Tullow Oil plc Annual Report 2011 - The Group

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Corporate responsibility continuedSOCIAL ENTERPRISE INVESTMENTWorking with and supporting our local communities2011 highlights In 2011, Tullow’s discretionary social enterprise investmentincreased 346% to $11.6 million (2010: $2.6 million) Introduction of the Tullow Education and EnterpriseDevelopment (TEED) fundOur social enterprise (SE) programme is focused on supportingeducation and enterprise development to build local capacity forthe oil and gas industry and other sectors that promoteeconomic diversification. In addition, many of the communitiesin which we operate require assistance with primary education,healthcare and building small local businesses. We expect allour SE initiatives to deliver demonstrable value and contributeto an environment in which Tullow can run its operationseffectively in order to achieve its business objectives.Aligned investment goalsWe seek to align our projects with the development goals of ahost country as well as our own business plans and initiatives.We engage regularly with local communities, authorities andother stakeholders to help inform our SE programme. Ourprojects vary in scale and nature. They can be highly localised,such as a community health check, or have a country-widereach, such as the Tullow Group Scholarship Scheme (TGSS).Our overall goals are to invest where we see the opportunity tobring meaningful and lasting benefits for sustainable long-termdevelopment and, where appropriate, to balance this withsupport for certain immediate needs that our local communitiesmay face.Integrated in the businessIn 2011, we strengthened the links between social enterpriseinvestment and business aims by establishing a working groupthat develops integrated initiatives between Social Enterprise,Supply Chain and HR. This working group focuses on projectsthat support local content development and promotes economicdiversification in host countries. Tullow’s commitment, in thisregard, is to create real opportunities for local people and localenterprise development through localisation, local supplierdevelopment and building industry capacity. The SE workinggroup includes representatives from Supply Chain, HR, Finance,EHS, External Affairs and IR to get a broad spectrum of skillsand experience, in conjunction with a wide range of stakeholderperspectives. This working group is responsible for projectapproval at Group level.Growing investmentIn 2011, Tullow’s discretionary SE investment increased 346%to $11.6 million (2010: $2.6 million). A significant part of thisincrease relates to the introduction of the Tullow Educationand Enterprise Development (TEED) fund. The fund’s mandateis to support projects that help to develop local/nationalcapacity for the oil and gas industry and develop localbusinesses. The fund also supports initiatives to attractForeign Direct Investment into Africa in order to promoteeconomic growth and diversification so that there is not anover dependence on oil and gas. Through its investments,we aim to support education and training to facilitate directand indirect employment in the industry and other growthsectors. Investments by TEED will be closely aligned withour local content objectives and localisation plans.Social enterprise investment by regionSocial enterprise investment by focus areaWest & North Africa 43%South & East Africa 50%Europe, South America & Asia 7%Education 42%Health 30%Other 16%Enterprise 10%Environment 2%Tullow Group Scholarship SchemeTEED-funded projects include the Tullow Group ScholarshipScheme, which was launched in early 2012. The scheme will fundpostgraduate degree, technical training and vocational studies.These scholarships aim to support local people’s participation inthe oil and gas industry, and in other sectors that promoteeconomic diversification. The scheme will address both existingindustry skills gaps and national capacity developmentrequirements and is aligned with Tullow’s aim of supportinglong-term socio-economic growth in countries where it operates.It is run through a partnership between Tullow and the BritishCouncil, an internationally recognised service provider inscholarship management and partnership development in highereducation. The British Council also has a strong profile in Africaand has a great deal of experience in running educationalprogrammes to support development goals and priorities. Thepilot phase has provided 24 Ghanaians from public sectororganisations with full scholarships to study oil and gas andbusiness related Masters Degrees at a range of UK universities.For more information visit:www.tullowgroupscholarshipscheme.org72Tullow Oil plc 2011 Annual Report and Accounts
3Key corporate responsibility policies and systemsGOVERNANCECORPORATE RESPONSIBILITY Code of Business Conduct– Gifts & hospitality policy andonline register– Guidance on avoidingfacilitation payments– Guidance on expenditure on ForeignPolicy Officials– Conflicts of interest declaration form– Awareness training programme Compliance online portal Compliance Committee Independent system for‘speaking up/whistle blowing’STAKEHOLDER ENGAGEMENT Employee stakeholder engagementguidelines (2012) Global online stakeholdermanagement tool (2012)ENVIRONMENT, HEALTH & SAFETY EHS Strategy Forum EHS policy (to be revised in 2012) Tullow Safety Rules Tullow Oil Environmental Standards(toes) IS014001 accreditation forEnvironmental Management System Crisis management and emergencyresponse facilities and plans HIV/AIDS policy Participant membership of theVoluntary Principles on Securityand Human Rights (2012)PEOPLE Tullow values Group HR policies Employee handbooks / induction /local legislation requirements Equal opportunities policy Harassment policy Localisation policySUSTAINABLE SUPPLY CHAIN Supplier centre online Group local content policy (2012) Master contract reflects Code ofBusiness Conduct, UK Bribery Act Tullow five contract criteriaassessment, which incorporates theUnited Nations Global CompactSustainable Supply Chain principlesSOCIAL ENTERPRISE Social enterprise guidelines Tullow Education and EnterpriseDevelopment (TEED) fund Social enterprise workinggroup responsible for approvingTEED projects Local and community SE projectsmanaged by in-country teamsGovernance & risk frameworkTullow has a strong governance and risk framework thatgives direct ownership of risk management and corporateresponsibility to the Board and Executive Directors. Thiscascades down the organisation through a Regional Businessstructure, which is supported by specialist corporate functions.It promotes accountability and transparency in our activities andsets the standard for acceptable and ethical behaviour. It isembedded in how we run our business and is fully integratedwith the Group’s business model.More informationPageCorporate governance 76Governance and risk framework 80Our business model 1473www.tullowoil.com
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Production operators in the central
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2011 highlightsRECORD RESULTSIndust
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In Ghana, we have experienced techn
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More informationPageStrong organisa
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CLEARVISIONSPECIAL FEATURETO BE THE
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1Exploration& appraisal7Sharedprosp
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EXPLORATION& APPRAISALStrategic pri
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DELIVERING MATERIALPRODUCTIONGROWTH
Page 23 and 24: 21www.tullowoil.com
Page 25: RISKMANAGEMENTStrategic priority: E
Page 28 and 29: MAINTAINING OURENTREPRENEURIALCHARA
Page 30 and 31: SHAREDPROSPERITYStrategic priority:
Page 32 and 33: DELIVERINGSUBSTANTIAL RETURNSOur st
Page 34 and 35: Key Performance Indicators continue
Page 36 and 37: Financial reviewFUNDING FUTURE GROW
Page 38 and 39: Financial review continued2011 Grou
Page 40 and 41: Financial review continuedDividendT
Page 43 and 44: Regional business management unitsI
Page 45 and 46: LONG-TERMPERFORMANCE RISKSWe group
Page 47 and 48: 1Operational risk continuedKey deve
Page 49 and 50: 482011 operations overviewOverall,
Page 51 and 52: 2OPERATIONS REVIEWEurope,South Amer
Page 53 and 54: DEVELOPMENT & OPERATIONSA new scale
Page 55 and 56: Senior DrillingSupervisor withtrain
Page 57 and 58: Mauritania & SenegalProduction from
Page 59 and 60: periods for Kasamene, Wahrindi, Kig
Page 61 and 62: 2West African and South American ex
Page 63 and 64: 62Creating shared prosperityCreatin
Page 65 and 66: More informationPageSpecial feature
Page 67 and 68: Social performance standardsWe are
Page 69 and 70: 3The effect of Uncontrolled Release
Page 71 and 72: 3Future talent poolIn October 2011,
Page 73: 3LOCAL CONTENTCreating real opportu
Page 77 and 78: 76Chairman’s introductionAt Board
Page 79 and 80: 4In order to provide the human and
Page 81 and 82: I am delighted to have taken on the
Page 83 and 84: Board of DirectorsEXPERIENCED LEADE
Page 85 and 86: 4CORPORATE GOVERNANCEAnn GrantNon-e
Page 87 and 88: Audit planning and update on releva
Page 89 and 90: Directors in their place. On 12 May
Page 91: CONTENTS89 Introduction89 Remunerat
Page 94 and 95: Directors’ remuneration report co
Page 102 and 103: Corporate governanceThe UK Corporat
Page 104 and 105: Corporate governance continuedThe f
Page 106 and 107: Corporate governance continuedAccou
Page 108 and 109: Other statutory informationResults
Page 111 and 112: All employees are helped and encour
Page 113 and 114: As part of our Code of Business Con
Page 115 and 116: Independent Auditor’s Reportto th
Page 117 and 118: Group balance sheetAs at 31 Decembe
Page 119 and 120: Group cash flow statementYear ended
Page 121 and 122: The principal accounting policies a
Page 123 and 124: 5Finance costs of debt are allocate
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5Commercial reserves estimates (not
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5Note 2. Business combinationsOn 24
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5Europe,South Americaand Asia$mWest
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5Non-current assets by originGhana
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5Note 6. Staff costsThe average mon
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5The Group’s profit before taxati
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5Note 12. Property, plant and equip
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5Note 13. Investments2011$m2010$m20
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5Note 18. Trade and other payablesC
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5The $3.5 billion Reserves Based Le
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5Note 20. Financial instrumentsFina
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5Oil and gas pricesThe Group uses a
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5Financial derivativesThe Group int
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5Deferred tax assets are recognised
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5Note 27. Share-based payments2005
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5UK & Irish Share Incentive Plans (
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Independent Auditor’s Reportto th
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Company balance sheetAs at 31 Decem
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Notes to the Company financial stat
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5Note 6. Bank loansCurrentShort-ter
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5Note 9. Shareholders’ fundsShare
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2010 Share Option Plan (2010 SOP) a
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5Note 13. Subsequent eventsSince th
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Commercial reserves and contingent
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Area TullowLicenceFieldssq km inter
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Licence / BlocksFieldsAreasq kmTull
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ContactsSecretary & registered offi
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KKenya 6, 7, 57Key financial metric
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MmmbblmmboemmscfdMoUMTMMillion barr
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This report is printed on Heaven 42
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