Sinphuhorm * Thailand Map of Bualuang * Chim Sao and Dua * Business Activities Vietnam 1 2 Block PM322* 4 5 6 7 8 9 10 11 12 3 Malaysia 13 14 15 16 17 18 19 20 21 1 Block A Aceh 6 South Sokang Block 11 Simenggaris Block 16 HQ 2 Geothermal Sarulla 7 Bangkanai * 12 Senoro-Toili Block 17 Tanjung Jati B South Sumatra Cluster 3 Riau IPP (MRPR) 8 West Bangkanai * 13 (South Sumatra Block, 18 Geothermal Ijen Rimau Block and Batam IPP (MEB, DEB, Lematang Block) 9 Bengara Block Batu Hijau 4 TM2500, ELB) 19 Sumatra IPP 14 (MPE, EPE and Singa) 5 Block B Natuna 10 Tarakan Block 20 Madura Offshore Block * 15 Mini Hydro 21 Sampang Block * International Assets Tunisia Yemen Production Power Installed Mining Production Development Power Development Mining Development Oil & Gas Exploration Power Mining Mining Exploration Mexico * Libya Tanzania * Oman * This report covers the calendar year 2018 and does not yet include sustainability data and information on Ophir Energy plc which was acquired in Q2 2019. For further information, please visit www.medcoenergi.com Table of Contents Chairman’s Welcome 47 Human Rights Letter from the Board 48 Public Policy 48 Action Plan 01 About this Report Enhancing Environmental 06 Management 02 About MedcoEnergi 50 Our Approach and Commitment 51 Environmental Compliance 07 2018 Performance 52 Emissions Reduction 08 Operational Highlights 54 Energy Efficiency 12 Sustainability Strategy and Management 54 Water and Effluent 56 Waste Management 58 Biodiversity and Conservation Thriving Communities with 60 Action Plan 03 Better Livelihoods Safe and Healthy at Work, 18 Our Approach and Commitment 07 Every Day 20 Community Development 26 Program Highlights 30 Understanding our Impact 61 Our Approach and Commitment 31 Security 62 Health, Safety, and Environment Management System 33 Action Plan 65 Health & Safety Performance 68 Action Plan Our Employees Reflect 04 Our Values 08 Awards 34 Our Approach and Commitment 36 Human Resources Management 38 Industrial Relations 09 Appendix 38 Contribution to Industry 39 Action Plan 70 Aligning Our Sustainability Initiatives with UN Sustainable Development Goals 05 Corporate Governance 72 Acronyms and Abbreviations 73 Performance Data 96 GRI Content Index 40 Our Approach and Commitment 99 Limited Assurance Letter 40 Good Corporate Governance Principles Feedback Form 42 Risk Management 42 Ethics and Compliance Chairman’s Welcome Chairman’s Welcome MedcoEnergi is a “ leading energy and natural resources company with a strong commitment “ to sustainable development Muhammad Lutfi President Commissioner 2 Sustainability Report PT Medco Energi Internasional Tbk Chairman’s Welcome At MedcoEnergi, our sustainable growth as Indonesian delegation to the Conference of the a competitive energy and natural resources Parties (COP) 24 meeting in Katowice, Poland. We company depends on the strong foundation of are also finding ways to support the Government our commitment to sustainable development. We of Indonesia in contributing to the United Nations have come a long way since we published our first Sustainable Development Goals (UN SDG), through sustainability report in 2006, and we now have an partnerships that include non-governmental ambitious five year road map in place that will guide organizations (NGOs), the private sector, and civil our efforts through 2021. society. We aspire to be part of the solution to the global challenges we are facing, and I am pleased The process of designing this road map involved to see the commitment shown by the Board of taking a look at best international practices, which Directors and MedcoEnergi’s executives to this goal. led to the creation of a new sustainability policy, and action plans across a wide range of areas including This report shares the concrete progress that health and safety, environment and social impact, MedcoEnergi has made in the past year in human capital and governance. Through these strengthening the foundation of our sustainability efforts, our approach to sustainability is becoming efforts, which we expect will enable sustainable much more integrated across our organization. growth for the years to come. We are committed to being a good corporate citizen by protecting the This report tells the next chapter of our sustainability environment, carrying out our social responsibility, journey during 2018, including our achievements, and upholding governance in our daily operations. our remaining and new challenges, and our plans I welcome you to be part of our journey, and for the future. Our journey takes place in the broader encourage your participation in helping to make our context of global and national sustainability issues. vision reality, together. The complex and interconnected challenges of poverty, human rights, environmental degradation, and climate change are global, but also tangible in the local communities where we work, and it is important to us to be actively involved as part of the solution. At the local level, we can contribute by creating jobs, supporting new businesses, organizing and funding environmental protection efforts with Muhammad Lutfi our employees and local partners. At the global President Commissioner level, we can help by developing renewable energy sources, and by engaging with the United Nations Framework Convention on Climate Change (UNFCCC) discussions on climate change, in which I was fortunate to take part as a member of the PT Medco Energi Internasional Tbk Sustainability Report 3 Letter from the Board Letter from the Board 2018 was a year of strong operational performance across our oil and gas, power, and mining businesses. We were able to meet our goal of maintaining low-cost production, successfully delivering two major projects with Block A Aceh and Sarulla geothermal, and we received 20-year extensions for two Indonesian Production Sharing Contracts (PSCs). These operational successes were enabled by additional geothermal units online at Sarulla delivers our achievements in sustainability. As part of on our commitment to increasing renewable energy our commitment to meet the expectations of our sources and reducing emissions, and we now have stakeholders, we work alongside communities to close to 1,500 MW of gross operating installed pursue social and economic goals, contributing capacity in gas, geothermal, and hydroelectric power to empowerment in the areas where we operate. plants. Additional geothermal assets are also being Completing the development of the Block A explored in Ijen, East Java and Bonjol, West Sumatra. Aceh project was contingent on our successful implementation of the Environmental and Social We are creating sustainable value for our stakeholders Action Plan. Extension of the Rimau and Tarakan PSCs through sustainable growth. The three pillars of our was made possible by the extensive environmental MedcoEnergi Sustainability Policy—Leadership of and social programs that we have implemented over and by Our Employees, Environmental and Social many years of operating these PSCs. Our efforts Development, and Sustainable Livelihoods and add value to local communities and increase the Community Development—represent our priorities confidence of our shareholders, investors, and and major categories of work, and each of them has stakeholders. associated goals and action plans. This report shares our efforts to achieve these goals, and the milestones At the same time, our operational achievements of our journey towards sustainable growth. support our sustainability commitments. Bringing 4 Sustainability Report PT Medco Energi Internasional Tbk Letter from the Board In 2018, we met our Health, Safety and Environment impact of expanding US, EU, and UN sanctions and (HSE) goal of measuring and reporting all Scope understanding the steps we need to take in response 1 emissions, continued implementing our Health, for our training and compliance programs. Safety, and Environmental Management System, and completing Occupational Health Hazard In 2019 and beyond, we will continue to strengthen Assessments. In the area of governance, all of our these sustainability efforts. We will maintain our goal employees completed Anti-Corruption training and of best-in-class HSE performance. We will continue we reviewed our security personnel management to build a competent workforce and equip them with system to align with Indonesian regulations, MedcoEnergi values. We will generate electricity, international standards and best practices. In developing and operating IPPs in natural gas, addition, Medco E&P Natuna Ltd was certified under geothermal, and other renewables. As MedcoEnergi the ISO 37001 Anti-Bribery Management System expands our presence in Southeast Asia with the (ABMS). acquisition of Ophir, there is an exciting opportunity to create enhanced scale and new growth opportunities. Of course, we also face challenges in achieving our sustainability goals. In 2018, we were deeply Our sustainability efforts and operational performance saddened by a fatality at one of our new operations. are interdependent, and strong performance in both is This is not acceptable and reinforced the importance of mutually reinforcing as we pursue sustainable growth rigorous safety efforts and continuous improvement and create value for our stakeholders. We look forward with the goal of accident-free operations. We also to continuing this journey in 2019, and appreciate your need to be responsive to current developments and participation and support. adapt accordingly. For example, we are assessing