Tullow Oil plc 2011/2012 Corporate Responsibility Report - The Group

Local contentBUILDING FUTURESThe capacity and capability of local people and businesses to participate inthe nascent oil and gas industry can be substantially increased through astrong commitment to local content in Tullow’s supply chain.STRATEGIC IMPORTANCEWe believe that Tullow will achieve a competitiveadvantage through building a vibrant and securelocal supplier base. This is both cost efficient andlowers commercial, operational and project risk inthe long run.HIGHLIGHTS FOR THE YEAR$146.6 MILLIONWe spent $146.6 million with local suppliers in 2011.There was a significant increase in Uganda andKenya local supplier expenditure during the year,reflecting the increased level of operational activityin these countries.NEWEnterprise Centre opened in Hoima in Uganda toassist SMEs in business development and to buildcapacity for the oil industry, with the objective ofgenerating growth and employment. An EnterpriseCentre is also planned in Ghana.TWOTullow won two awards in 2011/2012 for its localcontent activities. The Group received an award forthe most responsible investor in Uganda and at theGhana Summit on oil and gas, Tullow received alocal content award.DETAILED PERFORMANCE INFORMATIONOn page 55 of this report you will find moredetailed information on 2011/2012 performanceagainst objectives as well as local content2012/2013 objectives.A key role in creating shared prosperityTullow is committed to creating a strong external operatingenvironment to successfully deliver its business plans andcontinue with its growth strategy. To do this, we must contributeto social and economic development where we operate. Withapproximately $2 billion capital expenditure planned in 2012,our supply chain has a key role to play. Its activities can assistin the industrialisation of an economy and act as a catalystfor improvements in infrastructure, skills and technologytransfer, higher quality standards, increased productivity andthe development of entrepreneurship. These, in turn, helpto stimulate further investment and more diversifiedeconomic growth.In 2011/2012 Tullow has developed a robust local content policyand strategy which is committed to involving local individualsand businesses in our activities. This ensures that they have anopportunity to participate in developing their country’s oil andgas industry and the wider economy. The goal of our localcontent strategy is to build local capacity and to developsuccessful suppliers who can deliver a wide range of goods,services and skills to international standards. The mainmotivation behind our local content strategy is businesssustainability and long-term project cost considerations. Thedecision to invest in local content development programmesinvolves a delicate balance between higher short-term costsand the benefit of a dynamic, cost-competitive host countrymarket environment. The objective is to mitigate commercial,operational and non-technical risks.Joined-up thinking and activityCreating real opportunities for local people and local enterprisedevelopment is done in three interconnected ways by Tullow;supply chain, localisation and social enterprise investment. Wehave built linkages across the Group to align our businessactivities in these areas and to ensure we leverage and/oroptimise opportunities for local businesses and individuals. Wewant to make sure that all areas of our business work together inpursuit of our commitment to fostering local entrepreneurs andlocal enterprises. We also want to make sure that local contentdevelopment is integral to our business and is managed as such.74Tullow Oil plc 2011/2012 Corporate Responsibility Report