Citla Energy is committed to manage environmental and social performance focusing on the following priorities:
To develop an organizational structure with seasoned professionals who have proven technical capabilities and in-depth knowledge of oil & gas fields and operations;
To develop a proactive culture of safety focused on continuous improvement and the best-in-class processes and procedures supported by engaged upper management leadership;
Early identification of potential environmental and social risks, impacts, and legacy liabilities at each asset under consideration for proactive development of necessary measures to minimize impacts to the surrounding environment and communities;
Protection of the rights of workers and local communities
Citla Energy will develop a Corporate Environment, Social, Health and Safety (ESHS) Management System that will be consistent with good international practices and incorporate the following elements: policy & leadership, safety & health, risk management, incident reporting & investigation, crisis preparedness, environmental protection, biodiversity protection, community relations, security management, legal requirements, and continuous improvement. Citla Energy will incorporate the IFC Performance Standards into their ESHS management system.
Policy
To achieve these objectives, Citla Energy will develop an integrated environmental, social, health and safety (ESHS) policy to identify, assess and adequately manage Environmental, Social, Health and Safety (ESHS) risks and impacts from exploration and operation of oil & gas fields and associated infrastructure. The ESHS Policy will be developed to integrate IFC Performance Standards and GIIP. To ensure compliance with the above referenced policies and standards, in the event that Citla will be relying on a third party to operate the assets and/or will be a minority shareholder Citla will assess the E&S capacity of the potential partners to determine their level of commitment and alignment with Citla’s ESHS policies and IFC Performance Standards.
The ESHS Policy will be communicated directly to employees upon hiring, and through regular training events at regional offices and project sites.
Identification of Risks and Impacts
Citla Energy is expected to acquire oil and gas assets via concessions or licenses awarded by the Mexican Government through public bids. The bidding process allows for companies to gain access to technical information on oil and gas assets that are available for bidding. Following evaluation of the technical data, companies select the assets they would like to bid on and acquire. In addition Citla may acquire participations in assets through farm-outs and contract migrations. As part of Citla Energy’s asset evaluation process, the company will develop a screening protocol to identify potential environmental, health, security, health and safety risks, and impacts to biodiversity values including legacy issues
such as environmental contamination, poor community relations and land ownership disputes. The results of the E&S screening will assist in Citla’s decision-making process to bid for and acquire new assets.
Once oil and gas assets are awarded, Citla Energy will conduct the necessary environmental and social impact assessments required prior to the issuance of environmental licenses. According to newly enacted Mexican regulations, it is IFC’s understanding that a social impact assessment (SIA) and an environmental impact assessment (EIA) are required as part of the Mexican environmental permitting process for all hydrocarbon projects (greenfield and brownfield). Citla has committed to prepare the SIA and the EIA in compliance with Mexican regulations as well as the IFC Performance Standards. In addition, for mature fields that may have legacy environmental and social liabilities, such as land disputes, poor community relations and contaminated areas, the Company will conduct environmental and social audits, including a required environmental and social baseline study, that include site investigations for the identification of contaminated areas and also the identification of infrastructure and structure (e.g., injection wells, pipelines, storage tanks, access roads, etc.) that should be retired or decommissioned. The environmental and social audits will be conducted during the environmental permitting process for the proper identification of environmental and social liabilities prior to the issuance of environmental licenses.
Management Programs
The findings of the asset-specific SIAs and EIAs as well as from the environmental and social audits will serve as the basis for the preparation of mitigation measures, performance improvement and corrective actions necessary for the effective management of the E&S risks and impacts at each asset (project site), which will be aligned with the integrated corporate ESHS policy. The plans and procedures included in the E&S management system (ESMS) will be used during planning, design, construction and operation of the assets. The EPC and other contractors selected for each asset will incorporate into their ESMS the Citla’s E&S policies and management system. This will be done to ensure contractors’ compliance with Mexican requirements as well as the IFC Performance Standards.
The plans and procedures of the E&S management programs will be tailored to Citla Energy’s operations to address mitigation for the impacts and risks identified through the SIA, EIA, and E&S audits. These plans and procedures will also be consistent with requirements of IFC PS2 through PS8 and the Government of Mexico regulations. The plans and procedures of the management program should aim at avoiding, or where avoidance is not possible, minimizing adverse impacts on human health and the environment. Environmental monitoring will be an integral component of the E&S management program and will be conducted throughout the l
ife of the asset operations to provide ongoing understanding of environmental conditions and to indicate when corrective actions might be needed to address unanticipated impacts. This approach is commonly known as “adaptive management”. Issues to be addressed in the management plans for IFC PS3 through PS8 are presented below. The issues to be addressed in relation to management of labor and working conditions are addressed in the subsequent section under PS2: Labor and Working Conditions.
PS3 – Resource Efficiency and Pollution Prevention
Citla Energy will ensure that IFC Performance Standards and GIIP are included in the plans and procedures of the management program for each asset. The plans and procedures will aim at minimizing adverse environmental impacts from air emissions, effluent discharges, solid waste, noise/vibration, and to prevent oil spills.
Citla Energy will implement technically feasible and cost effective measures for optimizing the consumption of energy, water as well as other resources and materials, and for reducing Green House Gases (GHGs) emissions, with a focus on areas that are considered core business activities. These measures will be applied at each asset.
PS4 - Community Health, Safety and Security
GIIP will be applied in the preparation of procedures and plans that aim at preventing or minimizing potential adverse impacts on the health and safety of the Affected Communities, during the life of the operations, from both routine and non-routine circumstances. Additionally, the procedures and plans should consider safeguarding of personnel and property while maintaining protection of human rights and preventing or minimizing impacts on affected communities. Key components for the Community Health, Safety, and Security Procedures should include:
Development of a traffic safety program proportional to the project activity according to the principles outline in the General EHS Guidelines (Section 3.4 Traffic Safety). Where personnel and goods/products are transported by subcontractors, Citla Energy will use reasonable efforts to ensure the safety of these service providers, contractually requiring traffic safety risk analysis and adoption and implementation of driver safety programs.
Development of procedures for emergency preparedness and response (EPR) plan, based on the potential risks to the health and safety of the Affected Communities and other stakeholders that could arise from the Company’s operations. The individual EPR plans will be developed in close collaboration and consultation with potentially Affected Communities, local authorities and other relevant stakeholders and should include detailed preparation to safeguard the health and safety of workers and the communities, in the event of an emergency.
Development of a Security Policy including the requirement for regular security risk assessments in the event of the presence of public and/or private security and a Code of Conduct f
or security personnel and public security forces consistent with the requirements of PS 4 and incorporating the relevant guidelines of the Voluntary Principles on Security and Human Rights. The Code of Conduct shall set clear objectives for the work of security personnel and permissible actions, and be based on applicable law and professional standards. These instructions will also be communicated as terms of employment and through periodic training.
Development and implementation of a framework for labor influx management plan, including procedures to minimize the risk of incremental/accidental community exposure to disease and other potential impacts to the host community due to influx of migrating workforce.
PS5: Land Acquisition and Involuntary Resettlement
In alignment with newly established Mexican requirements, oil and gas and power generation projects will conduct social impact assessments as part of the environmental permitting process, which are required for mature and greenfield oil and gas developments. SIAs will be submitted to the competent authorities for approval.
Citla Energy will ensure compliance with requirements for the management of land acquisition, resettlement and rehabilitation of project-affected people by developing a land acquisition procedure that is aligned with IFC PS5 requirements.
PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
Citla Energy will develop a biodiversity strategy in line with PS6 as part of the development of its integrated ESHS policy and management system. In addition, a screening protocol will be developed by the Company to evaluate potential impacts on biodiversity values and will be integrated into the corporate risk identification procedures.
PS7: Indigenous Peoples
If Indigenous Peoples are located within the area of influence of the project, Citla Energy will develop procedures for engagement with Indigenous Peoples and for obtaining Free Prior and Informed Consent (FPIC) in line with IFC requirements as well as national regulations. Citla Energy will conduct an Informed Consultation and Participation (ICP) process. In the event that project related impacts are of such nature that FPIC is required, Citla Energy will go through an appropriate process to obtain FPIC from the Indigenous Communities prior to any project development.
PS8: Cultural Heritage
Citla Energy will develop and implement a chance find procedure for potential archaeological, paleontological, historical, cultural, artistic, and religious values, as well as unique natural environmental features that embody cultural values (e.g., sacred groves). As needed, protection and enhancement of sacred sites (e.g., ponds, forest groves, etc.) will be conducted in consultation with community members.
Organizational Capacity At the pre-bidding phase, Citla Energy organizational structure includes two Executive Vice-Presidents (EVPs), one responsible for Operatio
ns, and one responsible for Investments/Business Development. The two EVPs are supported by a team of seasoned technical professionals who were recruited from the Mexican and international oil and gas industry. Technical professionals are in the fields of geosciences, reservoir engineering, drilling and production engineering, and environmental and social consultants. This team will be supported by an Advisory Board/Investment Committee comprised by a group of ACON partners, senior executives from past and present ACON portfolio companies and by other experienced industry experts. Once Citla Energy reaches the operational phase, a CEO would be appointed and other areas of the company may be complemented or strengthened. Citla Energy senior management values a relationship with IFC to assist the Company to carry out its activities in line with IFC Performance Standards and GIIP.
In terms of ESHS personnel, Citla Energy will assign a dedicated staff at the senior management level as well as one person to manage the social and community development programs. Citla Energy will secure the services of qualified ESHS consultants to support the initial development of the various plans and procedures as part of the ESHS Policy and management system and to support their project activities, as needed. Emergency Preparedness and Response As part of its commitment to IFC’s investment, Citla Energy will develop a robust Emergency Preparedness and Response (EPR) Plan outlining emergency scenarios and response actions, key contacts, and responsible staff. The Company will also conduct training for employees and contractors on the information within this Plan. Monitoring and Review As part of the development of the ESHS Policy, a monitoring, inspection and audit program will be developed together with key performance indicators (KPIs) to track information on environmental, health and safety and social management, training, incidents and spills, etc. The Company will also develop an Environmental Monitoring Plan to establish monitoring requirements for each type of activity (i.e. exploration, development and/or production) for the acquisition program. The Company will hire an external Environmental and Social Advisory Consulting Firm (ESAC) to monitor and confirm sub-project’s compliance with Citla Energy’s ESHS Policy, ESHS-MS, and IFC PSs.
