Message from our leaders

In 2018, we faced one of the greatest challenges in the Company’s history when a record 7.5 magnitude earthquake hit our operating areas in PNG. You can judge the strength of a corporate culture when it is tested by a crisis and the speed, dedication and generosity of how our people responded to the PNG earthquake is testament to ours.

We were proud of how our employees and partners worked tirelessly together to come to PNG’s aid at its time of need. This was a major catastrophe with extensive loss of life and infrastructure damage. Our response was immediate and effective. We ensured the safe shut down of our facilities and prioritised disaster relief for project area communities. We provided nearly 80% of all First Responder aid to local communities in the first four weeks following the earthquake, before transitioning our attention to recovery and rehabilitation. Our contribution made a significant difference to local communities and we are honoured that it was acknowledged in the S&P Platts Global Energy Awards and through an inaugural Outstanding Humanitarian Award from the PNG Chamber of Mines and Petroleum.

Remarkably, despite the extraordinary circumstances and increased risk, our earthquake recovery and response activities were completed with zero recordable injuries. Our overall Total Recordable Injury Rate decreased by 22% from 2017, which is commendable at a time when we were undertaking more high-risk activities.

In spite of the earthquake, 2018 was a year of exciting opportunities. Entering Alaska in March began a new era of growth that will help support Oil Search’s long-term future in a world of constant change.

Actively working on solutions

During 2018, we continued to protect the stability of our PNG operations by working with stakeholders to address ongoing challenges. These included landowner concerns about the PNG Government’s distribution of the financial benefits derived from oil and gas, which led to some unrest in our project areas. We worked with all stakeholders and were pleased that the Department of Petroleum made some progress with landowner beneficiary identification, which is the cornerstone of benefits distribution. Oil Search’s enduring commitment to payments transparency and our participation in the EITI is playing a role in progressing this process.

Responding to the global challenge and risks of climate change, we published a Climate Change Resilience Report in March that aligned with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures. The Report showed that the risk of our low-cost assets being stranded in a carbon-constrained world was low. In July, a Carbon Tracker report backed up our analysis, placing Oil Search in the top quartile of oil and gas producers for resilience to climate transition risk in a range of decarbonisation scenarios, including a 2°C world. We began work on a comprehensive physical risk assessment to help us test the impact of a range of potential physical climate change risks on our assets, supply chains and project area communities. We ended the year by announcing a Public-Private Partnership (PPP) with PNG’s Climate Change and Development Authority (CCDA) to collaborate on climate adaptation initiatives that contribute to the resilience of PNG communities.

Human rights risks can be a threat to operational stability if not effectively mitigated and in 2018 we further strengthened Oil Search’s approach to managing them. We updated our Company-wide human rights risk review to assess the risks (including modern slavery) across all our businesses and supply chains, including our new Alaskan operations. With the Australian Commonwealth Modern Slavery Act passed in November 2018, we are preparing to release a Preliminary Modern Slavery Statement ahead of the requirement to do so, as a signal of our intent and commitment to take steps towards the elimination of this horrid crime.

Extending and strengthening partnerships

There is a compelling business and moral case for Oil Search to play an active role in working with communities, governments and other stakeholders in both the social and economic development of countries in which we work. Oil Search does this through innovative private-public partnerships which leverage respective strengths and work to improve sustainability. We believe this is essential for our future success and critical in building trust and support in communities. It is also an important issue in attracting and retaining staff who are committed to making a positive difference in the areas in which we work.

Oil Search and the Oil Search Foundation (OSF) demonstrated throughout 2018 how our sustainable development programmes contribute to the social and economic development of PNG providing tangible examples of the value of leveraging collective interests to achieve sustainable outcomes.

An outstanding example of this principle in action in 2018 is the Bel isi PNG initiative, which Oil Search helped to launch. As a founding partner in this innovative multi-sector model, OSF is partnering with various sectors to address gender-based violence in PNG and providing a valuable resource to our employees and their families.

The power of strategic partnerships was also evident in our health programmes with OSF. By working closely with Hela Provincial Health Authority, OSF has helped Hela Provincial Hospital to become one of PNG’s top three performing health facilities and our support kept it operational after the earthquake. Our support will continue to grow in 2019. The new Wok Bung Wantaim (“Working in Partnership”) strategy, which OSF and partners launched in May 2018, aims to improve coordination, planning, innovation and accountability for health programmes in Hela and Southern Highlands Provinces.

As always, Oil Search played a leading role in helping PNG realise ambitious infrastructure projects. When PNG hosted the 2018 Asia-Pacific Economic Cooperation (APEC) Summit, we helped to ensure the event’s success by delivering APEC Haus through the National infrastructure Tax Credit Scheme. Another important piece of new infrastructure, the gas-fired Port Moresby power station, delivered by NiuPower (part of Oil Search Power Holdings) will be commissioned in early 2019. It will produce the cheapest power in Port Moresby, contributing to the PNG Government’s goal to deliver reliable and competitively priced power to the PNG people in a country that has one of the world’s most expensive and least accessible power systems.

One of our first priorities in Alaska was to consult with local communities and take steps to build enduring stakeholder relationships. Through proactive, defined engagement, we aim to create the opportunity for dialogue, demonstrate our willingness to identify and respond to feedback and concerns and establish a positive reputation within the community.

Tackling the diversity challenge

Strengthening how we engage, develop and empower our employees was a major focus during the year. Based on the results of our 2017 employee engagement survey, we introduced several initiatives to manage our leadership pipeline and develop workforce capability and engagement. These included a new development process, coaching workshops for leaders and standardised guidelines for recognising individual achievement.

We also continued to progress our strategic priority of strengthening our organisational capability by supporting and celebrating diversity in our workforce, with a 2020 Diversity and Inclusion Strategy focused on three areas: gender diversity, PNG citizen development and an inclusive workplace. As a result, we achieved 33% female representation on our Board, increased the percentage of graduate females and expanded our female leadership pipeline. Our gender diversity efforts made Oil Search a top-200 company in the global 2018 Equileap Gender Equality Ranking. We also made major progress in 2018 against our citizen development goals, with 66% of the Company’s leadership roles in PNG now held by PNG citizens.

Overall, 2018 was a year of both steady progress against long-term goals and outstanding performance during a crisis. We continue to maintain our commitment to the principles of the UNGC and our efforts were recognised by being awarded the RobecoSAM Bronze Class Sustainability Medal. This puts us in the top 15% of companies worldwide in our industry for sustainability innovation and identifies us as being strongly positioned to create long-term shareholder value — something we can all celebrate.

Eileen Doyle – HSS Committee Chair Peter Botten - Managing Director