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ENVIRONMENTAL &

SOCIAL

MONITORING REPORT

4th QUARTER 2010

(CONSTRUCTION AND

OPERATIONS)

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ENVIRONMENTAL AND SOCIAL MONITORING REPORT (CONSTRUCTION & OPERATIONS PHASE)

TABLE OF CONTENTS

1 EXECUTIVE SUMMARY ............................................................................................7 1.1 Project Progress........................................................................................7 1.2 Environmental & Social Management Plan ...............................................7 1.3 Social Compliance.....................................................................................8 1.4 Health and Safety......................................................................................8 1.5 Lender Compliance ...................................................................................9 2 INTRODUCTION TO MAIN REPORT.........................................................................9 3 BRIEF SUMMARY OF CONSTRUCTION PROGRESS..............................................9 3.1 General Project .........................................................................................9 3.1.1 EPC Plant..................................................................................................9 3.1.2 EPC Pipeline .............................................................................................9 3.1.3 Upstream Construction and Tests ...........................................................10 4 UPDATE: ENVIRONMENTAL AND SOCIAL STUDIES, SURVEYS, REPORTS ......11 AND INTERNAL MONITORING .......................................................................................11 4.1 Marine Environment ................................................................................11 4.1.1 Sensitive Marine Works...........................................................................11 4.1.2 Monitoring by International Union for Conservation of Nature (IUCN).....11 4.2 Fisheries..................................................................................................11 4.3 Environmental .........................................................................................11 4.3.1 Waste Management ................................................................................11 4.3.2 Coastal Zone Management Plan (CZMP)................................................11 4.3.3 Water Quality Management.....................................................................12 4.4 Social.......................................................................................................12 4.5 Archaeology ............................................................................................12 4.6 Health and Safety....................................................................................13 4.6.1 Emergency Response (ER) and Crisis Management ..............................13 4.6.2 Health, Hygiene and Medical Matters......................................................13 4.6.3 ISO14001 Certification ............................................................................14 4.6.4 HSE Management Information System (MIS)..........................................14 4.7 Recruitment .............................................................................................14 5 MANAGEMENT OF CHANGE ..................................................................................14 6 UPDATE ON SOCIAL AND ENVIRONMENTAL TRAINING ACTIVITIES .................15 6.1 Formal Training .......................................................................................15 6.2 On the Job Training.................................................................................15 7 SUMMARY OF CONSULTATION AND COMMUNICATION ACTIVITIES.................15 7.1 Public Consultation and Disclosure Plan (PCDP)....................................16 7.1.1 Yemen LNG Internal Communication......................................................16 7.1.2 Project Area Awareness Campaigns .......................................................16 7.1.3 Wider Stakeholder Engagement..............................................................16

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7.1.3.1 Liaison with Authorities............................................................................16 7.1.3.2 Liaison with Communities........................................................................17 7.1.3.3 Community Newsletter and Magazine for Children .................................17 7.1.4 Issues and Response Management ........................................................17 7.2 ESMP & Lender Liaison: .........................................................................18 7.3 Project / Shareholder Liaison ..................................................................21 8 SUMMARY OF LAND ACQUISITION AND COMPENSATION ACTIVITIES.............21 8.1 Land Acquisition & Compensation...........................................................21 8.2 Short Term Economic Loss Compensation .............................................21 8.3 Fisheries Compensation..........................................................................21 9 ESMP IMPLEMENTATION.......................................................................................22 9.1 Terrestrial Environment ...........................................................................22 9.2 Marine Environment ................................................................................23 9.2.1 Coral Monitoring and Biodiversity Action Plan (BAP) ..............................23 9.2.2 Fish and Marine Biodiversity ....................................................................23 9.3 Labour Management ...............................................................................23 9.4 Archaeology & Cultural Heritage .............................................................24 9.5 Public Consultation and Disclosure Plan (PCDP)....................................24 9.6 Resettlement Action Plan (RAP) Commitments ......................................24 9.7 Contractor Control Plans (CCPs).............................................................25 10 NON-COMPLIANCES...............................................................................................25 11 HEALTH, SAFETY AND ENVIRONMENTAL INCIDENTS........................................25 11.1 Overview of Health & Safety Performance at end of 2010 ......................25 11.2 Tabulation of Incidents during Reporting Period......................................26 11.3 Tabular Statistics (Incident Rates per Million Man-Hours Worked) .........27 11.4 Key Incidents during Reporting Period ....................................................27 11.4.1 Lost Time Injuries ....................................................................................27 11.4.2 Restricted Work Cases............................................................................27 11.4.3 Medical Treatment Cases........................................................................28 11.4.4 Environmental Issues ..............................................................................28 11.4.5 High Potential Incidents...........................................................................28 12 SUMMARY OF SUSTAINABLE DEVELOPMENT PROGRAMS AND ACTIVITIES ..29 12.1 Overview .................................................................................................29 12.2 Social Programs ......................................................................................30 12.2.1 Programs for Women ..............................................................................30 12.2.2 Health Program .......................................................................................31 12.2.3 Education Programs ................................................................................32 12.3 Economic Programs ................................................................................33 12.3.1 Apiculture ................................................................................................33 12.3.2 Agriculture................................................................................................34 12.3.3 Fisheries Program ...................................................................................35 12.4 Vulnerability Alleviation Programs ...........................................................37 12.4.1 Water.......................................................................................................37 12.4.2 Electricity .................................................................................................38 13 UPDATE ON SIGNIFICANT CHANGES IN APPLICABLE ENVIRONMENTAL LAWS .....................38 14 MATERIAL ENVIRONMENTAL CLAIMS AGAINST YEMEN LNG ............................38

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LIST OF TABLES

Table 1: EPC Plant, Upstream and EPC Pipeline Information..........................................7 Table 2: Construction (Phase 2) Progress (Reported by SEPOC).................................10 Table 3: Incidents during Reporting Period.....................................................................26 Table 4: Incident Rates for the Reporting Period ...........................................................27 LIST OF FIGURES Figure 1: Construction (Phase 2) Progress.....................................................................10 Figure 2: One of the Proposed Landfill Sites ..................................................................12 Figure 3: Reinstatement Work on the Plateau ................................................................13 Figure 4: Training Sessions in Dubai, Balhaf and Sana’a...............................................15 Figure 5: Liaison with Communities ...............................................................................17 Figure 6: Issues per Project Region...............................................................................18 Figure 7: Issues per Areas of Concern ..........................................................................18 Figure 8: Total Fish Landings – Jan 2008 to July 2010 ..................................................22 Figure 9: Satisfaction Certificate signed by Community Members.................................24 Figure 10: Health and Safety Performance during 2010................................................26 Figure 11: 5-Year Sustainable Development Strategy....................................................29 Figure 12: Ceremony to Celebrate Completion of Infrastructure Development..............30 Figure 13: Yemen LNG’s GM Signs MoU with Public Works..........................................32 Figure 14: Provision of Tents as Temporary Classrooms ...............................................32 Figure 15: Yemen LNG Awards 40 Scholarships............................................................33 Figure 16: Elb Trees Planted in the Project Area............................................................34 Figure 17: Donation of Motorbike for Veterinary Services ..............................................35 Figure 18: Construction of MFW Office in Bir Ali.............................................................36 Figure 19: Yemen LNG Donates Tractor to Jela’ah Fishermen ......................................36

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ABBREVIATIONS ALARP As Low as Reasonably Practicable BAP Biodiversity Action Plan BVS Block Valve Station CBC Committee for Business Continuity CCP(s) Contractor Control Plans CCR Crisis Control Room CMS Company Management System CPU Central Processing Unit CRO Community Relations Officers (replaces CLO role) CRSD Community Relations and Sustainable Development Department CZMP Coastal Zone Management Plan EBS Environmental Baseline Study EMSA Emergency Medical Services Agency EPA Environmental Protection Authority EPL Republic of Yemen Environmental Protection Law (1995) EPC Engineering, Procurement & Construction ESDV Emergency Shutdown Valve ERT Emergency Response Team ESIA Environmental & Social Impact Assessment ESMP Environmental and Social Management Plan ESMS Environmental and Social Management System E&I Electrical and Instrumentation E&S Environmental and Social FAC First Aid Case FAD Fish Aggregation Device FRC French Red Cross GEF Global Environment Facility GM General Manager HR Human Resources HSE Heath, Safety and Environment HSEQ Health, Safety, Environment and Quality IP Injured Party IRR Issues and Response Report IUCN International Union for Conservation of Nature KP Kilometer Point (relating to pipeline location) KPU Kamil Processing Unit LCTF Lender Compliance Task Force LEDP Local Economic Development Plan LNG Liquefied Natural Gas LTI Lost Time Incident LTIF Lost time Injury Frequency

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MAA Maritime Affairs Authority MAI Ministry of Agriculture and Irrigation MEDEVAC Medical Evacuation MEP MacAlister Elliott & Partners MEZ Maritime Exclusion Zone MFW Ministry of Fish Wealth ML Material, Plant or Production Loss Incident MMcfd Million Cubic Feet Per Day MoE Ministry of Education MOF Material Offloading Facility MOM Ministry of Oil and Minerals MoU Memorandum of Understanding MRA Maritime Restricted Area MTC Medical Treatment Case NDT Non-Destructive Testing NGOs Non-Governmental Organizations OSCP Oil Spill Contingency Plan PTW Permit to Work RAP Resettlement Action Plan ROW Right of Way ROY Republic of Yemen RWC Restricted Work Case SD Sustainable Development SEPOC Safer Exploration and Production Operating Company SFD Social Fund for Development SIMOP(s) Simultaneous Operations SME Small and Medium Enterprise STP Sewage Treatment Plant SWM Solid Waste Management TRIR Total Recordable Incident Rate TSS Total Suspended Solids USAID United States Agency for International Development WSA Waste Storage Area YCG Yemen Coast Guard YFCA Yemen Family Care Association YGC Yemen Gas Company YLNG Yemen LNG Company YRCS Yemen Red Crescent Society

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1 EXECUTIVE SUMMARY

This Environmental and Social Monitoring Report is produced by the Yemen LNG Lender Compliance Task Force and it describes HSS&E performance for the fourth quarter of 2010. The following section summarizes key achievements across project, environmental, social, health and safety and lender compliance.

1.1 Project Progress

Overall Yemen LNG progress is 99.6% vs. 99.8% (as per the May 2010 revised plan). Table 1 below includes information on EPC Plant new Re-Baseline as of November 2008, Upstream New Re-Baseline as of June 2008 and EPC Pipeline Re-Baseline as of June 2007.

Table 1: EPC Plant, Upstream and EPC Pipeline Information

Cumulative Overall Progress %

Actual Target Plan

Delta

EPC Plant

100% 100% 0.0%

EPC Pipeline

100% 100% 0.0%

Upstream Facilities

95.6% 97.1% -1.5%

Total Project 99.6% 99.7% -0.1%

1.2 Environmental & Social Management Plan

During November 2010, Shaw Consultants (accompanied by Yemen LNG and SEPOC) have undertaken a monitoring mission to the Upstream facilities to observe site activities, construction progress and compliance with the Upstream ESMP. Shaw also visited Balhaf to monitor site activities and site compliance against the Operations ESMP. Implementation of the Environmental Management Plan including monitoring continued during Q4 of 2010. Planning for infrastructure development including construction activities at the MOF, a landfill site at Bir Ali and restoration of the South Tower continued while construction of an incinerator was completed. Monitoring activities mainly focused on water quality management, compliance with cultural heritage commitments and sea water temperature. An environmental monitoring mission was conducted at the Balhaf site in December 2010 and all parameters were within the stipulated limits.

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1.3 Social Compliance

During Q4 of 2010, implementation of the Social Management Plan including the 5-Year Sustainable Development Strategy, Public Consultation & Disclosure Plan (PCDP) and the Resettlement Action Plan (RAP) continued.

Sustainable Development programs including agriculture, beekeeping and fisheries continued to be successful (albeit with some technical difficulties experienced with the Fish Aggregation Devices that are being discussed with the implementing agents), Good progress has been made with Social programs including education, health and women. Several training and capacity building programs have been planned and conducted in Sana’a and in the coastal area and based on successes achieved with Bir Ali women, small loans will be provided to them in the beginning of 2011 to start with their own small businesses. A reproductive health lecture workshop is planned for women in the coastal area and it’s expected that more than 150 women will attend. The Health Contract which includes a rural hospital in the coastal area is still being discussed with the selected implementing agent, Yemen Family Care Association. Yemen LNG has signed an agreement with Public Works to upgrade and or construct 10 new schools in Shabwah and forty scholarships have been awarded to Shabwah students. English training courses for fishermen in the coastal area and training courses for twelve fishermen at the Marine Technical Institute in Aden continue. Good progress has also been made with vulnerability alleviation projects which includes water and electricity provision to Yemen LNG’s neighbouring communities in the coastal area from the Balhaf Plant. Several other water projects in Shabwah and Marib have been completed.

During Q4 of 2010, communication with stakeholders (including local and central government, project neighbouring communities and implementing agents) continued through efficient and effective consultation guided by the Public Consultation and Disclosure Plan (PCDP). The PCDP, originally drafted for construction consultations and amended in 2009 to recognize the transition to Operations, has been updated again in November 2010 to outline and guide PCD activities throughout the Operations phase of the Project.

Implementation of the Resettlement Action Plan (RAP) continued with a focus on reinstatement of waterways and water channels.

Mentoring of the Yemeni staff by the Social Consultant, as part of effective succession management continued and CRSD staff also attended an internationally accredited course in Public Participation in December 2010.

1.4 Health and Safety

During the reporting period several actions have been taken to ensure emergency response measures are in place, including the appointment of a rescue team at the Sana’a offices (for commencement of duties in Q1 of 2011), training sessions on emergency response duties and transfer of an ambulance vehicle from Balhaf to the Sana’a offices in case of emergency. Monitoring activities including inspection of fire alarm and fire extinguishers, health and hygiene inspections by Total’s Chief Medical Officer, recording of key incidents (including lost time injuries, restricted work cases, medical treatment cases and environmental issues) continued and are being reported in more detail in this report. Plans to obtain ISO 14001 certification within 18 months (ie by mid 2012) and to adopt ‘Maestro’ as HSE’s Management Information System, have been validated by the HSE Steering Committee.

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1.5 Lender Compliance

In recognition of the business critical nature of Lender Completion, Yemen LNG has set up a dedicated Lender Completion Task Force whose primary role is to facilitate and motivate the measures needed to achieve the timely submission of the completion certificates in nine areas listed in section 7.2. This task force reports to the Yemen LNG General Manager. The LCTF has drawn up a detailed project plan (e.g. timeline) which covers the 12 month period from 1st October 2010 to 30th

September 2011 and it details the milestones and key deliverables which are required for each of the 9 certificates.

2 INTRODUCTION TO MAIN REPORT

This report summarises the HSSE aspects of the Yemen LNG project Construction and Operations phase activities undertaken during the fourth quarterly reporting period of 2010 (1st October - 31st December). It describes the Upstream construction progress during the period and it provides details of environmental and social performance; monitoring and training activities; key Public Consultation and Disclosure Plan initiatives; the current status of Resettlement Action Plan activities and progress on the implementation of projects within the 5-year Sustainable Development Strategy framework.

3 BRIEF SUMMARY OF CONSTRUCTION PROGRESS

3.1 General Project

General construction progress at 15th December 2010 is as follows:

• Overall Yemen LNG construction progress is 99.6% vs. a planned 99.7%. The revised plan

includes EPC Plant new re-baseline as of November 2008, Upstream new re-baseline as of May 2010 and EPC Pipeline re-baseline as of June 2007.

3.1.1 EPC Plant

• Close-Out with EPC Contractor: YEMGAS position remains denial of force majeure and deemed accepted final performance tests. Feed gas limitations by SEPOC are delaying the combined train LNG acceptance test.

3.1.2 EPC Pipeline

• Pipeline construction has been completed. • Pipeline: 3rd Party contract/legal advice - EC Harris’s recommendation to be discussed during

the next Yemen LNG Board Meeting • Descent Exposure: Access to site to effect restitution of eroded pipeline cover on the descent

from the plateau, has been impeded due to security issues and tribal disruptions. � Pipeline Repair at KP205: Following the attempted sabotage of the pipeline, final

permanent repair by pipeline specialists, has been completed on 16th December 2010.

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3.1.3 Upstream Construction and Tests

• Upstream progress is 95.6% vs. a revised plan of 97.1% (based on May 2010 revised plan). .

• Upstream Tests

� Yemen LNG plan to commence the Upstream facilities performance demonstration (UFPD) test on 1st January 2011 if the feed gas issue with SEPOC is resolved.

• Upstream Phase 1: Completed and in operation.

• Construction Phase 2

� Meeting to Discuss Delays: Yemen LNG will be meeting with SEPOC and Hawk/Berksan on 19th January 2011 in Abu Dhabi to agree on corrective measures to address delays with construction progress and targets as per schedule.

Table 2 and Figure 1 below reflect progress as reported by SEPOC.

Table 2: Construction (Phase 2) Progress (Reported by SEPOC)

Discipline Wt. % Planned-% Actual-% Variance-% Contribution to Delay

Civil 37% 96% 93% -3% 9%

Structural 5% 100% 100% 0% 0%

A/G Piping 24% 86% 80% -6% 11%

UG Piping 3% 100% 89% -11% 3%

Mechanical Works 7% 100% 84% -16% 9%

Electrical Works 14% 91% 62% -29% 34%

Instrument Works 10% 87% 45% -42% 33%

Total 100% 93% 80% -12%

Figure 1: Construction (Phase 2) Progress

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4 UPDATE: ENVIRONMENTAL AND SOCIAL STUDIES, SURVEYS, REPORTS

AND INTERNAL MONITORING

4.1 Marine Environment

4.1.1 Sensitive Marine Works

• Material Offloading Facility (MOF) Extension Project: Construction activities to extend the MOF to accommodate the berthing of a Navy Marine Vessel will start during the first quarter of 2011. The environmental risk assessment and method statement have been completed.

4.1.2 Monitoring by International Union for Conservation of Nature (IUCN)

• The contractual agreement between Yemen LNG and IUCN states that IUCN representatives will undertake 2 observatory missions to Yemen LNG every year during the contract period (2009-2011). Due to security risk management measures, the second mission planned for November 2010 could not be undertaken as IUCN representatives were not allowed to travel to Yemen. This mission will be replaced by a documentation review and meetings in Paris at Total‘s Headquarters during the first quarter of 2011.

4.2 Fisheries

• Fisheries initiatives undertaken during Q4 of 2011 are covered in sections 8.3 and 12.3.3.

4.3 Environmental

4.3.1 Waste Management

• Bir Ali Landfill Program: Technical studies for designing the Bir Ali landfill and selecting the landfill site have been completed. The Bir Ali community has been involved in the landfill site selection and decision making processes. Work is expected to commence during the first quarter of 2011.

• Bir Ali Village Cleaning Campaign: The waste management awareness campaign conducted

during the first quarter of 2010 is regarded as successful as there is a remarkable difference between the period before the campaign and after it. Approximately 350m3 of waste was initially collected and tools and equipment were provided to the local community to continue with waste management, though on a smaller scale until such time that the larger waste management project is implemented.

4.3.2 Coastal Zone Management Plan (CZMP)

• Yemen LNG and Yemen’s Environmental Protection Authority (EPA) have signed a Memorandum of Understanding (MoU) to support the preparatory phase of the CZMP Project. The objective of the project is to help coastal communities to adjust to the impacts of climate change and to manage biodiversity in the face of evolving coastal changes. EPA will be responsible for preparing the project plan, securing of Global Environment Facility (GEF) funding

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and for implementing the CZMP. As support to this project, a Sensitivity Mapping Survey (Atlas) of the south coast of Yemen (Gulf of Aden) has been undertaken from 8th -19th December 2010. .

4.3.3 Water Quality Management

• The Sewage Treatment Plant (STP) at Balhaf which was previously operated by Yemgas’ subcontractor Intracs, has been operated by CIS since April 2010 under the supervision of Balhaf HSE.

• It has been reported that since the departure of Yemgas at the end of Q2 2010, all water quality parameters monitored are within acceptable limits. Monitoring of the water discharge will again be reviewed in 2011. Studies are on-going to use treated water for irrigation (Green Balhaf Project).

• In order to meet its groundwater monitoring commitments for the Balhaf Plant, Yemen LNG has contracted a company to do a groundwater contamination risk assessment. The draft report was received and is currently being reviewed by Yemen LNG’s HSE Department.

4.4 Social

Social initiatives undertaken during the fourth quarter reporting period of 2010 are covered in Sections 7, 8 and 12.

4.5 Archaeology

• Archaeological Baseline Survey for Proposed Landfill Sites: Baseline studies for the proposed landfill sites (Figure 2) were completed during the reporting period and a report with recommendations for the selection of a site was issued.

Figure 2: One of the Proposed Landfill Sites

• ESMP Compliance Visit: During the reporting period, archaeological monitoring of

reinstatement works on the Plateau has been completed (Figure 3).

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Figure 3: Reinstatement Work on the Plateau

• Construction Phase Archives: The Archeological archiving catalogue that includes more than

12,000 pictures, 500 drawings and a comprehensive description of all archeological sites along the pipeline was finalized during the reporting period.

• South Tower Restoration: The final amendment of the Memorandum of Understanding (MoU)

between Yemen LNG and GOAM to restore the South Tower was drafted and signed by Yemen LNG’s General Manager and was sent to the concerned authorities, namely the Ministry of Oil and Minerals (MOM) and GOAM for approval to commence the work.

4.6 Health and Safety

4.6.1 Emergency Response (ER) and Crisis Management

• A rescue team consisting of 2 fire-fighters/first aiders per shift will be appointed early in 2011 to take care of emergency cases at Yemen LNG’s premises in Sana’a. The rescue team will be available 7 days per week.

• Training sessions on Emergency Response duties continued to be conducted during the

reporting period,

• Monthly inspections and maintenance of fire alarm systems and fire extinguishers were undertaken during the reporting period.

• Two meetings were held with SEPOC HSE to clarify the interface between SEPOC and Yemen LNG in case of the need for a MEDEVAC.

4.6.2 Health, Hygiene and Medical Matters

• Health and hygiene inspections and audits were undertaken by Total’s Chief Medical Officer in December 2010. His report is due in early 2011. .

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• On 18th December an ambulance vehicle has been transferred from Balhaf Site to Yemen LNG’s offices in Sana’a and arrangements have been made for a driver to be on duty to respond in the event of any emergency.

4.6.3 ISO14001 Certification

A plan to obtain ISO14001 certification within 18 months has been validated by the HSE Steering Committee and related training and awareness campaigns will be conducted during 2011.

4.6.4 HSE Management Information System (MIS)

The adoption of ‘Maestro’ as the HSE’s MIS, has been validated by the HSE Steering Committee. Two documents related to the new MIS have been published, namely ‘Medical Evacuation (MEDEVAC)’ and an HSE chart which has been approved by Yemen LNG’s General Manager.

4.7 Recruitment

Three vacant positions in Yemen LNG’s HSE Department have been advertised, namely Head of HSE Methods, Environmental Advisor and Environmental Specialist. .

5 MANAGEMENT OF CHANGE

Nothing to report.

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6 UPDATE ON SOCIAL AND ENVIRONMENTAL TRAINING ACTIVITIES

6.1 Formal Training

• IAP2 Public Participation Training: In December 2010, Yemen LNG staff members attended

an internationally accredited training course in Public Participation (IAP2). Two similar training sessions were held: one in Sana’a and one in Balhaf to ensure that all Community Relations and Sustainable Development personnel as well as some Security staff members have the opportunity to attend the training. Upon successful completion of all 3 modules of the training program, participants received certificates in Public Participation Planning, Communication and Communication Techniques (Figure 4).

• Quality Management Systems: The Head of CRSD Quality and Processes successfully completed the ISO 9001 Lead Auditing course held in Dubai from 7th-11th November 2010 which coincided with the International Quality Day. The training was conducted by John Mercer, one of the Quality Pioneers who set up the system for the Dubai Quality Awards.

Figure 4: Training Sessions in Dubai, Balhaf and Sana’a

6.2 On the Job Training

• Mentoring of the CRSD staff by the Social Consultant, as part of effective succession management continued during the 4th quarter of 2010 as on the job project management training and capacity building have been mainstreamed across all CRSD programs. In general CRSD staff have made exceptional progress in the development of their capacity to implement the 3 components of the Social Management Plan. The 2011 training plan for CRSD staff has been informed by staff’s performance assessments, and advice obtained from the independent Social Performance Review which was undertaken in November and December 2010.

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7 SUMMARY OF CONSULTATION AND COMMUNICATION ACTIVITIES

The following sections summarize the progress on, and activities related to Public Consultation and Disclosure including stakeholder liaison undertaken by CRSD.

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7.1 Public Consultation and Disclosure Plan (PCDP)

In line with Yemen LNG’s PCDP and PCDP Updates, which are key supporting documents for the implementation of social performance measures throughout the operations phase of the Project, activities undertaken during the reporting period are summarized below:

7.1.1 Yemen LNG Internal Communication

• At a weekly meeting between Corporate Affairs (CRSD) and the Security Departments held in November, it was decided that the 2 departments will in future work in a more integrated way to ensure that coordination and liaison with local communities in Yemen LNG’s project area is optimized.

7.1.2 Project Area Awareness Campaigns

• Awareness Creation Materials for Disabled People: Awareness creation materials for the physically disabled in Yemen LNG’s project area has been prepared and will be further informed by Yemen LNG’s implementing agent who provides equipment to the physically disabled in Yemen LNG’s project area. The purpose of the awareness creation is to ensure that users of equipment provided by Yemen LNG fully understand how to use and maintain it in order to optimize benefits.

• MEZ & MRA Billboards: Preparation of the large billboards for the coastal area to inform fishermen (especially nomadic fishermen from Hadramout and other areas) about rules related to the Marine Exclusion Zone’s (MEZ) and the Marine Restricted Area (MRA) is ongoing. The contractor responsible for the boards has recently visited the proposed sites at Jela’ah and Bir Ali where the boards will be erected.

• Education - Guidelines for Teachers: Development of guidelines for teachers’ to ensure that Yemen LNG’s awareness creation programs for school children continue through ongoing awareness creation is progressing. This important component of Yemen LNG’s awareness creation activities will be transferred to the 2011 Public Consultation and Disclosure Plan activities.

7.1.3 Wider Stakeholder Engagement

Various meetings and workshops have been held during the reporting period to support Yemen LNG’s commitment to stakeholder consultation and disclosure. Examples of dialogue between stakeholders and Yemen LNG are summarised below:

7.1.3.1 Liaison with Authorities

• Yemen LNG General Manager Meets with Shabwah Governor: On the 2nd November 2010, Yemen LNG’s General Manager and the Corporate Affairs Manager met with the Governor of Shabwah. During the meeting both parties agreed to work together to resolve several outstanding issues including maintenance work along the Right of Way (RoW) and the employment issue related to ex-watchmen (demobilized at end of Construction).

• Reverse Osmosis Water Project: On 27th November, the Manager of the Rural Water Authority (RWA) in Shabwah met with Yemen LNG’s Construction Manager at Balhaf to discuss the amended design of the Reverse Osmosis Water Project and the role of RWA in the project which mainly includes management of the project outside Balhaf.

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• The Shabwah “University Student Support Project” (USSP): A letter has been received from

the Governor of Shabwah in which he requested Yemen LNG to sponsor enrolment fees for twenty eight students to attend studies at the Hadhramout University for Science and Technology and the Sana’a University. .

7.1.3.2 Liaison with Communities

• Meeting with New Beekeepers: An introductory meeting was held in Eiath to welcome new candidate beekeepers who were selected by the Village Committee. At this occasion, plastic bags for the use of planting Elb trees were handed to candidate beekeepers and advice on planting of seeds planting were given by the Extension Specialist.

• Meetings with Village Committees: During the reporting period, two meetings were held with Village Committees to discuss SD Projects. The first meeting was held with the Badayyan Village Committee to discuss the improvement of the girl’s school in their area at KP230) and another meeting was held with the BaFageer tribe in AlJurah at KP225 to discuss the construction of a Health Care Unit and a school for girls (Figure 5).

Figure 5: Liaison with Communities

7.1.3.3 Community Newsletter and Magazine for Children

• The 6th edition of the Community Newsletter will be issued during the first quarter of 2011. This

will focus on three main Sustainable Development programs supported by Yemen LNG, namely Education, Apiculture and Women’s development. Upon advice from the Social Consultant, a decision has been taken recently to issue three different newsletters, namely one for each project area (including the South, North and Plateau). The purpose of issuing different newsletter is to pay particular attention to SD projects which are being implemented in each area and to address each area’s specific concerns. In addition to the three newsletters, an informational magazine for children featuring topics related to Yemen LNG’s Sustainable Development activities will be distributed to all schools in the project area.

7.1.4 Issues and Response Management

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Issues Received per Area

Q4 2010

0%

57%

27%

8%4%

Contract & Logistic

Environment

PCDP

SD

RAP

HR-Government

Safety&Security

Issues Received per Region

Q4 2010

53%35%

12% 0%

South

Plateau

North

Marib

• Issues and Response Mechanism: The PCDP team continues to respond to issues raised by stakeholders as part of Yemen LNG’s Public Consultation and Disclosure efforts to create a stable operating environment. The diagrams below depict specific areas of concern related to issues raised by stakeholders during the 4th quarter of 2010 with sustainable development program issues being the most prevalent at 57% followed by RAP issues at 27% (Figure 7). The largest proportion of issues has been raised by stakeholders in the South at 53%, followed by the Plateau at 35% (Figure 7). Awareness Programs to manage communities’ expectations on Sustainable Development Programs and Resettlement Activities will be implemented in 2011.

Figure 6: Issues per Project Region

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Figure 7: Issues per Areas of Concern

7.2 ESMP & Lender Liaison:

• Yemen LNG Project “Completion Certificates”: The Common Terms Agreement (CTA) which was signed on 19th May 2008 sets out in detail the legal agreement with the Lending Agencies

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in order for them to part-finance the Yemen LNG Project. “Completion” is defined as the first day on which a series of nine “Completion Certificates” are delivered by Yemen LNG to the Lenders’ Intercreditor Agent (ICA), having been signed off to the satisfaction of an Independent Facilities Consultants (IFC), of whom there are four assigned to this task.

The nine Completion Certificates and the corresponding Independent Facilities Consultants who are responsible for providing the necessary evidence and certificates (noting that two of the certificates are self certified by Yemen LNG) are listed below. � Physical Completion Certificate (SHAW Consultants) � Upstream Facilities Performance Certificate (SHAW Consultants) � LNG Performance Reliability Certificate (SHAW Consultants) � Shipping Certificate (Poten & Partners) � Material Balance Certificate � Financial Completion Certificate (Bankserve Insurance Services Ltd) � Legal Completion Certificate � E&S Completion Certificate (SHAW Consultants) � Security Completion Certificate (Control Risks Group) Completion Project Plan: With regard to deliverables, a listing of all key documents and contractual commitments has been drawn up for each certificate. This itemizes the nature of the deliverable/commitment, who will be responsible for delivering it, who will be responsible for reviewing it and who will be responsible for approving it, plus the date by which it should be approved. Progress towards achieving each of these nine certificates at end December 2010 is as below:

o Physical Completion Certificate: A number of elements which count towards the Physical Completion Certificate have already been satisfactorily completed and work is progressing on the remaining aspects (mainly the provisional acceptance certificate for the fourth cryogenic unit CPU2 and intelligent pigging of the main line). Part of the completion dossier has been passed to the Independent Facilities Consultant and the balance will follow in the coming months.

o Upstream Facilities Performance Certificate: The Upstream Facilities Performance certificate gives evidence of the testing of the upstream facilities. Essentially this comprises (a) a 6 months test of the combined upstream facilities and (b) separate 10-day tests of each of the four cryogenic units (KPU-1, KPU-2, CPU-1 which are existing, & CPU-2 which is the new 4th cryogenic unit). Testing of the combined upstream facilities is scheduled to commence on 1st January 2011 and testing of the first cryogenic unit will commence during February. SHAW Consultants has nominated a 3rd party witness to observe the Upstream tests, he will mobilise in mid February. A monthly test report will be issued to chart progress with the 6-month test against the acceptance criteria.

o LNG Performance Reliability Certificate: The LNG Performance Reliability certificate gives evidence of a 90-day continuous test of the combined LNG facilities (trains 1 & 2 operating together, supplied with feed gas from the upstream facilities). There are clearly defined parameters for success which include production quality and quantities and limitations on unplanned shutdowns. The draft test procedure will be forwarded to the Independent Facilities Consultant in mid February. This test is scheduled to commence on 1st April 2011.

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o Shipping Certificate: The Shipping Certificate has been successfully obtained. It was sent to the Lenders’ Intercreditor Agent on 30th October 2010.

o Material Balance Certificate: Reservoir data to inform the material balance calculation has been sought from the Upstream operator SEPOC, but agreement on submission of this data has not yet been reached. The reservoir data must cover the period from 01 January 2005 to the date of the certificate. The material balance certificate must be submitted within 90 days of Completion, the final date for Completion being 30 September 2011.

o Financial Completion Certificate: The Financial Completion Certificate must be submitted at the end of the completion process (ie on or about the date of Completion) hence it is too early to contemplate this. However, the supporting evidence is being collated in order to reduce the workload during 3Q2011.

o Legal Completion Certificate: The Legal Completion Certificate must also be submitted at the end of the completion process; hence it is too early to contemplate this. However, the supporting evidence is being collated in order to reduce the workload during 3Q2011.

o E&S Completion Certificate: The Environmental & Social Certificate gives evidence of compliance with the E&S obligations of the loan agreements, primarily through assessment of a suite of documentation and by on-site monitoring of compliance with the Operations ESMP and Upstream ESMP which are the primary documents in which compliance is mandated. The E&S obligations in the loan agreements are wide ranging but they are being progressively closed out through 2010 and into 2011, however this process is independently audited and it will run up to Completion

o Security Completion Certificate: The Security Completion Certificate has been successfully obtained. It was sent to the Lenders’ Intercreditor Agent on 30th November 2010.

o Visit by Independent Facilities Consultant to Site: During 22nd -25th November, the appointed Independent Facilities Consultant (SHAW) visited the Yemen LNG facilities to undertake the second construction monitoring review during 2010. The visit commenced with a discussion and series of presentations on 22nd November at the Yemen LNG offices. SHAW were updated on; construction progress, recent issues, environmental & social compliance, health & safety performance and progress towards lender completion. On 23rd November the SHAW team visited Balhaf where they toured the site facilities and met with site staff. On 24th November the SHAW team visited the Upstream facilities accompanied by Yemen LNG and SEPOC personnel. SHAW was updated on the construction progress at Upstream and they visited the site, during which the construction work on the 4th cryogenic unit received particular focus. On 25th November SHAW returned to UK.

Initial indications from this visit (the SHAW report is expected in mid January 2011) are that; the site works maintain compliance with the environmental & social aspects of the lending agreements and that safety standards have improved at the upstream site. Site works at Balhaf were complete, but concerns were expressed about progress on the 4th cryogenic unit Upstream, and the criticality of this in relation to the program for Lender Completion which is currently anticipated on 30th September 2011. Whilst it was not possible to visit the pipeline, recent community actions were seen by SHAW to be of concern, although they recognised that Yemen LNG had successfully achieved a temporary repair of the pipeline at KP205 and that a permanent repair would be carried out in December (which was successfully achieved). SHAW also expressed concerns

21

over the delay in achieving the Provisional Acceptance Certificate (PAC) for the combined test of trains 1 & 2 at Balhaf. This is planned to be carried out in January 2011.

o Third Social Performance Review: Yemen LNG has received the draft of the latest social compliance report, which evaluates how the Company is progressing with its compliance against the criteria set by the Project Financing Agencies. Since mid 2005, the Yemen LNG project has endeavoured to put in place strict mechanisms to build and sustain its social compliance frameworks, using World Bank & IFC benchmarks as mandated by the Agencies. This has required strenuous efforts in terms of; public consultation and disclosure, managing resettlement and compensation, implementing grievance mechanisms, capacity building, developing sustainable community projects and generally being a "good neighbour" to the communities and stakeholders with whom we interact

This latest report, which has been produced on behalf of the Agencies by the NRgroup, an independent social consultancy, confirms that Yemen LNG has made impressive strides in achieving and maintaining social compliance, a finding which Yemen LNG shares with our stakeholders. The final report is anticipated in January 2011.

7.3 Project / Shareholder Liaison

• Reporting to Shareholders: Since January 2010, Yemen LNG decided to further its effort to build on effective relations with its shareholders by dedicating a senior position for managing Shareholder Relations - the purpose of which is to enhance internal coordination and consolidation on matters related to Yemen LNG shareholders, to timely and effectively address (and follow up as needed) on various requests from and to shareholders, as well as to provide support and propose further alignment to the work of the different shareholder committees where possible.

8 SUMMARY OF LAND ACQUISITION AND COMPENSATION ACTIVITIES

8.1 Land Acquisition & Compensation

• Nothing to report.

8.2 Short Term Economic Loss Compensation

• Short Term Economic Loss (STEL): Two claims related to STEL have been received during the reporting period. A community member from KP167 reported damages that were caused to his agricultural land during construction of the pipeline and another community member at KP194 reported the loss of seven goats caused by the helicopters flying low over the area. Both cases are being investigated.

8.3 Fisheries Compensation

• MEP Data Collection and Analyses Report: The data collection and analyses report received

from the implementing agents MEP; shows that fishing around the Fish Aggregation Devices

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(FADs) has contributed significantly to fishermen’s income since 2008. Fish landed at auctions in the area amounts to the total value of US$ 19.4 of which $10.2 million is attributable to fish caught at the FADs (see Figure 8). This demonstrates the importance of the FADs in sustainably maintaining the livelihoods of fishermen and in compensating for project impacts.

. .

Figure 8: Total Fish Landings – Jan 2008 to July 2010

9 ESMP IMPLEMENTATION

As part of the general implementation of the Operations ESMP, the following activities have been completed:

9.1 Terrestrial Environment

9.1.1 Environment - EPC Plant

• Environmental Monitoring Program at Balhaf: A third environmental monitoring mission at Balhaf site was undertaken in December 2010 and a report issued. All parameters monitored were within the stipulated limits. The PM10 for ambient air monitoring was conducted and results are in compliance with the stipulated limits.

• Construction of Incinerator and Waste Collection Handover: Currently, two incinerators (one installed during Construction and one recently installed) are fully operational.

9.1.2 Environment – Upstream On 24th November SHAW Consultant (accompanied by Yemen LNG and SEPOC) visited the Upstream facilities to observe compliance with the Upstream ESMP (details in section 7.2). .

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9.2 Marine Environment

9.2.1 Coral Monitoring and Biodiversity Action Plan (BAP)

• Biodiversity Action Plan (BAP): The marine biodiversity project is managed through 25 BAP actions planned for the Construction, Transition and Operations phases. Eight actions related to Construction were closed with authorities. A close-out report for the Transition period will be issued and BAP actions for the operation phase will be updated.

• Sea Water Temperature Monitoring: Ten loggers have been purchased of which eight have been installed within the Marine Exclusion Zone (MEZ.). The remaining 2 loggers will be installed at 2 reference sites outside the MEZ. Four loggers which have drifted have not yet been recovered and the procurement process to replace them is ongoing. Data collected through loggers has been downloaded during September and no negative impacts on sea water temperature (either through natural changes or from site activities) have been detected which is encouraging as the nearby coral colonies are traditionally sensitive to changes in seawater temperature.

9.2.2 Fish and Marine Biodiversity

• Coral and Fish Monitoring Survey: The contract for a Fish Monitoring survey is in the pre-qualification stage. Monitoring (as part of the new contract) will focus on natural recruitment, fish diversity and metal bioaccumulation in sediments. The frequency of monitoring will be twice a year for the first 2 years (2011 and 2012) and thereafter on an annual basis.

9.3 Labour Management

• Labour Compliance: Many incidents of labour instability which were experienced in Balhaf could be traced back to non-compliance issues or poor management practices by Contractors who in many instances did not have the basic systems, procedures and processes in place to ensure adherence to Labour Law and related legislative compliance. Because of the former, the Labour Compliance team conducted audits at the premises of these Contractors during the 4th quarter of 2010 with the aim of identifying and advising on possible gaps, and capacitating Contractors to close these gaps. Seven of the major Contractors in Balhaf were audited. Most Contractors were found to comply with Yemeni Labour and Social Security legislation, and reports were issued to relevant stakeholders to address gaps identified.

• Monitoring of Legal Compliance: A Labour Policy was established by the Yemen LNG labour compliance team to better monitor local content and enhance opportunities for project affected villages. The recruitment monitoring process is managed through the Labour Office to ensure that locals get an employment opportunity first. No Contractor personnel can work on site without a badge which would not be issued without Yemen LNG signing the application form which must be completed by the labour office. At any time, a contractor must be in a position to show that the local employment and supplies percentages (at least 70% of the Yemeni personnel shall be residents of the Shabwah Governorate, of which 50% shall originate from the Rhodhoum district) are respected. Each contractor is required to submit detailed monthly reports to show utilization of local personnel

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9.4 Archaeology & Cultural Heritage

Archaeology activities are in line with ESMP cultural heritage commitments (see Section 4.5 for archaeological activities during the reporting period).

9.5 Public Consultation and Disclosure Plan (PCDP)

Public Consultation and Disclosure activities are in line with ESMP commitments (see Section 7.1 for PCDP activities during the reporting period).

9.6 Resettlement Action Plan (RAP) Commitments

Yemen LNG continues to mitigate impacts of the main line and liquefaction plant on the income and livelihood of people living in nearby communities in the Right of Way vicinity as well as the coastal area as per the commitments in the Resettlement Action Plan (RAP). Activities conducted during the reporting period include the following:

• Support to Disabled People - Jela’ah Pilot Project: An analysis of questionnaires filled out by beneficiaries of the Jela’ah pilot project for disabled people has been submitted to Corporate Affairs Manager for consideration of future projects.

• Support to Disabled People - Bir Ali, Mafraq Balhaf: A project proposal and draft agreement

between Yemen LNG and the Association for the Rehabilitation of Disabled People is currently under internal review.

• Reinstatement of Roads, Waterways and Water Channels: � Reinstatement of Access Road at KP245: The reinstatement of the access road at KP245

has been completed during the reporting period. Payment was made to the contractor and local community representatives have signed the satisfaction certificate (

� � Figure 9).

Figure 9: Satisfaction Certificate signed by Community Members

ROW

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� Reinstatement of Access Road at KP 230 - KP 320: The survey for the re-instatement of

the access road from KP 230 to KP 320 has been completed during the reporting period. The Scope of Work has been finalized and sent to CRSD management for review and/or approval.

� Reinstatement of Agricultural Land ((Previous site for Hydro test, KP 317): Results of

soil samples (sent to the Nasser College of Agriculture at the Aden University for assessment) have been received and are being reviewed by the CRSD Advisor. The landowner claimed that he cannot grow crops anymore as his land became saline as a result of Hydotests that were undertaken during Construction.

� Re-instatement of Waterways: Reinstatement of waterways and irrigation channels in the Plateau area has been completed during October 2010 and several certificates of satisfaction have been signed by the local communities and contractors.

9.7 Contractor Control Plans (CCPs)

Compliance with CCPs is in line with expectations as described in this report.

10 NON-COMPLIANCES

No material non-compliances were recorded during the reporting period.

11 HEALTH, SAFETY AND ENVIRONMENTAL INCIDENTS

11.1 Overview of Health & Safety Performance at end of 2010

The summary of safety performance during 2010 shows that both LTIF (measured as lost time injury frequency per million man hours) and TRIR (measured as total recordable incident rate per million man hours) remain within the set benchmark (LTIF benchmark was set at 0.50 and TRIR benchmark was set at 1.80 for 2010). The LTIF for 2010 was 0.39 per million manhours worked and the TRIR was 1.29 per million manhours worked (15,457,000 hours worked during 2010) which is better than the industry average as determined by the International Association of Oil and Gas Producers (OGP). The performance during the 4th quarter of 2010 was marginally improved from the previous 3 quarters for TRIR as can be seen by looking at the Company performance which is illustrated in Figure 10: Health and Safety Performance below:

ROW

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Figure 10: Health and Safety Performance during 2010

11.2 Tabulation of Incidents during Reporting Period

Tabulation of incidents during the reporting period is reflected in Table 3: Incidents during Reporting Period below.

Table 3: Incidents during Reporting Period

Description October November December Total 4Q 2010

Fatalities 0 0 0 0

Lost Time Injuries 1 0 1 2

Restricted Work Cases 0 1 0 1

Medical Treatment Cases 1 1 0 2

Environmental Discharges 0 0 1 1

Near Miss / High Potential Incidents

3 1 5 9

0

1

2

3

4

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

RWDC+MTC

LTI

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11.3 Tabular Statistics (Incident Rates per Million Man-Hours Worked)

Tabulation of incident rates for the reporting period is outlined in Table 4 below.

Table 4: Incident Rates for the Reporting Period

11.4 Key Incidents during Reporting Period

11.4.1 Lost Time Injuries

• LTI- 12 October: (CPU-Upstream): A Hawk worker lost the first phalange of 3 fingers. The electrical motor of the bar bending machine was stuck when the victim tried to move the belt with his hand while the motor restarted which resulted in permanent disability for the victim.

• LTI- 12 December: (Sana’a Airport): A Yemen LNG employee twisted his ankle when entering in

the YJV lounge at Sana’a Airport. 3 Work days lost.

11.4.2 Restricted Work Cases

• RWC- 08 November: (Balhaf) A MTI mechanic attempted to loosen a bolt on the flywheel of a crane engine. The tool suddenly slipped down and his left middle finger was pinched between the tool and the flywheel casing.

Description Q4 2010

Total for the 12 months of 2010

YLNG

Benchmark

Lost Time Injuries 2 6

Manhours worked 3,981,803 15,456,997

Lost Time Injuries Frequency per million manhours worked – LTIF

0.50 0.39 0.50

Total Recordable Injuries

5 20

Manhours worked 3,981,803 15,456,997

Total Recordable Injuries Rate per million manhours worked – TRIR

1.26 1.29 1.80

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11.4.3 Medical Treatment Cases

• MTC- 26 October: (Balhaf): A worker from Tanmia injured his left hand while using a grinder at fabrication workshop. He received 2 stitches at the clinic.

.

• MTC- 22 November: (Balhaf): An AMI security guard sustained a head injury when he fell from a tricycle at the Jetty.

11.4.4 Environmental Issues

On 13th December inappropriate construction waste disposal by a YLNG contractor was reported by a Total employee.

11.4.5 High Potential Incidents

A special focus on high potential incidents was given in 4Q2010 in order to identify underlying causology and thus to prevent actual incidents from occurring.

Date Place Description

16-Oct-10 Balhaf A small skiff rammed into Qataban patrol boat. The skiff slowly sunk, two intruders were rescued and sent to Navy Camp for investigation.

20-Oct-10 Balhaf The 10 tons crane counterweight fell down from F-bed truck on the road. Minor damage to the road

23-Oct-10 Balhaf Excavator started to work to remove electrical wires which were still live (400 V). Electricians stopped the work.

21-Nov-10 Balhaf

Gas Detection Indicators (GDI) activated at Jetty due to trapped LNG liquid between MOV and HV for two Loading Arm B & D and released to the atmosphere. Approximately, 1m3 of LNG liquid released and activated 5 GDIs.

1-Dec-10 Balhaf The 10 tons crane counterweight fell down from the trailer on the road. Minor damages to the road and the trailer (idem 20/10/2010)

2-Dec-10 KP13 A military pick-up and a Wecando's pick-up circulating in the opposite direction along the pipeline have a head-on collision at KP13. 7 militaries and one local assistant from Wecando have been injured

2-Dec-10 Upstream

While Sun Temple car travelling along main road from Marib down to Safer Zone, 7km far from Sun Temple site, the car attempted to over take another car in front then derivated off the road by LHS both wheels and then sharply turned to the RHS off-road by rolling over on the sand ground resulted damage to the car external body. The passenger has got small stretch wound on his forehead.

14-Dec-10 Balhaf A minor LNG leak reported at the battery limit of Train 2 from the 40” FDL valve’s upstream and downstream flanges. (<0.1 Kg/s – T> 2 min).

15-Dec-10 KP205

A Hawk truck was parked on a slope above a military tent. When the driver removed the first gear to start, the truck started to move down the slope and rolled over the tent where 2 militaries where sleeping. One soldier injured to the ankles (minor injuries).

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12 SUMMARY OF SUSTAINABLE DEVELOPMENT PROGRAMS AND ACTIVITIES

12.1 Overview

• The main focus areas of SD programs are; social (health and education), economic (fisheries,

agriculture and apiculture) and vulnerability alleviation (water and electricity). Each of the eight programs within these 3 focus areas includes; capacity building and training, infrastructure development, industry development and SME development (Figure 11). Program implementation is mainly phased over a period of three to five years and the different projects within the broader programs are currently in different phases of the project cycle which include project initiation, planning, execution, control and validation and close-out and evaluation.

Figure 11: 5-Year Sustainable Development Strategy

• The 5-Year Sustainable Development (SD) Strategy Update: Approved by the Board in

August 2008, the SD strategy has been implemented since the beginning of 2009. By embracing a flexible and dynamic approach, Yemen LNG is currently updating and adapting the Strategy to ensure that SD programs remain effective in addressing the changing needs of authorities and communities. As opposed to the conventional approach to sustainability, which implies the idea of continuing the whole program in its original scope, Yemen LNG will continue to have a multifaceted, dynamic approach to sustain the SD programs and projects in various forms by using a combination of different strategies. The Strategy update will also occur along with continued awareness raising of Yemen LNG's project neighbours of the objectives of the Strategy and approach that will be followed with project design and implementation.

5 YEAR STRATEGY (2008 – 2012)

Economic Activities, related

income and numbers of households

involved

Aquaculture

(Fisheries)

Agriculture

(Livestock & crops)

Apiculture

(Beekeeping)

SocialElements impacting

negatively on people and their

livelihoods

Vulnerability

AlleviationFactors that can be

mitigated

Education

Health

Gender

Water

Electricity

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12.2 Social Programs

12.2.1 Programs for Women

• Future Programs for Women: The Scope of Work to implement projects for women in three new areas, namely Ayad, AlDaherah and Ayn BaMa’bad is being prepared. A draft project sheet to implement a number of live skills training programs and awareness lectures for women in Bir Ali, Ayn Bamba’ad, Ayad and Al Dahrah has been completed. The proposed training programs have been informed by needs assessment workshops undertaken in the targeted villages during 2010.

• Support to Sana’a Old City NGOs: Several activities were undertaken to support and enhance women’s capacity in economic development in Old Sana’a. A total of three Women’s Associations were supported by Yemen LNG to improve infrastructure, cooking and handicraft skills. Examples of activities are summarized below:

� Al Bait Al Sana’ani for Heritage (NGO) - Ceremony to Celebrate Completion of Training: Preparations for a ceremony to celebrate the completion of a three month training course for 53 women on life skills (conducted by the Al-Bait Al Sana’ani for Heritage, based in the Old City of Sanaa) is ongoing. The training courses were aimed at improving the skills of participants in handicrafts, traditional cooking and serving food and are expected to benefit the lives of the participants and improve their income. It will also help preserve the traditional identity of the Old City of Sanaa. This support falls within Yemen LNG’s contribution to sustainable development in Yemen.

� 22nd May Association Program- Infrastructure Development: On 21st October, members of Yemen LNG’s Sustainable Development project team attended a ceremony to celebrate the completion of the construction of a new section that was added to the current building used by the 22nd May Association for the development of women (Figure 12). Yemen LNG currently considers financial support to the Association for handicraft training for 120 women.

Figure 12: Ceremony to Celebrate Completion of Infrastructure Development

• Completion of Managerial Training Program for Bir Ali Women: A ceremony to celebrate the completion of the Managerial Training Program has been delayed to the first quarter of 2011.

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This is mainly due to construction work that is being undertaken by the World Bank's 'Fisheries Five' program to upgrade the Bir Ali Women's Association's facility.

• Capacity Building Program for Women in Bir Ali, Ayn Bamaba’ad, Al Daharh and Ayad: On 27th December, Yemen LNG’s Project Coordinator for Programs for Women discussed various possibilities with the Chairperson of the Al Shroog Women’s Association to implement capacity building and awareness creation programs for women in Bir Ali, Ayn Bamaba’ad, Al Daharh and Ayad.

• Construction of Women’s Center in Ayn Bama’abad: During the reporting period, the Project

Coordinator and Head of CRSD developed a project proposal for the construction of a Women’s Activity Center in Ayn Bama’abad. The proposal is being reviewed by CRSD management.

• Consultation with Small and Micro Enterprises Promotion Services – (SMEPS): On 25th

October, the Project Coordinator and Marketing Specialist at the Small and Micro Enterprises Promotion Services (SMEPS) discussed training opportunities in straw weaving design from which the Bir Ali Women’s Association can benefit.

• Small Loans Granted to Women to Start Business: In continuation of support to the Bir Ali Women’s Association, a proposal was developed to provide micro-finance to ten women that completed the Straw and Palm Leaf Training Course.

12.2.2 Health Program

• Construction of a Rural Hospital in Ayn Bama’abad: Based on the Shabwah Governor’s recommendations, Yemen Family Care (YFCA) has submitted a revised project proposal to Yemen LNG. The new contract with YFC is expected to be signed during the first quarter of 2011.

• Reproductive Health Lectures for Women: Yemen LNG will sponsor a three-day awareness workshop in early January 2011 on reproductive health and motherhood. The lectures which will be given by the Yemeni Women Union will among others address safe motherhood, pregnancy, childbirth and post-natal care, breastfeeding, family planning and related health issues that are crucial for the safety of mothers and children. The workshop is expected to draw more than 150 women from 3 rural villages in the Shabwah Governorate.

Support to Fight Dengue Fever: The tender process for medical supplies to fight Dengue fever in support of the Shabwah Health Office and Yemen Red Crescent is ongoing.

.

• First Aid Training for Bir Ali Women’s Association: Yemen Red Crescent Society will give First Aid training to 25 women from Bir Ali. The contractual process is ongoing and the training program is expected to start during the first quarter of 2011.

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12.2.3 Education Programs

• Infrastructure Development (Phase 3): � Yemen LNG Signs an Agreement with Public Works Project (PWP) to Upgrade and

Construct 10 Schools: As part of its commitment to contribute to sustainable development, Yemen LNG has set out a two-year project to construct and upgrade 10 new schools in Radhoum, Jirdan, and Al-Rawdah districts of Shabwah governorate..The schools will be provided with furniture and accommodation for teachers. By 2012, the schools will receive 2,000 female and male students from the targeted areas. The construction costs are estimated at US$ 1.8 million. A Memorandum of Understanding was signed in November 2010 between Yemen LNG’s General Manager and Public Works Project (Figure 13) who will implement the construction of the 10 schools. Yemen LNG has already constructed and/or upgraded 7 schools in its defined project area.

Figure 13: Yemen LNG’s GM Signs MoU with Public Works

� Provision of Tents as Temporary Classrooms: Delivery and erection of tents as temporary

classrooms (Figure 12) has continued during the reporting period. Some tents have been delivered to and erected in La’abel, Al Kareef, Al Shoraij and Ayad schools villages.

Figure 14: Provision of Tents as Temporary Classrooms

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• English Course for Fishermen (Phase 2): As part of capacity building for fisheries communities in the coastal area around Balhaf, the first session of a basic English training course attended by 120 students from the coastal area has been completed during the reporting period. After the completion of the exams organized by the Youth Economic Development Center (YEDC), results were sent to YEDC for review. Yemen LNG in coordination with YEDC is preparing for the second English course which will be given during the 1st Quarter of 2011.

• Yemen LNG Awards 40 Scholarships to Shabwah Students: During a ceremony held at the LNG Plant of Balhaf on 17th October (Figure 15), Yemen LNG awarded scholarships to 28 undergraduate students from the Shabwah Governorate (out of a total of 40), to study in Sana’a, Aden, Hadhramout and Dhamar Universities in the areas of medicine and civil engineering and chemical engineering. The ceremony was attended by the Governor of Shabwah, the Deputy Minister of Oil and Minerals, the Public Works Project Director, LNG’s General Manager and a number of the students who won the internal scholarship awards.

Figure 15: Yemen LNG Awards 40 Scholarships

• Education Projects (Phase 3): Project Sheets and project supporting documentation for six

Education Projects are being developed. The six projects include adult education, My Early Education (for young students), non classroom activities, parent’s councils, educational materials and hiring of female teachers. Examples of project’s details are listed below:

12.3 Economic Programs

12.3.1 Apiculture

• Project Monitoring and Evaluation:

� Project Monitoring: Several monitoring visits and meetings continued to be undertaken by the beekeeping field team in the project area in collaboration with beneficiaries. Previous difficulties are being largely overcome due to 100% of the targeted beekeepers been trained as well as improved expectations management. In addition, previous technical difficulties related to the Elb trees and watering issues are better managed with improved understanding of the importance of immediate tree care (and pest issues).

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� Project Evaluation: On 26th October, the Head of SD Programs and CRSD Adviser met with a National Apiculture specialist in Al Mukalla to discuss the Scope of Work (SoW) for evaluating the Beekeeping Program which is being implemented since 2008. Development of the SOW is ongoing.

� Elb Trees: The beekeeping extension specialist continues to provide beekeepers with

required materials and advice to maintain and improve Elb tree plantations (Figure 16). Previous technical difficulties related to Elb trees have been overcome with improved understanding of the importance of immediate tree care and pest issues. Watering difficulties are also better understood and addressed and clarification of ownership and responsibilities resulted in 97% of trees planted by the end of fourth quarter of 2010.

• Capacity Building and Training: Due to security risk management measures and tribal issues

in the project area, the second training session for new beekeepers from the coastal area (by the French beekeeping experts), could not take place during Q4 of 2010 as planned. It has been postponed to the first quarter of 2011, the security situation permitting.

• SME Specialist to Support Apiculture Programs: During the reporting period, the contractual process to contract an SME Specialist (Consultant) to assist CRSD with its SME Strategy design and implementation was ongoing.

Figure 16: Elb Trees Planted in the Project Area

12.3.2 Agriculture

Implementation of Yemen LNG’s Agriculture Programme (Phase 1): Implementation of Phase 1 of the Agriculture Program is ongoing. The section below summarizes progress with project component during Q4 of 2010:

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• Food Security Project for Wadi Salmon, Plateau, Wadi Jirdan and North Area: During the reporting period, Triangle revised the proposal for a Food Security Program for Wadi Salmon, Plateau, Wadi Jirdan and North Area and incorporated Yemen LNG’s recommendations. The proposal has been presented to the Shabwah Agriculture Office and Local Council after which it has been finalized and submitted for management approval.

• Drenching Campaign: A livestock drenching campaign to fight parasites was conducted in Bir Ali and Al Guwairi. A total of 1,255 goats and sheep have been drenched.

• Flood Protection for Al Hyrah and Lasbar: Flood protection measures have been taken.

• Support to Agriculture Activities: � Saisaban Production Market: An agronomist from Triangle (Yemen LNG’s implementing

agent) has accompanied members of the Bir Ali Women’s Association to Mayfa’a Hajr in order to explore markets for Saisaban tree products. During the visit, the agronomist gave a presentation on the advantages of Saisaban products and its elementary value for livestock.

� Awareness and Training on Livestock Health: During the reporting period, several

awareness and training sessions on livestock health, agriculture and environmental awareness were attended by at the Al Juwairi School, Twenty five participants from Al Juwairi and 55 from Ain Bama’abad attended. During the training sessions some medicines for livestock were provided to the women who benefited from initial training courses.

� Donation of Motorbikes for the Provision of Veterinary Services: Two motorbikes were

donated to Community members from the coastal villages to provide veterinary services to other villages in the coastal area (Figure 17).

Figure 17: Donation of Motorbike for Veterinary Services

12.3.3 Fisheries Program

• Infrastructure Development:

� Office Construction and Jetty Renovation: Construction of the office building for the Ministry of Fish Wealth (MFW) (Figure 18) has been completed 90% while renovation of the jetty has been fully completed during the reporting period.

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Figure 18: Construction of MFW Office in Bir Ali

� Yemen LNG Donates New Tractor to Jela’ah: As part of Yemen LNG’s support to its

neighbouring communities, the Company donated a new tractor that will help the fishermen to tow their boats from and to the sea during the monsoon. The tractor was handed over by the Plant Manager to the head of the Jela’ah Village Committee in the presence of all Committee members (Figure 19). The Village Committee expressed their thanks for the Company’s continuous support.

Figure 19: Yemen LNG Donates Tractor to Jela’ah Fishermen

� Fish Aggregation Devices (FAD):

o FAD Mats and Re-Deployment: The data collection and analyses report received from MEP in November 2010, again demonstrated that the FADs are extremely successful in providing additional cash income to fishermen. However, there were ongoing technical difficulties with the FADs (including chafing of ropes and instability of buoys) and at the time of this report, only 4 FADs were functional with 8 having to be redeployed and discussions with the implementing agents to resolve the problem are ongoing.

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o FAD Maintenance: During the reporting period, the Yemen LNG Project Coordinator and MEP representatives met with fishermen and Cooperative representatives to discuss maintenance and redeployment of the FADs that drifted during the reporting period (due to technical failure of buoys). MEP has submitted a proposal for long term FAD management and maintenance in compliance with the contractual agreement with Yemen LNG. The proposal is being reviewed and an action plan in coordination with MEP is due to be finalized during the first quarter of 2011.

• Capacity Building and Training:

� Vocational Training: Twelve fishermen from the fishing communities around Balhaf continue with their studies at the Marine Technical Institute in Aden. They have recently received their living allowances from Yemen LNG and will continue receiving further allowances for the duration of two years of enrolment at the Marine Technical Institute. Meanwhile, the Marine Technical Institute (MTI) has submitted a proposal to Yemen LNG to do basic on-site training for selected fishermen in fiberglass boat maintenance and engine and navigation instruments repair. The proposal is being reviewed by Yemen LNG.

12.4 Vulnerability Alleviation Programs

The vulnerability programs include Water and Electricity projects and progress is summarized below.

12.4.1 Water

• Reverse Osmosis (RO) Plant at Balhaf: Further to a meeting held during the reporting period between Yemen LNG’s General Manager, the Corporate Affairs Manager and the Governor of Shabwah and following the visit of the engineering team to the coastal area, it has been agreed to construct the water tank in Jela’ah as phase one of the Reverse Osmosis Water Project.

• Shabwah Water Project (Phase 2):

� Water Project (Phase 2) Completion Report: Work on the last 5 Phase 2 water projects has been completed during the reporting period and French Red Cross (Implementing agent) has submitted its final completion report to Yemen LNG.

� Water Project (Phase 3) - Assessment Phase: French Red Cross (FRC) has completed needs assessments and submitted their report to Yemen LNG which is currently being reviewed. During their need assessment visits, FRC conducted several meetings with representatives from targeted communities and Local and District Authorities to discuss future water projects.

• Marib Water Projects:

� A’al Al Naaj Water Project: The water well project has been completed and delivered to the beneficiaries.

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� Water Pump for Marib University: The contractor supplied and installed the water pump which was monitored by the project engineer.

� Future Water Projects: Project technical documents and request for works for 9 water projects have been completed and approved by management. In coordination with the Contracts and Procurement Department, a consultant was appointed to manage projects implementation and supervision including coordination and liaison with communities.

� Water Projects for Alwadi District: The tender process for 5 water projects in the Alwadi District (as per request of the Marib Governor) has been launched. Profiles for selected local contractors were sent to HSE by for the pre-qualification process.

12.4.2 Electricity

• Electricity Survey and Design Study in Rodhum: The Yemen LNG Project Department who is managing the Electricity Project has launched the tender process for the survey and design study. During the reporting period, engineering work has started.

13 UPDATE ON SIGNIFICANT CHANGES IN APPLICABLE ENVIRONMENTAL LAWS

• EPL Bylaws 1995: The EPL no 26 for the year 1995 was updated by the Environmental Protection Authority (EPA). A consolidated document including all the data which need to be reviewed with EPA is being produced.

• EPL Compliance Requirements: Environmental Performance report was sent to the Ministry of Oil and Minerals (MOM) in order to comply with the national statutory environmental monitoring and reporting requirements of the EPL and its Bylaw 2000.

14 MATERIAL ENVIRONMENTAL CLAIMS AGAINST YEMEN LNG To date there have been no environmental claims against Yemen LNG from the Authorities.

END OF REPORT