Shallow Water Absheron Peninsula (SWAP) Exploration Drilling Project Environmental and Socio-Economic Impact Assessment November 2020 ACKNOWLEDGEMENTS This Environmental and Socio-Economic Impact Assessment (ESIA) for the SWAP Exploration Drilling Project was carried out by AECOM on behalf of BP (Operator) and the SWAP Contract Area Production Sharing Agreement Contractor Parties. AECOM acknowledges the collective and individual contributions from companies, academic and scientific experts and institutions in the preparation of this ESIA. AECOM is grateful for the willing assistance of these parties and their contributions to a rigorous and comprehensive report. AECOM acknowledges with thanks the following: Company More Energy Ltd Award Environmental Consultants Ltd Academic and Scientific Experts Individual Expertise Brian Roddie Marine Scientist Tariel Eybatov Caspian Seal Specialist Illyas Babayev Bird Specialist Mekhman Akhundov Caspian Fish Specialist Grigory Palatnikov Caspian Fish Specialist Academic and Scientific Institution Azerbaijan Ministry of Ecology and Natural Resources SWAP Exploration Drilling Project Environmental & Socio-Economic Impact Assessment NTS Non-Technical Summary This Non-Technical Summary (NTS) presents a concise overview of the Environmental and Socio- Economic Impact Assessment (ESIA) prepared for the Shallow Water Absheron Peninsula (SWAP) Exploration Drilling Project (hereafter denoted the “Project”) to be undertaken in the SWAP Contract Area. It is intended to provide a summary of the project activities, the issues considered in the ESIA and the main conclusions on environmental and socio-economic impacts. Detailed technical description of modelling studies, proposed mitigation measures and monitoring activities are presented in the main sections of the ESIA. Introduction The SWAP Contract Area comprises three Prospective Areas. It is planned to drill three SWAP exploration wells in total; one in each Prospective Area namely: • North Khali (NKX01) exploration well in North East Prospective Area; • Qarabatdag (QBDX01) exploration well in South East Prospective Area; and • Bibiheybat (BHEX01) exploration well in West Prospective Area; This ESIA Report has been prepared to identify and assess the potential impacts associated with the drilling activities for the NKX01 exploration well. The indicative location of the NKX01 well is shown in Figure E.1. Exploration drilling activities at BHEX01 and QBDX01 locations will be covered in addenda to this ESIA. Figure E.1: Proposed NKX01 Exploration Well Location November 2020 i Final SWAP Exploration Drilling Project Environmental & Socio-Economic Impact Assessment NTS Overview of the SWAP Exploration Drilling Project In 2015, a 2D seismic survey was undertaken in the deeper waters of the SWAP Contract Area and surrounding area, followed by a 3D seismic survey in 2016 completed in shallower waters and in areas onshore. In addition, geohazard and bathymetry surveys have also been completed to understand soil stability and identify potential sub-surface hazards. The seismic, geohazard and bathymetry survey results were used to inform the decision making process regarding the exact exploration drilling locations and the definition of the associated revision of the SWAP Contract Area into three prospective areas. The NKX01 exploration well is located within the North East Prospective Area as shown within Figure E.1, approximately 15km from the Azerbaijani mainland in a water depth of approximately 22m. It is proposed to commence drilling of theNKX01 exploration well in Q1 2021, and drilling activities are expected to take up to 90 days to complete, with the possibility of a further 30 days to complete sidetrack well, if required. The base case assumes that drilling activities will commence in January 2021 however, for contingency, should there be any delay for logistical or operational reasons, and based on prior experience and best estimates, a delay of up to 2 months may occur. The key objective of drilling the exploration well is to confirm the potential presence of hydrocarbon resources at the North East Prospective Area for future field development. The well will be drilled using a jack-up rig, which will be positioned at the well location using three tug vessels. The well will be drilled using drilling muds (using water based mud for the conductor section and non-water based muds for the lower hole sections) with all mud and cuttings recovered to the jack- up rig and handled as waste. It is assumed the jack-up rig will be lit at night and operate 24 hours a day over the drilling programme. Preference will be given to source equipment and materials which meet the required Project specifications from Azerbaijan wherever possible. All supplies required during the drilling of the well will be transported from the existing BP Supply Base with drilling fluids provided from the Advanced Fluids Facilities (AFF). Alternatives Assessed Several conceptual options were analysed for technical and commercial feasibility during the development stage of the Project. These included an option to install a permanent or semi-permanent steel jacket, the option to build an artificial island or the option to use a jack-up drilling rig. Given the relatively shallow water depth at the Project location, a jack up rig was selected as the most suitable option for the Project. The rig will be demobilised and will be removed once the well has been abandoned. The key advantage of the jack-up rig is that impacts are temporary and, compared to other options considered, this option is considered to result in the lowest potential impact on the environment. Assessment Methodology The ESIA process (illustrated in Figure E.2) constitutes a systematic approach to the evaluation of a project and its associated activities throughout the project lifecycle. The overall aim of the ESIA process is to identify, reduce and effectively manage potential negative environmental and socio-economic impacts arising from the Project activities. November 2020 ii Final SWAP Exploration Drilling Project Environmental & Socio-Economic Impact Assessment NTS Figure E.2 The ESIA Process Assessment of the Project environmental and socio-economic impacts has been undertaken based on identified routine activities and accidental events that have the potential to interact with the environment. The impact significance considers receptor sensitivity and the magnitude of the impact and takes into account existing control measures embedded in the project design. Policy, Regulatory and Administrative Framework The Production Sharing Agreement (PSA) to jointly explore and develop potential prospects in the SWAP Contract Area was signed between BP and the State Oil Company of Azerbaijan Republic (SOCAR) in December 2014. The assessment has also included examination of how agreements, legislation, standards and guidelines apply to the project. The detailed legal regime for the joint development and production sharing of the SWAP Contract Area is set out within the PSA. November 2020 iii Final SWAP Exploration Drilling Project Environmental & Socio-Economic Impact Assessment NTS The PSA states that the “Contractor shall apply safety and environmental protection standards and practices that take account of the specified environmental characteristics of the Caspian Sea and draw, as appropriate, on (i) international Petroleum industry standards and experience with their implementation in exploration and production operations in other parts of the world and (ii) existing Azerbaijan safety and environmental legislation. In compilation of such standards and practices account shall be taken of such matters as environmental quality objectives, technical feasibility and economic and commercial viability”. The Project also takes account of a wide range of international and regional environmental conventions and commits to comply with the intent of current national legal requirements where those requirements are consistent with the provisions of the PSA, and do not contradict, or are otherwise incompatible with, international petroleum industry standards and practice. The Project will also adhere to the framework of environmental and social standards within the ESIA approved by the Ministry of Ecology and Natural Resources (MENR). The PSA also makes reference to international petroleum industry standards and practices with which the Project will comply. Environmental Impact Assessment Table E.1 summarises the outcome of impact assessment for the Activities associated with the Project. Table E.1: Summary of Residual Environmental Impacts Associated with the SWAP Exploration Drilling Project Significance Rating Event/Activity Receptor Impact Event Magnitude Sensitivity Significance Jack-up Power Generation Medium Low Minor Negative Support Vessel Engines Medium Low Minor Negative Atmosphere Jack-up Rig Positioning Medium Low Minor Negative Drilling (excluding conductor driving) Medium Low Minor Negative Use of Support Vessels Medium Low Minor Negative Conductor Driving Medium Low Minor Negative VSP Airgun Operations Medium Low Minor Negative Jack-up Rig Cooling Water Intake and Medium Low Minor Negative Discharge to Sea Drainage Water Discharge Low Low Negligible Marine Environment Marine Support Vessel Treated Black Water Medium Low Minor Negative Discharge Support Vessel Grey Water Discharge Medium Low Minor Negative Support Vessel Galley Waste Discharge Low Low Negligible Seabed Disturbance Medium Low Minor Negative Emissions