supporting economic progress

Widespread poverty, restricted access to education, insufficient business and technical skills, and lack of new employment opportunities are just a few of the barriers to economic growth in developing countries around the world. Entrepreneurs in these countries can help build local economies, but in many cases, the lack of an enabling business framework and supporting services infrastructure undermines their efforts.

By purchasing goods and services in-country and developing long-term supplier relationships, multinational companies can serve as a focal point for supporting the development of a local business community. Multinational companies are creating opportunities for small and medium enterprises, which contributes to the development of a local business framework and the necessary infrastructure to support sustained economic growth. As local suppliers and contractors grow, they create the financial, technical, and managerial expertise that continues to expand local capacity and capability to support the oil and gas industry in the long term.

ExxonMobil’s presence in communities generates revenues and taxes, creates jobs, and supports community development projects. One of the cornerstones of national content development is creating economic opportunities for local businesses and investing in developing the capacity and capability of local contractors, suppliers, and vendors. This fosters the development of a reliable and sustainable supply chain of local goods and services benefiting our operations because local suppliers understand our needs as well as the local business environment. We are particularly proud of our accomplishments to date. Some of these are featured below.

Angola
Based on our success with local suppliers in our Kizomba A and B offshore projects, we are continuing to expand their capabilities in the development of Kizomba C. We recognized early in the project life cycle that existing and potential local service providers were needed. We invested in training to enhance the capability of local suppliers to deliver goods and services that were aligned with our needs for quality and safety, and our schedule. By developing the use of qualified and cost-competitive local suppliers, we are contributing to building Angola’s future capacity to support the oil and gas industry.

In 2007, project activities included completion of a tie-back to existing Kizomba A facilities and ongoing construction of Kizomba C. We purchased goods and services in-country, awarded contracts for in-country fabrication and logistics support, and provided training and development to Angolan personnel. We also invested in local pipe fabrication yards to develop the capacity to execute the more complex work necessary for producing the high-strength steel components required in the construction of the Kizomba C Project.

Over a two-year period, we employed more than 1.5 million Angolan work hours in the construction of Kizomba C. We expect to complete our Kizomba C Project in 2008 and are projecting local supplier spending to reach over $1.5 billion. This will bring total spending with local suppliers for development activities in Angola to almost $4 billion, which does not include ongoing local expenditures for production.

Indonesia
At ExxonMobil, our primary goal is that every project achieves the desired outcome in a safe and environmentally responsible manner. To accomplish this goal in our Banyu Urip Development Project in the Cepu Field, Mobil Cepu Limited developed with Indonesian suppliers and contractors safety, health, environmental, and construction standards that meet our expectations. More than 90 percent of the work — equivalent to more than 133,000 work hours — was completed by Indonesians, and the project was completed with zero incidents. We are projecting to spend $1 billion on Indonesian goods and services to complete the project over the next four years. In the process, we are committed to helping develop the capacity of Indonesian suppliers to successfully bid on future work in the oil and gas industry.

Once operational, the Banyu Urip Development Project will provide employment opportunities to more than 400 Indonesians. Currently, we are training 61 of our future employees at the Pusdiklat MIGAS training facility, an educational institution owned and managed by the Indonesian government agency responsible for overseeing oil and gas operations. Another 40 to 50 Indonesians are expected to be enrolled in 2008. The curriculum includes comprehensive training and certification in oil and gas technology as well as full English language immersion.

In addition, we plan to invest $3 million to $4 million, in partnership with the government of Indonesia, to train more than 100 Indonesians to join our highly specialized and skilled workforce. This training initiative capitalizes on Indonesian manpower and resources from the surrounding Cepu and Bojonegoro areas. It is the first time that the formal training phase for the start-up of a new ExxonMobil project will use 100 percent local resources — 91 percent are services and 9 percent are materials.

Russia
Cement is an essential element in any drilling operation. During the initial drilling phases of our Sakhalin-1 Project, our drilling contractor imported cement from Singapore because there was no local supplier. We worked collaboratively with our contractor and the American Petroleum Institute to identify a cement factory on the Russian mainland serving eastern Russian and western Siberian markets.

Working together with the factory and the drilling contractor, we developed a plan for testing and evaluating the quality of the cement. We also developed the logistics for transporting the cement from the factory overland and by ship to the wellsite. Following positive test results, every well in the Sakhalin-1 Project is now supplied by this cement manufacturer. We continue to regularly assess the facility for safety and quality, to help ensure that ongoing issues and opportunities are actively addressed by the local manufacturer. To meet our construction specifications, we also provided training to Russian suppliers on international standards. This ensures that the quality of the manufactured product is consistent, reliable, and meets the expectations of ExxonMobil as well as other companies in the industry.

To date, we have placed orders for cement worth approximately $2.5 million with this Russian factory and eliminated the need for cement imports from Singapore and long-term storage. In addition to being cost-competitive, the Russian manufacturer is a key part of our supply chain, which allows us to maintain our world-class drilling operations on Sakhalin Island, including some of the longest extended-reach-drilling wells in the world. The factory employs more than 1500 people and plans to increase capacity by 50 percent by the end of 2009.