ADDING VALUE, PROTECTING THE BUSINESSThe objectives of Tullow's supply chain strategy are to add value and protect the business. Building a sustainable supply chain is integral to this goal and it is also closely aligned with our values and the way we do business in Tullow. Building a sustainable supply chainOur supply chain is embedded in all our activities. It is the starting point for an exploration campaign in-country, underpins the successful delivery of major development projects and helps to run our day-to-day business. Many of our areas of operation, but particularly those in East Africa, present some of our biggest challenges in technical and non-technical risks and sustainable practices. Distance, remoteness, geography, topography and infrastructure are often set within a complex operational context. They are frequently environmentally sensitive areas with multiple and overlapping interest groups and pastoral local communities with low EHS awareness. Delivering logistics in and bringing waste out, building camps in the right way and running trucks to the correct environmental and safety standards, for example, all require a long lead time and strong support to optimise sustainable practices all along the supply chain. As a consequence, we evaluate our suppliers against five key criteria - EHS standards, technical requirements, local content opportunities, ethics and compliance, and the best technically acceptable commercial offer. These five criteria address the 10 principles of the UN Global Compact to develop more sustainable supply chain practices. They also underpin the three key principles at the heart of building a sustainable supply chain for Tullow. These are to protect the environment as much as possible; support the creation of long-term social benefits in host countries; and achieve the right balance between environmental and social considerations, the commercial needs of our business plans and Tullow's commitment to creating shared prosperity.Developing robust contract strategiesAlongside the five criteria for supplier evaluation, supply chain works closely with specialist functions and experts in Tullow to identify all the risks in relation to the provision of goods and services. We also work with external stakeholders to aid our discussion on the design of contract strategies. This enables us to identify the custom elements that are needed in a contract to ensure we meet or exceed sustainable supply chain criteria and address all identified risks. We directly monitor supplier behaviour and practices on location and mandated supplier reporting gives us added assurance of high standards of performance. STRATEGIC IMPORTANCEThe activities in our supply chain impact every aspect of our business model, including how we create value as a company and how we run our business in pursuit of prudent risk management, strong governance, entrepreneurial flair and shared prosperity.HIGHLIGHTS FOR THE YEARNEWA new supplier centre was launched to promote transparency in how to do business with Tullow and what opportunities are available in our areas of operation.FIVETullow has five key supplier evaluation criteria which address the 10 principles of the UN Global Compact to develop more sustainable supply chain practices.UPDATEDIn 2011, supplier contractual terms were updated to take account of Tullow's new Code of Business Conduct. Supplier workshops have been held in Bangladesh and Kenya and for the TEN Project in Ghana.REVISEDMaster contract agreements were revised in 2011 to embed EHS standards and mandate local content requirements. DETAILED PERFORMANCE INFORMATIONSustainable supply chain and related local content performance information against objectives for 2011/2012 and key plans for 2012/2013 are set out on page 54 and 55 of this report.Sustainable supply chain72Tullow Oil plc 2011/2012 Corporate Responsibility Report

We recognise that local suppliers need additional support to achieve supplier pre-qualification, in addition to assistance post contract award to make sure they consistently meet the standards required. Most importantly we plan for success in our contract strategies so that we can meet peak supply chain requirements in a sustainable way and move to a fast track once oil is found. Our supplier development programme is set out in the local content section on pages 74 to 75 of this report.Fostering a wider opportunityLocal content plays an important role in risk assessment and market intelligence for our contract strategies. We are also developing stakeholder engagement skills within the local content team to work with all aspects of local and national government in support of robust legislation and strong government initiatives to build capacity. In 2012/2013, we are extending enterprise development and capacity building to a wider range of services and goods. We are also looking at creating greater linkages across our supply chain through vocational skills training and agri-supply. Agriculture is a significant part of host country development goals as it enhances food security and is a major source of revenue and employment.While there is a finite opportunity for suppliers within our supply chain, developing capacity to serve the emerging oil industry can be a passport to opportunity and growth in new business for local suppliers. The multiplier effect of higher standards, entrepreneurial networks and business-to-business relationships can evolve into economic and social development beyond the oil sector. Lasting improvements in quality, productivity and governance can serve as a magnet to attract other goods and services and foreign direct investment. Growing a country's private sector is the only long-term way to build a dynamic economy and benefit the lives of local people. In partnership with a wide range of stakeholders, Tullow can, through its supply chain, assist in building the right environment to facilitate local and international investment, thereby creating jobs and building a more diversified economy.We can already demonstrate that transferable skills and services can lead to new business opportunities and partnerships with international companies. Visit www.tullowoil.com/casestudies Tullow's Compliance team, along with Supply Chain, hosted the first Industry Partner Compliance Workshop in Bangladesh this year. This was followed by a similar event in Kenya. The forums featured an overview of anti-bribery legislation, including the UK Bribery Act 2010, and outlined Tullow's compliance expectations of Industry Partners. The forums also covered the importance of due diligence, the effects of non-compliant behaviour and details of Tullow's confidential reporting line.In addition, the Industry Partners were given an overview of Tullow's Code of Business Conduct, introducing key supplier related elements such as our gifts and hospitality policy and facilitation payments guidance. The issue of facilitation payments was an area of particular interest when Tullow and the Industry Partners discussed the challenges of working in developing countries.SUPPLIER ETHICS AND COMPLIANCEMore information PageCompliance 57Local supplier expenditure 83" Tullow's commitment to creating shared prosperity for our host countries, as well as our business, is underpinned by ethical and responsible business practices focused on creating a sustainable supply chain."David Mooney Head of Supply ChainMEASURING OUR PERFORMANCEMichael Mawuli Ahorlu, Supplier Development Specialist, Tullow Ghana73www.tullowoil.com3