GAZPROM NEFT: RESPONSIBLE DEVELOPMENT

Transcription

GAZPROM NEFT: RESPONSIBLE DEVELOPMENT
SUSTAINABILITY REPORT
FOR 2007
Acknowledgements from the Chairman
of the Board, JSC Gazprom Neft
I would like to express my gratitude to all specialists and managers
representing the Company’s various divisions and regions of presence
who contributed to the preparation of this Report. Thank you:
Yevgeny Akopov
Lyudmila Alpatova
Lyubov Aritkulova
Ekaterina Avramenkova
Irina Bagautdinova
Dmitry Baranov
Yuri Bakhmat
Elena Bashuk
Irina Bezmenova
Sergey Bilkey
Denis Brusnitsyn
Nikolay Bukharov
Vladimir Bykov
Alexander Chizh
Alexei Dvortsov
Khasan Delbiyev
Victor Dolgov
Olga Dolgova
Andrey Dredunov
Alexander Dybal
Mikhail Dyurik
Nikolay Dyurik
Mariya Fakhretdinova
Yelena Fedoseyeva
Danil Fener
Svetlana Feshchenko
Dmitry Filimonov
Galina Gamova
Gulshat Garyayeva
Natalya Gonchar
Gulnara Grigoryeva
Nadezhda Gurtovets
Vladimir Ivanishin
Alexader Ilchenko
Levan Kadagidze
Yuri Kalner
Abdulla Karayev
Alexander Karchkov
Artyom Kashin
Tatyana Khokhlova
Lyudmila Khoma
Yuri Khomich
Adlan Kikayev
Alyona Knyazeva
Valentina Koltsun
Vladimir Konstantinov
Grigory Konvissar
Natalya Korneychuk
Nalalya Korotkova
Alexander Krylov
Pavel Kryukov
Yulia Lekhova
Galina Lisitsa
Valery Lukyanov
Yelena Lyapina
Tatyana Lyashko
Alexander Makarchuk
Sergey Makeyev
Kseniya Martynova
Natalya Mezentseva
Vadim Mishin
Victor Misnik
Vladimir Myakotin
Svetlana Nazarenko
Natalya Nikitina
Oleg Nikolayenko
Svetlana Novikova
Lyudmila Ostrovskaya
Anatoly Pakalo
Tatyana Panova
Mikhail Pasechnik
Mikhail Perevyshin
Fyodor Petrov
Yanina Pitertseva
Alexander Podoroga
Vladimir Popov
Nina Prokhorova
Victoria Razuvayeva
Tatyana Rubezhanskaya
Gulnara Sayfiyeva
Andrey Shvetsov
Marina Shrayner
Vladimir Shutilin
Andrey Shutov
Oleg Sidomonidze
Vasiliy Sidorov
Andrey Skladchikov
Vadim Smirnov
Sergey Stomma
Vladimir Sychyov
Yevgeniya Taller
Natalya Tomenko
Dmitry Trotsenko
Lyubov Tupikova
Vitaly Ulitin
Yevgeny Unyatitsky
Sergey Vasilenko
Lyudmila Vlasova
Dmitry Volokhov
Lyudmila Voronina
Vadim Voronov
Natalia Vyalkina
Alexei Yankevich
Nikolay Yeliseyev
Gennady Yermolayev
Irina Yurkina
Yevgeny Yurovskikh
Lyubov Yusupova
Galina Zakusilo
Natalya Zhevlakova
Stanislav Zhivolup
Anatoly Zyulev
GAZPROM NEFT:
RESPONSIBLE
DEVELOPMENT
SUSTAINABILITY REPORT
FOR 2007
BRIEF INTRODUCTION TO THE COMPANY AND THIS REPORT
Gazprom Neft is one of the largest integrated oil and gas companies
in the Russian Federation, whose operations include oil and gas
production, oil refining, sales of oil and petroleum products, and
provision of oilfield services. The Company conducts its production
and sales operations in 16 regions of the Russian Federation and
4 foreign countries, and exports oil and petroleum products to 41
countries of the world.
This Report “Gazprom Neft”: Responsible Development” (hereinafter “The Report”)
presents an outline of the Company’s approach toward management of economic, social,
and environmental aspects of its activities in the context of sustainability (Chapter 1), the
respective results achieved in 2007 and plans for the mid-term perspective (Chapters 2-5).
The reporting principles, boundaries and scope of the Report are described in detail in
Annex 1. Annex 2 contains the index of the performance indicators disclosed.
Terms and abbreviations used are explained in Annex 3.
CONTENTS
2
Alexey Miller: Major potential, serious responsibility
4
Alexander Dyukov: We believe that responsible development
is the key to achieving Gazprom Neft’s leadership
Chapter 1. Governing responsible development
8
12
14
16
Components of governance framework for responsible development
Corporate governance
Operational management in the field of responsible development
Corporate communications
Chapter 2. Economic development
26
30
34
Company profile
Economic performance and efficiency
Development strategy
Chapter 3. Employee development and support
42
48
52
58
Approach to personnel management
Motivation and remuneration
Social security
Recruitment and training
Chapter 4. Contribution to regional development
68
70
80
Approach to participation in regional development
Collaboration in the regions
Engagement with customers and suppliers
Chapter 5. Environment and health protection – safe development
88
92
106
110
Approach to ensuring safe development
Mitigation of environmental impacts
Health and safety at work
Emergency preparedness and response
116 Annex 1. Application of the sustainability reporting principles
119 Annex 2. Performance indicators disclosed in the Report
139 Annex 3. Terms and definitions
143 Contact information and feedback
1
Major potential,
serious
responsibility
Alexei MILLER
Chairman of the Board
of Directors JSC Gazprom Neft,
JSC Gazprom
2
Gazprom Neft is the foundation of Gazprom’s oil business. The Company develops energetically,
working to improve the efficiency of its operations. In 2007, Gazprom Neft stabilized oil production
and increased oil refining, while concluding partnership agreements with a number of the largest
Russian oil companies. By embarking on international projects, the Company created conditions for
establishing itself on the international market, while continuing intense growth and development.
The Company reviewed and elaborated in detail its strategy regarding the key aspects of its operational performance, including oil production and refining output, as well as retail sales of petroleum products. Major potential of the Company opens unlimited growth prospects: Gazprom Neft is
able to strengthen its position, becoming one of the leaders of the Russian oil sector, and enter the
global arena in the nearest future.
In this regard, it is a pleasant fact that the Company followed the example of Gazprom, which has
been publishing environmental reports aimed at the general public for many years. By preparing
and publishing its first sustainability report, Gazprom Neft reached a new level. Such reports are
produced by virtually all leading oil companies of the world. The release of the report indicates the
seriousness of the Company’s approach toward sustainability and its readiness for an open dialogue. Gazprom Neft makes a serious commitment, but this is a deliberate choice. The Company
not only demonstrates a responsible attitude toward its socially significant goals and objectives, but
also has the capacity to accomplish them.
Respectfully Yours,
of Directors JSC Gazprom Neft,
JSC Gazprom
Miller A. B.
3
We believe
that responsible
development is the key
to achieving
Gazprom Neft’s
leadership
Alexander DYUKOV
Chairman of the Board,
JSC Gazprom Neft
4
You are holding in your hands our first sustainability report. To Gazprom Neft and to me personally, the decision to publish such a report
was an obvious one — this was necessary not
only to improve the information transparency,
but also to enhance the quality of management.
Being one of the five largest oil and gas companies in the Russian Federation, we intend to
establish a leading position in the sector, which
would be impossible without active implementation of the corporate responsibility principle,
without realization of sustainable development
ideas. This is the way we are going to hold to,
and we call it “responsible development”.
To us, these ideas are a necessary condition for
achieving our strategic goals, including long-term
competitiveness, efficiency, and growth of shareholders’ equity. We believe that regular and effective engagement of our stakeholders, including
everyone potentially affected by or affecting our
performance, is a cornerstone of stability and successful development of the Company’s business.
We realize that we will not be able to turn our
ambitious plans into reality without making
our management system transparent to all
our stakeholders. Therefore in 2007 we actively worked to optimize the organizational structure of the Company, further elaborated our
long-term strategy, and developed mechanisms
of corporate governance and corporate communications. Among important objectives for
the future, we see the implementation of an integrated risk management system covering,
in particular, non-financial risks related to responsible development.
It is impossible to establish a leading position
without support and participation from our employees; therefore, attracting and retaining people is among our priority objectives. In 2007, we
focused our efforts on development of a personnel motivation system, while in the next year we
will give even more attention to professional development of our staff and fostering corporate
culture shared throughout the Company.
We continue to closely cooperate with the authorities of our regions of operations, seeking to contribute to improvement of both the social climate
and well-being of their population, including, in
particular, our customers. We see our responsibility to customers in continuous improvement
of quality of products and services, while to suppliers our responsibility lies in establishing clear
requirements for them and maintaining a transparent procurement process. In 2007, we actively promoted stakeholder engagement in our regions of operations using a variety of means:
concluding official agreements with regional
governments, maintaining hotlines to get customer feedback, and introducing electronic tendering system to work with our suppliers.
While working on enhancing our operational and
financial performance, we think of the potential
impact of our activities on human health and the
environment. Our goal is to minimize any negative effects, and it can be achieved through efficient use of resources and modern technologies, through decision-making processes
incorporating opinions and suggestions of our
stakeholders, including shareholders, business
partners, employees, local communities, non-
governmental organizations. Therefore in 2007,
we started to implement an integrated health,
safety and environmental management system
based on the international standards, which, we
are sure, will allow us to improve the environmental performance and reduce injury rate.
In preparing this report, we relied on the sustainability standards and sectoral guidelines
the most widely used throughout the world*.
Already in this Report, we have provided information on all indicators in accordance with the
highest GRI Guidelines Application Level, being
the first among the Russian oil and gas companies in this respect. We intend to further develop
sustainability reporting systems and processes,
and in the next year provide you with an update
on the implementation of our plans.
I would like to express my hope that together we
will be able to address many objectives faced by
Gazprom Neft and discussed in this report.
Respectfully Yours,
JSC Gazprom Neft
Dyukov A.V.
*Sustainability Reporting Guidelines by the Global Reporting Initiative (G3 Guidelines), AA1000 series of standards by AccountAbility (the Institute of Social and Ethical Accountability), Oil
and Gas Industry Guidance on Voluntary Sustainability Reporting by International Petroleum Industry Environmental Conservation Association and American Petroleum Institute (IPIECA/API).
5
GOVERNING
RESPONSIBLE
DEVELOPMENT
COMPONENTS OF
GOVERNING
FRAMEWORK
FOR RESPONSIBLE
DEVELOPMENT
THE COMPANY REALIZES THAT IN ORDER TO ACHIEVE ITS STRATEGIC
GOALS IT HAS TO DEVELOP IN A MANNER PROVIDING FOR THE MOST
EFFECTIVE AND EFFICIENT IMPLEMENTATION OF ALL ITS PLANS.
VISION OF RESPONSIBLE DEVELOPMENT
Efficient development is possible only providing that the risks that may impede the achievement of
established goals are controlled and opportunities for gaining additional economic benefits are taken. Addressing them responsibly, i.e. taking into account these risks and potential benefits in all areas of the Company’s activities is a part of Gazprom Neft’s development strategy aimed at increasing its capitalization (see Development Strategy).
That is why Gazprom Neft has defined the notion of responsible development to rely on in its activities.
Responsible development is development of the Company’s business that involves systematic
and effective management of economic, environmental, and social risks and opportunities in
order to increase the long-term shareholder value.
Essentially, the Company views responsible development as synonymous with the terms “corporate responsibility” and “sustainable business development” widely used all around the world.
The Company fully shares and accepts general vision of these concepts presented, in particular,
in the IPIECA/API Voluntary Reporting Guidance and on pages 10–11 of the Social Horizons
review (http://www.gazprom-neft.ru/social/).
8
GOVERNING RESPONSIBLE DEVELOPMENT
In order to ensure systematic and effective management of risks and opportunities the Company
identifies four key components of responsible development as follows:
Economic development of the Company — growth of capitalization through increase of output in
accordance with the corporate strategy, improvement of production efficiency, and distribution of
the value created
Employee development and support — job creation, implementation of an integrated motivation and
remuneration system, social support, training, responsible approach toward workforce downsizing
Contribution to regional development — regional cooperation, including socio-economic
agreements and charitable activities, provision of customers with products while maintaining high
quality of services and fair prices, as well as creation of opportunities for suppliers based on clear
and transparent requirements for them
Safe development — protection of the environment, as well as employees’ and public health
through minimization of environmental impacts, resource efficiency, strict compliance with the
environmental legislation, and timely response to incidents and accidents.
9
FIGURE 1.1
STAKEHOLDER ENGAGEMENT
Responsible and thus successful development of the Company depends on a large number of individuals and organizations. That is why at the core of governing responsible development is the engagement of so-called stakeholders – those who can be affected by or affect the corporate performance of
Gazprom Neft. It is stakeholder engagement that is the main instrument of identifying risks and opportunities, which also helps develop and implement mechanisms for their management.
MECHANISMS OF STAKEHOLDER ENGAGEMENT
In order to improve systems and processes used for stakeholder engagement, in 2007 a Company
Working Group comprising representatives of various business functions elaborated a vision of key
stakeholder groups of the Company (see Figure 1.1). The Company needs such classification in order to identify common interests of different stakeholder groups, choose the right engagement approaches and methods. During the last year the Company engaged with representatives of all these
groups (examples of such engagement regarding different components of responsible development
are provided in the respective sections of this Report).
The effectiveness of stakeholder engagement is ensured by Company’s mechanisms of corporate
governance and operational management, which collectively comprise the governance and management system of Gazprom Neft. These mechanisms together with corporate communications instruments used by the Company make it possible to maintain the engagement at all levels of or-
10
ganizational hierarchy, in all regions of operations, and regarding all components of responsible
development.
Specific engagement forms and methods employed by the Company depend on particular region
of operations, stakeholder group and interests of the latter (see, in particular, Corporate Communications).
Partnership is a stakeholder engagement method of particular importance to the Company. In 2007,
key groups of Gazprom Neft’s partners, i.e. organizations and individuals with whom the Company
concluded official cooperation agreements, included
oil and gas production and petrochemical companies – through joint investments in new projects
and jointly owned businesses (see Economic Development for more details)
Company's employees – through employment contracts and collective agreements (see Employee
Development and Support for more details)
regional authorities and local communities – through socio-economic agreements (see
Contribution to Regional Development for more details)
suppliers and customers – through business contracts (see Contribution to Regional Development
for more details)
11
CORPORATE
GOVERNANCE
GOOD CORPORATE GOVERNANCE IS A KEY ELEMENT OF RESPONSIBLE DEVELOPMENT AND DECISIONMAKING AFFECTING THE STAKEHOLDERS. THE COMPANY ENSURES COMPLIANCE OF THE CORPORATE
GOVERNANCE PRACTICES OF ITS OWN AND ITS SUBSIDIARY COMPANIES WITH THE CODE OF CORPORATE
CONDUCT BY THE FEDERAL FINANCIAL MARKETS SERVICE OF RUSSIAN FEDERATION, AND USES
INTERNATIONAL PRINCIPLES AND STANDARDS IN THE FIELD AS GUIDANCE, CONTINUOUSLY IMPROVING
THE TRANSPARENCY OF ITS OPERATIONS AND THE QUALITY OF TAKING PUBLIC INTERESTS INTO
ACCOUNT.
BOARD OF DIRECTORS
The Board of Directors elected by the General Meeting of Shareholders, the supreme governing
body of the Company, plays a key role in determining strategic priorities and principles of the Company, including its position with regard to responsible development.
The Board of Directors is chaired by Alexei Miller, the Chairman of the Management Board of JSC
Gazprom. The Board comprises ten members who are listed at the corporate website: http://www.
gazprom-neft.com/company/management/boadr-of-directors/
Board members Marco Alvera and Stefano Cao are independent directors according to the criteria set forth in the FFMS’s Code of Corporate Conduct. Substantial practical experience and deep
knowledge of the Russian and global oil and gas sector allow the Board members to make optimal
and effective decisions on the key issues of managing the Company. In order to avoid a conflict of
interest in decision-making and to comply with the existing legislation, the decision on a transaction with respect to which there exists an interest is made by a majority vote of the Board members
having no interest in the transaction.
12
What is the role of the
Board of Directors
in the responsible
development
management?
Elena ILYUKHINA
Member of the Management Board,
Deputy CEO for Legal and Corporate
Affairs
The Board of Directors has two standing committees including (1) Audit Committee and (2) Personnel and Remuneration Committee. The Committees are advisory bodies intended to implement objectives set by the Board. The Audit Committee proposes to the Board nominees to serve as external
auditors, reviews regular financial records and audit findings, and evaluates performance of the internal audit system. The functions of the Personnel and Remuneration Committee include preparing recommendations on evaluating the performance of the corporate governing bodies’ members,
their remuneration, criteria for selecting candidates for these positions, and informing the shareholders on the individuals nominated for election to corporate governing bodies.
A shareholder(s) owning in total not less than two percent of the voting shares of the Company has
the right to submit agenda items for an Annual General Meeting of Shareholders, and to nominate
candidates for the Board of Directors and Auditing Commission of the Company. Any shareholder is
able at any time to submit to the Company an inquiry or recommendations on an issue of interest.
All such inquiries are reviewed and, when necessary, may be submitted to the Board of Directors or
a General Meeting of Shareholders for consideration.
For such a large oil and gas company as
Gazprom Neft, the issues of efficient use of
non-renewable natural resources, ensuring
safety of operations, creating decent
working conditions for the personnel,
assistance in development of infrastructure
and social sector in the regions of our
operations are among the key priorities.
The Board of Directors representing
interests of shareholders and providing
strategic management and supervision
always pays close attention to these areas.
Indeed, deep involvement of the Board
in such topics as occupational safety,
environmental impacts, and development
of regional cooperation seriously
contributes to building credibility of the
Company among minority shareholders,
many of whom are ordinary people –
workers of the oil sector or members of
their families.
13
OPERATIONAL
MANAGEMENT
IN THE FIELD OF RESPONSIBLE DEVELOPMENT
THE COMPANY RECOGNIZES CLEARLY THAT IT IS NECESSARY TO CONTINUOUSLY IMPROVE
EFFICIENCY OF ENGAGING WITH STAKEHOLDERS ON MATERIAL TOPICS BOTH AT GAZPROM
NEFT’S TOP MANAGEMENT LEVEL AND IN ALL ITS SUBSIDIARY ENTERPRISES.
ROLE OF DIRECTORS AND TOP MANAGEMENT IN RESPONSIBLE DEVELOPMENT
Gazprom Neft has appointed top management representatives responsible for coordinating management of one or more of material topics areas at the Company level (see Figure 1.2). With respect to
some topics, several managers or bodies may share responsibilities within one general area; links
with corporate governance bodies are also maintained. For example, the corporate Development
Strategy is approved by the Board of Directors, submitted to the Board by the Chairman of the Management Board, and prepared by the Strategic Planning Department jointly with business functions;
the latter then become responsible for its implementation.
INTRODUCING UNIFORM RESPONSIBLE DEVELOPMENT POLICIES AND
STANDARDS IN THE SUBSIDIARY COMPANIES
The Company realizes the utmost importance of top management’s commitment to the ideas of
sustainable development and corporate responsibility. But of equal significance is the introduction
of unified responsible development principles, practices and approaches throughout the Company,
including its subsidiary entities.
14
DEPUTY CHAIRMAN OF THE MANAGEMENT BOARD,
DEPUTY CEO FOR EXPLORATION AND PRODUCTION
CEO OF JSC GAZPROMNEFT-NEFTESERVICE
DEPUTY CEO FOR LOGISTICS, PROCESSING AND SALES
CHAIRMAN OF
THE MANAGEMENT BOARD
Managing responsible
development as a whole
Economic performance
Occupational health and safety
Environmental protection
Industrial safety
Customer relations
Supplier relations
DEPUTY CEO FOR ECONOMICS AND FINANCE
DEPUTY CEO FOR ADMINISTRATION
Organizational structure of responsible development
Attraction and training of personnel
Motivation and compensation
Social support
Industrial safety
MEMBER OF THE MANAGEMENT BOARD,
DEPUTY CEO FOR CORPORATE COMMUNICATIONS
Regional cooperation including charitable activities
DEPUTY CEO FOR CONSTRUCTION AND MATERIALS MANAGEMENT
Customer relation
DEPUTY CEO FOR LEGAL AND CORPORATE AFFAIRSМ
Corporate governance
STRATEGIC PLANNING DEPARTMENT
As a part of the management system reform started in 2007, JSC Gazprom Neft will introduce a
“Strategic Supervisor” model, under which the Head Office will define strategic lines of development and supervise their implementation while leaving to subsidiary companies operational autonomy based on a unified strategy, policies, standards, and shared corporate culture. This common
foundation of responsible development is currently being developed as an integrated system by the
Head Office.
FIGURE 1.2
RESPONSIBILITIES FOR THE KEY RESPONSIBLE
DEVELOPMENT TOPICS AT THE TOP MANAGEMENT LEVEL
LEGEND:
- MATERIAL TOPICS FOR WHICH TOP MANAGERS
AND/OR BODIES OF THE COMPANY ARE RESPONSIBLE
Thus, it is business functions of the subsidiary companies that in the future will be responsible for
the implementation of responsible development policies and standards of the Company, including
introduction of non-financial risk management systems at the local level. Specialists of the Head
Office will assist them in practical application of the unified approaches. The work on introducing
this system has already started, and the Company plans to present the results achieved in subsequent reports.
15
CORPORATE
COMMUNICATIONS
THE COMPANY ACTIVELY DEVELOPS INSTRUMENTS AND CHANNELS
OF INTERNAL AND EXTERNAL COMMUNICATIONS, SEEKING TO IMPROVE
THE PERFORMANCE OF ITS STAKEHOLDER ENGAGEMENT ACTIVITIES.
OPINION STUDIES AND STAKEHOLDER DIALOGUE
The Company studies the opinions of its stakeholders and maintains a dialogue with them in order
to make sure that their interests are understood and taken into account in the corporate decisionmaking processes. In 2007, Gazprom Neft carried out polls and questionnaire surveys of its staff in
order to assess the socio-psychological climate among the Company’s workforce (see Chapter 3).
As a means of customer communication, the Company maintains hotlines aimed at addressing the
issues regarding the quality of services and products in a timely manner (see Chapter 4).
Gazprom Neft representatives conducted meetings with shareholders and investors, participated in
conferences and roundtable meetings addressing important issues of oil and gas sector, as well as
of sustainable development as a whole. The Company discussed important topics relevant to socioeconomic development of Russian regions with non-governmental organizations, representatives
of local communities and governmental authorities (see Chapter 4).
Gazprom Neft’s Department of Corporate Communications monitors on a regular basis both media
and web publications on the Company’s activities in order to identify important issues that may potentially be of interest to stakeholders or that could lead to conflicts with them. Based on the monitoring
results, the Company adjusts its approaches and works to improve the quality of its communications.
One of the channels for stakeholder feedback is the corporate website (a form for submitting comments is available at http://www.gazprom-neft.ru/feedback/). The Company will continue to study
stakeholders’ opinions and maintain a dialogue with external stakeholders on a systematic basis.
16
Co-workers and colleagues
“Sibirskaya Neft” magazine
Federal and regional newspapers, television
Immediate supervisor and meetings
Corporate website and intranet
Bulletin board at the plants
Corporate (plant) publications
Meetings with Company’s and plant management
External websites
Other sources
Do not know
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
INFORMING STAKEHOLDERS
INFORMING THE STAFF
Gazprom Neft believes that it is critically important to provide diverse information to the stakeholders in order to raise their awareness of the Company’s activities. Therefore the Company
actively works to broaden the range of information channels used and to improve the quality of
these channels.
A study of internal corporate communications of
Gazprom Neft carried out in late 2007 showed that
the corporate magazine “Sibirskaya Neft” (Siberian
Oil) was the second source of information on the
Company’s affairs in terms of popularity among the
staff surveyed. The recently created corporate intranet
and the renovated website also took an important
place among the sources used by the staff.
In 2007, the Company put considerable effort into improving the content and usability of the corporate website, which now offers its users more information on all aspects of Gazprom Neft’s operations. The work on improving the corporate intranet has started.
In 2007, Gazprom Neft and its subsidiary companies continued publishing information of importance to stakeholders in corporate periodicals, including the monthly magazine “Sibirskaya
Neft” (Siberian Oil) and newspapers “Sibirskiy Neftianik” (Siberian Oil Worker), “Slovo Neftianika” (The Word of Oil Worker), “Nashe Delo” (Our Cause), and “Muravlenkovskie Novosti” (Muravlenko News).
Other means of informing stakeholders used in 2007 included public statements of directors and
managers of Gazprom Neft, corporate press releases, publications on the Company in federal and
regional media, mailing of various information materials (letters, information memorandums,
booklets, and brochures), as well as the Annual Report of the Company.
17
RESPONSIBLE DEVELOPMENT
GOVERNANCE AND MANAGEMENT
Managing responsible development as a whole
Corporate governanceе
Operational management in the field of responsible
development
ECONOMIC DEVELOPMENT OF THE COMPANY
EMPLOYEE DEVELOPMENT AND SUPPORT
Motivation and remuneration
Social support
Attraction and training of personnel
CONTRIBUTION TO REGIONAL DEVELOPMENT
Regional cooperation, including charitable activities
Customer relations
Supplier relations
SAFE DEVELOPMENT
Industrial safety
MATERIAL TOPICS COVERED
BY THE REPORT
RESPONSIBLE DEVELOPMENT REPORTING
The process of responsible development reporting occupies a special place within the Company’s
system of corporate communications. On the one hand, such a report is a channel for informing
stakeholders; on the other, it is a platform for studying their concerns and a foundation for stakeholder dialogue, essential to effective management of non-financial risks and opportunities relevant to the Company’s business, as well as for the improvement of the quality of management.
SVETLANA Borodina,
Director of Corporate Governance Ratings Services, Standard&Poor's
Gazprom Neft started to prepare, disclose, and publicly discuss its sustainability reports, and this is a
very important move toward meeting the needs of all its stakeholders. Since our partners include foreign
and, recently, increasingly more Russian investors, we view corporate reporting from the perspective of
this particular stakeholder group. It is important for investors to understand prospects for growth of the
investment value, potential factors of and obstacles to this growth. Reviewing sustainability reports, investors look for the information on how companies manage their non-financial risks – reputational, organizational, environmental, social etc. – the risks we attempt to assess with our corporate governance
ratings. We hope that the Company will continue to improve its risk management system thus contributing to enhancing its investment attractiveness and the quality of corporate governance.
18
What did the Company
want to achieve
by publishing this
Report?
KIRILL KRAVCHENKO
Deputy Chairman
of the Management Board,
Deputy CEO for Administration,
Supervisor of the Working Group
for Preparation of the Sustainability
Report for 2007.
Gazprom Neft realizes that building a corporate process for such reporting requires a lot of
effort, particularly aimed at organizing collection, analysis and checking of information related to responsible development of the Company. Therefore in late 2007 Gazprom Neft decided to establish a system for managing such information based on the requirements of the G3
Guidelines and IPIECA/API Oil and Gas Industry Guidance on Voluntary Sustainability Reporting – documents widely used throughout the world.
In addition to a system for collection, analysis and checking of information, one also needs a
tool to define appropriate quality and content of the Report in order to provide its users a complete picture of the Company’s performance. For this purpose the reporting principles proposed by the G3 Guidelines were analyzed and adapted (see Annex 1).
Corporate reporting is a continuously evolving process. Continuing social reporting practices
of Sibneft company, whose assets formed the core of Gazprom Neft’s business, in late 2007
the Company published “Gazprom Neft: Social Horizons” (http://www.gazprom-neft.ru/social/
gazprom-neft-socialnyje-gorizonty.pdf), a review focused mainly on social programs and social performance of Gazprom Neft.
When preparing and publishing this
Report, we set ambitious goals for
ourselves. We believe that now, when
the Company starts to work on many
aspects of responsible development, the
Report will help us identify possible steps
forward. For the first time we disclose
information on many topics significant
to the Company. This information is
expected to provide a foundation for a
future productive stakeholder dialogue
and initiate changes both within the
Company and around it. It is feedback
from Report readers that will show us
whether we succeeded in accomplishing
the goals set. The Company welcomes
comments and suggestions that will
help us correct deficiencies and gain
a deeper insight into relevant issues,
and will contribute to our responsible
development as a whole.
19
Now the Company is taking the next step by releasing a public document covering material
economic, environmental, and social topics. These topics were identified by the Working Group
in the process of materiality assessment (see Annex 1) and were reflected in the structure and
content of this Report.
In order to ensure high quality and usefulness of the Report to both the Company itself and its
stakeholders, Gazprom Neft presented the draft Report at meetings with a broad range of stakeholders (Omsk) and sustainability experts (Moscow). A number of comments and suggestions proposed by the participants were addressed in finalizing the Report; the rest will be taken into account
in further development of stakeholder engagement in the future and in preparing the next sustainability report of the Company.
IGOR Zuga,
Deputy to the Legislative Assembly of the Omsk region, Member of the Committee
for Economic Policy and Investments of the Legislative Assembly,
Director General of JSC Omskneftekhimproject
Publication of the sustainability report and conducting the roundtable in Omsk are important and
necessary initiatives. There’s not enough information in the media on activities and life of the real
sector of the economy. It is good that the Company now tells people what it is busy with, but I still
think it is not sufficient — it is necessary to actively demonstrate Gazprom Neft’s successes and
initiatives. Why don’t Omsk inhabitants know that JSC Gazpromneft-ONPZ [Omsk Refinery Plant]
has reduced its emissions more than by the factor of two, takes an active part in the development
of the city’s living environment, and so on?
Gazprom Neft plans to publish similar reports annually, expanding stakeholder engagement and
reporting on implementation of its responsible development plans in a timely manner.
20
21
MAIN PLANS FOR THE MID-TERM PERSPECTIVE
• Systematize the dialogue with external stakeholders
• Improve the system for collection, analysis and checking (in particular, by means
of external assurance) of quantitative data in the field of responsible development
• Prepare and publish sustainable development reports based on stakeholders’
feedback on the published Report
• Join the Social Charter of Russian Business
• Develop and approve key responsible development codes and policies, and ensure
their implementation at all enterprises of the Company
• Develop the corporate non-financial risk management system
23
ECONOMIC
DEVELOPMENT
COMPANY
PROFILE
GAZPROM NEFT IS ONE OF THE LARGEST RUSSIAN OIL AND GAS
COMPANIES. IT ACTIVELY DEVELOPS ITS PARTNERSHIPS WITH OTHER
LARGE COMPANIES IN THIS SECTOR AND ENTERS NEW MARKETS
IN THE COUNTRY AND ABROAD.
HISTORY OF THE COMPANY AND OWNERSHIP STRUCTURE
JSC Gazprom Neft emerged in its current form on the basis of Sibneft oil company, when Gazprom
Group became a majority shareholder of the latter. The Company controls 50% of shares of JSC
NGK Slavneft, which is currently managed jointly by Gazprom Neft and TNK-BP. In 2006 Gazprom
Neft entered the retail market of Central Asia. In late 2007 the Company acquired a 50% interest in
Tomskneft and made an agreement with Rosneft, the owner of the second half of the shares. At the
same time the Company reached an agreement regarding management of the Moscow Oil Refinery
with other shareholders of the enterprise. Thus the Company was able to considerably expand the
scale of its operations and strengthen its position in the Russian oil and gas sector. Open joint stock
company Gazprom Neft has its registered corporate address in St. Petersburg, while the headquarters of the Company are located in Moscow.
26
ECONOMIC DEVELOPMENT
Minority shareholder 4,32
Eni PetroRussia B.V. 20,00
Gazprom Finance B.V. 16,67
JSC Gazprom 59,01
STRUCTURE OF OWNERSHIP
OF JSC GAZPROM NEFT
(AS OF DECEMBER 31, 2007)
Where will we
see the Company
in the future?
MAJOR AREAS OF BUSINESS
AND REGIONS OF OPERATIONS
Major areas of the Company’s business include oil and gas production, oil refining, wholesale and
retail sales of oil and petroleum products, both domestic and international, as well as providing
specialized oil and gas field services, including exploration, drilling, construction and repair of wells
and pipelines. Gazprom Neft carries out its production activities in Russia’s largest oil- and gasbearing regions, including Khanty-Mansi, Yamalo-Nenets and Chukotka Autonomous Areas, as well
as in Tomsk and Omsk Regions. The Company also holds licenses for exploration and production
operations in other Russian regions (see Figure 2.1). Gazprom Neft has expanded its distribution
network in Russia and the CIS (see Figure 2.2).
Vadim YAKOVLEV
Deputy Chairman
of the Management Board
Deputy CEO for Economics
and Finance
Gazprom Neft continuously expands
its operations to new regions.
The main geographic areas of the
Company’s activities include Siberian
and Central Federal Districts, while
the distribution network currently
covers 12 Russian regions. The
Company also expands sales of
petroleum products in the countries
of Central Asia. In fact, Gazprom
Neft has already reached the
international level: in partnership
with JSC Rosneft and JSC Transneft
we participate in the international
Burgas–Alexandroupolis TransBalkan pipeline project. Our current
objective is to achieve the efficiency
level of the world leaders in the oil
and gas sector.
27
FIGURE 2.1
REGIONS OF OIL PRODUCTION OPERATIONS AND LICENSE AREAS OF THE COMPANY (INCLUDING ACTIVITIES OF SUBSIDIARY AND DEPENDENT COMPANIES)
- OIL PRODUCTION OPERATIONS AND RESERVES, - RESERVES
•
28
•
FIGURE 2.2
OIL REFINERIES AND SALES REGIONS (INCLUDING ACTIVITIES OF SUBSIDIARY AND DEPENDENT COMPANIES)
- REGIONS WITH RETAIL PRESENCE, - REGIONS WITH WHOLESALE SALES ONLY,
- REFINERY
•
•
29
ECONOMIC
PERFORMANCE
AND EFFICIENCY
GAZPROM NEFT IS STRENGTHENING ITS CAPACITY FOR LONG-TERM SUSTAINABILITY AND ECONOMIC
GROWTH. IN 2007, ITS CAPITALIZATION ON THE MICEX (MOSCOW INTERBANK CURRENCY EXCHANGE),
WHERE MOST OF THE COMPANY’S SHARES ARE TRADED, INCREASED BY 27.5%. AS OF DECEMBER 31,
2007, THE OVERALL CAPITALIZATION OF THE COMPANY WAS RUB 725 BILLION. THE VALUE OF THE
COMPANY’S ASSETS HAS ALSO BEEN GROWING — FROM USD9.930 BILLION AT THE END OF 2006
TO USD10.433 BILLION BY DECEMBER 31, 2007, I.E. BY 5.3% FOR THE REPORTING PERIOD.
KEY RESULTS FOR 2007
Due to a number of objective factors the growth rate of the Russian oil sector is currently low.
In 2007, many companies showed a decline in production and insignificant increase in oil refining. A detailed analysis of Gazprom Neft’s operational performance (see Table 2.1) in the
context of the Russian oil and gas sector’s development is provided in the Annual Report for
2007 and in the second issue of “Sibirskaya Neft,” the corporate magazine of the Company,
for 2008 (http://www.gazprom-neft.ru/press-center/corp-press/). In 2007, the Company succeeded in reducing the oil production decline rate, while its oil reserves increased by 125.9
million tons.
Oil production: In the reporting period JSC Gazpromneft-Noyabrskneftegaz remained the main oil
production enterprise of Gazprom Neft. At the same time the Company actively developed other
production subsidiaries and created new enterprises in the prospective regions. Oil production by
the Company’s subsidiaries in 2007 virtually stabilized. The Company resolved the issue of production decline at traditional oilfields, thus creating a foundation for further growth of production.
Refining: JSC Gazpromneft-ONPZ (the Omsk Refinery) — the key refining enterprise of the Company — in 2007 showed a steady increase in petroleum refining and, in particular, in the output of
light petroleum products.
30
What new partner
projects did the
Company start in 2007
Yuri LEVIN
Head of Department of Development and New Projects
Sales: The Company increased oil and petroleum products sales in Russia, while showing a slight
decrease in the export and a growth in retail sales.
Oilfield services: In 2007, the Company began restructuring its oilfield services business. In September 2007, Gazprom Neft set up Gazpromneft–Nefteservice LLC, a subsidiary company to manage the Company’s oilfield service assets, including JSC Gazpromneft–Noyabrskneftegasgeophisika, Kapitalniy Remont Skvazhin – Service LLC, Servisnaya Burovaya Kompaniya LLC and other
enterprises. Consolidation of the service enterprises will make it possible to actively develop the
oilfield service business of the Company and increase its performance.
In 2007, Gazprom Neft and LUKOIL
oil company created a joint venture
for developing new hydrocarbon
deposits in Timan-Pechora
Basin. In addition, the Company
continued joint operations with
US Chevron oil company aimed at
developing new oil fields in YamaloNenets Autonomous District on
the basis of JSC Severnaya Taiga
Neftegaz created in 2006. In 2008,
the Company plans to expand its
operations into new oil-bearing
regions, including East Siberia,
Central Asia, Middle East, and
North Africa.
ECONOMIC EFFICIENCY
With its high share of produced oil being refined, optimal balance between sales of oil and petroleum
products, major retail business, and strong R&D potential, the Company holds the leading position
among the largest Russian oil companies in terms of economic efficiency. According to the published
data for the first nine months of 2007, Gazprom Neft has the highest specific net profit and earnings
before interest, taxes, depreciation and amortization (EBITDA) per barrel of oil produced, as well as
the best return on average capital employed (ROACE) among the five largest Russian oil companies.
31
Oilfield services, billion RUB
Oil production, thousand tons
incl. subsidiaries
Gas production, million m3
incl. associated petroleum gas, million m3
Petroleum refining, thousand tons
incl. Omsk Refinery
Output of light oil products and aromatic hydrocarbons,
thousand tons
incl. Omsk Refinery
Refining depth (Omsk Refinery), %
Oil sales, thousand tons
incl. in Russia
incl. export sales
Sales of petroleum products, thousand tons
incl. in Russia
incl. export sales
incl. wholesale sales
incl. retail sales
2005
2006
2007
n/a
45 121
33 040
2 020
1 974
17 635
14 500
n/a
44 367
32 717
2 068
2 041
24 359
16 275
18,7
43 121
32 666
1 773
1 746
26 227
16 498
12 301
10 527
84.1
19 857
446
19 411
19 045
10 521
8 524
17 488
1 557
16 493
11 857
84.5
21 221
1 375
19 845
24 126
11 865
12 261
22 219
1 906
17 508
11 903
83.4
21 410
4 270
17 140
24 778
13 176
11 602
22 517
2 261
TABLE 2.1.
KEY OPERATIONAL PERFORMANCE INDICATORS
OF THE COMPANY
R&D INVESTMENTS MAKE SERIOUS CONTRIBUTION TO THE GROWTH OF OIL PRODUCTION
AND PROFITABILITY
In late 2007, the Company re-organized its Research and Analytical Department into Gazprom Neft Research
and Development Center LLC, a standalone corporate research and production center in the field of exploration, design, monitoring, and oil and gas production. It is planned that in 2008 specific R&D spending by Gazprom Neft will approach the level of such companies as ВР, Chevron, and Statoil.
This is what the investment plan of the R&D Center is aimed at: for example, preliminary estimates show
that effective water isolation works based on the Center’s proposal will result in oil production increased by
100–150 thousand tons per years. It is expected that drilling of additional horizontal sidetracks will result in a
production increase by 120–170 thousand tons per years, while hydraulic fracturing measures implemented
by the R&D Center will provide another 200–220 thousand tons per year. Moreover, according to the estimates
by Gazprom Neft’s management, activities of the Center will make it possible to reduce the cost of interpreting seismic data by 60–75%. Thus, economic benefit from creating the new subsidiary is obvious. Systematic
approach toward development of technology component of the Company’s business will help fully realize the
potential created by the former Research and Analytical Department, and strengthen Company’s positions at
the domestic and international markets.
32
Value generated (revenues)
Value distributed (expenses), including:
operating costs
salaries and other payments to employees, including payroll taxes
payments to providers of capital, including dividends
payments to governments, including taxes
charitable activities
Value retained
2006
2007
20.220
14.777
6.793
0.606
0.711
7.328
0.050
5.443
21.271
15.305
7.812
0.759
2.164
6.702
0.032
5.966
TABLE 2.2
DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED,
USD BILLION
DISTRIBUTION OF THE COMPANY’S PROFITS
NOTE:
Hereinafter financial and economic indicators cover only
the entities included in the reporting boundary according
to US GAAP (see Annex 1 for more details). This accounts,
in particular, for the difference in payroll data between this
table and Table 3.2 in Chapter 3, which provides the data for
the Company as a whole. In 2006 and 2007, average weighted
RUB/USD exchange rate was 27.8 and 25.6 respectively.
Gazprom Neft makes considerable contributions to the economic development of Russia and its regions. The Company invests in maintaining stability of operations and efficient use of oil and gas resources, creates jobs and pays decent wages to its employees (see Chapter 3).
Gazprom Neft is a good taxpayer and a responsible business partner (see “Engagement with customers and suppliers”), it pays dividends to shareholders and interest on its borrowings on a
timely basis.
The Company sponsors socio-economic partnership programs and charitable projects in its regions of operations (see “Collaboration in the regions”), and reserves remaining funds for future investments, research and development. The data on revenues and expenses (Table 2.2) show the distribution of the value generated between these items.
33
DEVELOPMENT
STRATEGY
IN 2007 THE COMPANY STARTED DETAILED ELABORATION OF ITS LONG-TERM
DEVELOPMENT STRATEGY. ACCORDING TO THE STRATEGY, THE COMPANY’S GOAL
IS TO INCREASE ITS MARKET CAPITALIZATION TO USD 100 BILLION BY 2020.
STRATEGIC GOALS OF THE COMPANY
The key targets the Company plans to achieve by 2020 include
(compared to the current values):
Proven recoverable hydrocarbon reserves
Oil production
Refining output
Retail network
Sales of petroleum products through
Company’s own distribution network
2007
Target for 2020
601.8 million tons
32.7 million tons
26 million tons
770 filling stations
2200–2400 million tons
5000–5500 filling stations
2.3 million tons
12 million tons.
In order to achieve these targets the Company plans to invest a total of USD70 billion by 2020.
The plan of reaching the production level set for 2020 envisions staged development of all Gazprom
Neft’s explored oil fields (taking into account the Company’s 50% interests in JSC NGK Slavneft and
JSC Tomskneft) and expansion of the resource base by putting into operation oil fields currently on
the balance sheets of other Gazprom Group companies, and by acquiring new licenses.
34
How has the
Company improved
its Strategy?
Yuri KALNER
Head of the Strategic Planning
Department
IMPLEMENTATION OF THE STRATEGY IN 2007
In order to improve its performance in all areas of activities and build a foundation for implementation of the Strategy, in 2007 the Company:
Introduced tendering systems to improve efficiency and transparency of procurement and
wholesale sales of petroleum products
Consolidated its oilfield services assets in order to improve competitiveness of this business
Strengthened its own research base for wide implementation of advanced techniques to improve
efficiency of production and oil recovery factor
Developed a mid-term strategy for achieving a high rate of associated gas recovery
Concluded important partnership agreements with other companies
Further developed its retail network and created new lines of retail business including bunkering
of vessels and fuelling of aircrafts
Started a reform of the management system in order to shift from tactical to strategic planning
and management
Started the implementation of an integrated health, safety, and environmental management
system at the enterprises of the Company
Systematized approaches toward personnel motivation, attraction and development, providing
decent social benefits, and formation of a shared corporate culture
Continued fruitful cooperation with its regions of operations
In 2007 the Company started to
introduce a systemic approach
toward formulating its concept of
strategic development. Within the
framework of this approach we
develop and annually update both
the top-level Strategy and a number
of strategies for various business
functions and divisions, which are
intended to guide the development
of individual business segments.
The strategic concept, as well as
functional and divisional strategies
are developed for short-term, midterm and long-term time horizons.
The so-called KPI pyramid, a
quantitative representation of the
degree to which the strategic goals
are achieved, serves as a foundation
for the managers’ motivation
system at various levels of the
organizational hierarchy.
35
According to its Strategy,
Gazprom Neft should almost
double its oil production by 2020.
How is the Company going to
achieve this goal?
Boris ZILBERMINTS
Deputy CEO for Exploration
and Production
We will work in several key areas.
These include bidding for the
acquisition of new license areas,
further exploration of discovered
oil fields, and introduction of the
most advanced techniques for the
improvement of oil recovery factor.
Increased efficiency and output
of joint ventures, development of
Gazprom Group’s oil fields, and
acquisition of operating assets
both in Russia and abroad will
also contribute to overall growth
of production. In 2008-2010, within
the framework of the Associated
Gas Recovery Program already
approved by the Company, we plan
to reach a 95% gas recovery rate,
in particular, through cooperation
with the SIBUR Group. I would
like to particularly emphasize that
all measures in the areas listed
above will undergo an efficiency
assessment, and only the most
profitable and feasible ones will be
implemented in practice.
36
How will the
Company
develop
its oilfield
services
business?
Which factors
will determine
the growth in
retail sales of the
Company?
Oleg VITKA
Anatoly CHERNER
CEO of JSC Gazpromneft –
Nefteservice
Deputy Chairman of the Management
Board, Deputy CEO for Logistics,
Processing and Sales
The development strategy of the Company’s
oilfield services business envisions not only
providing services to Gazprom Neft itself and other
companies of the Gazprom Group, but entering the
market with competitive services. We are planning
to improve the efficiency of the business by
offering a broader range of services, using modern
equipment and the most advanced technologies.
Cooperation with other companies specializing or
having significant experience in providing oilfield
services also contributes to our dynamic growth
and increased quality of services. The key role in
the service business development belongs to our
staff, its professionalism, high qualifications, and
extensive experience. The Company will improve
working conditions, elaborate a motivation
system and programs for professional upgrading
and retraining, and develop social support of
personnel. The introduction of new technologies,
advanced managerial and organizational
approaches will help improve the performance
of each employee. Active efforts made by
Gazprom Neft in the last year (2007) provide a
good foundation for realization of the Company’s
development potential and achievement of the key
targets envisioned by the Strategy.
The high quality of our refineries’ products
is recognized by customers. The integrated
development program of the Omsk Refinery
in the near future will make it possible to
produce gasoline and diesel fuel conforming to
the European environmental safety standards
(Euro 4 from 2011, Euro 5 from 2015). We plan
to increase the number of our filling stations,
not only expanding our retail network in our
traditional regions of operations and the
regions with a constantly high demand, but
actively entering new regions, prospective to
us. We will work to unify the appearance of
our filling stations, provide a broader range
of additional services, improve the quality of
services in accordance with modern standards,
analyze demand for and customer satisfaction
with our services, develop loyalty programs
for our clients. We will also continue the
development of new lines of business, including
bunkering of vessels, fuelling of aircrafts and
sales of motor oils, and will work to increase
the efficiency of wholesale sales, improving
the tendering system for sales of petroleum
products.
37
• Expand oil production through development of explored oil fields, improvement of
oil recovery factor at the oil fields being developed, and acquisition of new license
areas and assets
• Achieve further integration of oilfield services business and improve its
competitiveness
• Establish the Research and Development Center on the basis of the Company’s
Research and Analytical Department, and implement respective investment
program
• Produce environmentally safe types of motor fuel
• Expand and develop the Company’s retail business
39
EMPLOYEE
DEVELOPMENT
AND SUPPORT
APPROACH
TO PERSONNEL
MANAGEMENT
GAZPROM NEFT INVESTS IN PERSONNEL, SUPPORTING INITIATIVES AND INNOVATIONS AIMED
AT THE IMPROVEMENT OF EFFICIENCY OF OPERATING AND MANAGEMENT PRACTICES. THE
COMPANY ACTS AS A RESPONSIBLE EMPLOYER MAINTAINING EQUAL RELATIONSHIPS WITH ITS
PERSONNEL, PROVIDING DECENT WAGES, DEVELOPMENT OPPORTUNITIES, AND COMFORTABLE
WORKING CONDITIONS.
RESPONSIBILITY IN THE FIELD OF PERSONNEL MANAGEMENT
It is the Human Resources Department that is responsible for strategic aspects of personnel management. The Department includes four offices whose functions are described by their names: Office of Personnel Administration and Selection, Office of Personnel Development and Training, Office of Motivation, Remuneration and Benefits, and Office of Social Security. In the field of informing
personnel the Human Resources Department cooperates with the Corporate Communications Department.
DEVELOPMENT PRIORITIES OF THE PERSONNEL MANAGEMENT SYSTEM
At the current stage, the Company’s priorities in the field of personnel development and support include:
Development of an integrated system of employees’ performance evaluation encompassing all
stages of their work
Creation of a system of continuous training and development of the Company’s personnel
Formation of an integrated system of personnel motivation
Development of a candidate pool within the Company, creation of an effective promotion and
rotation system
Improvement of a system of social assistance to the Company’s employees
Attraction of highly qualified staff and development of adaptation programs for new employees
42
How do you see the
Company’s personnel
five years from now?
Oleg SIDOMONIDZE
Head of Human Resources
Department
Integrated achievement of these priority objectives will contribute to the formation of a highly professional team with a shared corporate culture.
In 2007, Gazprom Neft Asia enterprise implemented a targeted program aimed at training and motivation of junior staff. This Gazprom
Neft subsidiary, which employs 612 filling station attendants, organized a series of training workshops for them.
It is the filling station attendant who represents the face of the
Company when greeting and serving a client, receiving payments
for the service, and seeing him or her off. Therefore the training
program covered, in addition to legal liabilities and safe working
practices, topics on quality of services, business etiquette, and the
Company’s values.
It was decided to increase salaries of the junior staff and to introduce a new remuneration system aimed at providing incentives for
good work. According to the new scheme, the employee’s remuneration includes a guaranteed salary, a bonus linked to accomplishment of responsibilities and compliance with workplace conduct requirements, and an incentive part depending on sales of the
filling station. The management of Gazprom Neft Asia believes that
these measures will improve employees’ loyalty to the Company
and strengthen the corporate spirit.
We have to become a cohesive,
strong team of professionals,
where each member contributes
to achieving common goals at his
or her workplace. Our current
goal is personnel development
and formation of a collective
that would meet the Company’s
growing needs in highly qualified
managerial and technical staff,
while ensuring both continuity
and innovative development. We
strive to fill opening vacancies with
our own employees and to attract
young staff that meets the highest
requirements while being able to
quickly adapt to Gazprom Neft’s
corporate culture and practices.
43
FIGURE 3.1.
KEY CORPORATE VALUES
POLICY AND STANDARDS IN THE FIELD OF PERSONNEL MANAGEMENT
Currently Gazprom Neft is developing a draft unified Human Resources Policy, and expects to approve and begin implementing it in 2008. In order to produce a balanced and comprehensive document, representatives of regional subsidiaries are involved in drafting the policy together with specialists of all offices of the Human Resources Department.
In order to define a standard approach toward labor relations at all its enterprises, the Company
works on a standard collective agreement which would include unified employer obligations for all
Gazprom Neft’s subsidiaries. Each subsidiary company will be able to amend the agreement with
additional elements, adapting universal benefits and conditions to its particular situation.
In 2007, the Company also began to develop a set of new personnel management standards, including “Management by Objectives. Procedure of Setting Objectives and Performance Evaluation,”
“Procedure of Organizing Personnel Training,” “Planning and Training the Candidate Pool for Target Positions,” “Procedure of Working with Young Professionals,” “Procedure of Providing Quarterly
Bonuses to the Personnel,” “Personnel Awards and Corporate Celebrations,” etc.
Currently the Company is developing a corporate Code of Ethics, formulating its key principles on
the basis of expert judgments and opinion surveys of stakeholders with primary focus on the shareholders and employees. The key corporate values identified as a result of this work include:
Later these values will be set forth in the Code, whose adoption and application will contribute to
the formation of an integrated corporate culture of the Company.
44
5 000
44 494
47 965
48 327
31.12.06
31.12.07
4 000
3 000
2 000
1 000
0
31.12.05
FIGURE 3.2.
GAZPROM NEFT HEADCOUNT
PERSONNEL PROFILE
At present Gazprom Neft together with its subsidiaries employs more than 48,000 individuals working in 16 Russian regions, Kyrgyzstan, Kazakhstan, and Tajikistan (see Figure 3.2). In particular,
about 6% of the personnel are employed in Moscow and Moscow Region, about half of them in
the Head Office. 17% of the personnel work in Omsk and Omsk Region, more than half of them at
the Omsk Refinery. However, the biggest region in terms of Gazprom Neft employment is YamaloNenets Autonomous Area, where more than half of the Company’s personnel work. Distribution of
personnel by region and country is shown in Figure 3.3.
Most of those working at the Head Office of the Company are between 30 and 50 years of age (more
than 50%). 30% of the Head Office personnel are younger than 30, about 5% are working pensioners. About 30% of the managers working at the Head Office are women (women comprise about
half of the total personnel of the office). The share of women among the Company personnel as a
whole is slightly more than 25%. Workers comprise almost three-fourths of Gazprom Neft personnel; the share of specialists and office staff is about 18%. The average age of a Gazprom Neft employee is 40 years of age.
RECRUITMENT AND LEAVING
The key factors determining changes in the Company personnel (see Table 3.1) include Company’s
development, restructuring, and growth. For example, in 2005 more than 6100 employees of JSC
Sibneft-Noyabrskneftegaz left the Company, and more than 4600 were hired; thus the overall number of enterprise personnel decreased by more than 1500. Some employees were transferred to the
45
Average number of personnel
Recruited by the Company
Left the Company
Personnel turnover*
2005
2006
2007
44 640
11 981
10 343
23%
45 775
12 561
9 545
21%
47 686
9 932
9 584
20%
2005
2006
2007
13 748
13 309
439
16 478
15 982
496
19 958
19 259
699
*Ratio of those leaving the Company to the average number of personnel
TABLE 3.1.
CHANGES IN THE HEADCOUNT
Total personnel expenses, million RUB,
without payroll taxes
incl. total payroll, million RUB
social payments, million RUB
TABLE 3.2.
PERSONNEL EXPENSES OF THE COMPANY
Company’s oilfield service enterprises. Almost 1900 employees were hired by JSC Novosibirsknefteproduct VNK, where 1455 new jobs were created. In 2006, the largest contribution to the personnel
growth was made by JSC Gazprom Neft Asia, where almost 1400 new jobs were created. In 2007,
the number of Company personnel increased insignificantly.
If a planned restructuring of a Company’s division requires layoffs, employees of the division in
question are notified at the general meeting at least two months prior to the dismissal, as required
by the existing legislation. The Company, in cooperation with labor union organizations, uses this
period for consultation with the employees and offers them employment options such as transferring to other positions or divisions, other subsidiaries of the Company or project centers. Those approaching retirement age are offered early retirement on terms negotiated between the parties. If
an employee accepts neither of these options, he or she is paid dismissal compensation. In case of
a violation of employee rights, in particular, with regard to dismissal, all necessary efforts are made
to enable amicable resolution of the dispute and to remedy the breach. At the key enterprises of the
Company**, there were two cases of illegal dismissal in 2005, one in 2006, and three in 2007. All of
them took place in the Company’s retail business. All affected employees were paid compensations
and restored to their former positions.
PERSONNEL EXPENSES
The Company pays its employees competitive wages and provides decent social benefits. In 2007,
personnel expenses grew more than 20% from the previous year, reaching almost RUB 20 billion
(see Table 3.2).
**Companies listed in Annex 1.
46
FIGURE 3.3.
GEOGRAPHIC DISTRIBUTION OF THE COMPANY PERSONNEL (AS OF DECEMBER 31, 2007)
LEGEND: - MORE THAN 50%, - MORE THAN 15%, - FROM 1% TO 10%, - LESS THAN 1%
•
•
•
•
47
MOTIVATION
AND REMUNERATION
THE COMPANY SUPPORTS EMPLOYEES’
DRIVE TO WORK BY BUILDING A FOCUSED
TEAM THAT IS AIMED AT CONSISTENTLY
HIGH RESULTS.
PERFORMANCE-BASED REMUNERATION SYSTEM
An effective personnel motivation system is able to make a serious contribution to accomplishment of Company’s business goals by facilitating employee performance. Gazprom Neft introduces
and develops an integrated motivation system based on competitive wages, performance-based rewards, and non-financial incentives.
In 2007, the Company introduced the Management by Objectives (MBO) approach that links annual
bonuses of top and middle management to accomplishment of both their individual objectives and
corporate objectives of the Company. A system of key performance indicators (KPI) is being introduced for the personnel of the Company and its subsidiaries. The KPIs include, in particular, significant performance indicators in the field of occupational health and industrial safety. Managers of
the business functions and the Strategic Planning Department participated in the development of
KPIs. The Company plans to complete implementation of the system in 2008.
GROWTH OF WAGE LEVEL
Striving to attract and retain the best workforce available, Gazprom Neft carefully tracks competitiveness of the wages paid to its employees. Ratios of average wages at the Company's enterprises
to average wages in the regions of operations are shown in Figure 3.6. The Company wants wages
48
40
35
30
25
20
15
10
05
00
2005
2006
2007
What’s new
in the Company’s
remuneration system?
FIGURE 3.4.
AVERAGE SALARY LEVEL IN THE COMPANY
of oil workers to grow faster than the inflation rate. During the reporting period, year 2007, the average wage for the Company as a whole rose 16 % (see Figure 3.4). The next increase of the wage
level is expected in late April 2008. In 2008 it is planned to modify the remuneration system in order
to make the remuneration size depend more on the qualifications, experience, and performance of
an employee, and less on the fo mal position in the organizational hierarchy.
EMPLOYEE SATISFACTION
In 2007, Gazprom Neft, assisted by ZIRCON Group, a sociology research center, carried out a study
of internal communications and socio-psychological climate at its enterprises. The study included
a survey of 7500 employees of 10 enterprises representing different areas of the Company’s business. During the survey, among other important questions, employees were asked about their satisfaction with work.
Alyona KNYAZEVA
Head of the Office of Motivation, Remuneration, and
Benefits
To encourage people to work
for the Company with full
commitment while knowing
that their efforts will be
decently rewarded, we need
a motivation system aligned
with goals and objectives of
the Company and its business.
Gazprom Neft has introduced a
balanced compensation system
for its employees. At present
the Company is developing
a system for evaluating
personnel performance, which
will logically complement the
existing motivation system.
According to the survey results, the vast majority of employees (more than 70%) are generally satisfied with work at their enterprises. The distribution of answers is presented in Figure 3.5. At some
Company’s enterprises the level of employee satisfaction is even higher. In particular, at Gazpromneft-Noyabrskneftegeaz, one of the largest Company’s subsidiaries, 73.8% of employees are satis-
49
Not satisfied 27,2
No answer 0,7
Satisfied 72,1
FIGURE 3.5.
LEVEL OF EMPLOYEE
SATISFACTION WITH WORK
fied with their work. This situation is primarily a result of the wage level at the Company’s enterprises. Despite this high level of employee satisfaction, in 2008 the Company plans to put an emphasis
on improving the system of monetary and non-monetary incentives, fostering a shared corporate
culture, strengthening personnel loyalty and engagement, and increasing the effectiveness of the
internal communications system. In order to measure positive changes in the personnel attitude,
Gazprom Neft plans to carry put similar surveys on a regular basis.
RECOGNITION OF EMPLOYEE ACHIEVEMENTS
The existing personnel motivation system involves not only monetary incentives, but also various
kinds of non-monetary rewards. The most productive workers and winners of professional contests
are awarded sectoral and corporate honorary signs, their achievements are publicized by the corporate media, and their images are featured on honorary boards. Corporate professional and sports
competitions are organized. All this helps employees realize their individual contributions to the
common cause, strengthen the corporate culture and shared values.
In 2007, five staff members of JSC Gazpromneft-Noyabrskneftegaz were awarded the honorary title of Meritorious Worker of JSC Gazprom-Neft. At a special ceremony organized in Moscow, Alexander Dyukov, the
Chairman of the Management Board of the Company, presented a gold badge with the Company’s symbols and
a monetary remuneration of 100,000 RUB to each of the five employees.
The honorary title of Meritorious Worker of JSC Gazprom-Neft was established as a reward for years of productive work, high professional level, and achievements in increasing the performance of Gazprom Neft.
50
FIGURE 3.6.
RATIOS OF AVERAGE WAGES AT THE COMPANY’S ENTERPRISES AND IN RUSSIAN REGIONS IN 2007 (FOR THE REGIONS
WHERE MORE THAN 1% OF THE COMPANY PERSONNEL IS EMPLOYED)
LEGEND: -MORE THAN 200%, -FROM 100 TO 200%
•
•
51
SOCIAL
SECURITY
SOCIAL BENEFITS PROVIDED TO PERSONNEL NOT ONLY HELP CREATE COMFORTABLE
CONDITIONS AND INCREASE CONFIDENCE IN THE FUTURE, BUT ALSO STRENGTHEN
THE CORPORATE CULTURE BY DEMONSTRATING COMPANY’S RESPONSIBLE ATTITUDE
TOWARD ITS EMPLOYEES.
Social programs complement monetary compensation as an instrument of attracting and retaining
qualified workforce. Various corporate events, competitions and celebrations also play an important
role in the Company’s life, gathering together all staff members. All this strengthens the corporate
spirit and makes employees feel they are members of a single cohesive team.
BENEFITS PACKAGE
The Company’s employees, in addition to the benefits envisioned by the existing legislation, are provided a benefit package that includes:
Voluntary medical insurance
Payment of expenses for meals
Jubilee bonuses
Monetary assistance
Payment of recreation and travel expenses, vacation allowance
Additional child care allowance
Holiday gifts for employees and members of their families
Accident insurance
Death allowance
Since each subsidiary of the Company has a different scope and budget of social programs as a
result of its unique history, Gazprom Neft initiated systematization and improvement of such pro-
52
grams in order to provide a standardized decent benefits package focused on the benefits of the
most interest to the personnel. The Company develops an occupational pension scheme (calculations for two schemes, one to be funded by the Company only, and one involving also employee’s
payments, were made). Currently a housing program for young professionals has been introduced
and preferential loan schemes are being developed. The Company also works on enhancing its approach toward voluntary medical insurance of the staff.
In 2007, average social payments for an employee reached RUB 14.700, or 35% more than in 2006
(RUB 10,900). Still there remain considerable differences between the levels of benefits at different
enterprises and in different regions, as can be seen in Figure 3.7.
According to the collective agreement, employees of JSC Sverdlovsknefteproduct are provided a considerable
benefits package of about thirty items, including free health services and vaccinations, partial coverage of
recreation expenses, assistance to pensioners and mothers having many children, etc. All these obligations
are strictly observed by the company.
The company employees share not only a place of work, but their interest toward active recreations. Corporate
celebrations usually include contests and competitions. The employees are eager to participate in regular
corporate competitions in different sports. Sverdlovsknefteproduct’s sports initiatives spread beyond the company boundaries – its employees actively participate in bowling competitions between oil companies operating
in Sverdlovsk region.
One more good tradition of the company is to reward talented and proactive employees. Throughout the year
Sverdlovsknefteproduct conducts competitions in professional excellence rewarding winners with valuable prizes and monetary bonuses. The company organizes regular Best Idea Contests aimed at the improvement of quality of services at filling stations, development of a new station design, cost reduction, innovative sales promotions
etc. All these activities help improve performance of the enterprise and strengthen cohesion of its team.
53
FIGURE 3.7.
SHARE OF SOCIAL PAYMENTS IN THE TOTAL PERSONNEL EXPENSES (FOR THE REGIONS WHERE MORE THAN 1% OF THE COMPANY PERSONNEL IS EMPLOYED)
LEGEND: - MORE THAN 3.5 %, - FROM 1 TO 3.5%, - LESS THAN 1%
•
54
•
•
RELATIONS WITH LABOR UNIONS
Gazprom Neft actively collaborates with labor unions of its employees to jointly address social issues.
Union committees representing employees involved in different types of operations are present at the
largest subsidiaries of the Company, including Noyabrskneftegaz and Omsk Refinery. Most enterprises are covered by collective agreements. Meetings of union leaders with the top management of the
Company are conducted twice a year. Working meetings of union representatives with heads of Company’s department and offices usually occur on a much more frequent basis.
Members of union committees represent the positions of labor collectives and are actively involved
in development and implementation of benefits programs: in particular they participate in revision
of wages and distribution of recreation packages. Union committees also participate in organizing
corporate sports competitions and cultural events. When necessary, the unions help resolve labor
disputes occurring at the enterprises.
More than two thirds of the Company’s employees are union members; these include more than
85 % of those employed in Omsk Region and Khanty-Mansi Autonomous Area, and more than 60%
of those employed in Kemerovo Region. 76% of the Company’s personnel are covered by collective
agreements; these include almost all employees of the enterprises located in Omsk Region, Khanty-Mansi Autonomous Area, Yekaterinburg and Sverdlovsk Region, and more than 89% of those employed in Kemerovo Region.
55
CORPORATE SPORTS AND HEALTH IMPROVEMENT
Sports events help strengthen team spirit, unite employees, and promote a healthy way of life. According to a survey carried out by the Company in 2007, an absolute majority of employees – about
70% of those surveyed — were satisfied with conditions for sports and fitness at their enterprises,
and only 30% considered these opportunities insufficient.
In 2007, two corporate tournaments – football and chess – were organized with 180 representatives
of 12 enterprises participating in them. The Company created the Council for Sports and Health Improvement. For 2008, Gazprom Neft budgeted more than RUB 30 million for organizing sport events
and acquiring sports uniform and equipment for Company employees and veterans. The Company plans to organize volleyball, table tennis, billiard and chess competitions for Company veterans (non-working pensioners) living in Noyabrsk and Omsk. In May–July 2008, qualifying rounds for
Gazprom Neft’s Corporate Olympics will be organized in the Company’s regions of operations. The
Olympics themselves, associated with the Day of Oil Worker, will be held in August–September and
will include seven of the most popular sports among employees. In addition, corporate basketball
and ski racing competitions will be held in the same year. It is expected that more than 1000 employees will participate in all corporate level competitions.
In addition to internal events of the Company, it is planned to organize competitions between managerial teams of oil companies and international Omsk Refinery Prize Football Tournament among
petroleum refineries, and to take part in inter-corporate competitions of the Sports League of Oil
and Fuel Companies. Company teams and individual athletes will also participate in regional competitions and tournaments.
56
ASSISTANCE TO COMPANY VETERANS
Patronage of veteran organizations and assistance to retired employees is one more important
component of the Gazprom Neft’s social policy. The Company does not forget those who worked
for it for many years and supports them to the extent possible. Gazprom Neft’s enterprises provide
monetary assistance to their pensioners, organize cultural events, and make every effort possible
to ensure decent life of their veterans. Some enterprises pay supplementary pensions for long service. Members of Omsk “Fakel” (Torch) Club number almost 4000 veterans who worked at the Omsk
Refinery for at least 15 years. The refinery pays the veterans supplementary pensions, provides free
health services and space for club meetings and events. Other subsidiaries of the Company also
maintain their veterans associations. In 2007, total charitable aid to the veterans of the Omsk Refinery increased more than half compared to 2006, and reached 26.3 million RUB.
As the International Day of Older Persons was approaching,
JSC Gazpromneft-Tyumen provided charitable aid to veteran organizations of Tyumen and Tyumen Regions comprising, in particular, retired employees of the enterprise.
The funds were used to organize events and celebrations,
which were attended by more than 700 senior citizens.
Gazpromneft-Tyumen acquired essential goods and medications and gave them to Care for the Elderly NGO for further distribution among pensioners. The Council of War
and Labor Veterans of Mys settlement was provided with
gasoline. More than 500 retired and working pensioners
received monetary aid associated with the Day of Older
Persons.
57
RECRUITMENT
AND TRAINING
THE COMPANY STRIVES TO BECOME ONE OF THE SECTOR LEADERS
IN EFFICIENCY AND IS INTERESTED IN ATTRACTING TALENTED SPECIALISTS.
THE KEY AREAS OF PERSONNEL DEVELOPMENT IN THE COMPANY INCLUDE WORK
WITH YOUNG PROFESSIONALS, FORMATION OF A CANDIDATE POOL, AND CREATION
OF AN INTEGRATED CONTINUOUS TRAINING SYSTEM COVERING ALL PERSONNEL
CATEGORIES AND ALL LEVELS OF THE ORGANIZATIONAL HIERARCHY.
Systematic efforts aimed at personnel development help employees fully realize their potential and
acquire new knowledge and skills. In the future the Company plans to fill up to 80% of opening vacancies with its own employees (currently this figure is much less). Gazprom Neft already has more
than 2% of the employees in its candidate pool. The Company will also work to attract young talented employees.
ATTRACTING YOUNG PROFESSIONALS
When recruiting new employees, the Company will look for talented, promising and goal-oriented
young people capable of contributing to the inflow of fresh ideas and dynamic growth of the business. Realizing that excellent specialists are fostered in university auditoriums, Gazprom Neft collaborates with many Russian universities, assisting them in training students. In particular, in 2007
the Company recruited more than 300 graduates, while in 2008 it plans to recruit another 400 students. Gazprom Neft maintains a special adaptation and development program for newly recruited students.
58
350
300
283
306
334
2006
2007
250
200
150
100
50
00
2005
Why is Gazprom Neft
attractive to graduates?
FIGURE 3.8.
RECRUITMENT OF YOUNG
PROFESSIONALS
Irina BEZMENOVA
Head of the Office for Personnel
Development and Training
Our Company, one of the largest
in Russia, continues its active
development. We have programs
for supporting students and
young professionals. Gazprom
Neft offers graduates a broad
range of opportunities in terms
of both professional and personal
development.
The Young Professional Program takes three years. During this period newly recruited specialists
— new graduates — develop their professional, technical, and leadership skills, at the same time
planning their career paths. For all three years a young professional is assisted by a mentor who
initially helps the new employee adapt to the corporate environment, and then assists in developing
his or her professional and corporate competencies, identifying the leadership potential.
The Company organizes special training for the mentors themselves, thus helping them perform
their functions effectively. The program provides for rotation of young professionals between different divisions and business functions; the most talented and successful are included in the strategic candidate pool. In 2007, Gazprom Neft recruited 334 young professionals, or 9% more than the
previous year. By the end of 2007 the Company employed a total of 696 young professionals. The
program is considered a success — in 2008 it is planned to increase the recruitment of young professionals by 2.5 times. The growth of young professionals’ recruitment is shown in Figure 3.8.
According to forecasts, the overall share of young professionals among the Company employees
should reach at least 3%.
59
COLLABORATION WITH EDUCATIONAL INSTITUTIONS
For many years Gazprom Neft and its subsidiaries have closely collaborated with universities.
This partnership helps make training process closer to real practice due to a well-established
collaboration system that includes on-site training of students and internship of teachers at the
Company’s enterprises, funding research and development activities of universities relevant to
the Company and, finally, recruiting best graduates. Gazprom Neft cooperates with a number of
universities, including:
G. V. Plekhanov St. Petersburg State Mining Institute
M. Gubkin Russian State Oil and Gas University
M. V. Lomonosov Moscow State University
Tyumen Oil and Gas State University
Ufa State Oil Technical University
Tomsk Polytechnic University
Kazan State University
Omsk State University
Omsk State Technical University
Novosibirsk State University
Samara State Technical University
Siberian State Automobile and Road Academy
60
A good example of the Company’s partnership with educational establishments is the collaboration of the Omsk Refinery with Chemistry Department of the Omsk State University,
Chemical and Mechanical College, and Industrial and Economic College. The best students
of these establishments have been granted Ivan Litskevich Awards (named after a former
Refinery director) for eight years already. Since March 2002, the Refinery funds stipends
for the best senior students of Technical and Agrarian Universities. The stipends are granted based on the results a competition, which takes into account, in addition to learning
achievement, the students’ performance during their onsite training in the working collectives of the refinery.
In addition to targeted cooperation with universities, the Company collaborates with secondary professional educational institutions on a regular basis. This helps the Company recruit graduates of
such institutions for worker positions in its largest subsidiaries including JSC Gazpromneft-Noyabrskneftegaz and JSC Sibneft–ONPZ. As for the latter company, graduates of secondary professional
educational institutions account for almost 60 % of young professional recruited annually.
Our key partners in the field of secondary professional education include:
Noyabrsk Oil College
Omsk Industrial and Economic College
Omsk Chemical and Mechanical College
Moscow Geological Exploration Technical College
61
EMPLOYEE TRAINING
Gazprom Neft traditionally gives serious attention to training and professional development of its
employees. In 2007, training activities involved more than 30% of employees; in 2008 it is planned
to increase this number by 2.5 times. The integrated personnel training and development system
in place provides good conditions for development of employee creativity and lead, their professional and career growth.
Gazprom Neft’s integrated training system is designed to meet the requirements of the Company’s
business and its corporate culture. Corporate training programs include three main components:
Professional training programs aimed at acquiring knowledge and skills relevant to specific
professions, positions, and functions
Programs aimed at development of corporate competencies
Programs aimed at development of business thinking, economic literacy, and understanding
of business.
In 2008, Gazprom Neft plans to put special emphasis on creating new and enhancing existing corporate training centers, which would result in a considerable improvement of the quality of employee training. The Company introduces advanced training techniques including simulators and specially equipped training grounds.
The Company develops a career planning system. The key element of this system is Personal Development Plans based on job requirements, employee strengths, and recommendations of immediate supervisors and mentors. As a part of improvement of the corporate personnel development
system, in 2008 it is planned to introduce training methods based on best practices, including thematic master classes.
62
63
• Introduce a system of key performance indicators, and develop a system
of qualification grades, while linking the remuneration and benefits scheme to it
• Define of a common approach toward the scope of benefits packages and align
social assistance level across Company’s subsidiaries
• Form a shared corporate culture, strengthening personnel loyalty and motivation,
in particular, through the development and application of the Company’s Code
of Ethics
• Expand recruitment of young professionals and broaden collaboration
with universities and technical colleges
• Establish new and improve existing corporate training centers, expand programs
of professional training and development of organizational and managerial skills
65
CONTRIBUTION TO
REGIONAL
DEVELOPMENT
APPROACH TO
PARTICIPATION
IN REGIONAL DEVELOPMENT
THE COMPANY’S ACTIVITIES SIGNIFICANTLY AFFECT THE SOCIAL SPHERE
AND ECONOMICS OF ITS REGIONS OF PRESENCE. GAZPROM NEFT TAKES
AN ACTIVE ROLE IN RESOLVING PRIORITY TASKS OF REGIONAL DEVELOPMENT.
The Company is a major taxpayer; a number of Gazprom Neft enterprises are major workplace and
tax income sources for the towns in which they are located. Gazprom Neft maintains a dialogue
and collaborates with stakeholders in its regions of operations. It also implements charitable programs aimed at the development of cultural and social infrastructure of the regions, improvement
of health services, as well as education and upbringing of children and youth.Company’s collaboration in its regions of operations is described in more details in the section “Collaboration in the
regions.”
Large-scale operations of Gazprom Neft facilitate development of auxiliary economic sectors and
small businesses in the regions. The Company produces basic materials for the chemical industry, provides petroleum products for private and public transport, cargo transportation, and heating of remote villages. The principles of the Company's engagement with customers and suppliers are described in the section “Engagement with customers and suppliers.”
Gazprom Neft strives to participate in regional development in a manner providing for maximum
benefits both to society and to the Company, and to make joint projects with regional stakeholders
effective both in social and economic terms.
68
69
COLLABORATION
IN THE REGIONS
THE COMPANY’S COLLABORATION WITH THE REGIONS OF ITS OPERATIONS IS BASED
UPON SOCIO-ECONOMIC COOPERATION AGREEMENTS AND THE CHARITY POLICY.
RESPONSIBILITY IN THE FIELD OF REGIONAL COLLABORATION
In 2007, Gazprom Neft created the Commission for Regional Policy comprised of representatives of
the key divisions of the Company and its regional subsidiaries. Functions of the Commission include
planning actions related to Company’s policy in its regions of operations, and overseeing the implementation of socio-economic cooperation programs. Practical implementation of the programs is
a responsibility of the Office of Regional Policy and Internal Communications of the Department of
Corporate Communications and of regional subsidiaries of the Company.
The Commission for Charity created in 2007 is responsible for coordination of charitable activities of the
Company, oversight of respective expenses, and review of the results of individual charitable projects.
PARTNERSHIP AGREEMENTS WITH THE REGIONS OF OPERATIONS
Agreements on socio-economic cooperation are the main instrument of Company’s collaboration
with regional and municipal authorities in its regions of operations. Such agreements are usually initiated by the Company itself, since they make it possible to coordinate Gazprom Neft’s strat-
70
FIGURE 4.1.
REGIONS WHERE THE COMPANY IMPLEMENTED SOCIO-ECONOMIC AGREEMENTS IN 2007
egy with regional needs and join efforts to address the issues of priority to the Company and the
regions. The Company’s approach to designing such agreements is described in detail in the document “Gazprom Neft: Social Horizons. Overview of Corporate Social Programs 2007.”
In 2007, the Company concluded socio-economic agreements with Yamalo-Nenets and KhantyMansi Autonomous Areas, Omsk, Tomsk (Kargasoksky and Parabelsky districts), Tyumen (Uvatsky
district), and Krasnodar Regions. The overall Company’s expenses within the framework of all
agreements amounted to 595.7 million RUB (see. Table 4.1).
The funding under the Yamalo-Nenets Autonomous Area agreement was reduced in 2007, since the
Company, with the consent of the Area Administration, planned to reserve a part of the funds for financing the preparation and initial implementation of the Noyabrsk Town development strategy. All
the projects planned in Yamalo-Nenets Autonomous Area for 2007 were fully implemented. The regions participating in the cooperation agreements with the Company are presented in Figure 4.1;
the activities under these agreements in the three key regions are described below.
REGION (MUNICIPALITY)
2006
Yamalo-Nenets Autonomous Area 592
Khanty-Mansi Autonomous Area
100
Omsk Region
60
Tomsk Region (Kargasoksky
and Parabelsky districts)
7
Tyumen Region (Uvatsky district)
3
Krasnodar Region
Total
762
2007
360.3
150
62
13
5
5.4
595.7
TABLE 4.1.
BUDGET OF SOCIO-ECONOMIC AGREEMENTS WITH THE
REGIONS, MILLION RUB
71
YAMALO-NENETS AUTONOMOUS AREA
The General Agreement on Cooperation for 2006–2008 between the Company and the Administration of Yamalo-Nenets Autonomous Area envisions implementation of socio-economic development
programs in the towns of Noyabrsk and Muravlenko, and in Nadymsky, Purovsky, and Krasnoselkupsky districts.
In 2007, a number of socially significant programs, including those aimed at supporting small and
indigenous peoples of the North, were implemented in the Autonomous Area. In particular, the
Noyabrsk Ice Palace, an important sports facility, was reconstructed; in Purovsky District a Center of National Cultures was built in the Town of Tarko-Sale, assistance was provided to local rural communities and to the Purovskoe Branch of the “Yamal for Our Descendants!” Association. In
Krasnoselkupsky District, several residential houses were built and musical instruments for the
brass band of the Tolkinskoe Children’s School of Arts were acquired. In Nadymsky District, equipment for the boiler shop in Kutopyugan village was acquired, and traditional competition of Northern reindeer herders was financed. In 2007, the Company traditionally sponsored the Festival of
Reindeer Herders – one of the most important events in the calendar of the Nenets people, dedicated to the coming of spring. The main forms of assistance included:
food
fuel, lubricants and construction materials
work clothing
transport
health care services
covering expenses for secondary and university education
72
Why does the
Company participate
in the preparation of
the Noyabrsk Town
Development Strategy?
Mikhail PEREVYSHIN
LONG-TERM STRATEGY OF THE SOCIOECONOMIC DEVELOPMENT OF THE TOWN
OF NOYABRSK
Preparation and implementation of the long-term
socio-economic development strategy of the Town of
Noyabrsk is an important initiative supported by the
Company. It was originally proposed in 2007 by the
municipal authorities and Gazprom Neft and supported by large oil companies operating in Noyabrsky district including, in addition to Gazprom Neft,
Schlumberger, Gazpromneft-Noyabrskneftegaz, and
Gazprom Dobycha Noyabrsk. It is planned to involve
in the process other companies working in the region. It was decided to form a working group which
would coordinate the formulation and implementation of the town’s socio-economic strategy up to 2025.
In order to finance the project, the Noyabrsk Development Foundation, a non-commercial organization,
was established. The strategy preparation will involve
an analysis of the town’s development prospects and
identification of opportunities for the business sector to participate in this development. The objectives
the companies and municipal authorities set for
themselves imply maintaining steady development of
Noyabrsk through expansion of competitive sectors
and diversification of the local economy, which would
make it possible to preserve jobs and ensure comfortable living conditions for the town residents.
Head of the Office of Social
Security
Our Company is concerned about
the future of the regions where we
work. Moreover, the objectives of
socio-economic development of
the regions and of the Company’s
growth are inseparable from
one another. Gazprom Neft is
interested in improvement of
living conditions in Noyabrsk, in
making the population feel good
about their future prospects, since
our subsidiaries operating in
the Autonomous Area, including
Noyabrskneftegaz company and
service companies affiliated with
JSC Gazpromneft–Nefteservice,
collectively employ 23,000 local
residents. Therefore we consider
our participation in the preparation
of the town’s strategy as an
important strategic step.
73
KHANTY-MANSI AUTONOMUS AREA – YUGRA
The agreement between Gazprom Neft and the Administration of Khanty-Mansi Autonomus Area –
Yugra for 2006-2008 is aimed at socio-economic development of the Area and its municipalities, including implementation of the priority national projects, organizing temporary employment of teenagers during school vacations, recreation and health improvement, supporting youth policy, culture,
education, and health services.
Natalya ZAPADNOVA,
First Deputy Head of the Government for Social Policy, Khanty–Mansi Autonomous Area – Yugra
We energetically cooperate with Gazprom Neft within the framework of the socio-economic agreement, and it is interesting for us to learn about the whole range of programs implemented by the
Company in its regions of operations. In its report, the Company decided to disclose both its current
activities and objectives for the future thus demonstrating its openness. That is why in the next year
we would like one of the roundtable meetings dedicated to discussing Company’s social and economic performance to be conducted in Yugra, and results of the meeting to be taken into account by
Gazprom Neft in implementing the social partnership agreement.
In 2007, under the general agreement with Khanty-Mansi Autonomous Area the Company financed
a number of activities, including the Ninth “Save and Preserve” Environmental Television Festival,
arrangement of the Samarovsky Ostanets geological monument site, assistance to the Chess Federation of Khanty-Mansi Autonomous Area, the Spirit of Fire International Film Festival. In Nefteyugansk District equipment and furniture for educational institutions were acquired, in Russkinskaya
village of Surgutsky District the funds were used to support activities of the Ethnic Center of Small
74
indigenous Peoples of the North, in Nizhnevartovsky District temporary employment of indigenous
teenagers (from 14 to 18 years of age) was organized.
OMSK REGION
The cooperation of the Company with the Administration of Omsk Region under the general
agreement for 2006-2008 is aimed at the implementation of social programs in the region, including assistance to social facilities, as well as joint implementation of environmental and resource efficiency programs and projects. In 2007, the funds allocated under the agreement were
used, in particular, for social assistance to orphanages, schools and residential schools (“Development of the Educational System of Omsk Region to 2007” and “Children of Omsk Region” regional targeted programs, “The Road to Life” Governor’s program aimed at social assistance to
orphan children). In Tarsky District the Company funded a major repair of the local outpatient
clinic building, supported the introduction of energy-saving technologies and equipment in local
municipal utilities, etc.
OTHER REGIONS OF OPERATIONS
The Company is involved in implementing socio-economic programs in other Russian regions, where
it conducts production and sales operations. For example, under the general cooperation agreement with Krasnodar Region, the Company provided support to the Cossack Cathedral of St. Alexander Nevsky, and plans to participate in social, environmental, and research projects till 2009.
75
CHARITABLE ACTIVITIES
In June 2007, Gazprom Neft adopted its Charity Policy, which, prior to the final approval, was reviewed by all structural divisions of the Company. The Policy defines goals, principles, and priorities
of Gazprom Neft’s charitable activities, as well as procedures for implementing individual projects.
According to the Charity Policy, the key principles of the Company’s charitable activities include:
76
Regional principle
Charitable projects are implemented immediately in the regions of
operational, commercial or other business-related interest to the
Company
Long-term outlook
Company’s charitable projects are not limited to its current regions
of operations. Gazprom Neft views charitable activities in the regions
of importance to its mid-term or long-term development strategy as
investments in the future
Efficiency
Charitable aid should be rendered in a manner that ensures maximum
efficiency in terms of both use of funds by the recipients and contribution
to enhancing social climate in the Company’s regions of operations
Accessibility and transparency
Scope and social significance of Company’s charitable projects should fit
the needs of the citizens and communities. Projects should be selected
based on understandable principles and managed in a transparent manner.
The Company ensures oversight of spending in its charitable projects
Uniqueness
Charitable projects reflect values of Company’s corporate culture, its
unique identity. In most of its charitable projects the Company is the only
corporate sponsor representing the oil sector
What are the priorities
of the charitable
activities
of the Company?
Sergey BILKEY
Head of the Office of Regional
Policy and Internal
Communications
Regional social programs based on these principles are described in more details in the document
“Gazprom Neft: Social Horizons. Overview of Corporate Social Programs 2007” (see http://www.
gazprom-neft.ru/social/). The priority areas of corporate charitable programs include:
Supporting children and youth
Supporting educational sector
Protecting cultural heritage
Supporting health care sector
The Company supports
effective, transparent and
comprehensible projects in its
actual or prospective regions
of operations. The priorities
include development of local
infrastructure, support
of children and youth,
and sports.
Supporting sports
Total charitable spending in the reporting period, including expenses under the Socio-Economic Cooperation Agreements, amounted to about RUB 820 million. Systematization of the Company’s charitable activities and identification of clear priorities (“Regional Collaboration,” “Supporting
Children and Youth,” and “Sports”) in 2007 made it possible to reduce corporate charitable spending (the funding of sports organizations and indirect support through charitable organizations, foundations, and associations was reduced), while making it more focused. The Company substantially increased funding of social assistance programs aimed at orphanages, schools and residential
schools, cultural institutions, as well as authorities of districts, towns, and regions of Company’s
presence. Gazprom Neft is proud to be one of the primary sponsors of Zenit Football Club, the winner of 2007 Russian Championship. The Company also supports SKA – St. Petersburg Ice Hockey
Club, and is a co-founder of Avangard Ice Hockey Club.
77
The Company will continue to focus its charitable activities on strategic priority areas where longterm effects of investments can be expected, and with all due responsibility will take into account stakeholders’ opinions and expectations when determining targets and scale of its charitable programs.
The most significant priority is assistance to development of children and youth and supporting their
health. These priorities are taken into account in designing both general socio-economic agreements with the regions of operations and individual charitable programs and projects; they are followed by both the Head Office and regional subsidiaries of the Company. For example, in 2007 Gazpromneft-Noyabrskneftegaz company organized a charitable action “Gift for the School Season”
associated with the beginning of a new school year and aimed at low-income families. More than
120 school students from Noyabrsk, Muravlenko and Vyngapurovsky received new schoolbags with
all the necessary stationery. Similar actions were organized by Gazpromneft-Tyumen and Gazpromneft-Khantos, while Omsknefteproduct provided support to the Eleventh “Overcoming” Festival, an
Omsk City arts festival for children with disabilities.
78
What do you consider
to be the most important
in the charitable programs
of Gazprom Neft?
Alexander DYBAL
Member of the Management
Board, Deputy CEO
for Corporate Communications
PARTICIPATION
IN THE “GAZPROM TO CHILDREN” PROGRAM
In addition to its own initiatives aimed at social development of
the regions of operations, since March 2007 Gazprom Neft has
participated in the “Gazprom to Children” charitable program.
A prominent example of the program implementation is the
interregional Gazprom Neft Cup Ice Hockey Children’s Competition organized in Omsk in November 2007.
The Company’s regional subsidiaries also participate in the
program. For example, JSC Gazpromneft-Tyumen financed
New Year’s celebrations in the Karasul special residential
school, social rehabilitation center in Omutinskoe village, and
Tobolsk residential school #5. Gazpromneft-Noyabrskneftegaz, among other actions within the framework of the “Gazprom to Children” program, sponsored a mini-football children’s competition dedicated to World Football Day.
When planning and implementing
our charitable programs, we
think, first of all, of actual help
we can render to the residents
of all Gazprom Neft’s regions
of operations. We do not limit
ourselves to corporate programs
aimed at our employees only,
since we realize that successful
operations and development of
our Company depends on wellbeing and social comfort of
most residents in its regions of
presence. We try to ensure that
everyone has access to sports
activities, necessary health care
services, recreation, education,
and personal development.
79
ENGAGEMENT
WITH CUSTOMERS AND SUPPLIERS
THE COMPANY MAKES EVERY EFFORT TO ENSURE THE MOST COMFORTABLE
EXPERIENCE OF BOTH RETAIL AND WHOLESALE CUSTOMERS, OFFERING HIGH
QUALITY FUEL AT THE PRICES CORRESPONDING TO THE MARKET DEMAND.
Gazprom Neft uses fair pricing practices complying with the anti-monopoly legislation. The quality
of fuel produced by the Company’s enterprises is complemented by high quality of services provided to retail customers at the filling stations and to the wholesale buyers, and by permanent quality control at every stage from production to sales. The Company maintains a high transparency level of procurement and sales of petroleum products, thus ensuring equal market conditions for all
its partners.
RESPONSIBILITY IN THE FIELD OF SALES AND PROCUREMENT
It is the Regional Sales Department that is responsible for both retail and wholesale sales of petroleum products. The Corporate Communications Department is responsible for the re-branding
program, which involves, in particular, redesign of the Company’s filling stations. The responsibility
in the field of procurement and supplier relations lies with the Materials Management Department.
Procurement tenders are organized by the Tender Committee which is immediately subordinate to
the Chairman of the Management Board. The establishment and work of the Committee is one of
the key measures aimed at preventing incidents of fraud and corruption.
QUALITY OF CUSTOMER SERVICE
In 2008 the Company will begin to implement a new program of re-branding and modernization of
its filling stations, which is being currently designed, offering new services and continuing to improve the quality of services. Gazprom Neft plans to eventually reach European level of service at all
80
What do we do to make
our filling stations more
convenient to clients?
Alexander KRYLOV
Head of the Regional Sales
Department
its stations, using several basic formats depending on the station’s location – in a city or on a highway – and expected demand for additional services. In some regions, clients of the Company’s filling stations are already able to have a cup of coffee in a cafe, to use a car wash, to get free tire inflation, to buy periodicals and books, and to pay for mobile communications services. In order to ease
the choice of fuel for the clients, in the next years the Company plans to introduce its own brands.
Gazprom Neft conducts interesting sales promotions and prize draws for its clients, and introduces
the “Mobile Card” non-cash payment system.
We plan on modernization our
filling station network in all regions.
Eventually all our filling stations
will reach the world level – with a
high quality of services, additional
services, and attractive appearance.
Already in 2005, the Company introduced a unified phone hotline to quickly address customer complaints. Later Gazprom Neft switched to a scheme that better met customer needs and enabled
faster responses. This scheme involves a 24-hour hotline maintained by each retail division; the respective phone number is prominently posted at each filling station. The work of the hotline services is supervised by the Head Office on a weekly basis. Each complaint filed through a hotline triggers an internal investigation, and the Company takes necessary measures communicating with
the concerned customer. For example, if a complaint deals with the quality of fuel, the customer is
invited to be present during official analysis of the fuel samples; if terms of sales promotions or discount programs raise customers’ questions, detailed explanations are provided.
Communications of the Company’s managers with wholesale buyers are guided by well-established
procedures, and positive experience of the customers gives them confidence about the quality of
products and reliability of supply. In the nearest years, the Company will develop common customer
service standards applicable to all its enterprises as a part of unified corporate policies.
81
JSC Gazpromneft-Omsk maintains 40 self-service mini-markets at the filling stations of its retail network.
Recently the sales of mini-markets at the Company’s stations in Omsk increased 30%. Each shops offers
customers some three thousand items, including food and drinks, car and household goods, as well as the
latest issues of newspapers and magazines. The services are not limited to merely selling goods – a driver is
always able to drink a cup of hot coffee or tea, to buy fresh baked goods. Station attendants can help fill a car,
15 stations are equipped with free tire inflation systems and vacuum cleaners.
TRANSPARENCY OF WHOLESALE TRADE AND PROCUREMENT
In addition to creation and work of the Tender Committee, since 2007 the Company uses best international practices of open tendering for wholesale sales of petroleum products aiming, in particular, to prevent incidents of corruption and fraud. In 2007, overall sales of petroleum products
through an electronic tendering system, which can be accessed via the corporate website (http://
www.gazprom-neft.ru/tender-np/), amounted to 3.21 million tons, or about 30% of the total domestic wholesale sales of the Company. The introduction of the system allowed Gazprom Neft to achieve
maximum efficiency of sales and ensured equal access of all buyers to the Company’s resources.
The responsible approach of the Company to foreign trade was rewarded in 2007, when Gazprom Neft became the winner of the Customs Olympus competition in the “Leader of Russian
Foreign Trade” category. The annual competition was organized by the Federal Customs Ser-
82
What does
the Company do
for its suppliers?
Alexander ABRAMKOV
Member of the Board,
Deputy CEO for Construction
and Materials Management
vice in order to identify and reword the most bona fide participants of international trade among
Russian companies.
The key criteria in procurement of materials, equipment, and services for the Company include
maximum efficiency, delivery on time, and appropriate quality. The development of the Russian
economy allows the Company to rely on domestic suppliers, thus contributing to further development of non-extracting economic sectors. Russian suppliers account for 90-95% of all Company’s
purchases; only unique or special goods are purchased abroad. The Company has developed and
introduced a procurement system which allows for centralized selection of suppliers for standardized goods and services on a competitive basis: through open competitions, requests for proposals, and an electronic tendering system. And often it is offers from local suppliers that turn out to
be the most profitable. If necessary goods are produced by monopoly companies or a limited number of key suppliers, the Company builds strategic partnership relations, ensuring mutual benefits
and stable working conditions for both itself and its clients.
According to the “National Rating of Procurement Transparency” for 2007, the Company received
the highest score of 328 participants and was given the highest rating – “Guaranteed Transparency”. The rating was maintained by the National Association of Electronic Trade and supported by the
Federal Antimonopoly Service.
Full transparency and openness
of the procurement process, as
well as predictability of terms and
conditions, are important both to us
and our business partners. Recently
introduced tendering systems for
procurement of standardized goods
and services are accessible through
the Company’s website and make
it possible for organizations of any
size to participate on equal terms
with our traditional suppliers. This
allows us to broaden the range
of suppliers and use regional
potential, including opportunities of
small and medium business. At the
same time we continue to maintain
relationships with our long-term
partners developing cooperation
strategies convenient and beneficial
to both sides.
83
• Optimize charitable expenses based on the priorities set forth by the Charity Policy
• Develop a detailed methodology for assessing the efficiency of charitable projects
• Accomplish existing cooperation agreements with the regional authorities and
further develop regional collaboration
• Develop and implement unified client service standards
• Expand the filling station network and range of services offered to retail customers,
while improving the quality of services
85
ENVIRONMENT AND HEALTH
PROTECTION
— SAFE DEVELOPMENT
APPROACH TO ENSURING
SAFE
DEVELOPMENT
THE COMPANY REALIZES ITS RESPONSIBILITY FOR THE SAFETY OF ITS OPERATIONS
FOR THE ENVIRONMENT AND HUMAN HEALTH. GAZPROM NEFT AIMS TO EFFICIENTLY
USE NATURAL RESOURCES AND TO REDUCE NEGATIVE IMPACTS. THE COMPANY
STRIVES TO PREVENT AND APPROPRIATELY RESPOND TO INJURIES AND EMERGENCIES.
RESPONSIBILITY IN THE FIELD OF HEALTH, SAFETY, AND ENVIRONMENT
In late 2007, the Office of Health, Safety, and Environment (HSE) was created in the Head Office of
the Company. The new body will develop strategic approaches in the field of industrial safety, occupational health and safety, and the environment, coordinating activities of business functions and
subsidiary companies in this area. The Office also addresses the issues of emergency preparedness
and response jointly with the Section of Special Programs. Highly qualified HSE professionals work
in all production departments of the Company and its subsidiaries.
HEALTH, SAFETY, AND ENVIRONMENT POLICY
As guidance for its occupational health and safety, industrial safety, and environmental activities,
the Company has developed a Health, Safety, and Environment Policy approved in March 2008. The
Policy defines the strategic goal of the Company – to achieve a leading position in terms of HSE
among the world’s oil and gas companies, proving this with actual performance and advanced approaches. According to the Policy, the safety of employees, population, and the environment is the
priority in making economic and technical decisions. Company’s commitments established by the
88
ENVIRONMENT AND HEALTH PROTECTION — SAFE DEVELOPMENT
How does the Company
plan to implement an
integrated health, safety, and
environmental management
system?
Oleg NIKOLAYENKO
Head of the Office of Health,
Safety, and Environment
Policy include continuous improvement of working conditions, as well as industrial and environmental safety, implementation and continuous improvement of an effective management system,
development of stakeholder communications, enhancement of employee competence and their involvement in the Policy implementation, imposing uniform safety requirements on both employees
and contractors of the Company.
Taking into account the experience
of the world’s leading oil and gas
companies, we are building an
integrated management system
based on international standards.
Gazprom Neft plans to implement
the most effective system aimed at
protecting human life and health,
and the environment through the
management of key industrial and
environmentl risks.
Evgeny SHVARTS,
Director for Conservation Policy, WWF Russia, Doctor of Science (Geography)
According to assessments by World Wildlife Fund Russia (WWF Russia), in 2005–2006 Gazprom Neft
lagged considerably behind private Russian companies, including, for example, TNK-BP and LUKOIL,
in terms of environmental policy and openness to non-governmental organizations. This certainly
raised concerns about the path the country has taken – whether it evolved toward the Norwegian model or, say, toward Nigeria and Venezuela. The process of preparing the Gazprom Neft’s Sustainability
Report for 2007 raises the hope that the company and the country as a whole may begin the evolution
toward better development models, the most friendly to humans and the environment.
89
The Policy sets forth the key commitments of the Company, which would help it in accomplishing
established goals. In order to support the Policy implementation, key objectives for 2008 encompassing various HSE areas have been identified. The main priorities for 2008 include situation assessment at the largest subsidiary companies and development of corporate standards in a number of areas including: environmental management; safety and health risk assessment; personal
protective equipment; and safe driving In this year the Company will initiate a project on introducing a unified system of management reporting in the field of HSE, begin the development of a register of safety risks and creation of corporate HSE training programs.
IMPLEMENTATION OF AN INTEGRATED MANAGEMENT SYSTEM
In 2008, the Company plans to embark on the implementation of an integrated HSE management
system compliant with the key requirements of relevant international standards, including OHSAS 18001 (occupational health and safety), ISO 14001 (environmental management), and ISO 9001
(quality management), and recommendations of the International Association of Oil and Gas Producers. Based on the results of the integrated system implementation, a decision on the need for
its certification will be made.
90
91
MITIGATION OF
ENVIRONMENTAL
IMPACTS
THE COMPANY TAKES MEASURES TO EFFICIENTLY USE NATURAL RESOURCES AND
ENERGY, REDUCE EMISSIONS TO THE ATMOSPHERE AND IMPACTS ON WATER BODIES,
TO PROTECT BIODIVERSITY, TO PREVENT OIL SPILLS AND LAND CONTAMINATION.
ENVIRONMENTAL COMPLIANCE AND PREVENTION OF ADVERSE IMPACTS
The Company strives to fully comply with the requirements of the existing environmental legislation. In 2007, the total fees for exceeding established environmental impact limits and costs of repairing environmental damages by major Gazprom Neft subsidiaries were about RUB 2 million, an
insignificant sum given the scale of the Company’s operations. Total fines for breaches of environmental legislation amounted to RUB 1 million only; measures to eliminate the violations identified
were taken.
The Company plans to develop procedures for investigation and analysis of incidents involving
breaches of environmental legislation and, based on the analysis results, implement corrective
measures to minimize the probability of similar incidents in the future.
In accordance with the existing legislation, the Company conducts an environmental impact assessment when planning new activities. After obtaining a positive conclusion of the State Expert Review,
it implements selected options making efforts to minimize environmental impacts. All new products in the process of their development undergo an assessment of customer safety; safety issues
are taken into account at all stages of development and production. The approved HSE Policy reflects the Company’s understanding of potential risks associated with any planned and ongoing activities, and of the need for an integrated preventive approach.
92
ENVIRONMENTAL EXPENSES
The Company’s operating and capital expenses on environmental activities, including introduction
and use of technologies to minimize environmental impacts, exceed by many times the pollution
fees paid by the Company (see Table 5.1). Operating expenses also include costs of developing corporate regulations and standards, environmental monitoring and industrial environmental control,
professional upgrading and training of environmental specialists. As seen from the table, operating expenses in 2007 were lower than in the previous year with most of them spent for wastewater
treatment. This is the result of high environmental expenses in 2006, when, as a priority measure
for protecting water bodies, the Company made a major purchase of oil spill cleanup equipment
from Lamor company*.
Major capital expenses on the construction of environmental protection facilities were also made
in 2006. In particular, about 100 million RUB was invested in the construction of a gas cleaning and
separation section at the Omsk refinery; the facility is planned to be put in operation in 2008. It is
oil refining and production sectors that accounted for most capital and operating environmental expenses in these years. In the future the Company plans to introduce environmentally safer technologies and techniques, making necessary investments in environmental protection equipment and
implementation of best available techniques for reclamation of polluted areas. The dynamics of the
Company’s environmental expenses in recent years is shown in Table 5.1.
*The expenses were attributed to the “water consumption” budget item.
93
Operating expenses, incl.:
expenses on wastewater treatment
expenses on waste management
expenses on water consumption
expenses on air and gas cleaning
payments for violating environmental legislation and expenses
on repairing environmental damages
payments for impacts within established limits
Capital expenses
2005
2006
2007
518.6
366.6
54.7
24.7
1.3
722.7
353.6
41.5
226.7
13.3
577.7
349.1
43.7
30.7
12.6
0.6
70.5
83.2
1.3
82.7
256.2
2.2
128.2
29.9
Note 1: The amount of capital expenses was determined more accurately compared to the Annual Report for 2006 (p. 35) and
the “Social Horizons” review (p. 35).
Note 2: The data in the table encompass the subsidiary companies listed in the Annex 1. The contribution of the remaining
subsidiaries is considered insufficient.
Note 3: The data for 2005 in the table do not include the petroleum products supply sector. According to the data for 2006–2007,
the share of the supply sector in total energy consumption, water consumption and discharges was insignificant (less then 1%);
its share in total emission to the air and waste generation was about 1.5 – 2 %.
TABLE 5.1.
ENVIRONMENTAL EXPENSES, MILLION RUB
EFFICIENT USE OF RESOURCES AND MATERIALS
Efficient use of natural resources is a key area of the Company’s activities, relevant not only to the
field of environmental protection. Important objectives of the oil and gas extraction sector of the
Company include improvement of oil recovery factor at the producing oil fields and of associated
gas recovery rate. In the refining sector, high refinery depth is a priority. In 2007 the amount of oil
processed at the Omsk Refinery, the primary refining asset of the Company, reached almost 16.5
million tons. The refining depth at the refinery decreased 1.08% in 2007 reaching 83.4% (see Table
2.1), as a result of the focus on producing light petroleum products with high value added.
Nevertheless, according to the Russian Ministry of Industry and Energy, the Omsk Refinery is the
second Russian refinery in terms of refinery depth. In 2007, the output of key petroleum products
increased 1.7%, allowing the refinery to keep the leading position within the sector in terms of this
indicator.
In addition to oil, the refinery used 25,000 tons of reagents, catalysts, and basic materials for their
production in 2007, reducing their consumption 8.5% compared to the previous year as a result of
improved resource efficiency. In the extraction sector the consumption of materials considerably
grew between 2005 and 2007 as a result of intensified well drilling and construction. The data on
the materials consumption are presented in Table 5.2.
94
Oil refining
Reagents, catalysts, and basic materials for producing them
Basic materials for producing motor oils, additives and lubricants
Oil production
Components of drilling fluids
Cement of all grades
Earth for filling
Steel structures and pipes
2005
2006
2007
26 066
5 851
27 424
5 872
25 099
6141
12 313
43 090
4 340 000
61 120
18 073
63 245
6 370 000
89 708
21 687
75 894
7 644 000
107 649
TABLE 5.2.
CONSUMPTION OF RESOURCES AND MATERIALS, TONS
ENERGY CONSUMPTION AND EFFICIENCY
Total energy consumption of the Company grew in the recent years as a result of intensified operations in all areas of activity. The overall energy consumption* by key Gazprom Neft enterprises grew
from 74x1012 J in 2005 to 80x1012 J and 84x1012 J in 2006 and 2007 respectively. At the same time the
share of fuel in the total energy consumption decreased from 12% to 8% (from 8.7x1012 J in 2005 to
6.3x1012 J in 2007). Specific energy consumption (normalized to consumption of primary energy*) in
the oil extraction sector increased as a result of intensified operations. Specific energy consumption at the Omsk Refinery was decreasing – in 2006 it was 11.7% less than in 2005, while in 2007 it
was slightly less than in 2006.
Gazprom Neft makes efforts to improve the energy efficiency of its operations. The Company’s enterprises conduct energy audits, introduce measures to improve control over energy consumption,
and develop and implement programs aimed at more efficient use of energy resources. The implementation of such a program in the oil extraction sector made it possible to save RUB 34 million in
2006, and RUB 152 million in 2007. The Omsk Refinery has developed and implements a program
for reducing its heat consumption for the period to 2012. Complete implementation of the program
should result in a 17% reduction of specific heat consumption.
*The primary energy consumption was calculated based on the total consumption of fuel, heat and electricity, taking into account the amount of fuel required to produce these heat
and electricity, estimated using the Basic Indicators Methodology by the Russian Union of Industrialists and Entrepreneurs.
95
Total emissions to the air
incl.
CO
NOX
SO2
particulate matter
volatile organic compounds (total)
2005
2006
2007
159.1
159.4
161.8
79.5
12.8
12.8
2.8
32.5
68.1
10.9
12.8
4.1
42.6
73.0
10.7
12.5
3.6
54.3
TABLE 5.3.
EMISSIONS TO THE AIR,
THOUSAND TONS
EMISSIONS TO THE AIR
The Company’s subsidiaries make continuous efforts to reduce their emissions to the air. During the
period from 2005 to 2007 the total emissions slightly increased as a result of an increase in the Company’s operations (the emission data are presented in Table 5.3). The main source of the Company’s
emissions was the oil and gas extraction sector; emissions in the refining sector were decreasing.
In the previous periods the Company’s refinery enterprises also actively worked on reducing their
emissions; for example, from 1980 to 2006 the emissions of the Omsk Refinery decreased by four
times. Important factors that contributed to this reduction included general modernization of production facilities, replacement of burner units, optimization of process parameters, reconstruction
of tanks, and introduction of equipment for precise and enclosed loading of petroleum products. In
the oil and gas extraction sector, the emissions are determined mainly by the amount of associated gas burnt (the data on associated gas recovery are provided below in Table 5.4). Ozone depleting substances are used in some thermostatic and fire extinguishing equipment in amounts several
times less than the established standards. The Company has developed and implements plans for
replacement of these substances in the respective systems.
In 2007, the Company’s operations in Yamalo-Nenets Autonomous Area accounted for more than
half of its total pollutant emissions; operations in Omsk Regions for about 30%. The distribution of
the emissions by region is shown in Figure 5.1.
RECOVERY OF ASSOCIATED PETROLEUM GAS
The Company actively works on increasing the associated petroleum gas (APG) utilization rate in its
oil extraction sector. Currently the level of associated gas recovery at the key production enterprises of the Company remains low – about 35.7% of produced gas in 2007. The amounts of produced
and recovered gas are shown in Table 5.4. The decline in the utilization rate in 2007 is a result of re-
96
FIGURE 5.1.
DISTRIBUTION OF AIR EMISSIONS BY REGION
LEGEND: - MORE THAN 50%, - 25-30%, - 5-10%
•
•
•
97
Production, million m3
Recovery (utilization), million m3
Utilization rate, %
2005
5609
1974
35.2%
TABLE 5.4.
PRODUCTION AND RECOVERY OF ASSOCIATED
PETROLEUM GAS
2006
4532
2041
45.0%
2007
4886
1746
35.7%
pair work at gas pipelines, changed date of putting the pipeline between the Sugmutskoye oil field
and Muravlenko Gas Processing Plant into operation, and decrease in gas recovery rate at the Novogodneye oil field.
Indeed, increasing the APG utilization rate is an important national objective, and in order to contribute to its accomplishment, in February 2008 the Company has adopted a medium-term investment program for the period 2008-2010, aimed at increased recovery and more efficient utilization
of associated gas.
The overall budget of the program is RUB 17.6 billion, including RUB 12 billion for the construction of gas-collecting systems and gas-processing facilities, about RUB 5 billion for development
of Company’s own generation capacities, and about RUB 600 million for auditing existing APG resources, utilization of low-pressure gas, and organizing an associated gas accounting system. The
investment program will make it possible to recover 95% of associated gas, contributing to secure
energy supply of oil production facilities, and increased sales of associated gas and its derivatives.
All oil fields operated by Gazprom Neft are being or will be equipped with new gas collection and
transportation systems. By 2010 the Company plans to put into operation 2 gas turbine and 4 gas
engine power plants. The implementation of the program will make it possible to utilize an additional 10.5 billion m3 of associated gas during the period to 2014.
The adopted program will continue the Company’s previous and ongoing activities aimed at APG utilization, which have already brought certain results. In particular, the associated gas utilization rate prescribed by license agreements for oil field development is already achieved at the Kholmogorsk field
cluster. Recently the construction of gas pipelines from Novogodneye, Yarainerskoye, Sugmutskoye,
98
The government
established an objective for
oil companies concerning
recovery of associated gas.
To what extent is Gazprom
Neft ready to meet this
objective?
Nikolay YELISEYEV
and Romanovskoye fields operated by JSC Gazpomneft-Noyabrskneftegaz has been completed. Almost 93% of associated gas produced at Sutorminskoye, Muravlenkovskoye and Krayneye oil fields
is processed at the Muravlenko Gas Processing Plant operated by SIBUR Group.
Increased APG recovery will help reduce emissions of pollutants and greenhouse gases, and will
also help the Company make an additional contribution into meeting the demand of the national
economy for natural gas.
Realizing the importance of climate change issues, the Company plans to continue its energetic
efforts in the field primarily by undertaking a company-wide inventory of greenhouse gas emissions and by developing a detailed action plan to identify and take opportunities for reducing
these emissions.
Head of Gas and Gas Processing
Department
We plan to recover 95%
of associated petroleum gas
starting from 2011. For this
purpose the Company has
developed a medium-term
investment program with
a budget exceeding
RUB 17 billion.
PRODUCTION OF ENVIRONMENTALLY FRIENDLY FUEL
The refining sector of the Company systematically works on the improvement of environmental
qualities of the fuel produced. The Omsk Refinery has prepared a development program aimed at
complete transition to producing environmentally friendly types of fuel by 2012. In 2007, the refinery
undertook a scheduled major repair of a diesel fuel hydrotreater. As a result, the unit now is able to
produce Euro 3 compliant fuel. A serious modernization of the unit, aimed at making it capable of
producing Euro 4 and Euro 5 compliant diesel fuel, is planned for 2009. According to the refinery’s
plans, about 9 % of motor gasoline produced in 2008 will comply with the Euro 3 standard. Consumption of cleaner fuels produced by the Omsk Refinery will reduce emissions of sulphur dioxide
by vehicles by approximately 22 tons.
99
m3
Total water consumption, million
Incl. from underground sources
from surface sources
received from other organizations
Transferred to other organizations (without use)
Water recycling rate
(for key enterprises of the Company in all sectors)
Water recycling rate (oil and gas production)
Water recycling rate (oil refining)
Wastewater disposal, million m3
incl. transferred to other organizations (after use)
2005
2006
2007
72.8
23.4
48.1
1.3
21.4
79.8
29.2
49.0
1.4
22.4
73.8
31.4
41.1
1.2
29.1
84.1%
17.4%
97.7%
8.55
8.24
82.9%
18.4%
97.5%
8.00
7.62
90.0%
77.4%
97.6%
9.11
8.42
TABLE 5.5.
WATER CONSUMPTION
CONSUMPTION OF WATER RESOURCES
The Company makes efforts to ensure the most efficient water use at their enterprises, practicing
re-injection of produced water to maintain reservoir pressure in oil production operations, and organizing closed-circuit recycling of cooling water at their refineries.
The Company’s water consumption for its own needs fell by 21.9% in 2007 compared to 2006 as a result of broader use of produced water and gradual increase of water cutting at long-used oil fields
developed by JSC Gazpromneft-Noyabrskneftegaz. This also made it possible to reduce consumption of surface water for maintaining reservoir pressure and contributed to the increase of water
recycling rate in the oil and gas extraction sector. The water recycling rate in the refining sector remained very high — more than 97.5%. The overall volume of polluted discharges by the Company
in 2005–2007 was about 0.1 million m3. The data on water consumption by the Company are shown
in Table 5.5.
MONITORING OF WATER POLLUTION
Water samples are taken at the oil production enterprises twice a year: during spring flood and in the autumn.
The sampling points approved by environmental authorities are usually located upstream and downstream
from the places where pipelines cross natural watercourses – rivers and streams. The tests involve identification of not only the content of petroleum products, but also other physical and chemical parameters, including the content of manganese and iron, nitrates and nitrites, ammonium and other substances. Since due to
natural reasons the background content of many chemicals in northern rivers exceeds the limits established
for fishery water bodies, it is important to single out the impact of production operations, if it is present at all.
In the reporting period most water was consumed by the Company’s enterprises in Yamalo-Nenets
Autonomous Area and Omsk Region; about 10% in Khanty-Mansi Autonomous Area. The distribution of water consumption by region is presented in Figure 5.2.
100
FIGURE 5.2.
DISTRIBUTION OF WATER CONSUMPTION BY REGION
LEGEND: - 35-50%, - 10-15%, - 1-5%
•
•
•
101
Waste generation, thousand tons
Waste reuse and recycling (incl. waste transferred
to other organizations for reuse and recycling), thousand tons
Waste decontamination and disposal (incl. waste transferred
to other organization for decontamination and disposal), thousand tons
Waste stored at the end of the year, thousand tons
2005
2006
2007
269
352
393
17
50
63
232
185
219
275
231
379
TABLE 5.6.
WASTE MANAGEMENT
WASTE MANAGEMENT
The Company strives to reduce the amount of waste generated and improve waste management
practices. Most of the waste generated (more than half in terms of mass) is represented by drilling
waste of 4th hazard grade (low hazard). The overall share of 4th and 5th hazard grade waste (low
hazard and virtually no hazard respectively) in the amount of waste generated is more than 90%.
Drilling waste is generated by oil production and oilfield service enterprises (collectively these account for more than 90% of waste generated).
Therefore the observed growth of waste generation (see Table 5.6) is a result of developing new oil
fields, intensifying drilling works, and constructing new oil production and transportation facilities.
Currently most drilling waste is disposed of at special storage sites. At the same time the Company
studies the experience of the leading oil companies that practice re-injection of drilling waste.
Efforts to reduce waste generation and increase waste recovery are made by Company’s enterprises in all its sectors of operation. For example, the Omsk Refinery processes 100% of produced
waste oil and more than 85% of petroleum-contaminated waste. In the petroleum products supply
sector, the Company introduces new effective technologies, such as mobile cleaning system used
for cleaning internal surfaces of tanks from solid deposits. Tank walls are cleaned by a high pressure jet of a special chemical mix. Then the system separates gasoline suitable for further use from
the resulting emulsion pumped out of the tank, thus providing for waste recovery.
102
Oil spilled (tons)
Oil collected (tons)
Total number of pipeline
breaches
2005
2006
2007
4,1
2.9
5,3
4.1
5,6
4.8
1424
1823
1861
TABLE 5.7.
OIL SPILLS
PREVENTING LAND CONTAMINATION AND RECLAMATION OF CONTAMINATED LANDS
The Company works on cleanup of contaminated lands and elimination of unorganized consumption waste disposal sites. According to the data available, oil spills in 2005–2007 were of local scale
in terms of existing classification, although the number of pipeline breaches increased. The data on
oil spills are presented in Table 5.7. Gazprom Neft plans to develop internal processes for recording, reporting, analysis and removal of causes of incidents involving contamination of land and water bodies. Currently the Company develops an Accident Reporting and Investigation Standard in order to elaborate a unified and effective approach toward this issue.
In order to prevent oil spills and land contamination, the Company carries out inspections and technical monitoring of its pipelines, uses corrosion inhibitors to protect them, and replaces old corroded pipes. More reliable steel pipes with internal polymer coating and GRP (glass-reinforced plastic)
pipes are used for construction of new pipelines. A phased program to reduce pipeline breaches has
been designed and is currently implemented. At the first stage priority measures included inhibitor
protection and other approaches toward preventing breaches caused by corrosion. In 2007, 210 km
of pipelines were replaced. At the subsequent stages of the program implementation, from 2008 to
2011, the main efforts will be aimed at the replacement of worn-out pipelines.
The area of disturbed land and the number of mud pits in the oil extraction sector reduced in 2005
as a result of intense reclamation efforts, and then grew again in 2007 due to expanded drilling op-
103
Disturbed land, ha
by the beginning of the year
by the end of the year
disturbed during the year
reclaimed during the year
Oil-contaminated land, ha
Number of mud pits
built during the year
2005
2006
2007
11 714
10 400
349
1895
10 400
10 471
663
640
10 470
11 478
1176
214
783
623
160
623
354
269
354
189
165
280
232
16
64
249
263
14
25
263
288
35
10
TABLE 5.8.
LAND USE AND RECLAMATION
erations. In 2007, the need for new mud pits to contain drilling waste exceeded pit reclamation rate
by 1.3-1.6 times. The data on land use and reclamation are presented in Table 5.8. In 2007, the reclamation rate of disturbed (affected by the Company’s operations) land somewhat slowed down compared to the previous year. This was the result of the fact that in the last three years competent state
authorities almost stopped the acceptance of land reclamation results, which made it impossible
to include such lands reclaimed by the Company in official reporting. At the same time the Company continued intense efforts on reclaiming oil-contaminated lands and managed to reduce the area
of such land by more than three times in three years. In 2008, the Company plans to reclaim another 87 ha of contaminated land and increase the rate of mud pit reclamation. In order to reduce land
disturbance, the Company plans to introduce pitless drilling at a number of its oil fields.
In its land reclamation projects, the Company uses modern chemical bioagents (of Fare Zyme type)
for oil decomposition. Instead of new microbial cultures to be introduced, these agents contain
mostly mineral components that support natural microbial flora thus facilitating land restoration.
Massive planting of grass and perennial plants adapted to local conditions is also practiced as a biological reclamation method.
104
The Company’s system of spill response has the necessary equipment and technical means. Removal of causes leading to land contamination and reclamation of previously contaminated areas
are common priorities for traditional oil and gas producing regions that suffered from environmentally unfriendly production practices in the second half of the 20th century.
BIODIVERSITY PROTECTION
The Company neither carries out nor plans oil production activities in environmental protected areas
or in the areas adjacent to them. When developing oil fields in Khanty-Mansi and Yamalo-Nenets Autonomous Areas, the Company takes organizational measures to prevent operations in protected environmental areas, including in particular game reserves, and adverse impacts on biodiversity and
sensitive tundra ecosystems. The schedules of Company activities take into account vegetation periods, fish spawning periods, and seasonal migrations of birds and other animals in accordance with
recommendations of respective environmental impact assessment. All rare or endangered species
listed in the Red Book list of endangered species and the ecosystems which are potentially most sensitive to adverse factors associated with oil and gas production are identified and recorded.
105
HEALTH
AND SAFETY
AT WORK
GAZPROM NEFT TAKES MEASURES TO REDUCE INJURIES AND OCCUPATIONAL
ILLNESSES BY IMPROVING TRAINING AND CONTROL IN HEALTH AND SAFETY,
BY INCREASING WORKPLACE SAFETY AND COMFORT OF THE PERSONAL
PROTECTIVE EQUIPMENT.
ORGANIZATIONAL ARRANGEMENTS IN THE FIELD OF OCCUPATIONAL
HEALTH AND SAFETY
The Company’s Health, Safety and Environmental Policy, adopted in March 2008, gives great attention to issues of occupational health and safety, including reduction of the injury rate. Issues of employees’ health and safety are reflected in collective agreements and official agreements with labor
unions; they are continuously monitored by joint committees comprising workers and managers of
large enterprises.
The Office of Health, Safety, and Environment defines a consistent approach of the Company toward the
issues of occupational health and safety, in particular, working on unifications of corporate standards in
the field. The Working Group on Personal Protective Equipment (PPE), created in order to develop a corporate PPE standard, is an example of such activities. The standard will define allowance of work clothing and PPE, specifications for work clothing, and a registry of the best PPE types allowed to be acquired
for the Company employees. Gazprom Neft decided to provide two sets of work clothing for each employee and allocated RUB 82 million for this project. The standard being developed will provide clear
guidelines on selection of relevant PPE for employees based on their occupational risks, and on the re-
106
What is the place of of
occupational health
and safety among your
Office’s priorities?
Grigory Konvissar
Head of the Office for Health,
Safety, Environment, and Emergency Preparedness of the Oil
and Gas Production Department
quired PPE quality. In 2007, Company’s occupational health and safety expenses per employee were
about RUB 6500, or 13% more than in 2006.
REDUCING THE INJURY RATE
The key priority of the HSE Office is reducing the rate of injuries involving Company employees. In 2007, the overall number of recorded injuries decreased more than by 1.5 times. Given
increase in the number of employees, the injury rate and the rate of days lost as a result of injuries and occupational diseases decreased even more (see Table 5.9).In 2006 and 2007, some
cases of occupational diseases contracted earlier were identified as a result of an improved level of health services. In order to prevent injuries and occupational diseases the Company carries out an assessment of workplaces (so far 77% of workplaces have been certified as compliant with the relevant requirements) and works on elimination of workplace hazards including,
for example, increased noise level.
Protecting employee life and
health is the ultimate priority of
all Company’s operations. This
objective is accomplished through
introducing safe technologies and
working conditions conforming to
the best international standards,
providing employees with
convenient and state-of-the-art
personal protective equipment,
training them using modern means
and facilities, as well as fostering
personal responsibility, awareness
and creative attitude toward work
among the staff.
107
Number of injuries at work
incl. fatalities
Workplace injury rate*
Occupational disease rate**
Lost days rate***
2005
2006
2007
76
4
0.18
n/a
8.58
74
5
0.16
0.006
9.55
48
5
0.10
0.013
4.64
TABLE 5.9.
OCCUPATIONAL HEALTH AND SAFETY INDICATORS
SAFETY HOTLINE AT THE OMSK REFINERY
A Safety Hotline Service was created at the enterprise in June 2006 and proved its effectiveness. It was created to help employees realize their responsibility for safety of their own and their peers at the enterprise.
Calls from employees of the refinery, its subsidiaries and contractors helped prevent collapse of a crane and
an illumination pole, eliminate in time gas leakage from a pipeline, and remove numerous other hazards that
could potentially lead to workplace injuries. Most calls addressed occupational hazards and inadequate state
of industrial and occupational safety at refinery’s facilities and communications, including leaks in pipelines
and sealed equipment, and non-compliance with industrial and occupation safety requirements in the performance of work.
The main causes of grave injuries that occurred in 2007 included neglect of labor and workplace
discipline (violation of respective safety guidelines in the performance of work) and violations of established production processes. Therefore there are obvious opportunities for reducing the injury rate, which include increasing professional qualifications of employees, providing orientation in
specific safety requirements in the performance of work, strengthening line managers’ supervision
over and responsibility for employees’ compliance with established work procedures and safety requirements. Joint management/employee committees created at large enterprises participate in
investigating and analyzing causes of grave injuries, and in designing measures aimed to prevent
similar incidents in the future.
*Ratio of the total number of injuries involving Company employees to the total time in hours worked by the total workforce in the reporting period multiplied by 200000.
**Ratio of the total number of occupational diseases of Company employees (including cases identified earlier) to the total time in hours worked by the total workforce in the reporting
period multiplied by 200000.
***Ratio of the total number of work days lost by Company employees as a result of injuries and occupational diseases to the total time in hours worked by the total workforce
in the reporting period multiplied by 200000.
108
109
EMERGENCY
PREPAREDNESS AND RESPONSE
GAZPROM NEFT ENDEAVORS TO ACHIEVE A HIGH LEVEL OF SAFETY
OF INDUSTRIAL OBJECTS AND PREPAREDNESS TO LOCALIZE
AND MITIGATE CONSEQUENCES OF POSSIBLE EMERGENCIES.
COLLABORATION IN THE FIELD OF INDUSTRIAL SAFETY
The Company’s Office of Health, Safety and Environment, the Section of Special Programs, and
specialists of production departments and subsidiary companies all collaborate in the field
of industrial safety. The Section of Special Programs created in 2007 addresses the issues of
emergency preparedness and response at production facilities of the Company. Joint efforts of
these divisions and specialists are aimed at strengthening of the corporate incident, accident,
and emergency preparedness and response system.
The Company has formed special emergency units, which are provided with necessary training and special equipment. The Company collaborates with regional divisions of the Ministry of
Emergency in order to coordinate potential emergency response action, continues the development of plans for elimination of accidental oil spills, obtains necessary consent for these plans
and approves them. The Company’s emergency response groups have been fully formed and
are ready for possible accident and emergency response actions in coordination with the competent state authorities.
110
ACCIDENT ANALYSIS AND PREVENTION
In 2005–2006 there were two accidents in the Company, one in each year. In 2005, breach of safety rules during cementing a well led to uncontrolled gas outburst and fire outbreak, which finally
resulted in rig collapse. In 2006, a fire broke out at the Omsk Refinery, at a gas fractionation unit
being prepared for a scheduled repair. In order to prevent gas contamination of the area, the petroleum products were allowed to burn out. The fire was localized in two hours and extinguished
in three more hours. The planned repair was carried out according to the schedule. Three refinery employees were injured during the fire; one of them, operator of the unit, died from burns in
a hospital. The Company paid compensation to the operator’s family.
In 2007 there were two accidents in the Company. In one case breach of safety rules during well
commissioning resulted in a blowout with a subsequent fire outbreak; no fatalities occurred. The
second case involved breaking of a logging cable with a logging device during exploratory drilling.
In order to prevent accidents, in late 2006 the Company carried out an initial gap analysis and identification of industrial risks in the refining sector; a system of measures to minimize these risks
111
has been identified and implemented since 2007. In oil and gas production, refining, and petroleum
product supply sectors the Company carries out monitoring of pipelines and other industrial equipment, on a timely basis conducts preventive repair or replacement of equipment, takes measure to
increase reliability of equipment and ensure compliance with the safety requirements. In addition,
attention is given to oversight of employees’ compliance with HSE rules and emergency preparedness training. The Company also develops a system for recording and analysis of information on accidents occurring at its enterprises.
In the near future Gazprom Neft plans to intensify the relations with its contractors regarding their
HSE performance and strengthen oversight of their compliance with the respective rules. The Company will encourage compliance with HSE standards and rules, while holding its contractors – organizations, managers and individual workers – liable for breaches and non-compliance. The safety
record of contractors will be taken into account in tendering; preference will be given to those with
better safety performance.
112
113
• Implement the Health, Safety and Environmental Policy and establish an integrated
management system to accomplish it
• Improve associated petroleum gas recovery rate
• Conduct an inventory of greenhouse gas emissions
• Reduce employee injury rate and adverse environmental impacts
• Raise HSE awareness and competence of the personnel
• Provide state-of-the-art personal protected equipment to employees
• Increase the safety of road transportation
115
ANNEX
Annex 1.
Application of sustainability reporting principles
1.
The Company realizes that preparation of high-quality sustainability reports being of interest and use to the stakeholders requires adherence to certain rules of disclosure.
Following this approach, Gazprom Neft fully subscribes to the principles for defining report content and ensuring report quality set forth in the G3 Guidelines.
The Company’s understanding of these principles and approach to their application in
preparing the Sustainability Report for 2007 are summarized in the table below.
116
INTERPRETATION OF THE REPORTING PRINCIPLES
SET FORTH IN THE G3 GUIDELINES
APPLICATION OF THE PRINCIPLES IN PREPARING THE 2007 REPORT
Materiality. In defining topics to be covered by its sustainability
reports, the Company is guided by the recommendations
of AccountAbility and the requirements of АА1000 series of
standards, using so-called “materiality filters”. The process
of selecting topics for inclusion in the reports is based on
an annual assessment of their materiality, which takes into
account the Company’s policies and commitments, sectoral
practice of sustainability reporting in Russia and abroad, and
issues raised by the stakeholders and the mass media.
In preparing this Report, Gazprom Neft used the following “materiality filters”:
Policies and programs approved or being developed by the Company and addressing various social, economic,
or environmental aspects of its activities. Topics covered by similar reports for 2006–2007, prepared by other
Russian and international oil and gas companies. The Company’s commitments described in the “Social
Horizons” publication, an overview of Company’s social programs. Issues that were covered by the media or
raised concern among some stakeholders in the course of the Company’s stakeholder engagement activities
in 2007.
The Company included in the Report comments of key business function managers on some of these material
topics
Stakeholder inclusiveness. The Company maintains a process
for identification of stakeholders, engages with them, and
describes the results of this engagement in its reports. The
materiality assessment process includes analysis of issues that
attract stakeholders’ attention.
The structure of Gazprom Neft’s stakeholders, procedure used to identify them, and approaches toward
identification and analysis of material topics are described in detail in Chapter 1 “Governing Responsible
Development”. The Company welcomes feedback on the content and quality of this Report and will take it into
account in preparing subsequent ones. The contact information and feedback methods are provided at the end
of the Report.
Sustainability context. The company discloses available
information on significant economic, environmental, and social
issues discussed by the public. The Company also seeks
to present its activities in a broader regional, national,
or sectoral context.
In preparation of this Report, Gazprom Neft presented data or described its activities in a regional or national
context, when such information was available.
The Report scope is determined by the material topics identified as a result of an assessment encompassing
all aspects of sustainability. The Company’s organizational units were selected for inclusion in the Report
Boundary based on the magnitude of their impacts with regard to the material topics identified.The Report
presents information and data for Calendar Year 2007 (when appropriate and available, data for 2005 and 2006
are included for comparison). Qualitative and quantitative information on financial and economic indicators
is presented for the enterprises covered by US GAAP consolidated financial statements (see the Company’s
Annual Report), since the financial reporting boundary includes enterprises the most significant in economic
terms. All other qualitative and quantitative information, unless otherwise specified and except for the
information in Chapter 5, applies to JSC Gazprom Neft and all its subsidiary companies. The information
in Chapter 5, and on certain indicators in Chapter 3 (where specified), is presented for JSC Gazprom Neft and
the following subsidiary companies, selected on the basis of their scale (including the number of personnel)
and significance of their OHS and environmental impacts:
Gazpromneft-Nefteservice LLC
JSC Gazpromneft–Noyabrskneftegazgeophisika
Kapitalniy Remont Skvazhin – Service LLC
Muravlenkovskaya Transportnaya Kompaniya LLC
Noyabrskaya Tsentralnaya Trubnaya Baza LLC
Noyabrskneftespetsstroy LLC
Servisnaya Burovaya Kompaniya LLC
Servisnaya Transportnaya Kompaniya LLC
Yamalservicetsentr LLC
Spetstransservice LLC
JSC Gazpromneft-Noyabrskneftegaz and its subsidiaries
Gazpromneft-Khantos LLC
Gazpromneft-Vostok LLC
JSC Gazpromneft-ONPZ and its subsidiaries
JSC Gazpromneft-Tyumen and its subsidiaries
JSC Gazpromneft-Omsk and its subsidiaries
Sibneft-Krasnoyarsknefteproduct LLC
CJSC Gazpromneft-Severo-Zapad
CJSC Gazpromneft-Kuzbass
Gazpromneft-Noyabrsk LLC
JSC Sverdlovsknefteproduct
Gazprom Neft Asia LLC and its subsidiaries
JSC Novosibirsknefteproduct VNK
Gazpromneft-AZS-Service LLC.
The Company decided not to include in its Sustainability Report for 2007 the data and information on its
dependent companies, including in particular JSC NGC Slavneft and its subsidiaries, JSC Moskovskiy NPZ and
its subsidiaries, JSC Yekaterinburgnefteproduct, and JSC Mosnefteproduct. The decision on incorporating data
and information regarding the dependent companies in subsequent reports can be made in the future,
as the corporate systems for collection and analysis of sustainability information mature.
Balance. The Company considers it necessary to disclose
both favorable and unfavorable information, describing
both achievements and difficulties in its development and
stakeholder relations. This balanced approach allows
stakeholders to see the complete picture of the Company’s
performance.
Gazprom Neft strives to provide information on all material topics identified, covering both achievements and
problematic areas. Each chapter of the Report contains the Company’s future objectives regarding most of the
material topics.
Comparability. The Company tries to calculate and present
all qualitative indicators in a consistent manner, and seeks
to ensure continuity of the data presented in order to enable
Report users to track changes in the Company’s performance
across all reporting periods and compare the indicators
presented with similar indicators of other companies.
Gazprom Neft decided to rely on the G3 Guidelines, IPIECA/API Guidance, and Basic Indicators of the Russian
Union of Industrialists and Entrepreneurs. A content index helping Report users locate various indicators
proposed by these guidelines is provided in Annex 2. It is intended mainly for ensuring comparability of the
Report with reports of other organizations. The Company declares “A” GRI Application Level*. When necessary
information is available, the Report presents performance data for the last three years.
ANNEX
Completeness. The Company defines the scope of its reports
based on the results of materiality assessment process, thus
allowing its stakeholders to form their opinions on how the
Company addresses issues in the areas of interest to them.
As the Company improves its information management
systems, it gradually expands the reporting boundary.
The Company’s reports contain descriptions of their
boundaries and timeframes.
1.
*Regardless that this level assumes publicising maximal number of standard disclosures, the Level A provides reporting organization with an opportunity to explain
reasons for omission or partial provision of indicators.
117
118
C+
B
B+
A
A+
Report externally
assured
Third Party Checked
GRI Checked
C+
Report externally
assured
Optional
Self Declared
Report externally
assured
ANNEX
1.
2002 in accordance
Mandatory
Accuracy. The Company strives to ensure adequate
representation of its performance in published qualitative
and quantitative sustainability information, and intends to
continuously improve the system used for collection and
analysis of this information.
In preparing this Sustainability Report, Gazprom Neft used measurement and calculation methods
recommended by the G3 Indicator Protocols. A part of the consolidated information presented in this Report is
based on expert assessments, while some other indicators were produced using integrated calculations and
data from various sources at the level of the Head Office, subsidiary companies, and their production units.
The Company recognizes and accepts the fact that presentation of most social and environmental indicators
inevitably depends upon the human factor, especially given that the corporate system for sustainability
information management is still emerging.
Timeliness. The Company plans to release the sustainability
reports annually, aligning their content and schedule with the
ones of its Annual Reports.
The process of Report preparation was scheduled to align its release with presentation of the US GAAP
Consolidated Financial Statements and the Annual Report of Gazprom Neft.
Clarity. Being convinced that sustainability reports should be
interesting and comprehensible to representatives of all the
stakeholder groups, the Company works to present information
in simple language and explains in its reports the terms and
abbreviations used.
In the process of the Report preparation, Gazprom Neft used the services of a professional editor to ensure
clarity and consistency of the text. The Report is appended with Annex 3, where the reader can find definitions
of terms and expansions of abbreviations used.
Reliability. The Company is convinced that all information
presented in the reports should be based on data carefully
collected and independently verified using internal and, if
possible, external resources.
According to the reporting principles subscribed to by the Company, independent external assurance is an
important instrument of ensuring information and data reliability. However, in preparing its first Sustainability
Report, the Company decided to limit itself to internal assurance conducted by the employees involved in the
Report’s preparation at the level of both the Head Office and subsidiary companies. The assurance methods
used included self-checking, analysis and comparison of data from different sources, and cross-checking.
ANNEX
Annex 2.
1
2
3
4
5
6
2.
COMMENTS* AND
REFERENCES TO OTHER
SOURCES
STATUS OF PRESENTATION IN THE
REPORT AND OTHER SOURCES
PAGES OF THE REPORT
CHAPTER OF THE REPORT
RESPECTIVE BASIC
PERFORMANCE
INDICATOR (RSPP)
DISCLOSURE (INDICATOR)
OF THE G3 GUIDELINES
RESPECTIVE DISCLOSURE
(INDICATOR) OF THE
IPIECA/API GUIDANCE
Performance indicators disclosed in the Report
7
STRATEGY AND ANALYSIS
Statement from the
Statement from the CEO
1.2 Description of key impacts,
risks, and opportunities:
Statement from the CEO,
Chapter 1. Governing
responsible development,
Chapter 2. Economic
development, Chapter 3.
Employee development
and support, Chapter 4.
Contribution to regional
development, Chapter
5. Environment and
health protection – safe
development
description of the significant
impacts the organization has
on sustainability and associated
challenges and opportunities
Statement from the CEO,
responsible development
2-5
see below:
1.1 Statement from the Chairman
of the Board, Statement from the
CEO
4-5,
8, 9
The Company did not prioritize sustainability
challenges and opportunities yet. It plans to
do so and publish the results in the mid-term
perspective.
an explanation of the approach
to prioritizing these challenges
and opportunities
key conclusions about progress
in addressing these topics and
related performance in the
reporting period
The information on key sustainability trends, risks,
and opportunities, and their impact on the longterm prospects of the Company is not presented in
separate sections.
The Company plans to consolidate and publish this
information in the long-term perspective, as its
approach to the management of sustainability risks
develops.
Statement from the CEO
4-5
119
ANNEX
2.
120
1
description of the main processes
in place to address performance
and/or relevant changes.
2
3
4
5
6
7
12-23
description of the most important
risks and opportunities for
the organization arising from
sustainability trends
At present most enterprises included
in the reporting boundary identify and manage
sustainability impacts, risks, and opportunities,
relevant to their regions and the context of their
operations themselves. The Company plans
to consolidate and publish this information
in the long-term perspectives, as its approach to
the management of sustainability risks develops.
prioritization of key sustainability
topics as risks and opportunities
according to their relevance for
long-term organizational strategy
The Company did not prioritize key sustainability
risks and opportunities yet. It plans to do so and
to publish the results in the mid-term perspective.
table(s) summarizing performance
against targets, and lessonslearned for the current reporting
period
In the reporting period the Company started to set
specific sustainability targets; therefore information
on accomplishing them during the reporting period
is unavailable. This information will be published
in the short-term perspective.
table(s) summarizing targets for
the next reporting period and midterm objectives and goals related
to key risks and opportunities
Chapter 2. Economic
Employee development
and support, Chapter 4.
Contribution to regional
development, Chapter
5. Environment and
health protection – safe
development
23,
39,
65,
85,
115
Provided at the end of each chapter.
concise description of governance
mechanisms in place to specifically
manage these risks and
opportunities, and identification
of other related risks and
opportunities.
Annex 2. Performance
indicators disclosed
in the Report
120
The Company develops an integrated risk
management system. Key sustainability-related
impacts and opportunities of the Company are
described in the Report. A generalized analysis
of risks is presented in the 2007 Annual Report.
At present most enterprises included
in the reporting boundary identify and manage
sustainability impacts, risks, and opportunities,
relevant to their regions and the context of their
operations themselves.
2
3
4
5
6
7
2.1 Name of the organization.
Chapter 2. Economic
development
26
2.2 Primary brands, products, and/
or services.
Chapter 2. Economic
development
27
2.3 Operational structure of the
organization, including main
divisions, operating companies,
subsidiaries, and joint ventures.
Chapter 2. Economic
development
30-31
2.4 Location of organization’s
headquarters.
Chapter 2. Economic
development
26
2.5 Number of countries where the
organization operates, and names
of countries with either major
operations or that are specifically
relevant to the sustainability issues
covered in the report.
Brief introduction to the
Сompany and this report,
Chapter 2. Economic
development
2.6 Nature of ownership and legal
form.
Chapter 2. Economic
development
26
2.7 Markets served (including
geographic breakdown, sectors
served, and types of customers/
beneficiaries).
Chapter 2. Economic
development
28-29,
33
2.8 Scale of the reporting
organization, including:
Chapter 2. Economic
Employee development and
support
see
below:
ORGANIZATIONAL PROFILE
number of employees (breakdown
by country/region)
Chapter 3. Employee
development and support
ANNEX
1
2.
Cover,
28-29
54
Net sales of the Company are disclosed in the 2007
Annual Report; the Company considers breakdown
of sales (revenues) by significant regions to be
confidential.
net sales, breakdown of sales/
revenues by countries/regions that
make up 5 percent or more of total
revenues
total capitalization
Chapter 2. Economic
development
30
quantity of products or services
provided
Chapter 2. Economic
development
32
total assets
Chapter 2. Economic
development
30
beneficial ownership (including
identity and percentage of
ownership of largest shareholders)
Chapter 2. Economic
development
27
121
ANNEX
2.
1
2
3
4
5
6
7
Total costs of the Company are disclosed in the
2007 Annual Report; the Company considers
breakdown of costs by significant regions to be
confidential.
costs by countries/regions that
make up 5 percent or more of total
revenues
2.9 Significant changes during the
reporting period regarding size,
structure, or ownership.
Chapter 2. Economic
development
2.10 Awards received in the
reporting period.
Chapter 4. Contribution to
regional development
26
82-83
Significant changes regarding Company's size
during the reporting period did not affect the
Report scope. They will be taken into account in the
subsequent reports.
In 2007, the Company received awards
acknowledging its achievements in foreign trade
and ensuring transparency of procurement.
REPORT PARAMETERS
122
3.1 Reporting period.
Annex 1. Application of the
sustainability reporting
principles
117
3.2 Date of most recent previous
report (if any).
principles
118
3.3 Reporting cycle.
principles
117
3.4 Contact point for questions
regarding the report or its
contents.
Contact Information and
Feedback
143
3.5 Process for defining report
content.
principles
18-20,
116
3.6 Boundary of the report.
principles
117
3.7 Limitations on the scope or
boundary of the report.
principles
117
3.8 Basis for reporting on joint
ventures, subsidiaries, leased
facilities, outsourced operations,
and other entities that can
significantly affect comparability
from period to period and/or
between organizations.
principles
117
The Report scope covers the complete range of
significant economic, environmental, and social
impacts of the Company.
2
3
4
5
6
7
principles
118
3.10 Explanation of the effect of
any re-statements of information
provided in earlier reports, and the
reasons for such re-statement.
Chapter 5. Environment
and health protection –
safe development, Annex
2. Performance indicators
disclosed in the Report
94,
123
Technically, this is the first sustainability report
of the Company. Nevertheless, the Company
considers it important to improve the accuracy of
information and data provided in the documents
already published. When necessary, the information
published earlier is re-stated in this Report; such
re-statements are explicitly specified.
3.11 Significant changes from
previous reporting periods in the
scope, boundary, or measurement
methods applied in the report.
principles
117
This is the first sustainability report by the
Company with clearly defined scope and boundary.
3.12 Table identifying the location
of the Standard Disclosures in the
report.
indicators disclosed in the
Report
119139
3.13 Policy and current practice
with regard to seeking external
assurance for the report.
principles
118
ANNEX
1
3.9 Data measurement techniques
and the bases of calculations,
including assumptions and
techniques underlying estimations
applied to the compilation of the
Indicators and other information in
the report.
2.
The Company decided not to seek external
assurance of this Report; at the same time it used
internal assurance mechanisms.
GOVERNANCE, COMMITMENTS, AND ENGAGEMENT
4.1 Governance structure of the
organization, including committees
under the highest governance
body responsible for specific
tasks, such as setting strategy or
organizational oversight.
15
4.2 Indication whether the Chair
of the highest governance body is
also an executive officer.
12
4.3 For organizations that have
a unitary board structure, state
the number of members of the
highest governance body that are
independent and/or non-executive
members.
12
123
ANNEX
2.
124
1
2
3
4
5
4.4 Mechanisms for shareholders
and employees to provide
recommendations or direction to
the highest governance body.
13
4.5 Linkage between compensation
for members of the highest
governance body, senior managers,
and executives (including
departure arrangements), and
the organization’s performance
(including social and environmental
performance).
Employee Development
and Support, Chapter 3.
Employee development and
support
4.6 Processes in place for the
highest governance body to ensure
conflicts of interest are avoided.
12
4.7 Processes for determining
the qualifications and expertise
of the members of the highest
governance body for guiding
the organization’s strategy on
economic, environmental, and
social (sustainability) topics.
14
4.8 Internally developed statements
of mission or values, codes of
conduct, and principles relevant
to economic, environmental, and
social performance and the status
of their implementation.
Chapter 4. Contribution
to regional development,
and health protection – safe
development
8, 76,
88
4.9 Procedures of the highest
governance body for overseeing
the organization’s identification
and management of economic,
environmental, and social
performance, including relevant
risks and opportunities, and
adherence or compliance with
internationally agreed standards,
codes of conduct, and principles.
12-13
6
7
Mechanisms for incorporating shareholders'
opinion are described. In the long-term perspective,
the Company will publish information on
mechanisms for non-shareholder employees to
provide recommendations or direction to the Board
of Directors, as such mechanisms develop.
13, 48
By now the Company has adopted its Charity Policy
and the EHS Policy. The Company set an objective to
prepare and approve key responsible development
codes and policies at all its enterprises. These
documents will be based upon the internationally
recognized standards. At present the policies
already adopted are being implemented, and
information on the extent of their implementation is
not yet available. This information will be disclosed
in the mid-term perspective, as respective mission
statements, codes, and policies are adopted and
implemented.
2
3
4
5
13
6
7
The performance evaluation process is based
on recommendations of the Personnel and
Remuneration Committee, according to item 3.5
of its Charter (see http://www.gazprom-neft.
com/investor/corp-governance/Regulation%20
on%20the%20Human%20Resources%20and%20
Remunerations%20Committee-eng.pdf). Currently
the evaluation is based on economic performance
of the organization. The information on the
processes for performance evaluation will be
amended in the long-term perspective, as the
respective criteria of environmental and social
performance are defined.
4.11 Explanation of whether and
how the precautionary approach
or principle is addressed by the
organization.
development
92
4.12 Externally developed
economic, environmental, and
social charters, principles, or other
initiatives to which the organization
subscribes or endorses.
Report
125
At present the Company has not been subscribed to
any of such initiatives.
4.13 Memberships in associations
(such as industry associations)
and/or national/international
advocacy organizations.
Report
125
The Company does not consider its membership in
associations as a material factor of its economic,
social, and environmental performance.
4.14 List of stakeholder groups
engaged by the organization.
10-11,
68
4.15 Basis for identification and
selection of stakeholders with
whom to engage.
10
4.16 Approaches to stakeholder
engagement, including frequency
of engagement by type and by
stakeholder group.
Chapter 3. Employee
development and support,
11,
16-20,
44, 49,
55-57,
59-61,
68,
70-71,
81-82,
106
ANNEX
1
4.10 Processes for evaluating
the highest governance body’s
own performance, particularly
with respect to economic,
environmental, and social
performance.
2.
Approaches to stakeholder engagement used in
the reporting period are described in a generalized
form; examples of specific engagement methods
used are also provided. The Company conducts
most of its stakeholder engagement activities
at the regional level using context-specific
means and methods. Such information has not
been consolidated. More detailed information
will be provided in the reports in the long-term
perspective.
125
ANNEX
2.
1
2
3
4
4.17 Key topics and concerns
that have been raised through
stakeholder engagement, and how
the organization has responded
to those key topics and concerns,
including through its reporting.
5
18
6
7
Key topics raised by stakeholders in the reporting
period are listed in the Report; Company’s
responses to them are described in the Report in a
respective context
ECONOMIC PERFORMANCE INDICATORS
Management Approach
1.1. Key business
principles
14-15
1.2. Sales
of products
(services)
1.3. Taxes and
other mandatory
payments
1.4. Spending on
employees
1.5. Capital
investments
1.6. Community
investments
1.7. Payments to
capital providers
33
ASPECT: ECONOMIC PERFORMANCE
EC1 Direct economic value
generated and distributed,
including revenues, operating
costs, employee compensation,
donations and other community
investments, retained earnings,
and payments to capital providers
and governments.
ECO–1 Tax
Expenses;
ECO-A1
Transparency
of Payments;
ECO-2 Dividends
Paid Plus Share
Repurchases;
ECO-A2 Payroll
and Benefits;
ECO-3 Capital
Expenditures;
ECO-A3 Interest
Paid
No such assessment was carried out. Currently
the Company plans to assess implications, risks,
and opportunities related to climate change; the
information on the results will be published in the
long-term perspective.
EC2 Financial implications and
other risks and opportunities for
the organization’s activities due to
climate change
EC3 Coverage of the organization’s
defined benefit plan obligations.
EC4 Significant financial assistance
received from government.
126
1.8. Voluntary
pension schemes
Chapter 3. Employee
In the reporting period the Company did not
have obligations under defined retirement plans;
information on the future plans regarding additional
(occupational) pension schemes is provided. The
Company plans to disclose such information in
the mid-term perspective, as these schemes are
implemented.
The Company considers this information
confidential.
2
3
4
5
6
7
EC5 Range of ratios of standard
entry level wage compared to
local minimum wage at significant
locations of operation.
Chapter 3. Employee
48-49
The data in comparison with average wages in the
regions are provided, which is more material than
the GRI requirement. The Company plans to provide
the data on wages in other contexts in the longterm perspective.
EC6 Policy, practices, and
proportion of spending on locallybased suppliers at significant
locations of operation.
83
General information on the Company's approach,
not including data on specific regions and
proportion of local procurement, is provided. The
Company plans to provide more information on this
indicator in the long-term perspective.
Report
127
The Company gives preference to local workforce
in hiring. The information on proportion of senior
managers of subsidiary companies hired from
the local community has not been consolidated.
The Company plans to publish more detailed
information on hiring procedures and proportion
of senior management hired from the local
community in the long-term perspective.
EC8 Development and impact of
infrastructure investments and
services provided primarily for
public benefit through commercial,
in-kind, or pro bono engagement.
71-79
EC9 Understanding and describing
significan indirect economic
impacts, including the extent of
impacts.
68
EC7 Procedures for local hiring and
proportion of senior management
hired from the local community at
locations of significant operation.
SOC-A3 Local
Employment
Opportunities
ANNEX
1
ASPECT: MARKET PRESENCE
2.
ASPECT: INDIRECT ECONOMIC IMPACTS
The Company works to better understand its
indirect economic impacts, and the information
on them provided in this report is not complete.
The Company pans to develop its approach to
assessment of indirect economic impacts and
disclose the results in its reports in the mid-term
perspective.
ENVIRONMENTAL PERFORMANCE INDICATORS
Management Approach
ENV-6
Environmental
Management
Systems
1.1. Key business
principles
development
88-90
development
94
ASPECT: MATERIALS
EN1 Materials used by weight or
volume.
127
ANNEX
2.
1
2
3
4
5
EN2 Percentage of materials used
that are recycled input materials.
ENV-A5
Recycled,
Reused or
Reclaimed
Materials
2.1. Percentage
of recycled or
reused input
materials
development
102
6
7
development
95
The data are provided without breakdown by
primary source due to the difficulty of consolidating
such information. It is planned to publish these data
in the mid-term perspective.
EN4 Indirect energy consumption
by primary energy source.
development
95
The data are provided without breakdown by
primary source due to the difficulty of consolidating
such information. It is planned to publish these data
in the mid-term perspective.
EN5 Energy saved due to
conservation and efficiency
improvements.
development
95
The data on certain projects are provided.
Consolidated data are currently unavailable,
since most of such projects were not managed
in a centralized way. It is planned to produce and
publish such data in the long-term perspective.
ASPECT: ENERGY
EN3 Direct energy consumption by
primary energy source.
EN6 Initiatives to provide energyefficient or renewable energy
based products and services, and
reductions in energy requirements
as a result of these initiatives.
ENV-5 Energy
Use
2.2. Energy use
ENV-A8 New
& Renewable
Energy
Resources
The Company does not implement initiatives to
provide energy-efficient or renewable energy
based products and services. The information on
such initiatives will be published in the long-term
perspective, as they are adopted by the Company.
EN7 Initiatives to reduce indirect
energy consumption and
reductions achieved.
development
95
development
100
Report
128
The Company works on improving energy efficiency
of its operations by producing electricity from
associated petroleum gas. Quantitative data on
the overall energy savings achieved in this way are
unavailable due to the difficulty of consolidation and
analysis of such information. They are planned to
be disclosed in the long-term perspective.
ASPECT: WATER
EN8 Total water withdrawal by
source.
EN9 Water sources significantly
affected by withdrawal of water.
128
ENV-A7
Freshwater Use
2.3. Freshwater
consumption for
organization’s
own needs
As the Company extracts water from surface water
bodies within allowed limits, it is presumed that
the impact on the latter is insubstantial; however,
specific data on this are unavailable. The Company
plans to publish such data in the long-term
perspective.
2
3
4
5
2.4. Percentage
of water recycled
and reused
in total water
consumption for
organization's
own needs
development
100
6
7
development
105
The Company does not conduct operations in
environmental protected areas. The information
on the areas of high biodiversity value is not
consolidated. The Report contains general
information on the Company’s understanding
of importance of biodiversity. More detailed
information will be published in the long-term
perspective.
EN12 Description of significant
impacts of activities, products,
and services on biodiversity in
protected areas and areas of high
biodiversity value outside protected
areas.
development
105
The Company does not conduct operations in
environmental protected areas. The information
on the areas of high biodiversity value is not
consolidated. More detailed information will be
published in the long-term perspective. The Report
contains general information on the Company’s
actions aimed at protecting biodiversity.
EN13 Habitats protected or
restored.
development
104
ASPECT: BIODIVERSITY
EN11 Location and size of land
owned, leased, managed in, or
adjacent to, protected areas and
areas of high biodiversity value
outside protected areas.
ENV-A9
Biodiversity
EN14 Strategies, current actions,
and future plans for managing
impacts on biodiversity.
The Company does not have special strategies
and company-wide plans for managing impacts on
biodiversity. The Company plans to publish such
information in the long-term perspective, as such
strategies and/or plans are approved.
EN15 Number of IUCN Red List
species and national conservation
list species with habitats in areas
affected by operations, by level of
extinction risk.
The information is not consolidated. The Company
plans to publish such information in the long-term
perspective.
ANNEX
1
EN10 Percentage and total volume
of water recycled and reused.
2.
ASPECT: EMISSIONS, EFFLUENTS, AND WASTE
EN16 Total direct and indirect
greenhouse gas emissions by
weight.
ENV-3
Greenhouse Gas
Emissions
2.5. Greenhouse
gas emissions
The information is unavailable, no estimations were
performed. The Company plans to disclose these
data in the long-term perspective, as necessary
estimations are performed.
129
ANNEX
2.
1
2
EN17 Other relevant indirect
greenhouse gas emissions by
weight.
4
5
6
7
The information is unavailable, no estimations were
performed. The Company plans to disclose these
data in the long-term perspective, as necessary
estimations are performed.
EN18 Initiatives to reduce
greenhouse gas emissions and
reductions achieved.
development
99
EN19 Emissions of ozone-depleting
substances by weight.
development
96
The Report describes initiatives on improving
associated gas recovery rate, which directly lead to
reduction of greenhouse emissions, however the
amount of reduction has not been estimated. The
Company plans to disclose these data in the longterm perspective, as necessary estimations are
performed.
EN20 NOx, SOx, and other
significant air emissions by type
and weight.
ENV-4 Flared
and Vented Gas;
ENV-A6 Other
Operational Air
Emissions
2.6. Air pollutant
emissions
development
96
EN21 Total water discharge by
quality and destination.
ENV-2
Controlled
Discharges to
Water; ENV-A2
Other Effluent
Discharges
2.7. Total water
discharge
2.7.2. Discharge
of polluted
wastewater
development
100
The data on water discharge are provided without
breakdown by destination and quality, since the
overall impact of discharges is insignificant due to
their insignificant volume. The Company does not
plan to disclose these data considering them nonmaterial, unless changes in volume or quality of
discharges occur.
2.8. Amount of
waste
development
102
The data on the waste disposal methods are
consolidated according to the existing Russian
legislation, i.e. in a different way that the one
recommended by the respective G3 Protocol.
The Company plans to provide the information
in accordance with the Protocol in the mid-term
perspective.
2.9. Number
of accidents
that resulted in
environmental
damage 2.10.
Monetary value
of established
environmental
damages
development
103104
The Report contains the data on the total volume of
oil spills; the data published can be corrected later,
as the reporting systems improves. The Company
plans to publish data on all significant spills in the
mid-term perspective, as unified accounting and
reporting systems are implemented.
EN22 Total weight of waste by type
and disposal method.
EN23 Total number and volume of
significant spills.
130
3
2.5. Greenhouse
gas emissions
ENV-1
Hydrocarbon
Spills to the
Environment;
ENV-A1 Other
Spills and
Accidental
Releases
2
3
ENV-A3
Hazardous
Waste; ENV-A4
Non-Hazardous
Waste
4
Report
5
131
EN25 Identity, size, protected
status, and biodiversity value of
water bodies and related habitats
significantly affected by the
reporting organization’s discharges
of water and runoff.
6
7
Non-material. This indicator was excluded based on
the results of the materiality assessment process.
The Company is involved neither in transboundary
waste transportation nor in significant
transportation of hazardous waste at all.
Consolidated information on this indicator is
not available. The Company did not conduct an
assessment of impact of discharges on biodiversity.
It is planned to publish such information in the
ANNEX
1
EN24 Weight of transported,
imported, exported, or treated
waste deemed hazardous under
the terms of the Basel Convention
Annex I, II, III, and VIII, and
percentage of transported waste
shipped internationally.
2.
ASPECT: PRODUCTS AND SERVICES
EN26 Initiatives to mitigate
environmental impacts of products
and services, and extent of impact
mitigation
EN27 Percentage of products sold
and their packaging materials that
are reclaimed by category.
H&S-5 Productrelated Health
Risks
2.11. Initiatives
to mitigate
environmental
impacts of
products and
services, and
extent of impact
mitigation
development
99
Report
131
The indicator does not apply to the main products
of the Company – oil and petroleum products used
as fuel and basic materials for chemical industry.
The Company does not reclaim used motor oils
produced by it and their packaging.
development
92
No significant fines and non-monetary sanctions
were imposed on the Company in the reporting
period.
development
103104
Only information regarding land transportation of
oil is provided.
ASPECT: COMPLIANCE
EN28 Monetary value of significant
fines and total number of
non-monetary sanctions for
noncompliance with environmental
laws and regulations.
ASPECT: TRANSPORT
EN29 Significant environmental
impacts of transporting products
and other goods and materials
used for the organization’s
operations, and transporting
members of the workforce.
131
ANNEX
1
2
3
4
5
2.12. Investments
in environmental
protection
facilities
development
93-94
6
7
ASPECT: OVERALL
EN30 Total environmental
protection expenditures and
investments by type.
2.
The data are presented in accordance with the
accounting approaches used in the Russian
Federation. The data compliant with the
recommendations of the GRI Protocol are
unavailable; the Company plans to consolidate and
disclose such data in the long-term perspective.
LABOR PRACTICES AND DECENT WORK PERFORMANCE INDICATORS
Management Approach
1.1. Key business
principles
Chapter 3. Employee
42-44
LA1 Total workforce by
employment type, employment
contract, and region.
3.1.1. Total
workforce by
territory
Chapter 3. Employee
45, 47
Only the data on permanent employees are
provided; consolidated data regarding other
employee types are unavailable. The Company
plans to consolidate and disclosure data on other
employment types in the mid-term perspective.
LA2 Total number and rate of
employee turnover by age group,
gender, and region.
3.1.2. Employee
turnover rate
due to workforce
mobility 3.1.3.
Employee
turnover rate due
to all reasons
Chapter 3. Employee
45-46
The data are provided without breakdown by age
group and gender. The data with the respective
breakdown are unavailable; the Company plans
to collect and disclose such data in the mid-term
perspective.
Chapter 3. Employee
52-54
Chapter 3. Employee
55
Chapter 3. Employee
46
ASPECT: EMPLOYMENT
LA3 Benefits provided to full-time
employees that are not provided to
temporary or part-time employees,
by major operations.
ASPECT: LABOR/MANAGEMENT RELATIONS
3.1.4. Percentage
of employees
covered by
collective
agreements
LA4 Percentage of employees
covered by collective bargaining
agreements.
LA5 Minimum notice period(s)
regarding operational changes,
including whether it is specified in
collective agreements.
ASPECT: OCCUPATIONAL HEALTH AND SAFETY
LA6 Percentage of total workforce
represented in formal joint
management–worker health
and safety committees that help
monitor and advise on occupational
health and safety programs.
132
H&S-1 Health
& Safety
Management
Systems
development
106,
110
The data on the percentage of workforce
represented in joint OHS committees is not
provided, since it is not available in consolidated
form. The Company plans to disclose this
information in the mid-term perspective.
2
H&S-3
Workforce
Health; H&S-4
Occupational
Injury and Illness
Rates
3
3.1.5.
Occupational
injury rate 3.1.6.
Number of
fatalities 3.1.7.
Number of
employees with
occupational
diseases
identified
3.1.8. Work time
lost because of
diseases of any
origin
4
5
development
107108
133
development
106
Chapter 3. Employee
62
LA11 Programs for skills
management and lifelong learning
that support the continued
employability of employees and
assist them in managing career
endings.
Chapter 3. Employee
62
LA12 Percentage of employees
receiving regular performance and
career development reviews.
Chapter 3. Employee
48
Chapter 3. Employee
49-50
LA9 Health and safety topics
covered in formal agreements with
trade unions.
H&S-2 Employee
Participation
7
The data on the work time lost because of all
illnesses is not provided, since it is not available in
consolidated form. The Company plans to disclose
this information in the mid-term perspective.
2.
Report
LA8 Education, training,
counseling, prevention, and riskcontrol programs in place to assist
workforce members, their families,
or community members regarding
serious diseases.
6
ANNEX
1
LA7 Rates of injury, occupational
diseases, lost days, and
absenteeism, and number of workrelated fatalities by region.
Prevention and risk control regarding serious
diseases is a part of prevention programs covered
by voluntary medical insurance.
ASPECT: TRAINING AND EDUCATION
LA10 Average hours of training per
year per employee by employee
category.
SOC-5
Training and
Development
SOC-A2
Employee
Satisfaction
3.1.10. Hours
of training per
employee
The Company does not collect information in
such form; the information on the proportion
of employees trained is provided. The Company
plans to disclose the information in the form
compliant with the GRI Guidelines in the long-term
perspective.
The Company does not collect information in such
form; general approaches toward the improvement
of employee performance and career development
are described. The Company plans to disclose the
information in the form compliant with the GRI
Guidelines in the mid-term perspective.
133
ANNEX
2.
1
2
3
4
5
6
7
ASPECT: DIVERSITY AND EQUAL OPPORTUNITY
3.1.12.
Participation
of women in
organization's
management
LA13 Composition of governance
bodies and breakdown of
employees per category according
to gender, age group, minority
group membership, and other
indicators of diversity.
LA14 Ratio of basic salary of men
to women by employee category.
Chapter 3. Employee
45
The information regarding the Head Office is
provided; it is planned to consolidate information
on significant diversity indicators for the whole
Company and disclose it in the mid-term
perspectives.
Chapter 3. Employee
134
Basic salaries of men and women are equal.
HUMAN RIGHTS PERFORMANCE INDICATORS
Management Approach
Chapter 3. Employee
42-44
Because of peculiarities of existing legislation
and practice of Company's operations in the
Russian Federation, only the indicators regarding
employee rights are considered material.
This approach can be re-considered in the future.
HR1 Percentage and total
number of significant investment
agreements that include
human rights clauses or that
have undergone human rights
screening.
Report
134
Non-material. This indicator was excluded based
on the materiality assessment results. Because of
peculiarities of existing legislation and the fact that
the Company makes most of its investments in the
Russian Federation, there was no need for a special
human rights screening of investment agreements,
and such screening was not conducted.
HR2 Percentage of significant
suppliers and contractors that have
undergone screening on human
rights and actions taken.
Report
134
peculiarities of existing legislation and the nature
of activities of significant suppliers and contractors,
there was no need for a special screening of them
on human rights, and such screening was not
conducted.
HR3 Total hours of employee
training on policies and
procedures concerning aspects
of human rights that are relevant
to operations, including the
percentage of employees trained.
Report
134
peculiarities of existing legislation, the issue was
not considered material, and the Company did not
conduct trainings in human rights.
Chapter 3. Employee
46
ASPECT: INVESTMENT AND PROCUREMENT PRACTICES
ASPECT: NON-DISCRIMINATION
HR4 Total number of incidents of
discrimination and actions taken.
134
SOC-4 NonDiscrimination
and Equal
Opportunity
3.2.2. Incidents of
discrimination
2
3
4
5
6
7
HR5 Operations identified in which
the right to exercise freedom
of association and collective
bargaining may be at significant
risk, and actions taken to support
these rights.
SOC-7 Labor
Practices
Chapter 3. Employee
55
The Company is not involved in activities that result
in restricting the right to exercise freedom of
association and collective bargaining.
ANNEX
1
ASPECT: FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING
2.
ASPECT: CHILD LABOR
HR6 Operations identified as
having significant risk for incidents
of child labor, and measures taken
to contribute to the elimination of
child labor.
SOC-6 Nonretaliation
and Grievance
System
3.2.1. Labor
disputes
Report
135
The Company does not conduct operations involving
significant risk for incidents of child labor.
Report
135
There were no labor disputes at the Company's
enterprises in the reporting period.
Report
135
The Company does not conduct operations
involving significant risk for incidents of forced or
compulsory labor.
Report
135
peculiarities of existing legislation, the issue was
not considered material, and the Company did not
conduct such trainings.
Report
135
There were no incidents of violating the rights
of small and indigenous peoples by Company's
enterprises in the reporting period.
ASPECT: FORCED AND COMPULSORY LABOR
HR7 Operations identified as
having significant risk for incidents
of forced or compulsory labor,
and measures to contribute
to the elimination of forced or
compulsory labor.
ASPECT: SECURITY PRACTICES
HR8 Percentage of security
personnel trained in the
organization’s policies or
procedures concerning aspects of
human rights that are relevant to
operations.
SOC-1 Human
Rights; SOC-9
Security
ASPECT: INDIGENOUS RIGHTS
HR9 Total number of incidents
of violations involving rights of
indigenous people and actions
taken.
SOC-A6
Indigenous
Communities
3.2.3. Incidents
of violations
involving rights
of small and
indigenous
peoples
SOCIETY PERFORMANCE INDICATORS
Management Approach
1.1. Key business
principles
70, 76
The Company continues to develop its approach to
managing interactions with the society. Complete
information on this item will be provided in the midterm perspective, as this approach is improved
135
ANNEX
2.
1
2
3
SOC-8
Community
Relationships;
SOC-A4 Social
Investments;
SOC–A5 External
Capacity
Building; SOCA7 Resettlement
and Land Rights
3.3.1.
Collaboration
with authorities
in addressing
objectives of
social significance
(socio-economic
development of
organization's
areas of
presence) 3.3.3.
Assessment
of impacts of
organization's
operations on
socio-economic
development
of local
communities
4
5
6
7
ASPECT: COMMUNITY
SO1 Nature, scope, and
effectiveness of any programs and
practices that assess and manage
the impacts of operations on
communities, including entering,
operating, and exiting.
76-77
The Company develops systematic approaches
to assessment of socio-economic impact on
communities, and the Report provides examples
of using these approaches. Complete information
on this indicator will be provided in the long-term
perspective, as these approaches are improved.
ASPECT: CORRUPTION
SO2 Percentage and total number
of business units analyzed for risks
related to corruption.
SOC-2 Bribery
and Corruption
Report
136
The Company works to fight corruption. Incidents
of financial violations in all business units are
monitored.
SO3 Percentage of employees
trained in organization’s anticorruption policies and procedures.
SOC-2 Bribery
and Corruption
Report
136
It is the Economic Security Department that is
responsible for preventing economic violations. The
Company considers information on the percentage
of employees trained in this field confidential.
80, 82,
regional development, Annex 136
2. Performance indicators
disclosed in the Report
SO4 Actions taken in response to
incidents of corruption.
There were no significant incidents of corruption
identified in the reporting period. The Company
has a Tender Committee and other mechanisms of
supplier relations in place.
ASPECT: PUBLIC POLICY
SO5 Public policy positions and
participation in public policy
development and lobbying.
SO6 Total value of financial and
in-kind contributions t o political
parties, politicians, and related
institutions by country.
136
SOC-3 Political
Contributions;
SOC-A1 Political
Lobbying and
Advocacy
3.3.4.
Participation
in external
initiatives
including
public policy
development
Report
136
The Company did not take any special position
regarding public policy development.
Report
136
There were no incidents of anticompetitive behavior
by the Company in the reporting period.
2
3
4
5
6
7
SO7 Total number of legal actions
for anticompetitive behavior, antitrust, and monopoly practices and
their outcomes.
Report
137
В отчетном периоде не было случаев нарушений
в сфере противодействия конкуренции со стороны Компании.
Report
137
The Company strives to comply with all applicable
legislation in its operations. No significant fines
and non-monetary sanctions were imposed on the
Company in the reporting period.
ASPECT: COMPLIANCE
SO8 Monetary value of significant
fines and total number of
non-monetary sanctions for
noncompliance with laws and
regulations.
ANNEX
1
ASPECT: ANTI-COMPETITIVE BEHAVIOR
2.
PRODUCT RESPONSIBILITY PERFORMANCE INDICATORS
Management Approach
development
99
development
99
Report
137
There were no incidents of Company's noncompliance with product safety requirements in the
reporting period
Report
137
The existing legislation requires to provide
information on conformance of petroleum products
to safety standards. This requirement applies to
most products of the Company's refining operations
and is fully complied with
Report
137
There were no incidents of Company's noncompliance with requirements concerning
product information and labeling (accompanying
documents) in the reporting period.
ASPECT: CUSTOMER HEALTH AND SAFETY
PR1 Life cycle stages in which
health and safety impacts of
products and services are
assessed for improvement, and
percentage of significant products
and services categories subject to
such procedures.
H&S-5 Productrelated Health
Risks
PR2 Total number of incidents of
non-compliance with regulations
and voluntary codes concerning
health and safety impacts of
products and services during their
life cycle, by type of outcomes.
ASPECT: PRODUCT AND SERVICE LABELING
PR3 Type of product and
service information required by
procedures, and percentage of
significant products and services
subject to such information
requirements.
product and service information
and labeling, by type of outcomes.
3.4.1. Information
and labeling
137
ANNEX
2.
1
PR5 Practices related to customer
satisfaction, including results
of surveys measuring customer
satisfaction.
2
3
4
5
6
7
81
The Report contains a description of practices
used and qualitative information on customer
satisfaction; quantitative measurements of
customer satisfaction are not consolidated. The
Company plans to publish such information in the
PR6 Programs for adherence to
laws, standards, and voluntary
codes related to marketing
communications, including
advertising, promotion, and
sponsorship.
Report
138
The Company strives to comply with legal
requirements related to marketing communications
and implements a company-wide policy in this field.
marketing communications,
including advertising, promotion, and
sponsorship by type of outcomes.
Report
138
There were no incidents of Company's noncompliance with requirements concerning
marketing communications in the reporting period.
Report
138
There were no violations or substantiated
complaints regarding breaches of customer privacy
in the reporting period.
Report
138
No significant fines concerning the provision and
use of products and services were imposed on the
Company in the reporting period.
ASPECT: MARKETING COMMUNICATIONS
ASPECT: CUSTOMER PRIVACY
PR8 Total number of substantiated
complaints regarding breaches
of customer privacy and losses of
customer data.
АСПЕКТ: СООТВЕТСТВИЕ ТРЕБОВАНИЯМ
PR9 Monetary value of significant
fines for noncompliance with laws
and regulations concerning the
provision and use of products and
services.
LEGEND AND NOTES
* The Company considers it necessary (in accordance with «A» G3 Application Level) to explain its decisions regarding presentation of data or information on the G3 indicators.
In some cases a brief information on the indicators or a reference to additional sources that may be useful to the reader are also included.
- fully disclosed in the Report,
138
- partially disclosed in the Report, not disclosed in the Report,
- additional indicators
ANNEX
Annex 3.
Terms and Definitions
TERM/ABBREVIATION
1
DEFINITION/EXPANSION
USEFUL LINKS
2
3
AA1000 (AccountAbility 1000)
A series of standards developed by AccountAbility and addressing stakeholder engagement,
sustainability reporting, and independent assurance of sustainability reports.
http://www.accountability21.net/default.
aspx?id=228
http://www.urbaneconomics.ru/texts.
php?folder_id=202&mat_id=104&page_
id=8555
Accident
Disruption of structures and/or technical equipment used at a hazardous industrial facility;
uncontrolled explosion and/or release of hazardous substances.
AccountAbility
The Institute of Social and Ethical AccountAbility, the developer of AA1000 series of standards,
is an international non-profit organization established in the United Kingdom in 1995.
Members of AccontAbitiliy include leading companies, as well as NGOs, research institutions,
consultancies, and individuals from all over the world. AccountAbility's goal is to promote
accountability of organizations for sustainable development.
Additives
Substances, small amounts of which are added to fuels, motor and industrial oils in order
to improve their performance characteristics.
GRI
Global Reporting Initiative, an independent non-profit organization with the mission of
development and worldwide promotion of common sustainability reporting principles, relying
mainly on the Sustainablity Reporting Guidelines. Created in 1998, the organization with
headquarters in Amsterdam is governed by multiple stakeholders from all over the world.
http://www.globalreporting.org/
AA1000 (AccountAbility 1000)
A series of standards developed by AccountAbility and addressing stakeholder engagement,
sustainability reporting, and independent assurance of sustainability reports.
http://www.accountability21.net/default.
aspx?id=228
http://www.urbaneconomics.ru/texts.
php?folder_id=202&mat_id=104&page_
id=8555
Accident
Disruption of structures and/or technical equipment used at a hazardous industrial facility;
uncontrolled explosion and/or release of hazardous substances.
AccountAbility
The Institute of Social and Ethical AccountAbility, the developer of AA1000 series of standards,
is an international non-profit organization established in the United Kingdom in 1995.
Members of AccontAbitiliy include leading companies, as well as NGOs, research institutions,
consultancies, and individuals from all over the world. AccountAbility's goal is to promote
accountability of organizations for sustainable development.
Additives
Substances, small amounts of which are added to fuels, motor and industrial oils in order to
improve their performance characteristics.
API
American Petroleum Institute, a US non-governmental organization conducting research of
the oil and gas sector.
Assets, enterprises
In the context of this report, subsidiary companies of JSC Gazprom Neft
3.
http://www.accountability21.net/
http://www.accountability21.net/
http://www.api.org/aboutapi/
139
ANNEX
3.
140
1
2
3
Associated (petroleum) gas, APG
Mixture of various gaseous hydrocarbons dissolved in oil and released in the process of oil
extraction.
Basic indicators of RSPP
Indicators proposed by the document Guidelines for Using Basic Indicators of Companies'
Performance in Corporate Non-Financial Reporting (2007 version, draft), developed by
the RSPP Department of Social Policy and Labor Relations for the purpose of reporting in
accordance with the Social Charter of Russian Business.
Charitable activities
Voluntary activities aimed at non-profit (free of charge or at a reduced rate) transfer of
property, including monetary resources, performance of work, provision of services and other
support to individuals and organizations.
Company
In this Report the Company means JSC Gazprom Neft with all its subsidiary companies.
Interactions, including information exchange, between the Company and its stakeholders.
Corporate responsibility
A way of doing business wherein a company manages its economic, environmental, and social
risks and opportunities on the basis of systematic stakeholder engagement.
Environmental expenses
Operating and capital expenses on reduction (prevention) of environmental impacts, including
cleaning of waste gases, wastewater treatment and waste management, and fees for
environmental pollution within and beyond established limits.
FFMS of Russia
Federal Financial Markets Service of the Russian Federation
http://www.fcsm.ru/
G3 Guidelines
The third version of the GRI Sustainability Reporting Guidelines. G3 Guidelines provide
guidance on sustainability reporting (i.e. reporting that covers social, economic and
environmental aspects of organization's performance).
ReportingFramework/G3Online/
G3 Indicator Protocols
A part of GRI Reporting Framework, additional documents providing methodological guidance
on calculation and interpretation of indicators proposed by the G3 Guidelines.
GRI Application Levels
The levels reflecting the extent to which the G3 Guidelines and associated Protocols have been
applied in preparing a report.
Head Office
JSC Gazprom Neft, the managing company
HSE
Health, safety and environment
IPIECA
International Petroleum Industry Environmental Conservation Association, an organization
providing platform for communication of oil and gas industry with international organizations,
including the UN, on social and environmental issues.
http://www.ipieca.org/
IPIECA/API Guidance
Oil and Gas Industry Guidance on Voluntary Sustainability Reporting developed by IPIECA/API,
2005 version.
http://www.oilandgasreporting.com/
ISO 14001
Environmental Management Systems – Requirements with Guidance for Use (2004 version),
one of the most widely used environmental management standards developed by the
International Organization for Standardization.
ISO 9001
Quality Management Systems – Requirements (2000 version), one of the most widely used
standards in the field of products and services quality management, developed by the
International Organization for Standardization.
JSC
Joint Stock Company
KPI
Key performance indicator
http://www.rspp.ru/Default.
aspx?CatalogId=283&d_no=1810
2
Limited Liability Company
Material topics
Aspects that reflect significant economic, environmental and social impacts of the Company
and/or can significantly affect valuations and decisions of key stakeholders groups. Within the
framework of Gazprom Neft's reporting process material topics are identified by the Working
Group.
MBO
Management by Objectives
MICEX
Moscow Interbank Currency Exchange
NGK
Oil and gas company
NGO
Non-governmental organization
NOX
Nitrogen oxides
OHS
OHSAS 18001
Occupational Health and Safety Management Systems – Requirements, a part of the
Occupation Health and Safety Assessment Series (2007 version), one of the most widely used
occupational health and safety management standards.
Oil recovery factor
Ratio of produced amount of oil to overall (geological) reserves
Ozone-depleting substances
Substances listed in the Montreal Protocol on Substances That Deplete the Ozone Layer to the
Vienna Convention for the Protection of the Ozone Layer.
Personnel expenses
All kinds of payments to the personnel, and all capital and operating expenses on social
assistance to the personnel (except for expenses on personal protective equipment).
PPE
Personal Protective Equipment
Primary energy consumption
Consumption of fuel plus consumption of heat and electricity normalized to the amount of
fuel necessary for their production. The evaluation method used in preparing this Report was
based on the RSPP Basic Indicators methodology.
Produced water
Water contained in oil-bearing formations being developed, a by-product of oil extraction.
Report
Gazprpom Neft's Sustainability Report for 2007 (this Report), a public document disclosing
information of the Company's sustainability performance for the reporting period.
Responsible development
A concept combining “corporate responsibility” and “sustainable development”
RSPP
The Russian Union of Industrialists and Entrepreneurs
RUB
Russian rubles
SDC
Subsidiaries and dependent companies
SO2
Sulphur oxide (IV)
Stakeholders
All individuals and organizations who are interested in the Company's performance, affect it,
or can be affected by it.
Substantial / category incident
Failure of or damage to technical equipment used at a hazardous industrial facility, or
deviation from established process conditions, in case such event falls into a category defined
by the existing standards or regulations.
3
ANNEX
1
LLC
3.
http://www.rspp.ru/
141
ANNEX
3.
142
1
2
Significant fines
Fines exceeding 1% of annual turnover of the enterprise they are imposed on.
Significant non-financial sanctions
Non-financial sanctions by regulatory bodies that may result in substantial (more than 1%)
changes in revenue or output of the enterprise on which they were imposed.
Sustainability reporting
Systems and processes for collection, consolidation, checking, and analysis of information and
data on the range of material topics.
Sustainable development
The development whose goal is to “meet the needs of the present without compromising the
ability of future generations to meet their own needs.” [World Commission on Environment
and Development. Our Common Future. Oxford: Oxford University Press, 1987, p.43. (Cited
from the G3 Guidelines)].
Thermostatic equipment
Equipment for maintaining a constant temperature
UNESCO
The United Nations Educational, Scientific and Cultural Organization
US GAAP
Generally Accepted Accounting Principles in the United States, also used is some other
countries.
VOC
Volatile organic compounds
Working Group
A coordinating group comprising managers of various business functions of JSC Gazprom
Neft. The objectives of the group include improvement of the responsible development
reporting system, and systematization of stakeholder engagement activities.
3
http://www.unesco.org/
CONTACT INFORMATION
AND FEEDBACK
The Company considers it very important
to receive your feedback regarding all topics
presented in this report. Indeed, the Company
will not be able to improve its performance
without your suggestions and comments.
You may reach us to express your opinion
regarding the Report’s content or to ask
a question of interest to you by telephone
or regular mail, email or fax, using
the following contact information:
JSC Gazprom Neft
125 A, Profsoyuznaya Street, Moscow
117647, Russia.
Tel.: +7 (495) 777-3152, 777-3184
Fax: +7 (495) 777-3151, 777-3164
Office of Social Security of the Human
Resources Department
dup@gazprom-neft.ru
Other contact information is available at the
following page of the Company’s website:
http://www.gazprom-neft.com/contacts/
You can also send us an electronic message
using the Company’s feedback webpage:
http://www.gazprom-neft.ru/feedback/
Questions and comments we receive will be
taken into account in the reporting process
and will be reflected in the Company’s
subsequent reports.
www.gazprom-neft.ru

GAZPROM NEFT: RESPONSIBLE DEVELOPMENT

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