Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate governance and strategy
• Climate risks and opportunities
• Flared gas
• Investment due diligence
• Governance approach
• Preventing corruption

Environmental Achievements

• No material environmental incidents were recorded. A series of initiatives were undertaken to improve emissions management and control, with the aim of reducing emissions.
• Significant improvements in the maintenance and repair routine of certain operating equipment at the Agbami field led to significant reductions in planned non-continuous production flaring.

Social Achievements

• No reportable safety incidents during 2020.
• Food distribution in collaboration with the Kenyan Ministry of Petroleum and Mining and the local government of Turkana South.
• Net social investment expenditure of $867,010 in Nigeria and $55,689 in Kenya.

Governance Achievements

• Developed an ESG Due Diligence Procedure.
• Implemented a multi-year program to integrate TCFD recommendations into the business.
• Incorporated environmental performance metrics into the due diligence process, including shadow carbon pricing.

Climate Goals & Targets

Environmental Challenges

• Challenges in the development of the South Lokichar Development in Kenya related to the COVID-19 pandemic and decline in oil prices.
• Inability to process and commercialise gas at the Agbami field due to lack of pipeline infrastructure.

Mitigation Strategies

• Working with the Government of Kenya to update and submit a Field Development Plan.
• Revising the Kenya project FEED to avoid routine flaring.
• Evaluating the integration of co-generation technology into the Kenya project using renewable energy sources.
• Considering initiatives to support further reduction of flaring at Agbami.

Supply Chain Management

Climate-Related Risks & Opportunities

Transition Risks

• Evolving government measures and public sentiment driving stricter climate-related policies.
• Technological and market shifts related to the energy transition.

Opportunities

• Resource efficiency improvements leading to reduced operating costs.
• Integration of co-generation technology using renewable energy sources.

Reporting Standards

Frameworks Used: GRI, SASB, TCFD, IFC Performance Standards

UN Sustainable Development Goals

• 8.3
• 10.2
• 13.1
• 15.1
• 16.6

Africa Oil's contribution to SDGs through FDI, equality, climate risk management, environmental protection, and ethical conduct.

Environmental Metrics

ESG Focus Areas

• Governance
• Environment
• Social

Environmental Achievements

• Net equity emissions of 127 ktCO2e vs. 129 ktCO2e in 2020; emissions intensity of 15.4 kgCO2e/boe
• Purchased an initial tranche of offsets covering >20% of net equity Scope 1 and 2 emissions from a Gold Standard certified clean cookstove project in Kenya.
• Began feasibility studies for direct investment in a proprietary nature-based carbon removal project.
• Adopted target to achieve carbon neutrality by 2025.

Social Achievements

• Zero Fatalities and Lost Time Injuries (LTIs)
• Supported the rollout of vaccines to protect people against COVID-19, contributing $150,000 which was used to purchase 15,000 vaccines; 100 of these doses were directly distributed to Africa Oil Kenya and Tullow Kenya BV employees and their families, while the remaining 14,900 were donated to the government.

Governance Achievements

• Inaugural ESG Review published in March 2021.
• Full materiality assessment and TCFD compliant scenario analysis conducted in Q4 2021.
• Renewed support for the Extractive Industries Transparency Initiative (EITI) and became a signatory to the UN Global Compact (UNGC).
• Zero non-compliance events or incidents in 2021.

Climate Goals & Targets

Environmental Challenges

• Climate change presents both direct and indirect risks to our business via changing weather patterns, local and global policy responses, changing consumer preferences and social action.
• Physical risks from changing weather patterns in Nigeria and Kenya (storms, rising sea levels, drought).
• Litigation risk related to climate change.
• Policy risks from evolving regulations in Kenya, Nigeria, South Africa, Sweden, and Canada.
• Technology risk from the evolution of clean energy technologies.
• Market risk from changing consumer preferences and supply chain constraints.
• Reputational risk from increasing scrutiny of the oil and gas sector.

Mitigation Strategies

• Conducting scenario analysis to test the resilience of the portfolio to a low carbon future.
• Developing a detailed energy transition strategy.
• Implementing emissions reduction measures.
• Integrating climate risks into investment due diligence procedures.
• Working with operating partners to identify, guide and support initiatives to avoid, reduce and displace emissions.
• Investing in credible carbon credit schemes and developing a nature-based carbon sequestration project.
• Monitoring developments in climate-related financial regulation.

Supply Chain Management

Responsible Procurement

• Robust third-party due diligence process to ensure that any company that is providing us with a service meets our high standards of governance and business ethics.

Climate-Related Risks & Opportunities

Physical Risks

• Increased intensity of storms and rising sea levels in Nigeria
• Increased temperature and rainfall, as well as more frequent extreme weather events in Kenya
• Shortage of water in Kenya due to drought

Transition Risks

• Changing consumer preferences
• Evolving regulations
• Technology evolution
• Market volatility
• Supply chain constraints
• Reputational risk

Opportunities

• Development of energy-efficient products
• Integration of renewable energy into operations
• New markets for new products and services

Reporting Standards

Frameworks Used: GRI, SASB, TCFD, UNGC

UN Sustainable Development Goals

• 6
• 8
• 10
• 13
• 14
• 15
• 16
• 17

See pages 10-11 for details on how initiatives contribute to these goals.

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environmental Management
• Health and Safety
• Human Rights
• Diversity and Inclusion
• Community Engagement
• Governance
• Business Ethics
• Financial Resilience

Environmental Achievements

• 27% year-over-year decrease in flaring in Nigeria
• 8% reduction in overall emissions (net equity emissions of 117 ktCO2e)
• >20% of emissions offset via purchase of Verra certified carbon credits

Social Achievements

• Adoption of a new Diversity, Equity, and Inclusion (DEI) Policy with aspirational targets
• Delivery of in-person DEI training to the Management team
• Zero fatalities and Lost Time Injuries in Nigeria
• Monetary donation to support food provision during drought in Kenya
• Ongoing water provision program in Kenya

Governance Achievements

• Establishment of a Board-level Environmental, Social, Governance, and Health and Safety (ESGHS) Committee
• Hiring of a Vice President of ESG
• Integration of ESG and climate-related risks into risk management processes
• ESG considerations embedded into business development due diligence
• Renewal of membership in the Extractive Industries Transparency Initiative (EITI) and the United Nations Global Compact

Climate Goals & Targets

Environmental Challenges

• Fatal accident in Kenya (May 30, 2022)
• Potential for stranded assets due to energy transition
• Commodity price volatility
• Increased cost of goods and services due to supply chain constraints
• Decreased access to capital due to climate change concerns
• Potential for climate-related litigation
• Advancement of clean energy technologies
• Environmental activism
• Increased regulation related to climate change
• Water scarcity in Kenya
• Social unrest in Kenya due to project impacts
• Data limitations for certain metrics

Mitigation Strategies

• Corrective actions taken in Kenya following the fatal accident (new Control of Work procedure, Incident Response Plan, training, on-site medical support)
• Scenario analysis to assess resilience of portfolio to energy transition
• Active hedging strategy to manage oil price volatility
• Contingency planning for cost inflation
• Engagement with investors and lenders to address climate concerns
• Development of a comprehensive energy transition strategy
• Monitoring of regulatory landscape
• Proactive stakeholder engagement
• Improved security measures
• Exploration of nature-based carbon offset opportunities in Kenya
• Improved water recycling technologies
• Integration of renewable power sources

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Rigorous due diligence assessment for all suppliers and contractors
• Detailed questionnaire for potential suppliers
• Compliance documentation review
• Internal questionnaire providing additional information
• Consultation with external counsel if necessary
• Use of online portal to automate the process

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (storms, increased precipitation, drought)

Transition Risks

• Changing consumer preferences
• Commodity price volatility
• Increased cost of goods and services
• Decreased access to capital
• Climate-related litigation
• Advancement of clean energy technologies
• Increased regulation

Opportunities

• Development of carbon offset projects
• Integration of renewable energy technologies

Reporting Standards

Frameworks Used: SASB (Oil & Gas: Exploration & Production), GRI (Oil and Gas Sector Standard 2021), TCFD, TNFD (pilot assessment), UNGC

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 7 (Affordable and Clean Energy)
• Goal 8 (Decent Work and Economic Growth)
• Goal 12 (Responsible Consumption and Production)
• Goal 13 (Climate Action)
• Goal 15 (Life on Land)
• Goal 16 (Peace, Justice and Strong Institutions)
• Goal 17 (Partnerships for the Goals)

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Governance
• Environmental Stewardship
• Strong Communities

Environmental Achievements

• Reduced net Scope 1 and 2 emissions by 9% year-over-year to 106,582 tCO2e
• Reduced net flaring by 31% year-over-year

Social Achievements

• Adopted a new Social Investment Framework prioritizing education, healthcare, and clean energy
• Zero fatalities and lost-time injuries at Prime Energy

Governance Achievements

• Formalized an Environmental and Social Management System (ESMS) framework
• Conducted a double materiality assessment in preparation for EU CSRD

Climate Goals & Targets

Environmental Challenges

• Potential negative impact of reduced oil and gas demand due to clean energy alternatives
• Potential for community opposition affecting strategic goals
• Potential for complicity in human rights violations through contracted labor or supply chain
• Potential for EHS incidents resulting in injuries or fatalities
• Potential for ineffective partner engagement
• Potential for financial mismanagement or inability to maximize recovery/monetize assets
• Potential for complicity in bribery or corruption
• Potential for violation of securities and other government regulations
• Potential for ineffective board oversight
• Potential for political and societal risks disrupting operations

Mitigation Strategies

• Working with partners to reduce operational costs and minimize stranded assets; scenario analysis
• ESIA process and public participation processes for proposed projects
• Community Relations and Human Rights Policy; human rights assessments
• Health & Safety Policy; strong H&S performance with zero fatalities and lost-time injuries
• Investment engagement practices; weekly operational updates with Prime
• Prudent budget and financial strategy; evaluation of investment opportunities against commodity price cases
• Code of Business Conduct and Ethics; Anti-Corruption Policy; anti-corruption training
• Audit Committee reviews financial statements, audits, and disclosures
• Corporate Governance and Nominating Committee assesses board effectiveness
• Monitoring political and social risk

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• ESG factors integrated into supplier due diligence procedures (starting 2024)

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Changing consumer preferences
• Commodity price volatility
• Increased cost of goods and services
• Decreased access to capital
• Climate-related litigation
• Environmental activism
• Increased scrutiny on nature-related impacts
• Increased regulation related to climate change

Opportunities

• Evolution of clean energy technologies
• Carbon credits programme

Reporting Standards

Frameworks Used: SASB (Oil & Gas: Exploration & Production), GRI (Oil and Gas Sector Standard 2021), TCFD, UNGC, EITI

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 3
• Goal 4
• Goal 7
• Goal 12
• Goal 16
• Goal 17

See pages 14-15

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• EcoVadis Gold Medal (top 5%)