While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

PS1: Social and Environmental Assessment and Management Systems
PS2: Labor and Working Conditions
PS3: Pollution Prevention and Abatement
PS4: Community Health, Safety and Security
PS5: Land Acquisition and Involuntary Resettlement
PS6: Biodiversity Conservation and Sustainable Natural Resource Management
PS8: Cultural Heritage

PS7: Indigenous Peoples is not included since there are no indigenous people within the footprint of the project.

Environmental Health & Safety (EHS) Guidelines that are expected to be applicable to this investment include:

General EHS Guidelines, April 2007;
Oil and Gas Development (Offshore), December 2000;
Oil and Gas Development (Onshore), July 1998;
Thermal Power: Guidelines for New Plants, July 1998;
General Environmental Guidelines, July, 1998;

This is a Category B project according to IFC’s procedures for Environmental and Social Review of Projects because the project has limited adverse impacts and risks which are manageable.

IFC’s appraisal of this investment identified the following environmental, social, health and safety issues:

Management of exploration activities
Social issues - Management of community relations, land acquisition and expectations through on-going consultation and disclosure.

PS1: Social and Environmental Assessment and Management Systems

The description and analysis below relates to the exploration and exploitation of oil and gas. This section specifically covers analysis of the key issues associated with offshore activities, including platform upgrade and operations, drilling and marine pipeline installation as well as onshore facility construction and operations. The gas-to-power project is on hold until the newly discovered oil reserves are better defined. BPZ is also in the process of initiating seismic on the three onshore blocks (Block XIX, Block XXII and Block XXIII). Key issues relating to these planned future expansions and developments will be analyzed when these activities are better defined. Key environmental and social issues relating to the project are listed below and specific information about how potential impacts will be addressed by the sponsor is summarized. Upon implementation of the featured mitigation measures described below and included in the attached Environmental, Health, Safety and Social Action Plan, the project will comply with environmental and social requirements, namely the law and regulations of Peru, IFC’s Environmental and Social Performance Standards and applicable World Bank/IFC environment, health and safety guidelines.


Social and environmental assessment:

BPZ has commissioned the following EIAs that are either approved or under assessment by government authorities:

Block XIX EIA for seismic and exploration –approved
Block XXII EIA for seismic activities –approved
Block XXIII EIA for seismic and exploration –under assessment
Block Z-1 Albacora field EIA for drilling of 6 wells – approved
Block Z-1 Corvina field EIA for 42 wells – approved
Block Z-1 Corvina field EIA for production facility – approved

The following EIAs are currently under development:

Block Z-1 Albacora field EIA for production facility
Block Z-1 Piedra Redonda and Delfin EIA for exploration wells
Block Z-1 EIA for seismic (update of EIA approved in 2003)
Block XXIII EIA for drilling

The EIAs identified the key activities and operations that may result in adverse environmental and social impacts and provided mitigation measures that will be implemented to eliminate or minimize these impacts. These mitigation measures include specific measures incorporated into the design of the project facilities, in addition to measures being developed into procedures and included in management plans for implementation by the company and its contractors. The EIAs mitigation measures coupled with IFC’s Action Plan will cover any gaps that have been identified due to the difference in the Peruvian regulations with IFC’s Performance Standards.


Community engagement
BPZ has a clear, on-going process of consulting with the community and other interested parties and, since early 2005, has been holding regular meetings with communities and conducting official public meetings requested by the government. Meetings have been well attended and have covered the content and findings of the ESIAs developed for the project and planned social development initiatives. All ESIAs have had participatory workshops with local communities as part of their process and the results of ESIAs have been disseminated to local communities.

BPZ is currently in the process of strengthening their stakeholder engagement strategy with the support of external consultants that are specialized in working with the extractive sector in Peru. The objective is to provide information that meets stakeholder needs and to develop mechanisms to constantly assess the need for and the effectiveness of feedback mechanisms.

BPZ has a local office in Zorritos where community members can talk with company representatives or file an oral or written complaint through the grievance mechanism. As part of this system there are suggestion boxes at six key locations within the communities.


Management systems, training and organization
BPZ has a Health, Safety and Environment (HSE) and a CSR manager in place responsible for ensuring implementation of the environmental and social management program and continued compliance with the project’s stated policies and standards. Supported by a team of environmental and social consultant services, both managers provide oversight, training and advice on environmental and social management requirements as well as health and safety matters to field staff and contractors. Guidelines and protocols to be followed by contractors with respect to HSE management have been included in all contract terms and conditions for the offshore platform refurbishment and drilling activities and a BPZ HSE representative is based offshore to monitor performance and provide advice during activities and operations. Similar arrangements will be made for all onshore field activities.

An environmental and social management system (ESMS) will be developed by BPZ, in accordance with ISO14001. The ESMS will provide a documented system for the management, mitigation and monitoring of the environmental and social aspects associated with BPZ project activities. BPZ are also developing an occupational health and safety management system to meet the international standard OHSAS 18001. BPZ has begun the certification process and has secured the services of a consulting company, it should take approximately three years to complete the process and obtain the certification.

Environmental Policy: BPZ’s environmental policy focuses on the development of oil and gas activities with minimal environmental and social disturbances in the area of operations. The Company evaluates all of the potential impacts around their exploration and development activities. In doing so, BPZ strives to operate its activities in a secure manner, without any spills or releases. BPZ tries to limit the generation and transportation of solid and liquid waste, and have a management plan to monitor and control waste disposal. BPZ’s policy also ensures that emergency plans are updated on a regular basis and that there are adequately trained personnel in place as well as the required equipment to implement the plans.

Monitoring: BPZ has internal and external monitoring programs, which include, auditing operations on a regular basis. As part of their management system, BPZ monitors the work of their contractors as well as it’s own personnel, and provides them with training in the areas of safety, occupational health, environment, quality assurance and social responsibility.

Reporting: The Company submits health, safety and environment reports to the environmental authorities in Peru on a regular basis. Additionally, the Company prepares an Annual Monitoring Report to the lenders. BPZ reports all significant incidents and accidents to the Peruvian authorities, and within the corresponding units of the Company. BPZ also updates their management plans (i.e. emergency plans) for the approval by the environmental authorities.


PS2: Labor and Working Conditions

Human Resources (HR):

BPZ is committed to ensuring that the local population shares the benefits of the project through local employment. The majority of the workforce employed on offshore drilling activities and onshore construction activities will be working for contractors. The majority of jobs will require skilled workers, however contractors will be required to give first preference to local people from the Tumbes area and surroundings, particularly for all non-specialized labor, during these activities. In December 2009, 177 people from Tumbes were hired through subcontractors and 103 direct staff were from Tumbes. In addition, a number of non-direct jobs relating to support services such as transportation, catering and facility maintenance have been made available to local businesses. BPZ has provided support to several local SMEs to help them formally register so they can become suppliers to BPZ.
BPZ has adopted Human Resource guidelines which clearly establish the rights and obligations of employees. Working conditions and terms of employment are in line with Peruvian requirements and PS2 requirements. Workers are currently not organized in unions but the company does not take any measures to prevent the establishment of workers’ organizations.


Occupational Health and Safety (OHS):
Work sites and equipment have been designed with controls in place to ensure that there are no significant risks to personnel health and safety. HAZOP studies have been conducted and a comprehensive set of health and safety procedures are already in place for offshore activities and under development for future onshore activities. These will be compiled into the occupational health and safety management system in accordance with OHSAS 18001.
All workers are provided with appropriate personal protective equipment (PPE) and the wearing of PPE is mandatory. HSE inductions and an HSE training schedule for field staff has been developed to ensure that the workforce have sufficient training in HSE requirements. Regular HSE meetings are held with the workforce (and contractors) to review and reinforce HSE procedures.
Grievance Mechanism:
BPZ has a grievance mechanism for all employees ensuring that all work related concerns are fed back to management. The grievance mechanism includes an anonymous phone line managed by an independent third party in Canada to ensure confidentiality.



PS3: Pollution Prevention and Abatement

Waste Management System: A waste management plan for all hazardous and non-hazardous wastes generated offshore has been developed. Excluding drilling process wastes and waste waters, all other wastes generated offshore are transported to shore for disposal by licensed and approved waste management contractors and disposal sites. A waste tracking mechanism is in place so that wastes can be followed from the originator to the disposal site. BPZ has audited these sites to determine their standards and compliance with Peruvian regulations.

A waste management plan to cover onshore activities will be prepared before onshore seismic activities begin. Disposal options similar to those used for wastes from offshore will be adopted and options to reduce, re-use or recycle the wastes generated will be evaluated. Selected off-site disposal facilities will be checked to ensure that they meet international standards.

All offshore discharges meets the toxicity testing and discharge requirements contained in the IFC Oil and Gas (Offshore) Guidelines, 2000 as well as MARPOL requirements. Water based mud systems containing inert chemical additives are used for the drilling program. Drill cuttings and spent muds are discharged overboard as waste water including deck drainage and treated sewage water, from the drilling barge and the platform. These wastes are tested prior to discharge to meet the specified standards. A marine sanitation device for sewage treatment prior to discharge has been installed on the drilling barge. The platform will be unmanned during operations.

Sewage water generated during construction and operation at the onshore facilities will be routed to a septic tank in accordance with local regulations and then disposed of to the ground through a soakaway system. The corresponding permit required for disposal will be obtained from the municipal authorities. There will be no other waste water routinely generated onshore, hazardous liquid wastes resulting from maintenance activities will be contained and disposed of in accordance with the onshore waste management plan.

Designated areas have been assigned for the storage of chemicals and hazardous wastes, the storage of fuels and for vehicle and equipment maintenance. These areas have secondary containment so that spills of oil, fuel or chemicals will be contained.




Pollution Prevention

BPZ is currently preparing an Energy policy that will focus on the amounts of energy and water consumption by the Company, this will form part of their management system procedures.

Energy use:
Energy is generated through Diesel engines located on barges for logistical support

Water Quality and Use:
BPZ counts with a desalinization plant where sea water is treated for being used in drilling operations, it is also used in bathrooms
In the case of water disposal, BPZ counts with monitoring programs and procedures, which include the pre-treatment prior to disposal or a transportation program to authorized facilities.

Emergency Response and Preparedness Plan:
BPZ has developed an emergency response plan for its offshore operations that contains the procedures to be followed in the event of an emergency in the field. The plan covers natural hazards, man overboard, fire and explosion, well blowouts and spill response. A fully equipped ambulance boat is serving both platforms; a doctor has been hired full time and is on permanent standby to respond to any incidents. Additional emergency response plan development is underway for onshore activities and operations and these will be in place before the construction program begins. Specific training in emergency response procedures, emergency evacuation and offshore survival have been undertaken for offshore field staff and contractors with training courses in fire fighting and spill control planned. Similar training programs specific to onshore field operations will be arranged prior to the start of onshore field activities. 

Air and noise emissions:The air and noise emissions that were generated during offshore platform refurbishment and drilling activities were of a relatively short duration and resulted in only limited emissions. Onshore activities at the port include a number of procedures to minimize noise and emissions: - appropriate equipment siting;- restricted vehicle and machinery movements; and- regular vehicle and equipment maintenance to ensure that any disturbance to local communities arising from construction related emissions is minimized. In the event of excessive dust generation during construction, construction areas will be watered down to limit any nuisance to nearby communities. Gas from the Corvina field does not contain hydrogen sulfide., During 2009 BPZ flared 2,498,449 Mscf and 8,245 Mscf for Corvina and Albacora respectively. The Company has authorization to flare by the Government of Peru, as the Company has not installed reinjection facilities at this time, however, this will change when the project moves into the commercial phase (when gas will be reinjected) or when the Gas-to-Power project starts operations.

PS4: Community Health, Safety and Security

Neighboring Communities:
The neighboring communities are exposed to limited health, safety and security risks from the project. The main risks are related to transportation to and from the site. The company has requirements for ensuring road safety, including speed limits and training of staff in defensive driving.

Security Personnel Requirements:
BPZ hires their security personnel through two Peruvian companies that are committed to hire local security staff for work at the facilities of BPZ. The security personnel have been trained by BPZ to ensure that they operate in accordance with the security policy of BPZ. BPZ does not get any support from the armed forces of Peru.

Emergency Preparedness and Response Plan:
BPZ is in the process of developing an emergency preparedness and response plan for the local communities that could potentially be affected by on-shore or off-shore activities of the company.

PS5: Involuntary Resettlement
Activities on the onshore blocks (Block XIX, Block XXII and Block XXIII) will not lead to physical or economic displacement. There will be limited land take which will be negotiated and compensated in accordance with the IFC Performance Standards requirements.


The exploration on the on-shore blocks will be located on land that is not used for agricultural purposes, drilling will be conducted from small platforms of 2 ha to minimize the footprint of the exploration phase. If any land use compensation is necessary for potential future developments and expansions, BPZ’s will conduct land acquisition in line with IFC’s Performance Standard 5 requirements. A land compensation/or resettlement action plan will be developed for the project if required.
PS6: Biodiversity Conservation & Sustainable Natural Resource Management
The environmental impact assessment for the marine platforms and other facilities includes analysis of the marine environment in the area of influence of the project. This analysis has determined that the most common mammal species in the area are sea lions and dolphins. Sea lions are usually found resting on the platform structures, but are not impacted by any of BPZ''s activities. Dolphins are protected under Peruvian legislation, which prohibits the capture, processing and commercialization of dolphins.

Within the region of Tumbes there are three units of Natural Protected areas under Peruvian legislation, however, these are not within the direct influence of the project. BPZ has established a management plan that requires specific monitoring of marine species which will be utilized to prepare specific mitigation measures once the project progresses to full production. In addition, the plan calls for biological monitoring of plankton to determine if there has been any changes to the base line due to the project. BPZ has also designed transportation routes for personnel and products to ensure that they do not affect any of the species in the area.


PS8: Cultural Property

A baseline study of the area around the site for the permanent onshore facilities found no evidence of archaeological, historic or cultural remains and the National Institute of Culture has issued a certificate verifying that the site has no cultural significance.

For Block XIX there is a certificate of non-archaeological remains issued by the National Institute of Culture. For Blocks XXII and XXIII BPZ is in the final stage of the process for obtaining similar certificates.
BPZ has developed an archaeological chance find plan with the support of an archeologist approved by the National Institute of Culture, which will be implemented in the event of accidental discovery of archaeological sites of interest or artifacts.

The onshore facilities are to be constructed at Caleta Cruz, close to the village of Nueva Esperanza. Approximately 7.7 km further to the south is the town of Zorritos. The total population of the villages of Caleta Cruz and Nueva Esperanza, and the town of Zorritos is over 20,000 people. Tumbes, with a population of about 100,000, is the nearest city and is approximately 19.3 km to the north of the site.BPZ has engaged regularly and proactively in consultation with local communities and the local authorities amongst other interested parties resulting in a positive relationship between the company and local communities and organizations including the fishermen’s unions. The community at large welcomes the company and appreciates the way they have communicated locally.

Prior to initiating seismic activities BPZ engaged with local communities including fishing communities to inform them about the nature of the seismic activities and the potential impact on fishing activities. During this process the regional government of Tumbes promoted the creation of a technical dialogue roundtable with the objective of identifying and discussing impacts of the seismic activities, particularly on artisanal fishing. As the evaluation period got delayed, and BPZ faced contractual commitments, BPZ decided to start the seismic acquisition outside of the 5 mile zone reserved for artisanal fishing. However, as soon as the seismic started blockades were set up in Zorritos and the situation escalated over the following two days but then subsided without any injuries or fatalities. BPZ then suspended the seismic acquisition and has
reinitiated the dialogue with the fishermen to obtain a social license to continue the seismic operations. The consultation process is being supported by external consultants that have extensive experience in stakeholder engagement in the extractive sector in Peru.

From inception BPZ has funded and implemented several community development projects to support health, education, employment and business opportunities for local communities.

BPZ has recently launched the foundation Step-by- Step whose objective is to support children and adolescents in Peru and has initial funds of 1 million USD and with the objective to grow the endowment to 10 million USD.

BPZ local office in Zorritos:

Av. Faustino Piaggio 121, Contralmirante Villar – Zorritos.