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Maintaining a stable operating environment is always a strategic priority for Oil Search. It remained so in 2016 and is likely to become a greater priority in 2017 as fundamental global shifts continue. Changing societal expectations, rising nationalism and technological disruption are driving significant political, economic and social change.

Meanwhile, concerns about climate change are increasing, governance challenges abound and entrenched sustainable development issues remain unchanged. According to the World Economic Forum Global Risks Report 2017, we are at a tipping point, with socio-political and environmental issues now crowding out economic issues.

Papua New Guinea (PNG) is a local reflection of this global phenomenon.  

We have a long-held belief that PNG’s success is Oil Search’s success. Sustainable development, strong and transparent institutions, access to fair justice systems, infrastructure investment and an environmental commitment are fundamental, and Oil Search has an important part to play in helping PNG to achieve these goals.

In 2016, our Board approved a refreshed Social Responsibility Strategy that creates a coherent narrative for the Company’s commitment, approach and many ongoing initiatives. The Strategy demonstrates our local response to these important issues and trends. It prioritises where we will focus our efforts, setting two measurable goals that address our deep connection to PNG and reflect our pride in what we do and how we do it.

Importantly, it recognises that we can improve how we measure and communicate the positive impact Oil Search has in PNG, and can continue to lead with the levels of transparency we demonstrate.

One of the Strategy’s most important and visible priorities is the work of the Oil Search Foundation, which had a seminal year in 2016.  

In March, we signed a Public-Private Partnership agreement with the PNG Government to transform the Hela Provincial Hospital. Oil Search Foundation and our medical administration and engineering staff worked with the hospital management team to recruit specialists, implement key finance and administration systems, train staff and improve governance to ensure local residents could continue to access critical specialist services. The Foundation also provided support for the Family Support Centre in Tari, a facility that manages extremely high levels of sexual violence, providing medical and psychological support for hundreds of women. Through the partnership, we have delivered over US$2.3 million worth of improvements to the hospital, including upgrades to wards, medical facilities and other critical supporting infrastructure.

The hospital is now better resourced, offers a wide range of critical specialist services and is run more efficiently. The impact has been so dramatic that we have committed a further US$2.5 million to continue the work in 2017 and are looking for further opportunities to apply the health care partnership model in other PNG provinces.

By supporting improved health care services, we are contributing to community stability in Hela, and operational continuity.

Another Foundation partnership in 2016 continued this theme. Our new Foundation partners, Buk bilong Pikinini, deliver early childhood development and literacy programmes in the Hela Province. We will work with the Foundation on expanding this initiative in 2017 as well as developing a more holistic, targeted approach to improving local education opportunities and leadership capabilities.

Climate change is a significant global issue and Oil Search supports moves towards implementation of an effective global climate agreement.  We are responding by supporting government efforts to establish and implement clear stable policy frameworks to support a 2°C trajectory, and ensuring our Company’s approach responds to ongoing regulatory, stakeholder and market changes.

In October, the Board endorsed a new Climate Change Strategy. The Strategy responded to recent sector developments and will help prepare our business for future changes. It will be updated at least annually, reflecting the dynamic nature of this issue. Under our policy of open stakeholder communication and transparent reporting, we also improved our disclosures around climate change, in line with the recommendations of the Financial Standards Board Task Force on Climate Related Financial Disclosures (TCFD).

We maintained our commitment to the principles of the UN Global Compact throughout 2016. These informed the Social Responsibility Strategy refresh and are embedded in the new version of our Code of Conduct, which the Board approved in October. In September, we joined other leading global companies in a public statement of support for the Sustainable Development Goals (SDGs) that highlighted the important role private sector organisations are taking in offering solutions to sustainability challenges.

Developing PNG citizen employees and increasing the percentage of women in leadership roles are key social responsibility goals. In September, we appointed a second female Board member and created three new Independent Member roles for PNG citizens, including two women, to advise our Board Committees.

This innovative move provides our Board members with access to local expertise and insights and expands PNG’s pool of skilled business leaders. We further increased our commitment to PNG’s skills development by continuing to develop our structured Citizen Development Programme (CDP).

As always, ensuring the safety of our people, the environment and host communities was a key priority. After recording an increase in our Total Recordable Injury Rate (TRIR) in the first half of 2016, remedial measures led to a full-year decline in our TRIR (from 1.91 in 2015 to 1.53) for the fourth year running. In addition, several initiatives designed to further improve our process safety management and reporting also resulted in a significant reduction in Tier 1 and Tier 2 process safety events.

In December, we were accepted as a Participant in the Voluntary Principles on Security and Human Rights Initiative, joining peers, civil society and government organisations from around the world in a concerted effect to protect human rights.

It was a fitting end to a year in which Oil Search continued to consolidate our industry leadership position as a socially responsible company.

We plan to maintain this role in 2017 by continually improving personal and process safety performance, finalising our responsible supply chain strategy, working with all stakeholders to ensure benefits are distributed to landowners, and developing a more strategic approach to planning and implementation of our sustainable development activities. In addition, we will keep improving our disclosure around issues that matter to our stakeholders, such as climate change and process safety.

With PNG’s national elections taking place during the year, these and other initiatives will play a crucial role in helping our Company to maintain the stable operating environment that is so important for the future of both Oil Search and PNG.

Keith Spence – HSS Committee Chair
Keith's Signature
Peter Botten - Managing Director
Peter's Signature