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Partners,
suppliers and contractors

We participate in 281 oil and/or gas blocks in 21 countries in which we do not have control of the operation and we use our capacity for influence to transmit our ethical, environmental and human rights standards to our partners.

Relations with our partners

A significant proportion of our activities is carried out by partners. These relationships are formalized by means of joint operating agreements (JOAs), which define the responsibilities of all the parties, particularly of the operating partner.

At December 31, 2011, we were participating without operational control in 281 blocks located in 21 countries, three more than the year before, due to new participation in a non-operated block in Spain and our entry into Ireland and Russia. Of these blocks, 184 are dedicated to exploration activities, 85 are under development and the remaining 12 are service contracts.

In light of how important it is that our partners apply ethical, social and environmental standards comparable to our own, in activities in which Repsol is not the operating partner we use our capacity for influence to ensure that our policy and management systems, or principles and systems equivalent to our own, are applied.

We notify our partners of our corporate responsibility requirements primarily via the technical committees. These sessions allow us to share experiences, examine the impact of the project and plan mitigation and remediation measures.

In 2011, we made progress with the commitments made in the Sustainability Plan 2012, after completing the review of the JOAs, which now include references to ethical behavior, fighting corruption, security and the environment. In 2012, we will continue to work to ensure that new agreements signed or renewed include clauses related to human rights.

Acquisition of new assets

Before deciding to get involved in a new exploratory block or a new block under development, we assess the existing and potential risks. In these assessments we pay special attention to risks relating to corruption or insufficiently justified payments, the existence of environmental liabilities, the safety of the existing facilities and the presence of communities in the affected area.

This process of due diligence is regulated by company policy and involves the participation of different areas of the company in the preliminary assessment process. This assessment assumes particular importance in socially or environmentally sensitive areas, such as those where indigenous communities are present, where there is a great deal of biodiversity or where there are exceptional safety concerns.

The audit and control department, at the request of the business units and the legal services department, takes part in the audits prior to the acquisition of assets. These audits include a thorough review of the processes for negotiating and signing contracts, paying particular attention to possible risks of corruption or failure to adhere to the guidelines described in the United States' Foreign Corrupt Practices Act.

Controls in non-operated partnerships

In 2011, the audit and control department carried out 40 studies of non-operated assets and contracts, in accordance with the plan put in place in 2010 to audit, as far as possible, all assets not operated by the company. This increase compared to the year before was due to a rise in investment in non-operated activities and to recent exploratory successes.

When auditing an asset not operated by the company, we carry out an analysis of the operation, taking into account the needs and specifics of each partnership. The scope includes, among other things, verifying the fulfillment of contracts by the operator and other partners, checking transactions and the distribution of production, examining the internal control processes and analyzing technical aspects of the operation.

In our audits of non-operated assets, we perform a selective check of transactions carried out and payments made by the consortium. In the event that unjustified expenditure or a potential incidence of corruption is detected, it is then analyzed. Once potential breaches detected during the course of the audits have been analyzed, they are formally reported, in writing, to the appropriate levels, including Repsol's senior management, so that the appropriate measures can be taken.

At the same time, recommendations are made about implementation of the remedial measures needed to rectify any internal control problems. Depending on the relevance or urgency of these measures, we use additional means of reporting, both internally and to partners, such as issuing audit notes, sending formal letters, working meetings with partners or with the committee responsible for operational control.