2011 Annual Report PDF - Tullow Oil plc

Risk management continued
Responding to changing risk
We operate in a dynamic environment where responding
effectively to changing risks is key to our continued success.
During 2011 we addressed emerging risks in the following ways:
Our crisis management processes were upgraded to meet
the challenges of our growing portfolio
of assets, including:
– Dedicated crisis management facilities
in the Group’s new London head office; and
– Recruitment of a new Group Asset Protection Manager
and a Group Information Security Manager.
In 2012, the Group is rolling out a new security standard that
will apply to all Tullow sites and activities.
Our compliance processes were enhanced with the
establishment of an experienced Compliance team and the
implementation of a range of initiatives to support our
regulatory compliance programme and to ensure we have
effective procedures to address the requirements of the UK
Bribery Act enacted during the year. This has included:
– Implementation of a revised Code of Business Conduct
supported by an ongoing programme of training and
education endorsed by the Chief Executive Officer and
the Board; and
– Enhanced procedures covering our gifts and hospitality
policy and declaration of conflict of interests.
Tullow Safety Rules were implemented during the year to
reinforce our existing safety standards for managing high
risk operational activities. These rules comprise a set of
requirements designed to manage day-to-day risks
associated with our operations that have the potential to
adversely affect employees, contractors, the environment
and surrounding communities. These rules were developed
using industry best practices, guidelines and standards to
reinforce existing Tullow and host government regulatory
commitments. The Safety Rules are being embedded
through a range of activities including:
– Training of staff throughout the organisation;
– Working with our contractors to enable them to
implement the rules when engaged in operations
on Tullow’s behalf; and
– Dedicated Intranet site and Safety Rules booklet
distributed to employees to support the education process.
Tullow’s Integrated Management System (IMS) was
upgraded during the year to reflect the continuous growth
in the business and increased complexity of our portfolio.
The IMS sets the minimum business standards to be used
throughout Tullow Oil’s activities through a framework for
managing all business activity throughout the organisation
and provides a high level of business assurance by:
– A systematic approach to critical business activities;
– High standards in business and EHS performance;
– Legislative compliance throughout all operations;
– Sound risk management, planning and decision making;
– Efficient and cost effective planning and conduct
of operations;
– Clear assignment of responsibilities; and
– Continuous improvement in all areas of the business.
The IMS is supported by an online tool and is subject to
periodic audit.
2012 principal risks and uncertainties
As part of our 2012 to 2014 business plan we identified the
following key risks and uncertainties in relation to the Group’s
financial and operational performance for the period:
Completion of the Ugandan farm-down (achieved February
2012), followed by delivery of a basin development plan and
timely approvals for this from the Ugandan authorities;
E&A campaign associated risks (approximately
20 high-impact wells are planned in 2012);
Timely remediation of Jubilee production (2012/2013)
and delivery of Group production targets;
Government relations/stakeholder engagement with
particular reference to the 2012 Board objective to
significantly improve political and economic risk
information and country risk profiling;
Achieve the appropriate balance between cash flow from
operations, equity/debt market opportunities and portfolio
management activities; and
Manage shareholder expectations, particularly with
regard to the Group’s long-term strategy, production
profile and funding.
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Tullow Oil plc 2011 Annual Report and Accounts