IPTC 16789

Corporate Social Responsibility- Methodologies, Performance and

Management in Oil and Gas Industry: Case of a leading E&P
Company in Colombia, South America
V.K.Baskaran, K.C.Dani, S.K.Pokhriyal, G.J.Fernandez, University of Petroleum & Energy Studies

Copyright 2013, International Petroleum Technology Conference

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Abstract

Mansarovar Energy Colombia Ltd. (MECL), a JV formed by India's ONGC and Chinese oil firm Sinopec, is
engaged in the exploration, development and production of oil and natural gas in Colombia. Our firm owns
interests in 11 fields across Colombia's Middle Magdalena basin, through association contracts with Colombia's
state oil company Ecopetrol. Velasquez oil field is located in central Colombia about 160 km far away from the
capital Bogota. Discovered in 1946, the Velasquez oilfield has an area of 32 km2 and was put into production
from 1947.

The Valley with 45,000 sq. km has 33 municipalities, 91 rivers and approximately 1,200,000 inhabitants who
make this region a potential for alternative projects that will generate social development with equity and allow
improved quality of life in this prosperous region.

MECL defines CSR as “The commitment assumed for the contribution to the development, welfare and
improving the quality of life for employees, their families and the community at large”. Under this commitment,
the company avoids any negative impact of its operations over people and its surrounding area. The
management is a five stage process: Diagnostics, programs and project planning, execution, tracking and
monitoring and evaluation of results.

The general objective of MECL is contribute to the economic development of the population in the vicinity of
Velasquez through the articulation and enforcement of contracts and agreements between private companies,
state and community efforts to articulate economic, operational and sustainability to find the social , community,
business and environment. Promoting social and territorial development through investment in education,
health, environment using basic mechanisms of institutional cooperation, management and community
participation, establishing new revenue-generating alternatives to low-income are some of our specific
objectives. Our activities include literacy programs, drug prevention workshops, cultural projects, business
development training, sexual health workshops, sports, education workshops for school community (parents,
teachers and students), provision of school kits to students, preventive medicine health training etc. MECL
invested 1.74 million USD to fulfil its responsibilities during the year 2011.
2 IPTC 16789

Introduction

Corporate social responsibility (CSR) has emerged as a business approach for addressing the social and
environmental impact of company activities. Companies from the oil and gas sector have been at the centre of
CSR development. With increasing expectations placed on business, one needs to ask if CSR is able to fulfil
these larger expectations. Therefore, the aim of this article is to analyse CSR’s potential and limitations for
contributing towards wider societal ‘challenges’. CSR implies more than the operation of the invisible hand; it is
linked to the idea that companies owe duties to their external stakeholders beyond those enshrined in the law.
The word “responsibility” implies a duty to someone or something; the use of the word “social” as a modifier
implies that companies owe duties to society at large.

MECL’S area of business took off in the 1940s, with the discovery and development of medium crude between
21 and 23 degrees API in the Velazquez field, and the Teca field with 13-degree API crude in the 1980s. Since
then, other heavy crude fields have been developed, including: Nare Sur (South), Jazmin, Under River and more
recently, the Girasol and Moriche fields, which were in the hands of the Texas Petroleum Company at that time.
There are also other areas that have already been explored such as Chicala, Abarco and Areas de Moriche
Buffer, which also have heavy crude oils with gravities ranging from 11 to 14 degrees API at depths between
1500 and 3000 ft.

Following years of exploration and development, the US oil company Omimex Resources Inc. acquired the
Velazquez oil field, formerly of the Texas Petroleum Company, by means of an international tender in 1994. A
year after purchasing the Velazquez Field (the only private oil property in Colombia), Omimex de Colombia
Ltd. acquired the ownership of the Velazquez – Galan Pipeline and Texaco’s rights in the Cocorna and Nare
Association Contracts signed with Ecopetrol.

A decade later, in the networking session opened by Omimex Resources Inc. at the end of 2005, the companies
Oil & Natural Gas Corporation (ONGC), a government-owned oil company from India and SINOPEC Corp., a
government-owned oil company from China, showed interest in purchasing shares of Omimex de Colombia Ltd.
After several negotiation sessions, these government owned companies decided to get together and, through
their subsidiaries ONGC Nile Ganga B.V. and SINOPEC Overseas Oil & Gas Limited, create Mansarovar
Energy Colombia Ltd. (MECL), as per the laws of Bermuda in order to merge technologies and capital and
close the deal to purchase the head office of Omimex de Colombia Ltd. However, on August 24, 2006, India’s
ONGC decided to change the subsidiary representing it in its share of Mansarovar Energy Colombia Ltd. to
ONGC Amazon Alaknanda Limited, which are finally the shareholders of Mansarovar from India.

Mansarovar Energy Colombia ltd. recognizes that good relationships are built every day and for that steps must
be taken to remain solid over time, that demonstrate clear results and social development of the regions. This is
what we do in our work, in our relationships with each of our strategic audiences, with communities who have
joined us in places where we advance our operations. Mansarovar’s social management is measured in the
benefits received by the people, opportunities to improve their living conditions, to reach a human and economic
development, which leads to a better society. This is done with the union and the joint efforts of the government,
institutions, companies and community. With unions, clear goals, compromise and teamwork, we can achieve
great results.

In 2011, Mansarovar handled job from surrounding communities and areas of influence to Velasquez-Galan
pipeline, Velasquez fields and Nare Association, improving their living conditions through sustainable
development projects in lines such as education, health, income generation, capacity building and community,
recreation, sports, environment and climate change.

During 2012, Mansarovar Energy Colombia Ltd., continued a process that began in late 2011 and is the
implementation of the management model of social responsibility, which means a complete improvement of
their processes to strengthen relations with each of their public, to achieve best practices in the industry and thus
strengthen the organization as a leader in the market, ethical, socially responsible and as one of the main drivers
that leverages the development of the region.
IPTC 16789 3

Corporate Social Responsibility at MECL: An outlook

The fundamental objectives of the area of Corporate Relations at Mansarovar Energy Colombia Ltd. include
facilitating the course of the operation by positioning the company’s image in its setting through strategies
aimed at generating social development in the region where its activities are carried out.

The point of reference of the efforts consists of three main stakeholders: communities, the Government and the
employees. Social Management is not the only responsibility of the Department of Corporate Relations; it also
has to do with how activities are performed in a framework of respect with communities, the environment,
environmental regulations and participation in our country. Our image is based on facts, and that is where we all
participate, either in a positive or negative manner, in the construction of our identity as a company. This
guiding framework serves as an action plan aimed at working in favour of social development. The Plan
includes four programs: Information and Dissemination, Community Improvement, Institutional Improvement
and Voluntary Social Investment.

One of the purposes of the area of Corporate Relations is to establish a network of institutional relations that will
provide social investment initiatives with increased scope, coverage and sustainability; in order to do so; it has
held talks with entities such as the Boyaca(a local municipality) Governor’s Office and town halls.

Over the first few months this year, work has been done by means of two agreements with the Ecopetrol
Foundation for the Development of the Middle Magdalena Region – FUNDESMAG (in Spanish); in addition,
the socioeconomic study of the communities in the area of influence of the Jazmin and Moriche fields was
conducted, and the tool will serve as a sensible analysis to define future plans.

CSR management process at MECL

• Plans,
••Utilidad
1 programmes and
projects
Intangibles
• Diagnostics
•2

• Execution
•5
• Evaluation of
results •3

• Monitoring and
•4 tracking

Figure 1: MECL CSR management process

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Influence areas

The towns of influence of MECL and its associations are Puerto Boyaca in Boyaca(a local municipality); Puerto
Nare and Puerto Triunfo in Antioquia; Puerto Parra, Cimitarra and Barrancabermeja in Santander.

Cocorna: located in the jurisdiction of the town of Puerto Triunfo, Puerto Perales village, Cocorona Station,
Puerto Pita, Santiago Berrio, approximately 600 families reported by census.

Nare Sur(South): located in the jurisdiction of the town of Puerto Nare, with its veredas Angelitas, La Moya
and Puerto Mulas, it is inhabited by approximately 180 families (not including the county seat of Puerto Nare).

Velazquez Field: located in the town of Puerto Boyaca, it includes the veredas Calderon, Muelle Velazquez,
Bateria Tres and Kilometro 11, with approximately 450 families.

Jazmin Field: located in the jurisdiction of the town of Puerto Boyaca, with the veredas Carbonero, Santa
Barbara, Puerto Serviez and Morro Caliente, inhabited by a total of 1300 families.

El Sauce Pipeline in Barrancabermeja: located in the jurisdiction of the town of Barrancabermeja, with its
northeastern neighborhoods and veredas Candelaria, El Playón, Colorada, Caño Rasquiña, Opón, San Rafael de
Chucurí, Ciénaga de San Rafael; in the town of Puerto Parra, with veredas Montoyas and Bocas de Cararé, and
the town of Cimitarra in the veredas San Pedro de las Vegas, Los Morros, Vuelta Acuña, Aterrado, San José,
Manjares, San Pedro de la Paz, Caño Baúl and Zambito, with a total of 2200 families reported by the census.

Figure 2: MECL influential areas

IPTC 16789 5

Volunteer social investment plan (pertaining to Velasquez oil field)

General Objective

To contribute to the economic development of the population of the area of influence of Velasquez field,
through the articulation and enforcement of contracts and agreements between private companies, state and
community efforts to articulate economic, operational and sustainability to find the social, community, business
and environment.

Specific Objectives

 To maintain good levels of acceptance into the trade by reducing the degree of dependence without
altering the activities.

 To promote social and community development programs through the implementation of community
and institutional strengthening through training and consultancy organization, development and
management of projects involving grassroots organizations present in the area

 To promote social and territorial development through investment in education, health, income
generation and environment using basic mechanisms of institutional cooperation, management and
community participation.

 To promote the establishment of new revenue-generating alternatives to low-income population

through the promotion, promotion, training, advice and strengthening socio-business, as well as
technical assistance and monitoring for each project.

Principles

 Act with full transparency in the activities and tasks in the area of influence in which it intervenes.

 Comply with the consensus reached with the community.

 Respecting cultural diversity, values and autonomy of social groups in the environment.

 Support the social development of communities in the area of influence.

 Respect the legal and social of the Nation, without seeking to replace the bonds.

Corporative social responsibility (CSR) policies

Mansarovar Energy Colombia Ltd., is identified by its commitment and responsibility to the social development
of the region in which forward its activities, the promotion of sustainable development, for environmental
protection and compliance with the commitments on basis of ethical conduct, consistent with all current
regulations and always looking for the common benefit of all its stakeholders.
The social responsibilities are based on the following premises:
 Respect human rights, cultural diversity, values and autonomy of social groups in the environment of
their operations.
 Within the capabilities and competencies required for the operation, and employment opportunities in
general, seek to use the resources available in the region, generating maximum benefits.
 Manage resources to generate positive impact on local development, social respecting the legal system
of the nation without substituting government bonds.
 Respond concerns coming from the neighbouring communities and make continuous efforts to
cultivate cordial relations through open dialogue and cooperation, fulfilling the commitments made to
authorities and communities in a timely and serious.
6 IPTC 16789

Investing in regional development

The purpose of the actions of corporate management, are intended primarily to promote a process that results in
improving the quality of life of the population of the area of influence of the company, while working to build
communities, people and leaders who are development engines, giving them tools to be better able to identify
and seek joint solutions to social problems and needs that afflict them, contributing to the creation of
opportunities, work, growth and progress of the region

Social management lines in MECL

Education
MECL, directs its efforts to lower the levels of illiteracy in their area of influence, to make available to the
habitants programmes to achieve and strengthen their work skills and optimize the quality of the education of
the students by multiple initiatives that seek not only to improve the facilities and the environment in which
classes are developed, but promote comprehensive education, with access to new technologies, encouraging
sports and access to higher education.

Figure 3 and 4: Supporting education

Health
To improve the quality of life of the population and provide comprehensive care, Mansarovar Energy Colombia
Ltd. supports strengthening the local network hospitals and health care centres. It also cares for the promotion
and prevention of health, for which develops brigades and first aid training to the habitants of their area of
influence.

Figure 5 and 6: Health care services

IPTC 16789 7

Institutional Strengthening and Community

MECL works for the benefit of the community, the strengthening of public institutions, the securities and
improve regional developments.
Revenue Generation:
Working together with the community provides support and advice for the development of productive,
sustainable, to promote the improvement of the living conditions of residents, income generation and local
development.
Environment
MECL promotes environmental stewardship, through the creation of a culture of respect and preservation of
natural resources, where the community aware and educated, work for it. Environmental clubs, ecological
management points in both paths as in educational institutions, the development of workshops and talks, help in
this purpose.
Recreation, sports and cultural events
MECL motivates talent socialization, cultural events and the healthy use of free time, which promote
community integration.

Social investment criteria

(a) Community Concentration: MECL, which supports projects involving government, community and public
and private institutions and thus helps local development (b) Social Cohesion: The inversions should aim to
achieve greater social cohesion. (c) Social development: Investment support projects consistent with regional
reality and generate a real social impact and result in a higher number of communities served. (d) Sustainability:
Productive investment initiatives must be viable and self-sustaining. (e) Co-financing: Investments are made on
structured projects of joint participation, where all contribute to the achievement of the objectives and targets
set.

Employment in the region

Mansarovar Energy Colombia Ltd. (MECL), aims to contribute to the progress of the region near its operations
through the use of human resources in the management of their activities and encouraging the participation of
local suppliers and contractors in bidding for provision of goods, works and services development in general.
For MECL, it is vital that companies with which it trades, requites meet the basic supplies needed for service
providers, which revolve around that are legally constituted, have HSE protocols, offering goods or services
high quality and are enrolled in the Single Register of Providers.
One of the exigencies that are made to contractors is the unskilled labour in the region, in the work that advance
with the company and the recommendation to integrate in their recruitment and selection processes to
professionals catchment areas that meet the requirements and job profile.
In 2011, MECL linked monthly to your operation an average of 3609 people during the months of April to
December. Contributing, through its policy foment local employment; improve the living conditions of the
population.

Chart 1: Employment census

8 IPTC 16789

Income generation and business development

Job training and business development: development is a talk of Bee keeping and food safety, dictated by
FEDAGRO (Spanish word), communities interested in this type of process, the public servants involved in the
technical area Umata, estuduiantes University of communities of peace and sidewalks Chucuri swamp and
itching, project beneficiaries Mansarovar supporting beekeeping. The workshop was held in Barrancabermeja
on 20, 21 and 22 of June 2011.

Figure 7 and 8: Bee keeping training

As part of supporting and monitoring the production of food security projects of sidewalks and Cano EI Playon
itching, benefiting 16 families, Company personnel development with technical training: on hanging tomato and
squash seedlings were delivered.
MECL followed the Food Safety productive projects Puerto Zambito and San Rafael de Chucuri, revolving
around the growing and marketing of tomatoes and peppers.

Figure 9 and 10: Growing and marketing tomatoes

They track the project progress Piscicola San Silvestre, conducted in partnership with the Municipality of
Barrancabermeja, the summoning Umata and communal leaders EI Llanito sidewalks and San Silvestre. 25
people benefited.

By Corprogreso Foundation, were followed for productive projects and community organization of the 40
families in the villages of Puerto Zambito, San Pedro de la Paz. Monitoring and control became the nursery San
Pedro de la Paz, where he was given structural orientation and organizational partners, a workshop on
commitment, which received technical assistance in improving the nursery, the design of the work plan and
supported in improving organizational and legal structure of the nursery. Review was conducted and followed
the participants for productive projects and Huertas Caceras Broilers, to whom I teach a workshop on
"Commitment", also were provided with technical support and advice from a veterinarian and an agronomist in
improving their projects which benefited 30 people from the village of Puerto Zambito. It began the project of
laying hens, by FEDAGRO and supported by MECL, benefiting eight families from the village Puerto Zambito.
IPTC 16789 9

Technical advices were followed and to beekeeping projects Mouths Carare sidewalks, gray Swamp Chucuri
and itching, in the latter were given theoretical and practical training and surrendered eight hives, centrifuges,
protective equipment and extraction equipment. 20 people benefited. It provided coordination of development
activities associated with cacao agroforestry project in the community of the village of Vuelta Acuna. 12
families benefited.

Support the management is carried out by the School of Arts and Crafts in the village of San Rafael de Chucuri,
by providing tools and equipment for carpentry and joinery. 25 people benefited. We developed a process of
training, technical assistance and astablecimiento 12 productive units of the farming and broiler levanter,
benefiting 12 families vulnerable sector of San Pedro de Las Vegas, Scimitar Township.

Health and Wellness

Nutrition and development

Mansarovar joined since March the program led from the city administration and that advances the nutritional
recuperation center- “Renacer”, with poor children who are malnourished and who are referred from the
Hospital Cayetano Jose Vasquez, where performed the first part of the treatment.
In association with the Hospital, the Mayor and the institution Renacer, were identified and prioritized needs, for
which the company provides food, educational materials and kitchen, benefiting approximately 200 children in
the municipality of Puerto Boyaca and vicinity.
Mansarovar supports the program because it takes actions consistent with the children and families. Children are
seen in the institution under the care of nurses and nutritionists, until they recover and then return home while
the family group is provided with a monthly market for one year, in order to ensure good quality of food and the
recovery of children.

Also, the institution, taking into account the social and economic characteristics of the families that are part of
the program, working with parents or guardians of children in areas such as domestic violence, bonding and
communication, in order to improve the quality of lives of family members.

Figure 9: Nutrition awareness programme Figure 10: Nutrition awareness programme

Community Integration
They support the community sector and Isla Santa Barbara veredal Carbonero, neighborhoods and Estanco Center Los
Mangos, with Farmer's Day celebration. The city administration gives gifts to support the work of the country people,
benefiting 600 families. Support Fairs Nare Cacique, in the town of Puerto Nare. Recreational activities were organized to
celebrate children Christmas Island veredal sector Carbonero. The contractor PetroTiger workers took care to donate gifts and
recreation. Serinpet company working with MECL, donated 150 gifts to children in the village of the hermit.

Rescuing social and cultural traditions

MECL, support with musical instruments, the development of cultural projects led by the Social Foundation of Peace
Weavers, in its course of action and cultural recovery of traditional musical values which integrates to 120 low-income youth
of Puerto Boyaca. Instruments and sound amplification equipments were delivered to Social Circle Foundation to Strengthen
Peace Weavers program that benefits young municipality of Puerto Boyaca. MECL, support the initiative of the leaders of the
Embera indigenous community Katio Chamu, composed of 39 families, aimed at rescuing their culture, by donating musical
instruments and supplies for the development of handicrafts and fabrics.

Building Dreams: Undergraduate scholarships

As part of its social responsibility policy in line Formento to education, Mansarovar Energy Colombia Ltd., in 2011
expanded the scope of its program of scholarships for undergraduate, driving the development of the area of student academic
of influence of the company who are known for their good academic and socioeconomic conditions which prevent them from
access to university.

It is also the possibility that young people interested in any area of study, not only Engineers can access the program,
increased the number of students per semester quota from two to four and generated a new category, which awards two
scholarships per semester by the value of tuition, students who are studying superiors, requiring financial aid and stand out
for their academic averages.

Contributions to develop the region: Reforming the royalty systems

The economic consideration received by the State for the exploitation of a natural resource is not removable, such as oil and
other kinds of hydrocarbons and minerals, whose production is extinguished over time. In the case of oil, the Colombian
State, receives royalties for the production, for which companies must pay between 8% and 25% of the value of production of
crude extracted directly from the well.

Conclusions

Mansarovar Energy Colombia Ltd., is aware that regional development can only be achieved with the vision and joint efforts
of the state, community and private enterprise, invites the authorities and leaders of the areas of influence of Velasquez-Galan
pipeline and Velasquez field and Nare Association, to contribute to the progress of your region, developing and managing
sustainable projects, social impact, contributing to regional integration and development.

In order to contribute to the respect of the environment and increase our commitment to the social responsibility, all the
reports has been printed with 100% recycled paper that not only preserves the environment, is also part of a chain that
benefits Colombian recyclers and their families.
The line of paper used is environment-friendly, acid free, elemental chlorine free paper and use of post consumed. This
means that for the production of this paper, no trees are cut down, as the paper with the paper as it is already used before.

With the use of recycled paper as raw material reduces consumption of virgin fibre, avoiding the cutting of trees, is also for
every 28 tons of recycled paper avoid cutting one hectare of forest, also decreases the volume of waste, water and energy
saving, preserving the ozone layer and the rivers.
IPTC 16789 11

Contribution made by consuming the recycled papers

Environment
(a) To lower the cutting of trees, which have the function help consume the CO2 generated in the environment. To the
reduction of solid waste generation, favoring the use of landfills and reducing pollutant emissions generated by
incinerators.
(b) To make better use of natural resources which are finite.

Society
(a) To generate new jobs for recyclers and their families by strengthening and improving the quality of life of the locals
and their families.

Reference
[1] Annual reports of Mansarovar Energy Colombia Ltd (MECL). 2011 and 2012.