The performance indicators are organized under two categories – core and additional – to differentiate between indicators that are commonly adopted across companies in the oil and gas industry versus indicators that may not have general applicability to all oil and gas industry companies and/or may not be sufficiently well-defined for common adoption.

Core indicators are typically:

• Considered relevant to almost all oil and gas industry companies;

• Inherent to activities in the oil and gas industry (e.g., upstream and downstream);

• Of common interest to a wide range of local and global stakeholders;

• Generally related to aspects or issues of national or global significance;

• Sufficiently mature in terms of consistent usage and reproducibility by those in the oil and gas industry.

On this basis, the core indicators have been defined to enable generally consistent reporting or aggregation on a global basis. There can be value and benefit in using core indicators to promote consistent performance reporting among companies, encourage best practice sharing and enable industry associations and organizations to generate reasonable overviews of sector performance.

Additional indicators can be of equal or even greater importance to individual companies than core indicators in specific contexts of location, activity or stakeholder group.

Additional indicators are typically:

• Assessed as relevant by the reporting company and its stakeholders;

• Associated with only a subset of the industry;

• Reflective of local regulations or legislation;

• Generally related to issues of local or regional significance;

• Evolving and under development.

Additional indicators may often represent a leading practice in sustainability or non-financial reporting.

Furthermore, some qualitative additional indicators may pertain to issues for which there are currently no generally accepted definitions or performance measurement practices. Additional indicators are typically locally defined and/or relate to local or regional issues. Since indicator definitions may not provide comparable or meaningful descriptors of overall company performance, reporters should exercise caution when interpreting additional indicators on a global basis by either consolidating information or aggregating data. Therefore, reporting at the local (operating unit or country) level is becoming more prevalent for oil and gas industry companies, especially to describe performance in locations where a particular issue has high significance or sensitivity.

Presentation of only consolidated qualitative information or aggregated quantitative data with these indicators may not be as meaningful or useful unless local context, disaggregated data or other explanations are provided by the reporting company. A company may not report all indicators addressed here if it has assessed that the indicator or issue is not relevant across all of its activities or because of insufficient information systems, quality, availability or resources.

Core and additional indicators can be defined either quantitatively or qualitatively. Quantitative indicators are reported as a number with a dimensional unit or some form of a numerical index. Certain indicators, however, do not readily lend themselves to quantification. Many social issues, in particular, are primarily reported in qualitative terms as there is not yet common understanding of appropriate quantitative measures.

When qualitative indicators are appropriate, reporting companies are encouraged to consolidate information and report their performance in terms of underlying policies, commitments, programme initiatives, stakeholder partnerships, industry alliances and case study examples that describe results, benefits and lessons learned from various initiatives.

Over time, qualitative indicators may evolve into more quantitative measures. Companies may start out by describing performance related to operational practices and by using anecdotal examples and local case studies. In time, these anecdotal descriptions may converge into a more objective approach for reporting performance within an organizational segment or operating region of a company. Finally, these practices may emerge as a quantitative index for measuring performance or assessing impacts.

Companies report performance data at varying levels of aggregation ranging from individual facilities to national/regional locations and to global coverage for the entire corporation. Aggregate reporting at the corporate level is most commonly observed for reporting occupational injuries, environmental emissions and incident data as part of both regulated and voluntary public reporting. Reporting companies are encouraged to determine the level of aggregation that is appropriate and provides a meaningful representation of the data being presented.

There are two principal aspects of performance indicators that are of interest to internal and external users of sustainability or non-financial indicator performance data: the absolute quantity of the indicator and the normalized quantity relative to some other measured input or output.

Reporting companies often present raw performance data in terms of absolute quantities that can be expressed in a physical unit of measurement related to weight, volume, energy or financial value. In general, absolute data can be expressed in units of measurement that are readily convertible. Absolute quantities may provide information about the magnitude or size of an output, input, value, or result.

Normalized quantities are relative figures representing ratios between two absolute quantities of the same or different kind. Ratios allow comparisons among operations of different size and facilitate comparisons of similar products or processes. They also help relate the performance and achievements of one company, business unit, or organization to those of another. Ratio indicators can provide information on the efficiency of an activity, on the relative intensity of an output (e.g., energy intensity) or on the relative quality of a value or achievement.

Often, companies measure and report performance based on both absolute and normalized quantities to provide a more complete and balanced representation of sustainability or non financial performance.

For many oil and gas companies, describing the boundaries of reported information or indicators is an important consideration because they often cut across an array of complex operational and organizational relationships, as well as direct and indirect impacts. In the oil and gas industry, two or more parties are often involved in an asset, such as in a joint venture, and work together under a variety of legal forms. In some but not all situations, performance indicators can be aggregated and normalized across a range of dimensions that consider ownership, management accountability, geographic and national locations, industrial sectors, company divisions, business units, facilities and source types.

The different types of performances indicators are the following:

1. Environment performance indicators:

•Hydrocarbon Spills to the Environment;

•Controlled Discharges to Water;

•Other Spills and Accidental Releases;

•Other Effluent Discharges;

•Hazardous Waste;

•Non-Hazardous Waste;

•Recycled, Reused or Reclaimed Materials;

•Greenhouse Gas Emissions;

•Flared and Vented Gas;

•Other Operational Air Emissions;

•Energy Use;

•Freshwater Use;

•New & Renewable Energy Resources;

• Environmental Management Systems;

•Biodiversity;

•Other Environmental Indicators.

2.Health & Safety Performance Indicators

•Employee Participation;

•Workforce Health;

•Occupational Injury and Illness Rates;

•Product-related Health Risks.

3.Social Responsibility Performance Indicators

•Human Rights;

•Bribery and Corruption;

•Political Contributions;

•Political Lobbying and Advocacy;

•Non-Discrimination and Equal Opportunity;

•Employee Satisfaction;

•Training and Development;

•Non-retaliation and Grievance System;

•Local Employment Opportunities;

•Labor Practices;

•Community Relationships;

•Social Investments;

•External Capacity Building;

•Indigenous Communities;

•Resettlement and Land Rights;

•Security.

4.Economic Performance Indicators

•Transparency of Payments;

• Dividends Paid Plus Share Repurchases;

•Payroll and Benefits Suppliers ;

•Capital Expenditures;

•Interest Paid

5.Normalization Factors

•Production of crude oil, condensates, natural gas liquids and dry gas in barrels of oil equivalent;

•Refining throughput;

•Product delivered or terminal throughput;

• Pipeline throughput;

• Motor fuel sales;

• Cargo transported.

Simply put, the measurement of performance for the Exploration activities require different statistics from that of Production. This is because Exploration dove-tails into Production, otherwise it will make less economic sense if one fails to produce reservoirs uncovered. Thus;

For Exploration; one may be interested in Number and Quality of seismic data produced. Number of shootings and time taken (efficiency) to obtain such data, Down time (Man hr losses) as a result of stakeholders disturbances, Quality of interpretation of seismic data and time taken to process data to enable Field Plan Development, Cost of all associated activities and for HSE, Number of LTIs (Loss Time as result of injuries).

For Production: It is important to note production based on barrels per day always measured in millions (mbpd), Production cost of each mbpd (efficiency) bearing in mind, number of staff (direct and indirect), No of disruptions of productions due to stakeholder issues, Number of Environmental issues (especially as a result of technical or equipment mal-functionings but not as a result of Sabotage), HSE, Number of LTIs (Loss Time as result of injuries.

Thus you may wish to categorize the KPIs (Key Performance Indicators) along the following thematic groups.

(a) Exploration or Production key Statistics ( Quality deductions from interpreted data and mbpd production figures)

(b) Stakeholder Management (Social Investment) & Sustainability Issues -

(c) HSES (Health, Safety, Environment and SECURITY)

Jorge,

Thanks a lot of for the extensive contribution. I would like to ask a followup questions:

1. As performance is conceptualised the ratio of output to input, what would you categorise as input factors for oil and gas exploration and production organisations that could lead to the listed 'performance factors' in your submission?

2. What does it mean to 'normalise' some of the 'performance factors' you identified?

3. Are aware of any study benchmarking the performance or the exploration and production organisations in any country or globally?

Regarding your questions, these are some ideas that could help:

1-Oil and gas companies conduct exploration projects worldwide in an attempt to search for and extract this extremely valuable global resource. Early oil and gas explorers relied upon surface signs for finding oil and gas deposit sites. Today, developments in science and technology have made oil and gas exploration more productive and efficient. Oil and gas exploration encompasses the processes and methods involved in locating and discovering potential sites for oil and gas drilling and extraction. This is the first-stage of oil and gas production. Many uncertainties exist during the exploration process. Geological surveys are conducted using various means from testing subsoil for onshore exploration to using sophisticated technology such as seismic imaging for offshore exploration.

Exploration cost can vary dramatically. The cost for unsuccessful exploration, which consists of seismic studies and a dry well, can cost US$5 million to US$20 million per exploration site, and in some cases, much more. However, when an exploration site is successful and oil and gas extraction is productive, exploration costs are recovered and are significantly less in comparison to other production costs.

Once a company identifies where oil or gas is located, plans begin to drill an exploratory drill well. Drilling is the final stage in the exploration process. Drilling allows further evaluation of the subsurface and reveals if oil and gas exist at a particular drilling site. Drilling an exploratory well can average 2 to 6 months. Drilling depths, rock hardness, weather conditions and distance of the site can all affect the duration for drilling.

2-Some of the so-called "critical success factors" in the oil and gas industry are the following:

-Aligned Resources

-Reliability, Operability and Sustainability

-Safety and the Environment

-Cost, Risk and Waste Reduction

-Integrated Goal Driven Management Teams

-Maintaining Focus on the Critical Elements

-Reinventing People and Teams for Higher Performance

Some of the performance factors that can be considered are the following:

-Financial performance: Net income and revenues.

-Production and consumption

-Import and export

-Price

-Productivity of the wells

-Reserves

-Refining capacity and efficiency; other refining factors

-Geographic and political factors

3-In order to compare energy use over time, you need to normalise your energy data for example the level of consumption. After doing this you can identify trends in consumption and apply performance indicators to compare performance. Having identified the factors that influence consumption and normalised your data, it is important to compare your performance against other internal or external reference standards to determine how well you are actually performing.

Sir

I do not think your further explanations numbered 1-3 addressed my questions either in the same order or otherwise directly:

Your detailed explanations seem to dwell on the end results for such organisation, be it what you called ‘performance factors’ or ‘critical success factors’. This I view as one aspect in measuring ‘performance’ which I would like to conceptualize as inputs/outputs.

Now I have received detailed explanations on what factors are considered as outputs in performance of oil and gas exploration and production. My next question is what are the inputs from these organisations to achieve set targets of such outputs?

I will consider your explanation on my second question on ‘normalization’ and revert with request for further clarifications if needed.

My third follow up questions was if you have a source I can get previous studies done on benchmarking the performances of such organizations.?

Dear Yahuza. Could you are some kind to be more specific on what you would like from me?

1- What you consider inputs from the organizations?

Dear Jorge

I don't know what could be classified as inputs (direct or direct), Materials or financial etc that may be attributed to all the elements you mentioned in your first submission as 'performance indicators'.

Definitely such organisations have to do something (inputs) to generate outputs ('performance indicators). My question is what are those things such organisation do that do have direct impact to the quantum measure of the performance indicators, these are the inputs i am looking for.

Dear Yahuza

In my comments you can find the most important inputs and outputs that you are looking for. Read carefully and make the necessary classification of the performance indicators as inputs and outputs. For example net incomes and reserves are inputs and export and waste reductions are outputs, and so on and so on.

Jorge

How could income (net or otherwise) can be an input to oil and gas exploration; unless the process is more than one phase, where an income (which naturally is suppose to be output) could be an input to next stage of the process...

Please describe how 'reserve' can be classified as 'input' to the process of exploration and production

Dear Yahuza

When you talk about oil there is a long chain of events that are part of a process from the existence of reserves to begin the processing of crude oil by your own until you use of the different oil product in several manners. In this long chain of events, inputs and outputs are connected by a process. An output in the chain could become input for the next processt in the chain of events

Let me put an example. You would like to produce different oil products in the country. The first thing that you have to look if you have the oil reserves to carry out that production or you have to buy a certain amount of oil to a foreign country. In the first case you have to know the amount of oil that you need to produce to obtain the different oil products that you want to have, if you have the capacity to process the oil and obtain the different oil products, the type of oil that you need to process and so on. In the second case you have to know the market, the price, how you transport the oil, etc.

It is very difficult to say that this is an input and this is an output unless you are considering only one piece of the whole process.

If this is not what you want, then I am sorry, but I am not following you and perhaps is better to let other experts to give you what you need because I am not an engineer.

Dear Jorge

Thanks a lot for your contribution... your performance indiators are outputs irrespective of which phase / stage of the exploration and production processes one may consider. Therefore, at minimum i beleve one can define the stage and classified the input and outputs else, making performace benchmarking difficult if not impossible.

I assume then that you are not aware of any study of benchmarking the performances of organisations in oil and gas exploration and production activities?

Any text book will show you .r

Rolf

Thanks to resend, since the text seems to be truncated..

Thanks so much for your insight. Kindly, what method will be best for the measurement and quantification of crude oil exploration and its effects?

High, any conference paper on this subject?