Sustainability Initiative: Integrating Environment and Social E&S Requirements into a Front End Loading FEL Management System

Abstract

Abstract All project requirements should completely be defined in the planning phase, thus it seen as the most critical activity in a project’s lifecycle. Sustainability aspects for an Exploration & Production (E&P) project need to be included starting from planning phase to identify and manage project risks particularly in Environment and Social (E&S) sides. In fact according to a study, some key principles of sustainability have actually been adopted in the E&P activities. Meanwhile, Front End Loading (FEL) is a structured approach to increase the predictability of the project outcomes by narrowing down the risks from all technical, commercial, legal, E&S and other aspects. It uses a stage gate system in order to assure the project prior to authorization and to move on to the next step of investment decision, and a typical FEL method has widely implemented in the E&P business across the globe using different company name. One of set of requirements addressing sustainability aspects in a project is that Performance Standards (PS) developed by IFC (International Finance Corporation). It has 8 comprehensive elements and internationally-accepted standard of E&S practices which encourages transparency and positive contribution to environment and community. In addition, adopting IFC PS has been mostly becoming compulsory nowadays when dealing with financial institutions to support a project financing to be considered as green financing. This paper will explore how to integrate E&S requirements taken from IFC PS, such as E&S Impact Assessment (ESIA) and E&S Management System (ESMS) into a FEL management system for an E&P company operated in Indonesia. It will discuss the gaps between sustainability features in IFC PS and Government regulation, and finally bridge them properly. To conclude, it is very important to include sustainability requirements earlier in the project’s lifecycle to help manage E&S risks in the project and improve the outcomes.