Establishment of Panel

BP has established an independent external panel, the Caspian Development Advisory Panel (CDAP), as part of its plan to ensure that the Baku-Tbilisi-Ceyhan (BTC) pipeline is a world class model project. The Panel, which has a three-year remit, will commence its work in early 2003, and will provide objective advice to the company on the economic, social and environmental impacts of the pipeline project in Azerbaijan, Georgia and Turkey, generally, and in areas closest to the 1,760-kilometer pipeline in particular.

While the primary focus will be on the BTC pipeline, the Panel will have an opportunity to look at other related BP activities and plans in the region. This will include the Azeri-Gunashli-Chirag (AGC) oilfield and the Shah Deniz gas field developments, including the Baku-Tiblisi-Erzurum Gas Export Pipeline, which will run parallel to BTC through Azerbaijan and Georgia. (BTC, ACG and Shah Deniz are all BP operated.)

Principal tasks will include, but not be confined to the following:

• Assess BP's plans to manage the environmental, social and economic impacts of the projects in Azerbaijan, Georgia and Turkey, both at the route level and, more generally, at the regional level. Make recommendations for improvement.
• Examine the application of BP's policies regarding the projects and critically appraise the impact of the projects.
• Advise on the appropriate focus of social and community activities to enable BP and its partners to make a positive difference to the economies and societies of Azerbaijan, Georgia and Turkey.

The Panel's role will be an advisory one and it will have no executive authority or responsibility in relation to the Project.

The Panel will be funded by the BP Group. It will be assisted by local representatives in each country and have its own Secretariat based at the Washington, D.C. law firm of Covington & Burling. The Panel has established a website (www.caspsea.com) and an e-mail address CDAP@caspsea.com. The Panel requests that any interested party submit information to the Secretariat for the Panel's review.

The Panel will report to the BP Group Chief Executive. Liaison between BP and the Panel shall normally be through a senior BP representative nominated by the BP Group Chief Executive.

Membership

The Panel shall have 4 members (including a Chairman) who shall be appointed by the BP Group Chief Executive but who shall otherwise have no ongoing direct connection with BP.

The Panel will be chaired by Jan Leschly (Chairman & CEO, Care Capital and former CEO of SmithKline Beecham). The other members are Stuart Eizenstat, former US Ambassador to the EU, Under Secretary of Commerce, Under Secretary of State and Deputy Secretary of the Treasury, currently a partner with Covington & Burling, Jim MacNeill, Canadian diplomat and policy adviser on environment, energy and sustainable development, former Secretary General of the World Commission on Environment and Development (the Brundtland Commission) and former Chairman of the World Bank's Independent Inspection Panel, and Mohamed Sahnoun, former ambassador and adviser to the President of Algeria, Special Envoy of the Secretary General of the UN and member of the Brundtland Commission.

Timetable

Panel Members shall meet formally as a group at least twice a year and in addition will make at least one visit of around one week in length to the Project area each year.

The Panel may, in agreement with BP, call upon national and international experts and consultants to advise the Members on matters relating to the evaluation and review of the Project.

Reports

The Panel shall aim to issue its first substantive report by the end of 2003. Additional reports shall be issued at least annually thereafter. The substantive reports and findings of the Panel will be made available to the public, after they have been presented to the BP Group Chief Executive and BP has prepared its response.

Funding

The Panel shall be funded by BP independently from the Project.