BP in Azerbaijan Sustainability Report 2012 bp.com/caspian Building a stronger, safer BP About our report This report covers the calendar year ending 31 December 2012. In some instances significant events from 2013 have been included. Unless otherwise specified, the text does not distinguish between the activities of BP p.l.c. and those of its subsidiaries and affiliates. References in this report to ‘us’, ‘we’ and ‘our’ relate to BP in Azerbaijan unless otherwise stated. When we cite ‘BP in Azerbaijan’ we refer to operations in Azerbaijan only. If we refer to ‘BP AGT’ we are including all our activities in Azerbaijan, Georgia and Turkey. Specific references to ‘BP’ and the ‘BP group’ mean BP p.l.c., its subsidiaries and affiliates. All dollar amounts are in US dollars. The report is issued annually by BP Exploration (Caspian Sea) Limited in its capacities as operator and manager of the joint operating company for the Azeri-Chirag-Deepwater Gunashli field, as manager of The Baku-Tbilisi-Ceyhan Pipeline Company and by BP Exploration (Shah Deniz) Limited in its capacities as operator of the Shah Deniz field and as technical operator of The South Caucasus Pipeline Company. For this report each of these entities has provided information relevant to its project and statements applicable to its project. Cautionary statement BP in Azerbaijan Sustainability Report 2012 contains forward-looking statements relating, in particular, to recoverable volumes and resources, capital, operating and other expenditures, 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. Find out more online bp.com/caspian Browse through latest news, project Our website, details, environmental and social impact assessments, legal agreements governing bp.com/caspian, is the main the projects, civil society monitoring information source about our reports and BP’s responses, earlier BP in Azerbaijan Sustainability Reports and other Caspian region energy projects. documents. bp.com This site contains information about the BP group including detail of the company’s policies and values, reports on its activities Front cover and operations worldwide and the group’s Tofig Gorchiyev, deck sustainability reviews. drilling construction lead engineer (left) and Elkhan ecbaku.com Tahirov, drilling project This site provides up-to-date information engineer at West Chirag about development projects and gives platform construction site. useful insights on how to work with BP and See page 9. other international and local companies. What’s inside? Overview BP in Azerbaijan Sustainability 2 Introduction 3 This is BP in Azerbaijan Report 2012 covers our business Gordon Birrell reflects on the highlights of our Our organization at a glance, our history, summary activities in 2012 and touches upon our future of our major achievements and challenges in performance, environmental plans. 2012. record and wider role in Azerbaijan during 2012. It is our Focus areas tenth sustainability report and 7 Our operations 33 Environment reflects feedback we received We operate large offshore hydrocarbon assets in Managing our environmental performance from about previous reports. the Caspian and manage pipeline links to regional exploration and the development of new projects and world markets. to production. 15 How we operate 42 Society How we improve the way we manage and We aim to have a positive impact on society and develop our people, strengthen our safety culture the local economy through our projects in good and deepen relationships with our stakeholders. governance, education, community and enterprise development. 27 Safety and health Focusing on achieving safe, reliable and compliant operations and putting safety and operational risk management at the heart of everything we do. Our reporting and key performance indicators 50 Five-year performance data We have reviewed BP in Azerbaijan Our key performance data covering areas Sustainability Report 2012 in order to including production, safety, environment and provide assurance to BP management that social spend. the data, statements and assertions made regarding the sustainability performance of 51 Five-year EITI reported data BP in Azerbaijan are supported by evidence BP supports revenue transparency initiatives in or explanation. Our scope of work and Azerbaijan and we continue to disclose our own conclusions can be found on page 52. disaggregated data in this publication. Ernst & Young 53 Report process and feedback Introduction to the assurance We aim to provide a full and transparent account of our performance and activities and to respond process to stakeholders’ feedback on previous reports. What’s inside? 1 BP in Azerbaijan Sustainability Report 2012 Introduction by the president of the BP Azerbaijan-Georgia-Turkey region It gives me great pleasure to provide the foreword Striving to be a responsible corporate to the tenth issue of the BP in Azerbaijan citizen and a good employer Sustainability Report – part of our long-standing th commitment to communicate openly about what Last year marked the 20 anniversary of BP’s we do and how we do it. arrival in Azerbaijan. Running safe and reliable operations over a sustained period anywhere BP globally has made many changes, turning in the world ultimately is down to the skills and lessons learned into action. By the end of 2012, commitment of our employees. In Azerbaijan, we sold assets worth $38 billion to reduce nearly 4,000 individuals deliver the highest complexity and risk. By concentrating investment standards of performance driven by their passion in our areas of distinctive strength, BP is now for safety, excellence, mutual respect and acting reorganized and refocused. as one team. Azerbaijan is one of those areas where BP has Our pledge to create a strong national workforce distinctive strength. We operate the giant Azeri- remains in place. In 2012, the number of Chirag-Deepwater Gunashli (ACG) oil field and the Azerbaijani employees in senior positions rose huge Shah Deniz gas field in the Caspian Sea as by 13% to reach 169. Last year we also launched well as the world-scale Sangachal terminal and an innovative training programme at the new major hydrocarbon export pipelines. BP and its Petro-Technical Learning Centre to train young co-venturers are committed to helping Azerbaijan Azerbaijani graduates for successful careers develop its hydrocarbon resources safely and within BP. reliably for the benefit of the country. Together with our co-ventures, we also supported Safe production enhancement is an important the development of the business sector in aspect of this commitment. During 2012, BP with Azerbaijan through our enterprise development its partners agreed plans to deliver our production and training programme and by increasing local BP and its co-venturers are promise. The first quarter results in 2013 suggest content in our projects. In line with this approach, committed to helping that we are making good progress. our in-country operations-only expenditure with Relentless focus on safety local suppliers rose by 29% from 2011 to around Azerbaijan develop its $1.2 billion. Safety remains at the heart of everything we do. hydrocarbon resources safely Before joining BP AGT in November 2012, I had Another noteworthy initiative was our support and reliably for the benefit of the privilege of contributing to the establishment of Azerbaijan’s teams and seven athletes at the of a new safety and operational risk (S&OR) London 2012 Olympic and Paralympic Games the country. function across BP. S&OR sets our company-wide as the official partner of the National Olympic safety requirements and works alongside our Committee and the National Paralympics businesses to ensure that they conform to our Committee. global operating management system (OMS). These are only a few highlights from a busy year. Along with many achievements, we faced some Gordon Birrell In Azerbaijan, we achieved improvements in President some key safety indicators in 2012 while there operational challenges, which are described in detail in this publication. Our aim in this report is BP Azerbaijan-Georgia-Turkey Region was more than an 8% increase in hours worked. We also operated under OMS and embedded its to provide a full and transparent account of our performance improvement cycle into our work and performance, reflecting feedback we received planning processes. about our previous reports. So we welcome your comments. Working towards the energy future We made significant progress on various new developments. The Chirag oil project progressed safely with no days away from work cases. This $6 billion development will boost oil production from the ACG field through the new West Chirag platform. Construction of its jacket was completed Gordon Birrell in 2012 and we are on track to tow the topside to the field later this year. President BP Azerbaijan-Georgia-Turkey Region We completed a 3D seismic survey on the 23 May 2013 prospective Shafag-Asiman structure and began the massive task of processing the data in-country. In the meantime, work on the Shah Deniz Stage 2 project - one of the largest new gas ventures in the world - made good progress. We expect to select export routes to Europe in 2013. 2 Introduction by the president of the BP Azerbaijan-Georgia-Turkey region BP in Azerbaijan Sustainability Report 2012 This is BP in Azerbaijan We aspire to be a valued, trusted and long-term partner in the development of Azerbaijan’s hydrocarbon resources. Our goals Together with our co-venturers we developed plans and agreed production themes to manage delivery from ACG efficiently for many years to come. The construction of the jacket for the West Chirag platform was completed and we are on track to tow the topside to the field in the third quarter of 2013. In this section 2.1 billion barrels of oil were produced by Azeri-Chirag- Deepwater Gunashli from 1997 to end 2012.