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http://www.cairnindia.com Cairn Connect is an internally created publication for all employees and stakeholders. It aims to create a common thread of communication and provide a vision to work together towards creating energy security for the nation.

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slide1

COVERSTORY

CREATINGWEALTHFORTHENATION

CHALLENGESOFTHEFUTURE

QUANTIFYINGSOCIAL

INVESTMENTS

slide2

Editor’’sNote

DearReaders,

refusestotranslateintoproduction!

toexploreanddiscoverandtheendlessmeetingsat

barriersassociatedwiththeremotenessoflocationand

isourendeavourtoreachouttopeopleworkingacross

moreshallfollow,wehavekeptthefocusonmacro

trendsofthesectorandthenrelatingthesametoour

discoverieswouldbefavourable!

Dowritebacktouswitharticles/views,criticalor

otherwiseatcorporate.communication@cairnindia.com

respectiveindividualsandtheseviewsdonotconsultto

slide3

CONTENTS

18HANDENHVSIAROFENMYENT

2COVER

EALTT

STORY

Y

FET

EN

SA

VI

RO

N

MENT

ALTH

HE

AS

SUR

ANCE

CairnIndia:CreatingWealthforthe

NationandSecuringEnergy

People,Process,

Environment

20SOCIALMEDIA

12HUMAN

RESOURCES

6PERSPECTIVE

DrivetocreateO&G

workforceofthefuture

CairnIndiaandVedanta

Resources:Facing

Challengesofthe

Future

OilandGasCompanies:

SociallyConnected

14CRESRPPOONRSAIBILESTYOCIAL

OT

O

VolatileOilMarkets:

SecuringtheFuture

QuantifyingSocialInvestments:IFC

FinancialValuationToolandCairnIndia

1

slide4

COVER

STORY

CairnIndia:

CreatingWealthforthe

NationandSecuringEnergy

ItisaclassicstoryoftheDavidand

theGoliath.AyoungE&Pcompany

daringtodream,havingthevision

andperseverance,wassettoalterthe

balanceofdomesticenergyproduction

forIndia,thelargestdemocracyinthe

world.Cairnhasbeenunlockingvalue

throughdiscoveryanddevelopment

ofhydrocarbonsinthesub-­continent

formorethan15years.Wepioneered

deepwaterdrillinginIndiathrough

Annapurna.Cairnalsodevelopedone

auction––Ravva,offthecoastofAndhra

Mangalain2004,thelargestonshore

hydrocarbondiscoveryinIndiasince

1985,changedthescopeandthenature

ofthebusiness.Theenormityofthe

discovery,thelargestinthatyearglobally

theleagueoforganisationshavingakey

roleintheenergysecurityhencefuture

growthtrajectoryofIndia.Threeout

ofthesevenlandmarkoildiscoveries

madeinIndiabetween2000and2005

havebeenbyCairnandthejointventure

partners.

billthisyearcouldreach$100billionif

crudepriceshoverintherangeof$100-­

$120/barrelwithuncertaintiesinsupply

fromtheMiddleEast.Thiswouldnotonly

thecountryhasexperienceddouble

digitgrowthincrudeoilproductionfor

2006-­2007thecrudeproductiongrowth

was5.6%whichdippedto0.4%,-­1.8%

and0.5%respectivelyinthelastfew

Pradesh.Currentlywearecontributing

2011,theproductionbyCairnIndiaand

Relianceledtoadoubledigitgrowthin

resourcenationalisationamongst

countriesandtheemergenceofthenew

domesticcrudeproductionthroughour

domesticcrudeoilproductionforthe

““SevenSisters””––thestaterunoiland

tothe12thplanprojectsagrowthrate

approximately7%.Thediscoveryofthe

of7%forcommercialenergydemand

22

slide5

RJ-­ON-­90/1

RAVVA

PR-­OSN-­2004/1

Formorethanadecade,Cairnhasbeenundertakingpioneeringactivities

3

slide6

Currentlyweare

contributingmorethan

afifthofthecountry’’s

domesticcrudeproduction

throughourRajasthan

fields.Thisishelping

offsetIndia’’scrudeoil

importdependencyby

approximately7%.

foraGDPgrowthof9%.Thisisonly

possiblethroughamajorsupplyside

management.

CairnIndiahasbeenatrailblazerina

lotofareasintheoilandgassector.

Overtheyearstheorganisationhas

builtanindigenousteamwiththe

capabilitytoexecuteprojectsacrossthe

wholespectrumofthebusiness-­beit

exploration,discovery,development

andproduction.Theteamiscapableof

executingprojectswiththescaleofour

Rajasthandevelopment,maximisethe

assetslikeRavva(AndhraPradesh),

applyingtechnologytotransformfrom

gastooilinSuvali,Gujaratanddesign

toimplementationofnewlinesof

continuouslyheatedandinsulated

pipelinefromRajasthantoGujarat.In

ourstageoftransformationalgrowth

withthepipelineoperationsbringingin

thedesiredscale,oursafetystandards

havebeeninthetopquartileagainst

globalbenchmarks.Ourterminalin

hydrocarbonfacility,beforeconnecting

withthemarketthroughourpipelineisa

maintainedathalftheglobalaverage

lastyear.Responsibilityandconcernfor

theenvironmenthasbeenintegratedin

ouroperationstrategybeittheusage

ofenvironmentfriendlycompletion

environmentalfootprintorourwellpad

4

slide7

designwithhorizontaldeviateddrilling

tooptimiseusageoflandandminimise

disruption.Wehavebeencreatingvalue

throughsubstantialcontributiontothe

30thAug2011

Price

%chgsince

governmentexchequerwithroyalties

paidmorethanUSD1billion,directand

indirecttaxesofmorethanUSD1billion,

NIFTY

5,001

28

governmentofgreaterthanUSD5billion

inforeignexchangeduetoreduced

*CairnIndiaIPOon9thJan2007

imports.

makingthedreamofIndia,anenergy

independentcountry-­areality.Aswe

theorganisationwillkeepworkingclosely

withgovernmentsandcommunities

acrosstheglobetodevelopfaster,better

andmorecosteffectivesolutionsforthe

energyneedsofgrowingeconomiesthus

enrichinglivesofthelocalpopulace.

Thecontinuousgrowthinproduction

anditsassetbasehasledtoincreasing

valuationofthecompany,whichhas

ultimatelyenhancedshareholderswealth.

Theinvestorcommunityandthemarkets

havealsoendorsedourinitiativesto

createvalueforourshareholdersasa

resultofwhichthemarketcapofthe

companyhasnearlydoubledfromUSD

6bntoUSD12bnsinceIPO.

CairnIndiawiththehelpofitsjoint

venturepartnersincludingONGC

continuestocreatevalueandwealth

forthenationandstrivetowards

5

slide8

PERSPECTIVE

CairnIndiaandVedantaResources:

FacingChallengesoftheFuture

Theworldofextractiveindustrieshas

beenunderavarietyofpressureswitha

seismicshiftintermsofthewayvarious

sectorslikeminingandoil&gasfunction.

Thehard-­hatworldofoil,gasandmining

hasbecomeintrinsicallylinkedtothe

hashelpeddemocratisethesectorin

continuetobestokedfromemerging

marketsintheeastratherthanthe

westerncountrieswhilethesupplyside

hasbeenconstrainedduetomultiple

reasonsofgeopoliticalrisks,resource

nationalism,complexityofdevelopment

projectsandlocationofresourcesacross

increasinglyremoteandunfamiliar

territory.

business.Whilealotofthepublicoil

andgasmajors,eventhebigguns,

havebeenverticallyintegratedwith

theirpresenceacrossthechainfrom

upstreamtodownstreamand/or

retailing,independentO&Gshavealways

preferredaparticularsegmentfortheir

onaglobalscale,competitionisactually

increasingwiththeappearanceofnew

marketspostthe2008downturn,

traditionalinstrumentsoftradingand

hedgingusedbyorganisationshaveto

companiesfromemergingeconomies.

transformationintermsofcostpressures,

consolidations,andnatureofbusiness

aswellasverticalintegration,bringing

aboutachangeinthewaywedo

beconductedinadifferentlight.Onthe

otherhand,demandinboththesectors

commercialmanner,alongwithfurther

privatisationsinOECDcountriessuch

66

slide9

SectorslikeoilandgasandminingarecontinuingtoclimbupthepoliticalSectorslikeoilandgasandminingarecontinuingtoclimbupthepolitical

prioritylistandaccordingtoarecentpollofglobalCEOsbyPwC.

costpressures,whilemanyendusersof

globalCEOsbyPwC––stakeholder

everystepofthevaluechain(particularly

intheU.S.)havealsoaddedtoglobal

competitivepressure.Todifferentiate

fromnewcompetition,international

marketing,technologicalcapabilities

toexploreandproduceonthemost

challengingfrontiersandscaleandscope

toinvestinnewformsofenergy.Inthe

miningindustry,thereisthescramble

tosecuresuppliesofscarceresources

andtogaingreatercontroloverpricesof

productionunitsinanageofincreasing

miningproductshavealsogainedcontrol

ofupstreamassets.Companiesarealso

lookingatotherwaysofachievingtheir

integrationobjectives,suchascombining

strategicinvestmentandoff-­takeor

partnershipagreementstolowerthe

riskassociatedwithintegration,butstill

investmentinAfricanMineralswith20

yearoff-­takearrangement.

Sectorslikeoilandgasandmining

continuetoclimbupthepoliticalpriority

listandaccordingtoarecentpollof

management,sustainabilityissues,etc.

arethekeyconcernsofmanagement

changingeconomicandsocialpriorities,

governmentsacrosstheglobeare

tighteningtheirgriponnationalresources

andarerevisitingroyaltiesandtaxation

policies.Itiscommonknowledgethat

SovereignWealthFunds(SWFs),initially

setupwithoilmoney,heavilyinvestsin

thesectorbutnon-­commoditybased

SWFsaregraduallyincreasingtheir

exposureintheminingindustryinabid

todiversifytheirinvestmentportfolio.

7

slide10

Theyalsolookforandleverageonthe

InCairnIndia,VedantaResourceshas

under-­valuedresources.Akeyshift

hasbeenthepoliticalovertonesbehind

SWFinvestments,withSWFroutebeing

oftenusedtoleadthechargebyforeign

governmenttosecurenationalresources.

gainedexposuretoanewsectorwith

atop20nonOECDE&Porganisation.

CairnIndiabringstotheVedantastable

morethanadecadeofcredibilitywith

pioneeringeffortsinthesectorinthe

Vedantaisnotthe

sub-­continent,landmarkdiscoveries,

Insuchevolvingtimesforboththe

sectors,theacquisitionofamajoritystake

inCairnIndiabyVedantaResourcesplc

providestheperfectplatformtobuild

reputationfortechnologicaladaptability

andinnovation,explorationsuccess

records,appetiteforgrowthandnew

thenaturalresourcechampionofthe

resourcechampion””aresomeofthe

energyphilosophyandaspirations.

majortoforayintooilandgas,whilethis

acquisitionpuzzledmany.Whileabout

gas,receivedininheritanceandbuiltover

oreminer,inkedadealwithPetrobras

andenteredoilsectorin2007toreduce

miningcostsandcurrentlyholdsstakein

morethan20explorationblocks.

Vedantahasalwaysshownanappetite

forstrategicinorganicgrowth-­acquiring

anassetandthenscalingitupfor

betterreturns,tendingmostlytowards

verticalintegrationintermsoftaking

supplyleadershiptooptimisethe

performanceofexistingassets.Their

focusisonleveragingthelowcostof

production,andinalotoftheacquired

assets,infusingthemwithnewenergyto

increaseproductionbymanymultiples.

yearsandjumpinrevenueby100per

cent,whileinSesaGoa,theproduction

hasgoneuppostacquisitionbyVedanta,

by115percentandthereservesby75

percentinthreeyears.Itsfocusison

organicandinorganicgrowthstrategyfor

bulkcommoditiesandbasemetals.

avenuesofbusiness(midstream)with

ameasuredriskapproach,whichhas

moreoftenthannotbornefruits,project

executionanddeliveryskills,andsound

corporateresponsibilitypracticeswith

InVedantaResources,CairnIndiahas

amajorityshareholderandowner,who

ambitionsacrossvarioussegmentsofthe

oilandgasbusiness,spanningmultiple

geographiesandhelpingleverage

internationalmarkets.

topglobaloilandgasentity,offering

uniquevalueaddedsolutionstocater

toenergyrequirementsofemerging

economiesacrosstheglobewithadeep

footprintinonlyselectmarkets-­and

milliontonneplusannualproduction

businessincopperandzincandmore

than2.6milliontoneforaluminumwhile

morethandoublingitsironoreoutputin

excessof50milliontone-­underscores

thegrowthmomentum,whichcanbe

achieveddespiteeconomicpressuresand

geopoliticalrisks,hencebeingtargeted

forthenextcoupleofyears.Stakeholder

management,corporatereputation,

andtheabilitytodeliverinchallenging

timeswillbethekeytosynergisingand

creatinganaturalresourceschampion

entityforthefuture.

gas,receivedininher-­

8

slide12

COMMODITYTRENDS

VolatileOilMarkets:

SecuringtheFuture

Energyispivotaltoeconomicgrowth

andasIndia,countrywithGDPofover

economyandthefourthlargestenergy

consumer,marchesintotheleagueof

topeconomiesintheworld,theneedfor

energy,tosecuretheneedsofcurrent

aswellasfuturegeneration,wouldgrow

exponentially.AscomparedtoUS&

22barrels&9barrelsofoilayear,an

averageIndianburnscloseto1barrela

year––representingthefactthatthere

issubstantialupsideforimprovement

economyexpands.

Securingenergyisperhapsthe

mostcriticalchallengeforIndiain

maintainingitseconomicgrowthrate.It

encompassesbothphysicalsupplyand

(InternationalEnergyAgency)fourmajor

security.Compoundingtheabove

stabilityofthecountrywithoilimport

billrisingtoapprox.USD100billionin

2010-­11.

geo-­politics;;weathertodynamicsof

fundamentalssupply/demand.

Afterrecoveringfromtheglobal

recessions,recentmonthshave

witnessedseveraleventslikeFrench

concerns-­Availability;;Deliverability;;

AffordabilityandSustainability.

Strike;;MiddleEastNorthAfrica(MENA)

Theglobalisationofeconomyin

therecentyearshasbroughtnew

opportunities,moreinterdependence

JapaneseEarthquake&Sovereigncredit

crisisinUS&Europeimpactingthe

dependencewhichwasabout50%inthe

over75%ofitscrudeoilrequirements––

creatingseriousconcernsonthesupply

alongwithlargergroupofrisks.

Internationaloilmarketinthecurrent

worldisaffectedbyeventsrangingfrom

broadbasedmacroeconomicpicture;;

internationaloilprices.

Oilpricesroseto$125/bblplusinApril,

howeverrecededsubsequentlydueto

10

slide13

haveapro-­foundingimpactonthe

economyandenergysector.Inthis

situation,increasingthedomestic

productionandreducingtheimport

relianceisanimportantelementfor

ensuringsupplysecurity.

whichisnowaccountingformore

crudeproduction,hascontributed

securityandbringingeconomic

tosavingsofforeignexchangeand

thedoublediprecessionfearlooming

ReductioningrowthforecastofUS,

crudepricesin2012duetotightsupply

demandfundamentals,Citibankin

itslatestforecasthaspredicted$86/

isnowresponsibleforthedelivery

crude

productionfromits

Europe&China(contributing50%of

operatedassets

acrossthe

yearplacingimportanceonthecredit

withhighunemployment&weak

economicdataisforcingauthoritiesto

comeupwithmoreincomegenerating

policiesandgeteconomiesona

meaningfulgrowthtrajectory.

Marketuncertaintyisevidentfrom

thewideforecastofoilpricesby

Internationalparticipantgoingintonext

year.Whilemostresearchdivisions

events.Uncertainty&volatilityofthis

magnitudecreatesfurtherchallenges

inensuringastableandsecureenergy

atmosphere.

Ensuringsupplysecurityremainsan

extremelychallengingtaskforthe

Governmentasdynamic

globalenvironment

country.

-­VarunGujaral

CommercialandNewBusiness

11

slide14

DrivetocreateO&G

workforceofthefuture

12

slide15

Inrecentdays,themarketshave

signalledconcernabouttheeconomy.

andlaggingeconomicindicators,

consumers,investorsandbusinesses

aresearchingforsomebrightspotin

themarket.Manybelievethattheoil

andgasindustry,whichhasconsistently

deploy,andconnectemployeesthrough

Thisissuehasbecomeparticularly

workforce,combinedwithadiminishing

pipelineofnewandexperiencedtalent.

Toguardagainstcorporatebraindrain,

companiesneedtoformulateeffective

strategiestoattractandengagethe

requirescommitment,

cooperation,investment

shownstrengthduringthislengthy

economicdownturn,hasthepotential

tohelplifttheeconomyiftheright

energypoliciesareinplace.

generationisnotall.Itisalsoabout

Theindustry,whileshowspromise,

isfacedwithitsownchallengesand

uncertainty.Inadditiontotheexisting

challengesrelatingtoglobalenergy

security,longtermsustainabilityandthe

uncertaintysurroundingtheinvestment

framework,theoilandgasindustry

willface““new””challenges.Future

energydemandisexpectedtogrow

substantiallyandthesectorisinneedof

massiveinvestment––notjustcapital.

managingexistingtalentanddeveloping

theperiodictableoftalent.

InternationalOilCompanies(IOCs)are

facingarealchallengethatmayhavean

impactonexpansionandgrowthplans,

achallengethatrequirescommitment,

cooperation,investmentandnew

approachesindeveloping,managingand

retainingthetalentpool.

Collectivecollaborationandcoordinated

Therearemanyissuesthatcallforan

theirstrategiesinthefaceofslowing

Inordertomeetthedemand,the

industrywillexplore,developand

produceoilandgasinincreasingly

cooperationbetweengovernment,

academicandindustryonthevarious

issuesrelatedtocurricula,employment

severeconditions.Theabilitytoplan

andexecutelarge-­scale,complex

andsocialpolicies,andprogramme

NOCsandIOCsavoidrangingbackand

forthbetweenskillshortageandskill

developmentprojectsrequiresahighly

termthanisolatedinitiatives.

andIOCsjoiningforces,learninglessons

yetprofessionalswiththerequiredskill-­

setareascarcecommodity.

environmentoperationalchallengeswill

ThechallengefacingNOCsandIOCs

Overthelastfewdecades,averageage

todevelopskilledpersonnel,manage

ofworkforceinIndianupstreamoiland

costsanddevelopnewtechnology.This

situationcreatesnewchallengesandnew

sustainablelong-­termsolutionsto

manageworkforcedemographics,both

inboomandbusttimes.

Whetheronebelievesitistheresult

ofnormallyoccurringcompetition,

uncertainty,butalsonewopportunities

forcooperationandpartnershipbetween

attrition,agingorrestructuring,one

themepermeatesthecurrentdiscussion

aroundhumancapital:howtodevelop,

NOCs,IOCsandservicescompanies,

tosharerisks,technologyadvancesand

investinR&D.

PartnershipbetweenNOCsandIOCs

cancontributetoaddressingthe

13

slide16

QuantifyingSocialInvestments

IFCFinancialValuation

ToolandCairnIndia

Discoveringthepasttocreateabetter

businessforextractiveindustryincluding

oilandgas.Itisthisdichotomyof

synergisingthepastwiththefuture,

byadheringtoregulatoryframeworks,

balancinginvestorexpectations

andstrivingtocreatevalueforall

stakeholders,dealingwiththesentiments

whichsurround““nationalresource””,

allthiswhileoperatinginthemostremote

ofregionsacrosscountrieswithstateof

thearttechnology.

Gainingthetrust,cooperationand

partnershipsofcommunitiesinthese

frontierregionsoftenbecomesabusiness

necessitytoensureuninterrupted

operationsandbusinessactivities.Since

therichesofthesubsurfaceareoften

foundinthepoorestandmostremoteof

regions,organisationsinvestasizeable

portionindistributingthefruitsof

hydrocarbondevelopmenttotheresident

communities,tryingagaintobalancethis

needfordevelopingenergyresources

withthepaceofdevelopmentofthe

localcommunities.

ofcommunityengagementinitiatives

isnotoftenappreciatedorunderstood

bycompanies.Oilandgasisasector

whichoffersamyriadrangeofactivities,

allseeminglydisconnectedbutbound

aroundacommonproduct––thecrudeoil

orthegas!

Therangeofactivitiesrangefromthe

oroilservicescompanypersonontherig

ofsummer,toacommunityengagement

orsocialresponsibilityspecialist

implementingprogrammesinremote

regions,totheoiltradersurrounded

attendant––seeminglydiversepersons

unitedbythesameproduct.Thesame

paradoxesarealsoprevalentincosts.

Whilemostareawareofthealmost

perpetualwindfallgainsintheoil

business,oneoverlookstheriskcapital

deployedduringexplorationtimerunning

intohundredsofthousandsofdollarsper

dayinremoteonshoreoroffshoreareas!

Fraughtwithsuchinherent

contradictions,itisimperativetohave

astrategicapproachfordesigningand

implementingcommunitydevelopment

programmesinordertoensurethatthey

deliverthedesiredresultsofcommunity

support,mitigaterisks,andhelpinthe

unhinderedgrowthofbusiness.

14

slide17

upwiththeSustainabilityPlanningand

theabsenceofanystandardised

measurementmatrixentailsthatthe

impactofthesocial,environmental

andcommunityinvestmentscannotbe

FinancialValuationTool.Themodelwas

pilotedonacoupleofprojectslikethe

SMSprogrammeinitiatedforfarmers

inpartnershipwithReutersalong

tangiblymeasuredinbusinesslanguage.

longestheatedandinsulatedpipeline

intheworld)andthemobilehealthvan

investmentforsocialinitiativesalsoposed

programmeinRajasthan.

variousproblemslike:-­

““Throughthistoolcompaniescan

Notbeingabletomaximisethefull

potential/impactoftheinvestment

Notbeingabletocomparethe

investments

Notbeingabletoadvocate,

communicate,supportandjustifythe

investments

Notbeingabletoprioritise

investmentoptions

initiatives

Awarenessaboutsuchinvestments

withinorganisationandcross-­

functionalcollaboration

developmetricstoguidetheircommunity

investmentsandtranslatecommunity

programoutcomesintocompanyvalue,

intermsthatareunderstoodbythe

market––riskreduction,productivity

gains,savings,returnoninvestment,

andenhancedreputation.Anadditional

incentiveisthathigh-­performing

environmentalandsocialprograms

areincreasinglyseenasaproxyfor

effectivebusinessmanagement.

AccordingtoMultilateralInvestment

GuaranteeAgency(MIGA),aWorldBank

politicalriskinsurer,theywouldreduce

insurancepremiumsforanoperationthat

demonstratesrigorousriskmanagement.””

CairnalongwithNewmontandRio

Tintoaretheorganisationswithwhom

IFCcollaboratedextensivelytocome

––ExcerptfromIFCarticleonValuing

ReturnsonSustainabilityInvestments.

15

slide18

Thetoolhasbeendesignedinawayto

supplementthetraditionaldiscounted

costofmanpower,etc.)whilethelatter

thequalityofsocialinvestments

intheorganisationbutalsocontributions

investmentsthroughcommunityrisk

mitigationwhichinvolvedsteeringclear

ofriskswhichcouldresultindelayof

simulation(algorithmswhichutilise

repeatedrandomsamplingstocompute

etc.towhollyparticipateinthe

implementationofthetool.

Thetwobasicconceptscomprisingthe

toolaredirectvaluecreationandindirect

construction,productionpostponement,

planning,legalaction,etc.

Theprocessinvolvesrigorous

stakeholderanalysis,traditional

results)toarriveatanetvalueaccrued

tothecompany.

withReutersinvolvedprovidingcrop

1616

slide19

Traditional

Investment

Analysis(MPV)

2

Qualityof

Sustainability

Investment

6

ValueCreation

(Costbenefit

analysis)

4

NetValueto

CompanyFrom

Sustainability

Investments

+

+

+

+

+

=

Stakeholder

Analysis

1

Risk

Quantification

5

ValueProtection

(Indirectbenefit)

3

MonteCarlo

Simulation

7

Source:IFCArticle

advisoryandmarketinginformation

throughthemobilephonefor10,000

farmersalongtheCairnIndiapipeline

inGujarat.Thisprogrammenotonly

helpedmaintainacontinuedrelationship

withthefarmersbutensuredthatthe

communicationwastwoway.

van.Thevanoperatedandtraveled

to64villagesinandaroundtheCairn

projectareainRajasthan.TheFVtoolwas

abletocalculateandascertainthatthis

thecompanyasthealternativetosetting

up15clinicstoprovidesimilarservicesto

theconcernedpopulation.

Thefarmerscouldalsothroughtheir

mobilephonesinformtheorganisation

aboutbreachesinpipelinesecurity

withpilferage,leakage,sabotageor

othermaintenanceissues.Sowhilethe

SMSprogrammehelpedincreasethe

incomeoffarmersthroughtheprice

advisory,thefarmerswerealsoableto

actasthepipelinereportingcontactfor

thecompany.Soboththemodesof

valuecreationandvalueprotectionwas

Anotherkeysavingwasintermsof

mandaysforworkersfromthevillage.

Withthevanservicingthelocalvillage

populace,lossofmanhours/daysdueto

illnessofvillageworkerswereminimised

andmadenegligible.

ThesameFVtoolcouldbeapplied

holisticallytoquantifythereturnsof

variousotherCSRprogrammesand

provideadirectiontoimplementfuture

italsohelpedthecompanybyproviding

aneffectivereplacementforpipeline

securitypersonnel.

casesofpipelinesecuritywerereported

byfarmers,thuspreventingsabotage,

managementsupportandcommitment,

anattitudeforcross-­functionalsupport

management,etc.)anddeveloping

requisiteexpertiselikevaluedrive

leak,anddamagetothepipeline,

costof$2millionforthecompany.

Thesecondprojectstudiedwasone

whichinvolvedaccesstopreventiveand

curativehealthcare––themobilehealth

17

slide20

People,Process,Environment

Oil&Gasisconsideredtobeanunsafe

atvariousstagescanbeathreattothe

healthandwellbeingofnotjustpeople

workingonsite,butalsothecommunities

Goodgovernanceistheonlywayone

canensureaneconomicclimatewhich

isfavourablenotonlytoinvestments,

butalsowellbeingandsustainability

ofpeopleandenvironmentthatwe

comeincontactwith.We,atCairn,are

committedtoprotectingthehealth,

safetyandwellbeingofpeopleworking

onoursites,peoplewhocomeincontact

withouroperationsandthehealthand

sustainabilityofenvironmentthatwe

operatein.‘‘

OurCorporateResponsibility

ManagementSystem(CRMS)laysdown

detailedguidelinesandproceduresthat

supportthedeliveryofourcommitment

valuesandourapproachtobusiness.

thewayhe/shearrivesattheworkinthe

morning.Ourgoalistocreateahealthy,

supportiveworkingenvironmentthatcan

helpreduceabsenteeismduetofatalities.

comprehensiveone,whereinallthe

processandprocedures,toeffectively

laiddown.Thissystemensuresthat

thepoliciesareimplementedacross

variousactivitiesthroughdesign,

implementation,operations,monitoring

andreportingasitisbasedonthe

implementationinprogressforthe

Rajasthanoperations.

Wetakeprecautionstoavoidaccidentsor

pollutionincidents,andallouroperations

haverigorousprocedures,equipment

andemergencyteamsinplaceto

trainingismandatoryforallvisitorstothe

sitetoensuretheirsafety.

Respect:forpeople,communities,the

environment,theruleof

lawandhumanrights;;

Relationships:webelievethatbuilding

strong,openandlastingrelationships

withourstakeholdersisnotmerely

asocialresponsibilitybutisvitalto

achievingourbusinessgoals;;and

Responsibility:Werecogniseour

responsibilitytoensureouractionsdo

notharmpeople,theenvironmentor

society.

Whilewefollowthehighestlevelof

internationalcodesandstandardsinour

upgradethem.

Thenatureoftheworkinvolvessome

inherentrisksandfacingchallenging

environments.Westrivetomakesure

thateveryoneassociatedwithourwork

goesbackhomeintheeveningexactly

18

slide21

Companiesareincreasinglybecoming

recognitionfromtimetotime.This

year,theRajasthanoperationswonnine

safetyawardsinthe24thMineSafety

Awardsorganisedundertheaegisofthe

DGMS,Rajasthan.

Environment

Accordingtothe‘‘Ernst&Young

cautiousabouttheissuesconcerning

environmentalprotecting,includingair,

landandwaterquality.

Mostofitisduetotheheavyregulations

andcompliances.Theseregulations

continuetoevolve.Forexample,the

(EPA)greenhousegasreportingrulewas

ETY

EN

AF

S

VI

RO

N

MENT

ALTH

HE

AS

SUR

ANCE

andproductionsectoronNovember8,

2010andrequirescompaniestoreport

their2011greenhousegasemissions

beginninginMarch2012.

theclimatedebatewillcontinueto

complicatethestrategicdecision-­

makingofoilandgascompaniesacross

theindustry.””

Today,climatechangeandsustainability

issuesareakeycomponentofcorporate

agenda.Thestakeholdersareas

muchinterestedandpassionateabout

theseissuesastheyareaboutthe

compensation.

Ourapproachtoeachnewproject

includesundertakingPreliminary

EnvironmentalImpactAssessments

(PEIAs),EnvironmentalImpact

Assessments(EIAs)andSocialImpact

Assessments(SIAs),tominimiseany

potentialimpactsofitsactivities

WeatCairnhavebeencommittedto

minimisingtheimpactofourbusiness

ontheenvironment.Weintroduced

stringentmeasures,frominitialimpact

assessmentstowastemanagement,and,

intheeventofanyunplannedincident,

haveputinplacecomprehensive

emergencyresponseandoilspill

contingencyplans.

19

slide22

OilandGasCompanies:

SociallyConnected

communications,includingknowledge

andinformationmanagementfor20

percentofbusinessusers.

AccordingtoastudybyMicrosoftand

Accenture,nearly75%ofoilandgas

professionalsseevalueinusingsocial

mediaandcollaborationtoolsat

technologyatacorporatelevel.Thestudy

whichsurveyed275professionalswithin

international,nationalandindependent

oilandgasandrelatedcompanies,found

thatsocialmediaandcollaboration

Socialnetworkingisbooming.Facebook

hasbecomethemostvisitedwebsiteon

Internetpopulationvisitsocialnetworking

orbloggingsites.

Socialnetworkingisfacilitatingbusiness

andpersonalrelationships,with

individualsectorsnowstartingtocotton

ontothepotentialofinformationsharing

viathesechannels.

Gartnerpredictsthatby2014,social

networkingserviceswillreplacee-­mail

astheprimaryvehicleforinterpersonal

communications,

20

slide23

technologyadoptionisprimarilya

companiesthatareusingsocialmedia

thesametime,halfofthosesurveyedsaid

theircompaniesprohibitorrestrictthe

useofmanyofthesepubliclyavailable

tools,suchasphoto-­sharingandsocial

networkingsites.

toolsforotherpurposes.Chesapeake

Energyhassuccessfullyimplemented

streamthatpostscurrentjobopenings,

interactswithfollowersandoffers

careeradvicetonearly2000people.

Ontheotherhand,theoilandgas

industryitselfboastsofvarioussocial

networkingsites,suchaswww.energy-­

networks.net,www.oilandgascommunity.

com,www.hsee.co.ukandwww.oilpals.

com.Thesearefacilitatingknowledge

andinformationmanagement.

Energyisahighlyregulatedindustry,

anditscompaniesarerequiredtomake

informationavailabletotheirworkforces

manner.Cloudcomputing,public

instantmessagingsystemsandinternal

socialnetworksallowformorecross-­

opportunitytocommunicateviasocial

networkstomedia,GulfCoastresidents

andbusinessesaffectedbythespill,

concernedcitizens,andemployees.

industryfromsocialmediaismostlikely

theincreasedproductivity,thanksto

improvedcollaborationandknowledge-­

sharingbetweenworkers.These

elementsareimportantfordriving

revenue,cuttingcostsandcontributing

tothehealthandsafetyofworkers(Oil

andGasCollaborationSurvey2009)

barrierswhilekeepingupwiththe

changingfaceoftechnology.

industry.

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