Respect for human rights and the desire to do no harm underpin a socially responsible approach to our operations in host countries and across our supply chain. Together with our commitment to sustainable development, this helps us to maintain strong community relations and a responsible operating environment.
Our Social Responsibility Policy identifies our high level commitment to human rights.
Oil Search is a signatory to the UN Global Compact and a corporate participant in the Voluntary Principles on Security and Human Rights (VPSHR). Our human rights approach also considers and aligns with the UN Guiding Principles for Business and Human Rights.
These important initiatives inform our approach and affirm our commitment to:
- Respecting international norms of behaviour and recognising human rights, including the rights of Indigenous peoples, by seeking to avoid causing or contributing to adverse human rights impacts from our activities.
- Undertaking human rights due diligence and consider human rights in our risk and impact assessments.
- If any impacts inadvertently occur, acting to mitigate or address them. While we have a significant commitment to sustainable development, first and foremost we are committed to ‘doing no harm’.
- Respecting laws wherever we operate.
- Having and continuing to undertake appropriate due diligence of our activities and management controls.
- Supporting appropriate access to grievance mechanisms and appropriate remedies when required.
Oversight and governance
The Board HSSC is responsible for overseeing human rights risk management and material security related matters.
A cross-functional VPSHR Steering Committee, chaired by the Executive General Manager of our PNG Business Unit, overseas our performance managing this area of human rights risks within the framework outlined by the Voluntary Principles.
Management regularly reports on performance against the Human Rights work plan and any material community grievances to the Board HSSC.
Corporate human rights strategy, approach and functional assurance are led by our General Manager Stakeholder Engagement and Social Responsibility, while our discipline leads in Security, Community Affairs and Contracts and Procurement drive implementation of specific human rights elements in their areas.
A risk led approach
Human rights considerations are progressively being integrated throughout our systems, procedures, practices and guidelines. These include procedures and guidelines which address risk management, environmental and social impact assessment and management, grievance management, stakeholder management, security management, contract and procurement management, and land access.
Our Responsible Supply Chain work plan addresses contractor screening and management in relation to human rights as a key deliverable of our Human Rights Work Plan and Social Responsibility Strategy.
To ensure Oil Search understands how current and planned Company activities might affect internationally recognised human rights by employees, contractors, local community members and other national and international stakeholders, a Company-wide human rights due diligence exercise is conducted at regular intervals or at times of significant business change. The latest assessment commenced in late 2018.
This assessment will refresh the Company’s understanding of the human rights risks in PNG and consider new areas of operation in the USA and office in Tokyo. The review looks at the likelihood of specific human rights risks as a result of different activities conducted by Oil Search across its global operations and supply chain, according to broad business activity areas and projects phases as well as geographic areas of operation. It will include a detailed baseline study on the human rights contextfor all jurisdictions in which Oil Search has planned or current business activities.
Security and human rights
The potential actions taken by security contractors to secure project sites represents one of our most salient human rights risks in PNG. We therefore have specific measures in place to manage the particular risks posed to human rights as a result of the provision of security associated with Company operations.
Oil Search has been a participant of the VPSHR since December 2016. The Company publishes an annual VPSHR Report on our responsible security provision performance and progress towards the principles of this initiative. Senior human rights and security subject matter experts participate in the annual VPSHR plenary and Corporate Pillar meetings and engage with other VPSHR participants to facilitate regional and cross-industry learning on VPSHR-related challenges and opportunities.
In mid- 2017, Oil Search and the Royal PNG Constabulary (RPNGC) signed a Memorandum of Understanding (MoU). Both parties committed to acting in a manner consistent with the VPSHR and other relevant international frameworks; providing human rights training and awareness to key staff; and reporting, investigating and taking appropriate action if an allegation of human rights abuse was received by either party.
Private security personnel receive human rights training provided by Oil Search, and public security providers who work on-site receive a human rights briefing as part of their induction. These sessions cover the use of force, incident reporting and crisis management.
A cross-functional VPSHR Steering Committee meets regularly to oversee and discuss VPSHR implementation progress; oversee adherence to the MoU with the RPNGC; and monitor, review and investigate any security incidents with alleged or potential human rights breaches.
Responsible supply chain
Oil Search’s success is underpinned by a holistic approach to managing the risks and opportunities within our supply chain, which can directly influence the operational impact and reputation of all our partners and members of our supply chain.
Supplier performance, including sustainability performance, can significantly reduce our costs and risks and increase productivity. Ensuring a sustainable supply chain is a key element of our overall supply chain management strategy and presents an opportunity to foster the sustainable development of both the PNG economy and the economy within our host communities.
Responsible management of our supply chain is one of the principles of our Code of Conduct. This states that all contractors, suppliers and business partners must be selected, engaged and managed on the basis that they are expected to follow policies and procedures that are consistent with Oil Search’s Values and Policies, including our Code of Conduct and our Corruption Prevention and Social Responsibility Policies.
Our supply chain
As an oil and gas company, our supply chain is predominantly made up of large international oil and gas field engineering, construction and technical services companies, logistics and aviation services, large and small manufacturing companies, specialist consultancies and employment agencies. Most suppliers work with us under multi-year agreements.
We work directly with approximately 2,500 goods and services providers. Of these, around 50% were based in PNG, 40% in Australia and 5% in the USA. The remainder were from Asia, New Zealand, the UK and Europe (As of the end of 2018).
In PNG and Australia, about 95% of our contracting spend in 2018 was with 82 companies. They provided labour and technical services relating to drilling, exploration, subsurface, production, maintenance and engineering.
In terms of goods or products, almost 80% of our direct spend with goods providers was with 50 companies, mostly large manufacturing companies or technical service providers supplying equipment from Australia, Singapore and the USA. Our largest product categories included maintenance spares, tubing and casing, fuel, production chemicals, and drilling, process and wellhead equipment.
In Alaska, we partnered with 79 suppliers who provided drilling, subsurface, arctic logistics and engineering services related to appraisal drilling of our assets on the North Slope. Of these, 65% (or 78% of the contracted spend) were Alaska based companies and the remainder were based elsewhere in the US.
Promoting the inclusion and development of local business is a key principle underpinning our contracting and procurement strategies. We have purchasing guidelines in place and seek opportunities to work with other suppliers to apply the same principles in their supply chain.
In both Alaska and PNG, the Company has direct contractual relationships with several businesses established by members of local communities. Alaska Native Corporations and PNG Landowner Companies (Lancos) provide many core services to Oil Search including drilling support, security, camp management, catering, ice roads, general maintenance and transportation. PNG Lancos are often established to service the extractive industry specifically. They have a community-based shareholding structure meaning they are a valuable source of income as well as employment to members of host communities in PNG. Their success is a sustainable development priority for Oil Search in PNG.
Oil Search’s ability to manage ethical, environmental and human rights considerations within the supply chain is an important risk management and social responsibility consideration. We encourage and expect contractors to act in a safe and responsible manner that aligns with Oil Search’s standards around integrity, personal safety, environmental protection and good governance.
Oil Search’s third-party internal audit programme uses a risk-based approach to identify a sample of contractors and suppliers for review each year. These provide independent, risk-based assurance on the effectiveness of internal controls used to identify, prevent and mitigate risks associated with contracting services. Specific reviews are also included in the internal audit programme to focus on safety aspects of contractor performance, particularly for aviation and land transport contractors. These audits review compliance with contract conditions, including safety performance, and adherence to legislative requirements. Where necessary, we issue corrective action plans and their close-out is monitored by our Assurance and Compliance team. Results are reported to the Board Audit and Financial Risk Committee.
Oil Search establishes controls, communicates and trains contractors on environmental aspects. We require all contractors whose activities have the potential to cause significant environmental impact to comply with the documented control procedures, be aware of the requirements of our environmental management system and be competent to perform the job assigned. We regularly inspect and review contractor adherence to these requirements.
Our Contracts and Procurement team conduct annual meetings with contractors to discuss any concerns and performance improvement opportunities and provide support. Contractor reviews and site visits are also conducted annually to check performance against contractual obligations and agreed improvements.
As PNG Lancos often undertake more remote or labour-intensive tasks for us, we engage and support their safety performance using a number of approaches. These include the use of scorecards with safety KPIs, personal safety training and the support of a dedicated safety advisor. This is in addition to regular safety audits on the implementation of our safety systems and a Lanco Safety Incentive Scheme. Each PNG Lanco also has an agreed work plan to ensure ongoing compliance with PNG company laws and regulations. Compliance is monitored by Oil Search contract owners and Lanco representatives.
For further information on how we support local businesses and employment and enable smaller scale businesses to thrive, please refer to the Livelihoods and local enterprise development section of our website.