Non-operated activities and international investments
We have non-operated interests in assets both in the UK and internationally. Effective management and influencing of our joint venture (JV) partners helps us assure good Corporate Responsibility (CR) practices.
Non-operated JVs and international investments
In some of our operations, such as in the UK North Sea and Norway, activities are carried out by partner organisations and we participate as a member of a joint venture. Before entry into such ventures we undertake a due diligence process to ensure we have confidence in the integrity and CR track record of the partners we work with and understand the CR risks associated with the locations of interest. We also regularly assess the CR performance of our operating partners through partner operating and technical committees (see Identifying new opportunities).
Cairn’s UK sector non-operated activities include the Catcher and Kraken development projects, which are both due to deliver first oil in 2017. These projects continued to progress in 2015 with ongoing development drilling and fabrication and refit of the production vessels for both. Given that Cairn is not the operating party of either project, it is important to monitor and hold our partners accountable for both the delivery and the performance of these projects. We have worked very closely with our partners to enhance the performance of the contractors involved in fabrication and refit of the floating production storage and offloading (FPSO) installations in 2015.
In 2015, the Safety Case Regulations in the UK Continental Shelf were revised in line with the European Union Offshore Safety Directive (EU OSD), which places increased emphasis on management of major accident hazards including ‘Safety and Environmentally Critical Elements’ (SECEs). The revisions aim to ensure that operating parties effectively assess and mitigate health, safety and environmental (HSE) risks, and non-operating partners are also involved in understanding these requirements. Cairn engaged both of its partners for the Catcher and Kraken developments for this purpose and participated in safety case work, including visits to shipyards in the Far East and reviews of major accident hazard assessments. This engagement will continue in 2016.
Cairn’s UK and Norway region also continued to participate in a wide variety of non-operated assets in the UK and Norwegian sectors. In Norway, we continued to fulfil our ‘see to’ responsibilities under the Norwegian regulatory requirements and participated as a non-operating partner in one well in 2015, all of which were delivered safely. We also applied for licences in the Norwegian Sea, Norwegian North Sea and Barents Sea In Norway, we achieved a significant milestone in pre-qualifying as an operator and subsequently were awarded participation in five licences, one as operator.
International investment features highly in our activities where we may operate or be a joint venture partner. To protect our investment, we continue to assess CR risks as part of the entry into either a relationship or a new location. In Senegal, where we are operator, CR issues were fully integrated into the seismic and drilling projects including working and engaging with the relevant regulators and local community stakeholders. We have sought and ensured continuity of permitting ongoing improvements in understanding the community position including increased social investment activities. High standards of operation, good governance and transparency help protect our licence to operate (see Social investment).
In Western Sahara, where we are a non-operating partner, the first well was completed in early 2015 and we tracked the operating and engagement activities of the operating partner in order to seek assurance that good practice was followed, particularly in relation to human rights (see Human rights).