41
The Group’s operations expose it to significant environmental, health and safety compliance costs and potential
liabilities.
Numerous international and national laws and regulations affect the Group’s operations and regulate matters such as
discharges of hazardous substances, handling and disposal of waste and the health and safety of employees. The
technical requirements of these laws and regulations are becoming increasingly complex and compliance with such
regulations is increasingly expensive. Furthermore, regulators are becoming increasingly proactive in enforcing such
laws and regulations.
The Group may be subject to the imposition of damages, cleanup costs of spills, remediation, fines and penalties,
compensation to third parties and, in certain cases, criminal sanctions for non-compliance with environmental laws and
regulations. There are certain risks inherent in its activities, such as accidental spills, leakages, explosions, blow-outs,
equipment damage or failure, natural disasters, geological uncertainties, fires or other unforeseen circumstances that
could expose the Group to further significant liabilities. Such liabilities could materially adversely affect the Group’s
business, prospects and financial condition. Certain laws in the jurisdictions in which the Group operates or in which it
may operate in the future provide for joint and several liability for violations of local health, safety and environmental
regulations, and may expose the Group to liability for the conduct of others, including its joint venture partners.
The enactment of new or more stringent environmental laws, or new interpretation and enforcement of existing
environmental laws, could have a significant impact on the extent of such liabilities and operating and capital costs. For
example, as a result of new environmental regulations, the Group may need to modify its current operations in certain
jurisdictions, purchase new equipment, upgrade staff and contractor accommodation, install pollution control equipment
or perform cleanup operations.
In addition, failure to provide a safe working environment, to manage environmental risks or to comply with its health,
safety and environment policies and applicable environmental laws and regulations may result in harm to the Group’s
employees or the communities near the Group’s operations. In particular, although the Group is investing a significant
amount of effort in improving HSSE standards and at the same time increasing production, operations at the Group’s
various sites may not yet fully comply with all of the Group’s own internal HSSE requirements and site personnel may
not be fully aware of those requirements. For example, in 2013, motor vehicle incidents in Yemen, Ukraine and Egypt
resulted in three lost time incidents (“
LTIs
”) on Group-operated assets, including two fatalities. In addition, the Group
has experienced an increasing number of security incidents over 2013 and 2014 as compared to prior years, particularly
in Yemen. See “—
Risks relating to the jurisdictions in which the Group operates— The security situation in Yemen has
in the past caused, and may again cause the Group to cease exploration, appraisal and development operations in the
country, and may affect the validity of the Group’s licences if it is unable to obtain and maintain effective security
arrangements for Group personnel and assets in the country
.” Government authorities may also force cessation of the
Group’s operations in a given jurisdiction on a temporary or permanent basis or revoke the Group’s licences if the Group
fails to comply with laws and regulations. The Group could face fines and penalties, liability to employees and third
parties for injury, liability for environmental pollution and other financial consequences, any of which may be
significant. The Group could also suffer reputational damage, industrial action or difficulty in recruiting and retaining
skilled employees.
It is not possible to predict what future health, safety and environmental laws and regulations will be enacted or how
current regulations will be interpreted, applied, modified or enforced. Furthermore, any new environmental or health and
safety regulations or requirements could, if significant and costly, impair the Group’s ability to implement its strategy
and restrict the Group’s ability to predict or control over the nature and timing of its exploration, appraisal, development
and other activities. The Group’s ability to undertake these activities at all may be materially and adversely affected,
including by substantial delays or material increases in costs. Such additional costs, interruptions or delays could have a
material adverse impact on the Group’s business, prospects, financial condition and results of operations.
The Group relies on technology systems and applications which may fail.
The Group is reliant on certain technology systems and exploration and appraisal applications, in particular those
licensed from Schlumberger, for its business. The Group’s systems and applications could be exposed to, amongst other
things, damage or interruption from telecommunications failure, fire or natural disaster, unauthorised entry and malicious
computer code, power loss, human error and acts of war or terrorism. The occurrence of any of the foregoing may also
significantly disrupt the Group’s technology systems and applications and may lead to important geophysical and
geological data being irretrievably lost or damaged. Such damage or interruption may materially adversely affect the
Group’s business, prospects and financial condition.
Risks relating to the jurisdictions in which the Group operates
