BP in Azerbaijan Sustainability Report 2018 The energy we produce serves to power economic growth and lift people out of poverty. In the future, the way heat, light and mobility are delivered will change. We aim to anchor our business in these changing patterns of demand, rather than in the quest for supply. We have a real contribution to make to the world’s ambition of a low carbon future. For a secure, affordable and sustainable energy future. bp.com/sustainability Introduction from our regional president Sustainability is at the heart of BP’s strategy. meeting the dual challenge that we all face Azerbaijan. We hit this important milestone in We believe that a long-term business can only today: how to deliver more of the energy our cooperation with the government, SOCAR and prosper if it is constantly striving to bring a growing world needs but with fewer other co-venturers as part of our long-term sustainable positive impact to the societies in greenhouse gas emissions. As a result of strategy and commitment to enhancing which it operates. these efforts we achieved more than 95,000 nationalization of staff and development of our tonnes of sustainable GHG emissions workforce. For more than 26 years that we have been in reductions in our operations in Azerbaijan in Azerbaijan, BP has been committed to As a good corporate citizen and responsible 2018, which is over 75% more than in 2017. conducting a safe and sustainable business that neighbour of the communities where we At the same time, despite the significant benefits all our stakeholders and the wider operate, we continued our efforts in creating reduction in flaring from the Deepwater society. sustainable benefits for people and new Gunashli and West Chirag platforms, we saw opportunities for social development. Our We safely and reliably operate giant oil and gas increase in the volume of gas flared at our activities covered support for capacity building fields in Azerbaijan, which have contributed to operational facilities in 2018 mainly due to in these communities and local enterprise the development of the Caspian Sea as a the additional flaring from the Shah Deniz development. We continued to invest in modern hydrocarbon province. The work we do Bravo platform and the Sangachal terminal education through local universities, schools in the Caspian, both in the Shah Deniz and the Shah Deniz 2 site. and kindergartens. We also contributed to the Azeri-Chirag-Gunashli (ACG) fields represents Speaking about the world scale projects, we promotion of Azerbaijan’s rich cultural heritage one of the highest levels of activity we have witnessed the significant milestones in 2018 – and development of the country’s sports anywhere in the world. the official inauguration of the Southern Gas potential. To achieve success, we have combined our Corridor, the first commercial gas deliveries to Through all our achievements, milestones and international expertise, including experience in Turkey from the Shah Deniz 2 development, challenges over the past years, we have created developing world-class offshore fields, as well and the first production from the Shah Deniz successful and trusted relationships with the as applying advanced industry technology, Bravo platform. This was the culmination of government and our stakeholders. together with Azerbaijan’s local experience and many years of hard work by thousands of capabilities. people, across many countries. Together with We look forward to continuing to build on our success in Azerbaijan and to work even harder In our business we aspire to no accidents, no the government of Azerbaijan, our partners in to maintain a business that is resilient and harm to people and no damage to the Shah Deniz, as well as multiple stakeholders in sustainable in challenging times and continues environment. In 2018, we continued to focus on the wider region, we made it happen. to benefit all our stakeholders, including society keeping employees and contractors safe and We also signed a new production sharing at large. alert to potential hazards that could occur in their agreement with SOCAR for the joint exploration work. We reduced our recordable injury and development of Block D230 which frequency almost twice compared to 2017, underpinned our joint effort to explore further reaching the lowest score during the last five Caspian opportunities in support of long-term years. We also saw a reduction in the total production in Azerbaijan. vehicle accidents rate by 27% compared to the All these successes would be impossible previous year. without huge effort by our employees. I am Gary Jones We continued the efforts to minimize our proud that in 2018 BP achieved the target of Regional president impact on the environment and contribute to 90% nationalization of our professional staff in Azerbaijan-Georgia-Turkey region BP in Azerbaijan Sustainability Report 2018 1 About our report This report covers the calendar year ending 31 December 2018. In some instances, significant events from 2019 have been included. Unless otherwise specified, the text does not committed. All gas volumes are indicated in distinguish between the activities of BP p.l.c. standard cubic metres or standard cubic feet. and those of its subsidiaries and affiliates. References in this report to ‘us’, ‘we’ and The report is issued annually by BP ‘our’ relate to BP in Azerbaijan unless Exploration (Caspian Sea) Limited in its otherwise stated. capacities as operator and manager of the joint operating company for the Azeri-Chirag- When we cite ‘BP in Azerbaijan’ we refer to Deepwater Gunashli field, as manager of The operations in Azerbaijan only. If we refer to Baku-Tbilisi-Ceyhan Pipeline Company and ‘BP AGT’ we are including all our activities in by BP Exploration (Shah Deniz) Limited in its Azerbaijan, Georgia and Turkey. Specific capacities as operator of the Shah Deniz field references to ‘BP’ and the ‘BP group’ mean and as technical operator of The South BP p.l.c., its subsidiaries and affiliates. All Caucasus Pipeline Company. For this report, dollar amounts are in US dollars and if each of these entities has provided translated from other currencies reflect the information relevant to its project and exchange rate at the moment the funds were statements applicable to its project. Cautionary statement Front cover imagery BP in Azerbaijan Sustainability Report 2018 may contain forward-looking statements relating, BP employees inspect a gas valve at the in particular, to recoverable volumes and resources, capital, operating and other expenditures, Shah Deniz site of the Sangachal terminal. and future projects. Actual results may differ from such statements depending on a variety of factors including supply and demand developments, pricing and operational issues and political, legal, fiscal, commercial and social circumstances. BP in Azerbaijan Sustainability Report 2018 Sustainability Report 2018 Details of our sustainability performance with additional information online. bp.com/sustainability 2 BP in Azerbaijan Sustainability Report 2018 Overview Our operations Our people Safety Environment Society Our Performance What’s inside? BP in Azerbaijan Sustainability Report 2018 covers our business performance, environmental record and wider role in Azerbaijan during 2018. It is our 16th sustainability report and reflects feedback we received about previous reports. Overview Focus areas We aim to deliver safe and Page 6 Our operations efficient operations and projects contributing to sustainable development in the Caspian region. Our long-term success Page 12 Our people in Azerbaijan depends on having a talented and diverse workforce. Introduction We focus on maintaining safe, Page 17 Safety reliable and compliant operations Quick facts and overview of our and put safety and operational risk operations in the Caspian sea and management at the heart of everything we do. the region. Page 4 We recognize that managing Page 22 Environment environmental impacts is an essential part of what it means to responsibly produce oil and gas. The energy we produce serves to Page 27 Society power economic growth and improve the quality of life for millions of people. We aim to have a positive and enduring impact on the communities in which we operate. Our key performance data - Page 36 Five-year covering areas including production, safety, environment performance and social spend. data BP in Azerbaijan Sustainability Report 2018 3 Our operations in the Caspian Sea and the region Scale The Caspian region has become one of the major oil and gas producing areas in the world, with the reserves of Azerbaijan being $72 billion $82 million transported to global markets Capital expenditure on the ACG, BTC, Spent jointly with our co-venturers on through Georgia and Turkey. Shah Deniz and SCP projects since social programmes including the beginning of operations in 1995 community development and educational initiatives since the start of our operations in Azerbaijan BP in Azerbaijan, Georgia and Turkey Legal structure In Azerbaijan, BP operates under several A number of BP legal entities have registered production sharing agreements and host representative offices in Azerbaijan reflecting government agreements (HGAs) signed with the evolution of BP’s presence in the region the government of Azerbaijan. In Georgia and since BP opened its first office in Baku in 1992. Turkey, BP operates under HGAs that cover The principal legal entity is BP Exploration export pipelines and terminals. (Caspian Sea) Limited. 4 BP Sustainability Report 2016 Overview Our operations Our people Safety Environment Society Our Performance 3.5 billion 100 billion 9 Barrels of oil were produced by ACG Cubic metres of total gas were Drilling rigs currently involved from first oil in 1997 to the end of produced by Shah Deniz from first in our operations, including 2018 gas in 2006 to the end of 2018 two mobile offshore drilling units Registered address Employees The registered address of the representative The number of people permanently employed office of BP Exploration (Caspian Sea) Limited by BP in Azerbaijan was 2,714 of whom 2,458 is 153 Neftchilar avenue, Nasimi district, Baku, were Azerbaijani citizens, at the end of 2018.