Nexen has adopted the six Codes of Practice to help formalize our management systems and practices related to the life span of our products. The codes relate to:

• 1. Community awareness and emergency response
• 2. Manufacturing (operations)
• 3. Research and development
• 4. Transportation
• 5. Distribution
• 6. Hazardous waste management

In the business areas where Nexen has effectively implemented Responsible Care®, we have identified value in the following areas:

• • Emphasis on the ethic of Responsible Care®
• • Emphasis on four stages of management system development – plan, do, check, act
• • Increased focus on continuous improvement
• • Credibility and accountability associated with recognized external standards
• • Well-defined verification processes and timelines
• • Access to multi-industry best practices
• • Working with host communities
• • Improving the documentation of operating procedures

Responsible Care® mirrors Nexen’s core values and aligns well with our existing culture of ‘doing the right thing’. By adopting Responsible Care® in COG, the division can formalize its existing management systems, making them more efficient and effective.

New member companies are given three years in which to develop and implement the requirements of Responsible Care®. COG began this process in 2007. Year 1 activities focus on organizing and educating stakeholders. To date, COG has developed an organizational structure to successfully implement Responsible Care® and has begun to identify the key stakeholders to develop our education plan. These groups include employees, contractors, service providers, customers, community residents, emergency responders and partners.

In 2005, the Masila field and terminal in Yemen achieved its best-ever contractor Injury Incident Rate (0.28 IIR versus 0.79target) and we were slightly off our best-ever employee safety performance (0.45 IIR versus 0.42 target). These rates are exceptionally low for such a large operation (over 8 million person-hours worked) and are comparable to the best-inindustry worldwide. A key component in achieving these lower IIRs was our focus on injury prevention at the front line. Efforts in 2005 included the roll-out across all departments of the Take Two... for Safety^TM program, developed by DuPont.

Safe driving was another area for continued focus in 2005, including the installation of driving monitoring equipment, defensive driving training for all contractors and staff, radar-gun monitoring and formal vehicle inspections.

Yemen drilling and completions achieved a total recordable injury incident rate of 1.0, half that of its 2004 results, which were already the best ever achieved. Drilling presents greater injury risks than operations, as more of the work is conducted in the presence of moving and rotating equipment.

In Year 2, COG will continue to educate its workforce and develop management systems that are aligned with the Codes of Practice. In Year 3, all management systems will be implemented. COG is working toward completing the three-year process in preparation for verification in 2010.

Nexen’s Balzac operation was the first to adopt Responsible Care® and achieve verification. Balzac is pursuing three key initiatives to further improve its systems in preparation for its second re-verification in 2008. These include:

• • Planned ‘toll manufacturers audit’ of the company that handles sulphur-forming at Balzac to ensure its systems are aligned with Responsible Care®
• • Improvements to the overall Responsible Care® management system
• • Development of environmental targets to be rolled out to community stakeholders in the fall of 2007

Our operation in Yemen was verified by a team of external auditors in January 2005, making Nexen the only international upstream oil producing location in the world to have achieved this milestone. Our first re-verification is slated to occur in February 2008, and will include our new operation in East Al Hajr. In 2006 and 2007, our efforts focused on continuous improvement to existing systems and procedures. Key successes include:

• • Our gas utilization project, resulting in reduced consumption of diesel fuel and decreased flared gas – with a larger scale project planned for 2007
• • A plastic recycling program, which we plan to expand in 2007 to include paper and cardboard products
• • Several initiatives to reduce the number of vehicle-related incidents
• • Improvements to emergency response capabilities

Nexen’s US and UK operations do not formally participate in Responsible Care®, as their offshore operations do not lend themselves to some aspects of the program. These divisions do follow Nexen’s company-wide Health, Safety, Environment & Social Responsibility (HSE&SR) management system and follow additional programs dictated by industry experience in their region. In the UK, for example, all operations in the European Union are required to have an environmental management system in place which has all the elements of an accredited system such as ISO 14001. Nexen UK plans to have such a system in place in 2007.

Our safety management systems draw upon several sources including:

• • Nexen’s long-standing HSE&SR management system
• • Responsible Care®
• • Process Safety Management
• • Safety Case (UK)