The importance of oil and gas

Oil has been the most traded and most used energy commodity in the world since the early 19-hundreds because it contains a high amount of energy and is easy to store and transport. Modern society is dependent on cheap and efficient energy and thus highly dependent on both oil and gas. In addition to the use of oil and gas for transport and heating homes, oil is used in most materials and products we use on a daily basis, such as plastics, clothing, medicine, mobile phones and computers. 

Using our operations to provide these crucial resources responsibly and sustainably is considered an important task by Crown Energy – from the early stages of planning and licence awarding to the exploration and development processes.

For Crown Energy, conducting sustainable and responsible operations necessitates that we understand how we impact society and the environment in the areas in which we operate and work to meet the requirements and expectations of our operations to ensure they are not conducted in a way that causes environmental impact.

On the basis of Crown Energy’s current operations, the following aspects of sustainable growth are the most important to us:

• Transparency and ethics
• Environment
• Corporate social responsibility
• Health and safety

We report on each of these areas later in this section.

Responsibility between licence operator and licence partner

Sustainability responsibilities for an exploration and appraisal licence are divided between operators and partners. The operator is directly responsible for the licence's operations and is governed by the production sharing agreement (PSA) and/or local laws governing oil and gas extraction in the respective country. These PSAs signed with the licensing country/government agency (and/ or laws) govern responsibility for the environment, working conditions, insurance and related areas. These days, most countries have strong environmental legislation and strict environmental requirements which stipulate that oil companies follow best practices. 

In cases where there are multiple licence partners, the joint operation agreements (JOAs) also govern how decisions are made within the partnership and which party is responsible for what. Depending on the distribution of shares in the partnership, partners may have differing degrees of influence on decisions in areas such as strategies, procedures, suppliers and participation in local social programmes.

As a result of the above, Crown Energy is governed by the environmental and working conditions requirements of the PSA for licences where Crown Energy is the operator (Iraq and Madagascar). There may also be additional local statutory requirements. The operator has direct responsibility for licences where Crown Energy is a partner (South Africa and Equatorial Guinea). In cases where Crown Energy has a small share, it is naturally difficult to influence the decisions of other majority partners. However, Crown Energy has a policy of submitting recommendations for improvement if considered necessary.

Crown Energy is aware that it may have a limited influence on the decisions of the partnership in cases where it is only a minority partner. This is a risk for Crown Energy – if the other partners do not follow best oil practices, regulations on working conditions and environmental legislation, it could have a negative impact on us. This places demands on Crown Energy when choosing partners in situations such as an acquisition or a farm-out. Crown Energy generally selects partners on the basis of both financial strength and core values such as ethics, morals and the environment. In cases where the partnership changes during the life cycle of the project, there may therefore be cause to assess new partners on the basis of what they can bring to the partnership, both on the positive and negative sides.