Profitable, Responsible Operations in Equatorial Guinea
For the past 15 years, Marathon Oil has operated a world-class integrated gas business at Punta Europa on Bioko Island, Equatorial Guinea.
During this time, we have invested significantly to improve our facilities and capabilities in this West African asset, support sustainable development of the local economy and reinvest in the community. In 2017, we expect significant free cash flow from our Equatorial Guinea asset.
Our most recent investment, the Alba B3 compression project, is a model of sustainability for our Company. Throughout the project, we developed local content and built national capacity, while adhering to U.S. performance standards. We completed this major offshore engineering and construction project on time and on budget with first production in the third quarter of 2016. In addition to creating shareholder value by extending the Alba field’s plateau production and the asset’s life beyond 2030, the project allows us to continue sustainable social programs that build capacity and improve well-being in Equatorial Guinea. Extending Alba’s life also gives Bioko Island’s 280,000 residents continued access to the island’s only power station and their sole source of cooking gas and liquefied petroleum gas (LPG).
In Equatorial Guinea, we employ almost 800 national citizens. Through recruiting, training, workforce integration, and educational and vocational programs, Equatoguineans have grown to be 74 percent of our workforce. Since 2010, Equatoguineans have been promoted over 1,400 times, with 358 national employees promoted to higher employee grades. We provide pay above the national average and benefits for all national employees.
Additionally, Marathon EG Production Limited (MEGPL) has graduated four classes from our Leadership Development Program (LSDP), which nurtures employees with senior management potential. We have training programs that support technical certification across all major operations areas, such as gas plant operations, offshore operations, maintenance, mechanics, engineering and construction, finance and accounting, administration, supply chain and health, environment and safety (HES). We also support a National Safety Committee of employee volunteers who develop and promote asset-wide campaigns for work and home-based safety issues.
To help build a sustainable local economy, we have increased local content to support our operations in Equatorial Guinea. Since 2013, MEGPL has spent nearly $700 million with vendors in Equatorial Guinea that are 35 to 100 percent locally owned.
Prospective vendors must submit a questionnaire that ensures they share our commitment to safety, environmental stewardship, ethical business conduct, sound labor practices and human rights. Contracts address our expectations that vendors align with Marathon Oil values, adhere to our policies, and comply with all relevant export laws and regulations, including the U.S. Foreign Corrupt Practices Act (FCPA), U.K. Bribery Act and other applicable anti-corruption laws.
Our local procurement staff host at least two meetings annually with more than 40 local vendors to offer information and guidance on upcoming contracts with MEGPL. To ensure these businesses have opportunities to bid on contracts to work in our local operations, we inform business owners of our bidding process, as well as national laws and regulations for doing business with the petroleum industry. Items we purchase from local suppliers include furniture, personal protective equipment, office consumables, tires, fresh produce and vehicles. We also procure services such as engineering, construction, labor, landscaping and customs brokerage from local vendors.
Our liquefied natural gas (LNG) production facility, EGLNG, provides small- to medium-sized businesses in Equatorial Guinea with education and training, and encourages national companies to supply goods, materials and services. Local companies maintain EGLNG’s plant construction jetty, portable toilets and heating ventilation air conditioning (HVAC) system. Where possible, EGLNG combines activities to improve quality of life in Equatorial Guinea with economic development. For example, the facility has used 100 percent national companies for community projects, including renovating and building schools and water wells.
Through investments in HES activities, our operations are achieving outstanding safety performance and minimizing environmental impact. The 2016 Total Recordable Incident Rate (TRIR) for all of our operations in Equatorial Guinea combined was 0.04 during more than 5.1 million hours worked, well below the international E&P average as reported to API. In 2016, EGLNG reported zero recordable incidents for the fourth consecutive year (over 3.5 million man hours) and Atlantic Methanol Production Company (AMPCO) had zero recordables (over 2.5 million man hours).
We achieved these results through continued focus on hand injuries, which accounted for the largest number of recordable incidents in 2015, and dropped objects because they have the highest potential to be serious events. We communicated our journey to zero incidents with a Personal Responsibility for Safety campaign that trained over 100 people in risk awareness, hazard identification and good toolbox talks. To keep safety top of mind, we held almost 850 leadership safety engagements, more than double our target. Based on 2016 data, our annual risk assessment and a management review, we identified driving, hand safety and working at heights as 2017 focus areas.
Driving remains a high-risk activity on and off our site. In 2016, our National Safety Committee presented a program pointing out high-risk driving behaviors and safe driving precautions to our workforce, and distributed air compressors so employees can check tire pressure. In addition to promoting safe driving on site, committee volunteers will share this program with taxi drivers in the Bioko Island capital of Malabo in 2017.
Our operations in Equatorial Guinea recorded no effluent discharges or spills greater than 1 barrel outside of secondary containment, onshore or offshore, in 2016. We attribute our ability to prevent spills to plant reliability of approximately 94 percent, and strong inspection and preventive maintenance programs. Our key air emissions metric, ratio of gas flared to gas produced, came in 25 percent under target, primarily due to reducing the number of heaters and separators in our operations. This increased operational efficiency and lowered emissions. In addition, we recycled over 485 tonnes of industrial waste in 2016 and are evaluating recycling opportunities for domestic waste in 2017.
Through corporate social responsibility (CSR) programs, Marathon Oil is making lasting impacts in our key focus areas of malaria control and education. To ensure our CSR programs are effective, we regularly assess social risk and engage stakeholders. We frequently collaborate with business partners, nonprofit organizations and governmental agencies to develop and execute social investments, including the Bioko Island Malaria Control Program, the Equato-guinean Malaria Vaccine Initiative, long-term training programs supporting national health initiatives and university level ESL instruction, and infrastructure projects. In addition, we support a host of smaller projects that benefit the community such as the employee-driven Books for Bioko that has raised almost $850,000 in the past decade for school materials.
Marathon Oil emphasizes capacity building to ensure local partners can sustain social programs beyond our initial involvement. We have invested in training programs and scholarships to provide host nation employees and partner agency staff members with the education they need to take leadership positions in our Company and industry. We also provide university and technical college students with training and practicum opportunities in Equatorial Guinea and abroad.
In partnership with the Ministry of Health and Social Welfare (MHSW), Marathon Oil’s premier CSR investment in Equatorial Guinea is the Bioko Island Malaria Control Project (BIMCP). This investment, valued at more than $83.3 million (USD) since inception, is funded through a unique private-public partnership of Marathon Oil, Noble Energy, AMPCO and the Government of Equatorial Guinea.
In its first 10 years, the BIMCP reduced the malaria transmission rate 77 percent in children 2 to 14 years old, while deaths of children under age 5 declined 85 percent. These trends translated to overall reductions in lost time at Punta Europa due to malaria illness. By year-end 2016, the parasite infection rate dropped to just 11 percent of the Bioko Island population, from a high of nearly 50 percent in 2004. The project has built national capacity with a malaria intervention team that employs over 190 Equatoguineans in roles including spray teams, case management doctors and entomology technicians.
These BIMCP outcomes opened the door to fund the development of a candidate vaccine that protects recipients from malaria infection and also breaks the transmission of this disease between humans and mosquitos. Marathon Oil and our BIMCP partners are funding three trials of a highly promising malaria vaccine product developed by Sanaria, Inc., a U.S. biotechnology company, to block malaria transmission in humans and mosquitos. The partners have invested $22.5 million of a $48.5 million package for the Equatoguinean Malaria Vaccine Initiative. Two studies have been executed and over 25 Equatoguinean doctors, nurses, lab technicians, pharmacists and other support staff have been trained to run the vaccine trials. As human subject trials are carried out in Equatorial Guinea for the first time, they represent an investment in the health and education of Equatoguinean society and in other parts of Africa where malaria is a persistent scourge. Ultimately, the partners plan to invest $135.4 million total in the BIMCP from 2002 to 2018.
Whatever the outcome of the vaccine trials, at the end of Phase III the BIMCP will have a respected place in the history of malaria control programs. It has substantially reduced the burden of disease and the negative consequences of malaria-attributable illness, and saved thousands of lives on Bioko Island. The partnership has widely shared its scientific data, successes, challenges and lessons learned, prompting changes in malaria control practices worldwide and strengthening the global effort to eliminate malaria.
The BIMCP has received the following awards:
- Africa Investor Magazine Award (2006)
- US Chamber of Commerce International Community Service Award finalist (2006)
- World Oil Award (2006)
- Global Business Coalition first annual award for malaria control (2007)
- World Foundation for Medical Research and Prevention award (2007)
- Global Business Coalition award for Best Malaria Monitoring and Evaluation Program (2009)
- The Oil and Gas Year (TO&GY) Best Corporate Social Responsibility Project (Equatorial Guinea) (2013)
Marathon Oil provides scholarships for Equatoguineans to study at U.S. and Malaysian universities. To date, 12 Marathon Oil scholarship winners have obtained university degrees in geology and engineering at the University of South Carolina in the U.S.
Our internship program allows Equatoguinean college and trade school students to shadow employees and get on-the-job experience in our facilities, with the intent that interns obtain degrees in engineering, geosciences or geology to further build the oil and gas industry in their home country.
In addition, we supported the Equatoguinean Geology and Engineering Education Opportunity (GEGEO) program along with MEGPL, Noble Energy, Hess and South Atlantic Natural Resources. GEGEO funded $6 million from 2003 until 2013 for over 900 students studying at the National University of Equatorial Guinea and 15 students obtaining bachelor degrees at the University of South Carolina’s schools of engineering and geology. Of the 15 students, 10 were successfully recruited by Punta Europa companies.
To further develop the national workforce, Marathon Oil supports the Institute Technological National of Hydrocarbons Equatorial Guinea (ITNHGE). As part of the Alba B3 compression project, we sponsored 20 Equatoguinean students at ITNHGE for a total expected expenditure of $4.5 million over three years.
Marathon Oil complies with the U.S. Foreign Corrupt Practices Act (FCPA) and U.K. Bribery Act. We require designated employees with certain job responsibilities in Equatorial Guinea to complete annual anti-corruption training and we perform an annual anti-corruption compliance audit.
In addition to having well-established and effective security and human rights policies in Equatorial Guinea, we employ a proprietary guard force to protect our onshore facilities and engage with the Navy of Equatorial Guinea to protect offshore facilities. There were no known security-related incidents resulting in a human rights violation in these operations in 2016. We will work with the government of Equatorial Guinea and the United States Coast Guard in 2017 on reviews of International Port Ship and Port Facility Security (ISPS) to enhance safety and security at the country’s ports.
Marathon Oil’s integrated gas business in Equatorial Guinea includes the largest petroleum sector facility in Equatorial Guinea and the largest methanol producer on the African continent. Our operations demonstrate how an oil and gas company can run a world-class enterprise and bring economic progress, educational and employment opportunities, and sustainable social programs to the community and host nation, while building long-term shareholder value.