BP PAKISTAN

HEALTH, SAFETY & ENVIRONMENT STATEMENT 2004

1. Foreword
The purpose of this 2004 Health, Safety and Environmental (HSE) Statement is to report the HSE performance of BPP Exploration and Production Inc. (BPP) - to our partners, contractors, stakeholders and the public for the period January - December 2004. In addition, this report details our HSE policy; significant HSE risks and objectives and targets, and programs to manage those risks. We are a leading exploration and production organisation in Pakistan, producing around 36 percent of the country's oil and 7 percent of natural gas. In all our operations, we are committed to high standards of HSE and strive to achieve the corporate goals of no accidents, no harm to people, and no damage to the environment. I am pleased with the progress of our HSE performance in 2004 and appreciate the efforts of all our employees and contractors who have fulfilled their roles, however there is never room for complacency. Looking forward to 2005, BPP is committed to achieving our HSE objectives and targets presented within this document. Our focus remains to ensure safety of people working with us and around us and to implement sustainable options which reduce the impact of our operations.

Tariq Khamisani President October 2005

2. Introduction
BPP is fully committed to achieve the corporate goals of:

No accidents, no harm to people, and no damage to the environment.

These goals are endorsed by our leadership in our HSE policy (see next page). To achieve these corporate goals, BPP has initiated several management and technical systems which address health, safety & environmental risks. Example of some of these systems are: Getting Health Safety and Environment Right (gHSEr) BPs global HSE management system, providing a framework for HSE compliance. BP Group HSE Standard Process Safety / Integrity Management - This standard is focussed on the operational integrity of BP sites and based on the principle of risk assessment to evaluate hazards. Functional Standard - Driving Safety Since driving safety is one of the key risk associated with BP operations globally, BP has issued a Functional Standard on Driving Safety. It is mandatory for all BP operations including BPP to comply this functional Standard. Environmental Management System (EMS) - Our EMS is in line with the ISO 14001 standard and received certification for the same in January 2003. The EMS provides the framework required to achieve the goal of no damage to environment listed in our HSE Policy. Integrated Management System (IMS) BPP has fully developed Integrated Management System (IMS) which conforms to ISO 14001 and OHSAS-18001 requirements. The IMS process involves a continuous cycle of planning, implementation, checking/corrective action, and review to ensure continual progress on HSE performance as depicted graphically below:
HSE Policy Management Review Planning

Monitoring & Corrective Action

Implementation & Operation

BPPs HSE Policy

3. Description of our operations

BPP Exploration and Production, Inc. (BPP) operates in Badin and Mehran Concessions in joint venture with Government Holdings Private Limited, Occidental Petroleum (Pakistan) Inc., Occidental Oil and Gas Pakistan LLC, and Oil and Gas Development Company Limited (OGDCL). BPP is one of the largest oil producers in Pakistan, producing around 36% of the countrys total oil production this is complemented by about 7% of the total natural gas produced in the country. Our average gross production figures were about 19,768 barrels of oil per day (bopd) and around 207 million standard cubic feet per day (mmscfd) of gas during the year 2004. Key exploration and production activities within Badin and Mehran Concessions include drilling of exploratory and production wells and operation of oil and gas processing facilities. There are 13 oil and gas processing facilities in Badin concession, spread over a total area of approximately 6,500 sq km in the Sindh Province as shown in the following map.

LEGEND

HYDERABAD
GAS FACILITY OIL FACILITY GAS PIPELINE
SUPER

BADIN BLOCK
S.BUZDAR MAZAR

TANGRI

BLACK TOP ROAD

HIGHWAY

KARACHI Pipri
PRL NR
PORT QASIM

SUI GAS PIPELINE TO KARACH

BUKHARI TURK

DHABI NORTH LAGHARI KHASKELI

Thatta
NATIONAL HIGHWAY

GOLARCHI

Sujawal ARABIAN
INDUS RIVER

N. AKRI

GHUNGRO

SCALE - Kms

Keyhole G1

50

PAKISTAN

INDIA

4. Our health, safety and environmental activities and performance

Due to the nature and scale of our activities, there are some HSE risks associated with our operation including road safety, contractors HSE performance, lack of hazard awareness etc. We actively monitor and measure our impacts to better understand the techniques and methods that we can apply to continuously improve our overall HSE performance. Significant HSE impacts of our operations along with their relative manageability during 2004 are summarized in the matrix below.

BPP Risk Matrix (April 2004)

V H Managing Contractors Road Safety Construction Safety H Drilling Lack of Community Awareness (Road Safety) Integrity Management Lack of Hazard Awareness

L Desired direction V L VH H M L VL

All operations associated with key HSE risks (as depicted in above risk matrix) require certain controls. These controls are established, updated, and implemented to prevent and/or minimize the key HSE hazards. To continuously improve our HSE performance, all these controls are further translated into objectives and targets and programmes with time frames for completion as per the requirements of ISO 14001 and OHSAS 18001 systems. The following sections contain details of key HSE objectives, targets, management programs and performance against the 2004 targets.

4.1 Personal Safety

Objective In line with the BP Group HSE Policy of no accidents, no harm to people and no damage to the environment, the objective of personal safety management is to avoid all accidents. Targets Our targets for 2004 were as below: Fatality Zero DAWFCF DAWFCF not to exceed 0.07 RIF RIF not to exceed 0.18.

Management Since BP believes in continuous improvement, performance targets are set at the start of the new year on all identified significant HSE risks. Personal safety, being the top of all gets highest attention in the organisation. New years targets are set keeping in view previous years performance, with the exception of fatalities for which organisation has zero tolerance. Performance All of the above targets were achieved in 2004. In 2004, there was one DAFWC incident involving a contractor employee, who was working behind shale shaker, fell on the ground. Four occupational related injuries occurred at BPP sites, which required medical treatment. The following table and graph show the comparison of our performance over last three years. Matrix Fatality DAWFCF RIF 2002 2 0.04 0.26 2003 0 0.08 0.16 2004 0 0.03 0.15

Safety Performance
2.50

2.00

F qec re u n y

1.50

1.00

0 6 .2

0.50

0 6 .1

0 5 .1

0 4 .0

0 8 .0

0.00

Fatality

RIF

DAFWCF

2002

2003

2004

0 3 .0

4.2 Safety Inputs (Leadership & Behaviour)

Objective Foster good safety behaviours using various safety leadership tools and involving the workforce. Targets Our targets for 2004 were to improve upon 2003 numbers on Advance Safety Audits frequency (ASAf), Safety Observations frequency (SOf), Safety training hours and action items closure. Management Essential elements of safe performance are management involvement and ownership of the HSE performance, and the engagement of the whole workforce. BPP recognises use of tools such as ASAs, SO, Safety training, timely completion of identified action items. These 4 parameters are collectively called as safety inputs or leading indicators. Increased safety inputs mean decreased incidents. Performance In 2004, our performance on leading safety indicators showed significant improvements, resulting from leaderships continual drive to actively engage contractors, as shown below: Safety Inputs ASAf SOf Training Hours (TH)
Action Item Closure (%) [AC]

2002 1,782 118 136751 83

2003 1,386 245 78374 76

2004 2,082 862 83104 84

Safety Input Performance

2,082 2,500 1,782

2,000

Frequency

1,500

1367.51

1,386

1,000

118

245

500

83

SOf

ASAf

AC%

76

84

TH/100

2002

2003

2004

783.74

831.04

862

4.3 Driving Safety

Objective Minimize road accidents by implementing various requirements set under BPs Functional Driving Standard. Targets Our targets for 2004 were as below: Reduce driving exposure: kilometres driven target set for 2004 was not to exceed 2003 actual at Field Total Vehicle Accident Rate (TVAR) not to exceed 0.59. Management Road accidents (by BPP or its contractors) are serious risk for BP globally. Road safety is also a significant risk for BPP operation due to little or no safety awareness in the communities; poor conditions of the road infrastructure, combined with the high number of bowser movements and kilometres driven by BPP vehicles. Road safety risk has several dimensions and in the organisation, this risk is managed separately for the (a) risk exposure to BPP staff and contractors (b) risk exposure to community and in particular children as in past, some of the road related incident involved community members. (a) risk management for BPP staff and contractors Programmes are in place to pro-actively manage the human and mechanical aspects of road safety through implementation of Group Functional Standard on Driving Safety that lays down requirements for: Vehicle condition, Training & Assessment of drivers, Alertness of drivers, use of mobile phone / radio while driving the vehicle and Journey management. (b) risk management for communities in Badin concession Raising community awareness and in particular among children remained a focus area for BPP in 2004. BPP launched several programmes to address road safety awareness in local community. Programmes includes conducting road safety sessions in local schools, publishing of printed material, mass media awareness campaigns involving local newspapers, on road safety, such as road safety awareness campaign for schools, involving traffic police in this awareness campaigns are just few examples. Performance Field Operations performed exceptionally well to not only meet the kilometres driven target but achieved 16.2 % more reduction beyond the target. Unfortunately, our target for TVAR was not achieved. 2002 Driving Exposure (km driven) TVAR 8,372,868 1.07 2003 5,972,517 0.84 2004 4,382,019 1.14

Note: although TVAR target in 2004 could not be achieved, one of the contributing factor was a continued focus from leadership on open reporting. Moreover staff were encouraged to report even minor incidents (fender / bender type), which were not being reported previously. Because of these additional factors, target of TVAR could not be achieved.

BP Pakistan Road Expsoure (2002-04)

9000000 8000000 8372868

Driving exposure

7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 5972517

4382019

Kilometers
2002 2003 2004

D riv in g In c id e n ts
1 .5 0

Total Vehicle Accident Rate

1 .0 7 1 .0 0 0 .8 4

1 .1 4

0 .5 0

0 .0 0

2002

2003

2004

Road Safety Awareness campaigns remained a regular feature in Badin concession throughout 2004

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4.4 Contractors HSE Performance

Objective Promote safety culture amongst all BPP Contractors Targets Bring contractor vehicles into BPPs net of DriveRight unit to control over speeding of vehicles Roll out Safety Immersions for contractors Develop and implement program for contractors HSE audits, to be lead BPP Leadership Management Contractors are an important part of our workforce. BPPs Contractor Safety Management System (CSMS) is designed and executed to ensure that key HSE risks related to the contractors activities are identified and required controls are in place to minimise those risks. The following initiatives have been taken under CSMS: Risk Ranking of contractors (high / medium / low) Assigning contract sponsors (CS) Performance tracking: HSE KPIs for contractors & CS Imparting knowledge of HSE Immersions to contractors (driving, lifting & energy isolations) Leadership HSE audits Some of the contractors have also taken lead to certify their HSE management systems for ISO 14001 and OHSAS 18001. Performance The following data shows significant achievements in contractor HSE performance due to our continued focus and by actively engaging contractors: 7 million man hours without a DAFWC Zero fatalities since 2003 Significant reduction in over-speeding (Kazmi are numbers available for contractor vehicles) 64 contractor audits done by BPP leadership

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4.5 Atmospheric Emissions (Greenhouse Gases)

Objective Reduce greenhouse gas emissions as part of BP Group external commitment. Targets GHG emission not to exceed 200,000 CO2 eq. Tonnes (equity share) in 2004. Management Major contributors for GHG (mainly CO2 and methane gas emissions) in BPP are (a) Flaring of low pressure gas (b) use of fuel gas and diesel to operate generators, compressors, pumps and drive vehicles (c) venting of small amount of methane gas Though emission of GHG is not regulated under Pakistans Environmental laws, as a part of BP Group, BPP is committed to reduce its GHG emissions year by year. Following programmes are employed: Adding compressors wherever economically viable to compress low pressure flared gas in the national stream. Preventive maintenance of equipment and regular tuning of engines (to economise fuel consumption). Use of natural gas, wherever available, as a fuel. Performance Despite increase in fuel consumption (jet pumps, compressors and amine plant) and CO2 emissions from new amine plant at Tangri, overall reductions in GHG emissions (real sustainable reductions) were achieved in 2004 by reducing flaring of low pressure gas through installation of compressors at Jabo and South Buzdar Deep-1 locations. In 2004, 4% GHG were achieved from our operations. GHG emissions CO2 eq. Tonnes 2002 BPP
(equity Share **)

2003 203,325 451,833

2004 195,361 434,167

137,236 373,789

Gross

** based on BPPs commercial share in operation. BPP equity share increased in July 2002, when BPP deepened its share in Badin Concession.

Comparison of GHG Emissions for 2002, 2003 and 2004

500,000
451,833

GHG Emissions by Source (CO2 eq. Tonnes)

Venting 3% Amine Plant 12% Fugutives 2%

GHG Emissions (CO2 eq.) Tonnes

434,167

400,000

373,789

Diesel Combustion 3% Flaring 46%

300,000

Gross
203,325 195,361

200,000
137,236

BP (equity share)

Gas combustion 34%

100,000

2002

2003

2004

Flaring

Gas combustion

Diesel Combustion

Amine Plant

Venting

Fugutives

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4.6 Oil Spills

Objective Minimize hydrocarbon release into the environment. Targets Develop a reporting & monitoring process of Hydrocarbon major incidents and / or high potential (HiPO) releases. Management BPs Integrity Management system assures wells and facilities are designed, constructed, operated and maintained in a safe fashion using appropriate codes and standards to prevent the occurrence of, and minimise the consequences of, catastrophic releases of hazardous materials and major structural failures. Performance In 2004, reporting and monitoring of oil spills and leaks started under the definition set by the Integrity Management system. The aim of it was to develop a baseline of spills and leaks so that reduction targets could be set in subsequent years. In 2004, one oil spill of more than 1bbl occurred in which 8 bbl of oil was spilled. This spill occurred from low pressure trunk line. Matrix Number of spills > 1 bbl Volume of spills (bbls) 2002 4 22 2003 13 384 2004 1 8

C o m a p ris o n o f O il S p ills
450 400 13 14 12 10 300 250 200 150 100 50 0 2002 2003 2004 22 b b ls 1 8 b b ls 0 2 4 4 384 b b ls 8 6

Volume of Spills (bbls)

V o lu m e o f s p ills (b b ls )

N u m b e r o f s p ills > 1 b b l

Number of Oil Spills

350

13

5. Objectives and Targets

The existing HSE management systems and ISO 14001 & OHSAS 18001 require BPP to establish its HSE Targets to address its key HSE risks and to demonstrate continual improvement in HSE performance. Based on the BPP's 2004 actual performance, key HSE risks and BP E&P's HSSE 'focus areas', the following HSE objectives and targets for 2005 has been established:

HSE Target for 2005

Risk / improvement areas Personal Safety Key Performance Indicator Fatality DAFWCF RIF TVAR Hydrocarbon release into environment Reduce greenhouse gas emissions Number of Oil spills Zero Track and Improve over 2004 10 % < 2004 actual Track and Improve over 2004 10 % < 2004 actual Target

GHG emissions (equity)

Not to exceed 210,000 (CO2 eq. Tonnes) 20,000 (CO2 eq. Tonnes)

GHG real sustainable reductions (equity) Efficiency of HSE Management Systems Develop Integrated HSE Management Systems and get OHSAS 18001 certification along with ISO 14001 certification

Develop OHSAS 18001 compliant Occupational Health and Safety Management System by 1Q 2005.

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6. Glossary
Term ASA bopd CO CO2 CSMS DAWFCF (Days Away From Work Case Frequency) E&P EMS GHG gHSEr HiPo HSE IMS mmscfd NEQS NMHC NOx RIF (Recordable Injuries Frequency) Definition Advanced Safety Auditing Barrels of oil per day Carbon monoxide Carbon dioxide Contractor Safety Management System A Day Away From Work Case (DAFWC) is a measure of the number of serious incidents that cause injury resulting in a day (shift) away from work. DAFWCF is used to normalise the data per 200,000 hours worked. Exploration and Production Environmental Management System Greenhouse Gases Getting Health Safety and Environment Right High potential Incident Health Safety and Environment Integrated Management System Million Standard cubic feet per day National Environmental Quality Standards Non Methane Hydrocarbon Oxides of Nitrogen A Recordable Injury (RI) is reported for any work related incident that results in injuries that caused fatality, loss of consciousness, restriction of work or motion, transfer to another job, or require treatment beyond first aid. RIF is a number of injuries per 200,000 hours worked. Safety Observations frequency Oxides of Sulphur Total Vehicle Accident Rate It is the sum of all on-road and off-road motor vehicle accidents per one million kilometres driven.

SOf SOx TVAR

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7. Feedback
Tell us what you think. Are our statements easy to understand, not detailed enough or perhaps too complicated? Is there any other information that you would like to see? Let us know your views so that we can improve upon our Health, Safety and Environmental reporting. If you have any question about this report, please mail or fax us and we will be happy to answer. Amjad Shaikh Senior Environmental Engineer BPP Exploration and Production Inc. Telephone: (92) - 21 - 5611194 Fax: (92) - 21 - 5610634 e-mail: ShaikhA@bp.com

The next health, safety and environmental statement of BPP will be issued by April 2006 and will cover the year 2005.

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Some of road safety awareness campaigns material published by BPP during 2004 17