3 men on ship

Contractor engagement

The relationships between Cairn and our contractors are paramount to a safe and efficient operation. Cairn has consistently engaged positively with all contractors to ensure our expectations are met in the delivery of the services provided. This proactive approach has proved invaluable to the shared collaborative delivery of our ongoing Senegal operations.

2015 has proved to be another extremely busy year for Cairn, with the planning and completion of a 2,292km2 seismic project in Senegal, and the planning and execution of an appraisal drilling campaign to assess the significant discoveries made in 2014, as well as the roll out of the Cairn Operating Standards and the revised Corporate Responsibility Management System (CRMS).

Contractor working hours on Cairn projects have dropped from 1.16 million in 2014 to 397,713 in 2015, as our Senegal drilling programme did not commence full field operations until late September.

Verifying that our contractors share our focus on all aspects of health, safety and environment (HSE) and Corporate Responsibility (CR) is essential to maintaining our licence to operate. Experience, competence and demonstrating good performance are some of the key considerations when it comes to choosing the right people to supply the provisions, equipment and services needed to help run our business. Cairn applies a rigorous selection process in choosing contractors, which is embedded in Cairn’s Contractor Management Procedures.

Cairn’s Invitations to Tender (ITTs) set out our expectations and emphasise the requirement for all contractors to behave consistently with Cairn Group Business Principles, our HSE and quality standards, corporate governance requirements, joint venture/partner agreements, and the need to adhere to legislation and regulatory requirements. All potential contractors must confirm their capability to comply, and we assess their capability to do so, which takes substantial planning and checking. We seek to promote use of local suppliers where possible but our standards must not be compromised (see Local contractors).

Contractor engagement graphic

For the 2015/16 Senegal exploration and appraisal drilling campaign, Cairn appointed ConocoPhillips as our well activities delegate (see Working in partnership). This involved substantial planning and integration from both companies to ensure the collaborative approach was understood and operationally safe and efficient. The drilling operations commenced in October 2015 and have been running smoothly, mostly due to the careful planning and integration achieved in the preparatory phase.

Focus on HSE

During an offshore drilling campaign, a number of activities are undertaken that may pose significant HSE risks. These crucial processes include, but are not limited to, the rig, marine vessels, helicopters and supply base operations.

The key criteria for assessing risks when selecting contractors are based on industry practices and associated considerations, such as the implications of potential accidents, the number of people involved and sensitivity of environments. Significant due diligence is carried out on the HSE performance of our contractors prior to contract award. During operations, this is measured using audit activities, reporting of Key Performance Indicators (KPIs) and maintaining regular engagement at various levels. Cairn recognises that leadership plays a vital role in embedding appropriate HSE behaviours in our organisation and expects the same attention from all contractors and service providers who undertake work on our behalf. Our HSE focus originates at the Board level and that commitment is communicated to all contractors throughout the project cycle.

When planning operations in Senegal, local contractors and service providers were identified. Due to the lack of previous oil and gas business opportunities in these geographical areas, a number of actions were taken by Cairn to encourage these businesses to actively promote HSE behaviours and to improve the way they manage HSE in their organisations. Cairn provided advice and guidance on what was expected of contractors providing services to Cairn, which resulted in the majority of contractors improving their HSE performance and management of risk, and improving our overall performance for 2015 over 2014.

Monitoring and checking

Our contractor performance management process includes a number of contractor HSE KPIs. Key contractors are required to complete and deliver a regular scorecard detailing their HSE performance, which includes both leading and lagging indicators. We use this to assess whether they are meeting expectations, or their performance requires improvement or is unsatisfactory, in which case immediate action is taken.

Where Cairn is a minority joint venture partner and does not have operational control, we conduct due diligence and engage constructively with partners to ensure familiarity with the operator’s standards before an agreement to proceed on operations is made. This included significant input in support of our partners, in Catcher and Kraken developments and delivery by their contractors (see Health, safety and security).

Anti-bribery and corruption (ABC) and the supply chain

Our robust ABC policies are of growing importance as we start to operate in new areas of the world.

We have a zero-tolerance approach to bribery and corruption (see Governance) and conduct risk-based due diligence on contractors, as detailed in our ABC – Selection of Service Providers Procedure, which was monitored throughout 2015. This requires contractors to provide copies of their own ABC policies and, where necessary, we can also engage a specialist external consultant to carry out background verification checks on contractors.

We also spend a lot of time gathering information, finding out the background to companies and whether there is any history of ABC risk. In 2015, Cairn’s HSE presentation to contractors included a strong emphasis on ABC.

An ABC training package was rolled out for all Cairn employees in 2015 and delivered in sessions by our corporate risk manager in the UK and in Senegal.

Disease control and management

We evaluate the health threats faced by our people in all the locations in which we operate. In Senegal, Cairn compiled a Health Management Plan to ensure all health impacts that may face both employees and contractors had been assessed, and preventative or mitigation measures were in place. The objectives of the Health Management Plan are to provide personnel with information, guidance and procedures to ensure they remain fit and well while living and working in Senegal, with the philosophy that everyone should return home each day without harm to their health, wherever they may work in the world.

It was recognised that there are particular health risks in Senegal, most notably malaria, which is endemic in the region, and the situation with the Ebola virus is constantly  monitored. It was therefore essential that all staff, contractors, visitors to Senegal and their families were fully aware of the health risks prior to travel and understood means to avoid contracting such diseases.

Cairn, in partnership with ConocoPhillips, created an online malaria and Ebola briefing pack that all travellers to the country were obliged to complete prior to mobilisation. These presentations highlight the origins, signs and symptoms, and treatment of each of these potentially deadly diseases.

Outlook

Supply chain and logistics services are provided as part of the Well Management Contracting Strategy that was implemented by Cairn and ConocoPhillips during operated projects in 2015. Cairn will continue to provide oversight and assurance of the well activities delegate and will continue to champion good HSE behaviours to meet our commitments.

See performance data Supply chain.

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