Annual Sustainable Development Report 2018 2019 1 Contents 2 SOCAR son illərdə öz uğurlu fəaliyyəti ilə regional və Birləşmiş Millətlər Təşkilatı tərəfdən müəyyən edilən beynəlxalq enerji bazarlarında mövqeyini gücləndi- Dayanıqlı İnkişaf Məqsədləri proqramına qoşulmuş və rir, ölkəmizin iqtisadi qüdrətinin möhkəmlənməsinə, proqramda göstərilən hədəflərə nail olmaq üçün qüv- 1.0 Message from the President 04 2.0 About this Report 07 3.0 About the Company 11 4.0 SOCAR’s Contribution to the Sustainable Development Goals 37 5.0 Corporate Governance 43 6.0 Human Resources 63 7.0 Support for Local Social Development 89 8.0 Occupational Health and Safety 97 9.0 Environmental Activities 111 10.0 SOCAR’s Performance Indicators 141 11.0 GRI Content Index and Independent Assurance Statement 168 xalqımızın maddi rifah halının yaxşılaşmasına dəyər- vələrini səfərbər etmişdir. Ölkə iqtisadiyyatının aparıcı li töhfələr verir. Azərbaycan Respublikası 2015-ci ildə qüvvəsi olan SOCAR fəaliyyət və təşəbbüslərini In reIn 3 MESSAGE FROM THE PRESIDENT In recent years, SOCAR has been reinforcing its posi- tion in both regional and global energy markets to sup- port the strengthening of the country’s economic power and improvement of the nation’s welfare. In 2015, the Republic of Azerbaijan adopted the UN Sustainable Development Goals and mobilized its forces to achieve the goals set out in the program. As one of the driving forces in the country’s economy, SOCAR seeks to align its activities and initiatives with the Sustainable Devel- opment Goals. We have already begun to set targets to achieve the Sustainable Development Goals by the year 2030. In light of the need to adapt to rapid development and changes in the world oil and gas industry and to keep pace with global competition, SOCAR began the draft- ing of “SOCAR’s Corporate Strategy to 2035” based on its “Comprehensive Strategic Development Plan to To overcome these challenges, we need to develop our 2035”2025” that was approved in 2011. human resources, improve staff’s abilities skills and in- volve them in upskilling or reskilling training courses. To ”SOCAR’s Corporate Strategy to 2035”, which the this end, the Company has developed a comprehensive Company started to draft in October last year, analyzes training program. Webinars are held for employees in the current state of the Company from the value chain various specialties. perspective, identifies the future steps capitalizing on regional and global benchmarks, and examines the Today, we are observing how our measures digitalizing prospects for further rationalization and optimization production yield fruit – we have managed to make “Pet- measures. kim”, one of our strategic assets, acknowledged as one of the most digitalized petrochemical factories in the In recent years, we have observed growing digital com- world.High-tech plants of the “SOCAR Polymer” Com- petition in the global oil industry, impacted mostly by the plex producing polypropylene and high-density polyeth- Fourth Industrial Revolution. SOCAR has agreed a uni- ylene, the STAR oil refinery in Turkey, and the Carba- fied road map, which covers digitalization projects in all mide Plant, which we launched as part of the Sumgait areas of focus of the Company. The roadmap overarch- Chemical Industrial Park Project, are among the key es the entire value chain, from production to processing achievements of our company. TANAP, the longest and sales, and is currently being implemented with the and largest-diameter natural gas pipeline in Turkey, the support of Caspian Innovation Center. Middle East and Europe, has been in operation since last year. The Company has launched the construction The Fourth Industrial Revolution led to a decrease in of the Azeri Central East platform, and the first oil and demand for traditional jobs while creating many new gas production expected in 2023. Preparations for the jobs in the digital sector. The COVID-19 pandemic has development of the “Karabakh” field are underway as made it urgent to shift to working remotely in many ar- scheduled. New wells are being drilled in the “Umid-1” eas today. The sharp drop in global demand for oil could platform to increase production from the “Umid” field. lead to a standby period for thousands of workers in the oil industry, creating a need to limit production in many fields. 4 As a company with a strong understanding of corpo- universities thanks to having the largest number of stu- rate social responsibility, SOCAR is actively involved in dents awarded a Presidential Scholarship. The renewed Azerbaijani society, providing support to key social and and higher standards introduced by the Baku Higher Oil economic projects in the country. In addition, with so- School in technical subjects serve the development of cial responsibility and sponsorship projects in Turkey, the country’s education system. the Company provides support for the environment, ed- SOCAR will continue to work further to respond to the ucation, culture, arts, and sports of our natural partners. call of Ilham Aliyev, President of the Republic of Azer- The Company’s social activities in Georgia continue baijan, “to turn black gold into human capital”, and will successfully. expand the scope of its programs to support the sus- Today, SOCAR has become an international company tainable development of our country. that meets global standards for industrial and environ- mental safety. The Company carries out comprehensive environmental monitoring on a regular basis at both offshore and onshore production sites to ensure en- vironmental safety and exercise operational control of adverse effects on ecosystems in structural units and facilities. During 2019, a total of 70 environmental mon- itoring activities were conducted to protect the envi- President of SOCAR ronment, including 56 at onshore and 14 at offshore facilities. Rovnag Abdullayev At present, the Company continues cleaning and res- toration work in accordance with the landscaping and architectural plan for areas contaminated with oil and oil products and flooded by produced waters. A total of 130 ha of contaminated area were re-cultivated in 2019. As a member of the Steering Committee of the World Bank’s GGFR since 2008, SOCAR has managed to collect 1 bcm of gas emitted into the air over the past 20 years in order to transfer it to the country’s gas sup- ply facility. We highlight that Azerbaijan is the lowest air polluter among the top 10 countries exporting oil to the European Union, thanks to low emissions in associated gas production. SOCAR has launched the expanded use of alternative wind and solar installations at a number of sites and production systems. Today, most of the measuring de- vices installed in oil and gas pipelines and production processes run on solar energy. A number of facilities use windmills and solar panels to illuminate office build- ings. Staff training is among the priority areas at the Com- pany. SOCAR’s Baku Higher Oil School has quickly become one of the country’s top-ranking universities. All these measures, including education and career op- portunities, have significantly raised interest in technical subjects among young people. School graduates with ever higher admission scores choose this university each year, and the Baku Higher Oil School leads other 5 01 6 About this Report 7 About this Report This Sustainable Development Report (hereinafter, this Identification of material topics Report) is the ninth Report of the State Oil Company of the Republic of Azerbaijan (hereinafter, SOCAR) on SOCAR holds regular meetings with them and shares Sustainability. With the publication of Sustainable De- information through various mechanisms (see Table velopment Reports, our goal is to inform all our stake- 24 for more details). To provide a comprehensive and holders about our economic, social, and environmental transparent Report on the impact of our activities, the performance, as well as our approach to and princi- interests of both internal and external stakeholders and ples for managing sustainable development activities their comments made throughout the year were tak- throughout the year. The latest Report reflects the sus- en into account during the preparation of this Report. tainable development performance in 2019 achieved by Further, in order to identify material topics and aspects, SOCAR’s subsidiaries and affiliates abroad, along with we analyzed the highlights of SOCAR’s activities in the the Company’s structural units in Azerbaijan. mass media and sustainability reports of five interna- tional oil and gas companies, and held interviews with various stakeholders on a number of sustainable devel- opment areas. As a result of the analysis, material issues Applicable standards associated with SOCAR’s activities were identified and This Report has been prepared in accordance with the are illustrated in Figure 1. Moreover, Table 1 provides “Core” option of the Global Reporting Initiative (GRI) information on which aspects are the most important to Standards. The contents of the Report are based on SOCAR’s stakeholders. the GRI principles of materiality, stakeholder inclusive- This Report focuses on social, governance and environ- ness, sustainability context, as well as principles of mental aspects as key elements of sustainability. balance, comparability, clarity, timeliness, transparen- cy, and reliability. The disclosure statuses of the GRI indices are provided in the Table on page 149. Independent assurance of the Report This Report was independently audited by Ernst & Young. The Independent Assurance Statement (see 159 ) con- firms that this Report has been prepared in accordance with the “Core” option of the GRI Standards. Given the extensive and diversified portfolio of SOCAR’s opera- tions, particular care is required to ensure a consistent approach to calculating indicators and their scope. If the scope of material indicators is modified, relevant notes are provided. This Report covers information on SOCAR’s facilities in Azerbaijan across economic, social and environmen- tal aspects, as well as the operations of SOCAR En- ergy Turkey, SOCAR Energy Georgia, SOCAR Energy Ukraine, and SOCAR Energy Switzerland.