but has UAE scholarship program introduced on-the-job training via In 2015, we attracted six young dedicated trainers and is in the students to our Scholarship Program process of introducing e-learning. that is designed specifically for the UAE nationals. They were selected High-potential Turkmen employees based on high school grades, academic The development – and empowerment interests, and a panel interview. – of our Turkmen employees is a key The successful students then strand in our strategy to ensure we are a enrolled in a range of engineering sustainable business, with the qualified specializations, such as chemical, resources we need to enable our growth. mechanical, electronic and civil engineering, at the American University of Sharjah. This program will continue in future years.

Dragon Oil 28 Company Profile 2016 We rely on skilled staff and invest in training programs to promote their professional development and we offer internships and scholarships to university students.

Education assistance In 2015, five employees benefited from our Educational Assistance Program, which aims to help Turkmen and UAE nationals to continue their studies abroad. This year it included study at universities in Russia, Ukraine, the UK, Switzerland and the UAE in subjects such as production, project management, safety, logistics and marine studies. Under this program we provide the tuition fees for specific educational studies, which helps motivate the employees towards self-development, career planning and promotion to higher responsibilities.

Competencies We engaged the International Human Resources Development Corporation (IHRDC), which specializes in training and competency development for the oil and gas industry, to introduce a global standardized competency management system, focused on our employees’ development and to help in our succession planning.

Our HR department has completed a number of phases of the project since 3Q 2015, including software deployment and training; job description reviews for head office and expat employees in Turkmenistan; job competency modeling based on up to 15 technical competences per position aligned to Dragon Oil’s business strategy.

Work-life balance There’s more to life than work, and Dragon Oil is keen to ensure that our employees enjoy a good work-life balance.

And as part of this, we organized a family fun day in Dubai in March 2015 that was attended by almost all Dubai- based employees who also brought along their families. As well as offering children a good time on bull rides, climbing walls and soft play, their parents could take part in a day of fun-filled team building through events such as Tug of War and racing a boat that they had just built. Sustainability Continued

Code of Conduct Health, safety and by one of our contractors. We continue to work with our contractors to ensure Dragon Oil has an increasingly multi- environment compliance with higher safety cultural workforce across a number Safety should be the number one priority standards and practices. of countries. We have an established of any business: in particular the safety dedicated Compliance function of employees and of the environment. Our Group Health, Safety and to oversee ethics and regulatory Environment Management System compliance-related matters. And we Oil and gas companies often operate in provides a tool for maintaining and have had a Code of Conduct in place difficult locations, with complex systems, continuously improving HSE performance, for many years; it is shared with our heavy equipment, and inherently and meets ISO requirements as well as employees and contractors. It has dangerous products. Dragon Oil is no the legal requirements of Turkmenistan. been updated and will be published. different: which is why safety and the We obtained re-certification to both environment come first on our list of ISO14001 and OHSAS 18001 in 2015 What is a clear and easy decision for corporate values. with no significant non-conformances one team member may be ambiguous identified during the audit process. and complicated to another. Therefore, But we also believe that sound HSE rather than describing every possible performance is vital to ensuring a In line with our policies regarding the situation and defining expected sustainable business. It is an integral development of our local workforce, key behavior, we have sought to harmonize part of our business decision- HSE positions in our Cheleken Contract our overall corporate culture by making processes. Area are currently occupied by young establishing a clear and consistent and highly motivated professionals set of Principles, embodied in the Furthermore, we have performance from Turkmenistan. Code of Conduct. indicators that work on the basis of ‘things that get measured get During 2015, we employed an external Each Principle is based upon one improved’. Over the past few years, contractor to provide Emergency or more of our Corporate Values we have made great strides in Response Training at all locations. (see page 26), and it is from these systematically driving down our We then ran two follow-on exercises Principles that we derive our corporate Lost Time Incident Frequency rate. to test competence and understanding policies and procedures. following the training. We are committed to attaining the However, the Code does provide highest HSE standards and have Our Center of Excellence in Hazar runs specific guidance on issues such a Steering Committee to ensure: regular training courses using internal as whistleblowing – where each and • the compliance of all parts of our specialists, as well as training with every team member is expected and business with our corporate HSE instructors from external higher empowered to raise any questions or policies, procedures and standards; education institutions. concerns without fear of retaliation and • that the Group’s HSE practices are in where individuals who demonstrate Dragon Oil runs a number of incentive line with industry best practice and courage and integrity in stepping forward schemes encouraging employees and the policies of the International to raise issues are guaranteed anonymity. sub-contractors to adhere to safety Association of Oil & Gas Producers; rules in our operations. These positively and The Code also expects team members contributed to additional reporting of to routinely engage with the Compliance • compliance with our ISO certification near-miss incidents during 2015. function over changes – which can be requirements and the implementation frequent – to complex international trade of third-party audit recommendations. In 2015, we also carried out 13 High and customs regulations, economic Visibility tours at onshore and offshore sanctions and embargoes. As a business, we have been accredited facilities on topics ranging from lifting, to ISO 9001, ISO 14001 and OHSAS emergency procedures, permit-to-work All of our business partners are 18001 since 2012. and risk assessment, to highlighting expected to have the same approach unsafe acts or conditions, recording to business dealings as we do, and Safety findings and taking remedial action. we provide them with further guidance We continue to operate safely, with no about our expectations in a separate major accidents or serious environmental Monthly walk-through audits are carried Business Partners Code of Conduct. incidents. Our HSE work aims to out with each contractor working on our highlight risks and ensure safety of our project sites, to assess their performance operations. Construction nevertheless in meeting our HSE standards. remains a high-risk activity and, unfortunately, in 2015 there was a fatality at a construction site managed

Dragon Oil 30 Company Profile 2016 TRAINING Environment In 2015, as well as in 2014, our Hazar operations celebrated the UN’s US$1.8mn Earth Day by cleaning the Dragon Oil (Turkmenistan) Ltd. camp area in Hazar. US$1.8mn spent on training Youngsters taking part in the Dragon Oil Dragon Oil employees Turkmenistan Sports Cup helped clean the town’s beach and, together with Our Center of Excellence in more than 100 of our employees, Hazar runs regular training collected over 200kg of recyclable litter at each location. courses by internal and external specialists. This was processed at the state-of- the‑art waste disposal facility we built in 2013. We require project contractors to maintain daily site construction An agreement has been reached with inspection checklists, which will help Balkanabat Nature Protection Society to minimize and isolate negative that will involve the planting of factors and improve site conditions. approximately 1,500 plants (trees, In addition we: flowers and grasses) in 2016. • encouraged project contractors to promote Anomaly Observation Report The Earth Day campaign brought together schemes to develop their people’s not only representatives of different awareness and increase involvement Dragon Oil departments, but also many in the safety management system; of the company’s contractors. • held weekly HSE team meetings and monthly HSE Management meetings with contractors discussing lessons learned from incidents; Training across • developed training presentations for all of the Group confined space entry, lifting, incident/ near-miss reporting awareness, and Employees who attended, including incident investigation awareness for those who attended on a number of supervisors; and occasions or both internal and external • carried out 62 emergency- events (2015 data). preparedness drills and exercises English 7% at our facilities in Turkmenistan. Non-Technical 14% Health HSE 62% For our local employees in Technical 17% Turkmenistan, we make a voluntary top-up contribution into the state health scheme equivalent to 2% of salary. This covers basic healthcare and gives benefits on further treatments and medication. We also provide on-site medical facilities, with a doctor and nurses on duty to attend to routine and emergency medical cases. This covers our employees, as well as citizens of Hazar and is offered in addition to the medical care provided by the state.

We have also signed a contract between Dragon Oil (Turkmenistan) Ltd. and the Emergency Ambulance Centers in Ashgabad and Balkanabat to assist in emergency situations.

Dragon Oil Company Profile 2016 31 Sustainability Continued

Corporate Social patients of the Turkmenistan State Responsibility work Traumatology Center in Ashgabat. in Turkmenistan Education In Turkmenistan we believe we have Each year we invest in the overhaul a responsibility to give back to the of classrooms and facilities at schools community that hosts us by actively in Hazar. seeking to improve their health, wealth and happiness – in particular in the city This year’s work was concentrated on of Hazar, where our operations are based. the refurbishment of two kindergartens, which will help to alleviate the shortage Agency employees provided by Petroskills in London. Health of pre-school spaces in the city. The most important investment that At both Kindergarten #3 and And for the first time, Dragon Oil Dragon Oil has made in the healthcare launched a scholarship program for infrastructure of Turkmenistan has Kindergarten #4 we have funded repair work to buildings that had been high school graduates from Hazar. been the building, between 2011 and its Ten candidates (five boys and five girls) opening in 2013, of a US$5mn polyclinic closed as being unsafe. This work will continue in 2016, when we will also were selected based on their exam in Hazar. This provides out-patient services results in mathematics and chemistry, to our employees, their families and the be landscaping the sites, adding playgrounds and providing new to study at Tomsk University in Russia local community and plays a significant from September 2015. role in the city’s routine healthcare. furniture and equipment. Kindergarten #3 has since been recognized as the Sports Best Kindergarten in the Balkan Region. The Hazar Polyclinic can treat up to Sponsorship from Dragon Oil has a 100 patients a day. Specialist doctors’ significant impact on the sporting life rooms include gastroenterology and Further, we have sponsored several projects at School #3. These include – and well-being – of young people in ear-nose-and-throat facilities, with Hazar and throughout Turkmenistan. consulting services for ophthalmology, replacing an old roof in order to protect future and already completed cardiology and other specialties. For example, in 2015, we sponsored a renovation work from leakages. This The clinic also offers long-term benefits trip by the Hazar Girls Volleyball team project is nearing its end. We have to the community through a focus on to the International Youth Volleyball procured brand-new equipment to health awareness, disease prevention Tournament in Primorsko, Bulgaria, equip recently renovated kitchens at and health risk management. where they were bronze medalists. the school, replacing old stoves and But our investment in healthcare ovens and adding new items such as We also enabled the national team to in Turkmenistan also includes long- freezers and dough makers. The school’s take part in the European Paralympic standing support of the municipal obsolete electrical equipment has also Powerlifting Championship in Hungary. hospital in Hazar. been replaced, and the school now has We are deeply committed to the a stable supply of electricity for all development of sport for disabled During 2015 we refurbished the hospital’s classrooms and common areas. people and not only support the National X-ray unit, while also renovating the Paralympic Committee and Special We are continuing to recognize and Dental Department. This project included Olympics of Turkmenistan but also reward talented young people in both the main area where all dental regional organizations and local events. procedures are carried out and the Turkmenistan and once again sponsored waiting room for patients. New medical an award ceremony for the winners of In 2015, we held the 6th Dragon Oil Cup. equipment was procured for the hospital’s the High School Olympiads. More than Junior teams from all regions of pre-natal and natal departments, a hundred high school students were Turkmenistan competed at volleyball, including specialized equipment for presented with gifts from Dragon Oil for basketball, football, and boxing – newborns, and other important medical their outstanding academic performance together with other competitions equipment for the hospital such as in subjects that included all of the in table tennis and chess. therapeutic furniture for disabled patients. sciences, but also English, Turkmen, Russian, history and geography. We supply kit and prizes for a huge But in addition to equipment, we are variety of sports – from ice hockey committed to improving the infrastructure Furthermore, within the framework of and judo in Ashgabat to the training of of the hospital – both physical and our Youth Scholarship Program, we jockeys at the Balkan State Equestrian clinical. We completed a project to sponsor 10 students from Hazar to Center. Our support provided upgrade the hospital’s heating system, study engineering disciplines at Tomsk sportswear for the Turkmenistan which has been completely replaced, Polytechnic University in Russia. national Belt Wrestling team who took and are in discussion with the relevant part in the 2015 World Championship in Our support then continues for more authorities to organize training for the Poland where the team won four gold, specialized education, which this year hospital’s doctors. one silver and two bronze medals. included working with the International Beyond Hazar, we sponsored a supply Oil and Gas University of Turkmenistan We also provided sponsorship to of medical equipment for the new and providing internships for the TV channel Turkmen Sport for Avaza Hospital and provided prosthetic students at Dragon Oil field facilities, broadcasting international soccer devices to socially disadvantaged as well as funding training on cost and basketball championships. management for three State

Dragon Oil 32 Company Profile 2016 In Turkmenistan we believe we have a responsibility to give back to the community that hosts us.

Community support Dragon Oil takes an active part in the development and modernization of For example, we acquired and fitted Turkmenistan’s infrastructure. a new diesel generator to the city’s sewage treatment plant. This provides We began operating in the Cheleken a reliable source of power and However, one of the most important Contract Area in 2000, having signed ensures that the plant can operate aspects of Dragon Oil’s investment the Production Sharing Agreement in with maximum efficiency. in the Cheleken Contract Area is November 1999, and have since the opportunity it creates for local invested significant funds directly into We are also planning to install a diesel businesses and local jobs. We have the development of the local oil and pump for Hazar’s water reservoir partnerships with more than 20 local gas industry. station. The project will cover design, companies for contractual work and engineering, procurement, installation materials supply – with a significant But we have also been investing directly and commissioning of the pump, which value of contracts awarded to them into projects that immensely benefit our will safeguard the working of the plant, over the past few years. These host communities. which supplies water to the whole town. contractor companies employ more than 3,000 local workers. A vivid example of such an investment Concrete water storage tanks have also is the seawater desalination plant in been installed underground at three of Culture Hazar, put into operation at the end the city’s educational and childcare During 2015 we continued to support of 2009, that is transforming water facilities that will guarantee them a reliable cultural events that enrich lives of the from the Caspian Sea for wider use. Our and uninterrupted supply of water. local communities. We: plant provides potable water. It is also • sponsored concerts of classical music an important source of quality water Further projects to improve the daily for children by the Rovshen Nepesov that safeguards town health and lives of local people include the Orchestra in Ashgabat and Hazar; medical and water-related facilities construction of two new playgrounds from disruption in water supplies, for in an area of Hazar. • provided instruments to the Hazar example, during prolonged drought Musical School and Culture seasons or earthquakes. This is a clear We are also part-way through a project Department; and example of our long-term commitment to completely renovate the Hazar • promoted a concert by the popular to the local community. bakery, which supplies fresh bread Ashgabat-based band Black Jack in to the town but which has not been Hazar. This event not only gave the Other water-based projects in which refurbished since the 1990s. Phase 1 local youth access to the latest Dragon Oil was actively involved in of the project has involved the musical trends, but also helped to 2015, concerned improvements to the procurement of two bulk containers build a cultural bridge between Hazar supply and treatment of water in Hazar. for flour storage. and the capital.

Dragon Oil Company Profile 2016 33 Registered office Group headquarters London office: Ashgabat office:

Dragon Oil Limited Dragon Oil St Andrew’s Building Ata Govshudov Street 9/1 6th floor, South Bank House ENOC House II 17 Old Park Lane Ashgabat Barrow Street 3rd Floor London Turkmenistan Dublin 4 Right Wing W1K 1QT Tel: +993 1293 5333 Ireland Sheikh Rashid Road United Kingdom Fax: +993 1293 6377 Tel: +353 1 614 5247 P.O. Box 34666 Tel: +44 20 7647 7800 Fax: +353 1 614 5001 Dubai, UAE Fax: +44 20 7629 5543 www.dragonoil.com Tel: +971 4 305 3600 Company registration Fax: +971 4 335 6954 number: 35228