The sponsor has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements - Indian laws and regulations and the World Bank/IFC environment and social performance and the environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the sponsor is summarized in the paragraphs that follow.
- HSE Policies, Guiding Principles , Environmental and Social Management System:
At the original parent company level, Cairn UK instituted group-wide Health, Safety & Environment (HSE), Security & Corporate Social Responsibility (CSR) Policies, Guiding Principles and a HSE, Security and CSR Management System (HSEMS), which were also adopted and implemented by Cairn in India. The CEO of Cairn India has endorsed these Policies, Guiding Principles and HSEMS. Cairn India has also explicitly stated in these documents that the company will commit to implement IFC’s Performance Standards. The recent strengthening of HSE and CSR organizational structures and the recent update of the Cairn India policies to include more definitive commitments in line with IFC’s Performance Standards to biodiversity are evidence of this commitment. The HSEMS provides the company’s HSE manager and staff with procedures to implement the HSE planning and provides a performance target setting process which includes:
- establishing strategic HSE objectives which are made available to the public;
- setting specific annual HSE objectives that support the longer-term objectives;
- establishing annual HSE plans to meet these objectives;
- implementing the HSE plans;
- monitoring the progress of the HSE plans; and
- reviewing the process and providing feedback.
- The Cairn India Policies and Guiding Principles include the following commitments:
Cairn India’s HSE Policy declares the company’s commitment to the protection of its employees, stakeholders and the health and sustainability of the environment in all of their activities. Cairn India believes strongly in establishing controls for all personnel involved in their activities to protect the human and natural environment. Health and safety awareness and training programs are a key requirement for all employees and contractors.
Cairn India’s CSR Policy declares the company’s commitment to respect the rule of law, implement management systems and strive to operate its businesses honestly and with integrity, respecting the rights and dignity of all employees as well as the different cultures and rights of individuals and indigenous peoples, and contributing to community development.
Cairn India’s Guiding Principles, which were revised in June 2006, specifically commits the company to strive to meet key international standards (specifically the Universal Declaration of Human Rights [UDHR] and Voluntary Principles on Security and Human Rights), to conduct all activities in accordance with IFC Performance Standards and guidelines and to not conduct exploration or production operations in World Heritage Sites (as designated by the United Nations Educational, Scientific and Cultural Organization (UNESCO)) or environmentally sensitive areas (as assessed by Cairn, in collaboration with the relevant host governments).
Cairn India’s philosophy is anchored on the principle that its greatest strength is the quality and commitment of its employees, consultants and contractors. The Guiding Principles define Cairn India’s approach towards employees including a policy on equality of opportunity, for fostering a positive working environment which respects an individual’s personal dignity and freedom from discrimination. It also commits the company to not employing forced, bonded or child labor and recognizes that all employees have the right to freedom of assembly, association and collective bargaining. All human resource policies in Cairn India are in compliance to the law of the land.
The Cairn India Board has also agreed to establish a Corporate Responsibility (CR) Committee (reporting to the Executive Committee), whose role will be to monitor internal performance and external developments, to ensure that Cairn India’s approach to HSE, security and CSR is appropriate and effective. As part of the separation of the Indian business, Cairn UK and Cairn India will put in place a Transition Services Agreement through which specialist support can be sought from Cairn UK for a six month period following the listing of Cairn India. Through this mechanism Cairn India will be able to seek specialist HSE, security and CSR advice and support from Cairn UK’s Group Head of HSE, Risk and Assurance and from the Group Security Advisor.
A key component of Cairn India’s HSEMS is an environmental management system based on the international standard ISO 14001 and ISO 14001:1996 certification which has been obtained on all of Cairn India’s producing fields in India. This environmental management system is also informed by Cairn India’s own Marine Policy and Flaring Policy. Cairn India will publish annually a Corporate Responsibility Report (CRR) to disclose the year’s HSE performance and social activities, similar to such report already published by Cairn UK. This includes specifically air emissions, greenhouse gases (GHG), energy consumption, effluent discharge and solid waste as well as initiatives to address project related social issues (e.g. a summary of community development initiatives at each of its areas of operation). In line with best practice, the accuracy of the CRR will be independently reviewed by an external consultant, which for the 2005 CRR was Environmental Resource Management (ERM).
Cairn India has also adopted Cairn UK’s established (since 2000) strategy with regard to climate change which includes setting targets for methane and greenhouse gases (GHG), and has implemented several initiatives to reduce GHG (e.g. installation of high efficiency flares, third stage compression, and a policy on crude oil flaring). Of note, Cairn UK and Cairn India reports to partners and stakeholders on its emissions of GHG (as well as other climate change emissions) in the CRR. In addition, Cairn UK initiated a study on the potential Carbon Emission Trading opportunities under the Clean Development Mechanism (CDM) of the Kyoto Protocol.
In furtherance of the above policies and systems, Cairn India is preparing an overall Resettlement Action Plan Framework (RAP) to guide mitigation and compensation for any land acquisition, resettlement or economic displacement of households at each of its developments (to be completed and implemented by 31 December 2006). Cairn India is also preparing an overall Public Consultation and Disclosure Plan (PCDP) to guide its communications program at each of its areas of operation (to be completed and implemented by 31 December 2006). PCDP’s for Cairn India’s activities in Andhra Pradesh and Gujarat are already in place and will be complemented by more detailed site-specific PCDPs, which provides for on-going consultation with key stakeholders, and will be reviewed and updated on a regular basis.
At present Cairn India’s projects do not affect any groups that would be classified as indigenous according to IFC’s Indigenous People’s Performance Standard. However, provision has been made in the investment agreement to apply the Standard should any such groups be encountered in on-going development of the projects. It is not anticipated that Cairn India’s projects will have any significant impacts to cultural heritage, but if future project developments or chance finds result in such impacts IFC’s Performance Standard on Cultural Heritage will be applied.
- Specific Project Issues:
Cairn India has production operations in Andhra Pradesh (Ravva field) and Gujarat (Lakshmi/Gauri fields), exploration and development activities in Rajasthan (in block RJ-ON-90/1) and exploration opportunities on 8 onshore blocks (RJ-ONN-2003/1 and VN-ONN-2003/1 in Rajasthan, KG-ONN-2003/1 in Andhra Pradesh, CB-ONN-2002/1 and CB-ONN-2001/1 in Gujarat, GV-ONN-2002/1 in Bihar, and GV-ONN-97/1 and GV-ONN-2003/1 in Utter Pradesh) and 2 offshore blocks (KG-DWN-98/2 in Andhra Pradesh and GS-OSN-2003/1 in Gujarat).
- Andhra Pradesh:
In Andhra Pradesh, Cairn India operates the producing Ravva oil and gas field and also has a 10% interest in the ONGC-operated KG-DWN-98/2 deepwater block, which are both located in the Krishna-Godavari Basin.
The Ravva field comprises 8 offshore platforms and 25 producing wells, with production conveyed through various pipelines (10”-12”) to an onshore processing facility. Crude oil is exported via an offshore loading buoy to tankers for further processing in national refineries. The treated gas enters the local pipeline infrastructure operated by gas transportation company GAIL, where it is used for power generation and fertilizer units located in Kakinda. The nearest village to the Ravva onshore plant is Surasani Yannam (S’Yannam) which is located over 1 km away. The population of around 8,000 people is employed mainly in agriculture and fishing activities and is not directly affected by the project operation.
Cairn India’s operation in Ravva achieved ISO 14001 certification (with respect to ISO 14001: 1996 standards) in January 2005. The operations have an integrated HSEMS derived from the parent company HSEMS.
Cairn India’s Ravva operations team has instituted a community development plan. Under this, they contribute funds annually to a fund administered by local district administration for improvements to local infrastructure, schools etc. The company also provides financial and direct assistance to various community development projects in S’Yannam, including improvement to school facilities and village water supply systems, the provision of medical care, and adult education and training facilities.
Regular consultation takes place with local communities neighboring the Ravva on-shore facility and a PCDP has been prepared, detailing activities for on-going consultation with key stakeholders (throughout the life of the project). The PCDP was locally disclosed on 13 February 2006.
Cairn India has developed onshore and offshore emergency plans for the Ravva operations, including oil spill contingency plans and fire fighting protocols, both of which are validated through regular drills. The operations are evaluated through regular monitoring by Cairn India personnel, biannual ISO 14001 audits, annual HSE audits, and external audits by the Government of India Department of Director General of Hydrocarbons (DGH) and Director General of Mines Safety (DGMS). The findings of these audits are evaluated and corrective action plans are established. HSE awareness and training programs are conducted for all employees and contractors.
Cairn India has an established waste management plan for all identified liquid, non-hazardous and hazardous waste. The plan identifies methods for handling, treatment, storage and disposal. The plan also outlines methods for segregation of wastes and recycling where possible. Production-related waste at the Ravva plant is segregated and disposed of through Government-approved recyclers and/or disposal sites.
Drilling operations primarily use water-based drilling fluids which conform to the requirements of the Ministry of Environment and Forest (MOEF), and the spent drilling fluids and cuttings are disposed of in accordance with the requirements stated in the MOEF Environmental Clearance document. In the event that Cairn India decides to use synthetic oil-based mud, it will need the approval of the MOEF and will recycle the mud in line with MOEF guidelines. The drill cuttings are discharged only after proper washing and in accordance with the MOEF offshore discharge guidelines.
Air emissions are generated at the onshore Ravva plant due to combustion of produced gas for power generation and maintaining a small flare for safety reasons. The annual average amount of flaring for 2005 from Ravva operations was 0.26 tonnes/1000 tonnes of hydrocarbon produced. Regular monitoring tests have confirmed that ambient air quality in the area of the offshore platforms and onshore plant are within the applicable limits.
- Gujarat:
In Gujarat, Cairn India operates the producing Lakshmi and Gauri gas fields located offshore. The fields are located in the Gulf of Khambhat, on the west coast of India. The Lakshmi field consists of two offshore platforms, 11 wells and a 36km pipeline to the onshore terminal at Suvali. The Gauri field has a single platform with four gas wells and one oil well and its production is transported to the one of the Lakshmi field platforms through a 5km 12” sub sea pipeline, and from there through a 24” pipeline to the onshore terminal. The Suvali processing facility is located in 82 acres of land, approximately 7km from the industrial belt of Hazira, including the Shell/Total LNG terminal, in the district of Surat. There are no villages within 1km radius of the terminal. The nearest national Park (Velvadar) is located 45km from the fields and is not affected by the project operation. There are no coral reefs or sea grasses in the block.
Cairn India’s Gujarat operations achieved ISO 14001 certification (with respect to ISO 14001:1996 standards) in April 2005. As in the case of Ravva, the Gujarat operations have an integrated HSEMS derived from the parent company HSEMS.
The Gujarat operations have instituted a community development plan, pursuant to which various community development projects have been implemented, including improvement of school facilities and village water supply systems.
Regular consultation takes place with local communities neighboring the Gujarat on-shore facility and a PCDP has been prepared, detailing arrangements for on-going consultation with key stakeholders. The Gujarat PCDP was locally disclosed on 13 February 2006. Additionally, the company maintains an open door policy for any of the communities that request any project documentation. The EIA documentation is available through the regional environmental authorities.
Cairn India has developed onshore and offshore emergency plans for the Gujarat operations, including oil spill contingency plans and fire fighting protocols, both of which are validated through regular drills. The operations are evaluated through regular monitoring by Cairn personnel, biannual ISO 14001 audits, annual HSE audits, and external audits by the relevant Government of India departments - DGH and DGMS. The findings of these audits are evaluated and corrective action plans are established. HSE awareness and training programs are conducted for all employees and contractors.
Cairn India has an established waste management plan for all identified liquid, non-hazardous and hazardous waste. The plan identifies methods for handling, treatment, storage and disposal. The plan also outlines methods for segregation of wastes and recycling where possible. Production-related waste at the Suvali facility is segregated and disposed of through Government-approved recyclers and/or disposal sites.
Drilling operations primarily use water-based drilling fluids which conform to the requirements of MOEF, and the spent drilling fluids and cuttings are disposed of in accordance with the requirements stated in the MOEF Environmental Clearance document. In the event that Cairn decides to use synthetic oil based mud, it will need the approval of the MOEF and recycles the mud in line with MOEF guidelines. The drill cuttings are discharged only after proper washing and in accordance to the MOEF offshore discharge guidelines
Air emissions are generated at the onshore Suvali facility due to combustion of produced gas for power generation and maintaining a small flare for plant safety reasons. The annual average amount of flaring for 2005 from Suvali operations was 0.66 tonnes/1000 tonnes of hydrocarbon produced. There is no processing involved in the offshore platforms. Regular monitoring tests have confirmed that ambient air quality in and around the onshore plant is within the applicable limits.
- Rajasthan:
Cairn India also has a 70% interest and operates the RJ-ON-90/1 block in western India. ONGC, India''s largest oil and gas company, holds the remaining 30%. The block is located within the districts of Barmer and Jalore. The total surface area of the development and current approval area is presently approximately 4,740 km2. Within the block, the fields of Mangala, Aishwariya, Saraswati, Raageshwari, Bhagyam, Shakti and Guda are currently expected to form the core developments. The block area is arid and semi-arid, with low population density.
During exploration and appraisal activities, Cairn India has drilled more than 130 wells with 21 discoveries across 18 fields to date.
The company expects commencement of production from the Rajasthan Block to be from the Saraswati and the Raageshwari fields in the first quarter of 2007, which is the earliest anticipated commencement date and which remains subject to required approvals as well as negotiation of a crude oil supply agreement or implementation of appropriate interim offtake arrangements. First commercial production by trucking from the Saraswati field is expected to begin as soon as the oil sales mechanism has been finalised with the GoI, currently anticipated in the first quarter of 2007. First commercial production from the Raageshwari oil field is expected to start approximately three months after Saraswati. However, the main focus of the Rajasthan development is the Mangala field in the north of the block, where it is planned to construct 18 well pads with up to approximately 30 oil-producing wells being drilled initially and, in the three years following the commencement of crude oil production, drilling additional wells to reach a total of approximately 115 wells. In the second phase of the development of the Mangala field the company anticipates the drilling of a further number of wells to reach a total well count at the completion of the two phases of development of the Mangala field of between 165 and 225 wells to maintain plateau production, and the expansion of the surface facilities will permit the processing of additional produced water after water breakthrough. Up to 65 additional wells may be drilled at the Mangala field, if required, depending upon reservoir connectivity, individual well performance or for enhanced oil recovery. Oil processing facilities with an initial capacity of 100,000 bopd will also be constructed. Additionally, the Raageshwari Gas and N-R Water Fields will also be developed for the provision of gas for power generation and saline water for injection into the reservoir to aid oil recovery. The construction will necessitate the transportation by trucks of significant volumes of materials along roads which are in the vicinity of certain nearby communities. Accordingly, Cairn India has developed a comprehensive Transportation Management Plan which focuses on ensuring the security and safety of these activities. It is expected that, during the construction of the processing facility, contractors and employees will be housed at camps located within Cairn’s fields, and that all construction activities will be fenced in, so to avoid any accidents involving communities or animals.
Under the terms of the production sharing contract (PSC) for Cairn India’s Rajasthan block, the Contractor (Cairn India/ONGC) is to sell 100% of the production at the Delivery Point located at the Mangala Central Tank Farm to a Government nominee, namely ONGC subsidiary Mangalore Refineries and Petrochemical Limited - (MRPL). Consistent with MRPL’s nominee submission, the company has assumed that the produced crude oil will be transported from the delivery point via an insulated pipeline system to the northwestern coast of India where there are port facilities in the Mundra—Kandla area. The distance from the Mangala field to any of these locations is approximately 471 km. The proposed pipeline would follow a route through the RJ-ON-90/1 Development Area linking to the national highway 15 to Saltapur, where it would pick up the existing and approved Mundra-Delhi pipeline corridor. ONGC would be responsible for establishing the Right-of-Way (ROW) of usage along the entire export pipeline route. ONGC indicated that their route selection was designed to minimize impacts to highly populated areas and environmentally sensitive areas. Accordingly, only a small portion of the pipeline (approximately 10 km) would cross the low-lying flood plain of the Rann of Kutch. Although the company is not responsible for transportation beyond the delivery point, it committed to continuing to work closely with ONGC to ensure that the crossing of this environmentally sensitive area would be revisited to analyze alternatives. However, while MRPL, as the Government’s nominee, has an obligation under the PSC to take delivery from the delivery point of the full volume of oil produced from the Northern Fields, the company is aware of no firm agreement for the construction of the proposed pipeline or its specifications, including its route and MRPL has provided the company with only limited information in respect of the status of its pipeline studies. Accordingly, despite the obligations of the GoI under the PSC, the company believes that, in view of its assessment of lack of progress by MRPL towards construction of the Pipeline, it is appropriate for the company to investigate the possibility of becoming directly involved in midstream development planning and construction to ensure the proper integration of the upstream development and the pipeline
Given the scarcity of fresh water in the Rajasthan area, Cairn India commissioned a water resources feasibility study, to assess the expected water requirements during drilling, construction and commissioning at the Mangala field and identify the optimal way of addressing these with the least impact on the environment. The study estimated that approximately 25,000 m3/day of saline water will be required for the Mangala development. It further reviewed several options for water abstraction and/or transportation from other areas. Ultimately, however, these were discarded in favor of the proposal to use the Thumbli saline water aquifer, as the study confirmed that the abstraction will have a negligible impact in the existing fresh water resources. As part of a broader analysis of the fresh water situation in the area, Cairn India has also provided technical support to the Groundwater department who are carrying out a study to improve the freshwater resource management in the Barmer Area. It is important to note, however, that Cairn India recognizes and has made clear to the authorities that responsibility for managing and supplying the fresh water resources to the local communities rests with the Government. The authorities have approved the extraction of 25,000 m3/day of saline water from the Thumbli reservoir. The license for water extraction has been granted by the Central Ground Water Authority, Ministry of Water Resources for an initial period of 5 years and is to be reviewed and extended thereafter.
Cairn India in Rajasthan follows the same procedures as in Gujarat and Andhra Pradesh for the consultation and disclosure of information. The main objectives and goals of the public consultation and disclosure will be captured in a Group Framework Public Consultation and Disclosure Plan which will be completed by 31 December 2006.
Cairn India’s activities in Rajasthan are also managed under an HSEMS and the ISO 14001 certification is planned for soon after first oil production from Mangala, in 2009.
Cairn India is developing a Resettlement Action Plan Framework (“RAP”) to guide any land acquisition or resettlement at its projects in India. A more comprehensive RAP Framework will be prepared by the end of 2006 to address and mitigate all temporary and permanent land acquisition and resettlement related impacts in Rajasthan, associated with seismic investigations, well drilling and completion, construction camps, production and processing facilities, pipelines and access roads. Provision has also been made for the preparation of more detailed site-specific RAPs, as required, for any future land acquisition that may involve significant economic or physical displacement. Previous land acquisition is taking place in two phases up to March 2007. Every reasonable effort has been made to avoid any resettlement of homesteads by rerouting of the pipeline and access roads and by altering the siting of well pads and making use of directional drilling techniques. The existing land acquisition and compensation process has been undertaken in accordance with the Land Acquisition Act (LAA) which governs land acquisition in India. It is a comprehensive legislation which addresses in detail all the facets of the land acquisition process and provides a credible mechanism to determine the quantum of compensation. Currently, Cairn is in discussions with the District Administration on the completion of the LAA process and comprehensive RAP Framework for operations in Rajasthan Cairn India has also committed to the following conditions:
- An independent review of the current Mangala permanent land acquisition process to ensure that the requirements of IFC Performance Standard 5 on ‘Land Acquisition and Involuntary Resettlement’ have been met, and if not to prepare and disclose a Corrective Action Plan (CAP);
- 30 day disclosure of the Resettlement Action Plan Framework and Public Consultation and Disclosure Plan for Rajasthan; and
- No additional permanent land acquisition until the above conditions have been completed.
