Environmental and Social Sustainability Report

Transcription

1 Environmental and Social Sustainability Report 2010

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3 About the Report Pluspetrol s third Environmental and Social Sustainability Report (ESSR) has been prepared following the guidelines set forth in the second version of the Oil and Gas Industry Guidance on Voluntary Sustainability Reporting, designed by IPIECA 1, jointly with API 2 and OGP 3, and released at the end of The report aims at providing all stakeholders with accurate information on the environmental and social performance of Pluspetrol operations during 2010, as well as on the activities fostered by the Company to achieve an increasingly sustainable management. Pluspetrol was assisted by PwC Argentina in the preparation of this report. Environmental and Social Sustainability Report 2010 Compared to the previous versions, the 2010 ESSR includes the improvements proposed by the new version of the IPIECA s Guidance Report and a broadening of the issues covered. As to the environmental performance, a deeper analysis was performed through the application of ecoefficiency indicators. Also, detailed information on our production activities was incorporated with the purpose of promoting a better understanding on the origin of our environmental impacts, since the variations produced in these activities affect the performance in this area. Concerning our social performance, we have expanded on the information about the indigenous communities related to our operations, and about the activities implemented with the purpose of promoting their development. As in the 2009 ESSR, this document provides information on the performance of the Company as a whole and on each of the productive operations separately. It is thus intended to facilitate the approach and understanding of the diversity and complexity of the operations and their environment, the plurality of the activities developed and the results obtained from each of them. In addition, the 2010 ESSR includes detailed information on the Rio Colorado District, an operation incorporated by Pluspetrol through the acquisition of Petro Andina assets at the end of In this case, and considering that the information available involves the year 2010 only, the data on the District s environmental performance is presented separately from the rest of Argentina, so as not to affect the indicators comparability. With respect to the environmental and social information of the Business Units that are undergoing exploration stage, no performance indicators are detailed. However, progress was made on the analysis of the data and different study cases showing environmental management in these operations were incorporated to the ESSR. We are grateful to all those who have participated in the preparation of this Report, particularly the members of the Environment and Community Affairs of all the Business Units. 1. International Petroleum Industry Environmental Conservation Association. 2. American Petroleum Institute. 3. Association of Oil & Gas Producers.

4 Contents Our People Training Development Health About the Environmental and Social Sustainability Report About Pluspetrol Origin & Development Operated Areas Activities Results Conduct and Ethics

5 Community Relationships Participatory Dialogue Processes Social Investment IPIECA Indicators Community Projects Community and Value Chain Indigenous Communities Safety Occupational Health and Safety Management Systems Safety Risk Control Safety Performance Environment How we work Environmental Management Systems Energy Efficiency Environmental Impact Management Biodiversity

6 Purpose, Vision and Values Our purpose, vision, and values are the fundamental mainstays of our management. They constitute the basic elements in the establishment of our corporate policies and procedures. Purpose Meet the needs and expectations of all the stakeholders and institutions related to our activities (shareholders, employees and their families, partners, suppliers, clients, governments and communities of the countries in which we operate), while keeping our own identity. Vision Excel as a benchmarking company among the international energy companies. Values Think beyond obvious possibilities, taking action despite uncertainty. Be persevering. Work in teams to give free rein to our imagination and creativity. Develop human resources talent. Use resources efficiently, keeping a low-cost mindset. Capitalize on the opportunities. Preserve the environment. 4 Pluspetrol

7 About Pluspetrol

8 About Pluspetrol Pluspetrol is an energy company focused on the exploration and production of hydrocarbons. The projects operated by Pluspetrol are characterized by their complexity as regards the setting, the difficulty of access or the geological and technical complexity; this involves exploitation of giant gas fields, extraction of heavy crude oil in remote areas, exploitation of mature fields and marginal areas with secondary recovery. 180,000 1,800 Liquids Production in Bbl/d Gas Production in MMscf/d 160,000 1, ,000 1, ,000 1, ,000 1,000 82,939 80, , , ,319 20, , ,347 10, Pluspetrol starts its With the production The start of operations in The Palmar Largo and Pluspetrol enters the power With the incorporation of operations in the startup in the Ramos Field, Bolivia increases annual Puesto Touquet Fields, in generation market through Block 1AB to PPN, annual Centenario Field, in in Argentina, the gas operated gas production Argentina, are incorporated the operation of two operated gas production Argentina. production reaches to 145 MMScf/d. The and liquids production gas-fueled Power Plants in adds up to 482 MMScf/d 27 MMScf/d. Liquids incorporation of the Aguada reaches 10,715 Bbl/d. El Bracho, Argentina. and liquid production to Daily production is Production amounts Baguales and El Porvenir The gas production comes 82,939 Bbl/d. 279 Bbl/d liquids and to 5,245 Bbl/d. Fields, in Argentina, up to 170 MMScf/d. Operations start in the 2 MMScf/d gas. increases liquids production north of Peru, with the to 7,347 Bbl/d. production of oil in Block 8 (PPN), which increases the annual operated liquids production to 30,319 Bbl/d. Gas production adds up to 258 MMScf/d. 6 Pluspetrol

9 About Pluspetrol Origin and Development Over the last years, we have experienced an important growth, both in gas and oil volumes produced and in our reserves. This has turned us into one of the private Latin American companies with the largest development in the last decades: We are the largest oil and gas producer of Peru. We are one of the largest oil and gas producers of Argentina. We hold a significant presence in Latin America: Bolivia, Colombia and Venezuela. We are expanding our activities in West Africa. 158,709 1,593 1,355 93,710 98, ,537 81,429 78, Activities begin in Camisea. Production starts in Block Production starts in the Operations begin in the Through the acquisition of Operated production 88 (Camisea) and annual Tacobo Field, in Bolivia. Tajibo Field, in Bolivia. Petro Andina assets, amounts to 1,593 MMScf/d Exploration starts in gas production amounts Pluspetrol incorporates the gas and 158,709 Bbl/d Venezuela. to 576 MMScf/d. Liquid Operated gas volume Gas production adds up to Rio Colorado District to liquids. production is 78,310 Bbl/d. amounts to 909 MMScf/d 950 MMScf/d and liquid Argentina s operations. Annual production is and liquid production production to 98,391 Bbl/d. A commercial oil discovery 522 MMScf/d gas and Exploration begins in amounts to 93,710 Bbl/d. Operated liquid production is made in Angola and 81,429 Bbl/d liquids. the Pagoreni Field (Block Exploration blocks in amounts to 120,537 Bbl/d design of the field 56, Camisea). Colombia are incorporated. while gas production comes development plan begins. up to 1,355 MMScf/d. Environmental and Social Sustainability Report

10 Operated Areas Caracas With the certainty that it is possible to operate in highly complex environments, using the best-proven technologies while respecting both natural environment and local culture, we have developed hydrocarbon exploration and production activities in Argentina, Bolivia and Peru, and have exploration projects in Venezuela, Colombia, and Angola. Furthermore, we operate the El Bracho Thermoelectric Power Plants in Argentina. Quito Colombia Bogota Ecuador Colombia The exploration areas are formed by Blocks CPE-7, CPO-3 and CPO-2, located in the Departments of Guaviare, Meta and Vichada, in the central-eastern part of the country. The Block CPE-7 is located in the Orinoquia region of Colombia, one of the areas with the largest diversity of plant and animal species. The region is also rich in water resources. PPN,Peru Liquids Production (Bbl/d) Thousands Peru Lima In this area 8 indigenous resguardos are settled: Unuma Vichada, Unuma Meta, El Tigre, Caño Jabon, Charco Caiman, Mocuare, Barrancoceiba Laguna Araguato, and Nukat Maku Pisco Project La Paz Bolivia PPN, Peru Located in the Peruvian Amazon, this operation is the country s largest producer of crude oil. The fields in production are Corrientes, Yanayacu, Chambira and Pavayacu (Block 8) and Capahuari Norte, Capahuari Sur, Jibarito, Jibaro, Dorissa, Shiviyacu, Forestal, Carmen, Huayuri and San Jacinto (Block 1AB) ,055 32,810 34,263 The operation is situated in an area characterized by a high biological and cultural diversity. Indigenous communities of the Achuar and Quechua ethnic groups area settled in this area Camisea, Peru Gas Production (MMscf/d) Chile Argentina Camisea, Peru Located in the Peruvian Amazonian jungle, in the Lower Urubamba region, this operation is the third largest gas reserve of Latin America and the first one in Peru. The Cashiriari and San Martin fields, and the Malvinas Gas Processing Plant are located in Block 88, while the Pagoreni field is located in Block 56. The operation also includes a Natural Gas Liquids Fractionation Plant and a Maritime Delivery Terminal, located in Pisco. Camisea is in an area considered as a biodiversity hotspot due to its wide variety of flora and fauna, as well as to its geography and climate. It is also a region with an important cultural diversity. In the operation area, native communities of the Machiguenga, Yine, Ashaninka and Nahua ethnic groups are settled. In addition, the operation is located in the buffer zone of the Manu National Park, one of Peru s largest protected natural areas. About 67% of Block 88 is located within the Kugapakori Nahua Nanti Territorial Reserve. 1,600 1,400 1,200 1,178 1, Camisea, Peru Liquids Production (Bbl/d) Thousands Santiago Buenos Aires Likewise, the natural gas liquid fractionation plant of Pisco is located in the buffer zone of the Paracas National Reserve, the only maritime protected area of Peru Pluspetrol E&P, Peru ,000 80,756 Pluspetrol has exploration blocks 108, 115 and , Pluspetrol

11 Venezuela The exploration areas Tiznado and Barbacoas are located in the Guarico State, in central Venezuela. Bolivia The operation comprises the Tacobo and Tajibo natural gas fields (province of Santa Cruz), Madrejones (Cordillera province), and the Bermejo-Toro oil producing fields (Arce province). The Rio Seco and Huayco Fields are reserve fields that remain inactive. The Tacobo and Tajibo fields are located in the Tierra Comunitaria de Origen - Charagua Norte (TCO) (Original Communal Land), of Guarani indigenous origin. Gas Production (MMscf/d) Liquids Production (Bbl/d) Thousands Brazil 1,600 1,400 1,200 1, Brasilia Argentina Paraguay Asuncion Pluspetrol operations in Argentina are subdivided into Neuquen District, North District, El Bracho Thermal Power Plants and, since the acquisition of Petro Andina at the end of 2009, Rio Colorado District. The exploitation area of the Neuquen District comprises gas and oil fields in the provinces of Rio Negro and Neuquen: Centenario, Aguada Baguales, El Porvenir, Loma Jarillosa Este, Puesto Silva, Puesto Touquet, and Loma Guadalosa. It also involves the exploration areas of Zapala, Laguna Blanca, and Cinco Saltos. Uruguay Montevideo References Exploration Production Natural Gas Liquid Fractionation Plant Power Generation The North District is formed by the Ramos Gas Field and the Caimancito and Palmar Largo oil fields. On the other hand, the Rio Colorado District is located south of the Malargüe Department (province of Mendoza) and west of the Puelen Department (province of La Pampa). The operation comprises the productive areas of Gobernador Ayala and Gobernador Ayala III, Jagüel Casa de Piedra and CNQ 7/A, and the exploration areas CN-VI A/B, La Banda and Gobernador Ayala I. Finally, the El Bracho Thermal Power Plants constitute an energy hub formed by the San Miguel de Tucuman, Tucuman and Pluspetrol Norte Power Plants. Each operation is situated in an area of distinctive complexity. Part of the Centenario Field is located within municipal lands of the Neuquen City, with growing urban settlements are reaching over the production zone. The Ramos Field is located in the ecoregion of the Southern Andean Yungas, an area of great biological diversity. On the other hand, the Palmar Largo Field is the settlement area of Wichi indigenous communities. Gas Production (MMscf/d) 1,600 Liquids Production (Bbl/d) Thousands 160 Power Generation (GWh) Thousands 7 1,400 1,200 1, , ,078 4,309 4, ,382 16, Angola Exploration activities are developed in the South Cabinda Block, in the province of Cabinda, bordering the Democratic Republic of the Congo. This block is located within an area characterized by a highly sensitive environmental and social setting, with presence of traditional communities and located close to the city of Cabinda. Environmental and Social Sustainability Report

12 About Pluspetrol MENDOZA LA PAMPA CN-VI CNQ-7/A Jaguel Casa de Piedra CNQ-7 CNQ-7/A Gobernador Ayala I Gobernador Ayala III Gas Production 2010 (MMscf/d) 1,600 1,400 1,593 Apon (La Banda) 1,200 1, NEUQUEN RiO NEGRO 0 6 Rio Colorado Distrit Argentina Pluspetrol Rio Colorado District At the end of 2009, Pluspetrol acquired the assets of Petro Andina Resources in Argentina. The incorporation of this operation, which is currently part of the Rio Colorado District, allowed Pluspetrol to triple the operated production and be ranked in the 4th place among the main oil producers of the country. With a 16 MBbl/d production, after the acquisition of Petro Andina assets, operations in Argentina increased their liquid production to 43 MBbl/d in Location and Characteristics of the Operation Liquids Production 2010 (Bbl/d) Thousands 158, The exploitation area of Rio Colorado District is located south of the Malargüe Department (province of Mendoza) and west of the Puelen Department (province of La Pampa), in Argentina This zone involves the productive areas of Gobernador Ayala (Mendoza) and Gobernador Ayala III (La Pampa), Jagüel Casa de Piedra (Mendoza) and CNQ 7/A (La Pampa), and the exploration areas CN-VI A/B (Mendoza), La Banda (Mendoza) and Gobernador Ayala I (La Pampa) ,128 43,170 Distinctive Characteristics of the Region 20 This area is characterized by the presence of abundant volcanic material. A major part of the surface is marked by a terraced relief that comes down the Sierra de Chachahuen (Chachahuen Hill) toward the Colorado river. 0 Rio Colorado Distrit Argentina Pluspetrol The area s ecological characteristic is the scarce water availability. The nearest populations are Villa 25 de Mayo (La Pampa), 65 km to the East, and Rincon de los Sauces (Neuquen), 90 km to the South. The area has a very low population density; there are only three posts with permanent inhabitants devoted to goat breeding. Production The operation has 475 producer wells and 190 injection wells. The shallowness of the wells allows for fast drilling of non-consolidated, complex reservoirs with high permeability. The heavy hydrocarbon, obtained through the CHOPS 4 method, shows a high viscosity. This crude oil recovery method consists in the drilling of vertical wells using progressive cavity pumps for the extraction of crude and sand. Daily oil production is delivered through an 85 km oil pipeline to be later processed at the treatment and transfer plant located in Puesto Hernandez, province of Mendoza. The total gas production of the fields is used for domestic power generation. 4. Cold Heavy Oil Production (with) Sands.

13 Non-Operated Areas Salta, Argentina We have a 30% participation in the exploration area of Rio Colorado. The consortium is formed by Petrobras (30%) and Tecpetrol (40%), who is the operator. Magellan, XII Region, Chile The exploration area El Tranquilo is a consortium in which we have a 29% participation. It is formed by Geopark, who is the operator with a 29% participation, Winthershall with 25% and Methanex with 17%. As to the exploration area Otway, our participation is 25%; the operador is Geopark with 25%, Wintershall 25%, Methanex 12.5% and IFC 12.5%. Strategic Partners We sustain an active partnership policy: we seek and develop bonds with partners of international standing. Exploration Projects Peru Colombia Angola Peru Camisea Project Peru Block 8 Argentina Ramos Field

14 Activities Production Camisea Drilling of Cashiriari The increase in the volume of hydrocarbons produced in 2010 was closely realted to a greater operating activity. During the year, a total of 125 producer wells were drilled, 145% more than in , reaching a total of 164,071 meters. On the other hand, we carried out workover 6 tasks in 101 wells, which represented a 25% increase in this activity in comparison with In October 2010, following the Cashiriari 1008D well testing, and within the Cashiriari Field Drilling Plan, the drilling in Cashiriari 3 location was finished. This project began in June 2008 and involved the drilling of ten development wells and two wells for reinjection of drill cuttings from platforms Cashiriari 1 and Cashiriari 3. Drilling Evolution in quantity of wells Workover Evolution in quantity of wells The designs implemented combined Casing Drilling and Air Drilling technologies to drill the directional wells until the objectives are reached. As part of the best practices adopted, several aspects were taken into consideration: the offshore-inland concept for the construction of locations, by which each platform is operated in isolation and accessed by air, thus avoiding the construction of roads; the directional drilling, by drilling several wells from a single location; and the reinjection of cuttings, by placing them in deep wells, a practice in which Pluspetrol is pioneer in Latin America. (See Reinjection of drill cuttings in Cashiriari 1 and 3 in the Environment section). 5. The operating works carried out in the Rio Colorado District contributed to the significant increase shown in the production activity. 6. It is the process by which general maintenance in active oil and natural gas wells (non producers) is performed. The Cashiriari Field, located in Block 88, was not only a great technical challenge but also an important economic investment, thus becoming a milestone within the Camisea Project Pluspetrol

15 Bolivia Expansion of the Gas Plant In February, the expansion of the Tacobo Gas Plant became operational. The purpose of this project, which represented a US$ 35,000,000 investment, was to incorporate the production of well TCB-X1002 and to increase the production of the Tacobo Field from 42.4 MMScf/d to 77.7 MMScf/d. For this project, a dew point conditioning plant for 100 MMScf/d was installed. Other important equipment was installed, such as generators, a sales gas compressor, a condensate storage tank, new safety systems for the Plant, a new production manifold, and a test separator. Also, the existing control room was expanded. Environmental and Social Informe Sustainability de Sostenibilidad Report

16 Exploration During 2010 we progressed through the development of exploration activities in Angola, Venezuela, Colombia, Bolivia and Peru. We drilled four exploration wells, thus reaching a total of 4,782 meters drilled. Drilling Evolution in quantity of wells 5 Colombia 258 km of 2D seismic exploration in Block CPO-2, 249 km in Block CPO-3 and a first phase of 522 km in Block CPE-7 were carried out. The activities developed in Blocks CPO-2 and CPO-3 allowed defining the areas of prospective interest for the development of 3D seismic exploration to be carried out in In Block CPE-7, the first exploration phase allowed identification of the prospective zones in which the drilling of two stratigraphic wells is planned for 2011, simultaneously with the development of the second phase of the 2D seismic exploration, which spans 340 km. Venezuela In 2010, the assessment plan for the incorporation of non-associated gas reserves corresponding to the discovery of Pantanito-1X well in the Tiznado area was developed. This study seeks to quantify the discovery made in 2009 and determine its commercial viability. 3 3 Angola Exploration activities in the South Cabinda Block continued. 2 Camisea We went on with the development of the exploration plan that began in Pluspetrol

17 About Pluspetrol Angola Oil in South Cabinda At the beginning of 2010, the first commercial oil discovery was made in the onshore of the Cabinda province. The discovery resulted from the drilling of the first exploration well under Pluspetrol s operation in the Castanha area. Following this discovery, the field evaluation continued with the drilling and testing of three additional wells (Castanha 2, 3 and 4) with the purpose of verifying reserves that would confirm the feasibility of the field development. The field development plan foresees the drilling of two new productive wells in the area during the second half of 2011 (Castanha X5 and X6), aimed at initiating the field development and confirming the reservoir continuity as well as the distribution of fluids and the verification of their quality. With the purpose of incorporating additional hydrocarbon volumes, 170 km 2 of 3D seismic recording has begun. In addition, the drilling of six wells between years 2012 and 2013 is planned. The field development entails the construction of different facilities: roads, gas and water reinjection flowlines, an oil treatment plant, storage battery tanks, a power plant to use non-associated gas for electric generation, electricity transmission lines between the plant and the productive wells, and an oil pipeline from the area up to the Malongo terminal. The plan execution takes into consideration the environmental and social sensitivity of the area so that the activities envisaged have a minimum impact. Production in the field is planned to start by December 2012, with seven active wells and an initial oil flow estimated in 3,000 Bbl/d. The discovery, made within a short term despite logistics and technical difficulties, is the first important step for Pluspetrol s growth and the opening of new opportunities in West Africa, one of the most prolific regions and with the largest oil potential worldwide. Camisea Full Exploration Plan In 2009, we started the Full Exploration Plan (FEP) in Camisea. This is an exploration plan developed in Blocks 88 and 56 with the purpose of finding hydrocarbons that will allow replacing gas and condensate reserves, thus meeting the resource demand required by the project. In economic terms, the FEP involves the investment of more than US$ 500,000,000 as it includes surface geology, geochemistry, remote sensors analysis, 3D and 2D seismic exploration (both heli-portable, through the jungle, with a minimum environmental impact) and drilling of exploration wells. The program specifically envisages the drilling of four to six wells in Block 56 during 2011 and 2012, and four to six wells in Block 88 during 2013 and With the purpose of finding a location for these wells, a number of geological studies are being conducted to help obtain a better knowledge of the subsoil. The FEP will comprise the following activities: Block 88 Exploration activities with 3D seismic in an area of approximately 500 km 2 in the northern part of the block. Exploration activities of approximately 200 km with 2D seismic in the southern part of the block. Field geology. Aero-gravimetric survey. Drilling of four to six wells (SME-1001, SME-1002, KIM-1001 and ARM-1001) Bock 56 Exploration of 150 km 2 of 3D seismic in the northeastern part of the block. Drilling of four to six wells (MIP-1001, MIP-1002, PAG-W-1001, and SNR-1001). In 2010, progress was made regarding the studies required to obtain the environmental license for the drilling of wells in Block 88 as well as for the development of 2D and 3D seismic exploration. Environmental and Social Sustainability Report

18 Results Operated Production 7 In 2010, we increased the volume of hydrocarbons produced. With the incorporation of the Rio Colorado District (ex Petro Andina) to our operations in Argentina, the total volume of liquids 8 produced was increased by 32% in comparison with 2009, reaching the amount of 158,709 Bbl/d. Gas production, on the other side, rose to 1,593 MMScf/d, 18% more than in 2010, while electric power production remained at 4,141 GWh. Liquids Production (Bbl/d) Thousands , ,537 98, Gas Production (MMscf/d) 1,600 1,400 1,355 1, , ,593 Power Generation (GWh) Thousands 7 5, ,309 4, Proved Reserves 9 Liquids Reserves (MMBbl) The volume of proved liquid reserves at the end of 2010 reached 854 MMBbl. The increase in Argentina s reserves was mainly related to the incorporation of the operation Rio Colorado District, with proved reserves totalling 40 MMBbl. 1, Gas reserves amounted to 13,153 Bcf Argentina Bolivia Camisea Peru PPN Peru Pluspetrol Gas Reserves (Tcf) 16,000 14,000 12,000 13,390 12,340 12,205 14,557 13,475 13,153 10,000 8,000 6,000 4, Includes the total production of operations in which Pluspetrol is the operator. 8. Includes the production of oil and natural gas liquids (NGL). 9. Reserves which can certainly be recovered in a cost-effective manner and using existing techniques. 2, Argentina Bolivia Camisea Peru Pluspetrol 14 Pluspetrol

19 Conduct and Ethics Our commitment with stakeholders becomes evident in our conduct, based on public responsibility and ethical standards. In this respect, we count on different procedures and internal mechanisms that guide the behavior of the people who are part of the Company, with the purpose of achieving a transparent performance, consistent with our corporate values. Code of Ethics The Code of Ethics establishes the policies and procedures that guide our employees in the performance of their tasks in a professional and business environment, under high responsibility standards. Specifically, the code sets a pattern of integrity, discretion and moderation concerning our behavior toward clients, contractors, suppliers and people in general, whether they are part of Pluspetrol or not. All coworkers must sign the Code of Ethics and may refer to HR management, vice presidents, corporate directors and country managers for consultation, should any concern arise. Transparency in the relationship with host governments At Pluspetrol, we foster transparency in the relationship with all our stakeholders. For this reason, in our operations in Peru we participate in the Extractive Industries Transparency Initiative (EITI), which sets guidelines for transparency in the payment of taxes, royalties, etc. that extractive companies make to host governments. Code of Ethics: application The Code of Ethics guides our coworkers in situations that involve: Business courtesies. Business incentives. Conflict of interests. Disclosure of information to contractors, suppliers, the press, publications in general or other people. Professional tasks. Environmental and Social Sustainability Report

20 Participation in this initiative requires the endorsement of each country s government. Peru is the only country in Latin America to have endorsed EITI. Compliance with the initiative s commitments requires the progressive implementation of an action plan. In Peru, the plan included the development of a National Reconciliation Study that involved payments made to the government between years 2004 and 2007 by 24 mining companies and 9 oil companies that operate in the country. Through our operations in Camisea and PPN, we endorsed this transparency initiative in 2009, committing ourselves to deliver information about payments made to the Peruvian State during the period to the party responsible for the National Reconciliation Study and authorizing EITI-Peru to make this information publicly available. During July and August 2010, the French company CAC75 validated the National Reconciliation Study. The results allowed Peru to obtain the Close to Compliant status within the EITI s framework. What is the Extractive Industries Transparency Initiative (EITI)? EITI is an international initiative that brings together governments, extractive industries (mining, oil and gas), a company civil and international organizations to incorporate a transparency of payments that companies make to governments and the revenues that governments receive from these companies so that these resources are used to promote development. EITI asks companies to make public their payments to governments countries where they operate and governments to spread the payments they receive. EITI monitors and reconciles payments from companies to governments and revenueclearly by the governments in each country. The information is validated by an external controller selected by a multi-stakeholder. Sources: eitiperu.minem.gob.pe 16 Pluspetrol

21 Our People

22 Our People People are one of our main assets. For this reason, at Pluspetrol we direct Human Resources management toward the development of talents and the search for new ideas and perspectives to face each challenge posed by our operations. In 2010, we had 2,097 direct employees and 8,847 employees from contractors working in our operations. Number of Employees /2010 Evolution 5,000 4,500 4,000 4,598 3,749 Contractor Employees Pluspetrol Employees 3,500 3,000 2,500 2,861 2,148 2,446 2,026 3,006 2,221 3,438 2,725 2,000 1,500 1,631 1,231 1, Argentina Bolivia Camisea Peru PPN Peru 18 Pluspetrol

23 Training In 2010 we kept on strengthening the training of our coworkers through the Annual Training Plans in the different areas of the Company, which were developed in accordance with a survey and an analysis of the training needs. Although the plans include both in-house training and external courses, in 2010 the former was favored. So, 25 in-house courses were given, covering from different technical topics to management tools. These courses were delivered both by external instructors and by members of the Company. trained training training Hours Employees hours per Employee Argentina , Camisea, Peru , PPN, Peru , Environmental and Social Sustainability Report

24 Corporate Program for In-house Instructors Following the decision to promote In-house courses with internal instructors and with the purpose of getting clear synergy of the knowledge existing in our company, in 2010 we launched the Corporate Program for In-house Instructors. This initiative aims at identifying potential instructors in technical subjects that are capable of offering in-house courses. The program is developed in five stages: 1. Candidate application, for all employees interested in giving courses, specifying the subjects proposed, their expertise as instructors, and possible target audience. 2. Application Analysis and Actual training needs evaluated at corporate level so as to define who will participate in the program. 3. Instructors Training, through workshops developed by an external consulting firm with the purpose of providing participants with tools and methods for their development in their new role. 4. Instructors Certification, through an optional evaluation of the participant s learning performance. Once the certification is obtained, the instructor receives the Instructor s Diploma, certified by the ASTD (American Society for Training and Development), the most prestigious American organization dedicated to people development. The certification requires evaluation in the following aspects: didactic sequence, conceptual presentation, coordination of different activities, design of activities, etc. 5. Course Design and Implementation, where knowledge is shared and transferred. In 2010, progress was made mainly on the development of the first 4 stages of the program, and several in-house courses were given. 20 Pluspetrol

25 Our People Management Development Program (MDP) We continued to implement the Management Development Program, a custom-designed corporate program developed since 2005 in conjunction with the IAE Business School in Argentina, and with the University of Piura in Peru. The program, addressed to upper and middle level management employees, seeks to develop specific competencies required by the organization, obtain a global and cross-functional vision, develop effective delegation, facilitate the exchange of professional experience among managerial levels, generate a common language for existing and future middle level managers, and cooperate to build teamwork skills. In 2010, two parallel editions of the program were carried out: one in Argentina, with the participation of 41 employees, and another in Peru, with the participation of 30 employees. In Argentina, 16 employees from Petro Andina, the company recently acquired by Pluspetrol took part in the program. Intense work was required to integrate both organizational cultures. Technical Groups In 2010, we continued developing the Technical Groups (GTEC), a corporate tool lodged in the Company s Intranet, where people sharing common knowledge can benefit from a space for technical exchange that extends beyond their geographical position and location. This tool provides its members with a discussion forum, a documents section, a description of related courses, lessons learnt, and a complete list of members and their contact data. Technical Groups are developed through a knowledge map, in which different technical specialties along with their related skills or knowledge areas are listed. People completing this map are professionals who make their selfassessment according to 5 categories: read on the subject; need supervision; work alone; may lead other professionals; and are experts on the subject. The knowledge map allows detecting and reporting the names of the referents of the different specialty areas through the Technical Groups. By the end of 2010, we had 3 active GTECs: the Corrosion Group, with 72 members; the Artificial Extraction Systems Group, with 83 members; and the Well Construction Group, with 111 members. Language Program At Pluspetrol we have a Regular English Program at corporate level for all permanent employees in the Company who, because of their job, need to know the language. During 2010, the program was offered in Argentina, Peru, and Bolivia. Classes are in groups and take place from March to December, twice a week. Every year and a half all the students take an international exam to obtain their pertinent certificate. Conversation lessons are offered to those people who need to continue their practice and maintain their language skills but cannot comply with the program s regular conditions. Also, in some Business Units there are also French, Portuguese and Spanish programs of similar characteristics. In 2010, 322 employees from the different offices took part in the Language Program. Employees Argentina 216 Bolivia 36 Camisea,Peru 60 PPN,Peru 10 Total 322 Environmental and Social Sustainability Report

26 Development At Pluspetrol, the employees development plan is carried out thoroughly and constantly throughout the career of all professionals, according to their orientation and profile. For that purpose, the performance evaluations and the skills reported, the goals achieved, the potential shown, the personal interests, and the matter-of-fact characteristics related to the person s profile (age, studies, expertise, etc.) are considered an input. On the other hand, when there is a vacancy, priority is given to internal candidates, taking into consideration not only the needs of the requesting area but also the candidate s growth opportunities. In 2010, 146 internal movements were registered. Professional Training Programs Pluspetrol has two types of training programs to promote the professional development of its employees: the Corporate Professional Training Program and a Focused Training Program. Corporate Professional Training Program (CPTP) Addressed to professionals with a career degree or students attending the last year of their career that have joined the Company as trainees, this program aims at providing the participants with a global vision of the Company s business. Its implementation implies rotation through the different units of the country in which the person was selected. Once the program is completed, the candidate s coordinator evaluates, together with the Human Resources area, the employee s continuity and its promotion to a junior position. Focused Training Program The program is addressed both to professionals joining the Company and employees that, due to specific needs of their own or of the area, require focused and tailor-made training. Only if necessary, focused training may involve rotation through the Company s different locations to broaden the employees knowledge of the operations. In 2010, the Focused Training Program involved employees from different areas: Internal Audit (Corporate), Geosciences (Angola), Engineering (Bolivia and Peru), Maintenance (Argentina). 22 Pluspetrol

27 Our People Health Our operations have medical services that provide permanent emergency assistance and external medical consultation to Pluspetrol s and to the contractor s personnel. In addition, each Business Unit develops initiatives aiming at promoting our workers health, according to the work environment of each operation and to the most frequent illnesses. Food Plan and Catering After the nutritional evaluation performed at the El Bracho Thermal Power Plants in 2009 and within the Food Plan framework, the traffic light method was implemented in food catering. This method measures the calorie content of each dish (green: low; yellow: moderate; red: high). This initiative aims at raising awareness and strengthening the concepts transmitted by the nutritionists in 2009 to help sustain a healthy food plan. Argentina Medical Service for Head Office Personnel Aware of the importance of encouraging health and preventive medicine measures that have been developed over the last years, a medical advisory service has been incorporated with the purpose of coordinating preventive medicine actions. Frequent Flyer Vaccination Program We continue implementing the vaccination program for employees who travel to risk areas (such as Angola or Camisea), through the Center for Infectious Diseases Dr. Stamboulian. In 2010, 127 vaccines were administeres. Lectures Program Preventive medicine lectures on different health topics continue. In the North District, first aid and CPR lectures were delivered in the fields; additional lectures to those of 2009, regarding nutrition and metabolic syndrome, dengue, hanta virus and respiratory diseases were given. In the Neuquen District, there were lectures on management of multiple injury patients, respiratory diseases (N1H1 flu), food quality, nutrition, cardiovascular diseases, toxicology, CPR practice, eye care, dental care, ophidians and arachnids, hearing care, and addictions. At Palmar Largo, following the work performed on individual awareness, follow-up of cases detected in 2010 by the medical center continues. In addition, each menu is evaluated by the medical center nutritionist. Annual Vaccination Plan Within the Annual Vaccination Plan, the number of employees vaccinated in 2009 (348) was widely exceeded, amounting to 522 the number of vaccines given at the company s facilities. Bolivia Annual Vaccination Plan An Annual Vaccination Plan has been implemented with the purpose of preventing diseases, such as hepatitis A and B, typhoid fever, diphtheria, tetanus, yellow fever, influenza and pneumococcus. Lectures Program Through the medical service, preventive medicine lectures were offered on diverse topics, such as first aid, sunstroke, dehydration, eye injuries, hearing injuries, work-related mycosis, insect bites and dengue, Chagas disease, diabetes mellitus, malaria and yellow fever, among others. Plague Control Program Monthly fumigations continued with the purpose of fighting crawling or flying insects that could transmit diseases, such as cockroaches, mosquitoes and vinchucas. Environmental and Social Sustainability Report

28 Camisea and PPN, Peru Medical Care Through the medical services available, 6,763 medical assistance services and 791 dental services were provided in Block 1AB, and 5,355 medical assistance services in Block 8. Medical services were provided to 1,030 people at the Malvinas Plant. In addition, 277 Pluspetrol workers and 1,774 contractors employees received medical examinations in Block 1AB through these services. Hearing Health Program We continued to implement the Hearing Health Program in the Malvinas Plant and in Pisco (Camisea), as well as in Block 8 (PPN). During 2010, 100% of the personnel exposed to loud noise were evaluated with the purpose of preventing hearing impairment. Metaxenic Disease Control In 2010, we reviewed and updated the Leihmaniasis Control Program that had been implemented at the Malvinas Plant (Camisea). Nutrition Control In 2010, we implemented a Life Quality Program in Block 8 (PPN), by which we practiced nutrition control examinations to 80% of the personnel suffering from weight disorders, as well as dietary controls performed by a nutritionist. In the Malvinas Plant (Camisea), within the Nutritional Health Control Program, 499 nutrition consultations were carried out with the purpose of encouraging a balanced diet; the initiative Actívate Malvinas was implemented to promote daily physical activity. Chronic Cases Monitoring Program Implementation of the Chronic Cases Monitoring Program continued. Workers who suffer from chronic pathologies, such as obesity, high blood pressure (HBP), dyslipidemia and diabetes mellitus are identified in the annual medical examinations. Individual follow-up is performed on those employees within these risk groups. In addition, training and talks are given to raise awareness about this type of diseases and to prevent their occurrence. Dental Care Program In Block 8 (PPN), we continued with the treatment and follow-up of cavity cases, and with the implementation of preventive fluoridation campaigns. The program allowed reducing tooth decay incidence from 39% in 2009 to 13.71% in Through these activities, cardiovascular diseases, diabetes type 2, HBP and other diseases related to overweight, obesity, bad eating habits and physical inactivity are expected to be both prevented and reduced. Waste Management and Environmental Cleanup In Block 8 (PPN) and Pisco (Camisea), we implemented a method for the separation of biomedical waste, according to Pluspetrol s Biomedical Waste Management Manual. The management plan includes microbiological controls in drinking water and sewage. In Pisco, the plan also includes fumigation and rodent control initiatives. 24 Pluspetrol

29 Environment

30 Environment Care for the environment is a major issue in the management of our activities in all the areas where we operate. The Company s EHS 10 policy is the framework that guides our activities in all the Business Units holding sustainability criteria. EHS Policy Comply with all applicable laws and regulations and other requirements the Company adheres to. Consider EHS management as a Company priority. Provide employees with healthy, safe and environmentally friendly working conditions. Prevent all accidents, occupational illnesses, contamination and negative impacts on the environment and communities. Operate through a rational use of energy and natural resources. Manage EHS through continuous improvement programs, training and motivating Company staff and contractors regarding EHS policy. Promote this policy with the community and the stakeholders. 10. Environment, Health and Safety. 26 Pluspetrol

31 Environment How we work With the purpose of complying with our EHS Policy we implement specific measures and management tools, according to the different stages of a project. Environmental and Social Baseline Baseline studies of the physical, biological and social media are carried out, with the purpose of obtaining a comprehensive vision of the initial environmental and social status of the settings where each project is developed. Management Plans The Environmental and Social Management Plans (E&SMP) set forth the measures to be implemented in each stage of the projects to prevent, mitigate, correct and/or compensate the potential environmental and social impacts identified. Prior to the acquisition of a new area or during the bidding rounds, an Early Environmental and Social Assessment is carried out. The assessment considers environmental and social aspects as an additional criterion to the economic and geological evaluation of a project. This implies a crossdisciplinary process that encompasses different sectors of the Company. Monitoring Programs Management Systems (Continuous Improvement) Specific Monitoring Programs are implemented in each operation to allow controlling and ensuring compliance with the protection measures established, as well as facilitating the monitoring of the environmental and social conditions in the sites where each project is developed. With the purpose of improving the environmental performance and setting the activities within continuous improvement program, the implementation of Management Systems is furthered. Early Environmental and Social Assessment Corporate Audits Corporate Audits on Safety, Environment and Community Affairs are conducted in all Pluspetrol s Business Units to verify legal compliance and internal corporate requirements. Relinquishment Plan Evaluation and selection of new areas Exploration Development Relinquishment Early Environmental and Social Assessment During 2010, a Corporate Standard for the Early Environmental and Social Assessment was prepared. This Standard sets the guidelines to be followed for the performance of a complete assessment of the social and environmental complexity of the areas, either for exploration or exploitation, that the Company is interested in acquiring. Corporate Audits Continuing with the Corporate Audit Program on Environment, Safety and Community Affairs, 4 audits were conducted in 2010, in the following operations: Madrejones and Bermejo Fields (Bolivia), Block 1 AB-PPN (Peru), Palmar Largo (Argentina), and Fluvial Logistics in the Camisea Project (Peru). Environmental Impact Assessment All the projects and their modifications undergo an Environmental and Social Impact Assessment (E&SIA), for an early identification of potential impacts and related risks. The scope and methodology used is defined in accordance with the legislation of the host countries in which Pluspetrol operates. Environmental and Social Sustainability Report

32 Environmental Management Systems At Pluspetrol, we base our management on the prevention, reduction and mitigation of environmental impacts. For the identification, analysis and management of those impacts we implement Environmental Management Systems (EMS), which are certified under ISO 14001:2004, in our operations. In 2010, we maintained certifications under this standard in the North District and El Bracho Thermal Plants (Argentina), as well as the certification of the Integrated Management System in Camisea (Peru). As in Camisea, the Integrated Management System in Bolivia encompasses both environmental and occupational health and safety aspects. Since the operation is in the process of adapting the system to the certification of the OHSAS 18001:2007, the work plan for 2010 was focused on improving the occupational health and safety aspects while the environmental management programs remained unchanged. Argentina In August, after an external audit, we obtained the recertification of the Environmental Management System for North District under the ISO Standard 14001:2004, which covers the Ramos Field, the compression plants at Coronel Cornejo, the Balbuena tank farm and the offices located in Tartagal. In addition, as part of the annual program, three internal audits were conducted. The El Bracho Thermal Power Plants hold ISO certifications since In 2010, a maintenance audit on the system was conducted, resulting in the identification of some non-conformities 11. Consequently, we worked on improving the aspects evaluated: 3 internal audits were conducted and a new external audit was organized with satisfactory results, allowing us to obtain the certification. In both operations, and with the purpose of maintaining the performance in the management of environmental aspects and impacts, training on environment was carried out both for own personnel and for contractors. During 2010, 348 employees and 719 contractors received a total of 1,566 hours of training on different aspects related to environmental management. 11. Non-conformity is the non compliance with a standard requirement. 28 Pluspetrol

33 Environment Environmental Management System Training Personnel Trained North District, Ramos Introduction to the Environmental Management System (for own personnel) 16 Introduction to the Environmental Management System (for contractor s personnel) 4 Identification of non-conformities (for internal auditors) 61 Environmental Incident Report 9 Waste Management 18 Subtotal 108 Thermal Power Plants, El Bracho Introduction to the Environmental Management System (for own personnel) 139 Introduction to the Environmental Management System (for contractor s personnel) 715 Identification of non-conformities (for internal auditors) 65 Waste Management 40 Subtotal 959 Camisea, Peru Since 2008, Camisea has an Integrated Management System (IMS) that encompasses all the facilities and complies with all the requirements of the ISO 14001:2004 and OHSAS 18001:2007 standards and with the documents that Pluspetrol has established and implemented for the operation and improvement of its environmental, occupational health and safety management. In 2010, two external audits were conducted that resulted in zero non-conformities. In addition, three internal audits (one in Pisco and two in Malvinas) as well as one legal compliance audit were conducted. Audits to contractors were also performed as part of the operating control. Lastly, the implementation of the Environmental Management System in this operation involved the training of 210 Pluspetrol employees in our Pisco operation, who received 458 hours of training. Training carried out at Pisco, Peru Own Personnel Trained Induction on the Integrated Management System 10 Control of Hydrocarbon Spills 3 Contamination Prevention and Environmental Monitoring 92 Waste Management 90 Environmental Management Plan 15 Total 210 Environmental and Social Sustainability Report

34 Energy Efficiency The energy needs to meet the social and economic well-being expected by our society is, and will be, greater every day. At Pluspetrol, we understand that the main measures that can be adopted to satisfy these needs must be focused on improving the energy efficiency of productive operations and reducing the greenhouse gas emissions that result from our activity. Energy The intense production activity carried out during the year implied a total consumption of 1,738,042 Gigajoules (equivalent to 485,567 MWh) to supply our operations, which in absolute terms means a 30% increase compared with The increase was due to multiple variables. In Bolivia, it was mainly due to the expansion of the Tacobo Gas Plant, which increased its total gas capacity from 42.4 MMScf/d to 77.7 MMScf/d (approx. 80% more) at the beginning of In the case of PPN, the reinjection system of production waters implied greater energy consumption compared to Lastly, the incorporation of the Rio Colorado District contributed with a 12% increase in the total energy consumed. Although net energy consumption was greater due to an increase in production, in 2010 we kept the energy consumption per production unit at a constant rate, in comparison with the previous year: from 9.78 GJ/MBOE in 2009 to GJ/MBOE in In the 2009 Social and Environmental Sustainability Report, the indicator referred to Primary Energy Consumption when it included both primary and secondary sources. 13. It includes the power energy consumed and generated in situ in all the fields where hydrocarbon production activities are carried out, and in the El Bracho thermal power plants as well. 14. In the 2009 Social and Environmental Sustainability Report, a consumption of 19,020 GJ was reported, corresponding to the monthly average energy consumption, instead of the annual total. In 2010, the value of 54,223 kwh/year reported for 2009 was corrected and replaced by 650,678 kwh/year. 15. The Rio Colorado District production was not taken into account for the formulation of the ecoefficiency indicator of gas venting and flaring, since no data is of vented and/or flared gas are available in this operation. 30 Pluspetrol

35 Environment Energy Consumed per Production Unit, per Operation (GJ/MBOE) / 2009 / 2010 Comparison Argentina Bolivia Camisea Peru PPN Peru Pluspetrol Energy Consumed 12, per Operation (GJ 13 ) / 2009 / 2010 Comparison Argentina 666, , ,239 Rio Colorado District ND ND 216,545 Bolivia 19,615 21, ,856 Camisea (Peru) 334, , ,815 PPN (Peru) 2,181,600 2,498,300 3,034,800 Total Pluspetrol 3,202,116 3,648,475 4,512,255 Gas Venting and Flaring During oil exploration and production activities, a type of gas not fit for consumption or that requires the implementation of complex gathering and transportation mechanisms is released. In routine tasks, this gas is sent to the flare for combustion. In strictly exceptional cases, such as incidents that require emergency measures, the gas is released or vented directly into the atmosphere. Between 2008 and 2010, a significant reduction of the flared and vented gas volumes per production unit was achieved in our operations. Flared and Vented Gas per Production Unit, per Operation (Scf/BOE) / 2009 / 2010 Comparison Argentina Bolivia Camisea Peru PPN Peru Pluspetrol Environmental and Social Sustainability Report

36 Flared and Vented Gas per Operation (MMScf) / 2009 / 2010 Comparison Flared and Flared and Vented Gas Flared Gas Vented Gas Vented Gas Argentina 1, Rio Colorado District ND ND ND ND ND ND ND Bolivia Camisea (Peru) 7, PPN (Peru) 3, Total Pluspetrol 11,745 1,662 1, ,395 1,604 In Bolivia, we started up in October 2010 a compression system for low pressure gases that originate during the stabilization and separation phases with the purpose of continuing to reduce the volume of flared gas in the future, and as part of the Tacobo Gas Plant expansion. The recycling compressors installed allow the gas that was formerly sent to the flare to be now reincorporated into the process. With this improvement, flared gas volumes are expected to be reduced for Emissions Greenhouse Gas Emissions As part of a corporate strategy for the management of Greenhouse Gas emissions (GHG), in 2010 we began to work on the consolidation of a Corporate GHG Emissions Inventory. This inventory will improve accuracy regarding the data on our emissions and will enable us to define improvement objectives in the future, based on consistent, traceable and comparable information. During the first stage of this project, we developed and implemented a standardized methodology at corporate level for the calculation of CO2, as one of the main GHG released during oil and gas production activities. This methodology is based on the international guides prepared by IPIECA (International Petroleum Industry Environmental Conservation Association), API (American Petroleum Institute) and OGP (International Association of Oil and Gas Producers) for the preparation of GHG emission inventories. This improvement allowed us to reduce uncertainty in the calculation of the CO2 emission indicators, placing Pluspetrol s emission inventory at Level 2, according to the OGP guidelines. On the other hand, it allowed extending the inventory scope by taking into consideration all combustion sources and the emissions resulting from gas flaring. The second stage of this corporate strategy aims at defining an action plan to improve the quality and systematization of Pluspetrol s emission inventory, including additional sources and extending its scope to the rest of GHG related to the upstream industry. Other Emissions In hydrocarbon operations, there are emissions of volatile organic compounds (VOCs), sulfur oxides (SOx), nitrogen oxides (NOx) and particulate material (MP), whose atmospheric concentration may have significant impact on the environment. In our search for greater energy efficiency, we have included a new indicator that will allow us to monitor other emissions year after year, in addition to the greenhouse gases. CO2 Emissions, per production unit, per operation (TnCO2/MBOE) Argentina 18.5 Bolivia 10.2 Camisea Peru 53.9 PPN Peru 23.3 Pluspetrol 16. In the 2009 Social and Environmental Sustainability Report, 114 Mm 3 were reported (equivalent to 4MMScf), corresponding to the gas flared in the Tacobo Field. The value included in this report adds the Tajibo data for this year, which amounts to 879 Mm 3, (equivalent to 31 MMScf), to the previous value. 17. The most common greenhouse gases are those included in the Kyoto Protocol: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC) and sulfur hexafluoride (SF6), although gases associated with the oil and gas industry are CO2, CH4 and N2O. 18. As set forth by the OGP, inventories of Level 2 emissions base their calculation on factors defined by a detailed fuel consumption per facility, the volume of gas flared and the product loss. 19. Centenario Field not included. 20. Combustion emissions in Tacobo s amine towers. 21. Although the values are not comparable, due to the change in the methodology and scope of the measurement, a volume of CO2 emissions equivalent to 3,996,315 metric tons was reported in Pluspetrol

37 Environment CO2 Emissions, per Operation and Emission Sources (Tn) Combustion Flare Other Total Argentina 19 2,007,212 31, ,038,846 Other Emissions per Production Unit, total Pluspetrol (metric tons /MBOE) Rio Colorado District ND ND ND ND Bolivia 19,413 2,630 86, ,370 Camisea (Peru) 1,095,804 23, ,119,396 PPN (Peru) 654,106 20, ,649 Total Pluspetrol 3,776,535 78,399 86,327 3,941, Other Emissions per Operation (Tn) COVs SOx NOx MP Argentina , Rio Colorado District ND ND ND ND Bolivia Camisea (Peru) PPN (Peru) 0 1, , Total Pluspetrol , , COVs SOx NOx 2.62 MP Environmental and Social Sustainability Report

38 Hydrocarbon Spills Environmental Impact Management Hydrocarbon spills are due to diverse causes, related to material faults or human errors that make hydrocarbons reach the environment and affect it. They include leaks of crude oil and its derivatives (residue gasoline, distillates, asphalt, jet fuel, lubricants, naphtha, light ends, kerosene and aromatics). In 2010, there was a reduction in the number and volume of hydrocarbon spills in comparison with This reduction brought down to three the number of barrels spilled per million of produced barrels. In addition, contingency plans implemented in 2010 allowed in situ recovery of 42% of the hydrocarbon spilled. The remaining volume underwent pertinent remediation measures that allowed the restoration of the affected sites. Spills Our management is focused on the adoption of prevention plans. In case of spill occurrence, we have contingency plans adapted to the characteristics of each operation. These plans foresee response procedures such as isolation or mitigation of spill sources, recovery of the fluid spilled, and cleanup and restoration of affected areas. Volume of Hydrocarbon Spills per Production Unit, per Operation, 22 (Bbls/MMBOE) / 2009 / 2010 Comparison Argentina Camisea Peru PPN Peru Pluspetrol Hydrocarbon Spills, per Operation / 2009 / 2010 Comparison number hydrocarbon of Spills Volumes (barrels) Argentina Rio Colorado District ND ND 1 ND ND 6 Bolivia Camisea (Peru) PPN (Peru) Total Pluspetrol In the case of PPN, we continue to implement the Pipeline Integrity Management Program (IMP), with the purpose of improving safety and reliability on the pipeline systems and consequently reducing spill incidence. The program covers oil pipelines, and gas, diesel and well production flowlines in Blocks 8 and 1AB. 34 Pluspetrol

39 Environment PPN, Peru Pipeline Integrity Management Program (IMP) Considering that most spills occur during transportation of hydrocarbons between the producing wells and the treatment facilities, we have implemented a systematic process aimed at identifying, assessing and mitigating pipeline risk in a continuous and traceable manner. This program allows determining the current status of pipelines to enable both preventive and corrective actions. The process consists of three stages: visual and internal inspection of the pipelines by means of instruments; protection of piping by means of coating and cathodic protection; and, lastly, a repair stage by means of replacement of faulty sections. Program Scope Length block 1AB (km) block 8 (km) Well Production Pipelines Diesel Flowlines Gas Flowlines Oil Pipelines Total Pipelines In 2010 and as part of this program, the Pipeline Internal Inspection Project was begun, using scrapers (also known as intelligent pigs) that allow determining the current condition of pipelines and the need for progressive replacement. The scrapers are launched into the pipeline to be inspected and are driven by the fluid contained in it. The pipeline characteristics are determined through non-destructive techniques, then stored in the tool internal memory and later analyzed by a software that identifies anomalies (corrosion flaws, dents, cracks, etc.) and the condition of the accessories within the line (valves, markers, bypasses, welds, flanges, etc.). In 2010, we inspected 54% of the oil pipelines in Block 8 (covering 171 km of a total length of km). Neuquen District, Argentina Progress made on soil remediation of old hydrocarbon spills in El Porvenir Since 2007, Pluspetrol has taken on the responsibility to remediate approximately 40,000 m 3 of soil affected during the Fifties, under administrations prior to that of Pluspetrol. In 2010, 19,050 m 3 of soil tainted with hydrocarbons were treated; thanks to that, 70% of the total to be cleaned up, that is 26,809 m 3, was conditioned. 22. In all the ecoefficiency charts, Rio Colorado District is included in all the data from Argentina. 23. It corresponds to spills greater than one barrel (159 liters) that reach the environment. 24. The values reported in the 2009 Sustainability Report were adjusted according to the new categorization defined in the 2010 Report. See Water/Oil Mixture Spills. Environmental and Social Sustainability Report

40 PPN, Peru Contingency Response: Saramuro Spill On June 19, 2010, due to damage in a barge belonging to a Pluspetrol s contractor that was moored at the Tiwinza Port, in Saramuro, a crude spill occurred in the Marañon river. Immediately after the incident was reported, Pluspetrol activated its contingency plan: containment booms were spread around the spill site within an area of 600 m 2, so as to start the recovery of the floating crude using skimmers and absorbent material. At the same time, the affected river banks were cleaned up by removing vegetation from the banks and the soil tainted with crude oil. In addition, visual inspections of the possible areas affected were carried out. The cleanup and inspection process concluded 10 days after the spill occurred, when the waste and the recovered crude were loaded in vessels that transported them to Pluspetrol s Trompeteros base. The investigation conducted by Pluspetrol to determine the causes of the incident concluded that the damage in the Sanam-II barge was due to the decrease in the river water level plus remains of iron beams in the river bed that pierced two of the barge s holds and caused a leak of 302 oil barrels. The affected zone corresponded to a section of the Marañon river adjoining the Pacaya Samiria National Reserve, located in the Loreto region, Peru. Water quality was monitored five times by both Pluspetrol and the controlling governmental entities. The Government, through the intervention of the General Bureau of Environmental Health (DIGESA), carried out several surface water analyses to verify its quality. After the third monitoring, which was made 60 days after the incident, DIGESA officially announced that the Marañon river waters had recovered their customary sanitary quality. 36 Pluspetrol

41 Environment Volume of Water/Oil Mixture Spills per Production Unit, per Operation (Bbls/ MMBOE) Water/Oil Mixture Spills Environmental Sustainability Report 2010 so as to achieve greater accuracy on the environmental impact generated by our Although they are not pure hydrocarbon spills, Pluspetrol manages and reports oil and water mixture spills as strictly as oil spills. In line with this, we have incorporated this indicator into our Social and operations, specifying the hydrocarbon and water proportions contained in this type of spills. Therefore, hydrocarbon spills and other spills were adjusted to this new categorization. Water/Oil Mixture Spills, per Operation (barrels) total Volume Spilled Water Volume Hydrocarbon Volume Argentina Rio Colorado District Bolivia Camisea (Peru) PPN (Peru) Total Pluspetrol 1,218 1, Other Spills Spills of other substances include products other than hydrocarbons, such as chemicals, water based drilling fluids, production water or reinjection water. In 2010, we reduced by 58% the volume of other substances spilled in all our operations. 0 Argentina PPN Peru Pluspetrol 25. The values reported in the 2008 and 2009 Sustainability Reports were adjusted in accordance with the new defined categorization. So, the water-oil mixture spills were excluded from the hydrocarbon spills and other spills, and reported as mixture spills. 26. It corresponds to spills greater than one barrel (159 liters) that reach the environment. 27. In the 2009 Environmental and Social Sustainability Report, a total volume of 411 barrels spilled was reported under the other spills category for PPN. Said value included 24 spills smaller than one barrel, equivalent to 7 barrels. Other Spills per Operation / 2009 / Comparison number Volume of Spills Spilled (barrels) Argentina , Rio Colorado District ND ND 7 ND ND 36 Bolivia Camisea (Peru) PPN (Peru) Total Pluspetrol , Environmental and Social Sustainability Report

42 Waste Our waste management is based on the minimization of the amount of waste generated and on the adequate disposal throughout the life cycle of our activities, by applying initiatives of waste reduction, reuse, recycling and/or recovery. Conditioned Waste Comprehensive waste management is carried out in compliance with the regulatory framework of each country and provides for the environmental requirements necessary to ensure minimization of potential impacts throughout its six stages: generation, segregation, transportation, storage, treatment, and final disposal. Conditioned waste is the one that poses a significant hazard to health and the environment due to its high hazardousness or toxicity, as established by the relevant applicable authority. Among the main conditioned waste generated in our operations, we have batteries, greases, hydrocarbon-contaminated rags, oil filters, sprays, solvents, used oil, and tank sludges, among others. In 2010, there was an increase in the amount of conditioned waste treated and/or disposed of. The reason for this increase was the delivery for treatment and final disposal of 13,077 m 3 of tank sludges 28 in the Neuquen District (Argentina) that had been generated in 2010 and in previous years. Conditioned Waste Generated, per Operation (Tn) / 2009 / 2010 Comparison Argentina 7, , , Rio Colorado District ND ND Bolivia Camisea (Peru) PPN (Peru) Total Pluspetrol 8, , , Pluspetrol

43 Environment Non-conditioned Waste 30 Non-conditioned waste is the one that does not pose significant hazards to health or the environment, such as domestic waste, paper and cardboard, among others. 28. This waste is accumulated in the bottom of oil storage tanks and is composed of water, hydrocarbon and solids in different proportions, depending on the facility where they have been originated. 29. In the 2009 Environmental and Social Sustainability Report, a density of 2.5 kg/m 3 was taken into consideration for the weight calculation of liquid waste generated in Camisea. In 2010 we took into account a density of 1000 kg/m 3, corresponding to the water density, as it was more accurate for the calculation of the main components of that waste. For that reason, the value of 431 tons informed in 2009 has been modified. 30. It includes waste generated and disposed of. It does not include recycled or reused waste. Non-conditioned Waste Generated per Operation (Tn) / 2009 / 2010 Comparison Argentina Rio Colorado District ND ND Bolivia Camisea (Peru) 1, , , PPN (Peru) 4, , , Total Pluspetrol 6, , , Environmental and Social Sustainability Report

44 PPN, Peru Recycling of Tank sludges in Block 8 Since July 2010, at PPN we have implemented a project for the treatment and recovery of tank sludges with the purpose of minimizing the volume of conditioned waste disposal in this operation. The project aims at recovering and treating the tank sludges that are kept in storage pits, properly waterproofed and covered, where generated waste is accumulated during tanks maintenance in Block 8, in the Corrientes Field. In 2010, we treated 20,972 barrels of tank sludges stored in the 31X pit, which had an accumulated volume of 44,025 barrels at the beginning of the year. The methodology used consisted in the segregation of tank sludge settlings (hydrocarbon, water and sediment) and their treatment through the following stages: 1. Extraction of fluids stored in the pit; 2. Storage in a gathering tank; 3. Thermal treatment of the tank sludge by means of steam boilers; 4. Chemical treatment of the fluid; 5. Separation through a centrifugation system; 6. Treatment of recovered water with flocculants and delivery to water batteries for further reinjection; 7. Treatment of the sediment through incineration; 8. Delivery of the recovered hydrocarbon to the production batteries. In 2010, the procedure allowed recovering 6,080 barrels of crude that were reincorporated to the production process. Gathering Tank Chemical Treatment Heat Exchanger Tricanter Centrifuge Separator Centrifuge Water Treatment Tank Sludge Delivery of Clean Crude Solids Tank Incinerator Water Sediments Oil El Bracho Thermal Power Plants, Argentina Oil Recovery Process in Reducers via Filtering and Reuse At the end of 2009 and as part of our efforts to minimize waste generation, we incorporated a recovery process in the El Bracho Thermal Power Plants, which allows reconditioning and reusing residual synthetic oil that is generated during the operation. The initiative, developed within the Cooling System Optimization Program of the Power Plants, consisted in the implementation of a recirculation process: used oil generated during the lubrication process of the gear assembly of the Plants reducing equipment is filtered by means of high- efficiency filtering elements. 40 Pluspetrol

45 Environment 3 The conditioning of the lubricant oil extends its useful life, which results in lower consumption and, consequently, less conditioned waste generated. At the same time, it protects the mechanical parts of the equipment by preventing oil contamination, increasing their useful life and reducing the costs due to premature changes. In Argentina, the common use range of synthetic oils in any lubrication process goes from 6,000 to 8,000 running hours. This process enabled us to increase the useful life of the resources to more than 10,000 hours. Oil consumption at the El Bracho Thermal Plants was 856 liters in 2008 and diminished to only 125 liters in 2010 (85% less). Camisea, Peru Reinjection of Drill Cuttings in Cashiriari 1 and 3 (Block 88) During drilling activities, solid waste known as drill cuttings is generated; it is composed of drilling muds and small pieces of rock. The number of cuttings generated is related to the well depth, which, for the Cashiriari Field, is approximately 3,000 meters below wellhead (bwh). In the Cashiriari locations, situated in biodiversity hotspots, the reinjection of drill cuttings was the method selected to dispose of this waste, an innovative and safe system from an environmental viewpoint. The initiative entailed a US$ 10MM investment and positioned Pluspetrol as the first Latin American company to implement this technology. Drill Cuttings Reinjection Process Gathering of Cuttings Preparation of the Slurry, Drill Cuttings and Water Injection Well Pumping The reinjection process begins with the gathering of drill cuttings in the drilling equipment. They are later transported to the processing station where they are ground or crushed in water to form the slurry. An adequate diameter of the particles is necessary to ensure reinjection. Lastly, cuttings are pumped at high pressure into an injection well so that they do not interfere with surface and subsurface drinking water resources. 1 Injection is monitored through software specially designed for this project, in which the operating conditions (pressures and rates) are continuously simulated, as well as the field status and the recipient sands. Pozos de producción Las bombas extraen el petróleo del subsuelo a unos metros de profundidad. Separador trifásico Son tanques que se encargan de separar el petróleo, el agua y el gas extraídos del subsuelo, derivándolos a sus respectivos procesos. Tanque desnatador Su función es lograr que el petróleo quede suspendido en la parte superior del tanque y el agua en la inferior. Tanque de reposo El agua de producción ingresa a este tanque donde es clarificada por última vez. Bombas Trasladan el agua, mucho más limpia, del tanque de reposo hacia las bombas de reinyección para ser devueltas al subsuelo. Environmental and Social Sustainability Report Gas a Central termoeléctrica

46 Water An efficient water management includes both the rational use of this resource and the proper treatment of the effluents generated. At Pluspetrol, we use water for different activities, such as power generation in the El Bracho steam turbines, drilling of wells in the fields, and human consumption in offices and camps, among others. As regards the effluents, the greatest volume is generated during the separation of oil and water, which are extracted from the wells at the same time. Since 2009, Pluspetrol has reinjected the total water production generated in all the operations, and no discharges of that effluent to the environment have been produced since then. At the same time, effluents generated by both plant processes and domestic uses are treated with the adequate technology and methods to comply with the required limits. Water Consumption In 2009, in Argentina, the combined-cycle El Bracho Power Plants (Tucuman and San Miguel de Tucuman) operated as open-cycle (gas-fueled only) for a period of six months and a half, due to maintenance tasks. When the combined-cycle operation (gas and steam) was resumed in 2010, there was an increase in water consumption in this operation, even though a higher performance was obtained in terms of power generation 31. On the other hand, an intense drilling activity started by mid-2010 in the Centenario Field, Neuquen District, due to the beginning of the Islas Project, in the Los Hornos sector, Valentina Norte Rural. Said activity required high water consumption. Water Consumed per Production Unit, per Operation (Bbls/BOE) / 2009 / 2010 Comparison 1, , ,2 1,0 0, ,6 0,4 0, Due to all this, in 2010 there was an increase in water consumption in our operations, reaching a total of million barrels (equivalent to 12,325,361 m 3 ). The acquisition of Rio Colorado District contributed with a 16% increase to the total volume of water consumed, compared to Argentina Bolivia Camisea Peru PPN Peru Pluspetrol Water Consumed, per Operation (MMbbl, million barrels) / 2009 / 2010 Comparison Argentina Rio Colorado District ND ND Bolivia Camisea (Peru) PPN (Peru) Total Pluspetrol In 2010, the turbines of the El Bracho Power Plant operated 20, running hours (30% less than in 2009), with an electric power production of 4,141 GWh (only 4% less than in 2009). 42 Pluspetrol

47 Environment PPN, Peru Production Water Reinjection System Throughout 2010, we maintained our objective of zero discharge of production waters in our PPN operations. Set in 2006 upon signing the Dorissa Agreement, the objective was attained in April 2009, after completing the activities planned for the reinjection project. The project involved an important resource investment for the installation of 33 reinjection wells, 110 km of energy lines, 69 high pressure pumps, 29 low pressure pumps, 54 km of reinjection flowlines, and 38 process tanks. Reinjection System Production wells The pump draws oil from the ground to 2,500 feet deep. Phase separator Tanks are in charge of separating oil, water and gas extracted from underground, refer them to their respective processes. Skimmer tank Its function is to ensure that oil is suspended in the top of the tank and the water at the bottom. Surge tank Produced water enters the tank where it is clarified for the last time. Pumps Move the water much cleaner, the surge tank to re-injection pumps to be returned to ground. Gas Oil to Thermal Power Station to surge tank Water Phase separator Skimmer tank Surge tank Transfer pump High pressure pump Reinjection well 600 m 2,500 m Environmental and Social Sustainability Report

48 Biodiversity At Pluspetrol, we consider biodiversity conservation as a strategic element and a fundamental aspect of our operation management. For that reason, year after year we foster many actions aiming at its preservation and protection, such as: biodiversity baselines and monitoring in sensitive areas, species preservation programs, monitoring programs on the use of resources by the indigenous communities, plans to prevent introduction of exotic species and to eradicate invasive species, and programs on erosion control and revegetation with native species. 44 Pluspetrol

49 Environment Biodiversity Monitoring Program (BMP) Blocks 88 and 56 (Camisea, Peru) The BMP has been implemented in Camisea (Peru) since 2005 and consists of an instrument for collecting data that allows assessing the biodiversity status and perform long-term monitoring of the operation area. Following the results obtained within the BMP framework, different actions are recommended to detect and/or correct possible impacts on biodiversity. The monitoring tasks are carried out through the different scales contemplated in this program: landscape, communities and species, revegetation, and use of natural resources. In 2010, BMP activities focused on the monitoring of the landscape and of communities and species. As regards the first one, the landscape characterization of two projects was performed: the Malvinas Gas Plant and the Malvinas-Cashiriari-3 flowline (with its corresponding wells). The description, based on satellite images and aerial photographs, represents the projects status between September 2009 and May In addition, during the year a number of specific indicators were prepared to monitor changes in the landscape. Monitoring of terrestrial biota was performed for both communities and species (vegetation, amphibians and reptiles, small and large mammals, terrestrial birds and invertebrates) in Pagoreni A, Pagoreni B, San Martin Este, and Armihuari Norte. On the other hand, hydro-biological monitoring tasks were carried out in the following communities: Timpia, Shivankoreni, Miaria, Sepahua, Kirigueti (Urubamba river, Camisea river and Cashiriari river). As a result of the monitoring tasks performed since the start of the BMP, a Guide on Birds, Biodiversity and Native Communities of the Lower Urubamba was launched and disseminated in As a complement to the monitoring tasks, during 2010 we worked on the information, awareness and training of Camisea personnel through the execution of an Internal Communication Plan (ICP). The implementation of this plan allowed integrating the activities of the Biodiversity Monitoring Plan (BMP) with Camisea s Integrated Management System (IMS), thus facilitating the association of aspects related to biodiversity studies with those related to the Company s activities. Landscape Use of Natural Resources BMP Communities and Species Revegetation Environmental and Social Sustainability Report

50 Camisea, Peru Launching of the Bird Guide, Biodiversity and Native Communities of the Lower Urubamba As a result of the monitoring tasks carried out since the start of the BMP, in 2010 we sponsored the development and publication of a bird guide with the objective of highlighting the importance of biodiversity for the native communities in the Camisea area. The publication focused on birds as an indicator of healthy ecosystems: of all living beings, certain animals are good health indicators of an ecosystem; among them, birds are an ideal group for assessing the ecosystem s integrity. In other words, birds are considered as indicators of the conservation status of a specific ecosystem. The guide came up from joint work and interaction with the inhabitants of native communities, throughout the surveys carried out as part of the Biodiversity Monitoring Program (BMP) in Camisea. With the purpose of avoiding language barriers, the guide was presented in Spanish and Machiguenga, encouraging the dissemination of this language as well as the learning of specialized vocabulary in Spanish by the local inhabitants. The publication was presented during the celebration of the Environment Day and the Biodiversity Day, which were held in the Malvinas Gas Plant. Three thousand copies of the guide were handed in. Likewise, the guide was presented to the different native communities through the Community Affairs Department of Pluspetrol. Camisea, Peru Internal Communication Plan of the Biodiversity Monitoring Program Being aware of the importance of internally communicating the results obtained through the BMP and incorporating them to the operation activities, in 2010 the Program started an Internal Communication Plan (ICP) with the purpose of: Disseminating the BMP at the different hierarchical levels. Generating visual and graphic communicational tools. Defining products/information that allow the incorporation of BMP recommendations to decision-making. Continuing with the incorporation of biodiversity aspects to the Integrated Management System. In 2010, the first communication initiatives were encouraged. They consisted in the installation of graphic communicational aids in the Malvinas Plant to meet the information needs detected. At the same time, with the purpose of integrating the biodiversity aspects to the Integrated Management System, a training program was designed for the operating personnel. 46 Pluspetrol

51 Environment Biotic and Abiotic Monitoring Program Natural Gas Liquid Fractionation Plant, Pisco In 2010, we continued implementing the Biotic and Abiotic Monitoring Program in the Paracas Bay, Pisco, with the purpose of monitoring the main environmental variables of the maritime, coastal and terrestrial components of the project. The Biotic and Abiotic Monitoring Program has three major components: the Early Response System (ERS) that is carried out in the area of San Martin Port, Loberia Beach, and the loading platform (direct impact zone); the Biotic and Abiotic Monitoring Program, that covers the area of influence (direct, indirect and insular impact zone); and the Ballast Water Monitoring Program. The Early Response System (ERS) is the first line of defense against potential contingencies during the loading of hydrocarbons onto the ships. It is also focused on the detection of anomalies in the area, such as red tide or oil spills not related to the activities performed by the Company. The ERS monitoring is carried out on a daily basis. On the other hand, the objective of the Water Ballast Monitoring Program is to identify the presence of aquatic organisms with toxigenic or invasive potential that might be introduced into the ecosystem by cargo ships. The monitoring involves the sampling of ballast water tanks as well as of the recipient body. 80 ships were evaluated in The Biotic and Abiotic Monitoring Program seeks to generate the necessary environmental data to compare with the assessed baseline and to prove compliance with the environmental commitments. To that end, it encompasses 12 stations (21 points) in the direct impact zone with a monthly monitoring frequency, and 24 stations (42 points) in the indirect impact zone, with a quarterly monitoring frequency. The monitoring results are used in the evaluation of biotic parameters (bentos, plancton, vertebrates, microorganisms, terrestrial vegetation) and abiotic parameters of water quality (temperature, ph, dissolved oxygen, salinity, nutrients) and sediment (lead, chrome, mercury, zinc). Finally, with the purpose of setting trends and obtaining results on the assessed ecosystems, the initiative includes the development of a Biodiversity Follow-up Program (BFP) that includes the preparation of an annual report based on the systematized data from the biotic and abiotic monitoring. Biotic and Abiotic Monitoring Program ERS Monitoring Water Ballast Monitoring Abiotic Biological Observations (Daily) Abiotic (Monthly) Biological (Quarterly) Environmental and Social Sustainability Report

52 Colombia Field Research for the Characterization of Water, Flora and Fauna Resources in Block CPE-7 The area of interest of Block CPE-7 is situated in the Colombian Orinoquia region, one of the country s regions with the highest diversity in plant and animal species. The region is also rich in water resources. Locally, accurate characterization (inventory) of these natural resources is still poor. Within this context, in 2010 we started a field research aimed at characterizing water, flora and fauna resources, parallel to the development of the seismic exploration activities in the area. Activities Performed per Resource: Hydrology Characterization of the main water sources proposed for use at mobile camps. Vegetation Coverage Creation of forest inventories in the heliport areas, mobile camps and discharge zones. Fauna The fauna study carried out is closely related to the ecosystems and specific vegetable units. The results of this biological characterization will contribute to the definition of ecosystems, based on academic parameters tailored to the environmental and ecological reality of the country. In addition, the data obtained will contribute to complement the cartographic tools for the design of the area s ecosystem map. Block 8, PPN Support to the Protection of the Pacaya Samiria National Reserve The Pacaya Samiria National Reserve is located northeast of Peru, at the confluence of the Marañon and Ucayali rivers, Department of Loreto, and represents the largest National Reserve of Peru. This Reserve is home to a great diversity of flora, wild fauna and aquatic life as well as to a large number of threatened or endangered species. Taking into account the sensitivity of the Block 8 area, located within the Reserve, in September 2010 Pluspetrol entered into an interinstitutional cooperation agreement between the Secretariat of Natural Resources (SERNANP) and the Fund for the Promotion of Peru s Protected Natural Areas (PROFONANPE). The agreement is intended for the Support to the Strengthening of the Management, Protection, Handling and Monitoring of Natural Resources in the Pacaya Samiria National Reserve. This 5-year agreement involves different initiatives aiming at: Reinforcing the official and community surveillance and control of the Samiria river basin and its affluents. Implementing management, monitoring and control mechanisms of natural resources used by aquatic turtles (Charapa, Taricaya and Cupiso) as a way of preserving these endangered species. Preventing and mitigating deforestation of the Reserve s aguajales (palm swamps). Assessing changes in the use of the land. 48 Pluspetrol

53 Community Relationships

54 Community Relationships Among its initiatives, Pluspetrol fosters the implementation of practices capable of contributing to the human and socioeconomic development of the communities that inhabit the areas of influence of its operations. This is carried out from a global perspective of sustainability and within the framework of relationships involving cooperation, trust and learning, respect for land rights and cultural diversity. Taking the above into account, the community action is in keeping within a number of guiding principles. These principles are translated into specific management tools that are implemented at all Company levels. Within this framework, the Community Action and Social Investment Standards were approved at the end of Guiding Principles in our Community Relations Respect for human rights, in general, and for the indigenous peoples rights in particular. Dissemination of information regarding operations and projects in a sufficient, accessible, understandable and timely manner. Implementation of wide-ranging participatory processes. Participation of the community in the evaluation of the company s compliance with environmental and social commitments. Recognition of the relationship between biodiversity and quality of life for indigenous communities. Recognition of interculturality as a key human value in the practice of community relationships within multilingual and multicultural contexts. Design and implementation of community relationship plans: - Sustainable over time; - Capable of strengthening self-management; - Based on the idea of mutual learning and the appraisal of the ancestral knowledge of indigenous peoples; - Adapted to the environmental and social conditions of the areas where they are developed. Actions focused on productive projects in the fields of health, education, art and culture.. 50 Pluspetrol

55 Community Relationships Community Action Corporate Standard Pluspetrol s contribution to the development of communities must be based on a strategic approach, through short, medium and long-term objectives that ensure a lasting relationship and a greater capitalization of benefits for both the communities and the Company. In this way, community action comprises: An integral part of the management of a project or operation; Devised at the early stage of a project or operation and ongoing throughout its life cycle; Periodically planned and assessed; Adapted to the socio-economic, demographic and cultural characteristics of the social milieu. Communicated internally and externally; Developed taking into consideration that any outlay should be done within the framework of specially designed agreements and/or according to a specific plan or project. Community Action Cycle The development of the community action is based on a general scheme of a cyclic and adaptive type that comprises the following stages: Planning of community action through the definition of items, community relation plans and projects; Diagnosis; Project planning and design; Implementation and follow-up of projects; and Periodic assessment. Development of Community Action Continuous Improvement Community Action Diagnosis Evaluation of Categories and Action Plans Definition of Categories, Action Plans and Projects Pluspetrol Internal Participatory Project Evaluation Project Design and Planning Project Implementation and Follow-up Environmental and Social Sustainability Report

56 Social Investment Corporate Standard The Social Investment Corporate Standard incorporates the criteria to be taken into account for the definition of Pluspetrol s social investment; this is part of the general strategy of Community Affairs, which strives for the sustainability of Company s activities in the different areas in which it operates. Through this standard, we seek that investments on social matters last over time and at the same time be implemented by means of tripartite alliances. Sustainable Projects Sustainable projects are medium and long-term initiatives based on the idea of support or association, that may imply, for example: Transfer and strengthening of knowledge and skills; Institutional strengthening and selfmanagement; and Development of enterprises (productive, social, among others) and/or activities that generate income. In all cases, projects require the active involvement of all the recipients and associates, so that they may go on with the initiative long after Pluspetrol s participation has finished. Sustainability Added Value / Duration of Positive Impacts over Time Engagement of Beneficiaries Selfmanagement during and after Pluspetrol Transfer of Knowledge and Skills Skills Development in Communities / Institutions Tripartite Scheme The planning of community relationship projects is defined by means of participatory processes and the fostering of the beneficiaries engagement and involvement. As to its implementation, we promote that social investment be carried out in association/alliance with other entities, by privileging those initiatives that allow a tripartite scheme of the investment. For the definition of associated/allied party the following are considered, among others: Non-governmental Organizations, Local Community Organizations, Local Government or Local or Regional Institutions, and Multilateral Cooperation Organizations. Pluspetrol Associated Party Recipient 52 Pluspetrol

57 Community Relationships Participatory Dialogue Processes The cross-cutting principle of all the activities is the participatory approach. All the processes we promote -from dialogue, dissemination and consultation to community projects- are evaluated, designed and implemented in close cooperation with the communities, considering their points of view and respecting their values and culture. Each meeting or workshop associated with the different stages of a project or related to specific programs of community action and environment aims at ensuring free, previous and informed consultation and at considering the concerns and opinions of the communities from an early stage. When addressed to indigenous communities, dialogue processes also involve the organizations representative of the indigenous peoples, respecting the cultural mechanisms on local communication. During 2010, we furthered numerous participatory processes related to the development of new stages in different projects: Participatory Dialogue Processes Dissemination, Communication and Operation Project Consultation Processes fostered in 2010 number of Participants Neuquen District (Argentina) Drilling and workover in oil and gas wells at 30 locations (islands) in Valentina Norte Rural (Los Hornos sector) 1 informative meeting 120 Colombia 2D seismic project in Block CPE-7 43 meetings on the project s socialization 916 Bolivia Drilling project of 3 exploration wells in the Tajibo Field and complementary works 7 informative meetings 26 Intervention of 2 wells in the Rio Field and definitive relinquishment of 1 well 3 coordination and informative meetings 37 Drilling project of 3 wells in the Curiche Field 5 coordination and informative meetings 13 Exploration drilling project of 2 wells in the Jacobo Field 4 coordination and informative meetings 27 Camisea, Peru Construction of the Mipaya flowline Startup of Pagoreni A well drilling 66 informative workshops with native communities in Camisea s direct and indirect area of influence 1,841 Geological study Reports and negotiation on compensations per operating stage Education and health project Environmental impact assessment for the expansion of the processing and storage units of the Natural Gas Liquid Fractionation Plant in Pisco 2 informative workshops 1 public hearing complementary informative workshops PPN, Peru 3D seismic Project in the areas of Capahuari Norte-Sur, Tambo Este, Jibaro Noreste-Jibarito 2 informative workshops in the town of Nuevo Andoas and in the native community Pampa Hermosa public hearings 98 Electrification systems installed by the Company in native communities 1 workshop for children and youths in the Pampa Hermosa, Nueva Jerusalen, Jose Olaya, Nuevo Andoas and Los Jardines communities, on the risks and dangers in the use of electricity Environmental and Social Sustainability Report

58 Colombia Processes of Previous Consultation with the Indigenous Communities of Block CPE-7 Within the project s framework of 2D exploration seismic in Block CPE-7, in 2010 we began previous consultation processes with 4 indigenous communities located within the exploration area: these comprise the indigenous resguardos (reservations) Unuma Vichada (municipality of Cumaribo, Vichada Department), Caño Jabon (municipality of Mapiripan, Meta Department), Unuma Meta and El Tigre (municipality of Puerto Gaitan, Meta Department). The development of the consultation process begins with a mutual recognition meeting. During this meeting, each community and its authorities have the opportunity to introduce themselves while Pluspetrol presents the project to be implemented in the area. Next, a methodology for the following stages of the process is jointly agreed. In a second stage, Pluspetrol presents the project s details so that communities may identify the potential impacts associated as well as management, mitigation and compensation measures. These opinions provide feedback to studies under way and allow incorporating changes to the project s original design. The process ends with the presentation of a compensation proposal submitted by the communities that, once agreed upon with the Company, is formalized through the signature of an agreement that lists the commitments taken by Pluspetrol. The Minister of the Interior is present during all the meetings and simultaneous translation to the Sicuani and Piapoco languages is provided. Resguardo (indigenous community) Unuma Vichada Unuma Meta El Tigre Caño Jabon Consultation processes promoted since 2009 In 2010, 2 workshops on identification and project prioritization, and 3 workshops enabling the regularization of the consultation process were conducted In 2010, 5 meetings with leaders and communities were held. The consultation process is still under way In 2009, approaches were made to start previous consultation. In 2010, 9 meetings were held: 2 inter-institutional and 7 with leaders and communities. The consultation process is still under way The consultation process began in In 2010, 5 meetings were held. The consultation process is still under way Neuquen District, Argentina Island Project in Valentina Norte Rural The project involves the drilling of 77 oil wells and 16 gas wells from approximately 30 locations called islands, in the zone of Valentina Norte Rural. Over the last years, this zone has experienced an important urban encroachment advancing over the hydrocarbon exploitation area of the Centenario Field. The exploitation through directional wells, gathered in islands, aims at reducing the area affected by the project, thus minimizing social impact. The dissemination process began with the analysis of the social baseline. This baseline allowed establishing the activities to be developed in the community, based on the socio-economic conditions, the infrastructure and the basic services of the population living in the field s area. As part of this dissemination activity, a meeting was held at the neighborhood center of Valentina Norte Rural, with the presence of 120 neighbors. They were informed about the operations to be carried out, the working hours, and the communication channels available to the community for making suggestions. Lastly, an informative booklet was distributed in the community to respond to the most frequently asked questions from the neighbors with regard to the operation, apart from the permanent communication channels open at the Company. 54 Pluspetrol

59 Community Relationships Response to Grievances and Resolution of Conflicts The dialogue processes that we foster aim at generating a mutual understanding relationship. In all the operations we have procedures that guarantee the adequate reception and response, in the shortest possible time, to potential grievances from the local population, public or private institutions, and indigenous organizations located in the area of influence, among others. Although each operation has its own procedure, tailored to its characteristics and context, some of the basic elements of the processes for the resolution of grievances or claims include: Appointment of responsible people for all the management stages. Investigation of the event occurred and relevance of the grievance or claim to define corrective actions. Implementation of tools for registering and monitoring all the stages of the process. Compliance with response deadlines that guarantee satisfaction of the petitioner. In addition, in the case of non-desired events that might have adverse impacts on the life of the communities close to our operations, we establish dialogue processes to generate agreements on the measures to be adopted. In this sense, during the implementation of a contingency plan, dialogue is a key tool in providing an initial and fast response to the needs of the communities affected by these incidents, ensuring that this response is given in a proactive, efficient and coordinated manner. PPN, Peru Assistance to Communities Affected by the Saramuro Spill As a consequence of the crude oil spill occurred in Saramuro, in June 2010 (see Contingency Response: Saramuro Spill), Pluspetrol undertook to offer immediate assistance to the communities located in the Rio Marañon Basin, the area affected by the incident. From a social standpoint, the contingency plan set up by Pluspetrol began with inspections along the river and in some of the communities located downstream, with the objective of evaluating the incident. In the first place, Pluspetrol established prompt communication with the communities adjacent to the incident area (Urarinas District), and then continued with more remote communities (Parinari and Nauta Districts). Assistance to the communities was channeled through an Emergency Plan developed to assist affected population by means of an air and fluvial shuttle service. This service allowed provision of food, water and itinerant preventive medical service to a total of approximately 80 communities of the Urarinas, Parinari and Nauta Districts. Pluspetrol delivered a total of 730 tons of food and 1,500 tons of drinking water. The support provided by Pluspetrol was finished by mid-september, after the General Health Bureau (DIGESA) had confirmed restoration of the river water quality to the population. Environmental and Social Sustainability Report

60 Social Investment In 2010 we invested US$ 20,782, in the economic and social development of the communities located in the area of influence of our operations 33 ; this meant a 30% increase in our social investment compared with The definition of categories and projects, as well as the planning, execution and follow-up of the investment, was made upon consideration of the guidelines defined in the corporate standards of community action and social investment. Social Investment in US$ / 2009 / Comparison Millions Education Health Community Development Institutional Strengthening Other 771,641 2,192,009 2,164,867 6,142,299 1,093,046 3,595,794 1,803,601 4,633,151 3,824,162 2,077,668 1,983,565 8,358,273 3,944,064 1,003,280 5,493, It includes money handed over to indigenous communities as compensation for the activities developed in their territories: seismic exploration in Bolivia and river traffic and operations in Peru. 33. The reported amount includes social investment in those Business Units where Pluspetrol has oil and gas extraction activities. It does not include social investment made on exclusively exploration areas: Venezuela, Colombia and Angola. 34. The category Other includes donations for educational, religious, sports events and traditional festivities, investments in service infrastructure not included in community development projects, and amounts to be used for contingency responses. 35. The values included in this report differ from those included in the 2009 Environmental and Social Sustainability Report due to a reclassification of the amounts included in the categories education, community development, institutional strengthening and other, for the Bolivia operation. 56 Pluspetrol

61 Community Relationships Social Investment Categories Education Health Community Development Institutional Strengthening Other Initiatives to favor school permanence of children and youths. Projects to improve education conditions for students: improvement of infrastructure and technology. Teacher training. Projects to improve access to health care. Support to the available health public services. Sustainable productive enterprises. Training programs to improve employability of the communities. Initiatives to improve the infrastructure of basic services for the communities. Support the Support of educational, strengthening of religious and traditional management festivity events. and administration skills of social or Distribution of water indigenous to neighboring organizations. communities. Compensation to the communities surrounding the operations. Social and environmental care unforeseen contingencies. Colombia Participatory Social Investment In our effort to contribute to the human and socio-economic development of the settlers communities neighboring Blocks CPE-7, CPO-2, and CPO-3, we have implemented a social management plan and a social investment plan along with our exploration activities with the purpose of building bonds with the communities and achieve a positive impact on their quality of life. As part of the culture to implement broad participatory processes in order to define the social investment projects in 2010, we developed workshops for the formulation and prioritization of social projects in each of the communities in the area of influence. This process, which lasted approximately 4 months, fulfilled the objective of offering the communities tools for the collective definition of social projects to cover their main needs. For the Company, it was also an important opportunity to strengthen community bonds in new areas at the beginning of exploration projects. During 2010, 11 workshops were conducted and there were 517 attendees. The projects developed and selected by the communities during the workshops benefited 57,440 people. Some outstanding projects: Participatory Social Investment Operation Municipality Community Project Block CPE-7 Mapiripian Inspeccion Puerto Alvira Fluvial ambulance Block CPO-2 Block CPO-3 Vereda Nueva Esperanza Vereda Esteros Bajos Inspeccion El Anzuelo Inspeccion Rincon del Indio Vereda La Realidad Construction of health care unit School expansion Fitting out and furnishing of health posts Fitting out of health posts Construction of classroom Puerto Gaitan El Porvenir Purchase of an outboard motor Urban Area Puerto Gaitan Donation of sound equipment for the Cultural House (Casa de la Cultura) of the municipality Cumaribo El Viento Fitting out and installation of two children playgrounds El Progreso Fitting out and installation of two children playgrounds and solar panels Santa Rosalia Urban Area Santa Rosalia Hospital supplies Environmental and Social Sustainability Report

62 Bolivia Resource Multiplication Through our operation in Bolivia we were able to establish strong cooperation bonds with the communities of the Communal Land of Origin (Tierra Comunitaria de Origen) (TCO) Charagua Norte. By developing social projects in this operation, we have become real partners to the communities. In each project we developed, we assisted them in the request of funds to other organizations (NGOs, International Cooperation Organizations, State Entities), with the purpose of multiplying the impact of the investments we make. In this way, in 2010 we began searching counterparts for the Development of Communal Vegetable Gardens in the Igmiri and Estacion Aimiri communities. This project aimed at improving the conditions of access to water, both for productive and domestic use, and allowed the creation of a water cooperative for the installation of tanks and trickle irrigation. As a result of the search for counterparts to fund this project, communities were able to multiply by four the amount granted by Pluspetrol for its development. Percentage of the total amount of the project contributed by each counterpart % % % 8.82 % % % Japan s International Cooperation Agency in Bolivia (PROASU-JICA) Action Against Hunger Center for the Research and Promotion of Peasants (CIPCA) Municipality of Charagua Community Pluspetrol 58 Pluspetrol

63 59

64 Community Projects Below there is a detail of the main projects developed in 2010, in the categories education, health, community development, and institutional strengthening. Education We continue to invest in actions that can improve the educational conditions of children and youths of the communities neighboring our operations. Education Operation Project Location Project Objective Results 2010 Neuquen District, Argentina Paraje Challaco, and Plottier, Neuquen and Cutral Co locations, province of Neuquen Support program for educational school projects Improve the educational quality of students through educational/ pedagogic projects submitted by the schools 1,600 students benefited 16 projects developed jointly with Schools N 234, N 266, CEPEN N 9, EPET N 9 and EPET N 19 of Plottier. School N 176 of Challaco. Schools N 63, N 45, EPET N 1 of Cutral Co. And Schools N 223, N 245, N 356, EPET N 17, EPET N 3, School N 296 and Kindergarten 27 of Neuquen Neuquen District, Argentina Neuquen City, province of Neuquen This is Rhythm (Esto es ritmo, 4th Edition) Generate space of social participation and inclusion through artistic expressions Participation of 150 students from 8 schools. 3 public performances with the participation of the Provincial Symphonic Orchestra and the Provincial Choir North District, Argentina Gral. Mosconi location, province of Salta Construction of an Auditorium at the Mosconi tertiary school Provide a place for meetings and multiple uses at the tertiary school 800 students of tertiary level benefited The third stage of the work was finished; it included the laying of floors and walls and the assembling of the stage North District and Neuquen District, Argentina Neuquen Province and Tartagal town, province of Salta Scholarship program and financial help for high school and university students Favor school continuance of high school, tertiary and university students 10 mapuche students received financial help to pay their stay at the Educational Center San Ignacio, in Junin de los Andes 17 high school and university students of Neuquen and Cutral Co were granted scholarships 15 university students and one high school student received scholarships Bolivia Communal Land of Origin (Tierra Comunitaria de Origen, TCO) Charagua Norte School supplies to rural schools in Charagua Norte Improve school attendance rates and reduce school dropouts in the indigenous communities 916 students from 24 schools received school supplies Camisea, Peru Lower Urubamba region, Cusco Training for bilingual teachers of pre-school, primary and high school levels Improve the educational quality of the Lower Urubamba teachers 150 teachers trained through the agreement entered into with the Peruvian University Cayetano Heredia and INMED 3,000 students benefited Camisea, Peru Lower Urubamba region, Cusco Support to teachers Support the professional training of Lower Urubamba teachers 10 teachers received support for obtaining their degree 12 teachers received scholarships to complete their technical studies at the Laborde Institute in Sepahua Camisea, Peru Pisco, San Andres and Paraca locations, Department of Ica Environmental Education Program Strengthen skills for the environmental management of basic educational institutions in the province of Pisco 14,350 students trained Participation of 450 professors 25 educational institutions of Pisco, San Andres and Paracas benefited PPN, Peru Basins of the Corrientes, Pastaza and Tigre rivers, Loreto Department Support to educational institutions Improve the basic infrastructure of indigenous community schools 1 datacenter for basic education students installed in the Nuevo Jerusalen community 1 initial education center built in the San Juan Campesino community 1 classroom expanded for the educational center of the Pucacuro community 1 initial education center built in the San Juan Nativo community 1 school facility refurbished in the Pijuayal community 5,423 packages with school supplies handed over during the year 51 schools provided with school kits 60 Pluspetrol

65 Community Relationships Camisea, Peru Environmental Education Program in Pisco (EEPP) In strategic alliance with the Local Education Management Unit (UGEL-Pisco), a decentralized institution of the Regional Government of Ica, since 2008 we are developing an Environmental Education Program in Pisco, San Andres and Paracas. During 2010, the program was implemented in 25 educational institutions, strengthening the environmental management skills of 14,345 students and 450 teachers. The program s objectives for the period aimed to: Provide students with tools to identify the causes of the environmental problems prioritized by the program: sea contamination, solid waste, and deterioration of the Paracas National Reserve. Encourage the development of solid waste management systems in educational institutions. Generate activities to strengthen bonds between educational institutions and the Paracas National Reserve. Within this program, 4 contests were organized: Drawing and Painting, in celebration of World Environment Day; Solid Waste Management, to grant awards for the effective application of solid waste plans launched in 2009; Environmental Photography and Environmental School, aimed at awarding the most outstanding environmental management. In addition, 50 ecological productive workshops were conducted with the participation of 1,604 students. Parents and teachers of the Pisco, San Andres and Paracas districts made up products by reusing materials. Finally, projects on environmental recycling were implemented to foster the development of a sustainable relationship between Institutions and the Paracas National Reserve. A course was delivered on Learning about the Paracas National Reserve, and the Reserve personnel was in charge of training students on Reserve care and protection as well as informing about the most recurrent potential environmental impacts. Environmental and Social Sustainability Report

66 Health We keep on furthering health programs in strategic alliance with government entities and local NGOs, with the purpose of improving the access of communities to health care. Health Operation Project Location Project Objective Results Neuquen District, Argentina Neuquen, Plottier, San Patricio del Chañar, Cutral Co and Challaco Health Care Plan Provide schoolchildren and youths with dental, pediatric and ophthalmological assistance as well as education in hygiene and health habits 10 educational institutions were visited by mobile health trailers equipped with dental, pediatric and ophthalmological clinics Courses delivered in schools: - Cardiopulmonary Resuscitation (CPR) Courses for teachers; - Comprehensive Health Prevention for Teenagers; - First-Aid 2,697 dental consultations 1,630 pediatric consultations 879 ophthalmological consultations 398 pairs of prescription glasses handed over to students North District, Argentina Coronel Cornejo, province of Salta Health Care Plans in Schools Provide medical assitance to students of schools with difficult access to health care services School M.M. de Güemes of Cornejo: dental patients treated and 2,014 services provided; pediatric patients; medical referrals; - 16 pairs of prescription glasses handed over School Mariño of Mosconi: dental patients; - 1,370 dental services; pediatric patients treated; referrals; - 59 ophthalmological patients El Bracho Thermal Power Plants, Argentina El Bracho, province of Tucuman Manos a la vista (Eye care program) Improve visual health in schoolchildren, providing ophthalmological care Eye exams were carried out at El Bracho schools. 920 children were examined 22 pairs of prescription glasses were handed over Bolivia Communal Land of Origin (Tierra Comunitaria de Origen, TCO) Charagua Norte Community medical services Improve health level of the population in conjunction with the Health Bureau of Charagua Norte 30 communities benefited through medical campaigns 72 medical campaigns conducted in the communities. 1,499 inhabitants treated Supply of medicines Colombia Departments of Meta, Vichada and Guaviare Medical Brigades Provide medical assistance to communities with difficult access to health care services 980 dental services 974 optometric consultations 27 ophthalmological services 201 pediatric consultations 855 general practice services 71 smear tests 67 gynecological consultations 89 laboratory clinical tests Camisea, Peru Lower Urubamba Region, Cusco Health and Food Safety Project for the communities of the Lower Urubamba Region Improve the health of children under 3 years and expectant mothers from 7 native communities and 2 colonist settlements of the Lower Urubamba 7 indigenous communities of the Lower Urubamba have benefited: Camisea, Kirigueti, Segakiato, Cashiriari, Ticumpinia, Nuevo Mundo, Shivankoreni, and 2 rural settlements: Tupac Amaru and Shintorini PPN, Peru Basins of the Pastaza and Tigre rivers, Department of Loreto Health Care Programs Favor access to health care of indigenous communities in the area of influence, through primary health care campaigns, medical examinations, supply of medicines, and support to health care programs 30 health care campaigns (medical-dental) developed in the communities 6,619 members of native communities treated in the Company s health posts, in Blocks 8 and 1AB 1 communal medical warehouse built in the Nueva Valencia community PPN, Peru Corrientes river basin, Department of Loreto PEPISCO Comprehensive Health Care Program Favor access to health care for indigenous communities settled in the fields influence areas 32 Achuar communities received assistance through the Comprehensive Health Care Plan for the Corrientes river population Delivery of funds for the execution of the Annual Operating Plan and the construction of the Villa Trompeteros hospital 12 coordinating committees to follow-up project management 62 Pluspetrol

67 Community Relationships El Bracho Thermal Power Plants, Argentina Manos a la vista (Eye care program) In 2010, in alliance with the El Bracho Hospital and the Faculty of Medicine of the National University of Tucuman, we implemented the Manos a la vista program in schools under the influence area of El Bracho Thermal Power Plants. This program provides ophthalmological exams to schoolchildren. During the first stage of the program, examinations were performed by ophthalmology students from the Faculty of Medicine of the National University of Tucuman, who visited schools under the area of responsibility of the El Bracho Hospital. During the visits, ophthalmological exams were conducted on 920 children. Children presenting visual alterations were transferred to the Ophthalmology Professorship, in San Miguel de Tucuman, where more accurate diagnoses were made. Prescription glasses were handed over when needed. Colombia Medical Brigades In 2010, we developed the Medical Brigades program in the area of influence of Block CPE-7, with the purpose of providing medical care to rural and indigenous communities of the region, taking into consideration the difficult access to the area and the scarce presence of health services in the region. The program was implemented in conjunction with the Colombian Civilian Air Patrol (PAC), a non-profit and humanitarian private organization formed by pilots, physicians, paramedics and other professionals that provide voluntary health services in the most remote places of the country. Within this program 3 working sessions were carried out. Each lasted 5 days and provided medical assistance to 3,278 people from the following communities: El Anzuelo, Rincon del Indio, Barranco Ceiba, Siare, Yamu, Mitare, El Siria, Esteros Bajos, Esteros Altos, Mocuare, Matabambu, El Olvido, La Realidad, El Silencio, Nueva Esperanza, Puerto Alvira, Puerto Trujillo, San Fernando, Altos del Tigre, Los Kioskos, Altos de Tillava; and the indigenous resguardos of Caño Jabon, Nukak Maku, Unuma Vichada, Unuma Meta, and El Tigre. In each session, 15 to 20 general practitioners and specialists in odontology, optometry, ophthalmology, pediatrics and gynecology, among others, took part. Environmental and Social Sustainability Report

68 Camisea, Peru Ananeki Kameti: Health and Food Safety Project With the purpose of improving health and food safety conditions of the population living in the area of direct influence of the Camisea project, since 2009 we have fostered Ananeki Kameti, a health and food safety project, implemented in strategic alliance with PRISMA and Tecpetrol. This five-year phased project is estimated to involve a US$ 2,200,000 investment and benefit 2,480 people belonging to 7 indigenous communities and 2 rural settlements of the Lower Urubamba. The project s five action lines and the activities carried out in 2010 are detailed below: Improvement in the population s health and nutrition practices: a study on food habits and a family census update were carried out in 100% of the communities and rural settlements that participate in the program. Additionally, homes were visited to provide advice on adequate health and nutrition practices (vaccines, breastfeeding, complementary diet). Improvement of primary health care quality at health institutions: during 2010, a diagnosis was made on the quality of services and equipment of the 5 health institutions of the area. Also, in coordination with the Camisea Micronetwork, 4 training workshops were conducted to improve service quality. Improvement in basic cleaning conditions and creation of healthy environments: community actions were carried out to improve hygiene habits. In addition, the Healthy Schools initiative was implemented. This involved 26 awareness meetings for teachers and a training workshop addressed to 71 teachers of the Lower Urubamba. Improvement in social programs management and health management at district level: the first module of the training workshop on leadership, nutrition and food safety was carried out. It was addressed to 21 community leaders. Production diversification for improving food quality at family level: during 2010, a study on availability of native food and consumption patterns was carried out. Among the most relevant activities, 42 integral farms and family vegetable gardens were installed in an area of 7.9 hectares; 4 workshops related to sowing and harvest planning were conducted, and 70 visits to farms offering technical assistance and 6 workshops on farming were carried out. 64 Pluspetrol

69 Community Relationships Community Development In 2010, we increased our investment on community development projects. These projects aim at fostering sustainable economic growth of the communities in the area of influence of our operations as well as the insertion of their members in the job market. Community Development Operation Project Location Project Objective Results 2010 Angola Yiba (Cabinda) and Chimbolo Locations Kids Farmer s Club Provide children and youths with basic knowledge on agriculture to improve food safety and promote rural development, in conjunction with ADPP Angola NGO 180 children were trained in the development of vegetable gardens with manual irrigation system, local farming production and conservation agriculture Angola Cabinda Vocational Training for Young Women Provide training to young women to improve their labor insertion potential, in conjunction with ADPP Angola NGO 8 young women took part of the Cooking Course and received professional practice at Cabinda s HD Hotel 10 young women took part of the Administration and Accounting Course and received trainee practice in Cabinda s public offices North District, Argentina Palmar Largo Field, province of Formosa Social Productive Enterprises Support and promote the development of productive micro-enterprises for the Wichi communities in the area, in conjunction with the NGO Productive Enterprises Support Group (Grupo de Apoyo a Emprendimientos Productivos [GAEP]) More than 600 beneficiaries Guidance and strengthening of the development of 15 productive enterprises promoted in Installation of a band saw to supply 6 carpentry enterprises; - 40 families from 6 communities received seeds, spades, rakes and machetes for their community vegetable gardens; - Training on craftmanship for 60 children in the La Brea community and 42 adults in the Nivacle community El Bracho Thermal Power Plants, Argentina El Bracho, province of Tucuman Building Employment Skills Provide training in trades to develop knowledge and labor competencies Training on the following trades was given: - Bar and Tearoom Waiter; - Construction Work 2 courses dictated 70 participants North District, Argentina Palmar Largo Field, province of Formosa Survey on the Use of Resources by Wichi People Ensure the availability of natural resources to consolidate sustainability of productive projects Conclusion of the first stage: resource survey in the Wichi communities The project is co-financed by the Environmental Service Association of Alberta - Canada (ESAA), through the Regional Association of Oil, Gas and Biofuels Sector Companies in Latin America and the Caribbean (ARPEL) Bolivia Communal Land of Origin (Tierra Comunitaria de Origen, TCO) Charagua Norte Productive Project Plan Develop productive projects in conjunction with the Assembly of the Guarani People (Asamblea del Pueblo Guaraní [APG]), in Charagua Norte Poultry Project: a poultry farm with 2,037 chickens in the production phase was delivered to the indigenous organization for its administration and management Cattle Raising Project: - Provision of 120 cattle heads; - Availability of 15 pasture lots with a total extension of 750 hectares; - Implementation of a genetic enhancement program and provision of 6 double-purpose breeding male Bolivia Communal Land of Origin (Tierra Comunitaria de Origen, TCO) Charagua Norte Development of Communal Vegetable Gardens in the Igmiri and Estacion Aimiri communities Diversify intensive agricultural production by taking advantage of the existence of gravity fed water sources, in conjunction with NGOs and local authorities Creation of a water cooperative to supply both communities and private landowners of the zone Support to the communities to obtain counterpart funds for the execution of the Project (Pluspetrol contributed with 23%): PROASU-JICA, Action Against Hunger, CIPCA, municipality of Charagua PPN, Peru Basins of the Corrientes, Pastaza and Tigre rivers, Department of Loreto Infrastructure Development and Provision of Services Develop infrastructure works (design, construction, refurbishment, expansion) to improve the dynamics Construction of 4 communal facilities in the communities of Los Jardines, Pañayacu, Andoas Viejo, Nuevo Porvenir Construction of 1 facility for the mother s club in the Nuevo Porvenir community Renovation of 1 pedestrian bridge and extension of sidewalks in the communities of Andres Avelino Caceres and Nuevo Andoas Installation of 2 water systems with elevated tank in the communities of Jose Olaya and Nueva Jerusalen Implementation of 1 electrification project in the Jose Olaya Community, at Block 8 Construction of 1 carpentry workshop in the community of San Jose de Nueva Esperanza Environmental and Social Sustainability Report

70 Community Development Operation Project Location Project Objective Results 2010 Camisea, Peru Lower Urubamba Region, Cusco Women Development Project Nuestro buen vivir (Our Good Way of Life) Promote the development of productive activities in 4 communities of the Lower Urubamba Development of courses on local crafts (textiles, necklaces, bracelets, bags) Marketing of products through different channels The project is developed in agreement with the Flora Tristan Center of the Peruvian Woman Participation of 71 women from the Camisea, Shivankoreni, Cashiriari and Segakiato communities 100 families benefited Camisea, Peru Camisea Community, Lower Urubamba Region, Cusco Electrification Project Implement an electrification system to provide continuous energy supply to the community Development of a rural electricity system with a domestic installed capacity of 160 kwh, and of 75 kwh for the industrial line Camisea, Peru Pisco, Ica Department Support for the Reconstruction and Development of Pisco Contribute to the reconstruction of the area after the 2007 earthquake The activities carried out in 2010 were as follows: - Improvement of the Landing Pier of San Andres Artisanal Fishermen - Development of the first construction stage of the Belen Church - Improvement of the infrastructure at Pisco s General Hospital - Improvement of the Infrastructure of sports institutions - Construction of the Sports Complex of P.J. San Miguel - Restoration of drinking water networks and sewer systems - Construction of drinking water wells. - Street paving The works executed implied an approximate investment of US$ 3,000,000 Camisea, Peru Pisco, Ica Department Support for the Development of an Anchovy Processing Plant Provide the local fishermen community with infrastructure for the processing of the Peruvian anchovy (anchoveta) Increase power of the cold store to transport hydrobiological products 450 people of the Trade Association of the Artisanal Fisherman and Sea Food Extractors of San Andres (ASPAGEMSA) benefited Angola Vocational Training for Young Women With the purpose of providing development opportunities to young women, we implemented a vocational training program for youths, in conjunction with the organization Development Aid from People to People (ADPP). Pluspetrol s support allowed 18 young women to participate in courses and strengthen their labor insertion possibilities. Hotel and Catering Course The course provided students with knowledge on cooking, nutrition, hygiene, interior decoration and service. Likewise, they were instructed on all the stages of events preparation. When the theoretical part was concluded, the students undertook a 2-month professional practice at the HD Hotel in the province of Cabinda. Administration and Accounting Course The course provided training on all the issues related to office work. Once the theoretical phase was finished, participants undertook a 1-month professional practice in public offices of the province of Cabinda: Administração Municipal de Cabinda (Cabinda s Municipal Administration), Cabestive and Ministerio da Administração Publica Emprego e Segurança Social em Cabinda (Ministry of Public Administration of Employment and Social Security of Cabinda). 66 Pluspetrol

71 Community Relationships Camisea, Peru Camisea Lights Up In March 2010, the rural electrification system was inaugurated in the Camisea native community. With an installed capacity of 160 kwh for household consumption and of 75 kwh for the industrial line, the system provides this population, located at the heart of the Lower Urubamba (Cusco), with electric power 24 hours a day. The project required an investment of approximately US$ 200,000 by Pluspetrol and involved the design of the system, the laying of 4.5 kilometers of cables as well as the purchase of transformers and cells for the implementation of an electrical substation. In turn, the community invested part of the money paid by Pluspetrol in compensation for fluvial traffic to purchase materials and build the secondary network of this work. In addition, 60 men and 10 mothers of the community collaborated in the construction stage of the system. North District, Argentina Survey on the Use of Resources by Wichi people in the Palmar Largo Area Pluspetrol and other companies and non-governmental organizations have been fostering the development of productive projects with Wichi communities settled in the area for several years. Taking into account that most of these projects involve the use of natural resources, in 2010 we promoted an initiative aimed at ensuring their availability in the medium and long-term as a way to consolidate the sustainability of these productive projects. For the implementation of this Project, Pluspetrol receives co-financing through the ARPEL 36 -CIDA 37 agreement. The stages considered are: Identification of micro-enterprises that involve the use of natural resources; Identification of the natural resources used and of the changes experienced in their utilization and value over time; Survey of the natural resources location; Incorporation of data to a geographical data system; Proposal of lines of action and possible projects based on work conclusions. Additionally, it comprises: Identification of traditional knowledge related to natural resources, so that it can be transmitted to the new generations; Production of publication material (written, photographic, films, maps of participatory natural resources, etc.). During 2010, the first field survey phase was carried out, comprising 9 Wichi communities. The research aimed at obtaining information on the activities developed by the population and on the use of natural resources related to said activities. 36. Regional Association of Oil, Gas and Biofuels Sector Companies in Latin America and the Caribbean. 37. Canadian International Development Agency. Environmental and Social Sustainability Report

72 Angola Kids Farmer s Club During the second half of 2010 we developed the Kids Farmer s Club Program in the Yabi (Cabinda) and Chimbolo (Malanje) locations, in conjunction with the organization Development Aid from People to People (Ajuda de Desenvolvimento de Povo para Povo, ADPP). The objective is to offer children and youths basic knowledge on agriculture to improve food safety and promote rural development. Within this project, two land lots were made available for farming (1 hectare in Yabi and ½ hectare in Chimbolo). In these lots, 180 children received theoretical and practical classes to grow lettuce, pepper, tomato, eggplant and cabbage during the dry season, and cassava, corn, sweet potato and peanut during the wet season. As a result of the project, students learnt how to create a vegetable garden with manual irrigation system, produce local farm products, practice conservation agriculture using basic methods, and contribute with vegetables for their families and for the school meals program. 68 Pluspetrol

73 Community Relationships Institutional Strengthening We continue to support indigenous organizations in the consolidation of their administrative and management capabilities, with the purpose of strengthening their capacity to contribute to the development of the indigenous communities they represent. Institutional Strengthening Operation Project Location Project Objective Results 2010 Camisea, Peru Lower Urubamba Region, Cusco Institutional Strengthening Program Consolidate representation capabilities of local organizations Institutional strengthening agreements with 6 indigenous organizations: Machiguenga Council of the Urubamba river (COMARU), Organization of the Matsiguenga Native Communities (CECONAMA), Federation of the Yine Yami Native Communities (FECONAYY), Ashaninca Federation of the Lower Urubamba (FABU), Yines Indigenous Organization of the province of Atalaya (OIYPA) and Confederation of the Amazonian Nationalities, of Peru (CONAP) PPN, Peru Basins of the Corrientes, Pastaza and Tigre rivers, Department of Loreto Institutional Strengthening Consolidate representation capabilities of local organizations Institutional strengthening agreements with 3 indigenous organizations: Federation of the Lower Corrientes Indigenous Peoples (FEPIBAC); Federation of the Corrientes Native Communities (FECONACO), and Confederation of the Amazonian Nationalities of Peru (CONAP) 18 coordination meetings with the above mentioned organizations 2 meetings to evaluate the agreements PPN, Peru Institutional Strengthening through Agreements with Local Organizations During 2010, institutional strengthening agreements were signed with the Federation of the Lower Corrientes Indigenous Peoples (FEPIBAC), the Federation of the Corrientes Native Communities (FECONACO), and the Confederation of the Amazonian Nationalities of Peru (CONAP). The agreements allowed organizations to develop the following activities during the year: FEPIBAC Formalization of the organization s statute through its subscription in the public registries of Loreto. Consolidation of organization headquarters in the city of Iquitos, Amazonia s political capital. Registration of the organization s new board of directors (current board). Celebration of two meetings: one to develop a proposal for a coffee production project; the other to confirm the current president of the organization. Conduction of a training workshop for the formulation of development projects. FECONACO Conduction of a documentation campaign with the support of the RENIEC (National Registry of Identification and Civil Status) for the population lacking identity documents. Celebration of two meetings: one to report compliance with the Dorissa Agreement in the past year and choose new representatives before the regional government, and the other to change the organization s president. Conduction of two technical workshops for the environmental monitoring of the organization. CONAP Participation in the decentralized tripartite dialogues fostered by the State (Pucallpa-Iquitos-Trompeteros). Participation in the organization of decentralized workgroups organized by the Government to elaborate regional and national development plans benefitting indigenous populations. Representation of the indigenous sector before the State to review the proposals of the Forest Law and the Consultation Process Regulations (Agreement 169). Promotion of projects in the interests of indigenous populations with international cooperation resources. Environmental and Social Sustainability Report

74 Local Employment We have implemented initiatives for the hiring of local workforce, both from urban centers and from rural or indigenous communities located close to our operations. Selection through participatory processes, with the purpose of respecting the internal organization and the cultural values of the communities; Community and Value Chain The programs are developed in close cooperation with the authorities of the local communities and the contracting companies. Implementation implies the adoption of specific strategies, capable of favoring a labor insertion appropriate to the needs and socio-cultural expectations of the local workforce: Adequate training for the job, as well as training on environmental, social and safety issues; Economic Consultancy, with the purpose of promoting responsible use of the salary; and Personnel Turnover: employees are hired for limited periods with the purpose of reducing economic inequalities and safeguarding traditional activities. Training for the Job Jobs Covered by Local Workforce / 2010 Comparison 39 PPN Camisea Bolivia Selection through Participatory Processes Local Employment Economic Consultancy 2,500 2,000 2, , Turnover 1, Blocks 88 and 56 Pisco Communal Enterprises The Company s demand for goods and services in the operation area represents a possibility of economic development for the communities. encouraging also the capacity to meet not only specific demands from Pluspetrol but from other companies in the zone as well. In view of this, development programs for community suppliers and communal enterprises are being implemented, Through these initiatives we generate sustainable income opportunities for local people. 70 Pluspetrol

75 PPN, Peru Development of the Communal Enterprise for Agricultural Services Jose Olaya The Communal Enterprise Development Program started in 2008, with a pilot experience developed in conjunction with the native community Jose Olaya, of the Achuar ethnic group. This experience set the basis for the creation of other five communal enterprises during 2009 and 2010, in alliance with the communities of Nueva Jerusalen, Doce de Octubre, Alianza Capahuari, Nuevo Andoas, and Antioquia. The development of the Communal Enterprise for Agricultural Services Jose Olaya contemplated the provision of technical assistance to community members for the constitution of the micro-enterprise and their training in administration, labor rights, accounting and management, since the communal enterprises, once constituted, must comply with the same requirements as any other contractor. This enterprise provides maintenance and chaleo (weed and grass cutting) services in the Block 1AB Fields. This task was previously performed by an external contractor. Taking the intercultural aspect into account, work in shifts was implemented and selfmanaged by community authorities. This allowed community members to combine their work at the communal enterprise with the traditional productive and cultural activities of their community. In 2010, the communal enterprise had 36 regular workers and an annual average income over US$ 370,000. The income resulting from the provision of service to Pluspetrol allowed the company to invest in working capital (light trucks or pickups) in order to increase their services by supplying other private companies operating in the area. 38. In the case of PPN, the 2010 value includes jobs generated by community enterprises fostered by Pluspetrol (see Purchases from Community Suppliers). 39. In the 2009 Environmental and Social Sustainability Report, a total of 435 local workers was reported for the liquid fractionation plant of Pisco, but that value corresponded to the total workforce employed in that operation. Environmental and Social Sustainability Report

76 Indigenous Communities Our commitment is to respect the human rights, customs, values and cultural heritage of the indigenous communities influenced by our operations, as well as their land rights and the environment they live in. 72 Pluspetrol

77 Community Relationships Conduct toward Indigenous Communities The initiatives aimed at generating respect and appreciation for the cultural traditions of indigenous communities living close to our projects and operations comprise specific training for own and contractors personnel, induction talks, showing of films, special publications, and other tools. In this sense, in our operations in Peru (Camisea and PPN), we keep on applying specific codes of conduct to regulate our personnel s behavior in areas with significant presence of indigenous communities. In 2010, 81 induction talks were developed on the standards and procedures established by the codes of conduct toward the indigenous communities, with the participation of 1,196 workers. In PPN, 154 talks were delivered, with a total participation of 780 workers; in addition, 6 talks were delivered to 111 members of indigenous communities who work in communal enterprises that provide services to Pluspetrol. It is worth noting that conduct codes were prepared together with the indigenous communities within the areas of influence of our operations in Peru. Likewise, in Argentina, several talks on Wichi and Mapuche ethnic groups were delivered in 2010, with the purpose of disseminating the culture of the indigenous communities adjacent to our activities in the North District and the Neuquen District. The talks, organized by the Corporate Management of Environment and Community Affairs, were attended by 71 employees. Argentina In-house Workshops on Wichi and Mapuche Communities The first workshop, Current Status of the Mapuche peoples in the province of Neuquen, took place in the Neuquen District. Discussion was encouraged among the attendees by means of exhibitions and oral presentations, on issues such as the social impact processes brought about by large hydrocarbon and infrastructure projects, land tenure regimes, economic activities, worldview, and political organization of the Mapuche peoples that inhabit the area. The second workshop, Wichis: history and current status, was conducted in Tartagal and Palmar Largo (North District). In this occasion, the subjects dealt with included the history of the settlement in the region, cultures of origin, first records on the Wichi people, their contemporaneity, culture and worldview, and the social productive enterprises encouraged by Pluspetrol. Environmental and Social Sustainability Report

78 Land Rights In those projects or operations developed in indigenous community lands, we have implemented initiatives aimed at reducing the impact that our presence may have on the land and the natural resources used by these peoples. Camisea Access Control Program in the Lower Urubamba Region We continue to implement the Access Control Program with the purpose of keeping to a minimum the undesired immigration that our activity might generate, which could affect the life of the indigenous communities settled in the Lower Urubamba Region. Within this program, we continued registering the fluvial traffic and controlling and surveiling the access points that result from the construction stage in the Pagoreni A and B platform, and the operational stage at km 9, 13 and 19 of the Cashiriari flowline. During 2010, the main remarks registered by the community watchmen were related to the mooring of vessels alien to Pluspetrol projects, the entry of people alien to the Company and their circulation through non-authorized areas, as well as the opening of new farms and construction of new houses in the areas close to the locations. In all cases, the events registered were connected with comuneros of the zone and not with foreign people. Camisea Anthropological Contingency Plan During 2010, we continued implementing the Anthropological Contingency Plan (ACP), aimed at safeguarding the communities settled within the Nahua Kugapakori Nanti Territorial Reserve. The program seeks to preserve the traditional organizational patterns and the productive systems of those indigenous communities settled in the reserve that live in voluntary isolation or uncontacted. To that end, 14 communal watchmen perform monitoring with the purpose of registering any population displacement toward the reserve area that is close to the production platforms. In 2010, no encounters were produced with people uncontacted or in voluntary isolation. Nonetheless, watchmen registered 11 sightings in the vicinity of Pluspetrol locations. Most of these events were related to signs of mitayo (hunting) activities. 74 Pluspetrol

79 Community Relationships Compensations Taking into consideration the legislation in force in each country, compensation agreements are established with those indigenous communities whose territories are affected by our exploration and production activities. New Compensation Agreements signed in 2010 number of native Communities Operation Type of Agreement Agreements Signed or Hamlets Involved Bolivia Compensation for 2D seismic 1 Guariri, Puerto Viejo, exploration in San Isidro Block Tacuarembo, Takovo and (Tacobo and Tajibo Fields) San Jose Obrero Camisea Compensation for the 3 Shivankoreni, operational stage, Block 88 Cashiriari, Segakiato Camisea Compensation for the second 1 Ticumpinia expansion of the Malvinas Gas Plant Camisea - Block 88 operational stage Compensation Program and Indemnities In 2010, we signed compensation agreements for the operational stage of Block 88 with 3 indigenous communities: Shivankoreni, Cashiriari, and Segakiato. These agreements are defined through participatory processes that involve the Company, the communities concerned, indigenous organizations, NGOs, and State entities. Agreements contemplate the development of investment plans ensuring that compensations benefit all the members of the recipient communities. In the first place, investment plans aim at solving community needs regarding access to services, such as electricity and drinking water. In addition, they envisage the development of productive products to reinforce the communities capacity to generate economic resources. Investment plans may vary every 5 years, in accordance with the progress registered throughout their development. Compensation Program and Indemnities Community Shivankoreni Cashiriari Segakiato Preliminary Projects Included in Investment Plans Development of a primary and secondary electricity network. Development of a drinking water project for households. Development of fish farms (under way). Development of small productive projects for the sale of local products. Development of a primary electricity network. Development of a sawmill project for household improvement. Development of the communal enterprise SERDESBU (in conjunction with the Segakiato community) for hiring local labor force. Development of the communal enterprise SERDESBU (in conjunction with Cashiriari). Environmental and Social Sustainability Report

80 Environmental Community Monitoring In our operations in Peru (PPN and Camisea), we continue to implement Environmental Community Monitoring Programs (ECMP), with the purpose of providing indigenous communities with resources to monitor the compliance with the environmental and social objectives assumed by Pluspetrol. The Ministry of Energy and Mines of Peru awarded ECMP Lower Urubamba with the Ministry of Energy and Mines Medal, in recognition for the environmental monitoring work carried out within the Camisea Project framework. Said Ministry awards this medal annually to entities or individuals who perform actions in the benefit of the Nation, in relation to environmental, social and business activities. Eighteen monitors and members of the Coordination Committee of the ECMP, as well as several community chiefs and representatives of the Urubamba federations, took part in the event. 76 Pluspetrol

81 Community Relationships Environmental Community Monitoring Program (ECMP) Environmental and Social Monitoring Training for monitors and Coordinating Committees Communication and Dissemination Environmental Education Verify compliance with Strengthen the technical Improve oral and written Promote environmental environmental commitments through visits to Pluspetrol facilities. skills of monitors through a training plan. skills of monitors to reinforce their performance in coordination spaces within the communities. awareness and environmentally healthy conducts within the communities. ECMP Lower Urubamba Camisea, Peru The main results obtained in 2010 were: 22 community monitors from 11 communities in the area took part in the program: rural settlements Shintorini and Tupac Amaru; native communities Kiringueti, Segakiato, Camisea, Puerto Huallana, Cashiriari, Nuevo Mundo, Ticumpinia, Shivankoreni and Nueva Vida. 8 visits to work sites in Camisea, including platforms (Cashiriari, Pagoreni and San Martin 3), permanent and itinerant camps, right of ways. Zero environmental and social incidents registered by monitors. 6 training workshops to increase the skills for both monitors and the Coordination Committee. 1 course-workshop for Coordination Committee members on the handling of socioenvironmental conflicts derived from hydrocarbon activities. The course was delivered by professors of the Center for Analysis and Resolution of Conflicts of the Catholic University. Publication of the Work Notebook on Environmental Monitoring and the Work Notebook on Social Monitoring, two technical guides for monitor training. 186 families from 10 indigenous communities received technical assistance from the community monitors on the handling of household solid wastes. ECMP Corrientes PPN, Peru The main results obtained in 2010 were: 14 community monitors from 9 communities of the area (Santa Elena, Nueva Union, Pucacuro, San Juan, Trompeteros, Boca de Copal, Porvenir, Paraiso, and Providencia) participated in the program. 32 visits to work sites in Pluspetrol operations and fields. 19 environmental and social incidents registered by monitors. All the remarks made by monitors were managed by the Environment and Community Affairs team of PPN, and later supervised by community monitors. 8 workshops to promote local solid waste management, carried out in the communities. Exhaustive follow-up by the monitors on the compliance with the Code of Conduct among workers and contractors and on the commitments undertaken between the Company and the communities, through agreements on the use of lands and right of way. 1 geographic information system based on environmental monitoring records, in operation. Environmental and Social Sustainability Report

82 Indigenous Communities and Biodiversity We strengthen our commitment with the biodiversity conservation, aware of its importance as the main source of natural resources employed by indigenous communities to meet the different subsistence and cultural reproduction needs. Camisea BMP Resource Use Monitoring During 2010, we kept on supporting the research conducted by the Pontificia Universidad Catolica of Peru, through its Center for Sociological, Economic, Political and Anthropological Research (CISEPA-PUCP). The monitoring on the use of natural resources represents the social component of the Biodiversity Monitoring Program and aims at identifying changes in biodiversity that may affect the life of the inhabitants in the area of the Camisea Project. The program s approach is focused on the participation of all the local stakeholders in the research process and is sustained by the data gathered systematically by household members on the natural resources that they resort to through their hunting, fishing and harvesting activities. In 2010, 4 campaigns were conducted; information was gathered at the communities of Cashiriari, Shivankoreni and, Ticumpinia. Data survey is carried out 4 times during the year and takes 21 days each time. The months selected correspond to climate changes (hydrobiological cycles) and the dynamics of the family activity throughout the year. 78 Pluspetrol

83 Safety

84 Safety Pluspetrol s safety management prioritizes people, a core and fundamental value. Safety is a synonym for freedom and an antonym for uncertainty. In this sense, the more accurate the previous diagnosis of the risks of our operation is, the safer the actions we can take. Guiding Criteria for Corporate Safety Management: Prioritize people s protection over any other asset or value. Protect and preserve the Company s assets. Act preventively, avoiding the occurrence of undesired events, and minimizing their impact when unavoidable. Analyze and diagnose scenarios, considering political, social and economic aspects of their environment of application. Input relevant information for the strategic and tactical analysis of the business and the commercial planning. Implement safety measures that contribute to the success, quality and profitability of the operations. Adapt safety criteria dynamically in the face of new challenges, optimizing investments. 80 Pluspetrol

85 Safety Training conducted in Bolivia Occupational Health and Safety Management Systems In 2009, the Occupational Health and Safety Management Systems based on the OHSAS :2007 international standard were set as a goal at corporate level in all our operations for In 2010, the implementation process continued in the El Bracho Thermal Power Plants and in the Ramos Field, Argentina, together with the whole of Bolivia operations. For the latter, a 90% adaptation to the Integrated Management System was reached, which allowed obtaining OHSAS 18001:2007 certification. In the case of Camisea, the operation has an Integrated Management System that includes Occupational Health and Safety (OHS) issues and was recertified in 2010 according to OHSAS 18001:2007. Training Within the continuous improvement frame of Occupational Health and Safety Management Systems, we consider that training of all personnel according to their responsibilities and activities within Pluspetrol is a priority. In this sense, 1,071 Pluspetrol employees received 3,464 hours training throughout Training hours received per person trained Personnel Fire Brigade Practical Course (CALCIC)/ Fire fighting practices (Fire extinguishers and hoses) Defensive Driving - Practical-theoretical STOP Course Review First Aid and CPR Level III Change Management System Electrical Risk Total 393 Training conducted in Camisea, Peru Training hours received per person trained Personnel Pisco Basic Course on Occupational Health and Safety 4 15 STOP Course 4 3 Risk Analysis in Industrial Facilities 8 2 Commitment and Leadership Workshop on Safety 8 15 Use of Personal Protection Equipment Emergency Response with Hazardous Material Emergency Response 8 2 Work in Confined Spaces 2 22 Work at Height 3 16 Chemical and Biological Risks related to Health 2 91 Methodology for Accidents Investigation 8 20 Subtotal 204 Malvinas Defensive Driving 2 33 Jungle Survival Work in Confined Spaces 2 32 Use of Personal Protection Equipment 2 79 Work at Height 2 27 Work Permits 4 30 Fire fighting 8 8 First Aid Subtotal Occupational Health and Safety Assessment Series. Environmental and Social Sustainability Report

86 Safety Leadership Workshops In 2010, we conducted Safety Leadership Workshops at corporate level with the purpose of changing performance models and incorporating the necessary leadership and communicational skills to create a greater commitment of people with safety. The program included training in key (EHS 41 ) values, attitudes and skills that foster new behaviors toward people s safety and the protection of the environment. In this way, the training process was composed of 4 phases: 1. Safety as a Value; 2. Safety Leadership and Management; 3. Safety Pro-activity; 4. Safety Prevention. As part of this program, work was carried out in different group and individual sessions, framed within these four phases, to consolidate value and management concepts in the prevention of accidents. A total of 165 employees received 6,600 hours training in Safety in these workshops. 82 Pluspetrol

87 Safety Safety Performance Safety Risk Control At Pluspetrol, we believe it is essential to have employees participation programs for the identification and management of safety risks in order to establish a culture of cooperation and manage these issues effectively. One of the intervention and consultation procedures we have is the Risk Analysis per Job Post, which is implemented in all the operations. As part of the methodology, the corporate procedure foresees participation of all the employees, since they are the ones who describe their activities in meetings with specialists, identify hazards, list existing control measures, and suggest other measures that can contribute to the reduction or mitigation of risks. In 2010, as part of the implementation of this procedure, our employees took part in the evaluation of 824 job posts 42 : 540 in Peru, 160 in Argentina and 74 in Bolivia. In 2010, we obtained an improvement in the safety indicators (accident rates, frequency 43 and severity 44, per time lost at corporate level): accident frequency rate decreased by 18%, while the rate of days lost per accident was reduced by 66%. Throughout this period, we did not register any fatal accident in our operations. Accidents with lost time per operation 45 - Annual Cumulative Frequency, 2009 / 2010 Comparison Number of Accidents per 1 MM hours worked In the event of an incident, accident or near-miss occurrence, we encourage the investigation of undesired events for the identification and analysis of its causes, as key aspects for proactive safety management. Both detection of the basic causes through our Causality Model and implementation of preventive actions to fight them allow avoiding repetition of accidents in the operations. Argentina Bolivia Camisea Peru PPN Peru Pluspetrol Days lost per accident per operation 46 - Annual Cumulative Severity, 2009 / 2010 Comparison Number of days lost per thousand hours worked EHS (Environment, Health and Safety). 42. The jobs evaluated represent, in some cases, tasks that are performed by one person, but an important proportion corresponds to tasks performed by two or more people. For this reason, the number of jobs analyzed impacts on a larger amount of workers. 43. Frequency rate: number of accidents with time lost accumulated in the year, per million hours worked. 44. Severity rate: number of days lost accumulated in the year, per thousand hours worked. 45. Argentina values include Rio Colorado District (ex Petro Andina) performance. 46. Argentina values include Rio Colorado District (ex Petro Andina) performance Argentina Bolivia Camisea Peru PPN Peru Pluspetrol Environmental and Social Sustainability Report

88 IPIECA Indicators Description Status Page Environmental Indicators E1 Greenhouse gas emissions 31 E2 Energy use 30 E3 Alternative energy sources - E4 Flared gas 30 to 31 E5 Biodiversity and ecosystem services 44 to 48 E6 Fresh water 42 to 43 E7 Other emissions 32 E8 Spills to the environment 34 to 37 E9 Discharges to water 42 E10 Waste 38 to 41 Health and Safety Performance Indicators HS1 Workforce participation 83 HS2 Workforce health 23 to 24 HS3 Occupational injury and illness incidents 83 HS4 Product stewardship - HS5 Process safety - Social and Economic Indicators SE1 Impact and relationship with local community 50 to 53 SE2 Indigenous peoples 72 to 77 SE3 Involuntary resettlement * SE4 Social investment 56 to 58 SE5 Local content practices 70 to 71 SE6 Local hiring practices 70 SE7 Local procurement and supplier development 70 SE8 Human rights due diligence - SE9 Human rights and suppliers - SE10 Security and human rights - SE11 Prevention of corruption - SE12 Prevention of corruption involving business partners - SE13 Transparency of payments to host governments 15 to 16 SE14 Public advocacy and lobbying - SE15 Workforce diversity and inclusion - SE16 Workforce engagement - SE17 Workforce training and development 19 to 22 SE18 Non-retaliation and grievance systems - References Reported Not Reported The premises, initiatives, descriptions, programs, processes and other activities mentioned in this Sustainability Report shall not be deemed or construed either by implication or analogy, as legal, contractual obligation, or enforceable agreements, beyond any consequence resulting from any formal or express sources of legal liability. Such sources do not account or hinder their continuity, improvement or extension under the same or different circumstances, without the existence of an express acknowledgement in that regard. * In the course of 2010, Pluspetrol did not promote the involuntary resettlement of any community settled in the direct and indirect area of influence of its operations. 84 Pluspetrol

89 Editing and Coordination: Corporate Department of Environment and Community Affairs Design: Chiappini + Becker Tel

90 Argentina Lima 339 Buenos Aires Tel.: (+54-11) Angola - Cabinda Rua de Macau, Endereço Predio do BCI 1º & 2º Andar Tel.: ( ) Angola - Luanda Barrio Ilha do Cabo Rua Murtela Mohamed, casa s/n, Luanda Tel.: ( ) Bolivia Av. Grigota esquina calle Las Palmas Santa Cruz de la Sierra Tel.: (+591-3) Colombia Edificio Torres Unidas 2 Av. Cra. 9 # of Bogota Tel.: (+57-1) EEUU 5599 San Felipe Suite 1000 Houston, Texas, Tel.: (+1-713) Peru Av. Republica de Panama Piso 8 San Isidro, Lima Tel.: (+51-1) Venezuela Torre Forum, PB of. B Guaicaipuro con Av. Ppal. de las Mercedes, Urb. El Rozal, Caracas Tel.: ( ) ( )