Wintershall HSE Annual Report 2013 by Wintershall

Promoting Responsibility. Health. Safety. Society. Environmental Protection.

HSE Annual Report 2013.

03 HSE ANNUAL REPORT 2013 content

content. 04

Foreword.

Company Profile.

HSE at Wintershall.

Safety.

Focal Topic: Resources.

Environmental Protection.

Occupational Health.

Corporate Social Responsibility.

Outlook.

At a glance: 2013 KPIs.

Contact.

Imprint.

04 | 05 HSE ANNUAL REPORT 2013 Foreword

Dear Ladies and Gentlemen, The global population is growing. Experts predict that there will be about nine billion people living on the planet in 2050. A growing global population needs energy and natural resources. As such, the availability of and access to resources will become an increasingly important issue in the future. Without these resources, economic growth and the wellbeing of our population is not possible. Germany and Europe must start today in thinking about where they will obtain reliable and, above all, affordable energy in the future. As an industrialized region with a chronic lack of natural resources, it would be foolish to rely only on imports of natural resources, especially crude oil and natural gas. Supply security starts on our own doorstep and in our own market. The North Sea and the countries bordering it still provide more than 50 percent of the natural gas required in the European Union. As Germany’s leading company in the exploration and production of oil and gas, Wintershall will make its contribution to reliably meet the current and future rising demand for oil and gas – by pursuing activities right at the source. And this is how Wintershall will grow too: by developing new sources, producing from existing fields more efficiently, developing and applying innovative technologies and expanding strategic partnerships. Since fossil fuels are limited, and their use on a global scale has an impact on the environment and the global climate, it is crucial to manage them efficiently and use them in a responsible way. So far only about one third of the oil available in all the reservoirs around the world is actually being extracted. But with innovative and environmentally friendly technologies, one of our core areas of expertise, we can produce more effectively and on a longer term. In this sense, managing resources responsibly begins with production from existing reservoirs. Our activities in Germany that take place within a framework of stringent geological and legal requirements, are the center for innovation. Domestic production provides a breeding ground for new technologies which we can harness to boost our reputation worldwide and attract international energy partnerships. For example, Wintershall is involved in sour gas research in the United Arab Emirates – thanks to the know-how it gained from decades of production in Lower Saxony. The Arab region still offers a great deal of potential; about 70 percent of the world’s crude oil and natural gas reserves lie there. A continuously growing global market depends on being able to use these reserves. They provide balance and stability.

In 2013 we stepped up our activities at the source, first and foremost with new projects in Norway, Argentina, Russia, Germany and the Middle East. We were also very successful in our traditional countries such as the Netherlands. In all our activities, health, safety, security, sustainability and environmental protection (HS3E) are always our top priorities. When it comes to occupational safety and health protection, we continue to pursue our ambitious target of zero incidents in all our activities. The track record of the Wintershall Group remains very good in this area. A particularly positive development is that incidents among our contractors have almost halved. Yet we still see room for improvement, as the incident numbers among our own employees have risen. Again and again we see the importance of safety-conscious conduct at the workplace. Each and every member of staff must assume responsibility for their own safety and health – and for that of their colleagues. Henceforth we will work even harder to raise this awareness among our employees. One outstanding example of a proactive attitude is the development of a safe transport system for gas cylinders developed by our staff at the Rehden site. Their commitment was not just recognized internally: after having won an award by the Berufsgenossenschaft Rohstoffe und chemische Industrie (BG RCI), the professional association of the natural resources and chemicals industry in Germany, the innovative system won the prestigious German Occupational Safety Prize in 2013. In October 2013 we took over the offshore oil production field Brage as operator from our partner Statoil. This platform off the coast of Bergen is the first production platform operated by Wintershall Norge. Here we want to build on 20 years of safe operations. The integration of proven safety standards into our own HSE concepts was one of the key requirements for a smooth takeover. The challenges related to environmental protection and the advantages of structured environmental management were among the themes discussed by internal and external experts on a stakeholder workshop on the subject of sustainability to which Wintershall invited in 2013 for the first time. For us, taking ecological and societal concerns into account is a prerequisite for the long-term commercial success of our business. In this spirit, we completed the renovation and renaturalization of the last plant landfill site in Germany. The site was converted into a grass landscape with water areas and gravel stone islands. An energy management system in accordance with ISO Norm 50001 was launched at the production sites, the

natural gas storage facilities in Rehden and Jemgum as well as the administrative offices in Barnstorf. Our commercial success in 2013 was the confirmation of our efforts. Sales improved in 2013 by 16 percent to 14,776 million euros compared to the previous year. 2,929 million euros of this came from exploration & production and 11,847 million euros in natural gas trading. Despite the production stop in Libya, the crude oil and natural gas production stayed with 132 million barrels of oil equivalent (BOE) on the level of the previous year. We intend to build on this in 2014. Despite all the changes, our goal is to maintain our operational standards at the highest level possible. For me, this means first and foremost HS3E. You will find more information in this report, which focuses on the issue of natural resources. It also contains a summary of our activities in the area of health protection, safety, sustainability and environmental protection in 2013 as well as our key performance indicators. It is our competent, extremely motivated, innovative, and, most importantly, healthy staff that has made our company’s success possible. Their health and safety are the very foundations of our work! We must and will devote the greatest attention to both in 2014, for health and safety are of utmost priority. We will make every effort to ensure that the employees at Winters hall continue to have the best and safest working conditions in the future. I am confident that together we will master the challenges of the future and will achieve our goals. Our focus is on a secure and sustainable future. Therefore in the days and weeks ahead our thoughts are constantly with our colleagues in Libya – we wish them the strength and persistence to continue shaping the future of their country. I firmly believe that with patience and trust, Libya will find its own way. Wintershall – Promoting responsibility.

Rainer Seele Chairman of the Board of Executive Directors

06 | 07 HSE ANNUAL REPORT 2013 Company Profile

Core regions and activities. Wintershall Holding GmbH, based in Kassel, is a wholly owned subsidiary of BASF in Ludwigshafen and has been active in the exploration and production of crude oil and natural gas for over 80 years. Wintershall deliberately focuses on selected core regions where the company has a high level of regional and technological expertise. These are Europe, North Africa, South America and Russia. In addition, these operations are complemented by the company’s growing exploration activities in the Middle East. Winters hall employs around 2,500 staff worldwide from 40 nations and is now Germany’s largest crude oil and natural gas producer with worldwide operations.

South america

Russia Europe Germany Middle East North africa

08 | 09 HSE ANNUAL REPORT 2013 HSE at Wintershall

HSE at Wintershall. Our philosophy.

We assume responsibility â&#x20AC;&#x201C; for people and the environment. Values, standards and guidelines serve to protect the public and the environment, however, first and foremost, also our most important resource: our staff. Our aim is to create the best possible working conditions for our employees as well as opportunities for personal development, enabling them to realize their potential.

Policy. Wintershall has laid down its position on HSE in a policy. Our HSE policy is a core element of how we see ourselves and an important embodiment of the key objectives of our company.

Policy for Health, Safety and Environment Protection (HSE). As an important member of the BASF Group, Wintershall operates in the area of exploration and production of oil and gas. In this Wintershall combines financial success with societal accountability and protection of the environment. Therefore Wintershall’s management is strongly committed to adhere to the following HSE-principles: ■ We view HSE as an integral part of all our activities and strive for continuous

■

■ ■

improvement of our HSE performance. As a contribution to this we set our-selves ambitious goals and develop tailor-made HSE-solutions. We are convinced: “Everybody counts.” – Everyone working within the Wintershall organization contributes to the implementation of this policy through well-thought-out and dedicated action. This is equally valid for contractor companies of Wintershall. We are going to perform our worldwide activities in such a manner, that we fulfill our societal responsibility, especially concerning our employees, contractor employees, our neighbors and the general public. We rise to our responsibility for the global climate protection. We pledge ourselves to adhere to international conventions, the local laws and our self-set standards while performing our worldwide activities.

Economic success does not prevail over health, safety or environmental issues. Nothing is so urgent or important, that justifies neglecting these HSE principles. The Board of Executive Directors

Seele

Bachmann

Tiessen

König

Mehren

10 | 11 HSE ANNUAL REPORT 2013 HSE at Wintershall

Systematic HSE – Successful and safe. 4 steps – 12 elements

HSE management system. Our HSE Policy is not an empty promise: it is fully integrated in all our activities. Our HSE management system ensures that all our principles for protecting health, the environment and occupational safety are adequately taken into account. Our intelligent HSE management system helps us to reliably achieve what we really believe in: combining commercial success with safety standards, social responsibility and environmental protection. Thus, in the planning, development, implementation and monitoring of our HSE Policy we work according to an internationally recognized standard often used in the oil and gas industry – known as the 12-element model. These 12 elements are then grouped into four steps. The result is a consistently effective way of implementing our HSE Policy.

Well-planned 1. Policy, leadership & commitment 2. Hazards, risks, legal & business requirements 3. Objectives, targets & HSE Programmes

Implemented 4. Organisation structure, roles & responsibilities 5. Training & competence 6. Communication & consultation 7. HSE MS documentation 8. Operational control 9. Emergency preparedness & response

Notified We are constantly striving to improve the company-wide HSE management system (WINS) by conducting an intensive experience exchange and dialog between experts from the headquarter, Operating Companies (OPCOs) and Business Units (BUs) at Wintershall’s global locations through our involvement in committees of the International Association of Oil and Gas Producers (OGP) and national associations such as the German oil and gas industry association, Wirtschaftsverband Erdöl- und Erdgasgewinnung e.V. (WEG).

10. Incident reporting, investigation & corrective action 11. Monitoring & measurement

System improved 12. Management review & system improvement

Management. Project management.

Incident management.

Wintershall has many years of experience in developing reservoirs that are difficult to access and are geologically challenging. Hence, every new exploration project places high demands in terms of planning. Above all, exploration in unknown regions requires particular support for the employees and contractors on the ground. That is why HSE experts support the project teams from an early stage.

Wintershall promotes safety at work through risk assessments, procedures, seminars, training courses and audits. Reporting and investigation of incidents plays a key role in prevention and helps increase the standard of safety even further. Wintershall has established a reporting system that includes all locations worldwide. Detailed analysis of incidents helps to identify and assess their causes. Incidents where there was a high severity potential are also investigated. The results are used to derive measures to prevent incidents in future.

Apart from feasibility studies for a project, examination of environmental and safety aspects is an integral part of planning. This includes environmental impact studies and process safety analyses, as well as selection of contractors on the basis of HSE considerations. During advance expeditions to the exploration area, risks are identified and suitable measures to minimize them are defined and summarized in an HSE project plan. Safety engineers regularly supervise and control activities during the execution phase. Emergency concepts formulated at the outset are constantly reviewed and adapted as necessary. Compliance with the relevant regulations and HSE standards is ensured also in the operating phase. All projects at Wintershall are planned and carried out according to the same HSE procedures.

Contractor management. Many projects in the oil and gas industry are unimaginable without the support of external experts. That is why Wintershall uses contrac tors in various areas, including large specialist firms to conduct drilling campaigns, construction companies in infrastructure projects or smaller subcontractors at the administrative locations. Wintershall’s selection criteria for contractors are not limited to commercial aspects. Environmental protection as well as occupational health, safety and social standards are also taken into account in assessing new and existing contractor relationships. With regards to compliance with HSE standards, the Wintershall Group places the same high requirements on its contractors as on its own employees. Consequently, the company applies strict criteria in the selection of contractors and reviews these criteria regularly.

Crisis management. Wintershall’s HSE management system purpose is to prevent incidents. However, in order to be able to respond to unexpected events, Wintershall has a clearly defined and interdisciplinary crisis management system. Only a planned and organized approach ensures the best-possible prevention and management of emergencies. Emergency plans, regular safety exercises and annual drills for major incidents aim to ensure an ideal response. Training courses help sensitize and prepare employees. HSE experts and management are responsible for drawing up, maintaining and supervising the measures and documentation for emergency planning.

12 | 13 HSE ANNUAL REPORT 2013 HSE at Wintershall

Our activities. The exploration, production and transport of crude oil and natural gas always also entails an intervention in the social and natural environment that requires particular care. Even before we start our operations, we assess the potential impact on people and the environment, taking social aspects and the protection of cultural heritage into account. We are constantly working on improving all our processes to use resources even more efficiently and further minimize the impact on people and the environment.

Acting sustainably. No Flaring Policy.

Clear focus on the 2020 environmental target.

An example of our work to protect the environment and the climate is our “No Flaring Policy.” As part of this policy we have committed to stop flaring associated gas by the end of 2012. Existing facilities have been retrofitted to accommodate this objective and new facilities are designed with integrated associated gas utilization. This saves around two million tons of CO2 a year. Consequently, Winters hall meets the highest international standards for environmentally friendly oil production.

Our goal is to achieve a 10% reduction in carbon emissions in the natural gas transportation business – calculated by amount and distance of transported natural gas – by 2020 compared with baseline 2010. With the help of more energy-efficient pipelines and the more intense use of waste heat in the transportation network, we were able to reduce carbon emissions by around 9% in 2013 (2012: a reduction of 22.1%). The year-on-year increase in specific emissions was the result of nonoptimal capacity utilization for the pipeline compressor stations.

Voluntarily self-committment. Environmental protection statement.

Setting standards.

A mission statement substantiates the environmental protection guidelines from the Wintershall Group’s HSE policy. It illustrates just how important environmental protection is for Wintershall and governs the company’s environmental management through detailed guidelines. The aim is to minimize environmental impacts. We protect sensitive habitats and preserve biodiversity. To do that, we employ environmentally friendly and efficient technology and methods and promote innovative research and development. As part of our business processes, we rely on suitable methods such as environmental impact assessments, inspection, risk analyses, monitoring programs, management reviews and audits. And we ensure that our communication is transparent and open.

Wintershall works according to the highest safety, environmental protection and transparency standards as a matter of principle. As part of a voluntarily negotiated agreement, Wintershall forgoes the use of drilling and fracking technology in sensitive regions such as water protection areas. We also limit our drilling activities to a few central well sites so as to use as little land space as possible. We do not use hydraulic fracturing in the immediate vicinity of old coal and other mines. The hydraulic fracturing liquid we use for fracking does not exceed the currently applicable water hazard classification level 1 (= slightly hazardous to water). The integrity of our wells’ casing is regularly tested. The safety standards formulated by Wintershall also apply to all contractor companies.

in Discussion

Corporate HSE Manager Guido Schnieders talks about the current and future requirements in the area of health, safety and environmental protection.

Change is an opportunity. Which challenges did we face in 2013?

In Norway we employed around 300 new staff. Which challenges did this bring with it?

Wintershall is going through a period of transition. The company is focusing on its exploration and production activities so that it can continue to grow at the source. In order to do so, in 2013 some important steps were initiated, for example taking over operatorships in Norway and Argentina for the first time. More exploration and production, more Wintershall-operated projects and more employees also mean greater requirements in terms of health, safety and environmental protection. The risk of unwanted incidents increases when projects are not adequately prepared and new staff is not sufficiently integrated.

All the new staff had to be acquainted with and trained in the pro active safety culture of Wintershall quickly. A training department to ensure these training requirements were met was set up especially for this purpose. Our objective is that all the staff – new and old, internal and contractors’ staff – really internalize the fact that when it comes to occupational health and safety, everyone counts. After all, if each and every member of staff pays attention to his or her safety as well as that of their colleagues, the risk of accidents automatically diminishes. Naturally, the same principle applies to all the locations where we are growing.

What exactly does that mean?

Which tasks are ahead of us next year?

Wintershall took over the Norwegian platform Brage while operations were ongoing – and it did so safely and smoothly. To achieve this, the platform had to be integrated into our HSE concept. Prior to the takeover we analyzed the safety and environmental systems down to the last detail and drew up emergency concepts and risk analyses. One particularly challenging aspect was merging the IT systems, which are critically important for the safety of the platform. Major drills on the high seas were also part of the preparations. In Argentina we began seismic activities in a region that has so far barely been developed. To do so we had to strengthen our HSE capacities there and develop tailor-made concepts.

More change is on the horizon. In 2014 we will participate in two additional blocks of the Achimov formation in Siberia, where we intend to develop natural gas and condensate deposits together with Gazprom. Our know-how in the field of environmental protection is particularly sought-after there in addition to our technical expertise. In return Gazprom is taking over our shareholdings in the natural gas trading and storage businesses. We have been engaged in an intense dialog with Gazprom so that we can hand over our HSE concepts to our partner. In doing so, we can build on the existing cooperation between our two companies that goes back more than 20 years.

14 | 15 HSE ANNUAL REPORT 2013 HSE at Wintershall

German Occupational Safety Prize for innovative transport system. Innovative ideas that improve safety in daily working life are not just rewarded internally at Wintershall: in 2013, a system for transporting gas cylinders easily and safely won the prestigious German Occupational Safety Prize, which is awarded by the Joint German Occupational Health and Safety Strategy (GDA) of the German government, the federal states and statutory accident insurance institutions. The innovative system is a combined holding, loading and transport system that is firmly attached to the transport vehicle. It has been developed by a team of four at the site in Rehden. Before then, the loading and transporting of the gas cylinders, which can weigh up to 80 kilograms, brought some risks with it. The cylinders needed two people to carry them and because of their round shape and smooth surface, they could easily slip out of your hands. With the new system, which won the German Occupational Safety Prize in the category “Product Solutions with Large Companies”, just one person can carry out the loading and unloading safely and without straining the back. Since the gas cylinders are tipped onto the loading bay, only about one quarter of the weight actually needs to be lifted. The cylinder is moved onto the loading area via a track system, where it is locked into place for transportation. It wasn’t the first time the one-man transport system from Winters hall had been awarded. The development already won a prestigious occupational safety award in 2012, the incentive award of the professional association of the raw materials and chemicals industry in Germany (BG RCI).

German Occupational Safety Prize The German Occupational Safety Prize is awarded every two years to companies that demonstrate a particularly high level of commitment to the health and safety of their employees. The jury looks for clever concepts and processes or innovative products and technologies as well as measures that improve occupational safety in German companies effectively, thus encouraging other companies to follow suit.

Category: Product Solutions with Large Companies

16 | 17 HSE ANNUAL REPORT 2013 Safety

SAFETY. ALWAYS THE NUMBER ONE PRIORITY.

Our employees’ safety is Wintershall’s top priority – whether they are our own employees or contractors. Responsibility, a pro-active approach and personal commitment from everyone are vital to ensuring a high safety standard in the long term. Our managers take on responsibility for their employees so that every single one of them feels safe at work and returns back home healthy. The same applies to our contractors, who have to meet strict requirements but are also actively supported in their HSE work.

Safety first.

18 | 19 HSE ANNUAL REPORT 2013 Safety

Key Performance Indicators for Occupational Safety. All the data presented in this report and bases for calculations are in line with national and international standards in the E&P industry. As a member of the International Association of Oil and Gas Producers (OGP) and the German oil and gas industry association, Wirtschaftsverband Erdรถl- und Erdgasgewinnung e.V. (WEG), Wintershall uses the definitions of both internationally recognized associations when compiling data. 2013 was characterized by major change in our company. Still the accident figures remained at a similar level to the year before. Nevertheless, it remains imperative that we sharpen our focus on occupational safety, especially among our own employees. The accident figures for our own employees reached the highest level since 2005, with five incidents with lost time. The lost time injury frequency (LTIF) rate among our own employees thus rose from 0.20 to 0.97 compared to the previous year. There was a positive development in the figures for contractors. The number of accidents among contractors almost halved compared to 2012. The injury frequency rate among contractors fell from 1.48 in 2012 to 1.01. This is mainly attributable to the contractor management measures that have been successfully implemented in 2013. Overall there were eleven incidents with lost time in 2013 (own employees: five, contractors: six). This led to a slight rise in the overall lost time injury frequency from 0.93 in 2012 to 0.99. To ensure the continued early identification of weak areas and possible areas for improvement, in July 2013 two new performance indicators for HSE have been introduced. They report the sum of all

incidents (Total Recordable Injury Cases = TRIC) and the total incidents frequency (Total Recordable Injury Rate = TRIR). This includes lost time incidents (LTI), fatal accidents (FAT), incidents that require a restricted work case (RWC) and medical treatment cases (MTC) per million hours worked. The number of Total Recordable Injury Cases (TRIC), which include minor incidents, was 46 (own employees: 12, contractors: 34). That gives a Total Recordable Injury Rate (TRIR) of 4.14 overall (own employees: 2.33, contractors: 5.70). Wintershall is one of the most successful companies within BASF and in the German E&P industry in terms of occupational safety. A strong safety awareness takes top priority in the company. Our goal is to avoid any sort of incident in 2014. With enhanced standards and even greater commitment, we are striving to continuously improve the high level of safety and our performance. We are intensifying our efforts to create a proactive safety culture and are promoting a strong sense of responsibility among our employees. This culture is supported and practiced by the management and the staff. Regular training contributes to accident prevention and strengthens the knowledge of our employees about what to do in emergencies. In 2013 numerous large-scale drills were carried out worldwide across the Wintershall Group. These included several emergency drills on the newly acquired Norwegian platform Brage as well as the annual emergency drill for major incidents at the natural gas storage facility in Rehden. A large-scale fire drill was also repeated at the operations in Barnstorf. 110 members of the voluntary fire brigade in Barnstorf and the Wintershall fire department proved their capabilities in this exercise.

Wintershall

Contractors

Year

2013

2012

2013

2012

Number of employees*

2,416

2,021

2,821

3,136

5,141,799

5,094,822

6,019,021

6,753,346

Fatal accidents (FAT)

Incident with > 1 day lost (LTI)

Lost Time Injury Frequency per million working hours (LTIF)

0.97

0.20

1.01

1.48

Total Recordable Injury Cases (TRIC)

2.33

1.77

5.70

6.38

Working hours

Total Recordable Injury Rate per million working hours (TRIR)

*Excluding temporary employees; part-time employees pro rata.

20 | 21 HSE ANNUAL REPORT 2013 SAFETY | ACTIVITIES

Occupational safety worldwide: OUR Activities in 2013.

Germany.

Drills to maximize fire protection. 12 percent of Germanyâ&#x20AC;&#x2122;s natural gas requirements and three percent of its oil requirements are covered by domestic production. Wintershall is committed to domestic production â&#x20AC;&#x201C; which is often technically demanding â&#x20AC;&#x201C; and uses the expertise it has gathered over many decades to tap into new sources and enhance the yield from production. The highest possible standards are applied to the production, storage and transport of crude oil and natural gas in order to exclude risks to the environment, people and the plants. Fire protection plays a crucial role in the safety of the plants. Technical devices and training for the staff ensure the highest possible level of safety. Regular drills at the sites also ensure that internal processes for emergencies are practiced and constantly improved. The drills also offer the opportunity to improve the interaction with external emergency services as well as their site knowledge. Hence, the planning and organization is done in close consultation with the management level of the local fire brigades. In 2013, two large-scale drills took place, one at the natural gas storage facility in Rehden and the other at the site in Bockstedt. The drill scenarios were designed to be realistic and complex in order to enhance the effectiveness of the training. For instance, the company fire department and the local fire brigade had to rescue injured people and people in danger as well as fire-fighting. In both drills the cooperation between the different rescue forces worked without a hitch, and all the tasks were performed quickly and successfully.

22 | 23 HSE ANNUAL REPORT 2013 SAFETY | ACTIVITIES

Norway.

Well-prepared: Wintershall takes over the Brage platform. In autumn 2013, Wintershall took over operatorship of the Brage oil field on the Norwegian Continental Shelf. The Brage platform lies off the coast of Bergen and is the first production platform to be operated by Wintershall Norge. As such, Wintershall now covers the entire E&P process in Norway: from exploration to drilling activities, as well as development and the subsequent production of crude oil and natural gas discoveries. The company intends to build on the plant’s 20 years of safe operations. One of the building blocks of this continuity was the decision by the majority of the platform staff – hitherto employed by the Norwegian state-owned company Statoil – to move over to Wintershall.

Prior to the takeover Wintershall analyzed the existing safety concepts thoroughly and integrated them into its own HSE management system. Preparations included three emergency drills on the high seas, which were carried out together with Statoil. During the drills various scenarios were simulated and participants practiced the evacuation of personnel. The alarming chain of command was made up of an emergency team on board the platform, the emergency protection organization OFFB, as well as the Strategic Headquarters, which was manned by Wintershall Norway. The entire drill was conducted in close coordination with the crisis team at the headquarters in Kassel. The excellent cooperation between all those involved – not just HSE – during the entire integration process ensured a good and smooth transition.

Excellent cooperation.

24 | 25 HSE ANNUAL REPORT 2013 SAFETY | ACTIVITIES

Libya.

A front-runner in HSE. Wintershall Libya is at the fore when it comes to health, safety and environmental protection. Wintershall ensures the integrity of its production facilities by regularly inspecting all its facilities in the Libyan Desert. In May 2013, the plants in concessions C96 and C97 were temporarily shut down, serviced and certified for the coming years. In addition, some modifications for anticipated future developments were made, such as the installation of additional valves for the planned expansion of the facility in As-Sarah. Extensive planning was necessary in order to guarantee the safety of the staff and the facilities at all times, and also to minimize the production losses caused by the shutdown. All the trades and contractors were involved in the preparations, which already began a year before the general maintenance took place. In September 2013, Wintershall won the HSE Award of the Libya Oil & Gas Forum for its excellent work in the area of HSE. This economic forum is considered one of the most important in the country.

The jury said one of the reasons for awarding the prize to WintersÂ hall was the low incident rate of the company. Aside from the medical check-ups offered as part of the diabetes and cholesterol screening campaign, they also praised the companyâ&#x20AC;&#x2122;s new recycling system: at the site in Jakhira, waste is separated and collected. Materials that are not suitable for incineration, such as pressurized gas containers, tires, metals and glass, are either shredded or compacted and later picked up by local companies to be recycled. The remaining waste, such as dry food leftovers, wood and paper, is incinerated in a low-emissions process with temperatures of up to 1,400 degrees. This model is unique in the E&P industry in Libya. The recycling plant created jobs for local workers. At the same time it can help to further improve environmental awareness among the local population. On 9 November, Wintershall Libya celebrated a special date: it was the 1,000th day in a row where there were no incidents with lost time.

Sour gas Natural gas that contains hydrogen sulfide and carbon dioxide is called sour gas. Both elements are highly corrosive and can attack production facilities and pipelines if they do not have special protection. Hydrogen sulfide is poisonous even at low concentrations.

Abu Dhabi. Secure growth in the Middle East. Preparations for the first exploration well in the Shuwaihat field in Abu Dhabi were completed at the end of 2013. The natural gas deposits here contain so-called ‘sour gas’. This gas, which is known as sour gas because of its sour sulfur smell, asks for high standards in terms of materials, technology and HSE. Wintershall has many years of expertise in the safe development of sour gas deposits. It has gathered experience in Germany since as far back as 1961. Drilling equipment specially designed for sour gas is being used for the technical evaluation of the Shuwaihat field, which also contains condensate. The rig’s pipes are made of highresistance steel. There are also a number of gas detectors and shutoff valves installed to exclude the possibility of an uncontrolled leakage of hydrogen sulfide. The safety concept also includes extensive risk analyses, training for the drilling personnel, equipment specifications and emergency plans. A prohibited zone was set up all around the well to make sure no unauthorized persons were put at risk. Up to three exploration wells are planned by 2017. If the results of the wells are positive, commercial development of the Shuwaihat field could begin thereafter. All the production facilities would then have to be adapted to the characteristics of sour gas. For example,

a cleaning plant would filter off the hydrogen sulfide using a solvent. This could then be converted to pure sulfur, which is used as a raw material to make pharmaceutical products and fertilizers.

Qatar. Valuable discovery – without incidents. Wintershall discovered natural gas off the coast of Qatar. Around 70 billion cubic meters of sour gas are stored there about 70 meters under water. This is the first new gas find in the emirate for more than 40 years. The drilling and test phase was completed without any incidents with lost time. Wintershall has been active in Qatar for more than 30 years. In 2008 it signed an agreement on joint exploration and production in Block 4 North with Qatar Petroleum. This block is in the direct vicinity of the North Field, the largest natural gas field in the world. Wintershall, which will be the operator, will not only contribute its technical expertise to the forthcoming audit of a possible economic development of the find, but also its HSE competence.

26 | 27 HSE ANNUAL REPORT 2013 SAFETY | ACTIVITIES

Safety with HSE standards.

Argentina.

Environment study paves the way to seismic survey. Aside from the lively metropolis Buenos Aires, Argentina is particularly well known for its fascinating and seemingly unending landscapes. In the province of Mendoza, Wintershall has conducted a seismic survey in order to gain a precise image of the exploration block CN-V. The region is sparsely populated, with about ten people per square kilometer living there. Set against the backdrop of the plains and mountains, the seismic trucks seem like small toy cars. The purpose of the seismic survey is to investigate the potential of unconventional hydrocarbon reservoirs in Argentina. The region being surveyed, exploration block CN-V in the NeuquĂŠn Basin, lies in the south of the province of Mendoza, a remote and barely developed area. That presents particular challenges in terms of HSE. In preparation of the activities, a comprehensive environmental study was carried out and submitted to the authorities. The study

includes an evaluation of the environmental and socio-cultural influences of the activities as well as suitable measures for preventing and minimizing any potential effects of the project. Landowners there were informed extensively about the project before the seismic campaign began. In order to ensure the necessary HSE standards were being met, Wintershall evaluated the HSE management of the main contractor, including the way they address the risks during field activities. In addition, an HSE plan and a special emergency plan were developed together with the contractor. Among other things the local hospital was involved in this process and its medical services were being evaluated. Information on potential health risks related to the activities were also provided. Two fully equipped ambulances accompanied the teams on site during the project. Furthermore, rescue and emergency drills were conducted regularly.

28 | 29 HSE ANNUAL REPORT 2013 Natural resources

Natural resources. Sustainable use.

For a long time, the end of fossil fuels seemed to be drawing near. Yet, the more the transition to renewable energies progresses, the more it becomes clear that we cannot get by without oil, gas and condensate in the future either. This makes managing these resources in a sustainable manner increasingly important.

Conserving resources.

30 | 31 HSE ANNUAL REPORT 2013 Natural resources

How fossil fuels keep the world moving. Crude oil, natural gas, and gas condensate are some of the most important fuels in the world. Oil in particular is used in many more ways than just as a fuel. At the same time, new and often contradictory forecasts on potential reserves and resources keep on appearing. What future do fossil fuels have? Marion King Hubbert was one of the leading oil experts with Shell in the 1950s. The geologist developed the peak oil theory that is named after him – the Hubbert Peak Theory. He forecast that the maximum production volume would be reached in 1995. However, reality has disproved Hubbert’s theory. Discoveries of new reservoirs and the continued development of production technologies have forced the experts to continuously adjust their forecasts. In particular, the use of Hydraulic Fracturing has enabled the United States to become independent from gas imports. Just ten years ago, the energy-hungry state imported more than one-third of its gas requirements. In other words, the end of oil and gas production is not yet in sight. But one thing is certain: the reservoirs will be

Marion King Hubbert, US-American geologist and geophysicist (1903-1989).

depleted one day. Currently four times more oil is consumed than the volume discovered in new sources. This is why we should use our existing resources sensibly. At present, more than half of the oil used globally is consumed in road, air, and sea transportation. More than 97 percent of the global transportation industry uses diesel, kerosene, or gasoline as fuel. The chemical and pharmaceutical industries would be happy if cars and trucks were soon to use natural gas and electricity rather than gasoline. This is because most chemical products can be developed from about 300 basic chemicals. Ninety percent of these molecular compounds are currently recovered from natural gas and – above all – from crude oil. Because the price of oil has remained high for so many years, the chemical industry has also been looking for substitutes. For example, Wintershall’s parent company, BASF, recovers vitamin B2 from vegetable oil to which a fungus is added. Recovering this vitamin from crude oil would be much more costly. However, considering the many different applications for oil-based

The exploration well “Düste 7” makes a discovery on 12 November 1952 and is being renamed as “Aldorf 1”.

Historic Barnstorf derrick – in 2014 Wintershall celebrates 60 years of production.

90 millions

of barrels of crude oil are being used each day worldwide.

2035

the worldwide energy consumption will increase by one-third.

50 percent

less carbon dioxide is produced in the combustion of natural gas compared to brown coal.

substances, biotech processes at present offer a practical alternative only in very few cases. But another technical development – one in which BASF is also involved – has the potential to revolutionize the chemical industry. Scientists are researching a method to produce plastic from methane. This puts the focus more on natural gas as a natural resource.

power plants (CHP) are increasingly being built to supply district heating to surrounding households in addition to generating electricity. At present, the combustion of natural gas produces 20 percent less carbon dioxide than oil – and only half as much compared to brown coal (lignite). That is an important step towards decreasing CO2 emissions.

Natural gas also plays a key role in future energy policies. New production methods enable access to large deposits from unconventional reservoirs. The International Energy Agency (IEA) estimates that worldwide energy consumption will increase by one-third by 2035. While the share of oil will gradually decline, the importance of both renewable energies and natural gas is set to increase.

It seems that the E&P industry will still have an important role to play in the future. Oil and gas are available in the long term. The natural resources are needed, it is only their areas of application that will change. In the short to medium term, oil will be only partially replaced as a fuel through new drive systems. As a fuel for heating homes, it will gradually be replaced by other forms of energy. But oil will remain an important basic substance for the chemical industry. Gas can substitute oil as a heating and automotive fuel. In the future, industrial nations will need intelligent strategies to handle these valuable natural resources. They will no longer be able to afford to simply burn gas and oil as they did in the past – neither from ecological nor economic perspectives.

In the long term, the energy turnaround in Germany will also be inconceivable without gas-fired power plants. The flexible, efficient turbine power plants balance out peaks in consumption and are an alternative to solar- and wind-powered systems that are heavily reliant on specific weather conditions. In the US, combined heat and

32 | 33 HSE ANNUAL REPORT 2013 Natural resources

Demand for energy continues to rise. 2010

13 22

2035

6 12730 Mtoe

18 17200 Mtoe 24

■ Oil ■ Coal ■ Gas ■ Renewable energy ■ Nuclear energy ■ Information in percentage terms

According to the International Energy Agency (IEA ), global demand for energy will rise by more than a third by 2035. Some 60 percent of this growth will come from India, China, and the Middle East. Renewable energies will overtake nuclear energy. But fossil fuels will still dominate the energy mix in 20 years. While the share of coal and crude oil will decrease slightly, natural gas will become ever more important. 1.3 billion people still have no access to electricity – despite global technological progress. Three quarters of them live in just ten countries in Asia and sub-Saharan Africa. The IEA estimates that investments of almost one trillion US dollars are needed to give access to energy to everyone by the year 2030.

Reserves, resources and potential. Reserves are defined as proven quantities of natural energy resources that can be commercially developed at today’s prices and with current technology. Resources are defined as proven energy resources that cannot currently be recovered technically or economically, as well as energy resources that are not proven, but that are geologically possible and recoverable in future. When the reserves and the resources are added together, they are described as the remaining potential. The overall potential is the accumulated total from production, reserves and resources.

Crude oil. A diverse natural resource, for diverse purposes. As an unrefined natural product, oil is made up of more than 17,000 elements. It is divided into the following classifications: extra-heavy crude oil or bitumen, heavy oil, light oil and condensate. The API gravity (API: American Petroleum Institute) is the usual measurement of the density of crude oils. It is used worldwide to characterize crude oil and as a quality standard. The lower the API gravity, the heavier the oil and the more difficult the refinement process. Hence, heavy oil must first be turned into light oil. Only then is it possible to produce the end products, such as diesel, gasoline or petroleum. Crude oil is the most important raw material for the mobility sector, but also for the chemicals and pharmaceutical sectors.

Bitumen 10 °API

Heavy oil

Light oil

20-25 °API

Condensate

45 °API

Condensate. Light, low in sulfur and easy to process. Condensate is included in the category crude oil and can be described as an extremely light form of crude oil. It can be processed in refineries just like regular crude oil. The processing of condensate is even simpler than for normal or heavy oil. Gas condensate contains hardly any sulfur and has a low density. High-quality gasoline, jet, diesel and heating fuels are made from gas condensate. The petrochemical processing of condensate refers to the production of aromatic hydrocarbons, olefins and other monomers (small molecules) that are used in the production of plastics, synthetic rubber, fibers and resins.

ºc

bar

How condensate is formed. There are not just gas fields in the earth’s interior, but also gas condensate fields. When the pressure and the temperatures fall after a well has been drilled, it creates gas condensate – a mixture of liquid hydrocarbons that have separated from gas.

Natural gas. in kg CO2 /kWh fuel input (Hi)

Low emissions, great potential.

0.3 0.2 0.1

Gas

Heating oil Heating oil Hard (light) (heavy) coal

Lignite

Climate-friendly. Natural gas is the fossil fuel with the lowest CO2 emissions. It can replace energy carriers such as coal and oil, which are more harmful to the climate, in many applications.

The main element of natural gas is methane (CH4) – an organic compound consisting of carbon and hydrocarbon atoms. Usually natural gas contains heavier hydrocarbons too, methane homologs: ethane (C2H6), propane (C3H8), butane (C4H10) and some non-hydrocarbon admixtures. Natural gas is used first and foremost to generate electricity and heating. But it is also used as a fuel and in the chemicals industry, for example to produce fertilizers and paints. Natural gas could also become more important for the manufacture of plastics. Researchers from Berlin’s Technical University are trying to make the very valuable material ethylene from the main component of natural gas. If they succeed on a large scale, natural gas could replace crude oil, which has hitherto been the key ingredient in this field.

34 | 35 HSE ANNUAL REPORT 2013 Natural resources

The biopolymer Schizophyllan as an example for EOR. The origins It all begins with the fungus Schizophyllum commune, which can be found on coniferous and deciduous wood in every forest all over the world.

In the lab The white cotton wool-like part of the fungus is of interest to researchers at Wintershall and BASF, since it produces the biopolymer Schizophyllan. The brown fruiting body merely serves for reproduction.

Production Schizophyllan is produced at BASF in Ludwigshafen. The fungus and sugar are stirred in a fermenter and aerated with oxygen, which creates the biopolymer.

Transportation The thickening agent is transported to Bockstedt in special tank trucks. Just under one percent of this stock solution comprises Schizophyllan.

A toolbox for enhanced oil recovery. Fossil fuels are finite, and yet the deposits we do have are not being exploited anywhere near to their full potential. Indeed, all around the world, only about one third of the oil in place in the reservoirs is being extracted. But the recovery rate can be increased using special techniques. They make it possible to produce more effectively and to extend the production lifetime of a reservoir. Technologies that improve the extraction of oil, also known as Enhanced Oil Recovery (EOR) techniques, are one of Wintershallâ&#x20AC;&#x2122;s main areas of expertise. Environmental protection and environmental sustainability also play a key role in EOR.

Schizophyllan. This is a completely natural and organic thickening agent produced by a fungus. The gel-like substance can be used to thicken the water that is injected into the reservoir to improve the oil yield. That way the water can force up to ten percent more oil out of the rock pores. In contrast to synthetic polymers, Schizophyllan is also stable at high temperatures and salt concentrations. But most crucially, it is biologically degradable, and therefore does not impact on the environment. Hence, it could be used in ecologically sensitive areas such as the sea without hesitation.

Wintershall has already been successfully using steam flooding technology for 30 years. With this technique, hot steam is injected into the reservoir under high pressure, warming up the viscous oil trapped in the rock and making it easier to produce.

In order to gain practical experience with the biopolymer, in Bockstedt Wintershall has started a field test on a custom-made operating site which is scheduled to run until the end of 2014. The company intends to continuously build on its expertise in enhanced oil recovery in the future and conduct research in other technologies. The long-term goal is to develop a whole palette of EOR methods â&#x20AC;&#x201C; a toolbox for all different types of reservoirs.

A very promising new method that Wintershall is currently researching exclusively with BASF is the use of a biopolymer called

The field test in Bockstedt Schizophyllan is being used for the first time in the Bockstedt oil field. The polymer is mixed there with production water and pumped into the oil formation. The aim is to produce more oil.

Closed cycle The mixture of oil, production water and biopolymer that is extracted is transported to Wintershall’s nearby Barnstorf location, where the components are separated from each other and processed. The biopolymer and water are then returned to Bockstedt.

Water vs. polymer If the natural pressure in the oil field is no longer high enough, production water is injected to improve recovery. However, since it is usually far more viscous than oil, the water finds ways over time to bypass the oil.

The polymer avoids this effect: Schizophyllan thickens the water so that it can displace the oil better and more evenly.

Underground Three wells are part of the project: one injection well and two production ones. The Schizophyllan eventually reaches the latter – and hopefully so does more oil along with it.

BOCKSTEDT

LUDWIGSHAFEN

More oil with Schizophyllan: The biopolymer will enable up to ten percent more oil to be produced from existing reservoirs worldwide. This is a huge step forward.

36 | 37 HSE ANNUAL REPORT 2013 Environmental Protection

Environmental protection. Wintershall Group is committed to the responsible use of natural resour足ces in the exploration, field development, production and transport of hydrocarbons. We face the challenges by acting responsibly, applying high standards and driving technical innovation. Environmental protection is in our own financial interests. Therefore, the preservation of natural resources, the prevention of emissions and waste are integral parts of the exploration and production process. A key factor to our success is efficient use of the resources required to find and produce reserves with new or improved methods and therefore to minimize the impact on the environment.

FOR Safe future.

38 | 39 HSE ANNUAL REPORT 2013 Environmental Protection I KPIs

Environmental protection. decided to change the planned route of the pipeline to avoid the creatures’ habitat.

In 2013 Wintershall successfully implemented numerous measures worldwide that aimed to protect the environment and the climate and to use resources responsibly.

In Germany Wintershall successfully completed the renovation and renaturalization of the last plant landfill site. The grounds of the former drilling mud disposal pit in Emlichheim can now be gradually converted into a grass landscape with water areas and gravel stone islands.

One example of this is the growth of Wintershall in Norway. The oil production platform Brage was taken over successfully in October without any incidents and integrated into our own HSE standards. Protecting sensitive habitats on the seabed is also a high priority in the planning of a 100-kilometer-long pipeline for the field development of the Maria discovery. Wintershall invested in a detailed exploration of the seabed with the help of a diving robot, which discovered an occurrence of cold water corals and sponges. To protect this rare species the company

Wintershall is also a forerunner in environmental protection in Libya. In Jakhira a recycling system for separating and recycling the waste generated was launched. This model is the first of its kind in the E&P industry in Libya.

2013 Key Performance Indicators for environmental protection. As a wholly-owned subsidiary of BASF SE, Wintershall is committed to the Responsible Care Initiative. In accordance with BASF’s Responsible Care Reporting Guidelines, environmental emissions relating to the production of crude oil and natural gas are reported as a ratio of Wintershall’s participating interest in the consortium in question. As a member of the International Association of Oil & Gas Producers (OGP), Wintershall has been reporting its environmental emissions in exploration and production as part of the OGP’s “Environmental Performance in the E&P Industry” report since 2006.

Water. The exploration and production of crude oil and natural gas generates production and waste water. We try to recycle as much water as we can by using innovative technologies and water cycles. A total of 16.8 million m3 of water were used in 2013 (2012:14.4 million m3), most of which – 11.8 million m3 (2012: 12.1 million m3) was used for production (production water). Of the 16.8 million m3 of water used, some 8.1 million m3 of production water were sepa-

rated from the crude oil and natural gas at the surface and cleaned before being fed back into the original reservoirs. Production water from our offshore production platforms (totaling 7.1 million m3) was cleaned and then discharged into the sea in compliance with the statutory threshold limits. Another 1.6 million m3 of other forms of waste water were generated, for example during the construction and operation of cavern storage facilities (solution mining), during cleaning operations and water treatment. At locations where Wintershall is not connected to the public waste disposal network, waste water is cleaned and disposed of in line with regulations.

Reservoir water is a mixture of water, salt, hydrocarbons and other materials which occur naturally in the reservoir alongside oil and gas. Reservoir water is produced together with the oil and gas.

Retreat, Cultivation, Renaturation. Energy. We use electrical energy to produce, process and transport crude oil and natural gas, for example to drive pumps and compressors, and as thermal energy in the form of steam to produce oil. Depending on the location of our production sites to the supply networks, we obtain electricity from the public grid or produce it ourselves at remote locations. In 2013 we used a total of 661,883 MWhel in electrical energy and 664,487 tons of steam for our processes. We are constantly working on improving our energy efficiency, both in the energy we use and the energy we generate. Examples of this are the highly efficient micro gas turbine in Aitingen and the combined heat and power (CHP) plant in Bockstedt, which were brought on stream in 2013 after successful testing.

Waste. Waste can be generated during the exploration and production of crude oil and natural gas as a result of the production processes. We try to avoid such waste wherever possible. Unavoidable waste is recycled and disposed of according to regulations. Wintershall also disposes of waste properly and in an environmentally friendly way in regions where there are no public or private means of disposal.

Waste is classified, stored, handled, transported and disposed of in accordance with the applicable legislation of the country in question. In addition, Wintershall adheres to international and company standards. Waste is classified into the categories “hazardous waste” and “non-hazardous waste” according to EU regulations. In 2013 Wintershall generated 140,126 tons of waste (2012: 158,861). Of this sum, 96,856 tons were hazardous waste (2012: 127,905) and 43,270 tons non-hazardous waste (2012: 30,956). About 21.5 percent of the waste was recycled or recovered as energy, 1.2 percent was disposed of in waste incinerators and 77.3 percent in landfills in line with regulations. Overall, Wintershall was able to reduce the total volume of waste in 2013 compared to the previous year. Among other measures, this was mainly owing to the completion of the renaturalization activities at the drilling mud disposal pit in Emlichheim and the recycling measures successfully implemented in Libya. The two newly built high-efficiency waste incineration plants as well as several shredding machines for glass and plastics already reduced the waste volume significantly.

40 | 41 HSE ANNUAL REPORT 2013 Environmental Protection | EMISSIONS

Emissions. Reducing emissions. Emissions are created in the exploration, production and transportation of crude oil and natural gas as a result of the energy required in these tasks â&#x20AC;&#x201C; energy must be generated or imported in the form of electricity, process heat, steam and pressure. Since the production facilities are often located in remote areas, energy must be generated on site, normally using fossil sources, such as gas, heating oil or diesel. These emit a number of substances into the air during thermal conversion. Other processes where substances are emitted into the air are the discontinuous flaring of associated gas or condensate during production for safety reasons or as part of maintenance measures. As Germanyâ&#x20AC;&#x2122;s largest producer of crude oil and natural gas and a company that operates worldwide, Wintershall accepts its responsibility to protect the global climate. Apart from complying with

international conventions, local laws and our own standards, we help to reduce emissions by developing and using leading-edge technologies and new or improved methods to increase energy efficiency, thus continually reducing the impact on the environment, energy consumption and also costs at the same time.

Influencing factors. Greenhouse gas emissions associated with the production of crude oil and natural gas fluctuate for a number of production-related reasons. Projects, such as development of new fields, testing of wells, construction of pipelines or scheduled plant shutdowns for maintenance or repair work, as well as safety reasons may influence the volume of greenhouse gas emissions.

42 | 43 HSE ANNUAL REPORT 2013 Environmental Protection | EMISSIONS

Emissions in 2013 (t)

Emissions in 2012 (t)

Production processes

954,898

814,027

Indirect (import/export of electricity/steam)

103,390

87,790

Direct (electricity and steam production)

309,649

321,395

4,185

2,847

Total inorganic substances

3,358

2,956

Carbon monoxide (CO)

1,403

1,115

Nitrogen oxides (NOx) as NO2

1,717

1,616

237

225

1,633

1,360

Source of CO2 emissions

Source of CH4 emissions Production, undifferentiated Inorganic substances

Sulfur oxides (SO2+SO3) as SO2 Organic substances Non-methane volatile organic compounds (NMVOC) Other substances Particulate matter

2013 Key Performance Indicators for emissions. Greenhouse gas emissions.

Emissions of other substances.

Emissions released into the air are regularly monitored in accordance with statutory stipulations and our own standards. As well as greenhouse gas emissions, we ascertain emissions of air pollutants. These include inorganic gases such as carbon monoxide (CO), nitrogen dioxide (NO2) and sulfur dioxide (SO2). Apart from carbon dioxide (CO2), nitrous oxide (N2O) and methane (CH4), no other greenhouse gases are emitted by Wintershall.

Some fossil fuels, such as natural gas, heating oil or diesel, which emit various substances into the air during thermal conversion, are used for power generation and production at our operating sites. Emissions of inorganic substances rose in 2013 to 3,358 tons (2012: 2,956 tons).

Wintershall released more greenhouse gases overall in 2013 than in the previous year. Emissions rose by about 12 percent compared to 2012. The production operations of the Wintershall Group caused 1.37 million tons of CO2 (2012: 1.22 million tons of CO2) emissions and 4,185 tons of CH4 (2012: 2,847 t CH4) emissions overall in 2013. Based on Wintershall’s production of crude oil, natural gas and condensate, this is equivalent to specific emissions of 0.06 tons of CO2/toe (2012: 0.06 t CO2/toe).

Fifteen plants of the Wintershall Group across Europe are subject to the statutory requirements of the emissions trading scheme in the third trading period, which began in 2013 and envisages a continuous reduction of emissions allowances by 2020.

The rise in the emissions of greenhouse gases is mainly attributable to Wintershall’s growth in Norway and the increase in production associated with this. Greenhouse gas emissions in Libya rose further due to the maintenance measures as well as the shutting and powering down of the production facilities in August 2013.

Emissions trading at Wintershall.

They include three production platforms in the Netherlands as well as the installations in Germany and the newly added Norwegian production platform Brage. The new trading period has led to numerous changes in the emissions trading system, including, for instance, the auctioning of certificates as well as amended assessment criteria for certain types of facility: the number of certificates allocated is no longer based on the previous year’s emissions but on the most efficient plants of its class, which serve as benchmarks. In 2013 our plants were allocated 596,837 emissions allowances (EUA/a). Overall, our plants in Europe subject to the emissions trading scheme emitted 875,415 tons of CO2.

44 | 45 HSE ANNUAL REPORT 2013 Environmental Protection | ACTIVITIES

Environmental protection worldwide: Our activities in 2013.

High standards in Libya. Wintershall Libya is now following the example of Wintershall Noordzee and undergoing certification according to the internationally recognized environmental management norm ISO 14001. The standards are conducted by an independent auditing company and are regularly monitored. Auditors from the certification company Germanischer Lloyd inspected the plants on site and implemented environmental protection measures. Certification is expected to be completed in 2014. Wintershall would be the first E&P company in Libya to receive ISO 14001 certification for all its sites there. Its standards and initiatives have placed the company at the fore of environmentally friendly hydrocarbon extraction in Libya. For these efforts the company was also rated very highly for its commitment to environmental protection in an Environment General Authority Report commissioned by the government.

Environmental experts exchange views and experiences. Protecting the environment takes top priority at Wintershall. In order to improve the exchange of experiences and know-how at the various company locations, a company-wide group of environmental experts was set up. The members regularly exchange information on the environmental projects at the various company locations and discuss future measures and objectives. In 2013 the group visited the organization Oil Spill Response in Southampton. The discussions focused on the question of how oil pollution from leaks can be prevented and controlled effectively so as to protect the environment. Measures included a new capping device which will be kept in the Scottish coastal city of Aberdeen and which can be mobilized by Oil Spill Response. In case of emergency the emergency well cover can be transported to any worldwide location at any time.

46 | 47 HSE ANNUAL REPORT 2013 Environmental Protection | ACTIVITIES

More efficiency, more nature. Wintershall has been producing crude oil and natural gas in Barns torf for 60 years. Barnstorf is the central hub of German production and has developed into a center of innovation because of its geologically complex reservoirs. Here know-how on new and environmentally sound drilling and production techniques is being developed, and these techniques are then applied internationally too. Efficiency and by that the considerate use of energy resources play an increasingly important role in production. Therefore, Wintershall Germany has set itself the goal to decrease energy consumption and CO2 emissions. To this end, in 2013 it started the certification process in accordance with ISO 50001. To become certified for this norm, it is necessary to prove that an energy management system has been introduced that aims to continuously improve energy efficiency and performance. To begin with, all the energy flows at the production locations, the natural gas storage facilities Rehden and Jemgum as well as the administration site at Barnstorf were documented, possible improvement measures were ascertained and an energy handbook was put together. Certification which is conducted by an independent organization is expected to be completed in 2014. Wintershall has adopted a diverse range of measures in the past aimed at using energy even more efficiently. For instance, in Emlichheim a high-output combined heat and power plant was installed. This means the natural gas that was previously not commercially

exploited is now used to generate electricity and steam for pro duction. The energy management system makes a contribution to achieving the energy targets for Germany by 2020. In addition, in 2013 Wintershall successfully completed the redevelopment of the drilling fluid waste and plant landfill site “Holleberger Moor” in Emlichheim. Residue from production operations had been deposited there west of the Ems river since the beginning of the 1960’s. As part of an overall clear-up, 76,000 cubic meters of residue were cleared starting March 2012 and transported to hazardous waste landfills near Cologne and Speyer. The land in Emlichheim is now being recultivated: 55,000 square meters will be turned into grasslands with water surfaces and gravel stone islands. The restoration process was conducted in close cooperation with the responsible authorities and accompanied by numerous studies. This included the inspection of the groundwater and the material used to restore the surfaces, in addition to the substances to be disposed of. As such, the last of the four former landfills in Germany has been redeveloped and renaturalized in an environmentally and landscape-friendly manner. New habitats for birds, endangered plants and insects had already been created on the former landfill grounds at Bohlsen. The grounds of the former facilities in Eydelstedt und Wietingsmoor were filled with topsoil and handed back to the landowners to be used as agricultural land.

48 | 49 HSE ANNUAL REPORT 2013 Environmental Protection | ACTIVITIES

Environmental management – certified. Following the oil discovery F17a in Dutch waters, Wintershall Noordzee was able to announce another promising find in 2013. The Wintershall-operated exploration well Hibonite struck oil in the Danish part of the North Sea. The discovery lies 337 kilometers north of Den Helder and 278 kilometers west of Esbjerg in Denmark. Hibonite is situated about seven kilometers north of the field Ravn, where Wintershall discovered oil in 2009. The company has also once again proved its competence in the area of environmental protection: Wintershall already implemented an environmental management system in 2004 in accordance with ISO 14001. In order to renew the ISO certification, a new audit was carried out in 2013. In order to do so the certifying company Det Norske Veritas checked compliance with and the implementation of all the requirements of the ISO standard for all the WINZ onshore and offshore facilities. At the onshore facilities, it wasn’t just emplo yees from production and HSE that were involved, but also from drilling, purchasing, construction and HR. Offshore the inspectors

visited the platforms L8-P4, K13-A and L8-H. There were no objections, which meant the new ISO certificate could be issued in the summer of 2013. It is valid for three years. Irrespective of this process, a measure was implemented on platform L8-G to improve efficiency and reduce emissions. Thanks to a new pipeline, the gas produced is no longer dried on the platform itself but on a neighboring platform, the modern L8-P4 platform. Two obsolete plant parts – a regenerator and a gas turbine – were switched off. This saves 6.3 million cubic meters of fuel gas and 12,230 tons of CO2 a year.

Platform recycling The average life of a platform is about 25 years. After that the plants are usually dismantled and scrapped. But with the remodeling and modernization of two platforms in the Dutch North Sea, Wintershall succeeded in combining both ecological and economic interests: the natural gas platforms L5-C and E18-A were completely remodeled and modernized so that they can start producing again somewhere else. Compared to building a fully new platform, remodeling the old platforms saved costs, time, energy and materials.

Management with the ISO certificate.

50 | 51 HSE ANNUAL REPORT 2013 Occupational Health

Occupational Health. Prevention and health promotion.

The aim of occupational health protection activities at Wintershall is to prevent work-related illnesses or impairment to employeesâ&#x20AC;&#x2122; health, as well as maintain a high level of overall health within the workforce. Wintershallâ&#x20AC;&#x2122;s focus is on preventative health measures, health promotion and ensuring effective medical care in the event of emergencies.

Fit + healthy.

52 | 53 HSE ANNUAL REPORT 2013 Occupational Health

occupational illnesses

1,233

occupational health checks

635

trained first aiders and paramedics available for call-out

2013 Key Performance Indicators for occupational health. As in previous years, once again no employees at Wintershall suffered an occu pational illness in 2013. Together with HSE experts, company physicians at the individual locations and Business Units analyze working areas in order to minimize the risks to employees’ health in their activities. These are complemented by workplace walkabouts conducted by managers and HSE experts according to the requirements of the HSE Management System. In 2013, 1,233 occupational health checks relating to prevention or early screening for work-related illnesses and to prepare staff for work-related stays abroad were conducted worldwide. A trained first aider can save lives. To ensure that first aid can be administered in the case of a medical emergency, there are 635 first aiders and paramedics at the Wintershall Group’s locations who hold a nationally recognized certificate in first aid. Wintershall actively supports its employees who wish to take part in first-aid training sessions. Donating blood can also save lives. Blood donation opportunities are organized regularly at the headquarters in Kassel. During the annual Health Day in the headquarters in Kassel employees receive first-hand information about all kinds of health topics and have the opportunity to take part in different activities like measuring their blood sugar level for example.

Feeling fit? Medical check-ups for employees.

As part of the company’s health campaigns Wintershall gives its employees the opportunity to inform themselves about various different health topics and to get actively involved. As a result all employees can do something on their own in order to improve and maintain their health. After all, good physical health is a prerequisite in order to stay productive and efficient as long as possible. In 2013 we had a special focus on medical check-ups. Employees were offered a comprehensive voluntary medical check-up. Medical check-ups play an important role in detecting for example cardiovascular and kidney diseases or diabetes (diabetes mellitus) early. An early diagnosis can increase the chances of recovery and have a positive influence on the further development of the illness. In addition to the general medical check-up paid for by the health insurance fund, the employees had the option of an individual medical check-up. This included examinations – for example supplementary examinations for early cancer screening – that usually have to be paid for by the patients themselves. As part of the health campaign these costs were paid for by Wintershall. In Stavanger in Norway, the employees were additionally invited to take part in a health day. There they had the opportunity to have their level of fitness tested, their body fat measured, and to be tested for a possible risk of a cardiovascular disease – all that under the supervision of trained medical personnel. A course in cardio pulmonary resuscitation completed the day. The three-day event, which Wintershall organized in cooperation with a health services provider, received great feedback and the company intends to repeat similar events at other Norwegian locations.

54 | 55 HSE ANNUAL REPORT 2013 Corporate Social Responsibility

Corporate Social Responsibility. At Wintershall we see cultural differences as something enriching. We have seen that our shared values outweigh our differences. This is why Wintershallâ&#x20AC;&#x2122;s international operations not only produce crude oil and natural gas, but also closer contacts between people. Sponsoring cultural and social projects is not a luxury for Wintershall, but an expression of its social commitment and active steps to enhance quality of life.

Human rights. As a subsidiary of BASF, the Wintershall Group is committed to its responsibility to observe and promote human rights. We respect the internationally proclaimed human rights and effective law in our business activities. As a company in the BASF Group, a founding member of the UN Global Compact, we strive to help raise awareness and protect human rights in our sphere of influence. For this reason we also support our suppliers and business partners in acting according to internationally recognized standards. We aim to be an attractive employer, reliable partner and good neighbor. That is why we take on corporate social responsibility and actively support diverse projects around the world in the host communities where our sites are located, focusing on culture, education, science and health. With our social commitment we want to help to contribute to making positive developments in society and thus help to promote human rights.

56 | 57 HSE ANNUAL REPORT 2013 Corporate Social Responsibility

Cultural diversity. People from more than 40 different nations work for Wintershall all around the world. To ensure that the communication between the different company sites runs smoothly, all people involved should not only bring with them appropriate language skills, but also empathy and intercultural competence. Project-based work also brings experts from different cultural backgrounds together to work in teams. In such constellations we are reminded day by day that it is a person’s skills and expertise that count, and not his or her country of origin, culture or religion. As such, working in an international company can help to increase mutual understanding and respect and to dismantle prejudices. At Wintershall, cooperation and teamwork have proved to be a winning combination. The more diverse the team at a company site or within a project, the more creative the solutions as different vantage points and mindsets are incorporated. Hence, diversity and intercultural competence are not simply side effects of the globalized working world, but a crucial competitive advantage. One example is the project team that is preparing the company’s entry into Brazil, in which experts from 13 different nations are working together.

Wintershall supports its employees as they venture into new countries and cultures. For instance, staff that move abroad as expats are prepared for this step in advance. They can study the language and familiarize themselves with the culture, habits and customs in the new country in different seminars. That helps them to settle in once they have moved. At the moment about ten percent of Wintershall’s workforce is working in a foreign country for a limited time. Special services are also offered to make sure they don’t have to be separated from their families during this time. In 2013, for example, the foundations were laid for an international primary school in Kassel. Wintershall initiated this project. The idea is that the children of company employees can be taught here entirely both in English and German. The school is also open to other families from the region that are interested in giving their children a bilingual education, and thus enriches the local school landscape. Wintershall awards scholarships for free schooling to children from low-income families. The new school is expected to open starting with the 2014/2015 school year.

58 | 59 HSE ANNUAL REPORT 2013 Corporate Social Responsibility

A dialogue with the people. Today the realization of large-scale industrial projects requires not only the approval of the authorities, but also the acceptance of the population. That also applies to investments in energy infrastructure. The public has developed a growing awareness of intervention in nature, landscape or residential areas, and thus expects to be provided with comprehensive information. Although most people would like to see an expansion to the environmentally friendly energy supply, the construction measures required for this are often met with hostility. Investors who fail to involve the citizens have to expect resistance. A dialogue can only succeed when the local people are convinced of the merit of a project and at the same time feel that their concerns are being taken seriously. Hence, land and property owners, residents and other stakeholders are involved early in the planning and implementation of projects. In so doing, we manage to clear up ambiguities and avoid conflicts. This is the only way to build trust and good neighborly relations, which can even evolve into mutual support. The neighborhood communication model has proved its worth.

Guided tours to the well site. Wintershall offers guided tours to the well site of its exploration well “Düste” at its Barnstorf operations. Tight gas is located here which would make production with the so-called “fracking” technique

necessary. Fracking has been used for producing tight gas for many years. The well site tours aim at giving all interested citizens factual information and can help to allay any possible fears.

In dialogue with the fishing community. We also have neighbors offshore. Before starting with the planned seismic exploration near Lofoten, Wintershall sought a dialogue with the Norwegian fishing association. The fishermen often take a critical stance to the E&P industry. They fear that the seismic equipment could lead to poorer catches and damage their nets. But together with the fishing association, Wintershall identified a good time window to carry out the work so that any disruption to the catching activities could be kept to a minimum.

Exchange with the tribal elders. In the Libyan Sahara, where the production facilities are situated close to three oases with overall some thousands of inhabitants, Wintershall has been cultivating a relationship based on trust with the population for years. For instance, it participates in a regular exchange with the tribal leaders of the oasis, the elders. During these discussions, property and security issues, amongst others, are discussed in detail and joint strategies are decided on.

Employees and their families. Our employees are our capital and our most important resource. Each and every employee contributes to the success and development of the company. Our principles include creating the best possible working conditions for our staff as well as opportunities for personal development. The Wintershall Group offers extensive training and further training programs alongside “on-the-job training” for qualified university graduates and a Work & Life Service to help employees balance their professional and family lives. We play a pioneering role in this field. The Work & Life Service is a place employees can go to for support in reconciling the needs of the job and their personal lives. Flexible working hours, company sports and health measures, household-related services, parental leave, ensuring an easy return to work, as well as child care and school support are the main ways by which we support our staff.

Our children’s daycare facilities – the KiWi which was set up in Kassel in 2001, and the new WiKi, which was set up in 2012 – are an important part of our Work & Life Service. Wintershall has grown continuously over the years and so has the demand for childcare facilities. Here we provide our German and international employees with a place where their children, aged between six months and 12 years, will be looked after by professional and dedicated staff. There are over 140 places available. Thanks to flexible daycare offers, shared places, homework supervision and a play area suitable for all age groups, our daycare facilities have turned into a small second home over the years. Wintershall is very committed to provide the best possible working atmosphere at all of our locations. By supporting our staff in their needs, Wintershall offers a service-oriented working environment, which has been awarded with the certificate “audit berufundfamilie” from the non-profit HERTIE foundation since 2003. Naturally we also look after our staff at all our international locations, while respecting cultural diversity.

60 | 61 HSE ANNUAL REPORT 2013 Corporate Social Responsibility

Libya. Commitment to the population and the employees. In Libya Wintershall continues its commitment to an advanced rebuilding process of the country and to help improve the quality of life of its employees and the population. Health care was identified as a particularly urgent issue. In response to this, the company pushed ahead with the construction of a health center in the Jakhira oasis which is near the Wintershall facilities in the Libyan desert. This has been done in close cooperation with the Libyan health ministry. The tribal elders from the oasis actively accompanied the planning process. The project implementation has been launched in 2013. The main aim will be on providing emergency medical care for the people in Jakhira. Once the medical center has opened, Wintershall will provide it with technical support and staff, and, together with the support of an experienced medical services provider, ensure the operation of the hospital for up to five years until it is

running by itself. In the meantime health care within the company for the Libyan employees has been adapted to international standards. Every employee now has health insurance that is valid internationally. Health care had previously been provided via the companyâ&#x20AC;&#x2122;s own health care system.

Further training offered. Additionally a special training program for further education was put together in cooperation with a company that is specialized on trainings. In training measures that are oriented towards international standards employees can improve their professional skills, as well as other skills in order to gain the right qualifications and to be equipped to meet operational requirements and future challenges. The aim is to gain an internationally recognized certificate. Special attention is paid to HSE competence, amongst other skills.

Russia. Good prospects. Icy temperatures present no obstacle at Achimgaz – a joint venture of Wintershall and Gazprom in Russia. Approximately two billion cubic meters of natural gas a year are now being produced from more than 20 wells in this very inaccessible reservoir located in Siberia. By 2018 over 100 wells are meant to raise production to an annual plateau level of about eight billion cubic meters. The two partners want to build on the positive experience they have gathered already and expand their cooperation in Siberia. Hence, Wintershall and Gazprom have signed an agreement to develop two additional blocks in the Achimov formation of the Urengoy field in Western Siberia together. Naturally, compliance with international standards is a given in this endeavor.

Achimgaz internationally certified. In 2013, Achimgaz successfully underwent an audit in accordance with the standards of the International Finance Corporation (IFC), an enterprise of the World Bank Group. In so doing, the GermanRussian joint venture proved that it works according to international standards. These include minimizing the impact on the environment

and the local population. The audit was carried out by the independent auditing company ERM. Achimgaz was also certified in accordance with ISO 14001 and OHSAS 18001 for its standards in the area of environmental and occupational protection.

Young Visions Award. Wintershall and Gazprom International have bestowed the “Young Visions Award” for the first time. The competition aims to support young people in the exploration and production sector and is advertised at universities in Germany and Russia. The goal is to bring together students from both countries and to promote an exchange. It focuses particularly on combining ecology and commercial viability. In 2013, German and Russian students were asked to develop innovative concepts for the environmentally friendly and sustainable offshore production of oil and gas. The prize was awarded to three female students from the city of Tomsk in Russia for their idea of capturing leaked oil with the help of peat. The winners asserted themselves against three other teams in the finals. The award was handed over in September as part of the RAO/CIS Offshore trade fair in St. Petersburg.

62 | 63 HSE ANNUAL REPORT 2013 OUTLOOK

outlook. What the Future Holds.

Promoting an open safety culture One of the key aims of our activities in 2014 is promoting an open safety culture that is part of daily working life for all our employees. One of the signs of a strong safety culture is when each and every member of staff feels responsible for safety and sees it as an integral part of his/her daily work. Irregularities or unsafe behavior are discussed openly across all hierarchy levels and problems are addressed together. Managers play a key role in embedding this culture. By setting a good example and promoting openness in dealing with safety issues, a positive safety culture can develop in the company long-term. To this end, several workshops are offered that are aimed specifically at middle management.

Launch of the Health Performance Index. The aim of occupational health protection at Wintershall is to prevent illness, to ensure the health of our staff is not adversely affected by work, and to preserve the good health of the staff in general. For this reason we focus on preventative occupational health measures, promoting good health and ensuring effective medical care in emergencies. Hence, in order to provide even more meaningful information on the health management system in the Wintershall Group, and in order to identify potential for improvement fast and easily, we will introduce a new â&#x20AC;&#x153;Health Performance Indexâ&#x20AC;&#x153; which includes various indicators and reflects the requirements of our industry.

HSE Award 2014. Wintershall will again be handing out the HSE Award at the end of 2014. The prize is awarded for innovative employee ideas that have been put into practice in the company in 2013 and 2014 and that lead to a significant improvement in health, safety or environmental protection. Another prerequisite is that the ideas have to be able to be applied to other company sites. The prize is awarded in the category “HSE project” with prize money of 12,500 euros and for a “Simple Solution” with 5,000 euros. Teams from all company locations can submit their ideas.

Time for applications: Prize for talented young E&P professionals. Wintershall and Gazprom International will award their prize for talented young professionals, the “Young Visions Award”, for the second time in 2014. The award focuses on enhanced oil and gas recovery. German and Russian students can submit innovative concepts on this subject that combine environmental protection and commercial viability. The winning team receives a technical budget for the first project phase of their idea’s implementation. The prize is expected to be awarded in Tomsk in September.

64 | 65 HSE ANNUAL REPORT 2013 Key Performance Indicators 2013

Key Performance Indicators 2013.

Unit

2013

2012*

Wintershall Performance mio. €

14,776

12,740

· Exploration & Production

mio. €

2,929

2,584

· Natural Gas Trading

mio. €

11,847

10,156

mio. €

2,516

1,676

· Exploration & Production

mio. €

1,659

1,187

· Natural Gas Trading

mio. €

857

489

2,416

2,021

Sales to third parties

Profit from operating companies (EBIT)

Occupational Safety Number of employees1 Own employees · Fatalities (FAT)

· Injury with > 1 day lost time (LTI)

0.97

0.20

2.33

1.77

· Lost time injury frequency rate per one million man hours (LTIF) · Total Recordable Injury Cases (TRIC) · Total Recordable Injury Rate per million working hours (TRIR) Contractors · Fatalities (FAT)

· Injury with > 1 day lost time (LTI)

1.01

1.48

· Lost time injury frequency rate per one million man hours (LTIF) · Total Recordable Injury Cases (TRIC) · Total Recordable Injury Rate per million working hours (TRIR) LTIF | TRIC | TRIR (own employees and contractors)

5.70

6.38

0.99 | 46 | 4.14

0.93 | 52 | 4.39

Occupational Health Occupational diseases own employees

635

545

1,233

1,184

MWhel

661,883

593,489

First aiders Occupational medical check ups Environmental Protection Energy · Energy consumption

664,487

469,486

mio. MWh

1.38

1.49

· CO2

mio. t

1.37

1.22

· CH4

4,185

2,847

3,358

2,956

EUA/a

596,837

808,051

875,415

492,934

140,126

158,861

mio m

16.8

14.4

mio m

11.8

12.1

· Steam use · Fuel use for own energy production Greenhouse gas emissions

Emission inorganic substances Emission trading Europe · Received emission allowances · Emissions from facilities regulated under emission trading scheme Waste Water use (total) · Production water

1 Excluding temporary employees; part-time employees pro rata. * Restated figure for 2012, adjusted to changes in IFRS 10 and 11. The restated figure includes 51 percent of the Libyan onshore oil production.

66 | 67 HSE ANNUAL REPORT 2013 Contact Persons

Contact persons.

Corporate HSE Kassel. +49 561 301–1757 hse@wintershall.com

Guido Schnieders Corporate HSE Manager

Malalay Osmani HSE Engineer

Thomas Küppers Process Safety Engineer

Nadja Brauhardt HSE Communication & Sustainability

Klaus Jantos Senior Environmental Advisor

Massimiliano Martino HSE Manager New Ventures

Locations worldwide.

Germany (WIDE) Michael Bätcher HSE Manager

Norway (WINO) Janne Lea HSE Manager

Abu Dhabi (WIME) Louis Susanna HSE Manager

Libya (WILI) Mustafa Abunagasa HSE Manager

Russia (WIRF) Evgenia Shvychkova Junior HSE Specialist

Argentina (WIAR) Jonathan Gandolfo HSE Manager

Netherlands (WINZ) Onno Spinder HSE & Permitting Manager

Qatar (WIQA) Henning Groeschke HSE Manager

Imprint. Responsible for the content Wintershall Holding GmbH Friedrich-Ebert-StraĂ&#x;e 160 34119 Kassel Conception and editorial work Nadja Brauhardt, Julia Stehlin Design atelier 41, Berlin Information graphics KircherBurkhardt GmbH Print Ruksaldruck, Berlin

Wintershall Holding GmbH Friedrich-Ebert-StraĂ&#x;e 160 34119 Kassel, Germany Tel.: +49 561 301-1757 Fax: +49 561 301-1027 hse@wintershall.com www.wintershall.com