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Cairn India Limited - Cairn Connect Dec 2011

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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Cairn India Limited - Cairn Connect Dec 2011

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  1. COVERSTORY CREATINGWEALTHFORTHENATION CHALLENGESOFTHEFUTURE QUANTIFYINGSOCIAL INVESTMENTS

  2. Editor’’sNote DearReaders, refusestotranslateintoproduction! toexploreanddiscoverandtheendlessmeetingsat barriersassociatedwiththeremotenessoflocationand isourendeavourtoreachouttopeopleworkingacross moreshallfollow,wehavekeptthefocusonmacro trendsofthesectorandthenrelatingthesametoour discoverieswouldbefavourable! Dowritebacktouswitharticles/views,criticalor otherwiseatcorporate.communication@cairnindia.com respectiveindividualsandtheseviewsdonotconsultto

  3. 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

  4. 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

  5. RJ-­ON-­90/1 RAVVA PR-­OSN-­2004/1 Formorethanadecade,Cairnhasbeenundertakingpioneeringactivities 3

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 9

  12. 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

  13. 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

  14. DrivetocreateO&G workforceofthefuture 12

  15. 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

  16. 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

  17. 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

  18. 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

  19. 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

  20. 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

  21. 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

  22. 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

  23. 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. 21

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