ADCO Sustainability Report 2012 English Final

8/17/2019 ADCO Sustainability Report 2012 English Final

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H.H. Sheikh Khalifa Bin Zayed Al NahyanPresident of the United Arab Emirates


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H.H. General Sheikh Mohammed Bin Zayed Al NahyanCrown Prince of Abu Dhabi

Deputy Supreme Commander of the UAE Armed Forces


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CEO Message 10

Report Parameters 12

Corporate Profile 14

Sustainability Vision 18

Workplace 22

Health and Safety 32

Economic 38

The Community 44

Climate Change 48

Environment 54

GRI Index 60

Glossary of Terms 66

Table of Contents


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Sustainability Report 2012

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CEO MessageIn 2011, ADCO promised that we woulddo our part by adopting a balancedand comprehensive approach to ensuresustainable development. With great pride,we would like to announce that ADCO wasawarded with the esteemed Sheikh KhalifaExcellence Award (Gold Category) inrecognition of the high quality and standardsadopted in our operations for 2011/2012.Such outstanding achievement representseffective implementation of our strategiesand it strongly underpins our commitmentstowards our vision and mission.

This year was one of the most challenging andsuccessful years in ADCO’s history, becausewe excelled our transformation strategies,

particularly in projects development, deliveryof oil and gas, organisational expansion andrestructuring our company. We would like totake this opportunity to congratulate everyonein ADCO, our shareholders, business partners,regulators, and the community as you arethe ones that contributed to the successfulachievement of these ambitious goals andobjectives.

We teamed, informed, developed, andinnovated together. We assure you thatwe have acknowledged all of these efforts.

We are sincerely grateful for the extensivesupport you provided. Your continued supportis vital to our continuous success.

The responsibility is on us as a lead companyin the oil and gas industry to be committedto continual improvement. Our core valuesof Honesty and Integrity, People and theirdevelopment, communication, workingtogether, accountability and performanceexcellence will be the principles in our journeytowards sustainable development. We fullyunderstand and accept our responsibility andwe remain committed to our vision of a betterand sustainable future.

Sustainability at ADCO is always aligned

with the national vision of the UAE andwe play our part by making our contributionssustainable. ADCO prides itself in recruitinga high number of UAE Nationals to train andintegrate them into our workforce to ensure astrong sustainable future of our company andthe UAE.

We recognise that the risk of climatechange and Greenhouse Gas (GHG)emissions has the potential to financiallyimpact our business. We also consider thisas an opportunity to excel in technology

innovation, adaptation, reputation,competitive ability, legal standings, businessvalues, and HSE performance.

In 2012, several precautionary measureshave been taken concerning health andsafety which helped us reduce the number ofincidents from the previous years. We continueto observe signicant positive behaviouralchanges among people towards health andsafety.

Our responsibilities go beyond operatingour facilities in an efcient and safemanner. ADCO considers it a moral obligationto give back to the community throughsustainable Corporate Social Responsibility

(CSR) programmes. We also aim to providea transparent, robust, and informative reportfor our stakeholders. We strive for continualimprovement in our sustainability programsevery year.

We are proud to present our SustainabilityReport for 2012 highlighting ourachievements, our contributions, and ourstrategies for the future. This report showcasesour initiatives and aspirations towardssustainable development and we look forwardto share our future progress with you in thecoming years.

Abdul Munim Saif Al KindyChief Executive Ofcer - ADCO


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Report ParametersOrganization Covered in this Report

Welcome to ADCO annual SustainabilityReport for 2012 covering all of our activities inAbu Dhabi, United Arab Emirates (UAE). This reportcovers all of our facilities, namely Asab, Sahil, Shah,Bab, Bu Hasa / Huwaila / Bida, Qemzan, JebelDhanna, and North-East Bab (Dabbiya, Rumaithaand Shanayel) and their respective operations.Where applicable, information on the performanceof our contractors is included provided that theirservices were undertaken within our premises.

We do not have inuence, signicant or otherwise,on any additional entities. ADCO does not have any

afliates or subsidiaries.

Reporting Period

We issue sustainability reports annually, and thisis the fourth sustainability report. This reportfor 2012 provides a summary of activities in fiscalyear 2012 (January 1, 2012 to December 31, 2012).The previous sustainability report was publishedfor 2011.

References to “currently,” “to date” or similarexpressions reect information for 2012. All data andinformation provided in the Sustainability Reportfor 2012 reect the sustainability performance andgoals of ADCO unless otherwise indicated.

Report Content

In deciding and dening what information would be included in the Sustainability Report for 2012, we followedaccepted standard practice. Our Sustainability Report for 2012 is based on the Global Reporting Initiative(GRI) 3rd Generation (G3.1) Sustainability Reporting Guidelines and also considered the oil and gas sector-specic reporting requirements such as that of the International Petroleum Industry Environmental ConservationAssociation (IPIECA) and the American Petroleum Institute (API).

The GRI G3.1 guidelines comprise the globally recognised framework for reporting on an organisation’seconomic, social, and environmental performance whereas IPIECA and API guidance is considered a

reference in the oil and gas industry. For more information on GRI, please visit www.globalreporting.org.

This report covers all core and additional indicators of the above guidance documents. Sustainability topics thatare material to our activities and deemed critical by our stakeholders are thoroughly addressed. Other relatedissues are mentioned as required, but are not covered in detail.

Key stakeholders were identied and continuously engaged throughout the process of developing this report.The information reported in each of the core areas is based on feedback that we received from internal andexternal stakeholders.

StakeholderGroup

Form of EngagementFrequency ofEngagement

Outcome of Engagement

Employees

Focus groups, meetingswith senior management,surveys and meetings withdirect management

Employees areengaged throughoutthe year throughvarious forms ofengagement

Employees repeatedly highlighted theneed for diversity in the workplace,importance of employee safety,

training, and well-being

Shareholders

Formal shareholder

meetings and informalmeetings on a needs basis

Every quarter and

throughout theyear (formally andinformally)

Commitment to international best

practices and the need to lead in thesustainability practices

Governmentand applicableregulatoryauthorities

Formal communicationand focus groups on acase-by-case basis pertopic

Every quarter and asrequired

Importance to align activities and journey with the UAE vision towardsexcellence, equality, and sustainability

Regulatoryauthority

Roundtable discussions Every quarter Means to reduce negativeenvironmental impacts

StakeholderGroup

Form of EngagementFrequency ofEngagement

Outcome of Engagement

Community

Focus groups, surveys,meetings, municipalitymeetings, andparticipation in traditional

group meetings

Every two months

Interest in community healthand safety as a result of ADCO’soperations and in knowing andunderstanding the community

investments undertaken

SuppliersSurveys and roundtablediscussions

Twice per year How to become a supplier and/or a preferential supplier for ADCO. Alsofeedback on performance

InternationalOrganizations

Events, roundtablediscussions, andparticipation on a globalagenda for the oil andgas sector

Four times per year Environment and climate changelatest issues

Our Sustainability Reporting Journey

Data Collection and AdjustmentsQuantitative data disclosed in this report originatesfrom various sources:• Performance related data are obtained from

the Performance & Information ManagementDepartment (PIMD);

• Economic data are extracted from the SupplyChain Management Division (SCMD);

• Production data originates from the productiondatabase;

• Labour practices and Employee PerformanceManagement data are extracted from theHuman Resource Division (HRD) and the Talentand Capability Management Division (T&CMD);

• Environmental, Health and Safety data isdetermined through direct measurement,calculation, and estimates in consultation withthe Health, Safety and Environment Division(HSED); and

• Corporate Governance data is sourced from theCorporate Governance Division (CGD).

We believe the measurements and claims in ourSustainability Report for 2012 were accurately

collected and reported. Based on our ownassessment of this report content against the GRI

G3.1 Guidelines, we have self-declared our fourthSustainability Report as Application Level ‘B’ andthis was subsequently veried by GRI.

ContactFor additional information about ADCO’sSustainability Report for 2012, its sustainabilityperformance or for any feedback, please contact:

Abu Dhabi, United Arab Emirates (ADCO)P.O. Box: 270Health, Safety and Environment Division (HSED)Abu Dhabi Company for Onshore Oil Operationswww.adco.ae

We welcome your feedback on how we can betterintegrate with our audience. We would appreciateyour feedback, questions, comments, andsuggestions on our Sustainability Report for 2012 [email protected].

2009 2011

2010 2012

GRI 3.1 + Oil and Gassupplement and IPIECA

and API indicatorsGRI and IPIECA and APIindicators

GRI Indicators onlyOnline reporting system

GRI Indicators only


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Corporate ProfileWho We Are

The Abu Dhabi Company for Onshore Oil Operations (ADCO)operates onshore and in shallow coastal waters of the Emirateof Abu Dhabi, one of the seven members of the UAE. ADCO wasestablished on 2nd December 1971, and our headquarters arelocated in Abu Dhabi.

Our original concession agreement was made with PetroleumDevelopment (Trucial Coast) Ltd. on 11 th January 1939, butgeological work did not begin until after the Second WorldWar. Exploratory drilling began in Abu Dhabi in February1950.

The first commercial oil discovery was made atBab in 1960, and oil exports began from the JebelDhanna terminal on 14th December 1963. In 1962,the company was renamed the Abu Dhabi PetroleumCompany, ADPC. On 1st January 1973, the governmentof Abu Dhabi acquired a 25% interest in the company,which was increased to 60% on the 1st January 1974. Thegovernment interest is held by the Abu Dhabi National OilCompany (ADNOC). ADCO was incorporated under LawNo. 14 on 8th October 1978 and has been responsible, sinceFebruary 1979, for operations in the concession area. Afterrelinquishments, the concession currently covers more than 21,000square kilometres.

Honesty andIntegrity

PerformanceExcellence

Peopleand their

Development

WorkingTogether

Accountability

Communication

ADCO’s main shareholders are ADNOC, Shell, BP, ExxonMobil, TOTAL, and PARTEX.

Corporate Governance

The Corporate Governance framework presents the relationships between ‘Business Direction’, ‘BusinessManagement’ and ‘Business Operation’. The framework is based on pertinent laws, decrees, regulations, andagreements established by the Abu Dhabi government and shareholders.

The highest governance body of ADCO is the ‘Joint Management Committee’ (JMC). Members of the JMCare nominated by the shareholders. The JMC appoint the Board of Directors which directs the business of the

company in accordance with the ‘Article of Association’. It provides recommendations to the JMC for approval.It is assisted by advisory committees in the technical, nancial and audit areas.

ADCO Management manages business based on guidelines, plans and directives as approved by shareholdersthrough meetings and other communiques. It is assisted by advisory internal committees. Business is conducted inaccordance with well established policies and procedures based on industry standards.

Our corevalues are vital

for achieving ourmission as well as

for ensuring the healthand prosperity of our

company andstakeholders


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ADCO and VISION 2020

We are a respected contributor to Abu Dhabi’s sustainable future.The ve enabling factors for ADCO to achieve its ‘Vision 2020’ are:• Continuously achieving the highest standards of Asset Integrity and HSE performance;• Generating and valuing a continuous pipeline of technical expertise and

leadership talent that delivers successful business growth and collaborativeperformance across the enterprise;

• Effectively evaluating and executing optimum reservoir development choicesand management strategies to maximise recovery while minimising the cost;

• Adopting and executing proven strategic technologies that enable the mosteffective and value adding eld development; and

• Ensuring operational excellence and the integrity of our facilities on a costeffective basis to optimise system availability.

Awards Received

The Sheikh Khalifa Excellence Award is designed to provide organizations with a road map to help themimprove their performance, to support a healthy economy, and to unify their management practice in abalanced holistic model using the European Foundation Quality Model (EFQM). ADCO was awarded with theesteemed Sheikh Khalifa Excellence Award (Gold Category) in recognition of the high quality and standardsadopted in our operations for 2011 / 2012.

Our Operations

Our main operations include the exploration, development, production, transfer, and export of oil and gasfrom onshore oil elds and shallow coastal water. We primarily produce oil and gas from six oil elds: Asab,Bab, Bu Hasa, Sahil, Shah and North-East Bab (Dabbiya, Rumaitha, and Shanayel). These elds are linked bymore than 450 km of pipeline with storage and shipping facilities at Jebel Dhanna. ADCO produced 1,344,991barrels of oil per day (bopd) from 1,217 oil wells from our concession area. Our personnel count by December2012 was 5,879.

ADCO Executive Dashboard

Dashboards have now become an integral part of our decision making process. A dashboard is an interactivegraphical interface that organizes and presents information such as Key Performance Indicators (KPIs) in aformat that is easy to visualize and analyse.

We have automated the KPIs from our Performance Contract with the shareholders into an ExecutiveDashboard. Several performance metrics are available within this dashboard such as Total Recordable IncidentRate (TRIR), High Potential Near Miss Incident (HIPONMI), Lost Time injury Frequency (LTIF), spills, and emissions.The performance metrics are available to senior management at a corporate level and the dashboard allowsthem to drill down to details by asset, eld, and time.

The main benets of the dashboard tool are:• Faster decision making: It is a web based solution and is accessible either on the desktop or on mobile

device. Therefore, it is available to senior management at any time enabling them to make fasterdecisions.

• Alerts and trending: KPIs are visualised and compared with goals. The dashboard alerts management ofpotential problems that exist or could arise in the future.

• Reducing efforts: The dashboard KPIs are read directly from the source system(s) and thereby, reduces theneed to consolidate the data.

• Improved accuracy: Manual data preparation can result in errors. This concern is avoided by producingthe data directly from the source systems.


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Sustainability is ADCO’s VisionMission Statement“ADCO acts on behalf of its Shareholders to explore, develop and produce hydrocarbons within its area of

operations. In meeting our S hareholders” aspirations, we will operate at maximum efciency and optimum costwith minimum impact on the environment and we will avoid harm to people. We will promote an environmentof continuous improvement while maintaining the highest standards of honesty and integrity in all aspects of ourbusiness.

Corporate Objective“Integrate economic, environmental and social values within ADCO’s decisions and operations to achievesustainable Management.”

Camel RaceThe Camel Race is a competition betweenADCO’s five assets, two functions, and thedrilling division with an ultimate objective of drivingbehavioural changes across the organisation. TheCamel Race is an important function within ADCOas it engages our employees in several importantaspects important to our success, including HSE,asset integrity, people development and businessprocess. The competition was initiated during 2011and continued in 2012. Similar to the camel bodystructure, four legs are considered for the camelrace scheme. Each leg represents areas identifiedfor improvement.

Our Sustainability ApproachImplementation of sustainability initiatives is a collective and shared responsibility that is now handled

throughout ADCO by a ‘Sustainability Steering Committee’ (SSC) consisting of members from differentoperational departments to monitor, manage and integrate sustainability in day-to-day business decisions.ADCO will continually improve in the development and implementation of these initiatives in line with ADNOCguidelines.

Social• Diversity & equal Opportunity• Education, Training and Development• Occupational Health and safety• Community• Human Rights

Socio - Economic• Business Ethics• Employment• Local Economic Impacts

Socio - Environmental• Nat ural Resources Stewardship• Local Environmental Impact• Global Climate Change

Eco - Efciency• Energy Efciency• Environmental Expenditure

Environment• Natural Resource use• Biodiversity• Pollution Prevention

and Control (air, water,land, waste)

Sustainability

Economic• Locally Based Suppliers• Economic Growth

Assets /Functions

Conduct Activities

Verify data Data Matches YES

NO

Extract CR scoresand ranking

AnnounceWinners

Filter activityresults

Receive / Extractactivity results

Filter activity results basedon common and specic

CR measures

Feed results intoADCOBSC system

ADCOBSC

Feed results intosystem / Send to FP

MAXIMO, Oracle,PIES, etc.

Businessunit FP /Asset FP(SPMA)

PIMD

Sustainability Steering Committee

Leg Weight (%)

Hea lth Sa fe ty & En vi ro nm en t ( HS E) 3 0

Asset Integrity 30

People Development 15

Business Process 25

The performance measures are audited everymonth and the winner of the race is announced andrecognized at the year-end. The winner of the 2012Camel Race was Bu Hasa Asset.


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Major Accomplishments - 2012 Ambitions - 2013 & Beyond

C L I M A T E C H A N

G E

• Optimization of existing assets (energy survey,planning for upgrade of the energy meteringsystem, etc.)

• Optimization of new developments (energyefciency in water injection, infrastructure projectsexpansion, etc.)

• Energy planning (ADCO Energy ManagementPolicy, ADCO Energy Management SystemManual, Energy Management processes andprocedures, energy reporting system for assets,energy performance KPIs, etc.)

• Organisation effectiveness (training sessions onenergy).

• Policy-level decision on reducing direct GHGemissions and implementation;

• Projects planned and implemented to reducearing (e.g. Spiking Compressor at Shah)

• Achieve ISO 50001 Certication for ADCOEnergy Management;

• In coordination with Talents & Capability

Management, implement the company-wide energy training program;• Implementation of the KPIs for energy; and• Development and implement ation of

Energy Action Plan• Energy training plan for 800 employees

in 2013, revised Competency AssuranceManagement System (CAMS) to includeenergy efciency skills, etc.

W O R K P L A C E

• Recruitment Plan & Recruit Against Vacancies;• L&D Management System (LMS);• Process Automation;• Social media for recruitment;• Discipline Based Salary Increase Model;• Sponsorship for higher Education & ADCO Pass

Program.• Updated ‘Change Management’ content in

ADCO Leadership Development Programs;• Road-Shows and Awareness Sessions;• Updated RACI Charts for Information Distribution;• Training Roadmaps created for selected Technical

Disciplines;

• Approval of new Technical Progression Program(TPP); and

• Approval of Employee Performance Procedure‘Quick Wins’.

• Emiratization target of 75% by 2017;• On-boarding Program for ADCO Pass

Trainees; and• Enhancement of Automation;• Inclusion of ‘Change Management’ in

T&CM roles and responsibilities;

• Road-Shows and awareness sessions forE-PCR Updates;• Creation of ‘Al Masar’, the career pathway,

for the employees;• Implementation of approved, new

Technical Progression Program (TPP); and• Implementation of Approved Employee

Performance Procedure ‘Quick Wins’.

E C O N O M I C

• Plan to engage 3rd party consultant to analysethe existing system of supply chain managementand establish a benchmark

• Develop Sustainable Procurement Strategy

E N V I R O N M E

N T

• Continued use of ‘recycled input materials’;• Continued with recycling and reuse of water;• Biodiversity conservation efforts (awareness

campaign, publication, etc.)• Updated ecological baseline information forADCO operation areas;

• Implementation of Biodiversity Action Plan;• Measures implemented to minimise the

environmental effects of transportation;

• Continued with recycle and reuse waste andlegacy pits seep management;

• Explore possibilities to increase the use of

‘recycled input materials’;• Explore possibilities to increase recycle and

reuse water; and• Implementation of Biodiversity Action Plan

and monitoring of efforts.

T H E C O M M U N I T Y

• Community Development Project Initiatives(Awareness Campaign, health check-ups,library, scholarships, Recruitment of nationals,Emiratization, etc.)

• On-going efforts

Sustainability Steering Committee Members


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WORKPLACEPeople are our most valuable asset and ADCO is committed to all of ouremployees and their well-being. ADCO believes that a diverse, engaged

workforce is the key to our continued success.

Our focus on diversity and Emiratization helps us to build a sustainableworkforce. Our training and development programmes help ensurethat our people feel valued and grow with the company. Our employeeengagement programmes give our people a voice. We recognise that wehave a responsibility to provide a healthy, productive, and enabling workenvironment which allows our employees to full their potential.

We take responsibilities for our wider workforce by working with ourcontractors to help ensure their employees receive the benetsdue to them under the UAE labour law.

Ensuring a sustainable future for ADCO meansdeveloping a highly-skilled and engagedworkforce and creating an environment whichallows our people to excel.

Productivity and motivationenhancements with better

welfare measures

Our People are Our StrengthADCO believes that a talented, trained, and fullyengaged workforce is essential to our ability to

deliver our services with quality and efciency. Thus,it is our responsibility to offer a culture which attractsand retains the right people. We believe in providingour employees with a healthy work environmentthat enables and encourages everyone at ADCO toachieve their full potential.

enables and encourages everyone at ADCO toachieve their full potential.To help ensure the intellectual and physical wellbeing

of our employees, we have developed variouspolicies and procedures. Some examples includelearning & development programmes, recruitmentstrategies, competence based assessments, talentand succession management while focusing on andexecuting our Emiratization strategy.

We realise the importance of retaining our people,and we promote diversity in terms of gender, culture,and professional experience across all stafnggroups. We offer regular learning opportunities toassist our people to achieve their professional goalsand aspirations.

Our Differentiators• Value, appreciate, and recognise our people

and work-life balance;• Autonomy, exibility, and leadership support to

our people;

• Open communication at all levels and directions;• Longstanding reputation for creativity, innovation,

and forward-thinking in our operation;• Safe work environment; and• Training and development opportunities.

Our strategy is to generate and value a continuous pipeline of technical expertise and leadership talent thatdelivers successful business growth and collaborative performance across our company.


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Workforce Diversity and Equal Opportunity

We had 5,879 employees as of December 31, 2012. This number will increase in 2013 due to the continuous growthof the organisation. All of our personnel are full time employees.

We encourage diverse, multi-talented, and multi-cultural employment of people with various ranges of experience,which brings a broad range of ideas and value to our company. The diversity of our employees has helped us notonly to grow our work force but also to understand and respect diverse approaches to life and work.

We have 24 members in our governance bodies for non-corporate reporting who are all male representativesand are all above Grade 18.

4,222

2010 2011 2012

4,943

5,879

Our Workforce

18

G > 50 G 30 - 50

6

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Western Arab UAE National

Diversity of Governance Bodies

We aspire for the growth of our company without compromising the interests of communities and the UAE. Weplace a very high priority on the national objective of Emiratization. ADCO prides itself in recruiting the highestnumber of UAE Nationals to train and properly integrate them for the future. To date, 42% of our employees areUAE Nationals and we aim to increase the number of UAE Nationals in the coming years.

1,070

2,469

2,134

1,044

229 316

1,990

1,470

6040

UAENational

Arab Western Asian Others

Distribution by Nationality 2011 / 2012

2011 20125,827

4,875

5268

Permanent Fixed Term

Distribution by Contract Type 2011 / 2012

2011 2012

26%

68%

6%

Distribution by Grade Type 2012

G18 or Higher G8 to 17 G7 or Lower

87.5%88.3%

12.5%11.7%

Male Female

Distribution by Gender 2011 / 2012

2011 2012

1,2971,140 1,132 1,099

2,671

3,483

< 30 yrs 30 - 50 yrs >50 yrs

Distribution by Age 2011 / 2012

2011 2012

We report our number and rate of new employee hires and employee turnover by gender and age group.

Employee Details Male FemaleAge

(50)

Job Grade≤7

Job Grade

8-17

Job Grade≥18

Number of new employee

hires1,017 194 438 736 37 156 1052 3

Rate of new employeehires

19.76 26.47 33.77 21.13 3.37 55.71 19.18 2.56

Number of employees left 202 28 32 126 72 13 211 6

Rate of employees left 3.93 3.82 2.47 3.62 6.55 4.64 3.85 5.31

We promote and ensure ‘Equal Opportunity’ for all of our employees, and no preferential treatment is givenbased on gender, age, or origin. Salary grades and basic salaries (including minimum salaries) are the same formale and female employees. Any differences in salary are driven by grade, experience, education level, yearsof service, and performance rating.


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Improving Labour WelfareWe have a substantial contractor and sub-contractor labour force of approximately 20,000personnel across our fields and Head Office. We arecommitted to labour welfare rights in our businessoperation to protect ADCO’s strong reputation inthe oil and gas industry. Welfare requirements are

an essential part of the labour’s legal rights and area contributing factor in reducing possible harm andaccidents to the workforce and potential unrestamong labours.

Most contractor labours does not receive the entire

welfare benets due to the lack of accountabilityby the contractor’s management or due to the lackof frequent monitoring by contract administrators.In an effort to correct the current situation, ADCOestablished a dedicated department titled the“Business Conduct Assurance Department” (BCAD)in 2010 to perform the role of assurance activitieson labour welfare compliance. BCAD is a unit of theCorporate Assurance Division and has a direct lineof reporting to the ADCO CEO.

A major initiative by the BCAD was development

and implementation of the ‘Attachment F – Labour

Welfare Standards’ which summarizes all criticallabour welfare requirements in line with ADNOC

Codes of Practice, UAE Works Relations Law of1980 (UAE Labour Law), and ADCO expectationon Welfare. The standards have been includedin all of ADCO’s service contracts since January2011. ‘Attachment F’ sets the benchmark for labourwelfare that is superior to labour law. The mainelements of ‘Attachment F’ consist of the following:• Timely payment to contractor’s personnel

(salaries, overtime, and benets);• Minimum monthly salaries (as dened);• Work schedule (overtime, leave relief, leave

schedule, off days, leaves, and medical);• Driving conditions and transportation of

contractor’s personnel;• Provision of return trip air ticket on annual leave;• Camp facilities (accommodation, food, and

safety measures);• Provision of free medical facilities;• End of service benet payment; and• Emirates Identity Card fees reimbursement.

BCAD has developed a methodology for LabourWelfare Compliance reviews which provides asystematic and focused approach for labour welfarereviews. The objective of the review is to provideassurance to ADCO management and other keystakeholders on contractor and sub-contractorcompliance with Labour Welfare Standards.

Some of the key action items implemented bycontractors as a result of labour welfare reviews

conducted by BCAD are as follows:• Leave salaries and air ticket allowance (annuallyfrom 2013);

• Salaries and overtime on an annual basis;• Emirates Identity Card fees reimbursement;• Commitment to implement action plans and

agreed payroll reviews;

• Payment of basic salary as per the contract;• Payment of salaries and overtime through ‘Wage

Protection System’; and• HSE incentive scheme.

Labour Welfare Reviews in 2012

Plan Actuals % Increase

Conductedspot checks ofcontractor’s camps

40 75 88

Reviewed

contractor payrollrecords

18 40 122

Held one-on-one /group meetings withlabours

180 851 373

In addition to labour welfare assurance reviewsconducted by BCAD, labour welfare committeeshave been established in NEB Asset and ASAB Full

Labour Welfare Compliance Methodology

Field Development Project to obtain commitment from the contractor’s management and to create a forum todiscuss labour concerns and agree on action plans. The primary objectives of the committee are:• Ensure that labour welfare issues are implemented;• Ensure that labour medical assessments have been implemented;• Conduct periodic verication audits;• Resolve worker welfare issues;• Ensure the implementation of incentive scheme;• Develop / conduct annual sport and social events;• Implement labour hotline and encourage labours to report any deviations; and• Other matters related to Labour Welfare

Achievementsin 2012

Any type of collective bargaining is not permissibleunder UAE law. Thus, our employees are not coveredby any collective bargaining agreements. However,we have a systematic management approach to

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Number of Issues Raised

2011 2012 deal condentially with employee and contractorgrievance.

ADCO implements all necessary actions to avoiddiscrimination in the workplace. Any kind ofdiscrimination with regard to employment or becauseof race, religious belief, colour, sexual orientation,physical disability, mental disability, marital status,age, ancestry or place of origin is strictly prohibited.We are committed to providing a workplace thatenables all employees to perform their work freefrom any form of discrimination. Discrimination isaddressed in ADCO’s Personnel Policy Manual.

GRIEVANCE PROCEDURE

• All employees have the right to ask questions about their employment and work, and they also have theright to expect authoritative replies and answers within a reasonable period.

• Employees can raise a grievance through the Grievance Procedure which is described in Personnel PolicyManual, Part 11 Sections 5 and 6.

• The purpose of a grievance procedure is to allow the employee to raise a formal grievance if his/her attemptto resolve a problem at work informally is unsuccessful.

• Issues such as employee/supervisor disputes, performance evaluation disagreements, justifying long-termsick leave absenteeism, justifying promotions, transfers, salary increases or reassignments are handledthrough the Grievance Procedure.

ADCO developed an ‘Ethics Helpline’ which is a tool developed to report any violations or grievances withoutfear of reprisal. The ‘Helpline’ is managed by independent consultants. The ‘Helpline’ which is accessed atwww.EthicsPoint.com, is the avenue for employees to report concerns anonymously and condentially. Work-related issues on matters such as HSE, fraud, theft or kickba ck, management and workplace malpractice, privacy,information security and misuse of ADCO property, nancial management, violations of law, etc. are generallyaddressed through the ‘Helpline’.

We believe that all of our employees have the right to a work environment free of all forms of sexual harassment.Sexual harassment is specically prohibited as unlawful and is a violation of Sexual Harassment Policy.


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Corruption, Anti-Competitive Behaviour

and ComplianceNo ADCO operation has been formally assessed for

risks related to corruption. However, our ‘PersonnelPolicy Manual’ provides general rules andrequirements to prevent the practice of corruption.ADCO’s ‘Ethics Helpline’ provides employeeswith a mechanism for reporting violations and formanagement to investigate alleged violations.

There is no official anti-corruption trainingprogramme at ADCO.

Employee BenetsADCO provides a wide variety of benets to allof our employees. We review our salary structureannually to ensure we are competitive and alignedwith the market conditions and to attract andretain high calibre talent. Our other benet plansare not only designed to comply with UAE’s labourrequirement but also to recognise our employee

educational qualication, professional experience,and skills. We offer competitive levels of annualleave entitlements, maternity leave, and afterservice benets considering the years of service.

ADCO offers employees the opportunity to takeleave for many reasons including medical, holiday,and the birth of a child irrespective of the genderof the parent. In 2012, 133 employees took leave forthe birth of a child. Approximately 51% were maleemployees (i.e. 69 employees) and approximately49% were female employees (i.e. 64 employees).Everyone returned to work following their scheduledleave period and is still working with us.

Benets Types Availability

Life insurance √

Health care √

Disability / invalidity coverage √

Parental leave √

Retirement provision √

Education assistance √

Bonus / spot bonus √Other (Interest Free Car Loan) √

Other (furniture allowance) √

Paid leave (Hajj, medical escort,examination, special event, etc.)

√

Employee Life Long LearningReorganising the importance and value of providingemployees with career opportunities and pathsthat realize and unleash their potential, learningand development frameworks and programs coveremployees’ career life cycle from graduate level allthe way up to leadership or technical progressionprograms which are the areas of focus for the newlyformed Talent and Capability Management Division

(T&CMD).

Employee training offered by ADCO is based on jobgrade, competence gaps, and required capabilitiesat all levels of the organisation.

We support our employees through internal trainingcourses, funding for external training or education,and providing sabbatical leave periods withguaranteed return to employment. We also havetransition assistance programs to support employeeswho are retiring or who have been terminatedthrough a ‘Severance Pay’ programme which takes

into account an employee’s age and years ofservice.

Core Training Programmes to Improve Skills in 2012

Job Category Training DetailsCost of Training

(AED)

Grade 17 and aboveE-Learning, Industry Shareholders (ISH), conferences, succession planningprograms

2.1 M

Grade 14-16 E-Learning, ISH, conferences, education Sponsorship, Annual TrainingPlan (ATP), ISH visits, leadership training programs

5.6 M

Grade 11-13E-Learning, English, full time studies, education sponsorship, ATP,Competency Assurance Management System (CAMS), GraduateDevelopment Program (GDP), Critical Task Plan (CTP)

8.6 M

Grade 10 and Below E-Learning, English, ADCO Pass, ATP, CTP 3.7 M

Training Hours and Costs in 2012

Training hours delivered in the reporting year to employeesMale Female Total

262,185 101,703 363,888

Job GradeG7 or below G8 - 17 G18 or above

3,737 355,202 4,949

Total cost of training delivered in the reporting year toemployees (AED)

Male Female Total

102,904,689.75 39,917,188.06 142,821,880.3423


1,466,667.79 139,412,866.19 1,942,347.5

Average number of hours of training delivered to employees Male Female Total5,095 13,875 NA


1,335 6,475 4,380

Total number of training hours delivered in the reporting yearto contractors

Male Female Total

- - 27,208

Total cost of training delivered in the reporting year tocontractors (AED)

Male Female Total

- - 2,628,278

Performance Review and Employee SatisfactionADCO has a corporate strategy on employee engagement covering all employees. Retaining employees is

fundamental to ensuring continuity and excellence of our company. ADCO conducts periodic ‘employeesatisfaction surveys’ to provide all employees an opportunity to makesuggestions on improving our work environment and comment onour systems and policies. Such initiatives assist us in measuring thesatisfaction level within the organisation and identify the areas which

require improvement.

Our ‘Performance and Career Review System’ is a toolfor ADCO to assess the performance of employeesand review of their career goals and is in line withcompany goals and performance expectations.Our review system assists us in receiving employeefeedback, assessing performance, and improvingthe performance of our employees. Everyemployee has an bi-annual performance reviewwith their manager or supervisor. Each employeeevaluation is recorded in our performance andcareer review system.

A total of 5,698 ADCO employees received a formal performanceappraisal and review which represents 97% of our total workforce in2012.


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At the beginning of each year, our management (comprised of the shareholders and board of directors)

reviews the annual Business Plan and set Corporate KPIs. The KPIs are cascaded through the Departmental LineManagement to every employee who translates them into personal objectives. At mid-year, each employeehas a review against their established objectives. At the end of the year, the review process is repeated toreect on their annual performance.

Change ManagementWe do not have any minimum timeframe for notifying our employees of signicant operational changes.However, in case of any signicant change, we keep our employees well-informed of operational changesthrough a formal as well as informal communication channel. Those channels include management staffbriengs, road shows with questions and answers sessions, and intranet based ‘Frequently Asked Questions(FAQs)’ and information. Such news is communicated through our intranet which can be accessed by anyADCO employee in either English or Arabic. In addition, department heads interact with department membersin a regular and effective manner. We have a proven history of complying with all UAE labour laws.

Examples of change management policies and initiatives include, but are not limited to:• ADCO Management Framework;• Asset Integrity Management System (AIMS);• Change and Communication Committee;• Addition of, and update to, change management training delivered in the leadership training programs;

and

• Updated Responsible, Accountable, Consulted, and Informed (RACI) Charts for dissemination ofinformation.

Employee ExitOur ‘Personnel Policy Manual Part 12’ governs the process for employees leaving ADCO due to resignation,retirement, or termination. However, the policy is not stipulated in writing in employee contracts. Employeesleaving the company must give prior notice. Similarly, employees being asked to leave the company are alsogiven prior notice. The notice period depends on the grade of the employee.


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HEALTH AND SAFETY ADCO is fully committed to the prevention ofall incidents, injuries, and occupationalillnesses to its employees, contractors, and stakeholders,ADCO HSE policy provides clear guidance that we holdall levels of management, supervision, and employeesaccountable for HSE performance.

Our continued commitment to a strong culture ofhealth and safety saw our rate of lost time injuryfrequency fall in 2012 for the fourth year running.We saw a slight increase in our total recordableinjury rate and will maintain our efforts of continuousimprovement in our health and safety performance.Our proactive monitoring of our performance helps us

to learn from our past mistakes and help to ensure asafer working environment for all of our people.

Assessment of health and safety risks is an integral partof the planning of any new project or modication ofan existing project through our Health Safety Environmental

Impact Assessment (HSEIA) process.

In 2012, ADCO updated its Life ProtectionRules (LPRs), a set of rules which apply to allemployees and are focused on more highest

risk activities. We are endeavouring tocreate a culture where health and

safety is everyone’s responsibility.

• Manage operations in a manner that assures the health, wellbeing and safety ofADCO’s employees, contractors, and community and minimises the impact on theenvironment.

• Increase focus on improving: supervision, contractor management, life protection rules,and road safety to achieve zero Lost Time Incidents (LTIs).

• Promote HSE culture and best practices for continuous performance improvement.• Contribute to a sustainable development by integrating environmental, economic and

social values within ADCO’s decision and operating strategies.

3

MultifacilityLevel

FacilityLevel

OrganisationalLevel

1

3

Number of Health and Safety Committees

ADCO is committed to the health and safety of ouremployees, our contractors, and local communities.For us, health and safety are always our highest

priority. ‘Zero Harm’ journey, safety considerationsat every step and constant vigil are the maincharacteristics of ADCO’s commitment to healthand safety.

We conduct occupational health and safetydialogues at the facility level (eld), multi-facility (HSETeam Leader’s), and organisational level (ProcessSafety Committee).

Total workforce represented in formal jointmanagement-worker health and safetycommittees – 1.5%

We are proactive in our health and safety culture. Following ADNOC guidelines, we always study the health andsafety risks before the start of any new project as well as modication of existing operations covering the entireproject lifetime. In 2012, we undertook the following HSEIA studies.

HSE Risk Management Studies in 2012

Project Name Report Submission Approval Status

ASAB - FFD (HSEIA – III) August 2012 Pending

SAHIL & SHAH FFD (HSEIA – III) December 2012 Pending

Bab Gas Compression Project PH-1 (HSEIA –III) August 2012 Pending

Shah Spiking Gas Compressor Project (HSEIA II) August 2012 Approved

QW buildings and infrastructure project (HSEIA – II) August 2012 Approved

BAB Habshan PH-1 (HSEIA I) July 2012 Approved

HAIL eld Development (3D seismic and Drilling) Feb 2012 Pending


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ADCO has high regard for safety of staff, protectionof the environment, and integrity of its assets.We achieved very challenging production andoperations targets during 2012 while also having ahigh focus on personnel and process safety.

During 2012, ADCO recorded over 160 millionMan-hours worked by over 52,000 ADCO andcontractor staff and we had driven over 200 million

kilometres. Regrettably, we have had two workrelated fatalities, 20 Non Accidental Deaths (NAD),and over 70 serious injuries. In addition we had 23vehicle accidents and six spill incidents.

During 2012, ADCO recorded the lowest LTIF of 0.08as well as our second lowest TRIR of 0.47 over thepast ten years.

M i l l i o n M a n h o u r s W o r k e d

L o s t T i m

e I n j u r y F r e q u e n c y R a t e /

T o t a l R e c o r d a b l e I n j u r y R a t e

Manhours Actual LTIF TRIR

ADCO’s Historical LTIF & TRIR Values & Trends

ADCO has exercised signicant efforts and resources to achieve ahigh safety standard at its worksites. However, health and safetyincidents have reoccurred. To create a dynamic learning process, a referencepoint was required to ensure that learning from incidents has been captured inwork plans to create awareness and reinforce critical safe behaviour. Effective

communication of ‘lessons learned’ has been adopted for the Sahil project asone of the operational performance indicators.

To support the implementation of this initiative, the Sahil team developed‘Pictorial Tool Box Talk’ guidance for communicating hazard information andinstruction. Due to the enhanced efforts to raise awareness about prior incidents,

a decrease in the number and severity of serious injuries due to repetitive incidentshas been observed. The initiative has also served ADCO and contractors as a means

to overcome language barriers between its multi-national workforces and contribute toempowering the HSE culture in a sustainable manner.

The initiative has enhanced ADCO’s reputation as a progressive organisation by cultivating safe workingbehaviour through effective communication among its staff and contractors. The initiative has been wellreceived by employees, contractors, and shareholders and has created an open environment for sharinginformation. The programme is now in its third year. The lessons learned component is planned to be linkedto ‘Electronic Permit to Work’ (e-PTW) to provide HSE induction and awareness for new employees andcontractors.

Non-Accidental DeathsA NAD is a death of staff or contractor worker dueto non-work related illness or suicide in the workenvironment. NAD events are among one of thechallenges encountered by HSE professionals inthe oil and gas industry. Investigating NAD eventsprovides opportunities to identify risks which wouldotherwise remain unnoticed and continue to exist.These risks are often linked or associated with gaps

in medical assessment/tness to work, occupationalhazards, training, and medical emergency response.NAD investigations assess the adequacy ofimplementation of these management controls atwork locations, especially in remote locations, andprovide opportunities for improvement.

Due to the nature of NAD events, which are linkedwith individual’s life style, cultural and personalchoices are generally beyond the framework of HSEManagement System. However, improvements inimplementing certain elements could improve focusand response to such events. Gaps/opportunitiesidentied through NAD investigations were groupedinto the following four categories:• Fitness to work: Assessment and Follow-up on

Chronic Illnesses• Initial First Aid Response• Adequate Transfer of Patient in Ambulance

• Effective Response of Physician in Managing thePatient

These investigations have led ADCO to furtherenhance Fitness to Work Assessment, availabilityof Certied First Aiders in eld crews, and effectiveresponse to medical emergencies.

Road SafetySince 2001, ADCO has consistently improved itsroad safety performance and achieved its bestperformance in 2008 by recording a VehicleAccident Frequency (VAF) of 0.11. Our road safetyperformance in 2012 nearly equalled the 2008

performance with a VAF performance of 0.12. Dueto the increased number of vehicles, large numberof new drivers, and increasing journey distances, the

road safety performance has become a challengeboth to ADCO and its contractors. Consideringthe km’s driven, this year is the highest in ADCO’shistory.

M

i l l i o n K i l o m e t e r D r i v e n / N o . O f V e h i c l e A c c i d e n t s

V e h i c l e A c c i d e n t F r e q u e n c y R a t e

KM Driven Vehicle Crashes VAF

ADCO Road Safety Performance

Incident Prevention through Learningfrom IncidentsPreventing the ‘next accident’ remained a key issueand a challenge to ADCO in 2012 and signicantefforts and resources were assigned to investigateincidents and embed incident lessons learned into

work planning. A Lessons Learned communicationstrategy was developed following a series ofworkshops with stakeholders including labourers,foremen, engineers and Asset Management teams.It resulted in redesigning contents (insertion ofpictures, highlighting causes and specic learning)and multi-lingual translations (Arabic, Hindi, Bengali

and Urdu) to remove language barriers for workers.During 2012, 55 signicant and serious incidents wereinvestigated and lessons learned were developed,communicated, and embedded in work plans.

HSE Electronic Analysis Reporting &Tracking System (HEARTS)HEARTS, the online HSE event reporting and actiontracking system, was enhanced to make it moreuser friendly in the generation of reports and HSEdashboard. During 2012, HEARTS was used to reportover 2500 HSE events.

Multi-lingual Booklets on IncidentLessons Learned

12%

12%

6%

21%

14%

35%

Types of Events Reported through HEARTS

Hazards Audit Accidents

S ug ge st ion s Tour an d In spe ct io n

Near-Misses

In 2012, over 2500 actions from following events weretracked using the HEARTS.

During 2012, ADCO recorded 380 incidents (wor k andnon-work related) of varying nature.

12%

10%

3%

28%

5%

42%

Injury/Illness Transportation Onshore Spill

F ir e Ga s R eleas eProperty Damage


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ADCO Logistic CentreTo strengthen the ‘Safe Land Transportation andMachinery Equipment Logistics’ programme, ADCOhas established the ‘ADCO Logistic Centre’ in 2012.The centre unies all logistic activities in one locationand offers an ‘Intelligent Logistic System’ to ADCOas well as advanced road safety tools. The centreoperates as a focal point to perform preventivefocused logistic functions to serve both ADCO and its

contractors, utilize advanced information technologysolutions, and offer value-added services to roadsafety, land transportation and logistics managementthrough:• Promotion and participation in drivers behaviour

change and performance improvement;• Protect and save human lives;• Minimization of vehicle accidents and any losses

associated with them;

• Maximisation of eet utilisation in an effectiveand efcient manner;

• Prevention of any unnecessary expenditures andachieve costs savings;

• Unique solution in Journey Managementprocesses of ADCO and contractors;

• Contribution to continuous improvement ofADCO Road Safety Management System; and

• Establishment of compliance requirements forADCO and contractors.

ADCO is recognising the value of providing clear, simple, and consistent communication regarding risks in theworkplace and the proper use of barriers and safeguards to protect our workforce. Hence, in the interest ofprotecting precious lives, ADCO is re-enforcing a mind-set of nine LPRs on a continuous basis. Providing moreemphasis that breaking one of the LPRs could result in serious injury or death, followed with negative impact on

the families involved and company reputation. ADCO’s 9 LPRs are the next step in our goal of “Zero HARM.”

The LPR rules were originally implemented in 2009 and revised in2011. The LPRs focused on activities where non-compliance hasthe highest potential to result in death or serious injury. For 2013,there is a plan to establish LPR guideline that will provide clearguidance for appropriate implementation of LPRs to allparties of ADCO.

The LPRs apply to all employees and all operationsunder ADCO’s operational control which set outclear instructions to help ensure that our people andsubcontractors are protected. We are determined toprotect lives.

By implementing ADCO’s LPRs, the following changeshave occurred:• The HSE culture has been substantially improved

and resulted in good understanding of HSE issues;

• Applying the LPRs has resulted in improving HSEperformance by reducing the number of incidentsand near misses as well as enhancing the HSEculture throughout the organization;

• A presentation of the LPRs results and implementationwas given to senior management of the ADNOC Groupof Companies, shareholders during Technical Committeemeetings, and the Society of Professional Engineers (SPE)conference and received high appreciation; and

• Contractors and subcontractor management workingwith ADCO have appreciated the LPR initiative inprotecting their labour force and improving labourHSE awareness.

ADCO’s9 Life

ProtectionRules (LPR)

In order to achieve these objectives, the LogisticCentre used a 3P, (Preserve, Protect and Promote)model to develop its strategy and its operationmanagement plan in line with ADCO’s strategic

expectations. A GPS based real-time, In-VehicleMonitoring system has been installed in all ADCOand contractor vehicles that transmits real-timevehicle data to the ADCO data centre. ADCO has

developed an integrated online system designedto monitor, record, analyse, and improve driver andvehicle performance. The project was implemented

in a timely manner with state-of-the-art facilities.

ADCO has shared this initiative with many companies

operating with large vehicle eets in the region. Thecompanies have reviewed and appreciated thisopportunity and have commended ADCO on thisinnovative initiative, commitment to safety, andutilising advanced technology to improve safetyperformance.

Save Lives through Cancer Screening (Colorectal) Programme

ADCO is committed to ensure the wellness and tness of our employees. We ensure that ouremployees are well cared for because we consider health to be at the core of a sound sustainable philosophy.

Cancer is the third leading cause of death in the UAE after cardiovascular and vehicle accidents. Whilethe company is addressing cardiovascular diseases and accidents, little attention was given in thepast to address cancer. As part of ADCO’s sustainability mission during the 2012 reporting period, wegave significant importance to ‘Cancer Screening Programme.’ Employees were characterized as high,medium, or low-risk based on specific screening criteria. Some of the criteria included history of tobaccouse, unhealthy diet, lack of physical activities, age 50 years and above for male and 40 years for female,chronic signs and symptoms, and family history of cancer. Employees in the ‘High Risk’ category werereferred to gastroenterologist for colonoscopy screening.

Apart from the screening, the medical department performed several lectures on cancer prevention addressingthe most common cancers in the UAE such as leukaemia, prostate cancer, breast cancer, and lung cancer.

YearNo of cases that

underwent colonoscopyNo of cases that had

positive polyp and wereremoved

Rate

2011 48 25* 52%

2012 47 32 68%

* 1 case with cancer stage 1 and polyp

In 2012, (January to November) 807 employees underwent periodic medical examination and 103 employeesunderwent cancer screening. Of 103 employees, 47 were referred to a gastroenterologist and underwentcolonoscopy and 32 cases were positive and had polyps were removed.

Based on our statistics, 57 employees possibly avoided developing cancer in the future, which denitelyincreased their morale and health condence. ADCO is proud to be the rst company in the UAE to implementa cancer-screening Programme that includes colorectal screening. We intend to continue and further developthe Programme.


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ECONOMICADCO’s economic objective is to achievegrowth consistent with our shareholderexpectations and to achieve the growth in anenvironmentally and socially responsible manner. Wealso recognise our responsibility to foster growth inthe national economy and to share our wealth withthe community by promoting jobs and businessopportunities.

ADCO is committed to ensure that the UAEeconomy benets from our success,and 2012 generated excellent value to the UAEeconomy. We have a responsibility to drive a cultureof sustainability within our company, our suppliers, and

the UAE.

Economic PerformanceADCO’s economic objective is to achieve growth in line with our shareholder expectations in anenvironmentally and socially responsible manner. The 2012 reporting period was one of the busiest years inADCO’s history in terms of the large number of development projects, product delivery, and organizationalchanges. The reporting period was highly successful in terms of generating value for the UAE economy andshareholders.

ADCO is committed to ensure that the UAE economy benets from our continued development. As an example,we made over 56 million AED in local community investments in 2012.

Our nancial business strategy is managed by our JMC and Board of Directors and is supported by the FinanceDivision. As an ADNOC group company, we are not required to publicly disclose our nancial data andeconomic information that is viewed as sensitive and condential. Consequently, sensitive and condentialinformation is not provided in this report. ADCO does not receive signicant nancial assistance from theAbu Dhabi or the UAE government.


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41

Supply Chain ManagementADCO recognises that we have a responsibility to drive a culture of sustainability within our company as well asour suppliers. ADCO is striving to be a regional leader in supply chain management by using progressive thinkingand technology best practice in line with our core values.

ADCO is fully committed to using local suppliers and distributors in order to support the local community. In 2012,100% of our suppliers were sourced from the local market.

ADCO understands that its operations can have a signicant impact in our areas of operation and is actively

working towards developing a framework which will guide our operations and ultimately ensure sustainability inthe management of our supply chain.

As a member of the global oil and gas industry,a major challenge for ADCO is to balance thethree core elements of sustainable development- economic, environmental and social – in ourbusiness operations. It is important that we developeffective operational strategies to enhance oureconomic performance while we also developfeasible implementation plans of the higheststandards for environmental stewardship and socialaccountability.

Historically, workplace safety and occupationalhealth and regulatory compliance have always been

our primary goals. Currently, climate change andenergy policy, biodiversity conservation, and respectfor human rights are at the forefront of sustainabilitydiscussions. We understand that effective ‘SupplyChain Management’ can inuence all of thesesustainability challenges and result in positiveoutcomes.

Integrating sound and well-balanced sustainabilityprinciples throughout all aspects of our supply chainmanagement is ADCO’s goal.

To be a regional leader in providing supplychain management services by usingprogressive and technological best practiceswhile preserving ADCO’s core values.

Manage ADCO’s supply chain requirements in accordance withthe highest business and ethical standards and full commitmentto ADCO’s core values, meeting shareholder expectations and

guidelines.

Supply ChainManagement

Vision

Supply ChainManagement

Mission

Applying Sustainability in Supply Chain Management’ is a relatively new concept for ADCO andtherefore, we need to feel our way. To assist us in achieving our goals, we plan to engage an external

consultant to develop a ‘Sustainable Strategy Framework.’ The framework will be developed in phasesas there will be periods of change required within ADCO and potentially for our stakeholders, before full

implementation of our new policy, requirements, and procedures can be achieved, specically in SupplyChain Management.

The framework will address the overall context of applying sustainability principles within the oil and gasindustry in general and ADCO in particular. The framework will take the potential economic, social, andenvironmental implications into consideration.

• Supplier’s survey: This will address our suppliers’ adaptability for sustainability principles;

• Challenges: Identify the challenges for the oil and gas industry in applying sustainable practices withintheir operations;

• Impact Assessment: Assessment of potential environmental, social, health, and economic impacts;

• ADNOC OPCOs: Review of other OPCOs and Gulf Cooperation Council (GCC) oil companies approachand commitment to sustainability and their applicability in ADCO;

• ADCO Shareholders : An overview of current sustainability practices performed by major international oiland gas companies, including ADCO’s shareholders;

• Conclusion and recommendations: A summary of the analysis of the above information andrecommendations to apply Supply Chain Management in our operations;

• Action Plan: A comprehensive list of essential and interconnected actionsthat must be addressed in order to develop a program aligned with ADCO’soperations and goals; and

• Implementation plan: A focused plan to direct all aspects of our various

operations to achieving our Supply Chain Management goals.

The framework is scheduled to be completed in 2014.

Applying Sustainability in Supply Chain Management

ADCO is committed to applying our purchasing

power to bring about long-lasting and signicantchanges in our Supply Chain Management. Byintegrating social, environmental, and economicsustainability considerations into our supply chainoperating decisions, we can improve outcomes forthe community and at the same time achieve bettervalue and create an effective and efcient supplychain.

Our Sustainable Procurement Vision“ADCO recognizes its responsibility to implementits procurement and supply chain activities in an

environmentally and socially responsible manner.ADCO will strive to incorporate environmentaland social considerations into their processes ofselecting suppliers, products and services. ADCOrecognizes that it is responsible to encourage andincentivise its suppliers and contractors to minimizesocial and environmental impacts associated withthe products and services they p rovide. ADCO alsorecognizes its responsibility to require and support

its staff to follow our sustainable business policiesand practices in all areas, including procurement,contracting, logistics and asset management.”

ADCO Procurement PolicyADCO understands that the impact of our operationis important to the economic development of AbuDhabi and the UAE and has put measures in place tohelp ensure the continued development of the localsupply chain. We recognise our responsibility to fosterthe growth of the national economy and share ourwealth with the community by promoting jobs andbusiness opportunities at a national level.

We have a well-dened and sound procurementpolicy which complies with ADNOC’s directivesand UAE labour law. Before awarding any contract,

the service provider is evaluated against the pre-determined criteria where environmental, healthand safety, and quality parameters are givenequal weight along with technical and nancialparameters.


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Procurement - Major Pre-Qualication Criteria• Government requirements (licenses and certicates)• Logistics including location (Abu Dhabi ofces, workshops availability, transport facilities, etc.)• Organization, resources and competence• Risk evaluation and management• Quality and diversity of products or services• Financial position• Capabilities (manpower, equipment, size of production)• Adequacy of outlets and service points convenient to ADCO operations

• Records of past work experience• HSE Performance

Local Procurement Promoting InitiativesADCO is fully committed to use local suppliers and distributors in order to support the local community. Thiscommitment which is also in line with good sustainability practice as using local services and products is alsogood energy conservation.

Goods procured by Contractor shall,whenever possible, be purchased from thelocal market of Abu Dhabi Emirate.

(ADCO - Corporate Procedure Manual No. 5)

Local HiringEmiratization Snapshot Emiratization

target of 75% by2017

ADCO PassProgram to

provide vocationaltraining with pay

for UAE Nationalsbefore hiring

Female

employeesallowed in

administration

positions in the

elds with dailycommute

Competency

AssuranceManagement

System (CAMS) /Graduate Development

Program (GDP)/Critical Task

Program (CTP)

Coaching andmentoring

Full-time study leave

Our procurement policy promotes locally based suppliers and the details are presented in our ‘Labour Practice.’In cases which require specialised services or technological upgrades, it is mandatory for the international serviceproviders to have a local partner. In 2012, 100% of our procurement budget (including service contracts andpurchase of materials) was expended with local suppliers and contractors based in UAE.

We also have a long-term goal of attracting and developing a talented national workforce covering all levels ofour operation. In 2012, approximately 63% (71 employees) in senior management positions (ADNOC Job Grade18 and above) were UAE Nationals as well as recruitment of 335 UAE nationals.


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THE COMMUNITY Social responsibility is a signicant part of ADCO’s cultureand we understand the importance of responsibilitytowards the communities in which we operate around.Moreover, we are committed to have a positive impacton the surrounding communities and societies mainly inthe Western Region of Abu Dhabi Emirate.

During 2012, our community development projectsincluded the ADCO Public Library at Al Marfa,Western Region Recruitment Exhibition, Al Dhafra CamelCompetition, Liwa Dates Festival, and Scholarships forthe students.

SocietyWe are aware that our operations have a veryinuential role on local communities and weunderstand that the expectations for socialresponsibility are therefore greater.

Following ADNOC’s Code of Practices (CoPs),we implement systematic HSEIA studies for allexisting, new or substantially altered projectsto identify, avoid or mitigate the impacts onthe surrounding area. Proper and effective riskassessment is completed before any critical activityis executed. Our Health Safety EnvironmentalManagement System (HSEMS) was developed andis implemented specific to our business operations

which promotes the highest standards in productsafety and quality, occupational health, safetyand environment. As a result of the recerticationaudit conducted in November 2012, we havebeen recertied for International Organization forStandardization (ISO 14001) and OccupationalHealth and Safety Assessment Series (OHSAS 18001)

for all assets and our Abu Dhabi ofce as a thirdparty for re-assurance.

We are undertaking several communitydevelopment projects and providing considerableresources towards local economic developmentand society in general.

Community Development Project Initiatives

Project Details Completion Date

Western Region RecruitmentExhibition

Encourage national youth to join ADCO Q4 2012

Al Dhafra Camel Competition Promote tradition and heritage Q4 2012

Liwa Dates Festival Promote tradition and heritage Q4 2012

ADCO Family Day To show appreciation of ADCO staff and their families Q2 -2012 (Annual)

ScholarshipsADCO sponsors 20 students to complete their studies incoordination with Western Region Development Council

Q3 2012

Supported Emirates FoundationYouth Development Program

To address nancial literacy, youth wise disability,volunteering and leadership and empowerment

2012

ADCO Public Library at AlMarfa Joint initiative by ADCO and ADACH to develop theknowledge and education of the public at Al Marfa Q4 2013

Energy Explorer Competition atWestern Region

To promote and brand ADCO image among studentsand their teachers in Western Region Society

Q1 2013

Handicraft Ladies Competition To provide opportunities for western region ladies to sharetheir small businesses

Q2 2013

ADCO Festival DayTo maintain the positive image of ADCO as a leadingexploration and production company in the UAE

Q1 2013

Student ExhibitionMotivating and encouraging the local talent to joinADNOC institutes and to promote the ADCO brand

Q2 2013

MEOSEducational opportunities to all professionals with aninterest in the future of the Middle East’s hydrocarbonindustry

Q1 2013


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As part of ADCO’s project risk assessment, we consider risks to society as one of the key indicators and therefore,we incorporate social impacts in our assessment studies (i.e. HSEIA). The assessment studies set the monitoringparameters and scope from the society perspective. The assessment details for 2012 are documented further inthe ‘Health and Safety’ section.

Emirates Foundation for Youth Development is an independent philanthropicorganization set up by the Government of the Emirate of Abu Dhabi and

working on three key themes: Leadership and empowerment, Social inclusionand Community engagement. Under the ‘Youth Development Program’, theFoundation is now focusing more to assist young people, associated institutions

and community organizations to contribute to the nation’s long-term progressand sustainability.

In line with ADCO’s core mission of delivering a positive and permanent impact on the lives of youngpeople, in 2012, ADCO supported Emirates Foundation to develop their new programmes to addressnancial literacy, youth wise disability, volunteering and leadership and empowerment. To improve thewelfare of people across the UAE, we are committed to extend our support to Emirates Foundation infuture also.

Product ResponsibilityThe GRI Guideline ‘Product Responsibility’ indicator is defined as the responsibility of the organisation forthe products and services towards customers and users from the health and safety perspective. Productsand services are expected to be fit for their designated purpose and not to pose any insufferable healthand safety hazards.

ADCO does not directly interact with customers and therefore, the ‘Product Responsibility’ in this GRIclause concerning customer health and safety does not apply to us. Accordingly, ADCO does not haveany formal product responsibility policy, goals, or objectives. However, we understand the potentialimpingement of our business operation to the people, environment, and economy. Thus, we understandand accept that it is our responsibility to take a stand against unacceptable products and practicesregarding health and safety. Health and safety aspects of our operation are addressed by the HSED.

Partnering Emirates Foundation


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CLIMATE CHANGEC limate change is currently one of the mainchallenges affecting the sustainability of society anddevelopment. ADCO fully acknowledges the criticalrole the oil and gas industry has in reducing emissionsof GHGs. We are striving to reduce our emissions byincreasing our energy efficiency and better managingour GHG emissions. Improved energy efficiency is beingachieved through the application of more efficienttechnologies in our processes, flare gas recovery,adoption of green building concepts, and througheducating our people in energy management.

ADCO is investing in technologies whichreduce our emissions of GHGs. Projectssuch as our are gas recovery project not only reduceour carbon footprint, but they prov ide a source of natural

gas to support downstream industrial development inAbu Dhabi. We have taken the initiative of working with

Masdar on a voluntary basis on the Clean DevelopmentMechanism (CDM) project and our Shah are gas recovery

project is currently being reviewed by the United NationsFramework on Climate Change (UNFCC) to register for

carbon credits.

Energy

In 2012, ADCO introduced several new initiatives tocontinue to improve our energy management.

• Introduced energy efcient equipment and systems such as variable speed drivers in large compressorsand pumps;

• Conducted detailed energy and emission assessment studies in all ADCO elds;

• Continued the program to phase out inefcient power generators and convert to higher efciencygenerators;

• Adopted implementation of Green Building concepts in building projects (e.g. Shah accommodation);

• Powered all new well head control panels, cathodic protection wells, and domestic water heatingapplications by solar energy; and

• Conducted company-wide training program to increase knowledge and awareness with energymanagement.

The direct energy consumed by ADCO in 2012 was 12,452,170 gigajoules (GJ) compared to 12,479,444 gigajoulesconsumed in 2011.

Energy Use in 2012

Details GJ

Direct energy sources purchased 12,452,170

Direct energy sources produced 3,568,089,073

Dire ct energy sources so ld 3,568,066,998

Total direct energy consumption 12,474,245

Total direct energy consumption(renewable sources)

22,075

Total direct energy consumption

(non-renewable sources)12,452,170

• Sources purchased: fuel gas and diesel;• Sources produced: crude oil, gas, renewable

production; and• Sources sold: crude oil and gas exported.

We are placing increasing emphasis on generatingrenewable energy. During the 2012 reporting period,we expended 1,464,000 AED to generate 22,075 GJof solar power.

In 2012, we purchased more indirect energycompared to 2011 in line with our energy

management strategy. The amount of primaryenergy consumed to produce the indirect energyused by ADCO is 21,607,926 GJ from ADWEA and177,291 GJ from TAKREER.

Energy Management Initiatives in ADCO - 2012

5,140,307 GJ2011

2012 6,441,501 GJ

Indirect energy purchased and consumed


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Energy savings is one of ADCO’s top priorities.

By implementing conservation and efciencyimprovements in 2012, we saved 6,528,459 GJ ofenergy. This direct energy savings has becomereality due to the decreased onsite power generationalong with the use of renewable sources.

Major Initiatives to Manage Indirect EnergyConsumption - 2012

1Developed ADCO Energy ManagementPolicy

2Developed energy efciency improvementprocedures

3Automated the energy reporting throughHEARTS reporting system

4Completed a comprehensive energy study onADCO production facilities

5 Conducted green building studies

6Initiated a project to install additional energymeters to monitor energy KPI

7Conducted an in-house energy trainingcourses covering deferent job levels within theorganisation

In order to improve energy efciency, ADCO hastaken a strategic decision to maximize powerimported from ADWEA/TRANSCO to meet its entirepower demand and retire onsite gas turbines prior tothe completion of their expected lifetime.

Various other initiatives were undertaken duringthe reporting period to provide energy efcient or

renewable energy based products and servicesresulting in reductions in energy requirements. Theseinitiatives included completing a comprehensiveenergy survey on all assets, issuing a scope of workto upgrade our energy metering system and othersimilar actions.

EmissionsEngrained in ADCO’s HSE policy is a commitment to

use best available environmental technology andpractices and to progressively reduce emissions,discharges and wastes, improve the efcient useof energy, and conserve natural resources. Wemonitor, assess, and track our emissions, efuent, andwastes from our operations and strive for continuousimprovement in all of these areas. GHG managemen tis considered part of our ve-year business planningprocess and forms part of our annual KPIs.

ADCO reports emissions as:• Direct GHG Emissions (Scope 1 GHG Emissions):

Emissions that result from sources that are ownedor controlled by ADCO;

• Indirect GHG Emissions (Scope 2 GHG Emissions): Emissions that result from our activities but aregenerated at a source owned or generated byothers; and

• Other indirect GHG emissions (Scope 3 GHG

Emissions): Emissions related to the production ofmaterial used, transportation of raw materials bysuppliers, business travel, employee commuting,etc.

ADCO recognises that the risk of climate change dueto GHG emissions has the single greatest potentialto nancially impact on our business. We recognisethe potential adverse impacts of GHGs on theenvironment and people and we are committed toproactively address GHG emissions challenges. Weactively support the national initiative to mitigate theimpact of GHG emissions on climate change.

Our total GHG emissions in 2012 increased compared to 2011 mainly due to the increased power import in 2012over 2011. Carbon dioxide (CO

2) represents 93% of our direct GHG emissions, while methane (CH

4) accounts for

4%, and hydrourocarbons (HFCs) for the remaining 3%.

By implementing energy efciency measures (e.g. reducing onsite power generation, improvement of energyefciency, and importing more power) in 2012, we avoided emitting an additional 41,601 tonnes of CO

2equivalent

GHGs.

During the reporting period of 2012, we have used 13,366 kg of HFC-22 in air conditioning and refrigeration units.We have developed an action plan to phase out HFCs in line with the Montreal Protocol. The following measures

are planned for coming years to reduce the use of HFC-22:• Inventory quantity in all air conditioning and refrigeration units;• Implement an Action Plan to phase out use of HFCs; and• Replace all units which have been operating more than 20 years.

Take a small step to make a big difference for Sustainable future

ADCO emphasizes the importance of energy conservation in linewith the UAE leadership’s vision of sustainable development.

To raise awareness and help reduce energyconsumption among employees, contractors,families and students, and engage them in moresustainable lifestyles, ADCO conducted variousprograms:• ‘Turn It Off’ campaign in partnership with

Environment Agency - Abu Dhabi (EAD);• Celebration of ‘Earth Hour’ in ADCO

installations;

• Energy conservation campaigns in ADCOassets and schools; and

• Green Information Technology initiatives tosave energy and paper.

Large interactive 3-dimensional installations suchas giant light bulb switches were installed in theADCO Tower as part of our ‘Turn It Off’ campaign.

Various modes of communication such as intranet,hoardings and monitors were used to spread themessage.

These campaigns successfully reached out to over4,500 families. Implementation of these initiatives isexpected to reduce energy consumption by 5 to10%.

879,300

1,045,943

1,224,745

1,380,713

1,087,655

655,059

167,56239,112

21,783

Direct GHGEmissions (Scope 1)

Indirect GHGEmissions (Scope 2)

Other Indirect GHGEmissions (Scope 2)

2011 20122010

4% 3%

93%

Direct GHG emissions

details - 2012

CO2 CH4 HFCs


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ADCO endeavours to reduce air emissions.

Total Weight of “Other” Air Emissions (non-GHG as per Kyoto Protocol denition) in tonnes

Emission 2012 (Tonnes)Difference with

2011 (%)Comment

Carbon Dioxide 815, 262 -20.4% Less on-site power generationSulphur Dioxide 6,338 -6.6% Less ar ing f rom Shah F ie ld

Oxides of Nitrogen 3,216 -7.7% Less fuel consumption by Gas Turbines

Methane 1,542 -5.5% Less fuel consumption by Gas Turbines

Volatile organic compounds (VOCs)excluding methane

24,890 -0.5% Less crude o il tanker loading

Carbon Monoxide 1,056 -9.7% Less fuel consumption by Gas Turbines

Gas is only ared during emergency and upsetconditions and ADCO takes measures to limit theduration of aring and frequency of aring events.Reducing gas aring and venting by injecting thegas back into the process is a high priority of ADCO’ssustainable development.

ADCO, through our specialist Carbon Management

Department, has been a forerunner in the use of CO2 for Enhanced Oil Recovery (EOR) and implementedthe rst CO

2-EOR project in the Middle East. This

major initiative paved the way for other ADNOCoperating companies to implement similar initiatives.

Success of the CO2-EOR project will benet the UAE

economically and environmentally.

In addition, ADCO is committed to addressing CDM

and CDM Certied Emission Reductions (CERs) issuesin coming years because of their credibility in the

market place and reputational benets.

ADCO voluntarily implemented a major project ina company initiative to substantially reduce theamount of GHG emissions from our Shah Field. Theproject received approval and compliments fromthe EAD.

Project Background

The Shah Field is located in a desert area approximately 180 km southof Abu Dhabi city and about 70 kms southwest of the Asab Field. Thefield is producing approximately 50,000 barrels of crude oil per day fromthe Shah Simsima formation since 1983. Earlier, due to the absence offlare gas recovery system, approximately 3.3 million standard cubic feet(MMSCF) of associated gas was flared daily in Shah Field.

A spiking gas compressor is installed to recover and utilize the associatedgas as part of Shah Full Field Development to reduce the gas aring by 3.4MMSCF and to g

Documents

ADCO Sustainability Report 2012 English Final