preliminary modern slavery statement · the key drivers and root causes behind modern slavery will...
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P R E L I M I N A R Y M O D E R N S L A V E R Y S T A T E M E N T 2 0 1 8
R I S I N G T O T H E C H A L L E N G E
PRELIMINARY MODERN SLAVERY STATEMENT 2018
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D I S C L O S U R E N O T E
This voluntary statement is intended
to meet the intent and future disclosure
requirements of the Australian Commonwealth
Modern Slavery Act 2018.
This statement has been made on behalf of
Oil Search Limited. This Statement covers all
entities within the Oil Search Limited group
structure - see p 146 of Oil Search’s 2018
Annual Report for a listing of all entities.
Each one is covered by Oil Search policies,
procedures and systems, including those
relating to contracting, purchasing and human
resources. Oil Search Foundation Limited is
Trustee of the Oil Search Foundation Trust,
a not-for-profit organisation established for
charitable purposes in PNG. The Trust is not
controlled by Oil Search but by its own Board.
The modern slavery risks and impacts
associated with projects which we do not
operate, such as PNG LNG and Papua LNG,
are not included in this Statement. We do
however regularly engage with joint venture
partners and operators on key issues affecting
project outcomes, including human rights.
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C O N T E N T S
LETTER FROM THE CHAIR AND MD 2
WHO WE ARE 4
OUR SUPPLY CHAIN 5
OUR COMMITMENT 6
MODERN SLAVERY RISKS AND IMPACTS 8
ASSESSING AND MANAGING RISKS AND IMPACTS 8
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C H A I R A N D M DL E T T E R F R O M T H E
Modern slavery is a human rights issue that impacts millions of people globally. In some regions it is so widespread and
entrenched that it will require a concerted, collaborative effort over many years to address it. Oil Search welcomes the opportunity to help raise awareness of this issue and communicate the steps that we are taking to assist with
addressing this corrosive global phenomenon through the publication of our first annual Modern Slavery Statement.
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We have issued this Statement — which has been approved by the Oil Search Board Health Safety and Sustainability Committee — as part of the Company’s preparations for our new reporting obligations under the Australian Modern Slavery Act which came into effect on 1 January 2019. We have chosen to publish this statement in advance of our regulatory obligation to demonstrate our commitment and communicate the steps that we have already undertaken.
Oil Search’s commitment to advancing human rights is longstanding and underpins our sustainable development approach in Papua New Guinea. Since 2014, when we undertook our first Company-wide due diligence exercise in accordance with the UN Guiding Principles for Business and Human Rights, we have had comprehensive workplans in place.
During 2018, we appointed a responsible supply chain lead and conducted an initial screening of all our operations and supply chains to better understand potential modern
slavery risks or impacts. In PNG, modern slavery was identified as a higher risk in areas such as logging, fishing, agriculture, tourism, construction, domestic service and commercial sex work. Oil Search has identified some potential areas of vulnerability to modern slavery risks and impacts relevant to our operations and is planning further work to verify, improve visibility of and manage these areas in 2019. This work will have dedicated resourcing and governance to ensure a consistent and holistic approach across the Group.
Tackling this issue is a challenging and evolving process. Success requires collaboration – with our supply chain partners, joint venture partners, industry, governments and civil society - transparency and a shared commitment to resilience and encouraging progress. Disclosure of the findings of such important and complex yet emotive work, requires leadership and courage from business and a genuine commitment from civil society to acknowledge
and support business efforts to uncover and eliminate modern slavery when incidents are identified. As always, we welcome feedback and engagement on our approach.
Richard Lee, AM CHAIRMAN March 2018
Peter Botten MANAGING DIRECTOR March 2018
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Oil Search Ltd is a Papua New Guinean (PNG) oil and gas company. We operate all PNG’s producing oil fields, hold an
extensive PNG oil and gas appraisal and exploration portfolio, and have interests in PNG LNG (operated by ExxonMobil PNG
Limited) and several major undeveloped gas fields in PNG. During 2018 we acquired a significant number of leases on the Alaskan North Slope, including the Pikka unit which Oil
Search operates and where we are undertaking a promising oil appraisal and drilling programme and are aiming to
commence production in late 2023.
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Our assets in PNG are located in Southern Highlands, Hela and Gulf Provinces and offshore in the Gulf of Papua. In Alaska, our assets are in the Alaskan North Slope area. Our head office is in Port Moresby, and we have other offices in Sydney, Tokyo, Anchorage and Abu Dhabi.
Most of the crude oil and natural gas we produce in PNG is sold into the Asia Pacific region. Our customers include integrated oil companies, refiners and commodity trading organisations.
The Company’s vision is to generate top quartile returns for shareholders through excellence in socially responsible oil and gas exploration and production. We achieve this by pursuing seven value-creating strategies, including optimising the value of our existing oil and gas assets, optimising commercial integration for LNG, exploring and appraising high-value accumulations, developing options for material growth, promoting a stable operating environment in PNG, optimising capital and liquidity management and enhancing our organisational capability to deliver.
The Company’s operating model includes three business units: LNG/ Gas, Alaska and PNG Operations. These are supported by functional centres of expertise and capability as well as specialist teams dedicated to special projects. Our governance and assurance processes are defined in our policies and procedures, to ensure all work is conducted in accordance with our performance requirements.
OUR SUPPLY CHAIN
As an oil and gas company, our supply chain is predominantly made up of large international oil and gas field engineering, construction and technical services companies, logistics and aviation services, large and small manufacturing companies, specialist consultancies and employment agencies. Most suppliers work with us under multi-year agreements.
In 2018, we worked directly with approximately 2,500 goods and services providers. Of these, around 50% were based in PNG, 40%
25.21 MMBOETOTA L N E T A N N UA L
P R O D U C T I O N
US$1,536 MTOTA L R E V E N U E
PNG US AUS OTHER
877 63 317 6N U M B E R O F E M P LOY E E S
BY CO U N T RY
9 %E M P LOY E E T U R N OV E R
~2,500 S U P P L I E R S U S E D
US$248 M S U P P L I E R S P E N D I N P N G
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in Australia and 5% in the USA. The remainder were from Asia, New Zealand, the UK and Europe.
In PNG and Australia, about 95% of our contracting spend in 2018 was with 82 companies. They provided labour and technical services relating to drilling, exploration, subsurface, production, maintenance and engineering.
In terms of goods or products, almost 80% of our direct spend with goods providers was with 50 companies, mostly large manufacturing companies or technical service providers supplying equipment from Australia, Singapore and the USA. Our largest product categories included maintenance spares, tubing and casing, fuel, production chemicals, and drilling, process and wellhead equipment.
In Alaska, we partnered with 79 suppliers who provided drilling, subsurface, arctic logistics and engineering services related to appraisal drilling of our assets on the North Slope. Of these, 65% (or 78% of the contracted spend) were Alaska based companies and the remainder were based elsewhere in the US.
Promoting the inclusion and development of local business is a key principle underpinning our contracting and procurement strategies. We have purchasing guidelines in place and seek opportunities to work with other suppliers to apply the same principles in their supply chain.
In both Alaska and PNG, the Company has direct contractual relationships with several businesses established by members of local communities. Alaska Native Corporations and PNG Landowner Companies (Lancos) provide many core services to Oil Search including drilling support, security, camp management, catering, ice roads, general maintenance and transportation. PNG Lancos are often established to service the extractive industry specifically. They have a community-based shareholding structure meaning they are a valuable source of income as well as employment to members of host communities in PNG. Their success is a sustainable development priority for Oil Search in PNG.
OUR COMMITMENT
Respect for human rights— including modern slavery — and the desire to do no harm is a fundamental underpinning aspect of Oil Search’s commitment to responsible business practices and sustainable development. These elements of our approach to operating responsibly, build the mutual trust and respect with stakeholders we require to maintain a stable operating environment and support the Company’s long-term value creation. This commitment is reflected in the Oil Search Code of Conduct, Social Responsibility Policy and supporting procedures, as well as our human rights, responsible supply chain and sustainable development workplans.
The Board Health, Safety and Sustainability Committee oversees all aspects of the Company’s social responsibility performance, including human rights and modern slavery with material matters reported to the Board.
In 2019, we will further strengthen our oversight by establishing a Responsible Supply Chain Steering Group and supporting Working Groups. These groups will be made up of members of the Company’s senior management team, senior procurement and contracting staff in PNG, Alaska and Sydney, and relevant subject matter experts. They will be responsible for the direction and delivery of the responsible supply chain workplan, and for developing our approach to monitoring how effective the workplan actions are at identifying and minimising modern slavery risks.
During 2018, Oil Search participated in the annual Global Compact Network Australia (GCNA) Australian Dialogue on Business and Human Rights and joined the GCNA Modern Slavery Community of Practice, which commenced and met twice in 2018. We also continued our active participation in the IPIECA Social Responsibility, Human Rights and Supply Chain Working Groups. These forums provide us with a valuable opportunity to discuss human rights, modern slavery and supply chain challenges with our peers and others, as well as to contribute to tools and guidance.
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The key drivers and root causes behind modern slavery will always be context-specific, necessitating a specific analysis for countries,
sectors, services and products. There are however, some common factors that make workers more vulnerable including: poverty and
inequality; discrimination (including against women, minorities, youth and migrants); conflicts and humanitarian crises; criminality and
corruption; geographic isolation; illiteracy and inadequate education.
M O D E R N S L AV E R Y R I S K S A N D I M PA C T S
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In 2018, we commenced an update to our Company-wide Human Rights Risk and Impact Assessment and conducted a desk-top modern slavery risk review. The key modern slavery issues in PNG are found in the logging, construction, mining, fishing, agriculture, tourism and hospitality, domestic worker and commercial sex work sectors. This sector vulnerability is also present in Australia and Alaska although to a much lesser degree. The Global Slavery Index ranked PNG in the top 10 countries in Asia and the Pacific for vulnerability to slavery. It is also where the Company has the greatest and most diverse business activity.
Underlying areas of potential vulnerability relevant to Company operations identified by the desk-top modern slavery risk review included:
� Outsourced services, such as construction, cleaning, catering, maintenance and facility management in all our countries of operation.
� Sourcing goods in PNG, predominantly in primary and plantation agriculture, seafood supply chains and logging supply chains.
� Use of domestic workers by expatriate staff in PNG and UAE.
In 2019, we will work with our suppliers to better understand and explore risks in these areas.
ASSESSING AND MANAGING RISKS AND IMPACTS
Oil Search’s ability to manage ethical, environmental and human rights considerations within our business and supply chain is an important risk management and responsible business consideration.
Our contractors are required to act in a safe and responsible manner that aligns with our standards around integrity, personal safety, environmental protection and good governance.
Targeted internal audits provide a level of risk-based assurance on the effectiveness of controls we use to manage safety and broader regulatory compliance risks associated with contracted services.
We also have in place a number of people management policies and procedures which include recruitment and selection, diversity, training and development and workforce management.
ACTIVITIES IN 2018During 2018 we took key steps towards development of a risk-based responsible supply chain approach.
In July, the Oil Search HSS Committee endorsed a high-level Responsible Supply Chain strategy. This strategy was grounded in the UN Guiding Principles for Business and Human Rights and promotes a holistic, integrated approach to responsible supply chain management. A responsible supply chain lead was appointed, and in
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2019 a cross-functional governance structure will be established to support coordinated delivery across the business.
The focus in 2018 was to strengthen our understanding of the potential human rights and modern slavery risks and impacts of our activities and our supply chain. We undertook several key activities with external assistance from an international labour and human rights specialist. These activities are progressing and are intended to ensure we have a robust and informed foundation to prioritise and direct our efforts to where it will matter most.
These activities included:
� Commenced an update to our Company-wide Human Rights Risk Assessment. This process is taking a more comprehensive look at the human rights risks and impacts associated with each type of Company activity and associated supply chain, including those associated with our power business and public infrastructure work in PNG, and current and planned activities in our Alaskan operations.
� Commenced a desk-based review of the potential modern slavery risks and impacts. The review covers Oil Search’s operations and supply chain in PNG and Alaska and our office-based presence in Australia, United Arab Emirates (UAE) and Japan. It provides an additional level of due diligence around the activities and geographies identified in the Human Rights Risk and Impact Assessment as being the most likely to give rise to a significant risk of modern slavery. The initial findings are outlined under Modern slavery risks and impacts.
� High-level scan of responsible business risks posed by our use of PNG Landowner Companies (Lancos). This focused primarily on modern slavery and labour issues, but also considered other human rights issues, corruption, bribery and environmental management. No material issues of immediate concern were identified. However, some areas were identified for further investigation or improvement and will be addressed as part of our responsible supply chain workplan.
� Commenced a review of our existing grievance management practices and systems. The purpose of this review is to update our business requirements for the assessment, escalation, investigation, and remedy of community grievances, as well as needs for resources, training and tools. Having an accessible and effective grievance management process is a core principle of the UN Guiding Principles for Business and Human Rights and is fundamental to our stakeholder engagement and human rights risk management.
PLANNED ACTIVITIES FOR 2019
The results of our efforts during 2018 will inform several deliverables planned for 2019. These planned deliverables will further our understanding of the potential modern slavery risks and impacts in our supply chain, and clarify and agree performance expectations for ourselves and our suppliers across all responsible business risk areas including modern slavery. They will also assist us strengthen our management controls, particularly around those suppliers identified as being at higher risk in any responsible business risk area.
They include:
� Finalisation of the Human Rights Risk Assessment and the Grievance Management and System Review — start implementing the grievance system review findings.
� Supply chain mapping — agreeing a basis on which to categorise suppliers based on modern slavery and other elements of their responsible business risk profile and using targeted mechanisms to improve visibility over lower tiers in identified higher-risk areas of the supply chain.
� Agreeing expectations — reaffirming the Company’s position on modern slavery and other key responsible supply chain issues with all suppliers.
� Modern slavery awareness — improving awareness of modern slavery risk indicators among our procurement and contracting function and other employees throughout the business who manage supplier contracts.
� Embedding risk consideration — identifying steps in supply chain management system and processes into which consideration of modern slavery and other responsible business risks should be incorporated.
Embedding consideration of responsible business risks into our procurement and contracting processes will be an ongoing process. Once appropriate controls are in place, supporting monitoring and assurance aspects such as key performance indicators and audits, will be introduced to ensure we are effectively managing risks and impacts and learning continuously.
M O D E R N S L A V E R Y R I S K S A N D I M P A C T S
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AU ST R A L I A N CO M M O N W E A LT H M O D E R N S L AV E RY AC T ( 2 0 1 8 ) R E P O R T I N G R E Q U I R E M E N TS
ACT REPORTING REQUIREMENT STATEMENT REFERENCE
16.2.a Details of approval by the principals governing body of reporting entity INTRODUCTORY NOTE FROM CHAIR AND MD
16.1.a Identify the reporting entity Disclosure note DISCLOSURE NOTE
16.1.b Describe the structure, operations and supply chains of the reporting entityWHO WE ARE
OUR SUPPLY CHAIN
16.1.c Describe the risks of modern slavery practices in the operations and supply chains of the reporting entity, and any entities that the reporting entity owns or controls
MODERN SLAVERY RISKS AND IMPACTS
16.1.d Describe the actions taken by the reporting entity and any entity that the reporting entity owns or controls, to assess and address those risks, including due diligence and remediation processes
OUR COMMITMENT
MODERN SLAVERY RISKS AND IMPACTS
ASSESSING AND MANAGING RISKS AND IMPACTS
16.1.e Describe how the reporting entity assesses the effectiveness of such actions OUR COMMITMENT
16.1.f Describe the process of consultation with any entities that the reporting entity owns or controls
DISCLOSURE NOTE
16.1.g Any other information that the reporting entity, or the entity giving the statement considers relevant
OUR COMMITMENT
DISCLOSURE NOTE
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Enquiries and feedback on this reporting and peformance are welcome. Please contact the Oil Search social responsibility team on:
RISING TO THE CHALLENGE
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VPSHR Report Transparency Report Preliminary Modern Slavery Statement
Social Responsibility Microsite
Picture TBCTRANSPARENCY REPORT 2018
R I S I N G T O T H E C H A L L E N G E R I S I N G T O T H E C H A L L E N G E
R I S I N G T O T H E C H A L L E N G E
PRELIMINARY MODERN SLAVERY STATEMENT 2018
R I S I N G T O T H E C H A L L E N G E
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FO R F U R T H E R I N FO R M AT I O N V I S I T
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