BP in Georgia Sustainability Report 2009

bp.com/countrysustainabilityreports BP in Georgia Sustainability Report 2009 What’s inside?

About this report Our operations This report, BP’s sixth annual sustainability report for Georgia, in Georgia in 2009 describes our activities in Georgia in 2009 and outlines our 99.9% operating efficiency performance and activities across a range of topics. In BP, we define sustainability as the capacity to endure as a group, by renewing assets; creating and delivering better products and services that meet the evolving needs of society; attracting successive generations of See pages employees; contributing to a sustainable environment; and retaining 4-7 the trust and support of our customers, shareholders and the communities in which we operate. To ensure the report is balanced and includes material on the issues that are most important to internal and external parties, we have used a formal process to determine which issues to cover. As in People energy all previous years, the report has been independently verified. People and their capabilities

Sustainability reporting See pages www.bp.com/countrysustainabilityreports 13-14

Local energy Working in partnership

See pages 15-19

01 Management introduction

02 Achievements and challenges

03 BP in Georgia

04 Our operations in Georgia in 2009 Cautionary statement BP in Georgia Sustainability Report 2009 contains certain forward-looking statements concerning the businesses, operations and strategy of BP. 08 Safe and responsible energy By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual 13 results may differ from those expressed in such statements depending on a variety of factors People energy including future levels of industry product supply; demand and pricing; operational problems; general economic conditions; political stability and economic growth in relevant areas of the 15 Local energy world; changes in laws and governmental regulations; exchange rate fluctuations; development and use of new technology; changes in public expectations and other changes in business conditions; the actions of competitors; natural disasters and adverse weather conditions; wars 20 Our performance and acts of terrorism or sabotage; and other factors discussed elsewhere in this document and in BP Annual Report and Accounts 2009. 22 Independent assurance statement In this report, references to ‘BP’ and the ‘BP group’ shall mean BP p.l.c., its subsidiaries and affiliates and, unless otherwise stated, the text does not distinguish between the 23 Glossary operations and activities of BP p.l.c. and those of its subsidiaries and affiliates. Unless specified otherwise, references in this report to ‘us’, ‘we’, and ‘our’ shall refer to companies in the BP group operating in Georgia. Unless otherwise indicated all currency amounts are 24 More information denominated in US dollars.

A glossary of terms and acronyms used in this report is provided on page 23.

An introduction to Ernst & Young’s assurance process Cover Images We have reviewed the BP in Georgia Sustainability Report 2009 in order to provide Top left BP employees at work, Georgia assurance to BP management that the data, statements and assertions made Top right Main pump house at Baku-Tbilisi-Ceyhan Pump regarding the sustainability performance of BP in Georgia are supported by evidence Station 1, Georgia or explanation. Our scope of work and conclusions can be found on page 22. Bottom right Marine operation at Supsa Terminal on the Black Sea Bottom left View to loading pump house at Supsa Terminal, Georgia BP in Georgia Sustainability Report 2009 Meeting our obligations is a recurrent theme of 2009. The year saw us complete many long-term efforts, Management introduction including: construction of the Emergency Drain Down Facility in the Kodiana section of the BTC pipeline; construction of the security base which is now in full use by government security services; building and now using the first EU-standard landfill site in Georgia following years of preparatory work; reaching agreement A view from in principle with the government on a plan for eco- compensation that will see enhanced protection for the Sataplia State Reserve following detailed analysis and BP Georgia’s extensive discussions; refurbishing and re-opening the Samtskhe-Javakheti History Museum at Akhaltsikhe, which exhibits archaeological finds made during pipeline construction in a building of international standard. In general manager addition, the government’s release of provisions on safety zones around pipelines, which applies to all pipelines nationally, marks a valuable clarification of a long- Neil Dunn BP Georgia General Manager standing issue. May 2010 We have not only made good on these past commitments, but we have gone beyond requirements. We progressed our well-established community investment programmes, supporting school and university education, promoting awareness of energy efficiency, and working in partnership to stimulate local economic development. The successful launch of the Project Management College and our continuing contribution to road safety initiatives with schoolchildren are just two of the examples in this report that show how we are helping build for Georgia’s long-term future prosperity. We are proud to be contributing to the fabric of Georgian society and equally proud that we are helping others create the institutions and the enthusiasm needed to develop civil society themselves. 2009 was an excellent year for BP Our commitment to Georgia is also evident in in Georgia, in which we delivered on our progress with the nationalization of our workforce. a number of important commitments Ninety five percent of those employed by BP in Georgia are now Georgian nationals. while continuing to operate safely We continue to face challenges. The changing and responsibly. This report speaks geopolitical circumstances of the region mean that we of a company that makes good on its sometimes work in an environment of political uncertainty and tension. We face the day-to-day challenge of promises, with a long-track record of operating our plant and equipment responsibly and openness. We can be rightly proud of safely. But our practices, procedures and staff are all we have achieved. world-class, and we draw on a variety of auditors and experts to provide challenge and scrutiny of our operations and business practices. 2009 was an excellent year for BP in Georgia. Achieving We were delighted, as a member of UN Global superb operational performance on the Georgia Compact Georgia network, to present our sustainability sections of the Baku-Tbilisi-Ceyhan (BTC), South reporting practices to the Global Reporting Initiative Caucasus Pipeline (SCP) and Western Route Export workshop in June 2009. This is our sixth consecutive Pipeline (WREP) – with 99.9% operating efficiency annual sustainability report, and we are again proud to – shows that on this measure we could hardly have disclose our achievements and transparently set out the performed better. This output was delivered without a challenges we face. I hope you enjoy the report, and single day away from work case or recordable injury in welcome your feedback. our core operations, which is further testimony to the skill and diligence of our workforce. We are fulfilling our commitments to our commercial partners and shareholders, delivering results we can be justifiably proud of. I congratulate everyone involved.

1 BP in Georgia Sustainability Report 2009 Achievements and challenges

This section highlights Achievements Challenges the major achievements and Operating efficiently, safely and WREP (Western Route Export Pipeline) challenges we faced in 2009. responsibly maintenance We achieved 99.9% operating efficiency on We continue to monitor the condition the Georgia sections of the BTC, SCP and of WREP to ensure any anomalies are WREP pipelines in 2009, an outstanding identified and that potential risks arising level of performance that was achieved from landslide and river crossings are without a single recordable injury or day addressed (page 5). away from work case in our core operations over the year (page 5). Illegal taps Two illegal taps on WREP resulted in oil Nationalization spills in 2009, and other attempts were We took further steps to increase made to siphon oil from it. We are working the proportion of Georgian nationals working with the government and our security in our business – now at 95% – and providers to increase security on appointed more Georgians to management the pipeline (page 6). and supervisory positions (page 14). Improving local contractor capability Fulfilling our commitments A number of our contractors have faced Equipment maintenance We completed a number of the ‘special difficulties sustaining their businesses and Baku-Tbilisi-Ceyhan projects’ linked to the construction phase we need to further our efforts to build local Pump Station 1 of BTC and SCP including the emergency management capability. The creation of drain down facility, the EU-compliant non- the Project Management College is a step hazardous waste disposal site, and the towards establishing long-term project government security base. We also reached management capability within the country agreement in principle with the government (page 18). on eco-compensation and clarified safety requirements around pipelines. These milestones marked the resolution of long- standing issues and the fulfillment of past commitments (page 6).

Capacity building We continue to work in partnership with a range of non-governmental organizations, multilateral agencies, and local institutions to create benefit for our stakeholders. Our programmes in local communities continue to provide valuable assistance to education and local economic enterprise (page 16).

2 BP in Georgia Sustainability Report 2009 BP in Georgia

BP Georgia context BP interests in the Caspian Region BP provides customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items. We operate globally, with business activities and customers in more than 80 countries and approximately 80,300 employees. We have exploration and production interests in 30 countries, including our midstream pipeline activities in Georgia. In 2009, the BP group produced the equivalent of approximately 4 million barrels of oil and gas per day for customers across the world. BP replaced its annual production by 129% in 2009, the seventeenth consecutive year that our reported reserves replacement ratio has exceeded 100%. Our values Innovative BP’s operations in Georgia are undertaken We push boundaries today and create Our operations in the context of the BP group values and tomorrow’s breakthroughs through our strategy. people and technology. in Georgia Our values, set out below, guide us BP is the operator of the Baku-Tbilisi-Ceyhan in the conduct of our business. In all our Performance driven oil pipeline and South Caucasus gas pipeline business we expect our people to meet We deliver on our promises through in Georgia, which are now in their fourth high ethical standards and act in accordance continuous improvement and safe, reliable full year of operation. The BTC and SCP with our code of conduct. operations. pipelines run side by side for 248 kilometres within Georgia, with two BTC pump Progressive stations, gas offtake pressure reduction We believe in the principle of mutual and metering facilities on SCP and a total advantage and build productive relationships of 21 block valves in the country. BP with each other, our partners and our operates these facilities on behalf of two customers. international consortia of energy companies and investors. Responsible On behalf of an international We are committed to the safety and consortium of energy companies, we also development of our people and operate the Western Route Export Pipeline, the communities and societies in which 373 kilometres of which is within Georgia. we operate. We aim for no accidents, It carries oil from the Caspian Sea via the no harm to people and no damage to Sangachal terminal in Azerbaijan to the Supsa the environment. oil terminal on the Georgia Black Sea coast. Air BP, in a joint venture, provides Operating facility service to international customers at Tbilisi Baku-Tbilisi-Ceyhan Pump Station 1 airport.

3 BP in Georgia Sustainability Report 2009 1 Our operations in Georgia

How did BP’s operations develop in Georgia in 2009?

We ran our operations and projects efficiently, safely and responsibly in Georgia in 2009. In this section, we describe the key developments that took place in the course of the year. 2 3

Images 1 Marine operations on the Black Sea 2 Pipeline patrol with sniffer dog 3 View from fire water tank, Supsa Terminal 4 Mechanical technician during maintenance activity, Baku-Tbilisi-Ceyhan Pump Station 1 in Georgia

Key developments www.bpgeorgia.ge

4 Site safety inspection Supsa Terminal

The Baku-Tbilisi-Ceyhan (BTC) pipeline An important step forward was taken by During pipeline construction, we and The BTC operations team in Georgia achieved the Georgian government in codifying our partners took steps to preserve and a significant milestone in 2009: achieving provisions relating to safety zones around protect important archaeological sites and 99.9% operating efficiency for a full year pipelines. The measures will provide greater finds uncovered on the pipeline route. In – a measure of how efficient we were clarity in an area where consistency was 2009, we completed refurbishment of the in transporting the oil delivered to the lacking by prescribing the activities that can storage facility and exhibition area at the Georgian section of BTC through and cannot be carried out in the vicinity of Samtskhe-Javakheti History Museum in the pipeline over that period. pipelines. They relate to the major pipelines Akhaltsikhe, and opened it to the public. This achievement is especially in the country. significant when taking into account The Western Route Export Pipeline the quantity of hydrocarbons transported The South Caucasus Gas Pipeline We operated WREP at 99.9% efficiency through BTC in 2009 – nearly 286 million We continued to deliver gas safely and throughout the year, safely transporting barrels, or approximately 783,000 barrels reliably through SCP into Georgian and approximately 86,000 barrels of oil per day per day – enough to fuel more than 10 Turkish markets and to provide fuel gas for through the pipeline, which runs from Baku million family cars, each driving some BTC machinery. The supply of this gas, from to the Supsa terminal. 20,000 kilometres per year. the Shah Deniz field in the Caspian Sea, We undertook extensive work in In 2009, 366 tanker loadings were remains an important element in Georgia’s 2006-07 to refurbish Soviet-era sections completed from the marine oil terminal at energy security. of the pipeline. We continue to assess the Ceyhan on the Turkish Mediterranean coast, condition of the pipeline on an ongoing where the BTC pipeline ends. Fifty one BTC/SCP security and human rights basis. We carry out regular monitoring and tanker loadings were also made from the A focus of activity in 2009 has been support maintenance and undertake intelligent Supsa terminal, the end point of WREP, in for training on the Voluntary Principles on pigging – using sophisticated electronic the course of the year. Security and Human Rights for the private surveillance equipment that can analyze sector guards who provide security along the pipeline’s condition and detect BTC modifications the pipelines. anomalies such as corrosion. We carry out We undertook work in 2009 to expand the We provided refresher training for geotechnical analysis on sections of the capacity of the BTC pipeline to 1.2 million more than 200 guards in six workshops. The pipeline that lie within areas affected by barrels per day. Increased flowrates will be sessions were designed to develop their landslide, and specialist surveys of river achieved by the injection of drag reducing understanding of the need for restraint in crossings to monitor any possible effects agent, a chemical injection which eases the response to potential security threats, and of bank erosion or changes to river flow. flow of oil. We completed the installation of to enhance their knowledge of international We report regularly on the state of the injection apparatus, piping, pumps, storage standards, relevant Georgian legislation and pipeline to internal engineering technical tanks and tanker unloading stations at pump BP’s own principles on human rights. authorities and to the BP group operations stations and other locations in 2009. This work risk committee which is the main board- was done without any safety incidents, and BTC/SCP cultural heritage level body responsible for oversight of without interruption to normal pipeline activities. protection operational risk. There were five instances of illegal We carried out a number of other Responsible operations not only involves taps on WREP in 2009, and a further six modification projects on BTC in the course running our assets safely and efficiently. illegal tap attempts. In addition to using of the year. These included constructing It also requires protecting the surrounding our own resources to prevent these an oil spill response base and equipment environment. maintenance facility at PSG1, a generator occurrences, we continued discussions with shelter at Area 80 in the west of Georgia the Georgian government about how best to protect equipment from harsh winter to eliminate theft of oil, and the associated conditions, and installing and commissioning environmental risk, from the pipeline. sewage treatment plants at Pump Station 2 and the Tsalka oil spill response base. 5 BP in Georgia Sustainability ReportEmergency 2009 Drain Down Facility The Kodiana section, Baku-Tbilisi-Ceyhan Pipeline

Two of the illegal taps resulted in oil spills, Kodiana special projects handed over from the project construction which were the only spills in our operations We made good progress with the additional team and is now managed as part of our in Georgia in 2009. One resulted in a loss special project facilities requested by routine operations. of 4,300 litres (equal to approximately 27 the Georgian government in the Kodiana We also completed civil construction barrels) and the second resulted in a loss section of the BTC pipeline. work on the BTC secondary containment of 1,200 litres (approximately 7.5 barrels). We commissioned the Emergency sites (settlement basins and dams with Approximately 95% of the oil spilled was Drain Down Facility (the EDDF) – an 8,500m3 sluice gates to contain oil safely in the recovered, with the remainder remediated steel tank constructed within a secondary unlikely event of a pipeline rupture). Final on site by our specialist team. underground concrete tank for the draining work to install control and power systems and storage of oil from the Kodiana section gear and validate the system is scheduled of the BTC pipeline in certain emergency for 2010 when the locations become situations. The facility has been formally accessible after winter.

‘Silent running’: BTC Georgia’ s operating efficiency

’A full year of 99.9% efficiency is a clear demonstration of our ability to export oil reliably” says Erekle Lezhava, BP Georgia Operations Superintendent. “In practical terms, this achievement requires all equipment to be fully operational at all times, and the need to have an emergency plan in place in case any equipment fails.” This success was underpinned by adhering rigorously to well-established processes. These include daily conference calls, thorough work planning, vulnerability reviews and process upset analysis and reporting. “Continuous improvement is our team’s mantra” Erekle explains. “We closely monitor our deliverables, identify potential problems at an early stage, involve the teams and apply the lessons learned from every incident. Conference calls identify areas for action and provide vital communication with other teams along the route. We know one thing for sure: there is no room for complacency”. About 80 people are behind this exceptional performance; 40 at each of the BTC pump stations in Georgia, with a core team working in rotational shifts and providing round-the-clock cover. The teams operate and maintain the two largest and most complex pump stations on the BTC pipeline. Their role is to ensure the maximum availability of equipment such as the ten main oil line pumps powered by Solar turbines, the six independent power generator sets and the two crude topping units which refine crude oil into a diesel cut to fuel turbines and generators. Proper maintenance lies at the heart of any successful continuous operating machinery. Nugzar Maisuradze, Maintenance Team Leader in BTC Georgia, agrees that planned maintenance is vital: “The task of the maintenance team is to ensure that all equipment is available and efficiently used to maximize pipeline throughput. We continuously review schedules and procedures so that our maintenance and operation regimes are as effective as possible”. Nugzar adds that a new optimization project is being implemented. “We plan to have one main power generator constantly online at PSG1 and PSG2 instead of the two currently in use. Besides saving costs, this will reduce the impact of our operations on the environment”. Alistair Liddle, Georgia Exports Manager, concludes: “A full year with this level of efficiency is a staggering achievement and a great example of ‘silent running’ in Georgia. I like to compare our performance to a swan swimming across a lake. On the surface everything is serene and beautiful. But underwater the swan is working hard to get to where it wants to be. BP aims to be the best and this achievement is a case in point. But like the swan we have to keep paddling to reach our final destination”.

6 The Akhaltsikhe museum: ancient and modern With the completion of BTC and SCP pipeline construction, the amount of foreign Located in south Georgia, Akhaltsikhe is one of the country’s oldest cities. Narrative direct investment by BP and its partners sources mention the city from the twelfth century. Among the antiquities of Akhaltsikhe, in Georgia has declined. Government the most important is the old citadel. The collection of the Samtskhe-Javakheti History statistics indicate that approximately 2.2% Museum, which lies within the city’s old citadel, bears testimony to the region’s rich cultural of foreign direct investment in Georgia heritage and its ethnic and religious diversity. Old manuscripts, epigraphic, archaeological, came from BP and its partners in 2009, numismatic, ethnographic materials, and photographic records make up a remarkable compared with 2.8% in 2008. With pipeline collection. At present, more than 25,000 objects, records, and archives are preserved here. operations under way, however, we make An agreement between BP and its partners and the Georgia National Museum an important contribution to the value in 2007 paved the way for the museum’s archaeological materials, storage facilities and of exports. Government statistics show exhibition areas to be upgraded from their previous poor condition. The agreement also sought that our pipeline operations contributed to raise awareness of the cultural heritage sites alongside the BTC and SCP pipelines, and approximately 19% of the total value of promote awareness of museum reforms and functions among scientific groups and the service exports in 2009. general public. Approximately five months of rehabilitation work were carried out, using a local Working with local contractors construction company, renovating the exhibition halls and depositories of the museum and We continue to work with local contractors improving the building’s basic infrastructure. Now, all archaeological materials discovered where possible. In 2009, our payments during BTC/SCP construction are housed in modern and well-equipped storage which to local companies totalled $50.7 million meets the international standards the collection deserves. This includes micro-climate compared with $74.3 million in 2008. The control and modern safety and security systems. The renewed exhibition displays some fall in spending reflects the lower totals of 800 artefacts dating from the Paleolithic to the Middle Ages discovered during capital and operational expenditure, but the the BTC/SCP project. proportion of spend with local companies The museum is open to the public and is already an attractive site for education and remained very similar in 2008 and 2009. tourism, not only providing insight into Georgia’s past but generating economic benefit for Where we work with international this region’s future. suppliers, we are incorporating provisions in our contracting processes that require them to describe their plans for increasing the number of Georgians in their own Air BP Financial and economic impact workforce. We hope this will be a useful mechanism for raising technical and trade Air BP continued to provide international Our economic contribution to Georgia skills within the local economy. grade aviation jet fuel to its customers at remains significant. As part of our effort to build the Tbilisi international airport. As in 2007 and Our operational expenditure in Georgia capability of local contractors, we and our 2008, operations throughout the year were totalled $104.9 million in 2009 compared with partners have supported the creation of carried out without a DAFWC or reported $130.9 million in 2008. Capital expenditure a Project Management College, which recordable injury. amounted to approximately $38 million in provides training to individuals on all 2009, the majority of which was spent on aspects of project management. The pipeline modification and commissioning college’s first year of work is described in projects associated with BTC. more detail in the ‘Local Energy’ section of Profit tax payments from all the BTC this report. business partners linked to the throughput on the BTC pipeline in 2009 totalled $34.3 million. This compared with $29.6 million in 2008. We made WREP tariff payments to the Georgian government of $7.2 million for 2009.

7 BP in Georgia Sustainability Report 2009 1 Safe and responsible energy

How does BP seek to ensure its operations in Georgia are safe and are conducted responsibly?

Our goal of ‘no accidents, no harm to people and no damage to the environment’ is fundamental to BP’s activities, wherever we operate. We work to achieve this through consistent management processes, ongoing training programmes, rigorous risk management and a culture of continuous improvement.

Images 1 Equipment maintenance at Baku-Tbilisi-Ceyhan Pump Station 1 2 Safety inspection at Baku-Tbilisi-Ceyhan Pump Station 2 3 Safe Roads Project 4 View to office area at Supsa Terminal

Reliable operations www.bpgeorgia.ge

2 4

3 Safety performance As always, there is no room for For the third consecutive year, our activities complacency. Every safety incident in Georgia were completed without a single generates learning. We carry out day away from work case. The number of comprehensive investigations to ensure we reported recordable injuries declined in learn the right lessons and take action to try comparison with 2008, from five to three. to stop any incident from happening again. This resulted in an improved recordable Actions arising from incident investigations, injury frequency, which is one of our most audits, inspections, risk assessments, important performance indicators. The management meetings and plans are number of vehicle accidents and the total logged and followed up. There were no vehicle accident rate also declined. While overdue actions within Traction, our internal any incident is one too many, it was an action tracking system, at the end of 2009. excellent year’s performance. In our view, it is no coincidence Safety and operations audits that the excellence in operating efficiency We subject our safety and operating recorded in 2009 was matched by an systems and behaviour to rigorous internal excellent safety record; safe and efficient scrutiny. A safety and operations audit, operations are two sides of the same conducted by the BP group specialist audit coin. The operating management system team, was undertaken in January 2009. It Safely round the world (OMS), currently being introduced at BP resulted in a number of recommendations Alexi Chalaganidze, a BP Georgia driver, has sites around the world, reinforces this against group standards. The majority of driven approximately one million kilometres point by incorporating detailed safety and these have been completed and verified with no accidents – the equivalent of 25 environmental requirements and practices by the auditors, with two long-term actions times around the world! to create a consistent BP way of operating. scheduled for completion in 2010 and 2011. Alexi started working for BP as a Preliminary work to document procedures The preparation process, the audit itself, contractor with his private vehicle in 1996, as part of OMS implementation was carried and the learnings generated were invaluable. initially during WREP construction. “He is to out in BP Georgia in 2009. Our colleagues in Azerbaijan be congratulated on a remarkable record”, These achievements require carried out a review of our driving safety says transportation team leader Salome consistent effort and attention on issues measures in 2009. An assessment of Kobaladze. “During these 13 years, Alexi of personal and process safety. Where site medical emergency arrangements has had no road traffic accidents and has necessary, we upgrade our existing was undertaken by the business’s central completed hundreds of individual trips. processes to ensure we align with group health and regional adviser. Many people have cause to be grateful requirements and best practice. For example, for his safe and professional driving. And a set of mandatory internal requirements Driving what’s more, he has also taken great care on how to prioritise and manage risk was Road travel represents one of the most of the vehicles assigned to him, which is introduced in 2009. The risk review process significant risks our people face when one reason they last so long‘’. helps identify and assess risks and define carrying out work in Georgia. This is not preventative measures. only because of the extent of road travel Effective communication, which lies – our workforce drove more than 8 million at the heart of good safety performance, kilometres in 2009 – but because road was achieved by providing weekly safety standards and awareness of road safety circulars and carrying out refresher across the country need to improve. sessions to remind all members of the There were two vehicle accidents in our workforce of the paramount importance of activities in 2009, neither of which resulted safe operations. Topics covered included in injuries. BP Georgia’s vehicle control lessons learned from incidents, process and system, which allows online speed, location personal safety related to fire and explosion, and driver performance tracking was driving safety, lifting operations, carbon recognised by the safety and operations monoxide hazard awareness, office safety audit team as a good practice. and other related topics. We regularly conduct awareness On WREP and at Supsa, we raising efforts on driving safety. Topics introduced ‘ISSOW’ (a web-based include ‘safe driving – vehicle deadly integrated safe systems of work system) weapon’, winter driving and pedestrian following its successful use on BTC and safety. Speed and alcohol checks are SCP. The system is designed to reduce routinely carried out, with drivers workplace risk by giving more structure to regularly assessed. work planning and control measures.

9 BPWorking in Georgia with Sustainability contractors Report on 2009 safety We held regular safety events with contractor management teams throughout 2009. ‘Safety Leadership Team’ meetings are held at which risks are discussed, incidents analysed and good practices shared. Safety site visits have been conducted with contractor companies at different locations, where the project safety team and contractor leadership seek to reinforce and improve HSE standards and requirements. This form of visible leadership helps site personnel appreciate the importance of making every work environment safe. We reward the contractor with the best safety performance with the annual BP Georgia Contractors HSE Award.

Protecting health We use an internal assessment tool to identify risks to the health of our workforce. The potential health hazards facing those who work in our business are very varied and cover issues such as noise, food safety, Promoting road safety in schools and water quality. Our assessment gauges the level of risk and devises actions to Building on the success of a pilot initiative in 2008, the Georgia Alliance for Safe Roads mitigate the hazards. project seeks to improve youth road safety education in Georgia and increase the use of seat We carry out regular awareness belts among Georgia’s vehicle users. The project is run by the Partnership for Road Safety sessions to encourage employees to look Foundation, a non-profit organization that promotes road safety through education after their own health, covering topics and advocacy. such as smoking and ‘caring for your The effort is an alliance of many organizations both Georgian and international. These heart’. We also ensure we are prepared include the project’s main financial supporters, who are USAID, BP and the FIA Foundation, for challenges like swine flu, updating our a UK-based registered charity which manages and supports an international programme of pandemic response plan in 2009 and testing activities promoting road safety, environmental protection and sustainable mobility, as well our potential response by carrying out a as funding specialist motor sport safety research. readiness exercise. The 2009 project aims to educate 20,000 children in 48 schools about dangers on the road – as pedestrians or vehicle users. Using booklets, posters, photography, videos Responding to emergencies and events, the campaign highlights risks and explains how to avoid them. Advocacy work Having the capability to respond to has also been carried out to introduce road safety within the national educational curriculum emergencies, whether related to health, by September 2010. safety, security or the environment, is an According to Eka Laliashvili, the project director, “The pilot project focused important aspect of risk management, in awareness-raising initiatives on 48 schools, targeting 8-9 year olds. We assessed levels which training and preparedness are critical. of road safety awareness among the children and found that it had increased by 38% In 2009, we carried out an offshore following our efforts. It’s an encouraging start, but we are going to be working hard with oil spill response emergency exercise at our partners to make further progress. BP’s commitment, not just through its financial the Supsa terminal and an exercise to backing but by the example it sets in taking road safety seriously, is extremely valuable”. respond to a spill of chemical drag reducing agent at BTC facilities. We also completed a cross-border emergency response exercise between Georgia and Turkey. Incident management plans and emergency response plans were reviewed and training provided for members of the incident management team (IMT). The IMT is now staffed entirely by Georgian nationals.

10 Waste management BP EU-standard non-hazardous landfill site in Georgia

Environmental management Waste management Eco-compensation 2009 was a year in which we successfully How and where to dispose of waste in Georgia We reached agreement in principle with closed out a number of environmental has been an issue since BP started working the government on eco-compensation for commitments from previous years. in Georgia in the mid 1990s. During and after the forestry loss which occurred during The eleventh post-financial audit of BTC/SCP construction, waste volumes pipeline construction. the Independent Environmental Consultant, increased significantly, creating even more Following detailed analysis of acting on behalf of BTC lenders, was of a challenge. options and extensive discussions with completed in June 2009. The audit, which The inauguration of the non-hazardous government, it was agreed that BP included visits to operations sites, found waste landfill site, which started receiving should contribute $3.5 million towards no new areas of non-compliance with the waste from BP operations in May 2009, marked the protection of the Sataplia State BTC project environmental and social the culmination of many years work to create Reserve. The funding will help protect the commitments. A previous non-compliance the first EU-standard landfill site in Georgia. preserved area, which is of international relating to arrangements for non-hazardous This included identifying and purchasing paleontological significance. waste disposal was closed with the startup a suitable site, finding and appointing of the non-hazardous waste landfill site in qualified contractors, carrying out an Systematic environmental May 2009. A non-compliance relating to environmental and social impact assessment, management stack emissions monitoring remains open, holding public consultations, managing The significant steps forward on waste although monitoring is conducted on a interim arrangements for the safe handling of management and eco-compensation routine basis. waste, completing the licensing and permitting achieved in 2009 stand over and above Our environmental track record process with government, and constructing the day-to-day achievement of operating is underpinned by taking a disciplined the facility. Its launch shows that our responsibly and managing compliance with and systematic approach to operations. commitment to manage waste responsibly relevant standards and legal requirements. The BTC/SCP and WREP pipelines were has been successfully fulfilled, however Operating our assets in a way which successfully re-certified against the complex and occasionally difficult the process. is environmentally responsible is an integral international environmental management In addition to constructing this landfill part of our privilege to operate, particularly system standard ISO 14001 following an site, we and our partners in BTC and SCP because our pipelines pass through a independent audit in October 2009. The have committed to assist the Georgian number of protected areas, including audit ended successfully with no system government in funding the construction of those with International Union for the findings for the Georgia pipelines. an EU-standard municipal non-hazardous Conservation of Nature (IUCN) designated landfill site at Rustavi. In 2009, an status. Many of our project activities, such agreement was signed with the EBRD on as the construction of the emergency drain providing financial support for this initiative. down facility and secondary containment On behalf of the BTC/SCP co-venturers, systems in Kodiana, are driven by the needs BP committed grant funding of $1.1 million of environmental compliance. Additional with EBRD and other funders contributing a leak detection processes at sections of total of approximately $3.5 million. BTC in Tsalka, one of the most sensitive WREP site visits undertaken by the environmental areas crossed by the ISO auditor showed that a high priority is put pipeline, also reflect the need to ensure on good housekeeping and general upkeep effective operations in compliance with of the facilities. The audit report commented requirements. that the waste management system requirement for waste segregation was being fully adhered to in all areas. All bins and skips were properly labeled and waste segregated as per container labels. Chemical storage was also to a high standard. 11 BP in Georgia Sustainability Report 2009 Biodiversity the Baku-Tbilisi-Ceyhan/ South Caucasus Pipeline off RoW faunal component monitoring: aquatic habitat survey Dragonfly: Lindenia tetraphyla

While these projects help to safeguard Sewage treatment facilities Eco-awards the environment in themselves, additional We are carrying out a project to install Grant awards under the new eco-awards steps have been taken within their scope to sewage treatment plants at BTC pump scheme we have launched with our protect the environment. For example, the stations and associated facilities. partners were made in 2009. Under this BP projects team relocated rare species to New facilities have been installed and initiative, which we are backing with Bakuriani; we reinstated and bio-restored commissioned at PSG2 and the Tsalka $600,000 over two years, with the potential land parcels used by local contractors oil spill response base. Work included for an additional $300,000 in the third year, during construction activities as staging installing rotating biological contactor organizations submit proposals to carry out areas, lay down, and disposal sites; systems and associated pumps, piping projects that will have an economic and and we carried out site landscaping and and ancillary treatment equipment. Reed environmental benefit. The programme is seeding at the EDDF to minimize beds were also constructed to receive the administered by the Eurasia Partnership the facility’s visual impact. effluent from the sewage treatment plants. Foundation. The themes in the programme are Oil spills Land reinstatement and biodiversity broad. Projects on biodiversity conservation, Performance against one of the key protection eco-tourism, and protected areas all environmental indicators – oil spills We continue the programme of land received funding this year. – remained good in 2009. The two oil reinstatement along the BTC/SCP Fifty one proposals were submitted spills we suffered were both the result of pipeline right of way and temporary in 2009. Evaluation is undertaken by a illegal taps. While we take many measures facilities, carrying out bio-restoration, panel including representatives from to try to stop this illegal activity, these seeding and erosion risk monitoring. For relevant government bodies, international incidents lie beyond our direct control. example, we undertook action to restore organizations and independent experts. In both cases, we mobilized our incident a three kilometre road used for EDDF Shortlisted projects are submitted for final response team and managed the spills construction – tackling the challenge selection by BP and the Eurasia Foundation. effectively, containing and recovering most of erosion by planting at the roadsides. Five proposals won awards in 2009 of the lost oil, remediating the affected This involved assessing the suitability of for projects concerning wheat marketing, soil and thereby minimizing impact on the indigenous species to plant, determining sustainable tourism, the conservation and environment. how to maintain soil conditions and re- commercial use of economically important establishing the forest habitat. We planted flora species, the protection of species Number of oil spills 2005-09 approximately 7,000 saplings in autumn of Adjara wild flowers, and facilitating

3 2009, with more to follow in 2010. stakeholder participation in protected areas We also continue to adhere of Georgia. to our commitments within the BTC 2 environmental and social action plan on ecology. For example, we continued rare floral species diversity monitoring. 1 Our assessment in 2009 indicates that conditions have improved since our baseline

2005 2006 2007 2008 2009 assessment in 2007.We transplanted 11 rare floral species of flowering grasses to their original habitats adjacent to the BTC/ SCP right of way and continue to track their survivability rates.

12 BP in Georgia Sustainability Report 2009 1 People energy

How is BP building the skills and experience of its workforce in Georgia?

People and their capabilities are fundamental to our sustainability as a business. To build an enduring business in Georgia, we recognize the need to develop the operating skills and 2 3 experience of local people, creating an environment which provides opportunity for all staff.

Images 1 Calibration of temperature transmitter at Baku-Tbilisi-Ceyhan Pump Station 2 2 Operations at Supsa Terminal 3 Main pump house at Baku-Tbilisi-Ceyhan Pump Station 1 4 Crude storage tank at Supsa Terminal

Our people www.bpgeorgia.ge

4 BP in Georgia Sustainability Report 2009 Georgians at Supsa: a pipeline of Georgian nationals

As the Supsa terminal manager, Zaza Ramishvili has responsibility for an operation that handles about 86,000 barrels of oil per day, and typically loads one tanker per week with some 630,000 barrels of oil delivered via WREP. Zaza, a graduate chemist and process engineer, has worked at Supsa since 1998 when he began his career with BP. Beginning as a trainee operator, he became an operations supervisor before being appointed terminal manager in December 2007. Zaza has seen many changes over this period. Two developments stand out particularly clearly. The first is the ever-sharpening focus on safety and environmental protection. “Over the past two decades, there has been much more focus across the industry on how we get our work done, not just on hitting performance targets. Discussing risks, assessing safety hazards and having rigorous controls over how we approach every task is built into the way we work at BP”. The second major change is the steady growth in Georgian nationals working at the terminal. “I am, of course, very proud to be the terminal manager. But I am equally proud that every single employee here at Supsa is now a Georgian national as well. We have all come a long way”.

Nationalization Building an operations-focused Treating our staff with respect We increased the proportion of Georgian organization and dignity nationals working in the business in Georgia We have continued the transition of BP We strive to maintain an open working to 95% by the end of 2009. This continued Georgia from a project-focused to an environment in which everyone is treated the steady growth we have achieved operations-focused organization. with respect and dignity. We simplified and in nationalization since 2004 when the This change reflects the nature of our updated the staff handbook in 2009, which percentage of Georgian nationals within the business, requiring a different composition provides guidance on expectations and key total headcount stood at 73%. to our workforce with different skills information on topics of use to employees. and experience. We provided a separate Georgia staff BP Georgia headcount 2009 The total size of our workforce handbook for the first time, which we made

Contractor expatriate staff Contractor national staff 700 declined in 2009. The fall in the number available in Georgian and English. BP expatriate employees BP national employees of BP employees was due principally to We continue to highlight the importance outsourcing the transportation and security of the BP code of conduct, which underpins

600 departments, completed in 2009.The our aspiration for an open and fair environment. number of expatriate staff continued to The code represents BP’s commitment to decline as project activities are completed. personal integrity, defining what is expected 500 The posts still filled by expatriates demand of every BP employee in the areas of health, high levels of experience. Our aim is to safety, security and the environment; develop Georgian nationals so they have interaction with employees; business partners; 400 the necessary experience to assume these governments and communities; and the roles in future. approach to company assets and financial integrity. We recognise that we cannot be 300 Supporting our employees complacent as issues continue to be raised In addition to supporting our people in their through our annual ethics certification process. 200 professional lives, we aim to help them outside Feedback from an employee opinion work. We launched an Employee Assistance survey undertaken in 2009 showed that BP Programme in 2009, a confidential counselling Georgia employees were confident that BP 100 service provided by an independent third party gives priority to the code of conduct and to support employees with personal issues. the law when pursuing its business goals. We improved the way employees can access Responses, which are provided confidentially, 2005 2006 2007 2008 2009 information about their long-term savings also registered employees’ confidence in their ability to speak out about doing the right As well as seeking to increase the number plan, a benefit we introduced in 2007.We thing without fear of reprisal. Employees of Georgian nationals within the business, improved the recreation benefit provided to also registered that managers emphasized we aim to build their experience and skills staff by offering greater flexibility in how it the importance of doing the right thing. so they can assume leadership positions. is used. Georgian nationals now hold senior BP Georgia headcount management positions in finance, human 2005 2006 2007 2008 2009 resources, government relations and regulatory affairs, legal, business services, Georgian nationals 398 492 499 498 386 health, safety and the environment, security, BP employees 271 274 280 323 316 social responsibility, external affairs and Contractors 127 218 219 175 70 operations. A number of Georgian nationals Expatriates 138 162 92 38 19 were appointed to supervisory positions in BP employees 38 26 26 12 9 the course of the year. Contractors 100 136 66 26 10 Total headcount number 536 654 591 536 405 14 BP in Georgia Sustainability Report 2009 1 Local energy

How is BP contributing to social and economic development in Georgia?

We aim to ensure that our presence in Georgia, and wherever we operate, creates mutual advantage for us and for those with whom we come into contact. We work to understand local needs and 2 3 respond to them, building the capacity of individuals, communities and institutions by working in partnership.

Images 1 Project management college graduates 2 Tsnisi milk processing facility, Akhaltsikhe district 3 Lectures at the International School of Economics in Tbilisi 4 Agricultural demonstration farm in village Moliti, Borjomi district

Social projects www.bpgeorgia.ge

4 BP in Georgia Sustainability ReportRehabilitated 2009 gym in village Lesa Small Grants to Schools investment programme

Strategy Engaging with stakeholders The panel highlighted the ‘excellent We began this year to implement the We continue to work with the villages and progress’ made in handing land that was stakeholder engagement strategy agreed communities in the vicinity of BTC/SCP required during construction back to its with our partners in 2008. We plan to invest and WREP. original owners, and in closing outstanding an average of $3 million per year in Georgia Working to our community land acquisition cases in the second on activities within the strategy in 2009-2011. communication plan, our team of Community half of 2008 and in 2009. We now have Our goal is to maintain good Liaison Officers (CLOs) maintains regular agreements in place regarding future land relationships with communities near our contact with village communities, engaging use with 83% of private landowners and facilities, as well as support the creation with village heads and trustees, local residents, are continuing to make efforts to contact of a favourable environment for small and complainants, landowners, regional absentee landowners. medium sized businesses. The geography Governors and gamgebelis (district heads). The audit found that livelihoods had of our operations and the economic profile CLOs raise awareness of BP and its activities, been substantially restored or enhanced. It of neighbouring communities mean that and discuss safety issues, concerns relating noted that in some pockets of intensively sustainable projects in support of agriculture to land use, and community investment cropped agricultural land, further progress will remain our focus in rural areas. programmes. To reinforce messages about in restoring livelihoods can be made. In our In launching initial actions, we took pipeline safety and increase awareness of view, this is likely to require further growing account of the findings of an independent how to respond to oil spills or gas leaks or seasons. The panel found that consultation evaluation of the Community Investment raise a complaint or query, we developed and information dissemination activities Programme (in particular the CIP2 and distributed a community calendar for were widely praised, with the roles of CLO programme which ran for three years 2010. The calendar also contains guidance and land officers highly appreciated by from 2006) and a mid-term evaluation of on how to improve energy efficiency communities. We are aware of the need the ‘Farmers to Markets’ (FTM) initiative. in everyday life, without making major to continue to work constructively with FTM seeks to improve the livelihood of modifications to home appliances. communities in future and to continue to agricultural communities near the pipelines We have worked for a number of build mutually beneficial relationships. by providing support services and better years to fulfil the commitments made access to markets. in the BTC/SCP construction phase The independent evaluation environmental and social action plan. backed the idea of continuing to support In September 2009, a ‘completion agriculture and civil society development, audit’ was conducted by the Social and including strengthening community-based Resettlement Action Plan expert panel. organizations and providing help for The panel was established to monitor and business start-ups. assess compliance with the Resettlement Action Plan and to verify that measures to restore or enhance the livelihood of people affected by the project were being implemented. They were also tasked with gauging the effectiveness of those measures and determining whether the quality of life and livelihoods of affected communities had been restored. The independent panel members spent several days in the field, meeting communities, landowners, district gamgebelis, and complainants.

16 Tsnisi milk processing facility Community Investment Programme

Civil society capacity building We support the British Council in We continue to provide financial support We work in partnership with a large number developing local media capacity. Over the for the International School of Economics of organizations to help build the fabric years, we have adapted the content of this at Tbilisi State University (ISET) established of Georgian civil society. This includes programme to respond to what recipients in 2006 with the backing of BP and the international funding bodies like USAID and want. Originally focused on increasing governments of Georgia, Sweden and the Canadian International Development understanding of the energy industry, and Norway. The school exists to promote Agency (CIDA), international financial then on English language training, the excellence in postgraduate economic institutions such as the International initiative now concentrates on developing study and research. Two classes – totaling Finance Corporation (IFC) and the European skills relevant to broadcast and web-based 49 students – have now graduated since Bank for Reconstruction and Development media. More emphasis is also being given ISET opened, and the pool of applicants (EBRD), and local bodies including to regional media development. The Open continues to increase. Graduates have gone government and non-governmental Society Georgia Foundation and HSBC on to jobs in public and private sector organizations (NGOs). became co-supporters of this programme organizations and several of them have Many of the NGOs we partner with in 2009. continued with PhD studies at world- act as implementing organizations for renowned universities in North America our community investment programmes, Supporting education and Europe. described below. Others direct specific Supporting education has been an initiatives such as projects to heighten important element of our community Supporting local enterprise and awareness of road safety in schools, or investment programmes in Georgia since business development support cultural activities in the arts or their inception. We have financed projects We are taking a range of steps to help archaeology. We collaborate with various designed to make quick impact, such as develop local economic capacity. Some educational bodies including district schools refurbishing school buildings, as well as initiatives are linked directly to our and universities. longer-term initiatives that develop operational activities, while others promote We also work with community- the skills and capabilities of students. economic opportunity more widely. based organisations to help them develop We continued to support school Agriculture is important to many of the organisations, skills and confidence rehabilitation projects, such as small-scale the communities along the pipeline routes. they need to take action for themselves – building refurbishment in schools located We are therefore supporting business whether that be to resolve conflict, promote within two kilometres of WREP. Since this development in the agricultural sector in a enterprise, or undertake community effort began in 2007, 89 schools have three-year ‘Farmers to Markets’ project – a projects. In all these partnerships, our benefitted from it. As well as upgrading the marketing component of the Community aim is to help create vibrant and healthy physical infrastructure of school buildings, Investment Programme. The technical and communities. the programme has supported capacity advisory services we are providing under building in school administration. We have the programme aim to help farmers bring also led safety quizzes in schools to raise better quality products more efficiently awareness of safety and environmental to market. Work in 2009 focused on issues around our operations. establishing consolidation centres to bring groups of farmers within a district closer to their buyers.

17 BP in Georgia Sustainability Report 2009

The Project Management College: managing for the future A project under our Community Investment Programme is providing grants and training An assessment commissioned in 2007 by BP with the aim of identifying gaps in energy- for women who want to start up in related education, revealed that one of the key skills gaps among Georgian companies is business. Since this initiative began in 2007, project management. This is also evident simply – but powerfully – in our experience of 50 business ventures have been supported, doing business with local contractors, where some companies have struggled to meet with financial assistance provided to a total the high levels of expertise required in project management or have failed to manage their of 88 women. The initiatives supported are businesses sustainably. diverse, including food production, clothing, As part of the Regional Development Initiative implemented by BP and its oil and animal husbandry, milk and dairy product gas co-venturers, the decision was made to establish a Project Management College processing, handicrafts, catering, computer (PMC). The college is governed by a steering committee formed of representatives from services, and beautician services. BP, the global project management training institution ESI International and the Free In partnership with the IFC and University of Tbilisi. BP is providing $1.5 million over three years to support the creation CIDA, we have provided financial support and work of the college. to a project to improve the operating The PMC provides a series of training streams leading to accreditation and environment for business in Georgia. The developing the hard and soft skills and knowledge of participating students. Course project seeks to reduce the regulatory modules cover managing projects, scheduling and cost control, risk management, project burden on business by helping government leadership and communications, quality, project management applications, and preparation reform inspection systems and streamline for PMP® (Project Management Professional) examinations, governed by the Project permitting and licensing processes. It Management Institute®. also aims to improve small and medium Training is delivered by ESI International’s qualified instructors, leading to award of sized companies’ access to information. the ‘Masters Certificate in Project Management’ from The George Washington University. In 2009, initiatives concentrated on More than half of the first year’s 80 participants come from local businesses and the food production sector, developing other local organizations. Other participants are from foreign businesses operating in approaches to food safety. A Public Service Georgia, public sector organizations and international bodies. Center, open at the Ministry of Economic Course work is demanding. Each module lasts some three to four days and needs Development since April 2009, seeks to cut to be fitted in around participants’ existing jobs. Study involves a mix of classroom work, red tape, save time for local entrepreneurs, lectures, presentations, review questions, practical exercises and tests. Participants are and make application processes simpler encouraged to apply what they have learned in their own work environment. and more transparent. Work was also According to Tamilla Chantladze, one participant in the first group of students, from carried out on tax simplification, drawing on BP, “the course brings greater rigour and discipline to the experience you already have, as international expertise. well as the opportunity to learn from others from different sectors and disciplines. It has With our partners, we are also been challenging – not least the weekend working! – but hugely worthwhile”. supporting a three year project that aims to PMC programme manager, Keti Aleksidze, is delighted with the first year’s improve the corporate governance practices achievements. “The college has opened right in the middle of a very difficult economic of Georgian companies and banks, helping period. But despite the hard economic conditions, we have a full complement of students, them operate more effectively and allowing and companies have shown their readiness to put people forward and pay towards their them easier access to capital. In 2009, learning. That shows the value of what we are trying to achieve”. seminars and workshops were run on risk Improving project management capability has huge potential benefit for management, corporate reporting, and many sectors of the Georgian economy; banking, IT, manufacturing, construction, the role of women on corporate boards. communications and energy for example. While it is early days in the life of the college, the Training, consultation and conferences first steps towards delivering this benefit have been taken. These sentiments were echoed were also provided on issues of corporate by Lasha Zhvania, former Minister for Economic Development: “We look forward to seeing governance involving government the programme achieve its full potential, creating a larger network of certified project bodies, NGOs and banking sector managers in Georgia, and making a substantial impact on business profitability and the representatives. The project also published country’s economy, ensuring successful delivery of infrastructure projects and improving surveys, guidance booklets and launched the overall investment climate in Georgia”. competitions to raise public awareness of corporate governance matters.

18 We continue to support the EU-Georgia The Energy Bus: More talk and more action Business Council (EUGBC), which was established with a $300,000 grant under the The bus, a mobile information and demonstration unit, displays information, products and BP Pledge agreement with the Government technology that promote energy efficiency. It has visited more than 100 communities of Georgia signed in 2004. EUGBC activities in urban and rural areas across the country since the initiative’s launch, attracting in 2009 included discussions with Georgian approximately 150 visitors per day. In the last three-quarters of 2009, more than 15,000 and EU officials on trade and investment adults, children, householders, entrepreneurs and others have visited the bus. The matters and support for Georgian exporters examples below highlight examples of the type of interest shown: · and businesses, particularly small and medium sized enterprises. Brochures, trade In Dusheti, clergymen from various regions of Georgia toured the bus, expressing seminars, workshops and conferences interest in solar photovoltaic installations for their churches. · were supported. The head of Dusheti district administration expressed interest in the installation of a We also continue to work with 400W micro wind farm in the district. Energy bus representatives were able to put him the American Chamber of Commerce in in contact with relevant suppliers to start negotiations on purchasing and installing the Georgia, the British Georgia Chamber of system. Commerce in London and support the In October, the Energy Bus and its team participated in the first ‘climate change week’ activities of the US-Georgia Business organized by the Green Movement of Georgia and Friends of the Earth Georgia with Council in Washington. the support of the EC delegation to Georgia. Information on climate change and how to address the challenge was provided to schoolchildren and teachers. Energy efficiency awareness-raising Giorgi Abulashvili, the Director of the Energy Efficiency Centre, Georgia, who has We launched the ‘Energy Bus’ initiative in responsibility for leading the Energy Bus project, has commented on the work carried out March 2009, a three-year effort to raise to date: “We have made an excellent start, meeting our targets for visiting communities awareness in Georgian communities of how and attracting visitors. This initiative is addressing the real need in Georgia to improve to use energy efficiently and safely. The awareness of the importance of energy efficiency and also of the many actions people can initiative also seeks to help people install take to use energy more wisely. But one of the most important aspects of the scheme is renewable energy and energy-efficient the link it provides to the subsidized loan programme for households. By providing financial products in their homes. support, we have the capacity to do much more than just talk and raise awareness; we can A key feature of this project is that make a real and practical difference”. advice is backed with access to an attractive loan scheme. With our oil and gas co- venturers, we have committed to providing up to $1million of subsidy to ease the burden of regular interest rates and make eligible energy-efficient products – such as double glazed windows, insulation, solar panels for water heating and energy efficient stoves – more affordable to households. Visitors to the bus can not only learn about opportunities to use energy- efficient products and approaches, but can have detailed consultations about how to obtain concessional loans and install devices and appliances in their homes.

19 BP in Georgia Sustainability Report 2009 Our performance

Five-year performance data, trends and interpretation For the year ended 31 December 2005 2006 2007 2008 2009 Performance Total hydrocarbon throughput (mmboe) – 106.7 221.4 281.4 349.7 Social investment ($ million)a 12.4 20.1 8.7 8.0 8.5

Safetyb BP employee fatalities 0 0 0 0 0 BP contractor fatalities 1 0 0 0 0 Days away from work cases (DAFWC)c – workforced 4 3 0 0 0 Days away from work cases frequency (DAFWCF)e – workforce 0.06 0.07 0 0 0 Recordable injuriesf – workforce 30 5 1 5 3 Recordable injury frequency (RIF)g – workforce 0.41 0.12 0.04 0.26 0.17 Total vehicle accidents 35 33 5 6 2 Total vehicle accident rateh 1.30 2.06 0.49 0.71 0.25 Number of spills (loss of primary containment)i 1 3 2 2 2 Volume of product spilled (litres) 70,914 10,416 75,290 4,715 5,520 Volume of product unrecovered (litres) 0 0 51,000 0 320 Hours worked – workforce 14,527,840 8,158,739 4,459,899 3,873,410 3,507,005 Kilometres driven 26,844,882 15,999,715 10,101,030 8,503,842 8,120,198

Environmentj

Direct carbon dioxide (CO2) (tonnes) 35,421 146,084 408,273 251,090 285,415 Direct methane (CH4) (tonnes) 220 396 271 147 311

Equity share direct greenhouse gas (GHG) (tonnes CO2 equivalent) 13,687 47,675 122,346 76,443 88,289 Sulphur dioxide (SOx) (tonnes) 44 197 109 88 102 Nitrogen oxides (NOx) (tonnes) 651 1,751 2,704 1,992 2,309 Non-methane hydrocarbons (NMHC) (tonnes) 1,990 1,823 91 72 1,206 Hazardous waste disposed (m3) 388 243 383 352 864 Non-hazardous waste disposed (tonnes) 670 378 463 497 423

People Total BP Georgia headcount 536 654 591 536 405 Georgian nationals as % of BP Georgia headcount 74 75 84 93 95

a Figures show BP and partner spending. They include ‘cash out’ spending and support c DAFWC: An injury or illness is classified as a Day Away From Work Case (DAFWC) if as a provided under the BTC grant and the BP Pledge. For more information on BP Pledge consequence of it the member of the BP workforce could not have worked on any day after and BTC Grant please see BP in Georgia Sustainability Report 2005 and BP in Georgia the injury or illness, irrespective of whether there was scheduled work, or the member Sustainability Report 2006, respectively. of the BP Workforce comes to work even when a physician or other licensed health care b Safety data shows performance for BP in Georgia as a whole, encompassing our in-country professional recommends that the individual stays at home. activities described in this report (projects, operations, administrative support, and Air BP). d The BP workforce comprises all BP employees, all BP contractors and all BP Directors. e DAFWCf workforce: The number of injury DAFWCs to the BP workforce for every 200,000 hours worked in the same period. 20 BP in Georgia Sustainability Report 2009 Our performance

Performance Total throughput of hydrocarbons through BTC/SCP/WREP Total throughput of hydrocarbons through the BTC, SCP and WREP pipelines BTC annual throughput (crude) mmb 400 WREP annual throughput (crude) mmb increased in 2009, reflecting higher throughput in each pipeline. 350 SCP annual throughput (gas) mmboe 300 Performance bp.com/performance 250

200

150

100

50

06 07 08 09

Safety Recordable injury frequency (RIF) 2005-09 Following an increase in 2008, the number of recordable injuries and the recordable 0.45 injury frequency both declined in 2009. These figures are far lower than those 0.40 recorded during pipeline construction activity but our challenge is to drive continuous 0.35 improvement in the safety of routine operations. We made progress, for example, in 0.30 reducing the number of vehicle accidents and the total vehicle accident rate in 2009, and our goal is to continue this improvement further. 0.25 The number of oil spills, which is an indicator of process safety, has remained 0.20 broadly steady since 2004. Both spill incidents in 2009 were the results of illegal 0.15

taps on WREP. 0.10 0.05 Safety bp.com/safety 05 06 07 08 09

Environment Equity share direct greenhouse gas emissions (tonnes CO2 The increase in equity share greenhouse gas emissions and other air emissions in equivalent) 2005-09 2009 reflects the higher levels of hydrocarbon throughput through the pipelines, 140 000 following the reported decline from 2007-08 which resulted principally from the use of more appropriate emissions factors. The increase in non-methane hydrocarbons 120 000 compared with 2008 is principally the consequence of more tanker loadings at 100 000 Supsa, following increased throughout on WREP after pipeline refurbishment. The increase in hazardous waste volumes in 2009 has resulted primarily from wax waste 80 000 from WREP pigging operations, the generation of waste soil from spill sites and 60 000 waste air filters arising from maintenance activities. 40 000

Environment 20 000 bp.com/environment 05 06 07 08 09

People Number of Georgian nationals and expatriate workers The total BP Georgia headcount continued to decline in 2009, as it has done within BP Georgia headcount 2005-09 progressively since the completion of major project activities. The proportion of National 600 Expatriate Georgian nationals within the total BP Georgia headcount continued to increase, 500 reaching 95% in 2009. 400

People 300 bp.com/people 200

100

2005 2006 2007 2008 2009

f A recordable injury is a work-related injury and illness incident that results in a fatality, a day i In accordance with the BP group definition, hydrocarbon spills are those equal to or more than away from work case, restricted work or job transfer, or medical treatment beyond first aid. one barrel (equal to 159 litres, or 42 US gallons). g RIF: The total number of recordable injuries to the BP workforce for every 200,000 hours j All environment data relates to total BP-operated emissions with the exception of ‘equity worked in the same period. This is a commonly-used industry measure of personal safety share direct greenhouse gas (GHG)’ emissions which shows the BP share of emissions from performance. operations on an equity share basis. Environment data for 2005 covers BP operated activities h TVAR: Total Vehicle Accident Rate: the sum of all light vehicle, all heavy vehicle and all mobile on WREP and the Supsa terminal. Data for 2006 and 2007 covers BP operated activities for all plant accidents per one million kilometres driven. three pipelines (BTC, SCP and WREP) and associated facilities in Georgia.

21 BP in Georgia Sustainability Report 2009 Independent assurance statement

This report has been substantiated by Ernst & Young, the BP group Level of assurance auditors. The primary purpose of the report substantiation process Our evidence gathering procedures have been designed to obtain is to test that the assertions, claims and data set out in the text a limited level of assurance on which to base our conclusions. The regarding BP’s sustainability performance can be supported by extent of evidence gathering procedures performed is less than evidence. This process is intended to give assurance about the that of a reasonable assurance engagement (such as a financial report contents from an independent third party. Ernst & Young’s audit) and therefore a lower level of assurance is provided. scope of work and their conclusions are provided below. Our conclusions Independent assurance statement to BP management On the basis of our review and in accordance with the terms of BP in Georgia Sustainability Report 2009 (the Report) has been reference for our work we provide the following conclusions on prepared by the management of BP Georgia, who are responsible the Report. Our conclusions should be read in conjunction with the for the collection and presentation of information within it. Our above section on ‘What we did to form our conclusions’. responsibility, in accordance with BP management’s instructions 1. Does the Report cover the key issues? is to carry out a limited assurance engagement on the Report as We are not aware of any key sustainability issues relevant to BP outlined below, in order to provide conclusions on the claims, data Georgia which were raised in the media or the outcome of BP and coverage of issues within it. Georgia’s own materiality process that have been excluded from Our responsibility in performing our assurance activities is the Report. to the management of BP p.l.c. only and in accordance with the 2. Are the data and statements regarding BP Georgia’s terms of reference agreed with them. We do not therefore accept sustainability performance contained within the Report or assume any responsibility for any other purpose or to any other supported by evidence or explanation? person or organization. Any reliance any such third party may place We are not aware of any misstatements in the assertions and on the Report is entirely at its own risk. data presented by BP management within the Report regarding BP Georgia’s sustainability performance. What we did to form our conclusions Our assurance engagement has been planned and performed Our independence in accordance with the International Federation of Accountants’ As auditors to BP p.l.c., Ernst & Young are required to comply with ISAE3000.a the independence requirements set out in the Institute of Chartered The Report has been evaluated against the following criteria: Accountants in England & Wales (ICAEW) Guide to Professional Whether the Report covers the key sustainability issues relevant Ethics. Ernst & Young’s independence policies, which address and to BP in Georgia in 2009 which were raised in the media, BP in certain places exceed the requirements of the ICAEW, apply to Georgia’s own review of material sustainability issues, and the firm, partners and professional staff. These policies prohibit selected internal documentation. any financial interests in our clients that would or might be seen to Whether sustainability claims made in the Report are impair independence. Each year, partners and staff are required to consistent with the explanation and evidence provided by confirm their compliance with the firm’s policies. relevant BP managers. We confirm annually to BP whether there have been any Whether the sustainability data presented in the Report are events including the provision of prohibited services that could consistent with the relevant business unit level data records. impair our independence or objectivity. There were no such events In order to form our conclusions we undertook the steps or services in 2009. outlined below. 1. Reviewed a selection of external media reports and selected internal documents relating to the sustainability performance of BP in Georgia in 2009 including independent review reports and ethics certificate. 2. Reviewed the outcome of BP Georgia’s own processes for determining the key issues to be included in the Report. 3. Reviewed information or explanation about the Report’s sustainability performance data and statements. Whilst we reviewed documentation to support the sustainability data Ernst & Young LLP contained within the Report, we did not test the data processes London for gathering, collating and reporting data at country or site level. May 2010 a International Federation of Accountants’ International Standard for Assurance Engagements Other Than Audits or Reviews of Historical Financial Information (ISAE 3000).

22 BP in Georgia Sustainability Report 2009 Glossary

DAFWC (f) HSE Mmboe Glossary Day away from work Health, safety and Million barrels of oil case (frequency) environment equivalent BPD Barrels of oil per day EBRD IFC NGO European Bank for International Non-governmental BTC Reconstruction and Finance Corporation organization Baku-Tbilisi-Ceyhan Development pipeline IMT OMS EDDF Incident Operating CIDA Emergency drain management team management Canadian down facility system International ISET Development EU International School PMC Agency European Union of Economics Project at Tbilisi State management CIP EUGBC University college Community EU-Georgia investment Business Council ISSOW SCP programme Integrated safe South Caucasus FTM systems of work Pipeline CLO Farmers to market Community liaison initiative IUCN WREP officer International Union for Western Route GHG the Conservation of Export Pipeline CO 2 Greenhouse gas Nature (also known as Carbon dioxide the Baku-Supsa pipeline)

23 BP in Georgia Sustainability Report 2009 More information

BP’s sustainability reporting Feedback BP communicates non-financial We welcome feedback on this report. You commitments and performance at group, can write to us at the address below, marked country and site levels in both print and for the attention of the Communications online media. and External Affairs team, or send an e-mail to us at: [email protected]

Group reporting BP Georgia, 38 Saburtalo Street, 0194, BP Sustainability Review 2009 is available Tbilisi, Georgia. in pdf format in English, Mandarin Chinese and Russian. BP’s HSE performance data is Previous BP in Georgia Sustainability presented as interactive charts. reports are available at www.bpgeorgia.ge www.bp.com/sustainabilityreview2009 www.bp.com/hsechartingtool www.bp.com/sustainabilitymappingtool Acknowledgements Design: Besik Danelia, [email protected] Country and site reporting Photographs: Gela Kavelashvili, Internews Service Centre, [email protected] We publish country reports on our operations in Angola, Australia, Azerbaijan, Germany, New Zealand, Southern Africa, Trinidad & Tobago and Turkey. We also maintain a library of site reports for more than 30 of our major operations. www.bp.com/countrysustainabilityreports www.bp.com /sitereports

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