2009 performance overview

Group Key Performance Indicators (KPIs)

Cairn has a significant number of KPIs within its business; however, a number are 'high graded' to monitor business progress and for use in the annual cash bonus scheme.

For our 2009 Group KPIs, a consolidated approach has been adopted which is consistent with our corporate structure. It distinguishes between the performance of Cairn India and the rest of the business run from Edinburgh.

In determining our overall performance, the Company uses a weighting system to balance corporate strategic goals, Cairn India and Cairn (excluding Cairn India) KPIs, and individual performance. At a Group level, there were a total of seven KPIs in 2009 of which two are CR related as follows:

Cairn (excluding Cairn India) KPIs
Cairn India-based KPIs
2009 CR objectives – Group
2009 CR objectives – Cairn India

On cairnenergy.com:

Cairn (excluding Cairn India) KPIs

KPI	Explanation	Metric	2008	2009	Trend
Health and Safety	Minimising injuries is a key corporate commitment and we use the Total Recordable Incident Frequency Rate (TRIFR) as a key indicator for monitoring and reporting our performance, and to benchmark our performance against the OGP's industry average.	Total Recordable Incident Frequency Rate (TRIFR) per million man-hours	0.72	0.64	-12%
Greenhouse Gas Intensity (from production sites)	Minimising greenhouse gas emissions from our producing fields is a key corporate commitment and we use the CO₂ equivalent normalised to production rate to monitor and report our performance, and to benchmark our performance against the OGP's industry average.	CO₂ equivalent per 1,000 tonnes of hydrocarbon production	23.0	13.1	-43%

Cairn India-based KPIs

KPI	Explanation	Metric	2008	2009	Trend
Health & Safety	Achieving an injury-free work place is the goal. Two specific HSE targets – Lost Time Injury Frequency Rate (LTIFR) and Total Recordable Incident Frequency Rate (TRIFR).	LTIFR	0.27	0.26	-4.0%
Health & Safety		TRIFR	0.73	0.64	-12.3%
Environment	Minimising oil spills*. KPI is Oil Spill Severity Rate (OSSR) – defined as tonnes of oil spilled per million tonnes of oil produced.	OSSR	0	0.64	n/a
Greenhouse Gas Intensity (from production sites)	Minimising greenhouse gas emissions from our producing fields is a key corporate commitment and we use the CO₂ equivalent normalised to production rate to monitor and report our performance, and to benchmark our performance against the OGP's industry average.	CO₂ equivalent per 1,000 tonnes of hydrocarbon production	40.8	47.3	+15.9%

* A spill is defined as any loss of containment that reaches the environment.

2009 CR objectives – Group

Objective	Status	Notes
CR Management System
Review external expectations and consider any amendments to CR Policies, Guiding Principles and procedures	Completed	CR Guiding Principles and CR Policy updated, approved and issued in November 2009 Plan defined for updating Group CRMS in 2010
Develop and conduct gap analysis against CRMS across all operating areas	Ongoing	CR plans developed for Greenland and Mediterranean assets but gap analysis to be completed in 2010
Behaving responsibly in all our business relationships
Work to ensure effective communication and understanding of updated Code of Business Ethics and Whistleblowing Policy	Completed	New Code and Whistleblowing Policy approved and issued in May 2009; rolled out in workshops in Edinburgh, Tunisia and Bangladesh
Define assurance objectives for the 2009 annual CR report and assess need to move towards Level B of the GRI's G3 Reporting Guidelines	Completed	Decision to remain at Level C+ for 2009 report ERM conducting gap analysis against Level B requirements during 2009 CR Report verification process
Behaving responsibly towards our people
Implement action plan to address findings of 2008 employee engagement survey; close out identified actions (CR actions)	Completed	Project to address findings completed and roll-out of new HR policies and consultation completed Follow-up staff survey underway in January 2010
Utilise CR Intranet site to more effectively communicate CR knowledge sharing to head and asset offices	Incomplete	Project to update intranet site postponed to 2010
Behaving responsibly towards society and communities
Review, and update where necessary, Cairn's current human rights procedure	Completed	Human Rights gap analysis conducted by McGrigors Rights Group Update to CSR Policy completed and amended policy issued Human Rights Handbook completed and to be rolled out in 2010
Ensure that all assets have and implement Stakeholder Management plans	Completed	Cairn India and Bangladesh PCDPs well-established – Greenland and Albania PCDPs in place Tunisia PCDP updated in January 2010 to reflect 2010 drilling programme
Behaving responsibly towards the environment
Review and update Cairn's climate change strategy	Completed	Strategy communicated in 2008 CR Report reconfirmed
Review and update Cairn's Biodiversity strategy	Completed	Draft Biodiversity Policy, strategy and guidance developed Sign-off and roll-out in 2010

2009 CR objectives – Cairn India

Objective	Status	Notes
CR Management System
Embed the revised CRMS within CIL to improve health and safety practices and further develop the HSE culture	Ongoing	CRMS communicated to all staff via Intranet; further awareness and training sessions completed in operating assets HSE culture further embedded through focused campaigns on workplace hazards and road safety. About 80% of the staff at Gurgaon offices covered under these training programmes in 2009 Over 50,000 contract workers trained via HSE induction programme Over 10,000 workers attended HSE awareness road shows at MPT Over 6,000 workers given HSE training in pipeline project 700 Cairn staff at Gurgaon office and 300 at asset and project sites attended road safety and defensive driving training programmes. Rest of the staff will be covered under this training during 2010.
Introduce new systems, tools and techniques for ease of managing and improving QHSE, Security and Risk Assessment functions throughout CIL	Ongoing	New Cairn India Incident Management system launched in September 2009 has improved quality and quantity of near-miss and incident reporting Contractors trained on incident reporting and investigation system; included in investigation teams where appropriate Safety Observation Programme launched to monitor and improve workforce safety behaviour while we continued focus on using STOP system in operational assets Over 9,000 safety observations made during 2009 (300% increase from 2008) Business Risk Management system applied across organisation; regular departmental and management risk reviews
Behaving responsibly in all our business relationships
Delivery of improved systems, processes and procedures to achieve stakeholder performance standards Improve contractor HSE management processes	Ongoing	New integrated HSE audit process carried out at all operating sites and the recommendations are being followed up for implementation HSE regulations compliance reviews completed; report submitted to regulator Worked with construction and transport contractors to improve HSE systems and compliance with Cairn standards; quarterly external audits by IFC demonstrated continued improvement; contractor management processes upgraded; introduced new worker accommodation standard based on IFC Guidelines Local contractors used wherever possible; support in adopting HSE standards provided (especially road transport operations using local contractors for passenger transport and crude oil transport by road); included road tanker safety management system, road risk survey, tanker specification, driver competency, vehicle inspections journey management planning and emergency response system
Behaving responsibly towards our people
Implement an Occupational Health Management System	Ongoing	CIL Occupational Health Management System progressively introduced; focus on projects and contractors Standards introduced: site medical staff qualifications; medical equipment; ambulances; clinics; worker medical assessments; hot climate working controls; emergency medical response Full roll-out planned in 2010
Develop competency-based skill matrices for all QHSE and Security positions	Partially complete	Skill gaps identified through Personal Development Plans; appropriate training provided Development of formal skill matrices and assessment postponed; now planned in 2010
Behaving responsibly towards communities
Build capacity within CIL on IFC Performance Standards	Ongoing	IFC Performance Standards awareness training given to 179 employees at Gurgaon office, projects and assets Four audits carried out by IFC; increased awareness of standards needed and actions required
Behaving responsibly towards the environment
Improve project environmental performance	Ongoing	Environmental performance by construction contractors at project sites improved Contractors given training and implementation support on-site by environmental specialist consultancy; improvements recognised by IFC audits
Develop handbook on good environmental practices	Partially complete	Environmental Handbook drafted; further development ongoing; to be published in 2010