CORPORATE
SUSTAINABILITY
REPORT 2012-13
42

The cover embodies the Cairn India principle of creating

Economic
Sustainability

Creating Amazing Champions of
Energ...
Contents
CEO’s Statement	

4

About the Report	

7

About our Company	

9

	Origin	

10

	Operations	

10

	

Production F...
4

5

CEO’s
Statement
This report is one
small step to build
an organization,
which will lead
the path of growth
through s...
6

7

About the
report
This is Cairn India’s first
sustainability report which discloses
aspects related to the company’s
...
Portfolio of
Assets

9

From relief map of South Asia

Rajasthan - RJ-ON-90/1

About Our
Company
Cairn India Limited (here...
10

11

Origin

Even as Cairn India is leading the

We undertake fast track

way to opening up the country’s oil &

develo...
12

13

production companies with a rising
production profile.
In addition to the joint ventures,
Cairn India also has sub...
14

15

the Mangala Development Pipeline

located in the Gulf of Khambhat

from Barmer to Salaya; the

and one onshore wel...
Journey of
Growth
2004
1998
RAVVA
Satellite gas
discoveries
(Andhra Pradesh,
India)

2012

WORLD’S
LONGEST
CONTINUOUSLY
HE...
Cairn India
Group Structure
Cairn
Petroleum
India
Limited (S)

Cairn
Energy
Discovery
Limited (S)

Cairn
Energy
Gujarat Bl...
20
Customers

Our customers are oil & gas majors
who are into functions that are
further downstream. We do not have
any di...
Governance
Structure

23

The overall management of the

challenges and opportunities that

meetings are also called at sh...
24

25

•	 It is the responsibility of the

members of the Committee have the

senior management to implement

financial k...
26

27

•	 Coordinating the integration of

•	 Finalizing sustainability objectives

•	 Monitoring sustainability

•	 Advi...
Principles
and Policies
As we progress towards our
objective of becoming a global,
world class E&P company with a
diversif...
30

31

Economic
•	

Anti-Bribery Corruption
management System

•	

Electronic Legal Compliance
Management

•	

conduct wi...
33

Business
Environment

The E&P industry also faces
social concerns since a risky work
environment is one of its attribu...
Local
Community

Stakeholders

Employees

Investors
Suppliers

Stakeholder
Engagement
Cairn India has various categories
o...
36

Economic Aspects

Environmental Aspects

Social Aspects

Materials usage

Labour and workforce conditions

Energy usag...
Material Issues Employees

Material Issues Leadership

Material Issues Global Oil and
Gas Sector

Economic
performance

Ec...
Biodiversity & Greenbelt Development
Water Management
•	 Conserve water by improving
reuse/recycling and efficient
utilisa...
43

Economic
Sustainability

Direct economic value generated (INR crores)
Revenue

Operating costs

3,693.30

Share of exp...
44

45

The company has a multi-pronged
strategy to maintain our oil
reserves:(i) 	 Increase yield from existing
reservoir...
46

47

Case Study on
India’s Energy
Security
‘We are energy secure when we

can supply lifeline energy to all
our citizen...
48

papers, video content, and social
media. The message amplified to
reach smaller towns and cities
through more than 40 ...
50

51

Environmental
Sustainability

of applicable IFC Performance
Standards on Environment and
Social Sustainability.
Ca...
52

53

or carrying out any major

water is a part of the gamut of

by the company’s operations. With

aquifer (Thumbli Aq...
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
Cairn India | Sustainability Report 2013
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The cover embodies the Cairn India principle of creating
long term value for our stakeholders through sustainable
business processes. While the horizon is a reflection of our
diversified portfolio of producing assets, the heart of the
report is the people or communities around our areas of
operation. Just as the principles of Respect, Responsibility
and Relationships are embedded in our business
processes and carried forward by every employee, we
hope the essence and impact of sustainability will also
act as a bridge between older and younger generations
of communities. The tree of life embodies the fruit of
hydrocarbon development and the children the catalyst
and carriers of this sustainability journey.

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Cairn India | Sustainability Report 2013

  1. 1. CORPORATE SUSTAINABILITY REPORT 2012-13
  2. 2. 42 The cover embodies the Cairn India principle of creating Economic Sustainability Creating Amazing Champions of Energy(ACE) for India’s Energy Security issues 83 Employee & Contractor Safety Road Safety Programme long term value for our stakeholders through sustainable business processes. While the horizon is a reflection of our diversified portfolio of producing assets, the heart of the report is the people or communities around our areas of operation. Just as the principles of Respect, Responsibility and Relationships are embedded in our business processes and carried forward by every employee, we hope the essence and impact of sustainability will also act as a bridge between older and younger generations Can-do Spirit of communities. The tree of life embodies the fruit of hydrocarbon development and the children the catalyst and carriers of this sustainability journey. 50 Environmental Management Project Shrishti & the Desert Greenhouse 88 Society & Local Community Going Local, The Cairn Way
  3. 3. Contents CEO’s Statement 4 About the Report 7 About our Company 9 Origin 10 Operations 10 Production Facilities 13 Customers 20 Awards and Accolades 21 Governance Structure 22 Governance for Sustainability 25 Industry Associations 27 Principles and Policies 28 28 Code of Business Ethics Environmental Sustainability 50 Social Sustainability 70 Business Environment 32 Water Footprint 52 Employment & Workplace Conditions 71 Risks in the Oil & Gas Sector 32 Climate Change 55 Composition of Governance Bodies 74 Challenges Faced By Cairn India 33 Energy Consumption 56 Worker Safety 80 Stakeholders 34 Stakeholder Engagement 34 Prioritizing our Stakeholders 34 Engaging with our Stakeholders for Sustainability Energy Efficiency & Energy Conservation 57 Asset Security 84 Greenhouse Gas Emissions 57 Process Safety 85 Exploring Alternative Energy 59 Society & Local Community 88 Long Term Community Engagement 92 Environmental Management 34 Materiality 37 Sustainability Goals 39 Economic Sustainability 42 Economic Performance 42 Energy Security & Reserve Accretion 43 Estimated Proven Reserves and Resources 45 61 Biodiversity 61 Air Emissions 65 Waste Management 65 on Environment Environmental Fines and 67 Non-monetary Sanctions 68 68 Environmental Protection Investments 99 Human Rights 100 Product Responsibility 102 Global Reporting Initiative (GRI) Index 103 NVG Principles Mapping Other Initiatives to Mitigate Impact Corruption 123 Assurance Certificate 127
  4. 4. 4 5 CEO’s Statement This report is one small step to build an organization, which will lead the path of growth through safe and sustainable practices and will emerge as an inspiration for individuals and organizations Dear Stakeholders, I am proud to present to you Cairn India’s very first Sustainability Report. Our vision is to build a best-in class organisation through superior business performance and partnerships. As an oil & gas company in the natural resource sector, we are aware and therefore assume higher responsibility to promote and practice sustainability. Energy security is the key to ensure economic prosperity for India, which remains one of the largest importers of crude oil. All forecasts indicate that P Elango • Harness the innovative capital to This report is one small step to build this dependence on imported We believe in creating ownership oil will increase significantly. and individual commitment drive sustainability practices and an organization, which will lead the While ensuring our consistent to our core values of Respect, initiatives path of growth through safe and efforts towards building an Relationships and Responsibility. energy sufficient future, • We respect the rights of all our our responsibility towards sustainable growth remains intact. Therefore our approach should integrate coordinated initiatives and energy strategies, policies and regulations to charter a low-carbon and energy- stakeholders • We recognize our responsibility to deliver on these rights deeds. sustainability indicators such as As Cairn India continues to grow, many more projects with sustainability as their prime inspiration will be initiated Prosperity HSE performance, community and executed. • Integrate the sustainability done so far, communicate and by our performance on material organizations through its innovative environmental stewardship, The purpose of this report is to Initiatives, capture what we have sustainability will solely be judged as an inspiration for individuals and our carbon footprint, water usage, We endeavour to: will drive our Sustainability aware that our commitment to sustainable practices and will emerge relationships & Partnerships for • We commit to build sustainable secure growth path. articulate the core values that As we move forward, we are keenly agenda into the way we do business • Work in collaboration with our stakeholders engagement and inclusive growth. I am excited to steer our journey To provide management oversight, towards sustainability excellence. We we have constituted a sustainability seek your proactive participation to steering committee to ensure that help us create a sustainable business we meet our annual sustainability where every stakeholder is a ‘Partner goals and targets. in Prosperity’. commit what we intend to do. Chief Executive Officer & whole time Director, Cairn India Limited CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Ceo statement CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Ceo statement
  5. 5. 6 7 About the report This is Cairn India’s first sustainability report which discloses aspects related to the company’s economic, environmental and social performance in the financial year 2012-13. We have reported our performance as per the Global Reporting Initiative 3.1 guidelines (including the Oil & Gas Sector Supplement). The boundary of the report covers production operations from all our assets within India. This Data in the report has been measured, monitored, and reported as per national standards - International Association of Oil & Gas Producer (OGP) guidelines, benchmarks etc. disclosing information on 77 indicators. report excludes our exploration, project and drilling activities, our international operations, joint ventures and subsidiaries. Exceptions to the stated boundary above have been indicated by a β symbol. For further information please contact:General Manager (Sustainability) Cairn India Pvt Ltd 3rd & 4th Floor, Vipul Plaza, Sun City, Sector 54, Gurgaon – 122 002, Haryana, India. Email: cilsustain@cairnindia.com CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Data in the report has been measured, monitored and reported as per national standards, International Association of Oil & Gas Producer (OGP) guidelines and benchmarks; industry practices; and other recognised international standards. These are recorded in our Corporate Responsibility Management System. The financial figures are reported in INR crores and in USD millions. The currency exchange rate used in this report is 1 USD = INR 54.36 The report discloses information on 77 indicators with 38 indicators reported fully. This is a B-level Sustainability Report externally assured by DNV AS. We plan to publish our sustainability report annually. CAIRN INDIA SUSTAINABILITY REPORT 2012-13 ABOUT THE REPORT
  6. 6. Portfolio of Assets 9 From relief map of South Asia Rajasthan - RJ-ON-90/1 About Our Company Cairn India Limited (hereafter referred to as ‘Cairn India’) is a part of the Vedanta Resources PLC, which is a globally diversified natural resource conglomerate. The company was rated as the fastest-growing energy company in the world by Platts Top 250 - 2012 (http://top250.platts.com/ FastestGrowing). Cairn India accounts for more than 25% of India’s domestic crude oil production. We deliver Ravva - PKGM-1 best-in-class performance with one of the lowest operating costs to create significant value for all stakeholders. Cairn India’s operations not only helped reduce the country’s Cambay Basin - CB/OS-2 dependence on oil imports by nearly INR 38,500 crores (approximately USD 7,000 million), but also contributed nearly INR 20,000 crores (approximately USD 3,600 KG-ONN-2003/1 MB-DWN-2009/1 million) to the exchequer. We produce two products, viz. Crude Oil and Natural Gas. We hold nine (9) blocks, of which seven (7) are located in India and one each in South Africa and Sri Lanka. All our KG-OSN-2009/3 production operations are located in India. Our producing facilities are in Rajasthan, Gujarat and Andhra Pradesh. PR-OSN-2004/1 Our registered office is at: 101, West View, Veer Savarkar Marg, Prabhadevi, Mumbai – 400025. Our corporate office is at: 3rd & 4th Floor, Vipul Plaza, Sun City, Sector 54, Gurgaon – 122002. CAIRN INDIA SUSTAINABILITY REPORT 2012-13
  7. 7. 10 11 Origin Even as Cairn India is leading the We undertake fast track way to opening up the country’s oil & development of the discovered Cairn India Limited, a public limited gas reserves and making a significant fields. We have pioneered the use company was incorporated under contribution to the gross exchequer, of cutting-edge technologies to the Companies Act, 1956, on 21 it remains deeply committed to its extend the production life of the August, 2006 and was listed on inclusive-growth agenda. We have producing fields. Our hydrocarbon the National Stock Exchange and directed our efforts to a multitude sales contracts are with public and Bombay Stock Exchange on 9 of positive contributions to the local private buyers, including four major January, 2007. The Company is a communities in the regions where refineries across India. Our average subsidiary of Vedanta Resources we operate, strengthening local daily production in FY 2012-13 was Plc. which holds majority stake in economies and supporting local 205,323 barrels of oil equivalent the Company through its subsidiary communities. per day (boepd), which is over companies. Cairn India is the largest private Operations exploration and production Cairn India operates onshore and company currently operating in India. We are committed to ensuring the highest standards of safety and are among the top ten (10) global Exploration & Production (E&P) companies in Health, Safety and Environment (HSE) performance, based on the International Association of Oil & Gas Producers (OGP) benchmark. offshore hydrocarbon fields in India. We have made more than 40 hydrocarbon discoveries to date, of which 26 are in Rajasthan. Out of the seven (7) landmark discoveries in the country in the last decade, three (3) have been made by us. These discoveries, include the Mangala field, which is the largest onshore oilfield discovery in India since 1985. 25% of India’s total hydrocarbon production. Cairn India maintains a low operating cost base through efficient operations which deploy innovative operating concepts and technologies. Cairn India’s low-cost domestic production is critical to meet India’s energy needs, and thus we aim to increase the nation’s oil & gas production. We are consolidating our position as one of the world’s largest independent exploration and Shareholder Category No. of Equity Shares Shares held (%) Face Value INR 10/- each A PROMOTER HOLDING 1 Indian Promoters 383,840,413 20.09 2 Foreign Promoters 738,873,586 38.68 3 Persons acting in concert - - B NON-PROMOTER HOLDING a) Banks, Financial Institutions, Insurance Companies (Central/State Govt. Institutions/Non-Govt. Institutions) 152,765,191 8.00 b) Foreign Institutional Investors 278,117,140 14.56 c) Public 52,034,408 d) Qualified Foreign Investors 75,050 2.72 0.00 e) Mutual Funds f) NRI (Repatriable) g) NRI (Non-Repatriable) h) Bodies Corporate i) Foreign Bodies Corporate 196,174,600 10.27 j) Clearing Member 1,828,000 0.10 k) Directors/relatives l) Trusts Grand Total 59,751,067 3.13 1,588,589 0.08 661,433 0.03 43,850,079 2.3 177,746 0.01 500,852 0.03 1,910,238,154 100 * As on 31 March, 2013 Ravva Onshore facility, Surasaniyanam, Andhra Pradesh CAIRN INDIA SUSTAINABILITY REPORT 2012-13 CAIRN INDIA SUSTAINABILITY REPORT 2012-13
  8. 8. 12 13 production companies with a rising production profile. In addition to the joint ventures, Cairn India also has subsidiary companies in many other countries. All our subsidiaries are unlisted wholly owned foreign companies. These subsidiaries have their own Board of Directors holding the rights and obligations to manage such companies in their best interest. Cairn India has its representatives on the boards of subsidiary Mangala Processing Facility, Barmer, Rajasthan Key operations performance in FY 2012-13 • Gross operated production was 205,323 boepd • Delivered a record revenue from operations of INR 17,524.15 crores (USD 3,223 million) • Total profits (after taxes) for the year stood at INR 12,056.39 crores (USD 2,218 million) • Market capitalisation was over USD 10 billion companies, and regularly monitors the performance of such companies. We encourage the reader to refer to our Annual Report FY 2012-13 for further details on our financial performance (http://cairnindia.com/IR/ CB-OS/2 onshore facility, Suvali, Gujarat CAIRN INDIA SUSTAINABILITY REPORT 2012-13 ABOUT OUR COMPANY Pages/IRAnnualReport. aspx?UIDV=100&&Section=2) Production Facilities Cairn India has hydrocarbon production facilities at Ravva (PKGM-1 Block, Andhra Pradesh), Suvali (CB-OS/2 Block, Gujarat) and near Barmer (RJ-ON-90/1 Block, Rajasthan). The PKGM-1 and CB-OS/2 are offshore blocks with onshore processing facilities. The RJ-ON-90/1 block is an onshore block. The company also operates CAIRN INDIA SUSTAINABILITY REPORT 2012-13 ABOUT OUR COMPANY
  9. 9. 14 15 the Mangala Development Pipeline located in the Gulf of Khambhat from Barmer to Salaya; the and one onshore well located in the third largest field in pipeline is currently being further the transition zone. The crude the block and was brought extended to Bhogat, Gujarat. A oil is sold to the ONGC facility into production during the brief descriptions of the production at Ankleshwar, Gujarat. The current fiscal. It comprises facilities are: processed gas is transferred to of eight (8) well pads and is the gas pipeline of Gujarat State connected to MPT through Petroleum Corporation Limited pipelines. The well fluid is (GSPCL) at the custody transfer processed at MPT. • PKGM-1 Block (Ravva facility): The PKGM-1 block is primarily and offshore block. The Ravva - Aishwariya Field – It is metering skid within the Suvali processing terminal consists - In addition to the above, facility. of onshore oil & gas processing facilities connected to eight Saraswati and Raageshwari • RJ-ON-90/1 Block: fields contribute a small offshore unmanned platforms The Rajasthan production volume to the overall located in the Bay of Bengal facilities consist of the Mangala production. These facilities through subsea pipelines. Processing Terminal (MPT) are standalone minor The processed crude oil is located near Kawas, Barmer; and processing facilities, and transported to the Single Point the Raageshwari Gas Terminal the separated crude is Mooring (SPM) via subsea (RGT) located about 60 km transported to MPT using pipelines and is evacuated to south of the Mangala facility. The road tankers. the coastal refineries by marine hydrocarbon production fields of tankers. The natural gas is the RJ-ON-90/1 block currently transferred to Gas Authority consists of of India, Limited (GAIL) at the • Mangala Development Pipeline (Barmer-Salaya Crude Oil Pipeline): - Mangala Field – It is the custody transfer metering skid The processed crude from largest production field in the • CB-OS/2 Block (Suvali facility): the MPT is evacuated to the block. There are eighteen (18) located within the Ravva facility. permitted buyers through well pads that are connected a dedicated state-of-the-art The CB-OS/2 block is primarily an to MPT through infield buried pipeline system with crude offshore block with some portion pipelines storage and transfer facilities of the block in the transition - Bhagyam Field – It is the zone. The Suvali processing second largest production terminal is located near Hazira field in the block. Fifteen within the Gujarat Industrial (15) well pads are connected Development Corporation (GIDC) through infield pipelines to notified industrial area. The facility processes crude oil and natural gas and is connected to three (3) offshore platforms CAIRN INDIA SUSTAINABILITY REPORT 2012-13 ABOUT OUR COMPANY Mangala Processing Facility, Barmer, Rajasthan the trunk line connecting Bhagyam field to MPT. The at Viramgam and Radhanpur, Gujarat. A large storage and marine export facility is under construction at Bhogat (Jamnagar district, Gujarat) with offshore marine loading facility through SPM. Bhagyam well fluids are processed at MPT CAIRN INDIA SUSTAINABILITY REPORT 2012-13 ABOUT OUR COMPANY
  10. 10. Journey of Growth 2004 1998 RAVVA Satellite gas discoveries (Andhra Pradesh, India) 2012 WORLD’S LONGEST CONTINUOUSLY HEATED & INSULATED PIPELINE OPERATIONAL 2009 2007 INITIAL PUBLIC OFFERING Cairn India listed on Bombay Stock Exchange & National Stock Exchange 2000 CAMBAY DISCOVERIES Lakshmi, Gauri and Ambe fields (Gujarat, India) FIRST OIL Commenced production from the Mangala field (Rajasthan, India) 2013 100 MILLION BARRELS OF PRODUCTION FROM RAJASTHAN IN LESS THAN 3 YEARS Enabling reduced oil imports by ~USD 9 billion and contributed ~USD 3 billion to the government 2010 MANGALA DISCOVERY Largest onshore oil discovery in India in more than 2 decades (Rajasthan, India) FIRST oil & gas SALES Commenced production from the Aishwariya field; Gas Sales from Raageshwari Gas Terminal (Rajasthan, India) 2011 SRI LANKA DISCOVERIES First to discover hydrocarbons in the frontier basin in 30 years South africa TCP 2012 ENTRY IN SOUTH AFRICA Partnership agreement with PetroSA; Technical Co-operation permit
  11. 11. Cairn India Group Structure Cairn Petroleum India Limited (S) Cairn Energy Discovery Limited (S) Cairn Energy Gujarat Block 1 Limited (S) Cairn Exploration (No.6) Limited (S) Cairn Exploration (No.7) Limited (S) Cairn Exploration (No.4) Limited (S) Cairn India Limited (I) C M Y M Cairn Exploration (No.2) Limited (S) Cairn Energy Holdings Limited (S) 69.6% Cairn Energy Hydrocarbons Limited (S) Cairn Energy Australia Pty Limited (A) B.V. (N) Ceh Australia Limited (Bvi) Cairn Energy Gujarat Holding B.V. (N) CEH Australia Pty Limited (A) 31.82% Cairn Energy India West B.V. (N) Cairn Energy Cambay B.V. (N) Cairn Energy Gujarat B.V. (N) 99.63% Cairn Energy Asia Pty Limited (A) Wessington Investments Pty Limited (A) Cairn Energy Investments Australia Pty Limited (A) Sydney Oil Company Pty Limited (A) 0.37% Cairn Energy Cambay Holding Cairn Lanka Private Limited (SL) 68.18% Cairn Energy India Holdings B.V. (N) CIG Mauritius Private Limited (M) Cairn South Africa Proprietary Limited (SA) 30.4% Cairn Energy India West Holding B.V. (N) 0 0 0 100 CIG Mauritius Holding Private Limited (M) Cairn Energy Group Holdings B.V. (N) 100% Ownership unless specified. Country of incorporation: (A) - Australia (BVI) - British Virgin Islands (I) - India (J) - Jersey (M) - Mauritius (N) - Netherlands (S) - Scotland (SA) - South Africa (SL) - Sri Lanka C M Y M Cairn India Holdings Limited (J) Cairn Energy Netherlands Holdings B.V. (N) 1. 2. 100 85 0 13 Cairn Energy India Pty Limited (A)
  12. 12. 20 Customers Our customers are oil & gas majors who are into functions that are further downstream. We do not have any direct retail customers. Awards and Accolades Crude oil customers include, both Public Sector Undertaking (PSU) refineries like Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Corporation Limited (HPCL), and Chennai Petroleum Corporation Limited (CPCL); as well as private refineries like Reliance India Limited (RIL) and Essar Oil The vision of Cairn India is Transportation – Company of week 2012 under the aegis of company; establish a diversified the Year 2012” award given by DGMS, Ajmer and sustainable portfolio; and Petrofed, part of the PetroFed deliver long term value to host Pipeline Transportation Award governments, local communities 2012 and all stakeholders. In our progress Natural gas buyers are Gujarat Gas, we have received many awards Company Limited (GNVFC), Gas Authority India Limited (GAIL) and China Light and Power India Private Limited (CLPIPL). CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Technology Tower, Raageshwari Gas Terminal, Barmer, Rajasthan • 16 awards in 26th Mines Safety to become a world class E&P Limited (EOL). Gujarat Narmada Valley Fertiliser • “Oil & Gas Pipeline towards attaining this vision, which recognise our achievements. Some of these awards, which were obtained during the reporting period, are listed. • “Fastest growing energy company in the world in 2012” by Platts Top 250 • Runner-up award to Raageshwari Oil Mine by National Safety Awards (Mines), Govt. of India • Ravva asset won the Platinum Award under the FICCI Safety Excellence Awards for Manufacturing 2012 • Golden Peacock Award for Excellence in Corporate Governance for 2012
  13. 13. Governance Structure 23 The overall management of the challenges and opportunities that meetings are also called at shorter company is overseen and regulated the company faces, and the skills notices but never less than a by the Board of Directors. The and experience needed from the minimum of seven days. In some Board is responsible for formulating members of the Board. The criteria instances, resolutions are also policies in the short and the long are mainly the skill, knowledge and passed by circulation. These are term to ensure smooth operations experience related to the role that often preceded by Board discussions of the company. Cairn India’s Board the incumbent would perform. through audio conference. The decides the approach to manage the risks and utilise the opportunities that present themselves in the highly volatile oil & gas sector. It also ensures that the business is carried out in the best interests of its stakeholders and contributes to the overall growth of the industry and the economy. The company has a Nomination Committee of the Board of Directors, which facilitates the composition and selection of Board members including independent and non-executive directors The Board of Directors is the apex and highest governing body in Cairn India. It’s composition (including its committees) is determined keeping in focus the business critical needs, industry expertise and knowledge. It also ensures a judicial mix of executive, non- Cairn India Board of Directors 1. Mr. Navin Agarwal Chairman, Non-Executive Director 2. Mr. Tarun Jain Non-Executive Director 3. Ms. Priya Agarwal Non-Executive Director 4. Mr. Aman Mehta Non-Executive Independent Director 5. Mr. Naresh Chandra Non-Executive Independent Director 6. Dr. Omkar Goswami Non-Executive Independent Director executive, independent and nonindependent directors, diversity in composition, and compliance with legal requirements. In nominating the members for the board, the nomination committee considers succession planning, the Board is also free to recommend The Chairman of the Board is a inclusion of any matter in the non-executive promoter director. agenda for discussion. Senior All non-executive directors on the management officials are often Board are renowned professionals, called to provide additional inputs who have diverse experience and on the matters being discussed by expertise in finance, economics, the Board/Committee. oil & gas exploration, and general administration. Currently, the board The Board has complete access to comprises of seven male directors all the relevant information of the and one female director. Company. The quantum and quality The Board of the company in addition to meeting as and when required also meets every quarter to assess the performance of the company. The Board discusses, among other points, the business responsibility issues as a part of its deliberation. The company follows a structured process of decision-making by the Board and its Committees. The meeting dates are usually finalised well before the beginning of the year. Detailed agenda, management reports and other explanatory of information supplied by the management to the Board goes well beyond the minimum requirements stipulated in Clause 49 of the Listing Agreement. All information, except critical price sensitive information (which is handed out at the meetings), is given to the Directors well in advance of the Board and Committee meetings. The Company has been including data and information on the ‘responsible business’ aspects as an integral part of its Annual Report. • Regular internal and third party statements are circulated at least audits are conducted for the seven days ahead of the meeting. effective implementation of all To address specific urgent needs, policies. 7. Mr. Edward Story Non-Executive Independent Director 8. Mr. P Elango Interim CEO & Whole Time Director CAIRN INDIA SUSTAINABILITY REPORT 2012-13 GOVERNANCE STRUCTURE
  14. 14. 24 25 • It is the responsibility of the members of the Committee have the senior management to implement financial knowledge and expertise the policies. They have their mandated by Clause 49 of the respective departmental employees to assist them in implementation. • All approved policies and procedures are placed on the internal portal - Tejas. We have a well-documented ‘Delegation of Authorities’ schedule that outlines authority levels for each transaction type and matters Cairn India takes immense pride in its governance practices. During the recent change in promoter we maintained the highest levels of good governance practices to ensure that our shareholders’ interests, especially those of the minority Listing Agreement. The current • Executive Committee charter of the Audit Committee • Central Committee for Stakeholder Relations is in line with international best practices as well as the regulatory shareholders, were protected. We set up a Board Committee requirements mandated by SEBI and of two Independent Directors not related to the existing or Clause 49 of the Listing Agreement. prospective promoters and empowered it to supervise any The shareholders’ and investors’ contractual relationship that the Company was required Management Committees at Cairn India queries and complaints are to enter into, with the promoter and/or the acquirer and to reviewed and responded by the ensure that the obligations assumed therein were not onerous Shareholders’/Investors’ or prejudicial to the interest of Cairn India and its public shareholders. The Committee also provided the Board their The Board has a Remuneration and approved at the Executive unbiased comments and recommendations on the offer made Committee to make Committee level before being taken by the Acquirer, keeping in mind their fiduciary responsibility recommendations to the Board • Risk Management Committee • Ethics Committee • Grievance Committee • People Panel • Operating Unit Steering Committee • Sustainability Steering Committee Grievance Committee Board papers are deliberated • Contracts Committee reserved for Board approval. All up by the Board. The board is assisted in its tasks primarily by four committees. These committees are integral to the board and its functioning. These are: 1. Audit Committee 2. Shareholders’/Investors’ Grievance Committee towards the shareholders. • Where a simple Board meeting would have sufficed, the Company sought mandate of the shareholders by way of postal ballot – a more appropriate and democratic process of decision making – and gave all shareholders including the minority shareholders, the right to participate and vote on the matter. • We disclosed only publicly available and approved 3. Remuneration Committee information with our prospective promoter as well as 4. Nomination Committee existing promoter. Exchange of information was strictly All the Board Committees have specific terms of reference approved by the Board of Directors. The Company has an adequately qualified Audit Committee. All CAIRN INDIA SUSTAINABILITY REPORT 2012-13 GOVERNANCE STRUCTURE monitored. We took about 18 months to get all conditional approvals and this demonstrates that the procedures, policies and best governance practices were adhered to at all times. with regards to the Company’s framework or broad policy for the remuneration of Executive Directors and senior executives’ - one level below the Board. In determining the remuneration policy, the Committee takes into account factors it deems relevant and gives due regard to the Governance for Sustainability We have recently constituted a Sustainability Steering Committee and have rolled out our Sustainability framework document. The Sustainability Steering Committee is chaired Integration) and has as members the top management of various functional verticals. The Steering Committee reports to the Executive Committee. The committee’s key objective is to systematically address sustainability related risks and opportunities. Its key responsibilities are: by the Director (Strategy & interests of shareholders and to the financial and commercial health of the Company. Further, there are management Committees consisting of senior personnel with specific terms of reference. Highlights from our governance practices • All our CSR activities follow the same practices of ethics, transparency and accountability as the rest of Cairn India with respect to finances and governance. • All donations and sponsorships made by Cairn India are mandatorily approved by our Executive Committee and Board of Directors. CAIRN INDIA SUSTAINABILITY REPORT 2012-13 GOVERNANCE STRUCTURE
  15. 15. 26 27 • Coordinating the integration of • Finalizing sustainability objectives • Monitoring sustainability • Advising on implementation of sustainability agenda into the and setting clearly articulated performance against these initiatives/programmes to drive company’s development strategy, goals/initiatives targets and benchmarking Sustainability practices with our Corporate Responsibility (CR) major contractors & vendors planning and operations. • Ensuring adequate resources • Directing the organisation’s performance against peers are allocated, and reviewing & effort and approach to the most updating the initiatives at least critical sustainability issues over annually • Coordinating the preparation and publication of the both the short-term and the long- Sustainability Report term horizon Industry Associations Cairn India has a presence in the international body, Oil & Gas Producers (OGP), and in national industry associations like the Association of Oil & Gas Operators Board of Directors (AOGO), Confederation of Indian Industries (CII), Federation of 4. Submission to DGH on PSC Extension Policy bringing out Cairn India actively engages with these Associations for policy formulation/ advancement;/ improvement of public good and national interest towards Energy Security, Sustainable Business Principles, Governance and Administration & Inclusive Development Policies. international best practices on PSC extension 5. Submissions to the Dr. Vijay Kelkar Committee on the roadmap for reforms in the Indian oil & gas sector to achieve self-sufficiency in hydrocarbon production We need to interact with the Central and the State governments at different levels, for which we have clearly defined controls and methods for engaging with the government. Indian Chambers of Commerce and Industry (FICCI), Associated Executive Committee Chambers of Commerce and Industry (ASSOCHAM) and Petroleum Federation of India (PetroFed) among others. Cairn Sustainability Steerling Committee Chairman Sustainability Secretary India actively engages with these Associations for the policy formulation/advancement/ improvement of public good and national interest towards Energy Director QHSE Director HR Director RA & CS Director Projects Director PSCM Security, Sustainable Business Principles, Governance and Administration and Inclusive Development Policies. Head Pipeline & GB & LA Head Operations Head Renewable Energy Head CSR We actively contribute and work closely with the industry associations and the government We have mapped and assigned to arrive at informed policy responsibilities for Cairn India decisions. Some of our recent officials for interaction with each submissions through industry level of the government. All these associations are: are strictly under the overview of the Management. 1. Submissions to the Rangarajan Committee on the upstream fiscal regime and the role of enabling reforms in the Indian oil & gas sector 2. Submission of comments on the National Shale Gas Policy 3. Budget Memorandum for the oil & gas sector, which highlighted key taxation issues impacting the sector Cairn India Sustainability Steering Committee CAIRN INDIA SUSTAINABILITY REPORT 2012-13 GOVERNANCE STRUCTURE CAIRN INDIA SUSTAINABILITY REPORT 2012-13 GOVERNANCE STRUCTURE
  16. 16. Principles and Policies As we progress towards our objective of becoming a global, world class E&P company with a diversified portfolio, we also aim to deliver long-term value to host governments, local communities and all stakeholders. Our vision of pioneering energy, enriching lives is reflected in our values which encompass Teamwork, Respect, Ownership and Pioneering Spirit. Our company believes in creating value for its stakeholders. We are committed to conducting our business in a sustainable and an efficient manner. Our focus is on the long-term growth of the company, for which we follow best practices in its business and operations. The principles and policies of Cairn India are structured to inculcate a culture of accountability, transparency and integrity across the company as a whole. Our principles and policies are in adherence to the voluntary IFC Environmental and Social Sustainability Performance Standards (IFC PS). We Believe: • Our “License to Operate” comes from the community which needs to be earned through our deeds and can never be taken for granted. The principles and policies of Cairn India are structured to inculcate a culture of accountability, transparency and integrity across the company as a whole. • Promoting ‘stakeholder interests’ that include our shareholders’ interests is the way to build a sustainable future. • “Every Life Has Equal Value” be it the life of our employees, contractor personnel or local community, and we will make every effort to protect it. • Celebrating good behaviour holds more value than punishing bad behaviour. • HSE is a part of our DNA, Safety is not a parameter, it is a pre-requisite. • It is in our “Cairn Can Do Spirit” to build a sustainable eco-system which complements all our business activities. • Elements of environment and social aspects are integrated in our corporate strategy to help us make our business sustainable. 29 Values Code of Business Ethics Cairn India has defined its code of business ethics, which establishes the standards of business ethics and conduct. The code encompasses business ethics and practices, legal and regulatory compliance, financial integrity and asset protection, information management, and whistleblowing. Compliance to the code is binding on everyone who carries out work, for or on behalf of the company. The Code of Business Ethics articulates our core values and it applies to all aspects and operations of Cairn India. Heads of Departments throughout Cairn India, all Employees and Service Providers are responsible for ensuring consistent compliance with Company policies, procedures and standards within their areas of responsibility. We have an Ethics Committee comprising of members from the senior management who ensure an independent review of the compliance with the Code within Cairn India. The company has formulated the ‘Whistle-blower Policy’ and has provided various means by which any transgression of the code can be anonymously reported to a designated internal authority. Pioneering Spirit Respect Innovative thinking and a “can do” attitude Care for people and environment • Demonstrates self-belief and confidence in new areas • Demonstrates empathy towards others • Experiments without fear of failure • Understands diversity and is sensitive to different cultures • Provides leadership and drives to meet challenges • Committed to health, safety and security in our operations • Is passionate and outperforms on commitments • Cares for the community and environment Teamwork Ownership Working together towards common objectives Committed and accountable for our actions • Puts collective goal ahead of individual interests • Responsible for our own and team’s actions • Asks for and gives help willingly • Takes personal accountability for delivery • Listens and respects other’s opinions • Goes beyond one’s role to deliver on commitments • Shares information proactively • Manages resources of the organisation effectively CAIRN INDIA SUSTAINABILITY REPORT 2012-13 OUR PRINCIPLES AND POLICIES
  17. 17. 30 31 Economic • Anti-Bribery Corruption management System • Electronic Legal Compliance Management • conduct with suppliers Grievance Redressal Mechanism • • Risk Management Policy • Sponsorship, Donations Policy Gifts and Entertainment Policy • Policy on the procedure for implementing code of Code of Business Ethics • • Insider Trading Code • Whistleblower Policy Environmental • Health, Safety & Environment (HSE) Policy In the coming years, Cairn India aims to further strengthen awareness on ethics & good governance principles amongst employees and contractors. Our objective is to drive accountability and compliance to governance procedures through policy revisions/ additions. Social • Anonymous Complaint • Human Rights handbook • Cairn India Land Acquisition & • LTA, Club membership, Leave entitlements as per Laws Compensation Plan (LACP) Cairn India Public Consultation • Policy on Compensatory Time Off & Disclosure Plan (PCDP) • • Recruitment policy - An equal Opportunity Employer • CEO’s Corner • Company Medical Scheme • Relocation Policy • Corporate Social Responsibility • Remote Location Allowance Policy Policy • Sponsorship Donation Policy • Drug & Alcohol Policy • Transfer Policy • Road Safety Policy • vHearU • Education related policies CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Nal Sarovar Bird Sanctuary, Gujarat CAIRN INDIA SUSTAINABILITY REPORT 2012-13
  18. 18. 33 Business Environment The E&P industry also faces social concerns since a risky work environment is one of its attributes. 2. Delay or denial of approvals 5. Acquiring land for expansion entail shortfall in the actual and welfare of their employees. competitive environment in the for our products, driven by drilling, fracturing, completion global oil & gas sector. This sector geo-political factors as well as and well treatment plays a critical role in meeting the global demand-supply position, energy needs of people across the susceptible to frequent price world. It comprises three main fluctuations sub-sectors, viz. the exploration and production (E&P) industry; • Challenging business environment in accessing and petroleum refining or the processing developing new areas and industry; and retailing of petroleum monetizing them fuels. The end-products generated by this sector are an integral part of our daily lives, and are also • Availability of oilfield service providers and skilled manpower important for the transportation to meet the increased global sector. Cairn India’s current business is limited to the exploration and production (E&P) of hydrocarbon. Risks in the Oil & Gas Sector The players in the E&P industry, including Cairn India, face many challenges in their operation. Some of the key challenges are listed below. in the process of extraction, stabilization, and export of oil and gas • Generation of wastes in off shore and on shore activities • Potential oil spills during production causing substantial environmental damage Since the E&P industry has the potential to cause stress on environmental resources, it has to address the environmental impacts that follow the: • Extraction of non-renewable resources such as oil and gas • Significant water usage and Challenges Faced By Cairn India Human rights may be a key concern for such companies and the focus must be on managing issues regarding health, safety and welfare of their employees. system; changes in central, state, local laws; and regulations, such as restrictions on production, additional taxes and royalties, where we operate could negatively impact our business. and of prime importance to Cairn management of risk is imperative India. The Board of Directors and senior management are aware of of the available data and the the risks to the business and its engineering and geological operations. Management takes interpretation. Also, the actual appropriate measures, when extraction from the reservoir needed, to mitigate such risks to and the estimated volume may the best possible extent. vary significantly. Hence, this this industry in India. developments in the regulatory Reserves estimations involve a it is a function of the quality commonly faced by all the players in our business. Any unfavourable business operations. Effective high degree of judgement and industry issues there are risks led to negative implications for all such risks facing our reserves long term. In addition to the global in the regulatory landscape has and procedures to address and actual recoveries from oil many challenges in the short and environment and uncertainty and associated processes 3. Variation in the estimated Our business environment presents Changes in the business Cairn India has in place a Risk Management Policy, our projected targets. of its sites. • Potential regulatory uncertainties to geographically diverse locations performance in comparison with risk may have material impact on our company’s production and 1. Uncertain policy environment demands CAIRN INDIA SUSTAINABILITY REPORT 2012-13 OUR BUSINESS ENVIRONMENT • Emission of greenhouse gases communities with its operations due execution could be delayed. adversely. This could also regarding health, safety, security discharge in the process of in land acquisition our project impact project economics must be on managing issues affect the indigenous and local • Highly volatile global market operations. In the event of delays could delay new projects and for such companies and the focus In our business we need to acquire land for expansion of our unduly long approval processes Human rights may be a key concern Lastly, this industry may also Cairn India operates in a Ambiguity in regulations or cash flows. business. In order to understand these risks, Cairn India appropriate and competent undertakes several stakeholder service providers for services engagement programmes that such as geo-scientific surveys help clarify the expectations and has to secure the rigs at the its stakeholders have from the right time. Any changes in this market and the quality of service financial risk to our company. faces several environmental have a material impact on its The company has to get the provided imply operational and described above, Cairn India and social challenges that can 4. Availability of oilfield services In addition to the risks company. A detailed explanation of these risks is provided under materiality analysis. CAIRN INDIA SUSTAINABILITY REPORT 2012-13 OUR BUSINESS ENVIRONMENT
  19. 19. Local Community Stakeholders Employees Investors Suppliers Stakeholder Engagement Cairn India has various categories of stakeholders, owing to the size and nature of the organisation. Our stakeholder group mainly comprises of our employees, contractors, suppliers, customers, shareholders, local community, land owners, district administration, national and state government, regulatory bodies, industry associations, and media. Our interaction with them is fairly robust and is guided by our 3R principle – Respect, Relationships, and Responsibility. Many channels are available for these stakeholders to send us their feedback, complaints or even comments. Presently we have empowered our various functional groups to determine the stakeholders they need to engage with and the frequency of these engagements based on their specific functional and business needs. These engagements cover both formal and informal engagement process. Going forward, we plan to strengthen and formalise the stakeholder engagement process as part of the overall stakeholder management plan. Prioritizing our Stakeholders In 2013, we conducted a survey among our employees to identify the most important group of stakeholders for the company. These representatives ranked all our stakeholders on two main criteria – stakeholders’ influence on the company; our influence on them; at present and in the future. On the basis of this exercise, the depicted internal and external stakeholders were shortlisted. Engaging with our Stakeholders for Sustainability Contractors With a formal sustainability Shareholders framework at an early stage at Cairn India, we have made a conscious attempt to first engage with our employees in order to spread the awareness on sustainability issues within the organization. A companywide survey received over 500 responses to a pre-set questionnaire, which required the responder to rank each of the questions (covering the sustainability aspects as very important, important and not Cairn India’s 3R Principle important). The survey covered aspects across the economic, environmental, and social dimensions. Respect: Relationships: Responsibility: - Societies and - To understand our - Business ethics communities where we work - Laws and social norms of the countries where we work - Fundamental human rights CAIRN INDIA SUSTAINABILITY REPORT 2012-13 stakeholders potential impacts - Manage stakeholder expectations & relationships with communities - Third-party contractors - Towards staff, contractors, and communities - Revenue transparency - Climate change - Biodiversity
  20. 20. 36 Economic Aspects Environmental Aspects Social Aspects Materials usage Labour and workforce conditions Energy usage Health & Safety Environmental Compliance Training GHG emission Human Rights Indirect/Direct economic impacts on local Communities Materiality Diversity and Equal Opportunity Water consumption Economic performance Environmental Impact of Corruption Transportation Public Policy Biodiversity Product Responsibility Waste management Local Community Compliance to Laws The aim of the materiality analysis is to evaluate the organization’s performance on indicators across economic, environmental and social spheres. This process is an important step towards improving the sustainability performance The respondents were categorised into the following groups: of our company, and increasing • Issues identified by an employee engagement survey • Key sustainability issues pertinent to the global oil & gas • Sustainability issues identified sector by the Cairn India senior leadership The final list of material issues are presented in the figure below: disclosure and transparency for the benefit of our stakeholders. Employees Consultants Energy Security & Reserve Accretion The materiality analysis helps us Gender ascertain our current performance and construct a sustainable path for our future as an organization. Talent Management We held deliberations at the Environment Management highest management level with Management levels Site Corporate Overall the Sustainability Development Steering Committee attended by Water the CEO to understand what the key sustainability issues were for the company. The material issues finalised by the Sustainability Steering Committee were a The responses were collated and an in-house statistical tool was used to rank the issues. The results of the survey culmination of: Community Climate Change were presented to the senior management, Sustainability Steering Committee, and the CEO. Asset Security CAIRN INDIA SUSTAINABILITY REPORT 2012-13 OUR STAKEHOLDERS Worker Safety
  21. 21. Material Issues Employees Material Issues Leadership Material Issues Global Oil and Gas Sector Economic performance Economic performance Energy security Occupational health & safety Disposal of effluents Reserve accretion Compliance to environmental regulations Occupational health & safety Occupational health & safety Compliance to social regulations Compliance to social regulations Asset security Disposal of effluents Compliance to environmental regulations 38 Our Sustainability Goals 39 We recognize that addressing our material issues requires us to articulate and embed specific goals that will drive our sustainability performance. Waste management The Sustainability Steering Committee, in collaboration with our Water management term sustainability goals for Cairn India: Air Emissions Climate change Biodiversity functional departments has formalised the following short-to-medium- Local community engagement Local Community engagement Talent retention Sustainability Steering Committee Material Issues - Final List • Energy security & reserve accretion • Local community engagement • Occupational Health and Safety • Climate change • Asset security • Air emissions • Talent management • Greenbelt and Biodiversity • Water management The stakeholder engagement exercise conducted with our employees brought out a list of key material issues for the organization. We recognise that while there was a convergence on the issues between our employees and top management, there remain certain areas where we feel the need to further socialise the topics with our employees. The Steering committee has decided on a clear plan for socializing the idea of ‘Sustainability’ across the organization. In keeping with the principle of increasing rigour, we will expand our materiality analysis to include inputs from other key stakeholders as identified in the employment survey. This will be reported from the next reporting cycle. CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Our Materiality CAIRN INDIA SUSTAINABILITY REPORT 2012-13
  22. 22. Biodiversity & Greenbelt Development Water Management • Conserve water by improving reuse/recycling and efficient utilisation The operations department has taken ownership of this goal. • Contribute to the India’s Green cover through ‘Project Shrishti’ greenbelt development programme • Implement mangrove plantation programme and support Biodiversity conservation and prevent coastal erosion The land and greenbelt department has taken ownership of these goals. Talent Management Climate Change • Formulate Cairn India ‘Climate Change Strategy’ and socialize it among employees and contractors • Reduce Carbon Footprint of our production operation • Respect Diversity and work towards making Cairn India “Employer of Choice” • Build and develop on an enabling culture and continuously focus on organizational capability to ensure that the organisation is “built to last” The Human Resources department has taken ownership of these goals. • Pursue solar energy and energy efficiency initiatives at operating sites • Carry out Renewable Energy Opportunity Assessment Study to identify medium–term and long–term projects for implementation • New corporate office complex at Gurgaon to be designed to achieve LEED Commercial Interiors certification The renewable energy, projects, operations, and HSE department has taken ownership of these goals. Local Community Engagement Occupational Health & Safety • Implement awareness and audit programmes to build technical capability amongst employees and contractors on Process Safety Management and Asset Integrity • Maintain best in class HSE performance to ensure employee and community safety • Engage with global and national policy makers and practitioners on HSE and Sustainability issues and best practices The QHSE department has taken ownership of these goals. • Implement initiatives/programmes to drive Sustainability practices within our major contractors & Vendors • Influencing & building capability amongst local vendors on sustainability principles • Continue to support and implement programmes to deliver better heath for all in our operational areas • Progress on the vision – strive to achieve primary education for all rural children in our operational area • Implement farm based programmes that will improve the livelihoods of rural farmers and land contributors across our operational areas • Support initiatives that improve the quality of life through economic empowerment of communities, and development of community owned sustainable businesses by building local capacities and entrepreneurial talents The CSR department has taken ownership of these goals. Ethics, Transparency and Governance • Increase awareness on ethics & good governance principles amongst employees and contractors • Strengthen accountability and compliance to governance procedures through policy revisions and improved internal controls The Company Secretary’s department has taken ownership of these goals.
  23. 23. 43 Economic Sustainability Direct economic value generated (INR crores) Revenue Operating costs 3,693.30 Share of expenses from producing blocks, cess on crude oil, data acquisition, arbitration, royalty and production bonus. 103.25 Total monetary outflows for employees (current payments). Employee wages and benefits Control Room Facility, Mangala Processing Terminal, Barmer, Rajasthan a viable reserve base are keys Net sales plus revenues from financial investments and sale of assets. Economic value distributed (INR crores) Payments to providers of capital Strong financial performance and 18,560.39 to our economic sustainability. Towards this end, we have in place Payments to Government 654.97 Community Investments Economic Value Retained (INR crores) systems and process that help us 2,265.19 20.85 All financial payments made to the providers of the organization’s capital. Gross taxes. Voluntary contributions and investment of funds in the broader community (includes donations). 11,822.82 β:These numbers represent consolidated financials achieve financial viability as well as economic sustainability for the short term as well as long term. the Government of India, besides Our Economic Performance those provided to the sector in general. Energy Security & Reserve Accretion As an oil & gas major in India, we aim to continuously expand and consolidate our business in the Oil & gas sector meets a significant exploration and production of crude part of the global energy demand. oil and natural gas. At the end of March 2013, our gross production which mitigates the risk caused by equity per share, which along financial year. such fluctuations. We have robust with the dividend distribution tax Our company has exhibited a strong cash flows from the operating assets translated to 21.2% of Cairn India’s in Rajasthan, Ravva and Cambay. consolidated profit after tax. The This supports our growth plans as company fully redeemed the non- well as meets our needs for capital convertible debentures (NCD) expenditure. during the year. Dividend paid out to our equity We do not get any financial shareholders was INR 11.50 per assistance or specific benefits from was 19% higher than the previous balance sheet last year, despite significant volatility in the currency markets in the reporting year. Cairn India is actively involved in currency hedging through options, as per the Board approved policy, CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Economic sustainability Cairn India is the largest private crude oil producer in India and makes significant contribution towards achieving energy security by helping reduce dependence on oil imports. It currently operates over 25% of India’s crude oil production. A significant challenge for our company is to ensure continued availability of oil & natural gas. Cairn Advanced Visualisation Environment, Gurgaon, Haryana CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Economic sustainability
  24. 24. 44 45 The company has a multi-pronged strategy to maintain our oil reserves:(i) Increase yield from existing reservoirs using technologies Estimated Proven Reserves and Resources like Enhanced Oil Recovery Cairn India’s main assets are its oil (EOR) & gas reserves located in various (ii) Expand our exploration areas by securing licences to operate for new areas (iii) Form Joint Ventures and Partnerships to allow us access to more oil fields and reserves (iv) Retain high-quality talent so that they can drive efficiencies and extend the life of our existing reserves. In addition to securing our reserves, we are also mindful of our own energy consumption, thereby parts of India.3 The Company’s gross reserve estimates are based on forecast production profiles over the remaining life of the field, determined on an asset-by-asset State of the art seismic volumes reducing the subsurface uncertainty India Hydrocarbon Reserves and requirements of the Stock Exchange Resources Manual (2013)”, which is Board of India (SEBI). The internal consistent with the “SPE Petroleum report is also consistent with the Resources Management System requirements of the International (2007)”, the MoPNG “Resource Financial Reporting Standards Classification Guidelines (2006)”, (IFRS). SEC and FASB standards These internal estimates were the MoPNG “New Discovery have not been applied. prepared in accordance with the Notification Guidelines (2006)”, guidelines set out in the “Cairn and comply with the current basis, using appropriate petroleum engineering techniques. The Company’s net working interest in proven and probable reserves are as follows: making more natural gas available Proved and Probable (2P WI) Reserves for national consumption. During the reporting period we engaged with the Government along with our Joint Venture partner to permit the sale of excess natural gas from the Rajasthan Block and thereby achieve two pronged benefit of minimising the environmental impact due to reduction in flaring, and at the same time contributing to the energy demand of the country. The proposal is under consideration by the Government. CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Economic sustainability Type of Reserve Reserves as of 31 March, 2013 Proved and Probable (2P WI) Reserves (Developed) Proved and Probable (2P WI) Reserves (Undeveloped) Oil (mmstb) Gas (bscf) Oil (Mmstb) Gas (bscf) Oil (Mmstb) Gas (bscf) 279.57 18.58 182.38 17.17 97.19 1.41 mmstb: million stock barrel; bscf: billion standard cubic feet 3. Our resources are split into 3 main categories: (a) Reserves – Volumes of hydrocarbons to be commercially recoverable by application of a development project from a given date forward. These are categorised in terms of the level of uncertainty in the recoverable volume from Proved or 1P (most certain), Proved + Probable or 2P (Best Estimate), and Proved + Probable + Possible or 3P (least certain). (b) Contingent Resources – Volumes of hydrocarbons estimated to be recoverable from a discovered accumulation, but at which time are not considered commercially mature enough to be called reserves. (c) Prospective Resources – Volumes of hydrocarbons estimated to be recoverable from undiscovered accumulations CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Economic sustainability
  25. 25. 46 47 Case Study on India’s Energy Security ‘We are energy secure when we can supply lifeline energy to all our citizens irrespective of their ability to pay for it, as well as meet their effective demand for safe and convenient energy to satisfy their various needs at competitive prices, at all times, and with a prescribed confidence level, considering shocks and disruptions that can be The youth engagement programmes, organised four round table concerns on the issue of energy to be circulated with the relevant reasonably expected.’ –Integrated Amazing Champions of Energy discussions on the topics related security and how best to shape it ministries and the campuses. Energy Policy (2006). (ACE), is run under the aegis of to energy security and the role in the future. The key messages Project Amazing Minds. Under of hydrocarbons to engage with generated, were amplified through this programme, Cairn India took important bureaucrats, academics, engagement with national and the initiative to travel to different policymakers and media houses. regional media. A compendium The issue of India’s energy security and the role of hydrocarbons in the nation’s prosperity needed to be socialised amongst various target groups. Hence, Cairn India embarked on an engagement model (Project Amazing Minds) which aimed to raise awareness and issue recall regarding energy security college campuses across India to connect with the students and encourage them to be perceptive of the importance of energy security and its economic impact on our country. comprising youth connect as well as For the influencer connect influencer connect. initiatives, Cairn India also Genesis: For a developing country like India, it becomes very important to be energy secure. India is the fourth largest primary energy consumer, and with the expected growth rate of Indian economy, the energy demand is also set to grow. Energy Security, thus entails a complex set of coordinated initiatives, and the need for energy strategies, policies and regulations to be aligned in making specific choices for the country in charting a low-carbon and energysecure growth path. Given the strong dependency of Indian energy production on coal and considering that the coal supplies are stagnating, the importance of planning on energy security and looking for alternative resources becomes even more important. Cairn India envisioned the importance of the energy security for India and understood the challenge of developing awareness about this issue across various Campus Connect Initiatives -Amazing Champions of Energy (ACE) stakeholders. Through ACE, Cairn India provided a platform for the youth to voice their opinions and CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Economic sustainability Each round table discussion of the influencer connect initiative was followed by a white paper emanating from the deliberations. This was of the above deliberations was also adapted in the form of media documented and circulated among notes for publication. One composite key stakeholders. white paper was also prepared by The influencer connect involved PwC consisting of all the key issues discussions on a wide range of topics pertaining to the E&P (exploration concerning energy security– the and production) sector. policies, the technology, India’s Achievements: hydrocarbon potential and the economic benefits of reducing After its launch in early 2013, the dependence on foreign imports of project saw a phenomenal response energy. across campuses. More than 4,000 students replied to the teaser Methodology: questions which were posted on the Cairn India approached 12 social networking sites. The reach of management schools and the project was more than 208,000 engineering institutions for viewers. The institutes covered launching the case study ‘Amazing under this included some of the Champions of Energy’ competition leading management colleges (IIM and selected a campus champion Ahmedabad/Bangalore/Calcutta, (Team) from each of these institutes. XLRI Jamshedpur, ISB Hyderabad/ We also organised on-campus events Mohali) and some of the leading at each of the selected colleges. technical colleges (IIT Kharagpur/ The case study competition was supplemented with regular engagement activities on social Bombay/Delhi, ISM Dhanbad, PDPU Gandhinagar, UPES Dehradun, MIT Pune). networking websites. The The influencer connect round submissions were judged by a panel table discussions served its of jury members and best strategies purpose by creating an eco-system were awarded and appreciated of information generation and across campuses. The same is being exchange on India’s energy security compiled as part of a compendium in the form of press notes, white CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Economic sustainability
  26. 26. 48 papers, video content, and social media. The message amplified to reach smaller towns and cities through more than 40 regional 49 OIL AND GAS – rgy future The unsung heroes of India’s ene s energy of oil and gas could solve India’ Increased domestic production an energy-secure future. challenges and build by a lack of encourdetermined. This is compounded for a more proactive agement at the national level has undermined Inapproach to exploration, which media coverage in Rajasthan, dia’s E&P sector. of recoverable In 2011, India’s proven balance 9.04 billion barrels of oil reserves were reported at in an unimpresoil equivalent, placing the country However, according to sive 19th position worldwide. te General of Hya 2012 report by India’s Directora body charged with the drocarbons – the regulatory of India’s oil and gas promotion and management 2010-2011, 12% of resources – in the financial year unexplored, with India’s sedimentary basins remain explored”. In the a further 22% classed as “poorly India’s underdeveloped near future, production from is set to increase, as onshore and offshore fields potential. these are yet to realise their full Gujarat and Andhra Pradesh. Special delivery of the white paper was made to various key government and non government stakeholders and placed in the libraries of top business schools The Government of India must turn to its trusted partners and leverage their skills, expertise and technological capabilities and engineering colleges – IIMA, ISB, IIMB and UPES, ISM Dhanbad and PDPU Gandhinagar. This multi-pronged strategy, involving multiple partners and leveraging their associations, helped to create the ripple effect of information eco-system on energy security. Way Forward: Observing the overwhelming response to the campaign and results achieved as per the expectation, Cairn India plans to continue this project and further its outreach. valuable Oil is one of humanity’s most fuel transport, commodities. Not only does it nts in its derivatives are key compone , plastics, the manufacturing of fertilizer a whole host pharmaceuticals, textiles and is industrial products. This view of other are supported by the EIU: “Oil products petrochemicals dominant in the chemicals and energy its sub-sector, providing 94% of nt, requirement. Transport equipme also rely machinery, and mining and quarrying entirely on oil products.” Simply put, today’s world cannot without oil. C India is now the world’s fourth largest consumer of oil and the world’s fifth largest oil importer survive THE ECONOMIC INDIA’S GAS MARKET OIL rs Today, India’s largest consume of natural gas are the nation’s power sector, fertilizer industry, and liquefied petroleum gas (LPG) market. All three are critical components of the Indian economy, with LPG becoming more significant as domestic cooking and heating moves from the use of wood biomass to gas. However , only 22% of the nation’s sedimen tary basins are deemed to be “modera tely to wellexplored ” by India’s Director ate General of Hydroca rbons. Hence, the probabil ity of future gas discover ies remains strong. 100 85 0 13 C M Y M 0 0 0 100 ADVERTORIAL & PROMOTIONA sponsored by 100 85 0 13 C M Y M L FEATURE Norway and Brazil: National models T CHANGES LIVES T C M Y M >> pg 27 2013 Why Indian states must grow their hydrocarbons ind ustry Being gas import-reliant carries on similar challenges to a reliance long-term imported oil: both short- and riced than supplies are significantly higher-p domestically produced fuel. C M Y M FEBRUARY 28, wo nations that demonstrate the advan tages for both the state and its peopl developing dome e of stic hydrocarbon industries are Norwa y and Brazil. Despi te their vast geographica l differences, during late-1960s and early-1970s Norwa the y, Brazil and India harbo ured similar marke t traits. However, Norwa “Increased oil and y and Brazil took a very difgas producferent approach to India when it tion could pote came to their oil and gas ntially lift milsectors. lions of people "Norway and Brazil out of poverty” have set an examp for India's E&P le sector by not only being sufficient in their India's energy future. hydrocarbon quest, selfalso commandin "It but mulate holistic policie is vital for India to forg a place of respec t in global E&P sector s that will encou rage vestment in energy ," claimed the PwC the infrastructure, create instudy. In particular, the strategic energy a report stressed mix, and promo the importance of Norwa te coordination between the y's decision to provid central and state favourable conce e governments so that the ssion agreements country's energy to eign companies supply will be able to match with no mandatory forits economic growth participation. It state also noted the aspirations," said the report establish. ment of its nation al oil company, The EIU report went Statoil, which today opera on to cite govern procrastination over ment tes independen tly of the E&P approvals as Norwegian govern a major obstacle to the advan ment. Finally, it highlighted how Norwa cement of India's gas sector. Both oil and y's hydrocarbon local and interna s sector operates within tional media have also pinpoi the nation's highly nted the Govern robust industrial frame ment of work. India's lack of long-te rm strategy and "Norway's nation its discouragement of alistic ambitions private investment beyond amassing spread as contributing factors a greater fiscal to the nation's lagging share in production or impos E&P sector. ing more taxes on foreign companies. It entailed within This combination this a vimeans India's oil sion to expand the role of Norwe and gas production falls way short of its potent gian oil sector by creatin ial. As a result of this, so g a new indust does its socio-econom rial sector," said the PwC report standing. For examp ic . Today, Norway's le, to date 73 billion sector is the sole oil rels of oil and oil contributor to the barequivalent gas has nation's sovereign wealth been established in India, fund, which is the out of 205 billion largest and mana world's barrels of prognosticated ges Norway's state hydrocarbon resour sions. pences. Thus, around 132 billion he University of barrels of progno Brazil, on the other Oxford published sticated hydrocarbon resour hand, focused a white paper in RISING OIL, RISIN ces are in a 'yet to gressively growi on ag2011 entitled Oil G REVENUES find' catng its E&P sector egory; this repres Revenues and Thankfully, times ents a vast untapp during the 1970s. Following Economic per cent in 2009. have changed. As ed potential that could be an initial mono During the financ Development: a result of increased oil and used to fuel the polisation of the hydrocarbon ial year The Case of (FY) 2009-10, the gas production, nation's future growth. Rajasthan, India. s sector by its nation state produced Rajasthan today is a differe oil company, Petrob The paper exami just 448 kilo al tonnes per annum nt state. Successful ned the However, given economic climat ras, Brazil later (KTPA exploration for oil and the sheer size and opened e of the northw up to foreign partici Rs 148 crore in revenu ) of oil with around gas has transformed depth estern state gion India's hydrocarbon of Rajasthan and pants and emba es paid to the excheq the reinto one of great reserves, were produ of upon a programme rked identified areas uer. A year later economic promi to take place the of Indian ction society that could in FY 2010-11, Rajast of internal reform pointed out by 2012 se, as results could see speed up oil and benefit from increa s. To han produced 5,149 KTPA much greater gas production, domestic oil revenu sed with around Rs PricewaterhouseCo the Brazilian federa 1,858 crore cio-eco investment in the fundamentals es. paid to the excheq opers (PwC) white l government gradu of soResearch for this uer. PwC estima nomic developmen It's our turn now paper: FY 2012-1 ally removed restrictions project commenced t, such as educa - E&P partnership 3 these figures would ted that for tion, healthcare, late 2009, an excitin on foreign partici in for energy security. infrastructure and reach 9,872 in exploring Brazili pation g time in India's KTPA and Rs 5,449 employment. As the PwC an ration and produ explocrore respectively, The PwC white report points out: pendent oil regula oil assets. An indection (E&P) sector a yearon-year increase paper argues India's "Factors such as regulatory tory agency was as Rajasthan had of between 40 per mestic upstream dopolicies and marke just begun largealso established, and cent and 100 per cent over indust this model has scale prot determinants are among duction of oil. Howe the last three years. improving the nation ry is capable of both since been the primary agents successfully adopt ver, the state had Of even greater 's energy securit change in the E&P of ed by countries to benefit from as yet and simult significance is the y crisis landscape and some such as its newfound oil Angola and Colom contribu- tions aneously enhan tion these oil revenu and the renabia that are develo port duly highlig cing the country's have demonstrate es make to Rajast hted the poten their own dome ping economy. As the han's tial sociobe aligned and made d that these factors can stic energy indust economic growt PwC study points ries. h of Rajasthan. "Brazil's examp complementary out, the state's revenue le highlights the ture." in nadeficit had been "Rajasthan is a importance worsening of a persistent relatively poor since mid-FY 2007-0 attitude with which state...It has a population 8. Yet, upon increa reforms are implemente of 68.6 million production, this people of d," said which 15 million trend reversed itself sed oil OIL CHANGES LIVES (22 Increased oil produ the PwC study. and by FY As demo 2010-11 oil produ the national pover per cent) live below ction had helped nstrated by Norwa “As a result of incre of growth as Brazil' ction was a key driver ty line...Corresp transform crease Rajasthan into a y and Brazil, inased oil ondingly, s economy rose it has a lower level revenue surplus d oil and gas produ from being ranked 61st state. of human develo and gas productio ction The benefi in 1970 in terms than India as a pment n, Rajasthan sive. Betwe ts to society were equally impres- socio-economic rise of a nation.influences the whole," the study of nominal GDP to being Both nation today is a state have shown en said. It the sixth in the went on to conclu world today. Millions have with great eco- trict of Barmer 2006-07 and 2009-10, the dis- have extrem that properly handled E&P can s de that, "Given these low nom risen out of pover saw over 50 per levels of econo ely beneficial results mic and human ic promise” cent increase the country now ty and in Upper primar , with the revdevelopenues generated houses one of ment, effectively-sp y and secondary the world's positively impac largest middle-clas schools and ent resource revenu school enrolment ting the whole of society s populations, could have a signifi grew by 107 per es economic status. . supported by state-sponso cant impact on cent. In Rajasthan, the Using Rajasthan In India too, increa the welred healthcare, fare of Rajasthan's 'before and after' as a case study, the paper sed production developed world infrast citizens." scenario bons clearly indicates contends that the of hydrocarructure and educa has helped impro a clear link betwe The state's public state was: "Not on the map institutions that tion ve peoples' lives. en oil proinfrastructure, includ duction and the However, there are on par with energy, telecommun socio-economic ing states till recent of petroleum-producing must be a policy those of the West. developications and transment of a region ly when, in 2009framew that is conducive portation netwo . For Indian policym 10, it started producing crude to India's E&P sector ork rks, was severe akers and tion's oil and gas compa oil from the Barme ly underdeif the naveloped. Its vast enormous oil and nies r district (of Rajasthan) follow labour force was gas resources are there for potentially alike, the signs are ing the discovery be effectively access a largely to underused resour fruitful partnerships 2004." in ed. Legislation that ce. oil and gas E&P, over encourages foreign further a whole was runnin Added to this, India as with resultant positiv However, Rajast participation and g a high trade deficit e results for regional and han partnership would drive amplified by a national socio-econo , presented to it with seized the opportunity velopm the growth of India's weakening rupee mic deent. the discovery and hydrocarbon sector - and and increasing energ ploitation of hydroc exy impor the nation's econo arbon reserves. growth and develo mic the economic outloo ts, which dampened Within a period of just 12 pment. k of all Indian states A NATIONWIDE months, Rajasthan It may be challen including Rajast PROBLEM , moved from producing ging, but increased han. Despite Rajasthan's less than one per oil and gas production could rise in oil produ cent of India's total oil produ potentially lift million ction, and people select examples ction in 2008 to s of from other states, out of poverty. The over 10 India's E&P to activities over the opportunity is there bring India the econo last few years have mic prosperity the slowed tion fully deserv naes - and India must seize it. d to both This rise in imports is attribute a significant falling domestic supply and g to the IEA, increase in demand. Accordin triple by 2035 India’s gas consumption will in the power due to consumption growth energysector. Natural gas is a more fuel than coal, as well as being intense more environmentally friendly. India must therefore employ a two-pronged approach to its gas market. First, its current government must modify its make it more pricing structure in order to . These can attractive for private investors and capabilities bring experience, expertise hip to bear, creating a win-win partners sectors. between the public and private E&P activities And second, it must intensify nation’s the in order to move away from and thus make reliance on foreign imports India more energy secure. TIMES, THURSDAY, down. In those Indian states, such as Rajasthan, where increased hydroc arbons production has taken place, people have seen real, sustainable improvements to their quality of life. However, oil and gas produ ction across the nation is hinder ed by slow decisio n-making. This is due to the involvement of multiple government agenci es with inconsistenci siding between es recentral and state authorities. This institutional failing was recogn ised in a 2012 Economist Intelligence Unit (EIU) entitled Empow ering growth - Perspe report, ctives on maturing fields Gas production from India’s of the is starting to stagnate, as many levels of gas nation’s fields house lower According than was previously thought. Ministry of to data published by India’s imports Petroleum and Natural Gas, gas accounted for 28% of the nation’s is expected to supply in 2011, and this figure to 37% by 2020. increase currently hinEnergy imports are also secure. Opening forefront of making India energy . The Governhave the potential to be at the Energy secure: Offshore rigs dering the nation’s economy to securing this. billions of dolprivate enterprise could be key ment of India currently spends IEA eted subsidies, which the 40% by lars on non-targ nation’s oil needs would rise ill afford. During the fiand gas pro- predicted the in claims the nation can alls to increase domestic oil has only become more acute of India’s trade of late. 2020 and this need nancial year 2011-2012, 54% duction in India have been frequent at the Planning Commisecon- recent years. Speaking which stood at US$189.9 billion cs and India’s devel- deficit – International bodies, academi the institution that formulates imports. Because gas community it- sion – Singh − was due to oil omists, as well as the oil and l Five-Year Plans – Prime Minister deficit, the rupee their concerns over opmenta that we of such a high self, have unanimously voiced is vital for our energy security d, inflation soared and this will have not stated: “It n and also increase weakene increased imports and the effect domestic productio althere was a drawdown of security, but also on increase only on India’s future energy energy efficiency.” billion in India’s n would not only most US$13 the nation’s economy. Increased domestic oil productio e reserves. d by a new reit would also foreign exchang This stance was recently supporte country more energy secure, According to the PwC Intelligence Unit make the st Acport published by the Economi t macroeconomic benefits too. events could – Perspectives on offer significan by Price- report, these (EIU), titled Empowering Growth to a recently published white paper Inof essays from prom- cording – have been avoided had India’s energy future, a collection rs (PwC), titled It’s our turn now additional 17 and academia. waterhouseCoope had the dia produced an inent figures from research, industry ips for India’s energy security, million tonnes of oil domestiility of India’s energy E&P partnersh 169.7 million tonnes of oil it The report exposed the vulnerab not imported the in India’s Government of India nation 6.5% high- cally. This increase security and suggested that the India’s GDP would have been n would arsector to enable did in 2011, the report, domestic productio roll out reforms across the energy Not importing this oil, claims currency depreciation, contain foreign participa- er in 2012. domestic energy sec- rest robust decision-making, increased bill – would have also meant India’s inflation and reduce the import pricing. nal ent tion and competitive internatio 9.4 million person years of employm GDP. far in addressing tor providing and tax- resulting in a higher Such reforms will only go so n and decrease period of 20 years. Through royalties To increase domestic productio es. As the EIU points over a have been between India’s energy security challeng ent must first ingovernment revenues would is highly diverse. es, oil imports, the Indian governm out, the country’s energy sector and US$20 billion higher. e foreign for 70% of India’s US$8 billion troduce reforms that encourag Although coal currently accounts tion. In and private sector participa n is currently lagging electricity, domestic productio addition, it must turn to its trusted Coal found in India is behind the country’s needs. international partners to leverage be poor and high-ash, also widely acknowledged to imports. Alternatheir skills, expertise and techcoal forcing India to increase its solutions, but nological capabilities. tive fuel sources could offer potential . Possible althese too face significant obstacles TOWARDS le energy and nuclear ternatives, such as renewab ENERGY SECURITY need for large upfront power, are constrained by the s As India’s economy continue opposition and geoinvestment, as well as public to grow, so will its need for ts. graphical constrain alternaproduction of oil and gas of re- energy security. While to a lack Increased domestic India’s high imports are not due solution to India’s tive forms of energy in the form − but more as appears to be the most viable – as some incorrectly assume energy and nuclear infrastructure needed sources have signifi- of renewable growing energy needs. The policies and procedures that t obin place, and the a result of power look attractive, significan to extract hydrocarbons is already slowed domestic production. ad implementation fields remains high. cantly t hydro- stacles to widespre probability of discovering new is potentially sitting on significan future of India’s India production (E&P) of these sectors remain. The Multinational exploration and but reduced exploration activities resources, as well as the economic, geopoliti ss knowledge and carbon to be properly energy security, companies, with their world-cla from it, therefore their size and scope has yet cal and social stability that stems placed to fully harness means technical expertise, are well production of oil points towards increased domestic s. These companies also India’s oil and gas resource and gas. new ways of addresssedimentary bring innovative thinking and bons sector Status of exploration of Indian Challenges in the nation’s hydrocar which is greatly needing India’s energy challenges, basins, FY 2010-2011 ntable. Increased do exist. Yet, they are not insurmou is to be secured. ed if the country’s energy future nts in the nation’s domestic production and investme worries about India’s E&P sector will not only ease THE ECONOMIC BENEFITS OF reduce the nation’s CTION future energy security, but also INCREASED DOMESTIC OIL PRODUn of over rupee on the intertrade deficit and rejuvenate the and populatio India’s burgeoning economy 22% Poorly explored national foreign exchange market. exceptionally high demand. 1.2 billion has created bidding round for In the next NELP round – the accounts for around Currently, transportation fuel Government 12% Unexplored gas exploration blocks – the other major oil and tion, with 50% of domestic oil consump ns on foreign and power genof India must further relax restrictio users including agriculture, industry national and international generators have also 22% Moderately to participation so that eration. Diesel-run electricity to the nation’s most well explored companies have full access due to the nation’s become increasingly common bring its pricing promising plays. It must also result, demand for oil unreliable power supply. As a 44% Exploration rates, otherwise mechanisms in line with global last two decades: Ininitiated has rapidly increased over the g adequate levels India will fall short of attractin fourth largest consumer of oil dia is now the world’s required to grow its of foreign investment that are oil importer, as per the and the world’s fifth largest kers must act Energy. energy sector. The nation’s policyma 2012 BP Statistical Review of World journey towards 80% of its oil now in order to fast-track India’s Currently, India imports around future energy security. ge showing little sign Hydrocarbons demand, with this percenta Source: Directorate General of Manmohan Singh of cooling. India’s Prime Minister the oil and gas sector to CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Economic sustainability THE IMPORTANCE OF OIL TO THE GLOBAL ECONOMY 0 0 0 100 ADVERTORIAL CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Economic sustainability
  27. 27. 50 51 Environmental Sustainability of applicable IFC Performance Standards on Environment and Social Sustainability. Cairn India approaches the management of environmental issues through an organizational structure at the corporate level, and as an embedded function at the Cairn India has always had a strong focus on HSE excellence including environment stewardship. This has been achieved through our HSE policy and associated procedures which focus on Health, Safety and Environment of our people and operations across the entire organization. We take pride in strict enforcement of all our HSE policies and practices. Since the nature of our business, has high probability of HSE incidents, we mandate our HSE practices as non-negotiable and these have to be adhered to at all times by all employees, contractors and visitors at our premises. All our production operation facilities, including the crude oil evacuation pipeline CAIRN INDIA SUSTAINABILITY REPORT 2012-13 Thumbli Reservoir, Barmer, Rajasthan operational assets. The corporate implement a robust Environment Management System (EMS) certified to the ISO 14001:2004 International Standards. In addition our production operations at Ravva and Suvali are certified to Occupational Health and Safety Assessment System (OHSAS 18001) and work is in progress to implement the same in our Rajasthan operations. We also adhere to the requirements environmental group is responsible for advisory and strategic directions liabilities through the following Cairn India has always had a strong focus on HSE excellence including environment stewardship. Since the nature of our business, has high probability of HSE incidents, we mandate our HSE practices as non-negotiable. is also responsible for monitoring parameters to internal and external stakeholders. The embed functionaries at the operational assets are responsible towards dayto-day environmental management • Environment Impact Assessment Studies carried out by independent expert agencies to identify risks, and develop appropriate environment & social management & monitoring plans • Bi-annual audit by External Compliance Monitoring Group for environmental performance. It and reporting on performance means: • Integrated HSE audit carried Director QHSE has the overall responsibility for overseeing the environmental management for the company and is a member of Sustainability Steering Committee. and compliance requirements and Cairn India regularly identifies and are a part of the operations team. assesses environmental risks and out by an independent internal audit team • Hazard Identification (HAZID), Hazard Operability (HAZOP) and Project HSE Review (PHSER) are carried out as part of designing and establishing any new project CAIRN INDIA SUSTAINABILITY REPORT 2012-13
  28. 28. 52 53 or carrying out any major water is a part of the gamut of by the company’s operations. With aquifer (Thumbli Aquifer), the modification natural resources, we require, we the availability of fresh water to the total extracted volume will be less also realise it is essential for the local communities in and around than 1% of the total subsurface sustenance of local communities Barmer from the Indira Gandhi reservoir volume. Our unit at Ravva and the ecology. Cairn India believes canal, the dependency on the extracts saline groundwater for that detailed Environmental Impact groundwater for potable use has its operations through bore wells. Assessments (EIA) and other significantly reduced. The Suvali facility is located in • Compliance to the Gated process during the project life-cycle • Deliberations of the Risk Management Committees The findings/risks emerging from above are mitigated through appropriate corrective and preventive actions based on the principle ‘Design & Operate for Environment’. Water Footprint Oil recovery with water injection in an environmentally responsible manner • Optimal extraction of saline water resources for pressure maintenance • Re-injection of treated produced water related environmental studies, conducted early in the project cycle, help identify the environmental and social risks and are vital to the development of effective Environmental & Social Impact Management Plans (ESMP). We strive to reduce our consumption of such resources and to design our We have the requisite permission reuse or recycling of resources is to draw water from the above carried out to the greatest extent possible. Our objective is to conserve water by improving reuse/recycling & gas sector is an important At Cairn India, we try and minimize water demand primarily from saline our impact on local freshwater groundwater aquifer with Total resources. The water sources that Dissolved Solids (TDS) more than we extract from are modelled 5,000 milligrams/litre (mg/l). In and monitored after necessary terms of volume of water extracted approvals have been taken from the from the source, our extraction regulatory authorities before any is an insignificant amount of the extraction is done. These measures total reservoir volume. In the ensure that access to freshwater for lifetime of Cairn India’s extraction the local population is not disturbed of water from this groundwater of exploration and production activities. If not responsibly managed the on-shore operations can pose a risk on the availability of water for the local communities and also the flora and fauna. Further, the operational discharge has the potential to contaminate the quality of water and thereby cause health sources. The consumption of water is measured through water meters and reported to the concerned The water footprint of the oil consumption is an integral part supplied to us by Gujarat Industrial Development Corporation (GIDC). operations in such a manner that Sources and withdrawal of water environmental concern since its the industrial belt and water is and efficient utilisation. authorities. The Rajasthan Asset sources its The bulk of the water required in upstream processing terminal is for injecting back into the reservoir, as oil-replacement water. This is done to maintain the reservoir pressure. This process is called re-injection of water. The re-injected water generally comprises of additional water sourced for injection (water to replace the oil volume extracted) and the produced water removed concerns to the local communities Water Source and disrupt local biodiversity. Groundwater (Saline) 14,037,439 Groundwater (Fresh) 98,995 Cairn India has implemented a Total water consumption in 2012-13 (cubic meter) comprehensive plan to ensure Surface Water Nil that none of the above issues are Rain Water Nil faced by the communities in and near the operational area due to Municipal Supply 31,466 the company’s operations. While, CAIRN INDIA SUSTAINABILITY REPORT 2012-13 ENVIRONMENTAL SUSTAINABILITY CAIRN INDIA SUSTAINABILITY REPORT 2012-13 ENVIRONMENTAL SUSTAINABILITY

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