The project is in an early stage with expected activities in Block 8, West Badr el Din and Block 9, South East Meleiha to include seismic and exploration drilling.  Apex’s activities are expected to have limited impacts in the sparsely populated areas its blocks are located.  Other Performance Standards may become applicable should any exploration sites progress to field development. 

PS5 (Land Acquisition and Involuntary Resettlement) is not applicable as land acquisition is not required for the seismic or exploration activities in the Blocks 8 & 9.  On Ps 6 (Biodiversity Conservation and Sustainable Management of Living. Natural Resources) no protected areas or areas of biodiversity sensitivity are within or abut Apex’s exploration blocks.  On PS7 (Indigenous Peoples) & PS8 (Cultural Heritage), no Indigenous Peoples have been identified within Apex’s project location and no cultural resources have been identified to date.  The company will prepare a “chance finds” procedure to be applied in the event of discovering cultural heritage resources in the project area.

Apex’s additional developments in Egypt will be subject to a process of identification and mitigation of E&S risks as described under PS1 below.  Future investments could potentially have impacts anticipated by any of the Performance Standards.

This is a Category A project primarily due to potentially significant and diverse impacts which may be associated with some of Apex’s activities.

The key environmental, social, health and safety issues associated with this proposed investment is the recently founded company’s management capacity to identify and mitigate E&S risks in newly acquired and developed onshore and potentially offshore oil and gas projects.  This E&S risk management process includes undertaking adequate social and environmental assessments and monitoring during exploration activities and any subsequent development phase (including the assessment of potential cumulative impacts).  Typical issues associated with onshore and offshore oil and gas development include ensuring fair, safe and healthy working conditions for direct and contract employees; ensuring the proper handling of hazardous materials, and management of airborne emissions, wastewater, solid and hazardous waste; ensure appropriate management of the impacts of construction and operations on, community health, safety and security, and consult and engage with potentially project-affected communities; and ensure potential social issues relating to pipelines and facilities land acquisition processes are identified and mitigated.  Apex has committed that, upon implementation of the specific measures detailed below, their activities will meet the requirements of the IFC Performance Standards.

As outlined previously, Apex is a recently formed company founded in April, 2016.  To date Apex has developed a number of principles that define the company’s strategic commitment to manage environmental and social performance.  Ahead of taking institutional control of any blocks or assets, Apex will develop the principles outlined below into corporate Apex policies covering all future Apex sole, joint and non-operated activities [ESAP#1]. Apex’s principles are outlined under three main elements:

Health, Safety, Security and Environmental (HSSE) – Apex HSSE principles outline strategic commitments to i) comply with all applicable host national laws and regulations and best practice operating procedures that incorporate recognized industry standards, ii) focus on potential consequences of incidents or accidents that could have negative or potentially harmful effects on personnel, assets and/or the environment including steps to minimize the risk of such events occurring, iii) identify, assess and mitigate significant security risks within the company’s areas of operations, including any impact on the security of the communities in which Apex operates, iv) maintain safe, secure and healthy working conditions, and v) promote the conservation of natural resources and reduction of waste.

Corporate Social Responsibility Principles - Apex has developed principles outlining the company’s commitment to avoid or minimize potential adverse impacts to workers and by i) ensuring consistency with international labor standards, ii) ensuring non-discriminatory and equal opportunity employment practices and supporting and respecting the protection of human rights, iii) ensuring the identification, assessment and avoidance or mitigation of potential adverse impacts to communities within the area of influence of Apex’s operations, iv) undertaking engagement and consultation with affected stakeholders, v) supporting and respecting the rights of any indigenous communities, vi) respecting, protecting and preserving the cultural heritage of the communities in which Apex operates, vii) the development and implementation of an effective mechanism to track and respond to grievances received from Apex’s workforce, the communities in which Apex operates and other relevant stakeholders, viii)  periodic reviews and evaluations for measuring compliance with the policy, and assessment for continuous improvement and ix) conduct a formal annual policy review with Apex’s Board of Directors and update as appropriate.

Apex have also developed a set of Business Principles, which outline the company’s code of conduct and for that of Apex’s employees.  The business principles require the strict adherence with Apex’s Code of Conduct and the US Foreign Corrupt Practices Act.

Policy

As part of IFC’s investment and as noted previously Apex will develop the above principles into company policies and implement integrated policies to identify, assess and adequately manage existing Health Safety, Security, Environmental and Social (HSSES) risks and impacts from oil and gas exploration, development and operations activities. These policies will be developed to integrate IFC’s Performance Standards, Good International Industry Practice and the current versions of IFC’s EHS General Guidelines and Oil and Gas Onshore/Offshore Guidelines [ESAP#1].  Apex will undertake to ensure its operated and joint operated venture companies operate in a manner consistent with Apex’s corporate policies.

Once developed, the HSSES Policy will be communicated directly to employees when they are hired, and through regular training events at country offices and project sites [ESAP#5].

Identification of Risks and Impacts

The Apex process for identifying risks and impacts of prospective concession bids or acquisitions begins with an early stage screening process. This initial review involves the preliminary identification of key risks and impacts associated with the project, as well as potential historic environmental or social liabilities. Apex also considers its capacity to manage these expected risks and impacts and the role of third parties in achieving compliance with Apex’s existing principles in deciding whether to pursue the opportunity.  Once a project’s feasibility is defined, Apex relies on a variety of available assessment tools and approaches to identify the detailed environmental and social impacts and risks of projects before it decides to proceed with development or acquisition.

As part of IFC’s investment, Apex will engage a qualified third party consultant to assist in the development of an Environmental and Social Management System (ESMS) to ensure the company’s individual projects are acquired, developed and operated in a manner consistent with host country requirements, IFC’s Performance Standards and Good International Industry Practice [ESAP #3]. 

As part of Apex’s ESMS, an assessment procedure will be developed to ensure that Environmental and Social Impact Assessments (ESIAs) are undertaken for all future exploration and development activities.  The procedure will ensure such studies conform to the requirements of host national laws and regulations and are consistent with applicable aspects of IFC’s Performance Standards. The assessment procedure will require that ESIAs are undertaken at an appropriate stage in a project’s cycle, such as during exploration campaign planning or parallel to a Front End Engineering Design phase of any eventual asset development.  Similarly, the process will be integrated into and complement the wider Apex decision making and project sanctioning process [ESAP #2].  

Apex will augment and formalise existing acquisition practices, ensuring reviews and/ or audits of prospective assets are conducted and benchmarked against Apex policies and standards to determine areas of risk and identify necessary mitigation measures to ensure compliance with relevant requirements [ESAP #2].

Management Programs

As part of Apex’s ESMS, the company will develop environmental and social corporate standards and procedures that will clearly articulate the requirements of the ESMS to ensure consistency with Apex’s HSSES policies. Specifically, this will involve the development of a set of Apex standards and/or management plans tailored to Apex’s business and address mitigation of the following impacts and risks defined in Apex’s HSSES policies and consistent with Performance Standard 2 through Performance Standard 8. The standards should be suited to avoid, or where avoidance is not possible, minimize adverse impacts on human health and the environment. A key feature of Apex’s standards will be the use of ongoing environmental monitoring throughout the life of the project to inform any necessary corrective actions that might need to be taken should unanticipated impacts arise.

As part of any given ESIA, Environmental and Social Management Plans (ESMPs) for each project activity will be developed to ensure exploration and development activities include measures to mitigate adverse direct, cumulative and induced impacts as identified in project ESIAs; monitoring requirements for ensuring the mitigation measures are implemented effectively and in a timely manner; organizational and financial resources for carrying out the measures; an implementation schedule for these activities; an appropriate recognition structure for internal and contracted resources alike to ensure plans are implemented; and include appropriate E&S provisions in its contracts with third party service providers [ESAP #2].

Similarly, acquisition audit findings will detail a program of mitigation and performance improvement measures and actions necessary to effectively manage the E&S risks and impacts of each of its projects in line with corporate policy. Project-specific assessments, audits, and goals will be used to establish action plans and metrics for subsequent project construction and production operations [ESAP #2].

For greenfield developments, field expansions and acquired operational assets, EPC contracts for each project will incorporate the relevant project-specific mitigation measures and actions during the assessment/audit process and appropriate standards to ensure compliance with host country requirements, and IFC’s Performance Standards [ESAP #2].

As part of IFC’s investment Apex will develop a flora and fauna management plan/ procedure consistent with PS6 as part of the development of its HSSES policies and ESMS. Additionally, Apex will incorporate a biodiversity screening or assessment process as part of its risk and impacts identification process within its corporate ESMS [ESAP #2].

Apex will develop and implement a chance find procedure including for finds of archaeological, paleontological, historical, cultural, artistic, and religious values, as well as unique natural environmental features that embody cultural values, and put in place procedures to protect and enhance sites of cultural value in consultation with community members [ESAP #2].

Organizational Capacity

Apex’s senior management have an extensive breadth of experience in the application and operation of good international industry health, safety, security and environmental practice. Specifically, the company’s COO previously oversaw a large Oil and Gas independent’s Egyptian operations, including HSSE performance, in the Western Desert and subsequently performed a similar role for the same oil and gas independent’s Australian offshore operations.  Both Apex’s CEO and COO sit on the Apex board, with the latter responsible for HSSES performance across the Apex business.  Apex have engaged an HSE consultant, who has over 40 years’ experience in the oil and gas sector, to assist in the development of the company’s ESMS [ESAP #3].

As part of IFC’s investment, Apex will review, strengthen as necessary and maintain an organizational structure that defines roles, responsibilities and the authority to implement Apex’s ESMS.  Key environmental and social responsibilities will be defined and communicated to the relevant personnel and to partners and contractors alike. Sufficient management sponsorship and human and financial resources will be provided on an ongoing basis to achieve effective and continuous environmental and social performance. Prior to Apex commencing the planning activities for any exploration campaigns and or/ taking operational control of a project development, and/ or the company acquiring an entity and/ or asset which Apex will eventually operate, Apex will retain a full time HSSES manager to oversee all operational activities [ESAP #3].

Apex will also establish an HSSES sub-committee, which will convene quarterly and report directly to Apex’s board at an appropriate frequency.  The sub-committee will be chaired by a member of Apex’s board.  The sub-committee will opine on policy matters, review HSSES operational performance, and provide the necessary guidance to Apex’s operations.  Any amendments to Apex’s HSSES policies will be approved by the Chairman of the sub-committee and the Apex CEO and notified to the Apex board [ESAP #4].

Emergency Preparedness and Response

As part of IFC’s investment, Apex will develop a robust Emergency Response Plan outlining emergency scenarios and response actions, key contacts, and responsible staff. The company will also conduct training to employees and contractors on the information within this plan [ESAP #2].

Monitoring and Review

As part of the development of Apex’s ESMS, a monitoring, inspection and audit program will be developed together with key performance indicators to track information on environmental, health and safety and social management and training for operated, joint operated and non-operated assets. Similarly, Apex will develop and implement an HSSES recognition programme for staff and contractors.  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 [ESAP #2].

Currently Apex has a Human Resources (HR) Department managed by the Chief Administrative Officer, located in Houston, Texas further supported by an HR and Admin Manager located in Apex’s Cairo office.   

Apex is a newly formed company and is in the process of assessing potential projects, thus the number of employees is at present limited to 19 fulltime employees and 9 part-time or contracted staff.  As noted previously, Apex is committed to ensuring non-discriminatory and equal opportunity employment practices.  The company has advanced drafts of an employee handbook covering terms of employment; immigration, reference and background check; the work environment (including health, safety and security); payroll; travel and expense reporting; holidays; vacation; sick leave; maternity and paternity leave; other leaves of absence; benefits (insurance, retirement, health); employee terminations; business ethics and special local requirements. As part of IFC’s investment Apex will review and as necessary revise existing HR policies and procedures to ensure consistency with IFC’s Performance Standard 2 and finalise the employee handbook [ESAP #5].

Occupational Health and Safety:

As articulated in Apex’s HSSE Principles, a safe working environment and a proactive safety culture are a priority in Apex operations. Apex is committed to establishing and to implementing secure systems to protect their employees, contractors and assets from risks of injury, property loss or damage. Apex expects each member of the team working either directly or indirectly for the organization, to understand, promote and actively assist in the implementation of its health and safety policy.

As part of the HSSES policy/policies, specific Health and Safety documents will be developed including detailed procedures consistent with Good International Industry Practice to minimize accidents and incidents associated with Apex’s activities. The procedures will include provisions for worker health and safety training (including contractors), emergency preparedness and response and contingency planning.  It is key that procedures be formalized within the HSSES policy/policies to manage existing risks to workers and communities [ESAP #2].

Ahead of any exploration or field development Apex will develop a plan covering the design principles and criteria to be applied to workers’ accommodation to ensure that PS 2 standards are being followed in terms of camp layout and facilities, as well as a consideration of the camp management policies and procedures to be applied. In this context, it would be expected that there would be reference to using the guidance/advice contained within the IFC (2009) Guidance Note entitled “Workers’ Accommodation: Processes and Standards”.

Grievance Mechanism

As part of its ESMS, Apex will establish a grievance mechanism through which employees may raise their workplace concerns. The mechanism will establish the procedures for handling grievances, i.e., logging a grievance and mechanisms for resolution. Apex will inform and train the employees on the availability of this mechanism. The procedure will recognize the rights of employees to access the national system for labor complaints and disputes of the Ministry of Labor or any other equivalent authority [ESAP #5].

As part of the company’s ESMS and prior to taking institutional control of any producing assets and/ or the planning of any exploration activities, Apex will develop company standards to apply the appropriate and relevant elements of applicable World Bank Group EHS Guidelines (i.e., General, Oil and Gas Onshore/Offshore). To address PS3 related impacts Apex will take into consideration the application and implementation of technically and financially feasible and cost effective measures for improving the Project’s consumption of energy, water as well as other resources and material inputs, and the reduction of Apex activities’ greenhouse gas emissions (and where applicable implementing measures outlined by the Global Gas Flaring Reduction Partnership), with a focus on areas that are considered core business activities [ESAP #2].  Specifically such elements will consider:

Water Consumption – the main uses of water in exploration and development activities relate to drilling mud preparation and sanitary use in accommodation camps. Water usage for oil and gas exploration and production operations in Egypt is typically sourced from boreholes or produced water sourced from neighbouring oil field operations.  All water abstraction and discharge requires an approved permit from the Egyptian Environmental Affairs Agency (EEAA). 

For Western Desert operations, water is typically transported from the identified abstraction- or collection point to the project site via trucks and/ or temporary pipelines and hoses. Workers’ accommodation camps are equipped with mobile water treatment plants to provide water for sanitary uses (potable water is typically purchased for human consumption). Water for drilling activities does not require pre-treatment.  Water used in drilling is typically discharged to lined evaporation ponds and must comply with EEAA regulations (per Egyptian Law 4 of 1994).

Liquid Effluents – The main liquid effluents generated during exploration and production activities consist of sanitary wastewater in temporary workers’ accommodation camps, which are typically treated via septic systems with leach fields. Wastewater disposal must comply with EEAA regulations and additional requirements imposed in environmental permits (per Egyptian Law 4 of 1994). Workers’ accommodation camps at drilling sites are required to use portable wastewater treatment plants that meet Egyptian standards for reuse of water (i.e. for dust control of site access roads) and/or discharge.

Drilling activities generate wastewater effluents from the drilling mud solids dewatering process and from spent drilling fluids. Apex’s drilling activities are anticipated to rely on water-based drilling fluids and non-aqueous drilling fluids. During such operations wastewater from the drilling mud solids control and dewatering is treated via decantation to remove solids, monitored to establish regulatory compliance with heavy metals and other water quality parameters prior to discharge most often as water for dust control in access roads and/ or lined evaporation ponds. Other forms of wastewater discharge must meet regulatory requirements which include consideration of the receiving environment when the discharge is directed to a surface water body or groundwater. Spent drilling fluids recovered at the conclusion of the drilling activity will be stored and removed by the drilling contractor for subsequent recovery and final treatment in licensed facilities, and will be defined in the project-specific ESMPs. Used lubricating oils from equipment maintenance and waste oil from greywater grease traps are collected for recycling or final disposal consistent with legislative requirements (per Egyptian Law 4 of 1994).

In the event that future well testing activities are conducted concurrently with the exploration phase, Apex will ensure that effluents are treated to levels that meet the completion and well work-over fluids guideline values outlined in IFC’s 2007 Environmental, Health, and Safety Guidelines for Onshore Oil and Gas Development (total hydrocarbon content of 10mg/L and pH of 6-9) [ESAP #2].

Solid Wastes – non-hazardous solid waste streams in exploration, field development and production camp sites mainly consist of organic and inorganic wastes from camp activities (e.g. food wastes; glass, metals, paper, plastic and cardboard packaging materials) and wood from vegetation clearing. As part of the company’s ESMS, Apex will develop minimum standards for ESMP requirements for project activities to include detailed solid waste management procedures, segregation and recycling of wastes and disposal of non-hazardous, non-recyclable, materials at the nearest, permitted, municipal waste facilities. Similarly, Apex will develop procedures to ensure hazardous materials are collected and disposed of appropriately for subsequent treatment or disposal consistent with Egyptian legislative requirements and World Bank Group’s EHS General Guidelines [ESAP #2].

Water-based drilling mud solids will be treated in a solids control and dewatering system. The recovered solid residues will be temporarily stored in a lined pit where they are allowed to dry further to reduce moisture levels. The solids will be analysed for contaminants and, should the analysis results in non-hazardous classification of these materials, they will be deposited in un-lined pits on-site for final disposal [ESAP #2]. In the event that hazardous contaminants are identified, specialized equipment will be mobilised to site for remedial treatment of these solids.

Hazardous Materials Management – exploration and production activities and campsites store and use potentially hazardous materials such as fuels and lubricants, explosives, and drilling mud additives. All storage and use will be based on a Permit to Work system and defined in specific procedures in operating partner’s project-specific ESMPs. Fuels and lubricants will be stored in dedicated containers or tanks with secondary containment [ESAP #2].

Hazardous waste – as part of Apex’s ESMS, the company will develop a hazardous waste standard defining chain of custody protocols to manage hazardous waste which may be generated as part of Apex’s operations to ensure appropriate disposal to the Nasreya Hazardous Waste Treatment Centre in Alexandria, Egypt’s hazardous waste facility, or a similar facility if properly licensed, available and constructed and operated in a manner consistent with good international industry practice.

Atmospheric Emissions and Greenhouse Gases – exploration activities use fuels for a variety of applications.  In the event of a discovery, wells may be tested for flow performance requiring flaring activities for limited periods. These sources of emissions are considered temporary and emissions prevention measures consist mainly of maintenance to ensure efficient combustion or efficient flare design. During operations, Apex will seek to limit routine flaring as part of any greenfield development.  Of perhaps greater significance to communities located near seismic activities or drilling sites is the dust from the circulation of transport equipment and vehicles on unpaved access roads. As noted previously, dust emissions will be controlled through the application of treated wastewater from the drilling mud dewatering and from the sanitary and greywater treatment plants.

Apex’s awarded blocks in the Egyptian Western Desert are located in remote, sparsely populated areas. Consequently, there is a limited risk in terms of community safety as there are no significant community settlement areas directly adjacent or in close proximity to Apex’s planned activities.

As part of Apex’s ESMS, company standards will be developed to anticipate and avoid adverse impacts on the health and safety of Affected Communities during the project life from both routine and non-routine circumstances. Additionally, the standard will consider safeguarding of personnel and property maintaining high levels of human rights principles and avoidance or minimization of impacts to affected communities [ESAP #2]. Key components for Apex’s Community Health and Safety standard shall include:

1. a driver and traffic safety program proportional to the project activity according to the principles outlined in the General EHS Guidelines (Section 3.4 Traffic Safety) and recognised Good International Industry Practice (e.g. International Association of Oil & Gas Producers IOGP No. 365). Where transport-related activities are performed by subcontractors, Apex will use commercially reasonable efforts to influence the safety of these service providers, contractually requiring traffic safety risk analysis and adoption and implementation of driver safety programs.

2. emergency preparedness and response, based on the risk to the health and safety of the Affected Communities and other stakeholder from their activities. The plans will be developed in close collaboration and consultation with potentially Affected Communities and other stakeholders and should include detailed preparation to safeguard the health and safety of workers and the communities in the event of an emergency.

3. a Security Policy and a Code of Conduct for private security personnel.  The policy will also guide the company’s relationship with public security forces.  The policy will be consistent with the requirements of PS 4 incorporating Good International Industry Practice (e.g. the relevant guidelines of the Voluntary Principles on Security and Human Rights). The Code of Conduct shall set clear objectives for the work of private 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.

Tom Maher,

Apex Energy Company, LLC

Plot 233, Second Sector, City Center,

Fifth Settlement, New Cairo,

Egypt.