Ensure Long-Term Viability
Access to Resources
Some 60 percent of ConocoPhillips’ oil and natural gas reserves and production are within Organization of Economic Cooperation and Development (OECD) nations. However, some of the most resource-rich areas are in countries that pose risks associated with political instability, rule of law or corruption. Consequently, in 2004 the ConocoPhillips board adopted a resolution that the company will not approve business ventures in sensitive countries unless they comply with both the letter and the spirit of all U.S. government restrictions on business activities in such areas. The board also regularly reviews the business activities of the company in sensitive countries. The company has developed internal guidelines to assist employees in conforming with policies related to business activities in sensitive countries and to comply with applicable government regulations in areas subject to U.S. or international sanctions. Before entering a new country – or for other new developments, when warranted by the geopolitical environment – the company assesses the political risk of a potential investment. On May 1, 2007, in accordance with the requirements of a Venezuelan presidential decree law issued on Feb. 26, 2007, Petroleos de Venezuela S.A. (PDVSA), the Venezuelan national oil company, assumed operational control of ConocoPhillips’ interests in two Venezuelan onshore heavy oil projects, Petrozuata and Hamaca, and the offshore Corocoro project. ConocoPhillips cooperated with established transitional committees to ensure a safe, orderly transfer of operations. While discussions with the Venezuelan government are ongoing, as of June 2007, agreements had not been reached concerning appropriate compensation for the expropriation of the company’s interests. Throughout our six years of involvement in the Corocoro area, we have worked with stakeholders to understand their needs and concerns and to develop, in conjunction with the local community, national and international nongovernmental organizations and the national government, regional and national programs for biodiversity conservation and socio-economic development. We have provided advanced funding for five of these programs to ensure their continuation through the remainder of 2007. These five programs are for breastfeeding education, small-business microcredit financing, biodiversity participatory monitoring, handicraft training for the Warao (the local indigenous people) and leadership development for local entrepreneurs. After 2007, PDVSA will be responsible for determining whether these programs will continue. We hold nonoperating interests in the Niger Delta of Africa, an area challenged by social upheaval and safety and security risk. We work with the operator and our fellow interest holders to address the sustainability risks faced by our projects and their potential impact on the region and to develop strategies to mitigate those impacts.