Savannah Energy : Sustainability Review 2022

Savannah Energy Sustainability Review 2022

Strategic Report

Sustainability Review 2022

Embedding our sustainability strategy

At Savannah, sustainability underpins everything we do.

Introduction

We developed our sustainability strategy in 2021 based on an in-depth materiality assessment, involving extensive consultations with our internal and external stakeholders, which identified 12 material issues and an additional eight to report on. The 12 material issues are grouped into our four core sustainability pillars, which are set out below, together with our ambitions for each. Our four sustainability pillars are linked to a range of key sustainability metrics that we measure across our business and are aligned with 13 specific UN Sustainable Development Goals ("UN SDGs"), where we aim to make a positive impact.

We are pleased to publish our first disclosure report in accordance with the requirements of the Task Force for Climate-Related Financial Disclosures ("TCFD") on page 17.

Basis of reporting

In 2022 we have chosen to adopt the net equity basis for emissions reporting purposes, having previously reported our emissions on an operational control basis. In practical terms, as we had operational control over all of our hydrocarbon assets in previous reporting periods this resulted in Savannah

reporting 100% of all of our assets' emissions as our own. However, as we prepare to incorporate additional assets into our portfolio, where for example we may not have operational control, our previous approach to emission accounting would have resulted in our emissions being under reported by Savannah.

Accordingly, our environmental emissions data is expected to be reported on an equity share basis for all assets where we have a financial interest, regardless of whether we have operational control or not. This is consistent with the World Resources Institute Greenhouse Gas Protocol (Equity Share Approach) and is also in line with our financial reporting.

Where we refer to 2021 emissions in this report, we have restated them according to our new equity share organisational reporting boundary standard. Data relating to Pillars 1, 2 and 3 will continue to be reported on an 100% basis for all assets.

All data covers the period from 1 January to 31 December 2022, unless otherwise noted. As the acquisition of the Cameroon assets was completed on 9 December 2022, Cameroon data is not included in this review but will be included for the 2023 reporting period.

Material issues Pillars

1. Promoting socio-	2. Ensuring safe and	3. Supporting and	4. Respecting the
economic prosperity	secure operations	developing our people	environment
•	Socio-economic prosperity.	• Operational health	•	Workplace culture	•	GHG emissions.
•	Tax transparency	and safety.		and engagement.	• Climate change and the
	and contribution.	• Security and human rights.	•	Training and development.		energy transition.
•	Community engagement		•	Diversity and equality.	•	Biodiversity.
	and development.		•	Compliance.	•	Water management.

• Local content and responsible procurement.

Ambitions

• Make a positive difference to the socio-economic development of our host countries.
• Build strong and meaningful relationships with our local communities based on mutual trust and benefit.
• Enhance value creation potential by championing the development of local content.

• Continually prioritise and improve upon the safety and security of our work environment.

• Cultivate a winning and inclusive culture to position our employees and the business
  for success.
• Recruit, develop and retain the best talent through our commitment to professional development.

• Deliver a cleaner performance by minimising our GHG emissions.
• Monitor and manage
  our impacts on biodiversity and water.

UN SDGs

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  Sustainability Review 2022

Fayama Yellowe, Senior Electrician at Savannah's City Gate Gas Receiving Facility, Nigeria

2023 materiality assessment

In line with peer practice, post-year end we conducted a fresh materiality assessment of the key ESG issues relevant to Savannah. We conducted a stakeholder engagement exercise with key investors and media, together with an evaluation of the material issues for the stakeholders in the countries in which we operate. This was conducted in order to ensure that we continue to focus on the issues that matter to our stakeholders as we grow our business in the region. The stated view of our key investors and media was that issues such as GHG emissions, climate change & the energy transition, compliance, and diversity

• inclusion have increased in significance for Savannah since the previous assessment was conducted in 2020. GHG emissions and diversity & inclusion were already included in our 12 material issues, while climate change & the energy transition and compliance were included in the additional eight topics which we already chose to report on. However, reflecting the increase in their materiality to investors and media, going forward we plan to include climate change & the energy transition and compliance as material issues within our four pillars.

The materiality assessment also identified some suggestions for improving Savannah's sustainability strategy and reporting

• including the potential to rationalise the number of reporting standards we align to - which we will take under consideration.

Governing sustainability at Savannah

Responsibility for the implementation of the strategy in each of our four sustainability pillars lies with Savannah's CEO, supported by the relevant members of the senior management team. The Group is structured in such a way that we seek to embed sustainability in all our business practices. Together

with the Health, Safety, Environment and Security ("HSE&S") Committee, the senior management team promotes behaviours and a culture that supports our sustainability strategy, through communicating the Company's commitments to our people, contractors, and other stakeholders. This embeds sustainability as part of our corporate culture and values.

Responsibility for sustainability strategy oversight in 2022 lay with the HSE&S Committee, while the Audit and Risk Committee assisted the Board in discharging its oversight responsibilities with regards to the system of internal controls and management of risk. The HSE&S Committee oversees compliance with the Company's framework of policies, procedures, systems and controls in place around sustainability. This Committee, which meets quarterly, receives reports on progress and performance from the relevant members of the senior management team and liaises with the Audit and Risk Committee of the Board on the mitigation of sustainability-related risks1.

Looking ahead to 2023

Savannah is committed to identifying and adopting best practice across the Company, as well as implementing our Sustainability Strategy in our expanded portfolio. In 2023, we are integrating our Cameroon assets into our sustainability and performance reporting framework, as well as any other assets we may acquire during the year.

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Strategic Report

Sustainability Review 2022 continued

1

Promoting

socio-economic

prosperity

Books and shelving donated to the St Francis

Secondary School, Nigeria

The first pillar of our sustainability strategy is to promote socio-economic prosperity within the countries in which we operate. Savannah's gas enables approximately 24% of Nigeria's thermal power generation capacity. In Niger, we are participating in a wider energy sector project which is forecast to contribute up to 24% of Niger's GDP by 20252. In addition, we provide a positive economic contribution through tax payments, payments to our people, suppliers and contractors.

2022 performance

• We supplied gas enabling approximately 24% of Nigeria's thermal power generation capacity and continued to play a strategic role providing a stable and reliable supply of gas to power stations and industrial users, adding four new gas customers.
• Our Total Contributions(d) to our host countries increased by 3% to US$56.9 million in 2022 (2021: US$55.1 million).
• Our social impact investment increased by 23% to US$304,000 in 2022 (2021: US$246,000) across 26 projects (2021: eight).
• We spent US$22.9 million in 2022 with local suppliers and contractors in Nigeria and Niger (2021: US$26.2 million).

Strategic objectives

1 2 3 4

Principal risks

4 5 7 9 11 12 14

Contribution to UN SDGs

2023 objectives

• Develop targeted impact metrics that reflect Savannah's expanded portfolio and that further measure Savannah's contribution to socio- economic prosperity in our host communities and countries.

Reporting metrics

• Total Contributions(d) in US$
• Social impact investment in US$
• Number of social impact projects
• Payments to local suppliers and contractors in US$

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Creating a positive impact

Our approach

Our ambition in the first pillar of our sustainability strategy is to make a positive difference to the socio-economic prosperity in our host communities and countries. Extreme poverty alleviation is the most important issue facing African countries today, with 32% of Sub-Saharan Africans classified as suffering from extreme poverty3. The World Bank also calculates that only 56% of Africans have access to electricity4. Studies have shown the strong relationship between power consumption, income levels and broader human development metrics; ceteris paribus, the higher a country's per capita power consumption, the higher GDP per capita, human life expectancy and those metrics are expected to be. Therefore, energy poverty alleviation would substantially contribute to solving Africa's extreme poverty problems. That is why we focus on providing our host countries with energy to drive socio-economic prosperity.

Read more on page 8 of our 2022 Annual Report

Using energy to drive prosperity

Savannah supplies gas to enable approximately 24% of Nigeria's thermal power generation capacity, playing a strategic role in providing a reliable supply to power stations and industrial users. In 2022 we expanded our customer base, and signed GSAs with four new customers, delivering gas to eight customers in total.

In Niger, we are participating in a wider energy sector project which is forecast to contribute up to 24% of Niger's GDP by 2025 and up to 45% of tax revenues2. The expected completion of the Niger-Benin pipeline in 2023 will facilitate the export of up to 110 Kbopd of oil from Niger to the international market. Savannah expects to tie our planned production directly into the Niger-Benin export pipeline.

In March 2022, we announced plans to build and operate Niger's first wind farm, which is expected to increase Niger's on-grid national electricity consumption by up to 40%, create 500 jobs in the construction phase alone and reduce the cost of electricity for ordinary Nigeriens.

At a local and regional level, Savannah creates significant socio-economic impact. Our impact includes payments to employees, contractors and suppliers as well as social impact investment in community projects. This contribution has a multiplier effect, creating economic impacts in the wider community and economy of our host communities. Our approach here is built on creating strong and meaningful relationships with our local communities based on mutual trust and benefit.

Our performance in 2022

In 2022, our Total Contributions(d) increased by 3% to US$56.9 million (2021: US$55.1 million). This is primarily the result of an increase in tax and royalty payments to local governments as we increased production in Nigeria.

Our economic impact

	Contribution to Nigeria's	Estimated contribution to
24%L+7624%L+
	thermal power generation	Niger's GDP 20252
	capacity 2022
(2022):			(2025E):
	Savannah Energy	Hydrocarbon
	408 MW			sector
(US$m)	+3%
	Total Contributions(d)
	2022	56.9
	2021	55.1

We are a pan-African energy and resources company seeking to deliver excellent performance for our stakeholders. We want to meaningfully contribute to the economic development of the countries in which we operate through the development of businesses and projects that make a material difference to those countries."

Andrew Knott

Chief Executive Officer, Savannah

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