Woodside Petroleum : 16.03.2017 2016 Sustainable Development Report

Woodside Petroleum Ltd | i

SUSTAINABLE DEVELOPMENT REPORT

2016

On the cover‌

Woodside places great value in supporting and recognising indigenous cultures.

The cover shows West Australian Aboriginal theatre company Yirra Yaakin performing Boodjar Kaatijin. The performance takes

the audience on a cultural journey about Noongar knowledge sharing, caring for country and environmental sustainability.

Woodside has supported the Yirra Yaakin Theatre Company since 2012 and the Sustainable Development Report is our way of sharing our sustainability story and demonstrating how we have grown in 2016.

Woodside Petroleum Ltd | i

ANNUAL REPORT 2016

DELIVERING VALUE GROWTH

Our Annual Report 2016

Our Annual Report 2016 is a summary of Woodside's operations, activities and financial position as at 31 December 2016. Copies of the Annual Report 2016 are available on request or from our website.

Who we are

Integrity

We are open, honest and fair. We do what we say we will do. We have the courage to do the right thing.

Respect

We give everyone a fair go. We listen.

Working sustainably

We are here for the long term. We look after each other, our communities and the environment. We keep each other safe.

Working together

We are on the same team.

We build long-term partnerships.

Discipline

We play by the rules.

We set goals and we hold ourselves to account.

Excellence

We achieve great results. We learn. We get better.

Where we're going

Our mission

To deliver superior shareholder returns.

Our vision

Our aim is to be a global leader in upstream oil and gas.

Our strategic direction

Maintain our leading Australian position by optimising our producing assets and commercialising our growth projects and other premium opportunities.

Grow our portfolio by leveraging our core capabilities for global upstream growth.

How we'll get there

Partner of choice

We are the premium choice for partnerships based on our distinctive capabilities, culture and track record as a great partner.

Engaged people

We work for a highly regarded and successful company. We are part of a team working together for great results and have opportunities to contribute and grow.

Functional excellence

We leverage our core capabilities and the latest technology to create new opportunities and sharpen our competitive edge.

Decision effectiveness

We make and execute decisions in line with our business priorities and

our values.

Additional information

In this report, we have indicated where additional information is available in other sections of this report and online like this:

Notes and definitions and a glossary

of key terms are on pages 62-63. For more information go to our website.

Report feedback

To help us improve our report, we welcome your feedback.

Email: communities@woodside.com.au

We are working with Green ReportsTM in an initiative that ensures communications

minimise environmental impact and create a more sustainable future for the community.

OVERVIEW

Scope

This report is published for key stakeholders to understand Woodside's sustainability approach, actions, performance and key material issues for the 12-month period ended 31 December 2016. The report was approved by the Woodside Board of Directors on

14 March 2017.

Woodside Petroleum Ltd (ABN 55 004 898 962) is the parent company of the Woodside group of companies. In this report, unless otherwise stated, references to 'Woodside', the 'Company' and the 'Group' refer to Woodside Petroleum Ltd and its controlled entities. The information in this report covers all sites and production facilities wholly owned and operated by Woodside or that are operated by Woodside in a joint venture.

Our share of production and revenues from non-operated assets is reported on an equity share basis. In these instances, we have only reported the Woodside interest. Health, safety, environment and people performance data is reported as total, although environmental performance data also includes a Woodside equity share reporting basis.

Health and safety data includes international exploration activity.

All dollar figures in this report are expressed in USD currency, unless otherwise stated.

Reporting approach

The Sustainable Development Report 2016 has been restructured from previous years to reflect our updated sustainability

principles. This change in reporting structure demonstrates our maturity in reporting, setting targets and approaching issues holistically as well as addressing stakeholder feedback. It also better links our sustainability principles to our company mission, vision

and values.

The report has been prepared in accordance with the Global Reporting Initiative (GRI)

G4 core-level reporting. The GRI guidelines provide a globally accepted framework of principles and indicators for reporting an organisation's economic, environmental and social position, practices and performance. This report includes indicators from the

GRI G4 Oil and Gas Sector Disclosures.

Woodside also reports in accordance with IPIECA and Oil and Gas Industry Guidance on Voluntary Industry Reporting (2015). IPIECA is the global oil and gas industry association for environmental and social issues.

A GRI and IPIECA content index, which cross- references the GRI and IPIECA indicators to the relevant sections of this report and the Annual Report 2016, is summarised on page 57 and more information can be found on

our website.

In determining the report content, we have been guided by the AA1000 standard. The AA1000 standard provides a framework for our organisation to identify, prioritise and respond to sustainability challenges.

Inclusivity

We acknowledge the importance of stakeholder participation in developing and implementing our response to sustainability reporting. We sought the opinions of a range of stakeholders as part of the materiality process that helped to define the content

of this report. More information on our stakeholders, their interests and our responses can be found on pages 14 and 15.

Materiality

Issues are considered material if they have the potential to impact our ability to achieve our business strategy or affect our reputation, or they are of material concern to our stakeholders. The materiality assessment process is discussed on page 12. This year

we selected six material issues. Each material issue has a case study included.

Responsiveness

The report aims to respond to those issues identified as material for Woodside and our stakeholders. Information on our response to material issues can be found throughout the report (see page 13 for specific locations).

External assurance

Ernst & Young has conducted reasonable assurance over information in the Sustainable Development Report 2016 related to Woodside's material issues and limited assurance over the balance of the report.

A copy of Ernst & Young's assurance statement is on page 64.

Woodside Petroleum Ltd | Overview 1

Materiality 12

Materiality matrix 13

Understanding our stakeholders 14

A year in review 16

Operating with transparency and integrity

Business ethics 18

Transparency, anti-bribery and corruption 19

Regulatory compliance 20

Payment transparency 21

Human rights, security and supply chain 22

Fostering the organisation and culture

People 24

Leadership and capability 25

Inclusion and diversity 26

Building a resilient business

World energy outlook 28

Economic performance 29

Climate change 30

Applying technology and innovation 34

2 Woodside Petroleum Ltd | Sustainable Development Report 2016

Creating shared value

Value generated (economic contribution) 46

Social investment 46

Indigenous engagement 48

Reconciliation Action Plan (RAP) 49

Supply chain 50

Technology and innovation collaboration 52

Sustainability performance

Sustainability targets 54

Our performance 55

GRI and IPIECA indexes 57

Data tables 59

Notes and definitions 62

Glossary 63

EY assurance statement 64