CORPORATE RESPONSIBILITY
SOCO is an international oil and gas exploration and production company headquartered in the United Kingdom and listed on the London Stock Exchange. With three operating licences in the Africa region and five non-operated interests in South East Asia and Africa, SOCO has interests within regions having multifarious economic, social and environmental conditions and cultures.
Whilst the Board’s primary responsibility is to return value to its shareholders, the Board recognises that consideration of its other stakeholders’ interests are core factors in the Company effectively achieving its business objectives and reducing its risk profile. The host countries in which we operate are primary stakeholders in each of the respective projects.
This is due to the potential for positive and sustainable economic and social benefit on a national scale that natural resources from a successful project could generate. Our relationships with our business partners, host governments, local communities, contractors and employees are highly valued. The Board therefore embraces the opportunity to promote sustainable development on an economic, social and environmental level and to engender corporate responsibility (CR) good practice and values into its management and corporate culture.
SOCO has greater CR influence over some projects than others. In projects where we hold the operating interest, we are able to exercise direct influence. Our influence is less direct where we hold a minority interest as an investor or participant in a project. However, in both scenarios, our approach is to clearly communicate our values and to promote sound CR management practices. SOCO endorses the guidelines set out in the Extractive Industries Transparency Initiative and supports its goal of strengthening governance through improved transparency and accountability.
This report focuses on the CR values which define our business policies and how these are implemented in terms of:
- Our management of CR
- Our engagement with stakeholders
- Our commitment to our employees and contractors
- Our commitment as a customer
- Our commitment to local communities
- Our commitment to the environment and to sustainable development
The examples provided in this report focus primarily on our three operated interests, which are the Marine XI and Marine XIV Blocks located in shallow waters in the Lower Congo Basin, offshore the Republic of Congo (Brazzaville), and the Nganzi Block, located onshore in the Bas-Congo Province of the Democratic Republic of Congo (DRC).
SOCO’s non-operated interests are the Bualuang field in Block B8/38 located offshore in the Gulf of Thailand, Block 5 located onshore in eastern DRC, near to the border with Uganda and including part of Lake Edward, and the Cabinda Onshore North Block which is bordered in the north by Congo (Brazzaville) and in the south and east by the DRC. SOCO’s interests in Vietnam, which are operated through the Hoang Long and Hoan Vu Joint Operating Companies (JOCs), are located offshore in the Cuu Long Basin and comprise oil production from the Ca Ngu Vang (CNV) field and appraisal/development operations in the Te Giac Trang (TGT) and Te Giac Den (TGD) fields.
Policy
SOCO is committed to applying widely accepted good practice in CR management. The detailed guidance set out by the World Bank Group and incorporated into the Equator Principles is the basic benchmark SOCO has adopted.
SOCO’s framework of policy documents and procedures is reflective of the relatively small scale and nature of the Company’s operations and size of organisation. SOCO’s Code of Business Conduct and Ethics (the Code) is a dynamic policy that was approved by the Board in 2004 and is regularly reviewed. The Code encapsulates the values of the Company in its economic, social and environmental performance. The Code sets out the standards of business conduct that the Company requires of its personnel to ensure that its day-to-day business affairs are conducted in a fair, honest and ethical manner.
The Code is disseminated from the Board to senior management and to the country managers and employees. Implementation is the responsibility of all personnel of the Group, each of whom are given detailed guidelines for application. The guidelines include criteria and checklists for ethical decision making on an individual level so as to directly impede inappropriate and corrupt business practices. SOCO’s health, safety and environment (HSE) policy, which has been in place since the Company’s inception, conforms to international best practice and includes bespoke HSE management systems tailored to the Company’s projects. Formal reporting to the Board is mandatory for all HSE incidents. Any HSE incident report is automatically investigated to determine the cause and identify actions for prevention of future recurrence.
SOCO commits to meet legal and regulatory requirements governing environmental practices, as a minimum standard, and strives to ensure its activities are consistent with sound environmental management and conservation practices. We seek to minimise the adverse effects of the by-products of our processes on the natural resources and ecosystems in which we operate. SOCO routinely engages third parties to review our compliance with existing systems and to update systems to reflect project evolution, including the Code and HSE policy.
Management of CR
The Chief Executive Officer is the Director responsible to the Board for HSE and other CR performance. He delegates day-to-day responsibility for managing HSE/CR matters to the Vice President-Operations and Production, who is invited to attend all Board meetings. CR matters are reported to the full Board in a monthly operations report and a separate agenda item at each Board meeting addresses any significant HSE/CR issues.
The country managers report to the Board through senior management and are responsible for implementing the Company’s CR strategy on a local level. Through its recruitment and training processes, the Company recognises that key managers and operations personnel have a specific role in the success of the Company’s CR commitment. It is a priority consideration, therefore, that the relevant employees each have an understanding of the importance of CR and have knowledge of what constitutes best practice standards. This fosters informed decision making and an instinctive appreciation of the relevant business implications associated with each operation.
The Audit Committee is responsible for reviewing all areas of the Group’s corporate risk management processes, including HSE/CR. The effectiveness of these processes is monitored on a continuous basis and a formal assessment is conducted at least annually. The Senior Independent Director, who has experience in the relevant area, reviews HSE/CR performance in detail with senior managers and is kept routinely informed of any material performance issues as they arise.
External advisors are utilised to ensure that best practice is achieved and CR objectives are met. Deployment of external, rather than dedicated internal, resources ensures optimal access to sound expertise in each area which is not compromised by management numbers and layers and which would not otherwise be available in a staff of our size.
Engagement with Stakeholders
SOCO maintains an open and active dialogue with its shareholders. The Company maintains a website wherein important information can be posted and disseminated promptly to a wide audience. At a minimum, the Company provides three personal communication forums annually; the Annual General Meeting, the presentation of Annual Results and the presentation of Half Year Results, whereby shareholders can directly interface with Company executive management. Additionally, management have met directly with investment stakeholders on approximately 200 occasions during 2009.
Reporting into the Board through the senior managers, SOCO’s country managers are responsible for the local channels of communication in our host countries both with regulators and with the wider local population. In Congo (Brazzaville), DRC and Angola, project updates are disseminated in the form of a newsletter which highlights employment and contractor opportunities arising from direct operations as well as a broad range of indirect socio-economic activities.
In DRC, the local communities of the Bas-Congo province, particularly in the region of Kipholo, were impacted by SOCO’s activities that began in 2008 relating to the Nganzi Block. Consultation meetings were held with the Governor of Bas-Congo and with community leaders. The development initiatives were overseen by SOCO DRC Exploration & Production’s Assistant Director, who is a DRC national. The consultation resulted in dynamic support from the local population for SOCO’s recruitment campaign and interest from other stakeholders to invest in the region.
SOCO’s corporate website also serves as a platform through which stakeholders across the world and any member of the public may electronically interface with executive management on any subject. Our reporting and participation in public benchmarking activities reflect the size and nature of our operations.
Commitment to our Employees and Contractors
SOCO’s policy is to maximise local employment and contract outsourcing in all the operations we control. Whilst realising the positive benefits of this approach, the Company recognises the CR management risks that a highly localised approach can introduce. SOCO manages this area of risk carefully, both in its selection of contractors and the subsequent monitoring of their performance.
We promote a workplace culture where each person is treated with fairness and respect. The Company is committed to providing our employees with a working environment that is free from harassment and discrimination and where each individual has the opportunity to develop their talents and capabilities and to fulfil their potential based on merit and ability. SOCO is committed to protecting the health and safety of all its employees and to safeguarding employee records.
We endeavour to facilitate honest, timely and two-way communication and to maintaining avenues for the equitable resolution of employee complaints. In Congo (Brazzaville), a formal representative body has been set up for staff, in accordance with local regulation, and was operational throughout 2009. Its formation involved the election, under the supervision of a state official from the Ministry of Labour, of two workers to act as staff representatives. The representatives are allotted with 10 hours per month to perform their duties and are assigned to record feedback from staff, to meet with management on a monthly basis and present any suggestions or complaints, to advise their colleagues as to their rights and duties and to have access to the country’s Labour Inspectorate. Feedback to the staff is provided through meetings and posters. This has resulted in open and harmonious dialogue between management and employees. A representative body, organised on similar lines, has also been set up for staff working in DRC and has been operational since December 2009.
As part of our HSE procedures, processes were put in place to handle potential incidents or emergencies during the drilling campaign. A Level 2 Emergency Response Exercise was successfully carried out in October 2009 to test the effectiveness of these processes. HSE audits were carried out during the Congo (Brazzaville) Marine XI drilling operations and affirmed that there had been no occurrence of lost time accidents or cases requiring medical treatment or first aid.
Our Commitment as a Customer
SOCO’s policy is to settle the terms of payment with suppliers when agreeing the terms of each transaction to ensure that suppliers are made aware of and abide by the terms of payment. Our tender processes include relevant due diligence measures.
Commitment to Local Communities
SOCO understands that its operational success is highly dependent on the support of the communities in which it operates. Maximised local involvement is our policy in all the operations we control, providing potential for positive, economic and social benefits, both on a local and national level. Our operations are underpinned with a strong commitment to build and utilise skills among local communities through the creation and expansion of local infrastructure, the creation of jobs, exposure to training of a high international standard and support for technical co-operation and capacity building.
In SOCO’s operations, virtually all personnel are nationals of the host country. In Vietnam, the JOCs currently have 110 employees and contractors of whom 86 are nationals. Across the Africa region, SOCO has 62 personnel, 58 of whom are nationals, of whom 17 received formal training sponsored by SOCO at various international training centres in Canada, Congo, Dubai, France, Gabon, South Africa, UK and USA during 2009.
SOCO also supports local communities by providing resources to the non-profit sector and by supporting local education. In Vietnam, through the JOCs, SOCO focuses its social development commitment through programmes aimed primarily at projects which serve those most at need in society, particularly children, the elderly and those with limited ability to work. In Africa, in addition to providing access to employment and training, the focus of SOCO’s support for the community is through the provision of educational facilities, medical care, provision of fresh drinking water and local infrastructure.
During 2009, SOCO provided support to medical centres and local charities working with children and vulnerable adults in Congo (Brazzaville). SOCO built a maternity ward in Mbomo, a district in the Cuvette-Ouest Region of western Congo (Brazzaville), and purchased medical equipment for two clinics in Pointe-Noire, where SOCO has its offices. In the capital, Brazzaville, electrical and gas stoves were purchased for the Soeurs des Pauvres charity. Donations were also made to Halte Side, an organisation for children orphaned by HIV, and to the National Association for the Blind.
In Angola, the contractor group which includes SOCO provided a medical centre with nurse accommodation at Massabi and assisted in providing fresh drinking water at Dinge by recovering an existing water well, constructing a water distribution branch and installing a generator.
A water well was also drilled at Inhuca, where a water tank was re-commissioned and the water distribution system was restored. A primary school with six rooms and accommodation for teachers was provided at Benfica. In DRC, SOCO sponsored the refurbishment and extension of school buildings, which included the headmaster’s office and four classrooms.
In the United Kingdom, SOCO donated £10,000 during 2009 to Action for M.E., the UK charity dedicated to improving the lives of people with Myalgic Encephalomyelitis.
Commitment to the environment
Emissions
The Company recognises the environmental impact of emissions from both its operated and non-operated activities. Currently, SOCO supports the Operator effort to reduce joint venture emissions, while SOCO currently has minimal operated emissions in terms of carbon dioxide equivalent. As part of its growth in operations, the Company is reviewing the most appropriate means through which the environmental impact of operations is measured, and continues to seek ways of reducing its emissions of greenhouse gases in particular.
Environmental Impact Assessments (EIAs)
EIAs were carried out in Congo (Brazzaville), Vietnam and Thailand during 2009. At the time of this report, an EIA is under way over the Nganzi Block, onshore DRC, and preparations have commenced for an EIA over Marine XIV offshore
Congo (Brazzaville).
Commitment to sustainable development
Sustainable Development in South East Asia
The first flow of crude oil and wet gas from the CNV field, in the Cuu Long Basin offshore Vietnam, occurred in July 2008. The hydrocarbons are transported via a subsea pipeline system to the processing facilities at Bach Ho. Crude oil is processed and then stored in a floating storage and offloading vessel prior to sale. The wet gas is separated offshore and transported to an onshore gas facility for further distribution to meet domestic demand.
The CNV field utilises an unmanned platform that is tied back to the Bach Ho central processing platform. This is the first project in the Vietnam petroleum industry to utilise the existing facilities in order to maximise the life of existing infrastructure, minimise the investment costs and reduce the impact on the environment. Oil production passes to existing offshore facilities, so the principal impact is an extension of the useful life of these assets, thus having a beneficial sustainability influence. The most material environmental issue is the production of significant quantities of associated gas. This represents an important economic asset for the Company and for the Vietnamese people and the Company is party to a gas sales agreement for national use.
In Thailand, the Bualuang oil field, in Block B8/38 in the Gulf of Thailand, commenced oil production in August 2008. The crude oil is processed and then stored in a floating production storage and offloading facility vessel prior to sale. Under the terms of the petroleum licence, SOCO contributes in the form of a petroleum royalty on production to Thailand’s Petroleum Fund, which is a monetary reserve used to stabilise the domestic retail price of petroleum. Sustainability initiatives in Thailand supported by SOCO include the Fisheries Resources Conservation Project, involving the release of juvenile fish and shrimp larvae and compensation to fishermen during seismic activity on the Block. SOCO has also supported local fundraising activities to promote tourism in the Chumporn Province, the onshore area adjacent to the Company’s offshore interest. In December 2009, prior to the 3D seismic programme which was acquired in the Bualuang field during the first quarter of 2010, compensation of approximately 8 million Thai Baht was paid to local fishermen.
Sustainable Development in the Africa Region
The Nganzi Block is located in the Bas-Congo Province of the DRC. Efficient road and air access was a focal consideration in SOCO’s preparation for the seismic campaign and planned drilling programme and the Company invested in the introduction and upgrade of transportation infrastructure across the area. This included the building of a 1,000 metre airstrip with related infrastructure at Kipholo, the construction of six bridges over the Lukunga, Lubuzi and Lemba rivers and the maintenance and improvement of 135 kilometres of road. These building initiatives will provide lasting infrastructure for the local populace and has already inspired indirect socio-economic benefits by opening up the rural area. This has stimulated an increase in trade and other stakeholder interest, including the building of a medical clinic by a non-governmental organisation.
Manpower for both the seismic acquisition work and the related development initiatives was sourced from the local population. Approximately 450 local employees were recruited for geophysical work and given the relevant seismic drilling, topography and recording training. Housing improvements can be seen across the area, reflecting raised employment levels during the seismic campaign.
Carbon Footprint in the United Kingdom
Although not qualifying for the CRC Energy Efficiency Scheme in the UK, the Company has measures in place at its UK offices to reduce its energy usage and to enable office equipment, furniture, stationery and packaging to be recycled.
Outlook
As SOCO embarks on its most active drilling campaign in the Company’s history, the Board recognises the business imperative to act responsibly and we continue to develop policies and practices that promote sustainable development on an economic, social and environmental level. Our goal is to be a positive presence, building value for our host countries and local communities, as well as our shareholders. Regardless of the success of individual projects, SOCO is dedicated to improving the wellbeing of the people who are affected by our presence and our operations.
