SUSTAINABILITY REPORT 2015 of the Board of Directors 1

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ROSNEFT Message from the Chairman SUSTAINABILITY REPORT 2015 of the Board of Directors 1

Rosneft Sustainability Report

2015

ROSNEFT SUSTAINABILITY REPORT 2015 СONTENTS

Message from the Chairman of the Board of Directors ��2 Innovation ��48 Message from the Chief Executive Officer ��4 Partnerships with leading universities and innovation centers, and international collaboration ��51 Key sustainability performance indicators ��6 Improving industry innovation management standards ��51 About the Report ��10 Efficiency improvements ��51 Reporting principles ��11 Occupational health and safety ��52 Reporting boundaries ��11 Occupational health and safety (OHS) management system ��52 COMPANY PERFORMANCE OHS performance in 2015 ��55 The Company in 2015: general information ��14 Environment ��62 International projects in frontier regions ��16 Environmental Management System ��62 Expanding partnership with international players in Russia Environmental protection performance in 2015 ��73 ��17 Energy consumption and energy efficiency ��81 Domestic offshore projects handled together with international players ��18 Employees ��84 Arctic expeditions ��19 HR management system ��84 Import substitution and localization ��21 HR management performance in 2015 ��85 Retail network ��23 Society ��106 Corporate governance ��28 Social impact management system ��106 Board of Directors ��31 Social performance in 2015 ��107 Shareholder relations ��32 Independent Assurance Report on the Sustainability Report 2015 ��114 Investor relations ��33 Annex 1 Management of sustainable development ��34 Progress against the 2015 objectives set in the 2014 Ethical management framework ��34 Sustainability Report ��116 Compliance framework ��35 Objectives for 2016-19 ��119 Prevention of fraud and corruption ��36 Annex 2 Risk management and internal control ��38 GRI Content index ��120 Risk management ��38 Annex 3 Internal control ��43 List of Abbreviations ��138 Stakeholder engagement ��44 Public consultations on the environmental footprint of planned activities ��44 Roundtables in the key regions of operation ��45 ROSNEFT Message from the Chairman SUSTAINABILITY REPORT 2015 of the Board of Directors 2

MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS

n 2015, Rosneft retained its potential, maintaining energy security position as a leading player on the and promoting the sustainable use of Idomestic and world oil and gas natural resources. market despite the global economic and geopolitical uncertainty. The Over the past year, Rosneft Company extracts and processes oil completed major upgrades across and gas, and supplies consumers its refining facilities to allow the with quality energy products production of cleaner Euro 5 gasoline ensuring that the nation’s unique and diesel fuels for the domestic wealth of natural resources is used market, thus meeting the relevant effectively. Rosneft is the biggest requirements of Customs Union taxpayer in Russia, playing a critical Technical Regulation in a timely role in providing the budget with a manner. sustainable revenue stream. Rosneft’s activities have a substantial The Company’s management has impact on related industries in followed a balanced approach in all regions where it operates. its investment, operating, financial The Company is a member of the and social policy. Our current consortium that builds the Zvezda achievements make a convincing shipyard in the Russian Far East, case for the Company’s development one of the most ambitious projects strategy, which is focused on in modern Russia. Rosneft is to harnessing the country’s energy provide the shipyard with a strong ROSNEFT Message from the Chairman SUSTAINABILITY REPORT 2015 of the Board of Directors 3

OVER THE PAST YEAR, ROSNEFT COMPLETED MAJOR UPGRADES ACROSS ITS REFINING FACILITIES TO ALLOW THE PRODUCTION OF CLEANER EURO 5 GASOLINE AND DIESEL FUELS FOR THE « DOMESTIC MARKET»

Andrey Belousov

Сhairman of the Board of Directors

pipeline of orders at the initial stage version of the Code of Business and of operation in line with its license Corporate Ethics, developed in line obligations. Zvezda will contribute to with the world’s best practices. the economic welfare of the Russian Far East, create highly productive As a leading player in Russia’s jobs and improve the region’s social economy, Rosneft is aware of its climate. responsibility and continues to undertake socially oriented projects Rosneft continued to develop oil and and initiatives in the regions where gas fields off Sakhalin Island. The it has a presence. These efforts help Company, jointly with its partners in to improve the economic, regulatory the Sakhalin-1 project, drilled the and organizational environment of world’s longest well of 13,500 meters the Company’s business operations thus breaking its own record. and drive sustainable development of the Russian regions. Rosneft’s key priorities remain a high level of corporate governance, Sincerely, information transparency, and compliance with rules and standards Andrey Belousov that meet the requirements of the state, the market and the general Chairman of the Board of Directors public. An important milestone in 2015 was the adoption of a new ROSNEFT Message from the Chief SUSTAINABILITY REPORT 2015 Executive Officer 4

MESSAGE FROM THE CHIEF EXECUTIVE OFFICER

he year 2015 brought turmoil business. In 2015, Rosneft started improvements to its occupational for global markets, triggered using its own catalysts for catalytic health and safety culture through Tby plummeting hydrocarbon reforming and hydrogen plants at informed leadership and responsible prices. Despite the macroeconomic its refineries. All catalytic cracking governance, with relevant uncertainty, Rosneft weathered the plants were converted to locally performance indicators now global downturn with a positive manufactured catalysts. Kara-Winter embedded in management KPIs. performance trend. In 2015, the 2015, a research expedition organized Occupational health and safety costs Company boosted oil production by Rosneft in cooperation with the have exceeded RUB 32 billion. to 254 mmtoe and consolidated its Arctic Research and Design Center footprint in the gas market, producing for Offshore Developments and Minimizing any potential negative 62.5 bcm, up 10% from the previous the Arctic and Antarctic Research impact on the environment is a year. A reduction in lifting costs to Institute, is the most extensive and number one priority for Rosneft. The US$2.6 per boe is further proof of the thorough study of the Arctic in the Company has sharpened its focus on Company’s improved performance. past 20 years. Rosneft invested a total improved environmental performance With its reserve replacement ratio of RUB 116.9 billion in innovation, in all areas – from land restoration, holding above the 100% benchmark, including RUB 36 billion in research sludge removal to the treatment the Company is well placed to and development. of oil-contaminated wastes. Along maintain sustainable levels of with growing extraction and refining production even in challenging times. The Company is committed to volumes, the Company has managed operating safely and responsibly, to increase associated gas utilization Commitment to innovative protecting the health, safety to 87.9%, while cutting gross development helps the Company to and wellbeing of its employees, emissions by 2.7%. With new reserves deal independently with operating contractors and local communities. increasingly coming onstream, drilling issues across all segments of its In 2015, it continued extensive waste has dropped 38% from 463 to ROSNEFT Message from the Chief SUSTAINABILITY REPORT 2015 Executive Officer 5

ROSNEFT CONFIRMED ITS STATUS AS ONE OF RUSSIA’S MAJOR EMPLOYERS, WITH THE NUMBER 336 tonnes per thousand meters. The OF EMPLOYEES EXCEEDING 258.800 AT THE END Company spent a total of RUB 71.6 OF THE YEAR» billion on environmental protection « initiatives in 2015.

Rosneft confirmed its status as one Igor Sechin of Russia’s major employers, with the number of employees exceeding Chief Executive Officer 258,8001 at the end of the year. Employee salaries across all Group entities are adjusted for inflation on an annual basis. The average monthly salary in 2015 stood at RUB 69,900, charity programs and regional development of the regions where it exceeding the region’s average pay in social activities, totaled RUB 6.4 has a presence (e.g., East Siberia, with most cases. billion2. Initiatives to mark the 70th a number of new fields expected to Anniversary of Russia’s victory in the come onstream in the next few years). As the largest taxpayer in Russia, Great Patriotic War were also high Rosneft is committed to achieving its Rosneft contributed RUB 2.3 on the agenda in 2015. Given the goals and objectives by leveraging trillion in taxes and customs government’s heightened focus on top talent within the organization and duties to government revenue in education and science, the Company maintaining effective operations that 2015, including RUB 213 billion to continued to work closely with its meet health, safety and environmental regional budgets. The Company has partner educational institutions standards. traditionally paid special attention on various educational, research, to social and economic initiatives innovation and infrastructure projects, in the regions where it operates. spending a total of RUB 794.3 million Group entities provide charitable on these activities. donations to healthcare and social service institutions and support Achieved success is not the end and non-governmental organizations of Rosneft continues to set new and Sincerely, indigenous peoples of the North with ambitious targets. The Company a view to promoting their cultural is looking to ramp up its upstream Igor Sechin identity. Rosneft’s social spending investments in 2016, creating new in 2015, including investments in jobs and driving the economic Chief Executive Officer

1 Within the scope of centralized business planning

2 As per the Company’s 2015 Annual Report, total charity expenses stand at RUB 5.6 billion and do not include RUB 0.8 billion spent on financial support for educational institutions, with the relevant information disclosed in the Youth Policy section of the Annual Report ROSNEFT Key sustainability SUSTAINABILITY REPORT 2015 performance indicators 6

KEY SUSTAINABILITY PERFORMANCE INDICATORS

OPERATING AND ECONOMIC PERFORMANCE INDICATORS3.4 Indicator 2013 2014 2015

SEC proven reserves of oil, condensate and natural gas liquids, mmt 3,398 3,432 3,331

SEC proven gas reserves5, bcm 1,329 1,414 1,609

Hydrocarbon liquids production, mmt 189.26 204.9 202.8

Gas production, bcm 38.27 56.7 62.5

Hydrocarbon production, mboe 1,622 1,864 1,883

Oil processing, mmt 90.1 99.8 96.9

Output of petroleum products and petrochemicals, mmt 87.1 97.1 95.4

Assets at the end of the year, RUB billion 7,531 8,736 9,638

Total revenues and equity share in profits of joint ventures and associates, RUB billion 4,694 5,503 5,150

Total equity, RUB billion 3,169 2,881 2,929

Current and non-current liabilities, RUB billion8 4,362 5,855 6,646

Dividends declared (including minority dividends), RUB billion 85 136 87

DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED, RUB BILLION9 Indicator 2013 2014 2015

Generated direct economic value 4,741 6,028 5,445

Revenues 4,741 6,028 5,445

Economic value distributed

Operating costs 1,195 1,385 1,590

Employee wages and benefits 185 231 257

Payments to providers of capital 57 192 152

Taxes, duties and national insurance contributions 2,45710 2,968 2,259

Community investments 6.6 8 9

Economic value retained 840 1,244 1,178

3 According to IFRS, unless stated otherwise 4 Data for 2013 relating to asset values at the end of the year, equity, as well as current and non-current liabilities has been restated after the purchase price of certain Group companies was finally allocated to the fair value of the individual assets and liabilities acquired 5 SEC proven gas reserves for 2013-14 include only marketable gas. 6 This includes TNK-ВР’s since the acquisition date. Oil and condensate production, including that of TNK-ВР since 1 January 2013, amounts to 206.9 mmt 7 This includes TNK-BP’s and ITERA Group’s assets since the acquisition date. Gas production, including that of TNK-ВР since 1 January 2013, amounts to 42.1 bcm 8 Excluding liabilities relating to assets held for sale 9 Data for 2013 and 2014 has been restated as a result of the methodology revision. 10 Data according to IFRS, with TNK-ВР’s data included since 21 March 2013. ROSNEFT Key sustainability SUSTAINABILITY REPORT 2015 performance indicators 7

ECONOMIC VALUE RETAINED

HEALTH, SAFETY AND ENVIRONMENT PERFORMANCE INDICATORS11 Indicator 2013 2014 2015

Incidence rate of non-fatal injuries (per million hours worked) 0.219 0.33012 0.327

Incidence rate of fatal injuries (per 100 million hours worked) 2.14 3.98 4.76

Gross emissions of pollutants, thousand tonnes 1,802 1,619 1,575

Air pollutant emissions from extraction activities per thousand tce, tonnes13 4.58 4.03 3.65

Air pollutant emissions from refining and petrochemical activities per thousand tce, tonnes 1.39 1.27 1.23

Associated petroleum gas utilization rate, %14 69.8 80.8 87.9

Gross wastewater discharges to surface waters, million cubic meters 90.8 91.0 110.7

Wastewater discharges from extraction activities per thousand tce, cubic meters 0.0001 0.0002 0.0002

Wastewater discharges from refining and petrochemical 0.8 0.8 0.97 activities per thousand tce, cubic meters

Total pipeline ruptures (in-field oil pipelines, gas pipelines and water pipelines) 10,425 9,450 8,841

Crude oil and petroleum product spills due to pipeline rupture, tonnes 1,015 903 855

HSE and emergency preparedness training, thousand man-courses 159.6 210.515 255.7

Occupational health and safety expenditures, RUB million16 10,034 18,298 32,474

Expenditures on emergency prevention, fire and radiation safety, RUB million 12,222 14,718 13,426

Blowout prevention expenditures, RUB million 811 1,017 1,10617

Capital environmental expenditures, RUB million 36,843 36,930 44,646

Operating environmental expenditures, RUB million 16,986 21,803 27,000

Environmental fines payable, RUB million 55 88 201

Payments to budgets at all levels associated with environmental protection 3,872 4,134 5,153 and the sustainable use of natural resources, RUB million

INNOVATION PERFORMANCE INDICATORS Indicator 2013 2014 2015

R&D expenditures, RUB billion 23.2 33.2 36.0

11 According to management accounts. 12 The 2014 incidence rate of non-fatal injuries was 0.3295, if rounded to four decimal places. 13 Air pollutant emissions (including by category) and wastewater discharges to surface waters are calculated within the scope of consolidated environmental data. 14 Information about the sustainable use of associated petroleum gas (APG), both current and future, is hereinafter provided for Russian assets only. 15 Total man-courses in HSE and emergency preparedness in 2014, including 3.200 held at Tomskneft VNK, are 213.700. 16 Occupational health and safety expenditures for 2013 and 2014 have been restated to reflect total spending on occupational safety. 17 Blowout prevention expenditures for 2015 include radiation safety costs of RUB 52 million. ROSNEFT Key sustainability SUSTAINABILITY REPORT 2015 performance indicators 8

HR PERFORMANCE INDICATORS18 Indicator 2013 2014 2015

Headcount at the year end, thousand 221.9 243.0 258.819

Average headcount, thousand 212.6 228.5 247.5

WORKFORCE BY CATEGORY AT THE YEAR END, % Indicator 2013 2014 2015

Blue-collar employees 57.9 57.1 55.8

White-collar employees 29.8 30.1 31.6

Managers 12.3 12.8 12.6

WORKFORCE BY GENDER AT THE YEAR END, % Indicator 2013 2014 2015

Women 36.0 34.0 34.0

Men 64.0 66.0 66.0

Employee turnover, % 14.1 17.0 12.0

Company average monthly salary per person, RUB 60,093 64,933 69,847

Gross payroll (incl.benefits, one-time bonuses and annual compensation), RUB million 153,323 178,065 207,408

Social payments to employees, RUB million 7,379 5,427 5,898

SOCIAL PERFORMANCE INDICATORS Indicator 2013 2014 2015

Tax payments and customs duties, RUB million 2,720,08520 3,053,696 2,271,568

Incl. tax payments to the federal budget and customs duties 2,436,696 2,801,062 2,007,75221

Incl. tax payments to regional budgets 248,130 213,107 212,897

Incl. payments to extra-budgetary funds 35,259 39,526 50,919

Expenditures on social programs, social investments 29,715 29,766 35,653 and charity in the regions, RUB million22

Incl. optimizing working conditions, RUB million 8,511 9,681 12,526

Incl. social investments under cooperation agreements 3,685 1,667 4,069 with regional authorities, RUB million Incl. support for educational institutions in line with the government’s policy 1,430 2,573 2,28323 in the area of education and science, and other charity initiatives

Incl. other social expenditures 16,089 15,845 16,775

18 Hereinafter, quantitative HR performance indicators are presented within the scope of the Company’s centralized business planning, unless stated otherwise. Average headcount, average monthly salary, gross payroll, social payments and employee turnover are presented including a 50% interest in Tomskneft VNK. 19 With 4.000 employees of Tomskneft VNK, the resulting headcount totals 262.800. According to IFRS consolidated data, total headcount at the end of 2015 was 261.500. 20 Includes TNK-BP since 1 January 2013. 21 The Company’s fiscal charges in 2015 decreased from 2014, largely due to major changes in the macroeconomic environment. 22 According to management accounts (within the scope of centralized business planning). 23 Charity support for educational institutions is disclosed separately in the Youth Policy section of the 2015 Annual Report, with the relevant expenditures not included in the Company’s total charity expenses for 2015. ROSNEFT Key sustainability SUSTAINABILITY REPORT 2015 performance indicators 9

Occupational health and safety Air pollutant emissions from Associated petroleum gas expenditures, RUB million16 extraction activities per thousand utilization rate, %14 tce, tonnes13

32,474 4.58 87.9 4.03 80.8 3.65 69.8 18,298

10,034

2013 2014 2015 2013 2014 2015 2013 2014 2015

Employee wages and benefits, Company average monthly salary R&D expenditures, RUB billion RUB billion per person, RUB

257 69,847 231 64,933 36.0 60,093 33.2 185 23.2

2013 2014 2015 2013 2014 2015 2013 2014 2015

Workforce by category at the year Workforce by gender at the year Tax payments and customs duties, end, % end, % RUB million

12.6 2,007,752 55.8 66 34

31.6

50,919 2,271,568

212,897

Blue-collar employees Women Tax payments to the federal budget and customs duties White-collar employees Men Managers Tax payments to regional budgets Payments to extra-budgetary funds

Expenditures on social programs, social investments and charity in the regions, RUB million22

1,524 12,526 5,381 Incl. optimizing working conditions, RUB million Incl. social investments under cooperation agreements with regional authorities, RUB million Incl. support for educational institutions in line with the government’s policy in the area of 741 education and science, and other charity initiatives Incl. health, promotion of healthy lifestyle and other social expenditures 35,653 Incl. housing program Incl. non-governmental pension benefits Incl. social infrastructure

9,129 4,069 2,28323 ROSNEFT About the Report SUSTAINABILITY REPORT 2015 10

ABOUT THE REPORT

This 2015 Rosneft Sustainability Report There have also been some changes (the “Report”) is the tenth in a series to the disclosure of certain matters of non-financial reports that are that are covered in this Report. These published annually by the Company. All changes are primarily related to the reports are available on the Company’s new sustainability context in which corporate website at www.rosneft.ru the Company operates. For example, topics such as import substitution Non-financial reports have been and localization, retail business traditionally targeted at a wide development, management leadership, range of stakeholders, including improved safety performance and Company employees, shareholders, environmental awareness have been investors, local communities, public given special attention in this Report. organizations, clients and partners. The Report is structured to provide The Company uses various channels insight into the Company’s activities in to collect feedback on its sustainability areas such as corporate governance, publications, including through sustainability management, telephone, email (with the details risk management, stakeholder provided in the Contacts section engagement, innovations, occupational of each publication) or in-person health and safety, environmental meetings. All comments are then protection, human resources carefully analyzed and incorporated in management, local community the next report. engagement.

THE REPORT PROVIDES DISCLOSURES FOR ALL ASPECTS AND To avoid duplicate disclosures, INDICATORS DESCRIBED IN GRI G4, INCLUDING OIL AND GAS references to the Company’s 2015 SECTOR DISCLOSURES THAT WERE IDENTIFIED AS MATERIAL Annual Report and other publicly available documents are provided in the Report.

In preparing this Report, the Company The Company has a unified system benefited from the materiality analysis of collecting and aggregating data of certain sustainability indicators along key dimensions of sustainability and targets conducted in 2014-15, performance. In preparing and drawing on the approach provided in presenting the relevant information, the fourth generation of Sustainability the Company is guided by GRI G4 and Reporting Guidelines of Global International Financial Reporting Reporting Initiative (GRI G4). The Standards (IFRS). material issues identified in the course of such analysis were included in the 2014 Sustainability Report and remain relevant to the current reporting period. ROSNEFT About the Report SUSTAINABILITY REPORT 2015 11

OPERATING AND FINANCIAL PERFORMANCE DISCLOSURES IN THE REPORT ARE MADE IN COMPLIANCE WITH IFRS.

REPORTING PRINCIPLES noticeable deal in 2015, contributing to the growth in reported parameters. The Company’s sustainability reporting principles derive from the approach The reporting boundaries for HR and described in GRI. These principles social performance indicators are set were originally outlined in the 2008 along the boundaries of centralized Sustainability Report and have business planning. The relevant remained unchanged ever since. disclosure approach is described in more detail in the previous year’s The Report provides disclosures for report and has generally remained all aspects and indicators described unchanged. in GRI G4, including oil and gas sector disclosures that were identified as The reporting boundaries for OHS and material. environmental performance indicators have not changed substantially This Report reflects the Company’s either. The OHS data collection scope progress in implementing the has expanded somewhat due to the principles of the UN Global Compact, inclusion of assets acquired in 2015, and includes information on the as well as certain oilfield services, basic performance indicators for marketing and distribution companies. non-financial reporting developed by This expansion, however, had no the Russian Union of Industrialists impact on the Company’s overall and Entrepreneurs. The Company performance and on the previous subscribes to and applies the year’s consolidated indicators. The principles of the Oil and Gas Industry same refers to energy consumption Guidance on Voluntary Sustainability data. The acquisition of Novokuibyshev Reporting by IPIECA/API (2010). Petrochemical Company was the Operating and financial performance most noticeable deal in 2015, The 2015 Sustainability Report has disclosures in the Report are made in contributing to the growth been externally assured by EY and has compliance with IFRS. in reporting parameters been prepared in accordance with the Core option of GRI G4. The external There have been no major changes assurance statement is provided on from previous years in terms of the pages 114–115 of this Report. coverage of economic, social and environmental aspects. REPORTING BOUNDARIES

Rosneft prepares sustainability reports at the company-wide level, covering all entities controlled by the Company that are significant in terms of its sustainability performance. The acquisition of Novokuibyshev Petrochemical Company was the most COMPANY PERFORMANCE

THE COMPANY IN 2015: 14 GENERAL INFORMATION

28 CORPORATE GOVERNANCE

MANAGEMENT OF SUSTAINABLE 34 DEVELOPMENT

38 RISK MANAGEMENT AND INTERNAL CONTROL

44 STAKEHOLDER ENGAGEMENT

48 INNOVATION

OCCUPATIONAL HEALTH 52 AND SAFETY

62 ENVIRONMENT

84 EMPLOYEES

106 SOCIETY

ROSNEFT Company SUSTAINABILITY REPORT 2015 performance 14

THE COMPANY IN 2015: GENERAL INFORMATION

WITH OVER 254 MMTOE In 2015 the Company conducted PRODUCED IN 2015, ROSNEFT extensive exploration activities in ROSNEFT IS THE LARGEST Russia, covering all mature provinces, PLAYER IN THE DOMESTIC SET A NEW RECORD IN such as the Far East, East and West OIL REFINING INDUSTRY. HYDROCARBON PRODUCTION Siberia, the Volga-Urals region, IN RUSSIA, THE COMPANY AND CONFIRMED ITS STATUS Timan-Pechora and Southern Russia. OWNS 11 MAJOR REFINERIES OF THE WORLD’S LARGEST Reserves replacement is a strong ACCOUNTING FOR 32% point of Rosneft: at the current OF DOMESTIC REFINING PUBLIC OIL COMPANY. rates of production, the remaining OUTPUT commercially extractable reserves Rosneft’s core businesses include (ABC1) will last for another 46 years. hydrocarbon prospecting and Another strength is the performance of exploration, oil, gas and condensate the upstream business with its record- production and refining, and the low level of lifting costs as a result of marketing of oil, gas and refined a significant reduction in 2015 – from products in Russia and abroad. The US$3.9 to US$2.6 per boe. Company actively develops its own oilfield services business, striving Gas accounts for 20% of the to take the top place among other Company’s total hydrocarbon industry players in terms of economic production. With that in mind, the performance and technology development of gas business is high enablement. on the Company’s strategic agenda. Rosneft is engaged in gas production Rosneft’s largest shareholder is in Russia, Vietnam, Venezuela and Rosneftegaz (69.50%), a wholly-owned Canada both independently (through state company; BP RIL holds another more than 30 of its entities) and in 19.75% in the Company, with one share partnership with other companies as held by the state, as represented by part of joint venture arrangements. the Federal Agency for State Property With substantial gas reserves at Management. The remaining stock is the initial stage of development, the free floating. Company is well placed to grow its gas business and steadily increase Rosneft is a global energy company production. The Company also intends with a diversified asset portfolio to achieve further improvements in comprised of Russia-based core assets APG utilization. and other assets in frontier regions across the globe. The Company does With newly acquired OFS assets business in 23 countries: Russia, in 2015, the Company managed to Venezuela, Cuba, Canada, the US, meet over 50% of its onshore drilling Brazil, Norway, Germany, Italy, Algeria, needs, and 20% of hydraulic fracturing Egypt, Mozambique, Mongolia, China, needs. Capital investments in the India, Vietnam, Indonesia, Armenia, OFS business in 2015 totaled RUB 11 Turkmenistan, Kyrgyzstan, Belarus, billion. Ukraine and the UAE. ROSNEFT Company SUSTAINABILITY REPORT 2015 performance 15

> 254 MMTOE US$2.6 PER BOE

ROSNEFT SET A NEW LIFTING COSTS IN 2015 RECORD IN HYDROCARBON PRODUCTION IN 2015

Vankor field

Rosneft is the largest player in the 21% interest. Following the acquisition sites, of which 20 are controlled by domestic oil refining industry. In of Novokuibyshev Petrochemical the Company and 19 by its partners, Russia, the Company owns 11 major Company, Rosneft captured the the Company holds around 32% of the refineries (accounting for 32% of desired synergies in the refining and market. domestic refining output) and several petrochemical segments and became smaller refining facilities. It also the third-largest domestic LNG In 2015 the Company continued oil holds a 50% interest in Ruhr Oel producer. supplies to Glencore, Vitol, Trafigura, GmbH (ROG), a joint venture with BP China National Petroleum Corporation that owns stakes in four refineries On the marketing front, Rosneft (CNPC) and BP Oil International in Germany. The partners in the carefully analyses its strategy to Limited under long-term contracts. It joint venture plan to restructure ensure a balanced mix of monetization also signed a new one-year oil supply their refining and petrochemical channels, including oil refining at contract with China National Chemical businesses in 2016. As part of the own facilities in Russia and abroad, Corporation (ChemChina), and restructuring deal, Rosneft will export sales under long-term and spot extended the contract for oil supply to become a direct shareholder and contracts, and domestic supplies. The Poland for three years. increase its shareholding in three Company has a wide retail network of ROG’s four refineries. Rosneft of 2,557 filling stations and multi- undertakes oil processing in Belarus service facilities in 59 Russian regions on a contract basis; processing (2.363) and FSU countries. Rosneft is operations are based at the Mozyr also the leading domestic producer of refinery, in which it indirectly holds a aviation fuel. With sales via 39 fueling ROSNEFT Company SUSTAINABILITY REPORT 2015 performance 16

Joint project of Rosneft and PDVSA in Venezuela

INTERNATIONAL PROJECTS For a number of years, the Company at Block 06.1 had reached 300 mboe, IN FRONTIER REGIONS has been involved in a project of which 35% are attributed to Rosneft for hydrocarbon exploration and Vietnam B.V. In June 2015, Rosneft Rosneft is an active international development at Solimoes license Vietnam B.V marked 13 years of safe investor and has a successful track blocks in Brazil. In October 2015, offshore operations, an important record of oil and gas projects in Rosneft became the sole holder of milestone in its activity. In recognition frontier regions across the globe. these license blocks after closing a deal to acquire Petro Rio S.A.’s 55% Building on its strategic partnership stake in the Solimoes project. Further IN JUNE 2015, ROSNEFT with PDVSA, a Venezuela state-owned exploration activities are scheduled for VIETNAM B.V MARKED 13 oil and natural gas company, the 2016-17. YEARS OF SAFE OFFSHORE Company signed a Memorandum on OPERATIONS, AN IMPORTANT joint projects in June 2015 to formalize The Company continued exploration a number of preliminary agreements and production of gas and condensate MILESTONE IN ITS ACTIVITY in priority areas. Rosneft is currently at two blocks in the Nam Con Son engaged in five upstream projects in basin off the south coast of Vietnam. Venezuela with estimated in-place By May 2015, accumulated production oil reserves over 20.5 billion tonnes (Petromonagas, Petroperiha, Bokeron, Offshore oil extraction in Vietnam Petrovictoria and Petromiranda). Rosneft produced 1.67 million tonnes from these projects that yielded a total of 8.8 million tonnes in 2015.

Under agreements concluded with PDVSA in 2014-15, Rosneft pledged to provide training for Venezuelan nationals in its partner universities. In September 2015, 15 PDVSA employees enrolled in a three-year MBA Oil and Gas Management Program at Gubkin Russian State University of Oil and Gas. ROSNEFT Company SUSTAINABILITY REPORT 2015 performance 17

MILLION TONNES 200 IN 2015, ROSNEFT AND STATOIL ASA COMPLETED PILOT DRILLING OF RECOVERABLE OIL AND AT THE NORTH KOMSOMOLSKOYE CONDENSATE RESERVES (АВС1+С2) FIELD (LAYER PK1) THE PROJECT AT THE NORTH KOMSOMOLSKOYE FIELD (LAYER PK1) IS SET TO BRING ONSTREAM

of this remarkable achievement, Forging ahead with their international On 16 March 2016, Rosneft’s subsidiary Rosneft Vietnam B.V. was awarded partnership, Rosneft and ExxonMobil sold a 29.9% interest in Taas-Yuriakh Labor Order (Class II), a distinguished set up a consortium to participate in Neftegazodobycha to a consortium government award of the Socialist Mozambique’s fifth licensing round. of three Indian companies, Oil India, Republic of Vietnam. The consortium was awarded a Indian Oil and Bharat Petroresources. contract for three offshore areas (А5- A number of agreements were reached В, Z5-C и Z5-D), with Rosneft holding a In September 2015, Rosneft inked with Egyptian General Petroleum 20% stake in the project. a deal with ONGC Videsh Ltd. to Corporation (EGPC), including an sell a 15% stake in Vankorneft. Six agreement for oil product supplies. EXPANDING PARTNERSHIP months later, on 16 March 2015, Rosneft has been an accredited WITH INTERNATIONAL PLAYERS the parties signed a memorandum supplier of EGPC since the beginning IN RUSSIA of understanding for cooperation in of 2015. The Company is also emerging respect of the Vankor project, which as a global LNG trader with the signing Rosneft and BP entered into a number envisages a potential increase to a of a general agreement for LNG of agreements involving exploration, 26% share of the Indian company in supplies with Egyptian Natural Gas production and oil refining activities Vankorneft. The parties also agreed Holding Company (EGAS). that are designed to cement a long- to explore the possibilities for joint term strategic partnership between trading, including the signing of long- In 2015, Rosneft agreed with the the two companies. In November term oil supply contracts. Egyptian Ministry of Petroleum 2015, Rosneft sold a 20% interest in and Mineral Resources to assist in Taas-Yuriakh Neftegazodobycha to On 16 March 2016, Rosneft entered into arranging training for local nationals BPRIL, a member of the BP plc. Group. a heads of agreement with Oil India, in the Company’s partner universities. Taas-Yuriakh Neftegazodobycha Indian Oil and Bharat Petroresources Rosneft undertakes to cover training, will continue the development of to sell up to 23.9% in Vankorneft. The accommodation and medical insurance the Srednebotuobinskoye oil and parties also signed a memorandum costs, and to provide educational gas condensate field, one of the of understanding envisaging the allowance for students. largest deposits in East Siberia. The analysis of a potential partnership for shareholders will be jointly looking the development of the Vankor cluster into possibilities for expanding existing (the Suzunskoye, Tagulskoye and infrastructure to ramp up exploration Lodochnoye fields). and develop the region’s resource potential. In 2015, Rosneft and Statoil ASA completed pilot drilling at the North Komsomolskoye field (layer PK1). As provided in the relevant agreement, the companies conducted detailed studies, including the analysis of core samples and formation fluid samples collected from the wells. The project is set to bring onstream around 200 million tonnes of recoverable oil and condensate reserves (АВС1+С2). ROSNEFT Company SUSTAINABILITY REPORT 2015 performance 18

Offshore platform Berkut

IN 2015, THE COMPANY RECEIVED ITS FIRST COMMERCIAL OIL FLOWS WITH LOW SULFUR CONTENT FROM THE UNIQUE OFFSHORE PLATFORM BERKUT

DOMESTIC OFFSHORE PROJECTS of license areas in the Barents Sea, HANDLED TOGETHER WITH were completed in 2015. A sea-ice 13,500 M INTERNATIONAL PLAYERS monitoring plan was developed with an input from the Arctic and Antarctic A RECORD-BREAKING MEASURED As part of joint projects in the Sea of Research Institute. Rosneft and ENI DEPTH OF THE WELL DRILLED Okhotsk, Rosneft and Statoil completed conducted the interpretation of the FROM THE ORLAN PLATFORM the processing and interpretation of upper section of 3D seismic data 2D and 3D seismic data and conducted acquired over Black Sea license area in a number of geotechnical surveys. order to assess biogenic gas resources With exploration drilling to start in and their commercial viability. To 2016, the JV initiated site preparation prepare for exploration, the license at Lisyansky and Magadan-1 license area was covered by a comprehensive areas and signed a contract with environmental survey with a view to ChinaOilfieldServicesLimited (COSL) analyzing baseline environmental to drill exploration wells and provide conditions and assessing the impact of Nanhai-9, a semi-submersible rig that natural and anthropogenic factors. had been positively evaluated by an audit for compliance with Russian and Rosneft, in collaboration with international requirements. ExxonMobil, SODECO and ONGC Videsh Ltd, continued work on Sakhalin-1, Rosneft and Eni jointly develop one of its key offshore projects. The offshore reserves in the Barents Sea project includes three offshore fields and the Black Sea. The processing (Chayvo, Odoptu and Arkutun-Dagi) and and interpretation of gravity, magnetic applies industry-leading technologies. and 2D seismic data, coupled with In April 2015, Rosneft finished drilling other geological and geophysical the world’s longest well at Chayvo. studies aimed at exploring the geology The well was drilled from the Orlan ROSNEFT Company SUSTAINABILITY REPORT 2015 performance 19

WITH ITS EXTENSIVE SCOPE AND CONTENT OF RESEARCH, KARA-WINTER 2015 HAS BECOME THE LARGEST ARCTIC EXPEDITION IN THE LAST 20 YEARS

platform and has a record-breaking production. In 2015, oil at Chayvo’s conditions, switching to year-round measured depth of 13,500 meters. northern tip was produced from three drilling operations, detecting and In 2015, the Company received its unique wells, with total average flow mitigating environmental risks. first commercial oil flows from the rate over 7,000 tonnes per day. On unique offshore platform Berkut at the 28 November 2015, just fourteen In 2015, the Company’s Arctic Arkutun-Dagi field. Sokol, the Russian months after the start of production, Scientific Center and the Arctic for falcon, was approved as the name the Chayvo field produced the two- and Antarctic Research Institute for this oil grade with low sulfur millionth tonne of oil. performed joint studies of sea ice and content. The work to start commercial hydrometeorological conditions at production at the Arkutun-Dagi field ARCTIC EXPEDITIONS the Company’s license areas in the was conducted in strict compliance Barents Sea, the Kara Sea, the Laptev with the established technological With a view to exploring the Sea and the East Siberian Sea. To that specifications and subject to all possibilities for effectively handling end, the Company launched three occupational and environmental safety its offshore projects in compliance major expeditions – Kara-Winter 2015, regulations. with license obligations, the Company Kara-Summer 2015 and Chukotka- launched a target innovation project Summer 2015. NC-3, a well drilled at the northern to create a database of environmental tip of the Chayvo field, was put in conditions and seabed soils at offshore With its extensive scope and content production ahead of schedule – on 12 license areas in the Arctic and the Far of research, Kara-Winter 2015 has September 2015. The well borehole East. become the largest Arctic expedition in has a high angle of deviation from the the last 20 years. Yamal, an icebreaker vertical axis. For all wells drilled at this A reliable source of information about employed during the expedition, section of the field, advanced pumping environmental conditions at offshore traveled from the Barents Sea to the technologies were used, with each well sites would help to address a number East Siberian Sea, traversing almost equipped with a blowout preventer of critical tasks, such as extending the the entire coastline of the Russian to control the flow of gas and ensure drilling season beyond the open-water Arctic. All tasks were performed with the highest level of accumulated season, effectively managing sea ice due care and diligence, observing ROSNEFT Company SUSTAINABILITY REPORT 2015 performance 20

Research expedition Kara-Winter 2015

the highest environmental and collars to track their location and in the four seas of the Arctic Ocean. occupational safety standards. movement, and continued biological These stations not only will help Kara-Winter 2015 lasted for 55 days, studies designed to assess the impact optimize exploration and production expedition costs totaled RUB 401 of climate changes on polar bears. but will also spark another series of million. Arctic research programs, resulting in The next round of research took significant improvements in weather The completed research program place in the summer of 2015, forecasting in this region. involved a detailed study of 35 with hydrometeorological studies hummocks and 4 icebergs, glacier conducted by the Victor Buynitsky The expedition also looked into studies across the islands of Novaya research vessel during the Kara- populations of polar bears in target Zemlya, Severnaya Zemlya, the Summer 2015 expedition. The studies areas of hydrocarbon development, New Siberian Islands and Frantz covered 7 license areas in the Kara with the main focus being the Josef Land, a study of physical and Sea, the Laptev Sea and the western assessment of baseline concentrations mechanical properties of Arctic ice, part of the East Siberian Sea; 16 of anthropogenic substances in polar and morphometric studies of ice submersible buoy stations, which take bears. The experts of Marine Mammal sheets and hummocky formations. measurements of currents and waves, Council, a regional non-government 100 buoys were placed on drifting were recovered to take readings and organization, contributed significantly icebergs to measure their trajectories re-deployed. The expedition collected to this effort. They took air counts of and movement patterns. Maintenance a unique set of ice and metocean data, polar bears, fitted satellite tracking jobs were done on 6 automatic weather adding to the knowledge of northern collars, and collected skin samples stations and 13 autonomous ocean seas. Expedition costs totaled RUB 34 by remotely fired biopsy darts and flux buoys. The research program also million. biological samples using non-invasive included seismic studies at license methods. areas in the Laptev Sea, and live tests Chukotka-Summer 2015 was another covering certain elements of sea ice expedition launched in the summer of Plans for 2016-19 include further management. 2015. The deployment of an automatic meteorological, hydrological, sea- weather station on Wrangel Island ice and environmental studies, The expedition continued the polar marked an important milestone in the coupled with the analysis of seafloor bear research program, accumulating research, as it helped to recover the composition and geological hazards new knowledge on polar bear system of Arctic weather observations at offshore license areas in the distribution in the study area; almost completely. Rosneft currently Arctic. It is also planned to test the scientists fitted adult bears with radio runs seven modern weather stations ice management system in the Kara ROSNEFT Company SUSTAINABILITY REPORT 2015 performance 21

ROSNEFT STRATEGIC GOAL IN LOCALIZING PRODUCTION AND EQUIPMENT IS TO ENSURE REALIZATION OF COMPANY’S PRIORITIES TO DEVELOP ROSNEFT RESOURCE BASE IN AN EFFECTIVE MANNER WITH MAXIMIZED USE OF RUSSIAN SUPPLIERS ALL OTHER CONDITIONS BEING EQUAL

agreements with leading global Cooperation with manufacturers, to launch the local General Electric assembly of high-technology foreign equipment and to increase the In 2015 Rosneft continued to advance Sea, establish a research base on localization rate to 70% by 2025. cooperation on import substitution Preobrazhenie Island and develop and localization with General Electric, certain elements of Arctic engineering. In 2015 Rosneft adopted a 10-year its key partner. The companies Import Substitution and Localization concluded a number of agreements IMPORT SUBSTITUTION AND Program that is aimed at reducing to achieve a greater localization of LOCALIZATION dependence on imported equipment leading-edge technologies in Russia’s and developing internal production oil and gas and shipbuilding sectors. It is the Company’s intention to achieve and engineering resources both within The cooperative effort between technological self-sufficiency by Rosneft and Russia’s oil and gas sector Rosneft and General Electric targets localizing the production of equipment in general. The Program covers all various strategic facets, with the two it currently imports. Rosneft plans equipment on the Company’s purchase companies focused on fostering strong to enter into strategic partnership list for the next decade, including partnership in academic research. marine and aviation equipment, as well as technologies that are critical for In 2015 Rosneft and General ROSNEFT PLANS TO LAUNCH exploration, drilling, oil processing and Electric organized a joint venture THE LOCAL ASSEMBLY offshore oil and gas production in the named Sapphire, an engineering OF HIGH-TECHNOLOGY Arctic. and training center designed to FOREIGN EQUIPMENT support the Company’s projects AND TO INCREASE THE The Company continued to engage by offering core solutions. The LOCALIZATION RATE TO 70% actively with the Russian Government, Center is also focused on corporate BY 2025 the Ministry of Industry and Trade, the professional development, with five Ministry of Energy and other federal technical training courses, covering executive bodies. It is represented in shipbuilding, energy efficiency, gas various intergovernmental task forces monetization, well intervention and and research groups established by drilling, organized in 2015 to support federal executive bodies to consider localization projects. The training top issues, such as reducing the sessions were held in Moscow and St. domestic energy sector’s dependence Petersburg with over 80 attendants on imported equipment, components from the corporate headquarters and and spare parts, as well as on foreign Group entities. services and software. Rosneft is also involved actively in public discussions For details about the cooperation with of draft laws and regulations aimed at General Electric, see Rosneft’s 2015 facilitating import substitution. Annual Report. ROSNEFT Company SUSTAINABILITY REPORT 2015 performance 22

Construction works at the Zvezda shipyard

Participation in the Zvezda Other import substitution > 7,000 project in the Russian Far East initiatives

NEW JOBS ARE EXPECTED TO BE The Zvezda shipyard, a shipbuilding In 2015 the Company signed a number CREATED DURING CONSTRUCTION complex to be constructed on of strategic agreements with its OF THE ZVEZDA SHIPYARD the premises of the Far Eastern international partners to promote Shipbuilding and Ship Repair Center, the development of emerging LNG is one of the most ambitious projects markets. in modern Russia. The project is handled by a consortium of companies, Rosneft agreed to team up with CIMC comprising Rosneftegaz, Rosneft and Enric Holdings Limited in expanding Gazprombank. Once commissioned, the use of natural gas as a motor fuel. Zvezda will be Russia’s first shipyard, Under the cooperation agreement, geared for building customized the companies undertake to conduct a vessels, large offshore modules, feasibility study into the development platforms and rigs to be used, of infrastructure for using LNG as a among others, in offshore oil and gas motor fuel in Russia. projects in the Russian Arctic. The project envisages the construction Rosneft and Golar LNG Limited of plant facilities and supporting also signed a memorandum of infrastructure, coupled with the understanding to cooperate on rollout of cutting-edge technologies projects involving the construction to enable effective operations. The and operation of floating LNG plants. shipbuilding complex is expected to The parties intend to consider the give a boost to the region’s economy possibility of leveraging Golar’s and have a noticeable positive social proprietary technologies in their joint impact by providing over 7,000 jobs for projects. local residents. Rosneft is to provide the shipyard with a strong pipeline of orders at the initial stage of operation in line with its license obligations.

For details about the shipbuilding cluster in the Far East, see Rosneft’s 2015 Annual Report. ROSNEFT Company SUSTAINABILITY REPORT 2015 performance 23

ROSNEFT IS COMMITTED TO QUALITY PRODUCT SUPPLIES, HIGH SERVICE STANDARDS AND STRONG OCCUPATIONAL AND ENVIRONMENTAL SAFETY PRACTICES

RETAIL NETWORK development of the retail network included raising operational efficiency, Rosneft’s retail network is the biggest both extensively and intensively, and in Russia. Apart from 59 Russian expanding the supporting businesses regions, the Company has a presence and small wholesales on the back in Abkhazia, Ukraine, Belarus, of improved cost performance. The Kyrgyzstan and Armenia. efforts in 2015 resulted in improved manageability and decision- At the end of 2015, the Company’s making speed, coupled with overall retail network consisted of 2,557 own performance improvements. For and leased assets. The Company’s details about the regional distribution multi-service filling stations include a of the Company’s retail network and total of 1,819 convenience stores, 691 retail sales in 2015, see Rosneft’s 2015 cafés and 174 car washes; 80 stations Annual Report. FILLING provide minor repair and maintenance 2,557 STATIONS services. Fuel supplies are procured Rosneft is committed to quality product from 135 own fuel depots with a total supplies, high service standards and ROSNEFT RETAIL capacity of 2.6 mcm. strong occupational and environmental NETWORK IN 2015 safety practices. Having the right Continuous improvements to the way people is essential to the success and Rosneft manages its retail business sustainability of the retail business. RUSSIAN are critical to the development of its With that in mind, the Company gives 59 REGIONS retail network. In 2015 the Company special attention to talent development worked closely with its oil product initiatives and internally developed AS WELL AS ABKHAZIA, UKRAINE, distributors, placing a particular corporate training programs.. BELARUS, KYRGYZSTAN AND emphasis on building a team and ARMENIA ARE COVERED BY tracking the progress towards ROSNEFT RETAIL NETWORK business goals and objectives on a weekly basis. Main areas for the ROSNEFT Company SUSTAINABILITY REPORT 2015 performance 24

GREATER CUSTOMER CENTRICITY REQUIRES HIGHLY PROFESSIONAL STAFF AND IS ACHIEVED THROUGH THE ONGOING MONITORING OF OPERATING AND SERVICE THE COMPANY HAS ADOPTED STANDARDS AND LEVERAGING A PRODUCT QUALITY CORPORATE TRAINING ASSURANCE PROGRAM TO MONITOR FUEL PARAMETERS ACROSS THE ENTIRE SUPPLY CHAIN – FROM PRODUCTION, STORAGE AND TRANSPORT Maintaining high product quality Customer-centric retail business ALL THE WAY TO THE END CONSUMER As the leader on the domestic gasoline Customer experience is another market, Rosneft views product quality important driver in the retail assurance as pivotal to its retail business. Greater customer centricity offering. The Company makes every requires highly professional staff effort to ensure its products meet and is achieved through the ongoing the requisite quality standards: it has monitoring of operating and service adopted a Product Quality Assurance standards and leveraging corporate program to monitor fuel parameters training. Rosneft uses a Mystery across the entire supply chain – from Shopper program to measure the production, storage and transport quality of service and retail offering all the way to the end consumer. at a given location on a regular basis. Rosneft is one of the most recognized The program covers filling stations and trademarks in oil product markets fueling sites selling more than 3,000 across the Company’s regions and tonnes of petroleum products per has historically been synonymous with year. The Company develops loyalty high-quality fuel. programs designed to increase visit frequency and customer spend on fuel and complementary goods. ROSNEFT Company SUSTAINABILITY REPORT 2015 performance 25

A TOTAL OF 400 FILLING STATION MANAGERS ACROSS 13 SUBSIDIARIES ATTENDED THE SESSIONS, WHICH WERE LED BY 23 TRAINERS FROM DISTRIBUTION ENTITIES

Advancing online services Employee training and supervised internship settings. performance improvement Two training programs for filling In line with its commitment to raising across the retail network station managers – Effective Station the stakeholder awareness of various Management and Customer-Centric aspects of its business, the Company Rosneft gives high priority to employee Behavior – were developed in 2015, created a number of online resources training. In 2015, the Company with training sessions conducted at for its retail and small-wholesale embarked on an extensive overhaul RN-Moscow as part of a pilot exercise. customers that were deployed in 2015. of its approach to intra-group A total of 400 filling station managers The online resources are designed to communications, conducting weekly across 13 subsidiaries attended provide the most recent updates on the conference calls, keeping close track the sessions, which were led by 23 Company’s retail network and increase of performance changes, and building trainers from distribution entities. A speed and agility in responding to more effective vertical and horizontal training film called “Filling Stations: customer needs. Retail customers are communications. The retail team has Key Requirements, Equipment and welcomed to visitwww.rosneft-azs. ru, a dedicated website that contains a full list of the Company’s filling stations and provides the most recent updates and special offers available in a selected region. Visitors can learn about fuel prices in a given region or at a given location and receive detailed information about fuel quality. Website content is updated on a daily basis. Small-wholesale customers can benefit from www.rosneft-opt.ru, a website containing all the required information about distribution entities, combined with a detailed map of fuel depots in a given region. Customers can place a preliminary order online and choose fuel depots that best meet logistics requirements. Another novelty in 2015 is a mobile application been flexible and agile in responding Operations” was made in 2015 for for active users of modern mobile to market changes and worked hard distance learning purposes across the platforms. Apart from a map feature to find the best tools to meet their retail network. Specialist workshops to locate and route the user through essential task: increasing end- on effective supplies and logistics the nearest filling stations, the mobile consumer sales of quality products. were organized for chief engineers of application provides information on Group entities engaged in oil product fuel types and prices and special offers In addition to on-job training, retail distribution. Refresher workshops that are currently available. employees benefit from the corporate were held for trainers from distribution professional development program entities to update them on revisions to improve their professional skills. to instructor manuals and student After completing training as a filling handouts that are used to train filling station attendant, trainees are exposed station staff. to practical experience through ROSNEFT Company SUSTAINABILITY REPORT 2015 performance 26

The Company provides a full cycle of training for its retail personnel

AT EACH STAGE OF THEIR PROFESSIONAL DEVELOPMENT, EMPLOYEES GET ACCESS TO TRAINING PROGRAMS THAT ARE AIMED AT MAXIMIZING THEIR POTENTIAL

The Company provides a full cycle HSE management across the •• A 10 % reduction in the transport of training for its retail personnel. retail network accident rate At each stage of their professional development, employees get access A number one priority on the •• A 15% reduction in accidental to training programs that are aimed occupational health and safety front is wastewater spills into soils at maximizing their potential. The maintaining accident-free operations, cyclical nature of the learning and promoting a safe working environment •• A 30% reduction in above-limit development process in combination for employees and contractors and wastewater discharges into soils with a multifaceted approach ensure ensuring the wellbeing of customers comprehensive reach and help achieve and local communities in the regions •• A 50% reduction in environmental excellent levels of progress. of the Company’s retail operations. fines Automating tank farm operations, In 2015, the Company adopted an winding down poorly performing assets •• A 20% reduction in water updated version of the Filling Station and deploying a loss management consumption for internal needs. Staff Handbook that lays out common system aimed at reducing operating corporate requirements governing costs help to mitigate the risk of Below are major HSE initiatives the sale of fuel, goods and services product loss and improve both completed in 2015. at Rosneft’s filling stations and occupational safety and environmental determines the competencies and protection. Workplace safety: areas of responsibility of their staff. The Company significantly improved •• To promote a strong culture of Monthly site visits that general its HSE performance in 2015, adopting safety, Rosneft conducted safety managers make to their subordinate a risk-based approach to safety culture assessments across the entities to meet with local staff management and environmental Group (with Informed Leadership and discuss a wide range of protection. A dedicated effort across workshops held at 15 entities), matters, including health, safety the Company’s retail businesses led introduced behavior-based safety and environment (HSE), contribute to the following results (in comparison audits and adopted a practice of significantly to improved performance with 2014): regular management meetings across the retail network and help with staff on HSE issues to identify areas for development •• 85% Group entities reported a zero and monitor HSE compliance. These incidence rate of injuries •• A process to record and analyze practices help to identify areas the causes of micro-injuries was for development, achieve greater •• A 24% reduction in the number of introduced performance efficiency and promote injuries an improved safety culture among •• The Company developed and employees. •• A 43% reduction in the number of introduced a set of measures to fires mitigate the risk of inebriation and related incidents. ROSNEFT Company SUSTAINABILITY REPORT 2015 performance 27

Occupational safety Transportation safety:

THE COMPANY SIGNIFICANTLY •• The Company developed an •• The Company conducted seasonal IMPROVED ITS HSE effective OHS Risk Management road safety campaigns and PERFORMANCE IN 2015, Program after completing a organized Defensive Driver training ADOPTING A RISK-BASED comprehensive review of main for 2,560 employees APPROACH TO SAFETY process equipment across its MANAGEMENT AND fuel storage facilities, performing •• The Company introduced safety ENVIRONMENTAL PROTECTION a detailed risk assessment and controls involving in-vehicle drawing up risk-mitigation action monitoring systems plans •• Draft technical requirements were •• The installation of fall protection developed for fuel tank trucks, systems on loading/unloading lubricant trucks, gas tank trucks racks is underway and bitumen road tankers.

•• The Company developed and Environmental protection: introduced an action plan to mitigate the risk of fire and •• The Company developed and explosion at filling stations due to approved project documentation the accumulation of flammable for 187 sanitary protection zones vapors in the above-ground at retail facilities and repaired/ sections of fuel tanks and vent constructed 22 local treatment pipes. facilities. ROSNEFT Management of sustainable SUSTAINABILITY REPORT 2015 development 28

CORPORATE GOVERNANCE

Corporate governance at Rosneft ROSNEFT CORPORATE GOVERNANCE STRUCTURE represents a comprehensive framework involving the entire range of relations among executive management bodies, the Board of THE GENERAL THE COMPANY’S SUPREME Directors, shareholders and other SHAREHOLDERS’ MEETING GOVERNING BODY stakeholders that is aimed at:

•• Observing the rights of shareholders and investors RESPONSIBLE FOR THE STRATEGIC GOVERNANCE OF •• Increasing the Company’s THE BOARD OF DIRECTORS THE COMPANY ON BEHALF OF, investment attractiveness AND IN THE INTERESTS OF, ALL SHAREHOLDERS •• Creating effective risk assessment mechanisms that can have an impact on the Company’s shareholder value THE COMPANY’S SOLE THE CHIEF EXECUTIVE OFFICER EXECUTIVE BODY •• Ensuring the efficient use and safety of funds contributed by shareholders and investors.

THE EXISTING CORPORATE THE COMPANY’S COLLECTIVE THE MANAGEMENT BOARD GOVERNANCE STRUCTURE EXECUTIVE BODY ENVISAGES THE SEPARATION OF RESPONSIBILITIES BETWEEN STRATEGIC GOVERNANCE, SUPERVISION Board, as the Company’s collective AND OPERATING executive body, are responsible for MANAGEMENT the day-to-day management of the Company. Executive management The General Shareholders’ Meeting bodies report to the Board of Directors is the Company’s supreme governing and the General Shareholders’ body. The Board of Directors Meeting. is responsible for the strategic governance of the Company on The adoption of the Code of Corporate behalf of, and in the interests of, all Governance24 in June 2015 (the “Code”) shareholders. The Chief Executive marked an important milestone in Officer, as the Company’s sole the Company’s corporate life. It is one executive body, and the Management of the core documents to establish

24 The Code of Corporate Governance is published on the Company’s website at www.rosneft.ru / www.rosneft.com. ROSNEFT Management of sustainable SUSTAINABILITY REPORT 2015 development 29

the underlying principles and reflect •• The deadline for disclosing the date Streamlining the activities of the the development of the Company’s of compiling the list of individuals Board of Directors corporate governance. The Code draws authorized to participate in an AGM on internationally recognized practices has been extended A self-assessment of the 2014/2015 and follows the key recommendations Board of Directors was conducted in of the Corporate Governance Code •• Travel instructions and a sample May 2015 based on a questionnaire approved by the Bank of Russia. power of attorney have been posted approved by the Human Resources and on the Company’s website Remuneration Committee. The self- In February 2015, the Board of assessment covered the composition Directors approved an action •• AGM materials also contain (i) and structure of the Board of plan (road map) to implement the details of the individuals who have Directors, its core processes, functions recommendations of the Bank of proposed items for the AGM agenda and rules of procedure. Russia’s Corporate Governance or candidates for nomination as Code. In 2015, the Company took directors, and (ii) supplementary The results from the self-assessment steps toward observing shareholder information, e.g. the opinion of were considered by the Human rights, streamlining the activities of the Company’s Board of Directors Resources and Remuneration the Board of Directors, establishing a on the AGM agenda (an extract Committee in June 2015, followed by a remuneration system for members of from the Minutes of the Board of number of performance improvement the Board of Directors and executive Directors relating to the approval initiatives, including, among others, management, as well as establishing of AGM’s agenda has also been risk management, internal control and posted on the Company’s website). information disclosure systems, as CONFORMITY WITH HIGHEST provided in the road map. The practice applied by the Company STANDARDS OF CORPORATE for the second straight year was GOVERNANCE AND GREATEST Observing shareholder rights formalized in the Charter and TRANSPARENCY ARE THE the Regulation on the General MOST IMPORTANT FACTORS The Company completed a number of Shareholders’ Meeting in accordance OF RAISING INVESTMENT initiatives relating to the preparation with the resolution of the General ATTRACTIVENESS AND for an Annual General Shareholders’ Shareholders’ Meeting of 15 June 2016. ECONOMIC ACTIVITY OF Meeting (AGM). In particular, the ROSNEFT following steps were taken as part of In 2015, the Company started a project preparing for the 2014/2015 AGMs: to launch an online account system for shareholders. The system is designed •• Shareholders were granted access to (i) facilitate communication with to relevant materials 30 days shareholders, (ii) provide access to in advance of the meeting, with AGM information through a secure such materials being available connection, (iii) respond to the for review from the same date requests of shareholders, (iv) enable either on the Company premises shareholders to participate in an AGM or on the premises of Reestr- via a PC or mobile device. RN, Rosneft’s registrar, or at shareholder centers ROSNEFT Management of sustainable SUSTAINABILITY REPORT 2015 development 30

THE LINK BETWEEN EXECUTIVE MANAGEMENT RENUMERATION AND PERFORMANCE ON THE APPROVED KPIS WAS FORMALIZED

(i) familiarizing newly elected Board •• Support the activities of the Board management renumeration and members with the Company’s of Directors and its committees performance on the approved KPIs activities, including the structure of which were established in accordance its management bodies, (ii) providing •• Contribute to implementing with the Company’s Long-term an opportunity to discuss strategically the disclosure policy involving Development Program. important matters at meetings held the information presented to in presentia, (iii) establishing regular securities markets and arrange Risk management and internal communications with members of the for the safekeeping of corporate control: Board of Directors, its committees etc. documents The Company’s Board of Directors The findings from the self-assessment •• Act as a liaison between the and Management Board approved the are summarized in the Corporate Company and regulators, trade following core documents to support governance section of the 2015 Annual organizers, the registrar and effective risk management and internal Report. professional participants of the control practices: securities market on matters within The Company also revised the Terms their remit •• The Policy on Internal Audit, of Reference for the Human Resources whereby the Internal Audit and Remuneration Committee to •• Enforce and monitor compliance Department is made functionally expand its functions relating to the with statutory and internal subordinate to the Board of assessment of the Board of Directors’ procedures aimed at observing Directors performance, independence checks the rights and lawful interests of on its members, establishing shareholders. •• The Company’s standards for an organization-wide incentive the Internal Control Framework framework, making disclosures on A more detailed disclosure on the and Corporate Risk Management remuneration policies and practices, Corporate Secretary, similar to that Framework. as well as shareholdings of members envisaged for the members of the of the Board of Directors, collective Company’s Board of Directors and In December 2015, the Company executive bodies and other key executive bodies, is presented in the conducted a corporate governance executives of the Company. 2015 Annual Report (with the relevant audit to assess progress toward disclosure requirement stipulated in implementing the key provisions In June 2015, the Board of Directors the new version of the Regulation on of the Corporate Governance approved the Regulation on the the Corporate Secretary). Code approved by the Bank of Corporate Secretary that reflects all Russia. The audit was based on the listing requirements of MICEX and Remuneration for members methodology recommended by the almost all of the recommendations of the Board of Directors and Federal Agency for State Property of the Corporate Governance Code executive management: Management (Rosimushchestvo).25 approved by the Bank of Russia. Under The audit found that Rosneft had the newly approved Regulation, the The Board of Directors approved a implemented 88% of the Bank of Corporate Secretary has the following new version of the Regulation on Russia’s recommendations, which responsibilities: Remuneration for Members of the is significantly above the 65% target Board of Directors, whereby Board recommended by Rosimushchestvo •• Contribute to improved corporate members may seek professional and signals a robust governance governance system and practices advice on remuneration-related framework. matters at the expense of the •• Act as a liaison between Rosneft Company. and its shareholders and provide input to the prevention of corporate The Board of Directors also conflicts approved the Standard for Rewards and Compensations for Executive •• Participate in arranging and Management and the Regulation holding general shareholders’ on the Corporate KPI System that meetings formalize the link between executive

25 Order No. 306 of 22 August 2014. ROSNEFT Management of sustainable SUSTAINABILITY REPORT 2015 development 31

BOARD OF DIRECTORS member of the Board of Trustees of •• Other approvals include: Gubkin State Oil and Gas University. THE BOARD OF DIRECTORS –– KPI performance results, annual Guillermo Quintero is a member renumeration and major project PLAYS A KEY ROLE IN of the Board of Directors and completion bonuses payable to CORPORATE GOVERNANCE the Human Resources and top executives for 2014 AND IS RESPONSIBLE FOR Remuneration Committee. With over –– Executive KPIs for 2015 PROVIDING STRATEGIC 15 years of experience in sustainable –– An Innovation Program progress development, he has specialized report for 2014 GUIDANCE TO THE COMPANY. competencies and skills across a –– A 2014-18 Energy Saving Program broad range of sustainability topics, progress report for 2014 and the Members of the Board of Directors including environmental compliance, 2016-20 Energy Saving Program have the requisite experience and occupational health and safety, anti- •• The Board of Directors considered skills in the area of sustainable corruption and fraud prevention. the audit findings in relation to development and act as patrons of Guillermo Quintero completed progress achieved in 2014 on high-profile cultural, environmental, training at Cambridge Institute for the Long-Term Development social and academic institutions. Sustainability Leadership. Program and approved an action plan aimed at improving the Andrey Belousov is the Chairman of Oleg Viyugin is a member of the Company’s operating performance, the Board of Directors, Aide to the Board of Directors, a non-executive transparency and investment President of the Russian Federation, director, the Chairman of the Strategic attractiveness Doctor of Economics, Honored Planning Committee and a member Economist of the Russian Federation. of the Audit Committee. As a member •• The Board of Directors considered From 2012 to 2013, served as Minister of the National Council on Corporate progress achieved in 2015 on the of Economic Development of the Governance and the Independent Long-Term Development Program Russian Federation; from 2008 to Directors Association, he contributes and approved an updated version of 2012, was in charge of the Department to the work of these two organizations the Program of Economics and Finance of the focused largely on sustainability. Government of the Russian Federation, Oleg Viyugin also sits on the Boards •• In accordance with Directive of responsible, among other duties, for of Trustees of the New Economic the Russian Government No. improving the investment climate School, the European University at St. 5024p-P13 of 13 July 2015, the and implementing target federal Petersburg and the Moscow Economic Board of Directors approved programs. Andrey Belousov is a chief School. internal regulations adopted by research associate at the Institute of the Management Board in 2016 Economic Forecasting of the Russian For details of other members of the to optimize and improve the cost Academy of Sciences. He was awarded Board of Directors, see Sustainability effectiveness of the Company’s the Medal of Honor (2009) and the Reports for 2013 and 2014. charity and sponsorship activities. Order of Alexander Nevsky (2016). In 2005, Andrey Belousov received Sustainability-related decisions of When considering the above a commendation from the Russian the Board of Directors in 2015 are resolutions, the Board of Directors President in recognition for his summarized below: relied on the recommendations of its contribution to the State Council of the relevant committees. Russian Federation. Sustainability-related decisions of the Board of Directors in 2015 are Alexander Novak is a member of the summarized below. Board of Directors and the Strategic Planning Committee, also holds office •• The following internal regulations as Minister of Energy of the Russian were approved: Federation; has competencies and experience across a broad range –– Code of Corporate Governance of sustainability topics, including –– Code of Business Ethics and responsible financing, non-financial Corporate Conduct risk management, business ethics, –– Environmental Protection Policy anti-corruption practices, HR –– Occupational Health and Safety management, occupational health Policy and safety, human rights, stakeholder –– Dividend Policy relations. At preset he acts as the –– Policy on Onshore Oil Production Chairman of the Board of Trustees of –– Policy on Offshore Hydrocarbon Moscow Power Engineering Institute Exploration and Production (National Research University) and a –– Policy on Gas Business ROSNEFT Management of sustainable SUSTAINABILITY REPORT 2015 development 32

SHAREHOLDER RELATIONS

Rosneft maintains strong relations with of the Company’s net profit reported •• A hotline maintained by the its shareholders by regularly providing under IFRS. Shareholder Relations Group of the them will any information they may need Corporate Governance Department; to exercise their respective rights. The dividends were paid at the time and switchboard numbers for receiving in the amount approved. and processing oral requests: It is committed to creating the most +8 (800) 500-11-00 favorable conditions for shareholder The Company also paid shareholders (toll-free within Russia); engagement in corporate governance. and heirs of deceased shareholders +7 (495) 987‑30‑60, On 17 June 2015, the Company held its dividends declared but not paid for prior +7 (499) 429-06-89; 2014 Annual General Shareholders’ periods due to the absence of current Meeting in St. Petersburg, a home city payment details after such details had •• Mailing address: 26/1 Sofiyskaya for many of its shareholders. been updated in the shareholders’ Naberezhnaya, 117997, Moscow register and/or with a nominee holder. Russia; Those shareholders who were unable to be physically present at Rosneft uses all reasonable endeavors •• Email: [email protected]; the meeting, could watch it online to maintain accurate and reliable in Buzuluk, Gubkinsky, Krasnodar, records of title to shares and to ensure •• Fax: +7 (499) 517-86-53. Moscow, Neftekumsk, Nefteyugansk, that shareholders are free to dispose Nizhnevartovsk, Orenburg, Samara, of their shares with no limitations. The 2015 statistics include Usinsk, and at the Vankor field. The shareholders’ register is kept by Reestr-RN, a registrar company holding •• 9,005 phone calls All shareholders were given equal a perpetual license to engage in relevant opportunities to express their opinion professional activities. Reestr-RN is •• 664 letters on agenda items and to direct questions a reputable company that has all the at, and receive answers from, speakers, requisite resources, including technical •• 102 emails members of the Board of Directors, capacity, to maintain records of title to the Chairman of the Management shares and ensure that shareholders •• 642 dividend payment requests for Board, members of the Audit may exercise rights over their shares. prior periods Commission, independent auditors, candidates for executive and controller For advice on exercising shareholder Shareholders were provided answers positions, analysts and consultants rights, updating shareholder details or to all questions, including those either orally during the meeting or in dealing in own securities, shareholders relating to dividend accrual and writing promptly after the meeting. may contact the head office or branches distribution, ownership and records Shareholders participating in the of Reestr-RN, transfer agent offices at of title, participation in General meeting online were also provided an Rosneft’s partner banks or shareholder Shareholders’ Meetings, access to opportunity to ask questions. centers in the regions where significant information, etc. numbers of shareholders reside. Having equal and fair access to profits Answers to the most frequently asked distributed by the Company through The Company uses the following questions and other information about dividends is a fundamental right of channels to maintain effective the Company’s activities can be found shareholders. The Annual General communications with shareholders and in the FAQ section of the Rosneft Shareholders’ Meeting approved help them benefit from their rights to the website. dividends for 2014 in the amount of RUB greatest extent possible: 87.0 billion (RUB 8.21 per share), or 25% ROSNEFT Management of sustainable SUSTAINABILITY REPORT 2015 development 33

St. Petersburg International Economic Forum is one of the biggest platform for cooperation with investors

INVESTOR RELATIONS

In 2015, Rosneft continued to work combined assets under management The Company is in a constant closely with its institutional investors in excess of US$95t. Rosneft exchange with rating agencies, with drawing on international best maintains regular communications conference calls and in-person practices, with full transparency with the investment community by meetings held on a regular basis. regarded as a number one priority. providing meaningful information and Rosneft’s credit ratings held above the responding to information requests, country’s sovereign rating in 2015. The increasingly diversified investor including those on sustainability base is further proof that the aspects. For detailed responses, see The Company is fully committed to Company’s securities are attractive relevant sections of this Report. transparency. At the 18th Annual to investors. Company management Report Competition organized by had about 150 individual and collective Positive changes in the Company’s Moscow Exchange and the RCB media meetings with leading investment communication strategy in 2015 group in 2015, Rosneft’s 2014 Annual funds to discuss a broad range of have not gone unnoticed and Report was recognized as best annual topics that are top-of-mind for the drawn favorable response from report among companies with the investment community, including the investment community. The market cap above RUB 200 billion. operations, financial resource Company organized a site visit for management and sustainable investors to meet local and central development. The Company’s CEO management teams face to face was featured as a speaker at nine and obtain a first-hand impression high-profile international investment of Rosneft’s production processes, forums. robust occupational health and safety practices, social commitments and Some international institutional environmental excellence. investors place a prominent focus on the Company’s sustainability The Company also holds quarterly initiatives and corporate governance earnings release conference calls practices in making investment for analysts and investors, attended decisions. Among the Company’s by its finance and operations equity investors are signatories to executives. The Company’s website the Carbon Disclosure Project (CDP), provides access to relevant such as BlackRock Inc., TIAA-CREF information, including press releases, Investment Management, Goldman presentations, annual reports, Sachs Asset Management LP, Robeco sustainability reports and key facts Institutional Asset Management BV, about resolutions adopted by the SEB Varahaldus AS and others. CDP Board of Directors. Public information is an independent non-for-profit about shareholders holding more than organization that holds the world’s 1% of the share capital is updated on largest database of corporate climate a monthly basis. The Company makes change information and is supported standard quarterly disclosures of its by 822 institutional investors with financial results. ROSNEFT Risk management SUSTAINABILITY REPORT 2015 and internal control 34

MANAGEMENT OF SUSTAINABLE DEVELOPMENT

ETHICAL MANAGEMENT The Code reflects the Company’s of personal brochures containing FRAMEWORK corporate culture and asserts the the Code of Business and Corporate commitment of its employees to a high Ethics. IN 2015 THE COMPANY standard of business ethics. The Code sets out the Company’s core goals The Code update was backed by a ADOPTED A NEW VERSION and values, practices and principles strong communication support – OF THE CODE OF BUSINESS for engaging with its stakeholders, publication on the official web site and AND CORPORATE ETHICS protecting the corporate interests in corporate periodicals, a dedicated THAT IS APPLICABLE TO ALL and reputation, and preventing section on the corporate web portal, ENTITIES OF ROSNEFT GROUP (THE “CODE”).

violation of the adopted policies and leaflets on information boards at Group standards. Along with finalizing the entities, email distributions – putting it Code, the Company developed an in the spotlight of discussions among internal regulation that sets down Company employees. the Communication Procedure for Company Employees to Follow in All Group entities have appointed Applying Rosneft’s Code of Business ethics champions who monitor and Corporate Ethics. compliance with the Code, settle ethical conflicts and provide advice on The Code implementation activities applying the Code. covered all employees at the Company’s and Group entities’ The Code implementation activities headquarters and included about 4,000 will continue in 2016, taking a variety information meetings and distribution of forms, such as publications in ROSNEFT Risk management SUSTAINABILITY REPORT 2015 and internal control 35

THE INTERNAL REGULATIONS IN PLACE ACROSS THE COMPANY ARE FULLY COMPLIANT WITH THE METHODOLOGICAL RECOMMENDATIONS OF THE RUSSIAN MINISTRY OF LABOR AND SOCIAL PROTECTION FOR ORGANIZATIONS TO HELP THEM DESIGN AND IMPLEMENT ANTI-CORRUPTION MEASURES

corporate periodicals and on the COMPLIANCE FRAMEWORK web portal, a creativity competition, monitoring of employee awareness During the reporting period, the of the Code provisions and Company Company maintained its efforts to values, implementation of the strengthen and develop the compliance Communication Procedure for framework that ensures Rosneft’s Company Employees to Follow in compliance with applicable laws, Applying the Code, training courses for business ethics standards, and internal employees, etc. regulations.

The business ethics hot line continues The Company implements a set of to operate as a means of getting internal regulations covering the feedback on ethics issues. Any key compliance areas, including the employee or stakeholder who has Code of Business and Corporate information to report on the application Ethics, the Policy for Counteracting THE COMPANY HAS PUT of, and compliance with, Rosneft’s Corruption and the Policy for TOGETHER AND IS CARRYING Code of Business and Corporate Ethics Countering Corporate Fraud. In 2015 OUT A PROGRAM OF ON-SITE can send it to [email protected]. In 2015, the Compliance Framework Working AND DISTANCE TRAINING IN the ethics hotline received 145 reports Group of the Business Ethics Council COMPLIANCE – twice as many as in the previous analyzed internal regulations in year – a sign of its growing credibility. terms of coverage of the compliance Over half of the reports dealt with HR areas and pointed out overlapping issues. All reports were considered by and uncovered areas. The internal the respective business or functional regulations in place across the unit. There is an ongoing exchange of Company are fully compliant with the information with the Security Service methodological recommendations that supervises the Company’s security of the Russian Ministry of Labor and hotline. Social Protection for organizations to help them design and implement anti- corruption measures.

The Company has put together and is carrying out a program of on-site and distance training in compliance. The on-site training course on the systemic approach to the development of the compliance function is taught at the Company’s headquarters and is mandatory for its staff. In 2015, over 700 employees took this course at the Company’s and Group entities’ headquarters. The distance training on countering corruption and fraud has been available to the headquarters staff of the Company and some ROSNEFT Risk management SUSTAINABILITY REPORT 2015 and internal control 36

OVER 4,000 OVER 700

EMPLOYEES AT ROSNEFT HAD TAKEN EMPLOYEES TOOK THE ON-SITE A DISTANCE TRAINING ON COUNTERING TRAINING COURSE ON THE SYSTEMATIC CORRUPTION AND FRAUD APPROACH TO THE DEVELOPMENT OF COMPLIANCE FUNCTION

Group entities since July 2015. Over PREVENTION OF FRAUD and responsibilities of process 4,000 employees at Rosneft had taken AND CORRUPTION owners, and how they should it as of the end of the year. To complete respond to incidents identified, the distance training, employees need AS A PUBLIC COMPANY, including instances of corruption, to take a test and those who pass and report to management the ROSNEFT TAKES AN ONGOING it receive a certificate. In addition, results of their investigations Rosneft, in cooperation with its foreign EFFORT TO INCREASE partners, delivered training courses on TRANSPARENCY OVER ITS •• Implementing in Group entities, countering corruption and corporate OPERATIONS IN THE RUSSIAN including foreign operations, the fraud to JV staff in the regions where it policies for countering corruption FEDERATION AND ABROAD. has a presence. and corporate fraud approved by Rosneft’s Board of Directors in late In 2015, the Company enhanced the The Company is committed to follow 2014, with adjustments to comply communication component of its both international and Russian with local laws . compliance activities by preparing five anti-corruption laws, its internal new issues of All about Compliance regulations designed to counter The Company continued ongoing bulletin and two articles on the conflict corruption, as well as anti-corruption communication with the national law of interest and the security hotline for laws applicable in the UK, the US and enforcement bodies in line with the Our News information publication. other countries where the Company is agreement signed earlier with the operating or planning to operate. Russian Ministry of Internal Affairs, Further development of the in order to prevent, identify and compliance framework will follow the In 2015 the Company approved a investigate instances of corruption road map that includes a number of comprehensive anti-fraud and anti- and fraud. Alongside with that it activities and events in 2016-18. corruption program and put it into maintained ongoing communication action by: with law enforcement bodies of foreign countries and the security services of •• Carrying out an information its overseas partners, relying where campaign to embed the culture of possible on the existing Security zero tolerance to corruption and Cooperation Agreements, as well as fraud among Company employees with Russian diplomatic missions abroad in the regions where the •• Designing and launching an Company operates. Anti-Corruption section on the Company’s official web site where The Company implements safeguards it published the declaration of to protect corporate assets which zero tolerance to corruption, as include rigorous control of contract well as international, national and procedures, prices, discounts, and local laws and regulations and affiliation. There was an investigation other information materials on this focusing on certain counterparties, matter their management and ultimate beneficiaries, including those related •• Inacting a regulation on the Internal in any way to Rosneft’s current or Investigation Procedure, which former employees. The investigation that sets down the process of identified instances of Company arranging and carrying out internal employees being involved in fraudulent investigations at Rosneft, the rights or corrupt conduct; those found ROSNEFT Risk management SUSTAINABILITY REPORT 2015 and internal control 37

102,346

COMPANIES THAT APPLIED TO TAKE PART IN PROCUREMENT PROCEDURES WERE EXAMINED IN 2015

IN 2015, THE 24/7 SECURITY HOTLINE RECEIVED 13,227 CALLS, A QUARTER MORE THAN IN THE PREVIOUS YEAR. IN 12,054 CASES, THE CALLERS WERE GIVEN HELPFUL INFORMATION AND CLARIFICATIONS, AND 43% OF THE INVESTIGATED REPORTS PROVED FULLY OR PARTIALLY TRUE. THIS HELPED IDENTIFY/PREVENT DAMAGE OF RUB 242.9 MILLION

guilty were held responsible, some The 24/7 security hotline is an The results of operating the security employees were dismissed, and some essential part of the Company’s anti- hotline were reported to the Board were charged with a criminal offense, fraud and anti-corruption framework. of Directors on a quarterly basis, including in foreign jurisdictions, with In 2015, it received 13,227 calls, a and information on operating the support from the Security Service. quarter more than in the previous year. security hotline was published in the In 12,054 cases, the callers were given Company’s topical bulletin, All about In addition, 102,346 companies that helpful information and clarifications, Compliance. applied to take part in procurement and 43% of the investigated reports procedures were examined and 5,412 proved fully or partially true. This The plan for 2016 contains a number of them were rejected for various helped identify/prevent damage of activities to enhance the anti- reasons. of RUB 242.9 million. As a result, corruption practices, including the disciplinary sanctions were imposed development of internal regulations During the reporting year, the on 88 employees and employment on business entertainment and Company worked out an Action contracts were terminated with management of conflicts of interest. Program to prevent any instances, 29 employees. In 17 cases, the Apart from that the Company is looking and preclude the occurrence, of investigation materials were provided to improve the process of basic anti- theft, fraud or damage in dealing in to law enforcement bodies for initiating corruption training and appraisal of hydrocarbons and related products. criminal prosecution. In addition, its employees, further develop the In addition, it developed practical the Company lodged claims against security hotline, etc. recommendations to identify dishonest contractors for improper fulfillment purchasers that use passports of of their contractual obligations, quality and declarations of conformity identified conflicts of interest and for Company products in order to sell other misconduct, introduced security counterfeit products. measures, tightened the accounting rules for inventories, and took other preventive steps. ROSNEFT Risk management SUSTAINABILITY REPORT 2015 and internal control 38 RISK MANAGEMENT AND INTERNAL CONTROL

ROSNEFT HAS IMPLEMENTED incorporates current Russian laws and units on key risks, and preparing risk AND IS CONTINUOUSLY regulations, federal rules on auditing, reports at the level of Group entities, and recommendations of international business and functional clusters and at IMPROVING ITS RISK professional organizations in risk the corporate level. MANAGEMENT AND INTERNAL management and internal control. CONTROL SYSTEM (THE In addition, the Standard sets down the “RM&ICS”) IN COMPLIANCE The Board of Directors of Rosneft communication procedure and format reviews the design, operation and that key risk management participants, WITH RUSSIAN LAWS, effectiveness of the RM&ICS at including the Risk Department, the RECOMMENDATIONS least once a year and recommends Internal Control Department, the OF THE CORPORATE improvements if necessary. Internal Audit Function, as well as GOVERNANCE CODE APPROVED functional and business clusters, RISK MANAGEMENT should follow in managing all current BY THE BANK OF RUSSIA, financial and business risks. The AND INTERNATIONAL BEST The risk management process is Standard establishes a consistent PRACTICES. regulated by the Corporate-wide Risk mechanism for identifying and Management System (the “CRMS”) assessing risks, developing risk Standard approved in 2015. The CRMS management activities and follow-up The RM&ICS is a combination of risk management and internal control THE RM&ICS OPERATES IN LINE WITH THE GOALS, OBJECTIVES AND processes that operate on the basis of PRINCIPLES ESTABLISHED BY THE COMPANY’S POLICY ON THE RISK the existing organizational structure, MANAGEMENT AND INTERNAL CONTROL SYSTEM internal policies and regulations, risk management and internal control procedures and techniques applicable across all management standard follows the methodological monitoring of their implementation and levels and functional areas of the guidance of the Russian Ministry risk levels by business and functional Company, enabling the Company to of Economic Development for the clusters. identify, assess and respond to risks development of a regulation on the risk in a timely manner. The system is management system. During the reporting year, the designed to strike an optimal balance Company carried out the following between increase in the Company’s The purpose of the Standard is to activities to enhance its risk value, profitability and risks, and to support the implementation and management system: ensure its financial stability, efficient operation of the corporate-wide risk performance, integrity of its assets, management system. The Standard •• Continued quarterly monitoring of compliance with laws and internal sets down the corporate-wide risk its current financial and business regulations, and timely financial management procedure, uniform risks and preparation of risk reporting. requirements for the risk management reports infrastructure, the communication The RM&ICS operates in line with between Rosneft and Group entities in •• Introduced the CRMS in five more the goals, objectives and principles the risk management processes, and Group entities as part of a systemic established by the Company’s Policy general requirements for completing effort to put key Group entities on the Risk Management and Internal risk reporting forms. The Standard under the CRMS umbrella Control System. In 2015 the Company requires regular updating of top approved the updated Policy that management and heads of business ROSNEFT Risk management SUSTAINABILITY REPORT 2015 and internal control 39

•• Prepared an annual report on quantification model, and reported Key risks related to the strategic risks covering the period to management the results of Company’s business through 2030 assessing the Company’s exposure to market risks. Sector, country, regional, financial •• Extended the list of key risks for and legal risks to which the Company which quantification algorithms The Company continues to operate is exposed are described in detail in using accumulated statistics have an effective internal network of risk Appendix 2 to the 2015 Annual Report. been developed champions comprising 50+ employees This section contains a detailed of various business units. The risk discussion of risks to sustainable •• Estimated damage and took steps champions help identify and assess development, such as those related to resolve insurance claims under risks, prepare risk reports and to HR and social policy, occupational all insured events that occurred in coordinate risk activities across Group health and safety and environmental 2015; in particular, the Company entities. Training events are held for protection. settled claims for losses from the the risk champions on a regular basis. accident at Achinsk Refinery In particular, in 2015 the Company Risks related to prices for crude supported the development of a two- oil, gas and petroleum products •• Regularly evaluated the day master class in Risk Management, impact of market risks (price, held 7 workshops, and trained Prices for the Company’s products currency and interest rate risks) 134 employees of Group entities and directly impact its financial and on the Company’s financial Company headquarters as part of the economic performance and any price performance using the market risk corporate in-house training system. decrease may impair the profitability of oil and gas production by Rosneft. This will in turn decrease the amount of its commercially viable reserves and the cost-effectiveness of exploration activities. The Company can mitigate this risk, should it realize in case of a price drop or a significant gap between the domestic and world market prices, by re-distributing its commodity flows and managing its operating costs and capital expenditure.

Risks related to the reliance on monopoly providers of oil, gas and petroleum products transportation, and their tariffs

The Company’s business is built around the transportation of its oil, gas and petroleum products by monopoly service providers, such as Transneft, Russian Railways and Gazprom. It means that the infrastructure they use ROSNEFT Risk management SUSTAINABILITY REPORT 2015 and internal control 40

and tariffs they charge are beyond the Risks related to geography and Company’s control. climate

Risks related to the sale of gas The Company operates in the regions produced that have a steady climate and are rarely affected by natural calamities The key risk factor potentially adverse and disasters. However, extremely to the Company’s gas sales is that low temperatures in winter may customers will fail to take their impede the operation of its oil and gas contracted amounts of gas. Gas sales producing entities in northern regions. are also impacted by:

•• Failure to meet Gazprom’s quality requirements for gas accepted into its gas transmission system, resulting in the risk of restrictions on the amount of gas fed into the system and penalty sanctions from Gazprom

•• The risk that Gazprom will restrict the amount of gas accepted into the gas transmission system for the undistributed amount of gas.

Risks related to the amount of actual reserves

The oil and gas reserves data are estimates that largely rely on analytics performed by Degolyer and MacNaughton (D&M), the Company’s independent advisor on oil and gas Oil exports from the Black production technology. Actual reserves Sea terminals to ports in the may differ from these estimates. Mediterranean may be limited by the transit capacity of the Bosphorus and Risks related to competition weather conditions (gale-force winds) in the Black Sea in autumn. The Baltic The oil and gas sector is highly Sea terminals and De-Kastri may be competitive. Rosneft faces competition closed due to a severe ice situation mainly from other Russian oil and gas in winter. Lengthy downtime at the companies and is a sector leader both export terminals may adversely affect in Russia and globally, which gives it a Rosneft’s performance and financial significant competitive advantage. position. ROSNEFT Risk management SUSTAINABILITY REPORT 2015 and internal control 41

Risks related to adverse to have a greater impact on the environmental effects, financial performance of individual occupational safety and health business units and the Company as a that may result in substantial whole. The analysis of HR and social costs performance risks identified risks related to the Company fulfilling its All stages of oil and gas operations – social commitments, and those arising exploration, production, refining and from a shortage of well-qualified transportation – are inherently exposed staff in certain narrowly specialized to risks that affect environment, areas. Rosneft manages these risks occupational safety and health. The most common of these risks is the risk of accidents and incidents at production facilities resulting in oil spills, land contamination, harmful emissions above the allowable level, and pollution of surface water bodies, and occupational accidents affecting employees of the Company and its contractors.

The Company puts in considerable effort to mitigate the risk of such accidents and incidents: analyzes their reasons, adjusts the existing processes as required, enhances control over the quality of equipment, trains employees in occupational safety and health, and maintains high readiness to abnormal situations. The Company intends to continue its risk mitigation efforts by enhancing hazard identification and risk assessment processes, and through various activities set down applying a risk-oriented approach to in its HR policy for recruiting and planning its HSE activities. retaining highly qualified personnel, and develops and improves the existing Risks related to HR and social policies and procedures covering HR, policies social development and corporate culture. The success of Rosneft’s business rests on its people. With more work performed in challenging conditions, e.g. offshore, and involvement in international projects, employee motivation and qualification tend ROSNEFT Risk management SUSTAINABILITY REPORT 2015 and internal control 42

Country and regional risks business performance and give rise to and land use and town planning and currency risk. also include the associated risks Rosneft operates in all federal districts resulting from regulatory changes of the Russian Federation and takes Natural hedging is inherent in a that affect HSE. Rosneft performs into account their development business that has revenue and ongoing monitoring of changes in outlook as well as the potential social liabilities denominated in foreign laws and regulations, and senior and economic risks identified in currency because two opposing factors courts’ decisions, and analyzes law the Medium-term Socio-economic are at play mitigating the effect of enforcement practices. Development Program of the Russian exchange rate risk on the Company’s Federation. On the other hand, financial and business performance. In case of any systemic problems the Company has experienced the in law enforcement, Rosneft comes exposure of its business to geopolitical The Company is also exposed to credit up with proposals for improving the risks. risk that arises if a counterparty current regulations and turns to fails to fulfill its financial obligations government bodies for clarification and Apart from that Rosneft faces the to Rosneft. The Company applies a advice regarding a particular provision risks of operating outside Russia, comprehensive approach to managing or requirement. particularly in developing markets its credit risk, which requires the that are exposed to greater political, monitoring of counterparties’ financial The Company takes into consideration economic, social and legal risks than status by analyzing their financial the EU and US sanctions and monitors more developed economies. The risks statements. them continuously in order to mitigate of operating in developing economies any adverse effects. are in many respects similar to or even Liquidity risk arises from the higher than Russian country risks. realization of other risks inherent in the Company’s business. Therefore, Financial risks measures that manage price, currency and interest rate risks also work to Financial risks, including currency, manage liquidity risk. interest rate, credit and liquidity risks, are an important component of the Legal risks Company’s overall risk exposure. Legal risks inherent in the Company’s Rosneft generates a substantial business include risks related to portion of its revenue from export changes in currency, tax, customs, sales of oil and petroleum products. antitrust and procurement laws and Naturally, the fluctuations of the ruble regulations, and litigations involving exchange rate against other currencies the Company. In addition, legal risks impact the Company’s financial and pertain to the regulation of subsoil ROSNEFT Risk management SUSTAINABILITY REPORT 2015 and internal control 43

RN MONITOR MONITORS KEY PERFORMANCE INDICATORS OF THE ENTIRE BUSINESS AND INTERNAL CONTROL SIGNIFICANT PROJECTS THE INTERNAL CONTROL SYSTEM (THE “ICS”), ALONG WITH THE CORPORATE-WIDE RISK MANAGEMENT SYSTEM IS AN ESSENTIAL COMPONENT OF THE RISK MANAGEMENT management practices: complete down key performance characteristics AND INTERNAL CONTROL information on business process risks for the ICS, the list and objectives of SYSTEM. enables management to take effective its processes, and the main areas decisions and attain the goals it has of communication between system The ICS is a comprehensive framework set by preventing undesirable events participants. of organizational measures, policies, in business processes in a timely guidelines, corporate standards, manner. In order to address these During 2015, the Company carried out and control procedures designed to issues, Rosneft has put in place an the following events and initiatives to mitigate business process risks, and information system – RN Monitor – that enhance the ICS: actions taken by owners and operators monitors key performance indicators of the Risk Management and Internal of the entire business and significant •• Designed risk and control matrices Control System to ensure proper projects. The program supports for 14 business processes in place running of the business. Rosneft day-to-day supervision and decision- at Rosneft and 16 Group entities operates the ICS to ensure its financial making by top management and heads (over 100 matrices) indicating stability, strike an optimal balance of business units, and is accessible design deficiencies in process between increase in the Company’s online from computers and mobile control procedures, and improved value, profitability and business- devices for viewing results, analytics the design of control procedures process risks, run its business in a and reports on the most critical areas by taking steps to eliminate the smooth and efficient manner, maintain of the Company’s operations. The deficiencies the integrity of its assets, identify system processes about a thousand and correct or prevent irregularities, production, financial and economic •• Designed model risk and control comply with applicable laws and indicators, monitors over a hundred matrices for key business internal regulations, perform timely key projects and stores information on processes and implemented and reliable financial reporting, more than 900 entities of the Group. standard control procedures at and thus improve the Company’s Group entities investment appeal. The Company holistically implements and continuously develops its ICS in •• Conducted regular training The ICS helps achieve the Companies line with the corporate standard on on the ICS for employees of goals by supporting high-standard the Internal Control System that sets Rosneft, Group entities and joint ventures; designed and ran a multimedia training course on the fundamentals of setting up a risk management and internal control function

•• Updated the overall corporate compliance program as part of the Working Group’ effort to develop the Company’s compliance framework; conducted training for top managers, heads of business units and employees, including distance courses, such as the multimedia course on countering corruption and fraud). ROSNEFT Stakeholder engagement SUSTAINABILITY REPORT 2015 44

STAKEHOLDER ENGAGEMENT

ACCORDING TO THE POLICY and roundtables the Company holds in the town of Nogliki, the Sakhalin ON REGIONAL DEVELOPMENT regularly in the regions of operation Region, as part of public consultations AND COOPERATION WITH to share opinions and maintain on the 2016-17 integrated geophysical CONSTITUENT ENTITIES OF partner relationships with the local survey program at the Vostochno- THE RUSSIAN FEDERATION, stakeholders and regional government Pribrezhniy license block. The general representatives. public stakeholders could examine ROSNEFT’S STAKEHOLDERS the program materials, including INCLUDE ITS PARTNERS PUBLIC CONSULTATIONS ON THE environmental assessment, ask AND COUNTERPARTIES, ENVIRONMENTAL FOOTPRINT OF questions and put forward survey INTERNATIONAL AND PLANNED ACTIVITIES implementation suggestions to RN- Shelf-Dalniy Vostok staff and program NATIONAL BUSINESS Rosneft Group entities hold public developers. ASSOCIATIONS, NON-PROFIT consultations on the results of AND NON-GOVERNMENTAL assessing the environmental footprint In 2015 the Company updated its ORGANIZATIONS, of any planned business activities in integrated marine geophysical survey the regions of operation, as required by program, including environmental EDUCATIONAL INSTITUTIONS, Russian laws. assessment, for the Tsentralno- AS WELL AS ITS EMPLOYEES, Barentsevskiy block on the shelf of GENERAL PUBLIC AND In April and December 2015, RN-Shelf- the Barents Sea. The program won the OTHER PERSONS THAT ARE Arctic held two public consultation approval of the local community after meetings in the settlement of public consultations in the town of INTERESTED IN COOPERATING Iskateley, Zapolyarniy District, Nenets WITH THE COMPANY OR Autonomous Okrug. The discussion RELY MORE OR LESS ON ITS focused on the engineering survey OPERATIONS IN THE REGIONS and integrated geophysical survey programs, including environmental WHERE IT HAS A PRESENCE, assessment, at the Yuzhno-Russkiy AND EXCLUDE PUBLIC AND license block. GOVERNMENT AUTHORITIES. In February 2015, RN-Exploration held successful public consultations Rosneft uses various ways to engage in the town of Gelendzhik over the with its stakeholders and in doing Yuzhno-Chernomorskiy license so it always shows respect for their block. The participants considered interests, maintains ongoing contacts, the marine geochemical exploration and promptly provides them with and geological engineering survey information on key developments in its program, including environmental business. The mechanisms of engaging assessment, that were part of the with the key groups of the Company’s integrated marine engineering survey stakeholders, such as employees and at the Yuzhno-Chernomorskiy license investors, are described in detail in block on the continental shelf of the the following chapters of this Report. Black Sea. The most important of them are public consultations on the environmental In December 2015, RN-Shelf-Dalniy footprint of any planned activities Vostok carried out an opinion poll ROSNEFT Stakeholder engagement SUSTAINABILITY REPORT 2015 45

KEY TOPICS OF ROUNDTABLE DISCUSSIONS:

• Regional development • Environment, safety and health • Contribution to the development of regional economy and infrastructure Nickel, Pecheneg District, in December ROUNDTABLES IN THE KEY • Social responsibility and 2015. The program materials were REGIONS OF OPERATION charity also approved by the Murmansk • Education regional administration, the municipal Every year the Company holds administration of the Pecheneg District roundtable discussions in the key and the Federal Fishery Agency. regions of operation. The ninth series of 15 roundtables took place in In the towns of Ola, Magadan Region, 2015. Their participants came from and Okhotsk, Okhotsk Municipal production entities, refineries and District, Khabarovsk Krai, public distributors, representing all stages of consultations focused on the project the production chain. documentation for the construction of exploration wells on the Magadan-1 The purpose is to have a meaningful block of federal significance on the discussion of pressing questions northern continental shelf of the around the economic, social and Okhotsk Sea and the Lisyanskiy environmental areas of cooperation block of federal significance on the between Rosneft and Group entities on northwestern continental shelf of the the one hand and regional government Okhotsk Sea. authorities and stakeholders on the other, including public organizations, Key topics of roundtable educational and academic institutions, discussions communities of indigenous small- numbered peoples of the North, The meetings with stakeholders business partners, mass media, considered various topics that can and general public in the regions of be arranged into the following major operation. groups.

In 2015 roundtables took place in the Regional development following towns and cities: Angarsk (Irkutsk Region), Krasnodar and Information about Rosneft’s plans Tuapse (Krasnodar Krai), Igarka and and prospects for the development Baykit (Krasnoyarsk Krai), Orenburg of Group entities is of particular (Orenburg Region), Usinsk (Komi importance to its stakeholders Republic), Izhevsk (Udmurt Republic), because the Company exercises a Samara (Samara Region), Saratov significant influence on the economic (Saratov Region), Yuzhno-Sakhalinsk and social development of the regions (Sakhalin Region), Stavropol (Stavropol of operation, primarily as a major Krai), Komsomolsk-on-Amur employer and taxpayer. (Khabarovsk Krai), Khanty-Mansiysk (Khanty-Mansi Autonomous Okrug – The discussions at the 2015 Yugra), Gubkinskiy (Yamalo-Nenets roundtables revolved around issues Autonomous Okrug). that usually cause concern, such as the completion deadlines of the Company’s current projects, including refinery upgrades, construction of gas ROSNEFT Stakeholder engagement SUSTAINABILITY REPORT 2015 46

distribution stations and oil pipelines, treatment of oil sludge and lenses of Contribution to the development and new filling stations. Consumers petroleum products, disposal of brines of regional economy and come up with proposals as well. released to surface water, etc. infrastructure For example, the participants of the roundtable in Krasnodar discussed It is also important for the Company Group entities make a substantial with the Company whether it can to communicate with government contribution to the development of increase its presence on the liquefied authorities and non-governmental regions where they operate. The gas market, including gas supply to organizations in case of an emergency Company is a major employer and households for heating. situation. The roundtable discussion facilitates the development of related in Usinsk emphasized the Company’s industries, upgrade of regional The issues of importance to active involvement in resolving infrastructure and higher investment stakeholders include the Company’s problems that arise from emergency potential of the regions. medium- and long-term plans to situations both at the Company’s implement investment projects. facilities and in the region. In Orenburg, the stakeholders Apart from that stakeholders want to welcomed the Company’s decision understand the outlook for social and Monitoring of contractor performance to set up a Board of Suppliers economic cooperation between the and prevention of any wrongdoing and Contractors, and noted the Company and its regions of operation were in the spotlight of roundtable effectiveness of meetings with in order to develop scenarios for discussions as well. The participants potential contractors both at the regional social and economic pointed to the need of engaging the Company’s premises and at development forecast. qualified contractors to repair and roundtables and workshops at regional replace equipment used by the enterprises. Environment, safety and health Company. The participants of the roundtable in Issues that usually come up for Along with issues common to most Igarka expressed their gratitude to roundtable discussions include regions, the roundtables addressed Rosneft for the reconstruction of the mitigating the environmental matters specific to individual entities local airport after which it was able to footprint of Rosneft’s operations and of the Group. The participants of the operate new types of aircraft, increase maintaining occupational safety and roundtable in Yuzhno-Sakhalinsk the total number of flights and the health at Group entities. raised questions concerning the total freight carried. Many regions containment and treatment of natural suggest that the Company take part in Roundtable participants thought much oil seeps, proposed educational events the reconstruction and construction of of and appreciated the Company’s to improve the culture of petroleum local roads, construction of landfills efforts in these areas over the past product consumption, and discussed and other infrastructure facilities, and year. The participants of the roundtable the Company’s plan to limit the impact provide its equipment for local utility in Tuapse pointed out that the upgrade of its operations on biodiversity. In services. of the petroleum product pipelines Saratov, the roundtable participants eliminated the risk of petroleum suggested introducing occupational In Stavropol, the stakeholders products leaking into the ground. health passports for employees to proposed a joint effort to tackle the Furthermore, enterprises announced improve the monitoring of their health, counterfeit fuel in the region, and their plans to repair the accumulated and discussed with Company the in Khanty-Mansiysk the discussion environmental damage, including possibility of its involvement in the focused on the Company’s plan to the liquidation of abandoned drilling environmental education of youth. move non-operating oil production sites and wells, restoration of land, facilities out of town. ROSNEFT Stakeholder engagement SUSTAINABILITY REPORT 2015 47

Social responsibility and charity Education that included Open House Weeks at Rosneft entities, excursions to the Every year Rosneft carries out Involvement in educational projects Company’s oil fields, individual advice charitable projects that promote the is still another proof of Rosneft being on choosing a career, presentations of social and economic development of an active participant in the life of its skills required by Rosneft, as well as its regions of operation. The words regions of operation. Many roundtable trainings, lectures and conferences. of gratitude to Rosneft were spoken participants highlighted the success of at many roundtables to acknowledge Rosneft Classes as an effective way to The roundtable participants in Angarsk the support it provides under the bring up a new generation of skills for spoke of a successful integration social and economic partnership the oil industry. into the educational process of agreements and charitable projects. Rosneft’s employees who chaired The speakers at the roundtable in state attestation commissions at Roundtable participants pointed Yuzhno-Sakhalinsk pointed out that, exams where students defended their out that the Company takes on following in Rosneft’s footsteps, other graduation paper. The Company’s more social responsibilities than companies opened similar classes at specialists cooperate with the faculty required by law. Some stakeholders schools. of universities. The proposal to arrange a meeting of representatives from ROUNDTABLE PARTICIPANTS POINTED OUT THAT THE COMPANY TAKES ON universities and oil and gas companies MORE SOCIAL RESPONSIBILITIES THAN REQUIRED BY LAW was put forward at the roundtable in Khanty-Mansiysk.

Apart from that Rosneft supports proposed signing social and economic At the meeting in Samara, the the regions by providing materials, cooperation agreements for a few participants thanked the Company supplies and equipment for schools, years ahead. for giving the students of Rosneft setting up laboratories and dedicated Classes a chance to take part in lecture rooms at universities, and In Yuzhno-Sakhalinsk, they suggested industry events. In 2015, a student of a giving financial aid to orphanages. In that the Company support regional Rosneft Class for the first time made Usinsk, the roundtable participants healthcare system by providing a presentation at the International Oil asked the Company for assistance its communication facilities for & Gas Conference. Several students from its HR department in professional development of doctors. took part in the Russia-wide forum psychological testing of students and The Saratov community thanked held under the theme “Engineering helping them to choose a career, Rosneft for the involvement of its is Creative” and picked up awards for and requested further support of employees in volunteer clean-ups their works. Events like these motivate the popular Russian language test – of the city (‘subbotniks’) and other students and promote a sense of Totalny Dictant. public area improvements, including responsibility for learning. those related to the 70th Anniversary of Russia’s victory in the Great The Company has acted on the Patriotic War. proposals put forward at previous roundtables. In Samara, the speakers noted that issues discussed a few years ago had been resolved and were no longer on the agenda. In Gubkinskiy, the participants referred to events held in the wake of the 2014 roundtable ROSNEFT Innovation SUSTAINABILITY REPORT 2015 48

INNOVATION

ROSNEFT DRIVES INNOVATION The results of the Company’s adapts and implements advanced TO ACHIEVE ONE OF ITS Innovation Program show that Rosneft technologies, simultaneously steadily progresses toward this goal. evaluating their key features and STRATEGIC GOALS TO BECOME Currently, the Company implements conducting feasibility studies to A TECHNOLOGY LEADER several large-scale innovation determine whether the novel solutions IN THE GLOBAL ENERGY projects, which involve advanced can be successfully deployed in the INDUSTRY. research, the deployment of new Company’s geological and technical technologies, as well as the upgrade conditions. In 2015, Rosneft provided of existing production processes and RUB 1,658 million for technology tests facilities. and spent RUB 15,883.8 million on the implementation of solutions that The Company met its key innovation passed such tests successfully. targets set under the Innovation Program in 2015, pursuing activities In 2015, Rosneft continued to pursue and providing financial support for its large-scale upgrade program. The them as planned. Rosneft spent a total implementation of comprehensive of RUB 116.9 billion in 2015 on the technology innovations at the most of innovation process, including RUB 36 its refineries enabled them to produce billion on research and development Euro 5 gasoline and diesel fuel for the (R&D) activities. Investment in domestic market (see the Environment Rosneft’s Program Innovation Projects section for more details about this totaled RUB 1.53 billion. program).

A particular focus was placed on Under its Program Innovation Projects, putting R&D outcomes into practice Rosneft accomplished the following in and protecting intellectual property 2015: rights. As a result of intensive development and application of new •• A project was completed to develop technologies in 2015, the Company a computer-aided technology for filed more patent and know-how the processing of 3D seismic data applications. In particular, it submitted from unconventional hydrocarbon 69 applications for patents and plays in fractured-cavernous industrial design rights, with the reservoirs number of its patents reaching 503. •• Prospecting continued to study Under its Innovative Technology and Upper Jurassic sediments at Pilot Testing Program, Rosneft tests, license blocks operated by RN-

Technology testing and deployment in 2015

Cumulative oil production Total economic effect, Number increase, thousand tonnes RUB million

Technology testing 158 120 83.1

Technology deployment 137 2,668 1,642.7 ROSNEFT Innovation SUSTAINABILITY REPORT 2015 49

Yuganskneftegaz. The Company completed the drilling of two wells, obtaining core samples and performing detailed borehole logging to support the efficient and effective evaluation of the reserves and develop a multi-stage fracturing model

•• The Company tested its proprietary technology for the development to low permeable reservoirs using transverse multiple fractured horizontal wells at the Prirazlomnoye field developed by RN-Yuganskneftegaz. The test results showed that the solution can successfully be used for flow rate improvement PROGRESS UNDER THE GTL TECHNOLOGY DEVELOPMENT PROJECT IN 2015 •• Rosneft developed and approved a geosteering program for In 2015, Rosneft continued work on •• The small scale enables technology horizontal and sidetrack drilling developing innovative technologies for deployment in remote and using an innovative technology that the on-site conversion of natural and challenging locations, including outperforms competing techniques. associated petroleum gas into synthetic offshore The Company developed a crude oil. The key objective is to reduce module for modeling giant fields the flaring of gas from remote fields •• The modular unit is easier to be (Priobskoye, Prirazlomnoye, where the Company’s own energy transported and integrated with Samotlorskoye, Vankorskoye, etc.) needs are limited while tying into existing facilities irrespective of with improved quality and speeds. trunk pipelines requires heavy capital their capacity A project was completed to develop expenditures. catalysts for hydrotreating diesel •• Capital expenditures are lower than fraction and pre-hydrotreating Rosneft also developed a mini-channel with conventional GTL systems. gasoline fraction, with pilot tests reactor and technology for small-scale run for catalysts weighing a total of Fischer-Tropsch-based GTL processes The Company also developed an 200 kg, followed by an independent for the conversion of natural/associated experimental technology to determine comparative testing program petroleum gas into synthetic crude oil. the compatibility of mineral and that showed the technology’s This technology will enable the annual synthetic oils. Tests showed that competitive advantages over production of an additional 20 million mineral oils are compatible with foreign and domestically tonnes of crude oil through natural/ products manufactured using Fischer– manufactured hydrotreating associated petroleum gas conversion Tropsch synthesis, which makes it catalysts. The innovation enables into liquid products in the field. The possible to transport them via shared the Company to reduce its key benefits of GTL technology are the oil pipelines. dependence on catalyst imports following: ROSNEFT Innovation SUSTAINABILITY REPORT 2015 50

•• The Company developed was completed to develop inputs and composite materials based on an advanced technology to for designing a pilot production polydicyclopentadiene with unique produce synthetic oils based unit with an annual capacity of 300 mechanic properties per year. on polyalphaolefin (PAO) with tonnes of synthetic oils based on a high viscosity of 140 to 170, a PAO In addition, the Company conducted a low freezing point from minus series of important scientific studies 50 degrees Celsius to minus 65 •• The Company developed an in Russia’s Arctic area in partnership degrees Celsius, and improved experimental technology for with the Arctic Research and Design thermal and oxidative stability. manufacturing ruthenium catalysts Center and the Arctic and Antarctic This technology has a number of using diethyl for the metathesis Research Institute. See the Company benefits, including zero wastewater polymerization of dicyclopentadiene Performance section for more details. and toxic gas emissions, apart from (DCPD) with an annual capacity the possibility of commercial use of of 6 kg. This technology enables heat produced from the formation the Company to manufacture up of oligomers. In addition, a project to 120 tonnes of new polymers

COOPERATION WITH ROSATOM IN SCIENCE AND TECHNOLOGY

On the sidelines of the St. Petersburg icebreakers), process control and The program provides for the International Economic Forum, measurement systems, energy exchange of information about Rosneft signed a cooperation efficiency, occupational safety and the current and potential needs of agreement with Rosatom to environmental protection. Rosneft and its entities in Rosatom’s pursue joint strategic projects, products and services. Program as well as to develop and roll out Rosneft and Rosatom also developed, activities include prototype testing, import-substituting technologies approved and launched the medium- the development of pilot batches and equipment for applications in term Program for Science and and production batches of the size production at the Company and its Technology Cooperation under their agreed upon by the two companies, entities. bilateral agreement. The program R&D activities, as well as the upgrade envisages more than 30 projects to and reconstruction of core assets Both companies displayed interest in develop a wide array of technologies operated by Rosneft and its entities the following areas of cooperation: and equipment for well logging and leveraging the research, technological exploration technologies and drilling, automated process control and manufacturing capabilities of equipment, support of Arctic offshore systems, control and measurement Rosatom’s leading companies. oil and gas development and systems, supercomputer programs, production (including the support surface infrastructure, pumping of such activities with Atomflot equipment, etc. ROSNEFT Innovation SUSTAINABILITY REPORT 2015 51

PARTNERSHIPS WITH LEADING The Company also signed the first evaluating their bids. The one-stop- UNIVERSITIES AND INNOVATION project agreement for the development shop module can be accessed from CENTERS, AND INTERNATIONAL of a high-performance heat exchanger Rosneft’s website. The initiative is COLLABORATION for LNG plants. Work is in progress aimed at giving owners of innovative to draft terms of reference for project solutions a point of contact within Under its Innovation Program, Rosneft agreements on the development of: Rosneft for submitting their ideas, cooperates with higher education bringing consistency and transparency institutions, including Gubkin Russian •• Renewable energy technology to processes, reducing handle time State University of Oil and Gas, Tomsk to improve the energy efficiency and improving decision-making on Polytechnic University, Siberian of hydrocarbon pipeline the implementation of cutting-edge Federal University and Moscow State transportation (telemetry and solutions. Institute of International Relations diagnostic systems) known as MGIMO. In 2015, the Thus, Rosneft has developed a fully Company also cooperated closely with •• Organic Rankine cycle technology functioning innovation process Moscow State University (MGU) under a to reduce the amount of waste heat management framework in line with joint scientific research and innovation produced by refineries. best practices and international project (see the Environment section standards which allows the Company below for more details). IMPROVING INDUSTRY to timely identify risks inherent in INNOVATION MANAGEMENT innovation projects, add value to such Rosneft also pursued joint projects STANDARDS initiatives and obtain an organization- with the Skolkovo Innovation Center. wide effect from technology The Company’s corporate research Rosneft is committed to developing its deployment. center RN-TsIR, one of Skolovo’s key own innovation management standards residents, is responsible for the GTL to improve innovation process EFFICIENCY IMPROVEMENTS project. It conducted a feasibility study management practices and design for various project-related technology techniques for the implementation The Company pursues efficiency solutions and the construction of the of Program Innovation Projects. In improvement projects and inventive pilot natural/associated petroleum gas 2015, Rosneft developed and adopted activities in accordance with conversion unit with an annual capacity important internal regulations to established standards. In 2015, of 300 tonnes of synthetic oil. ensure robust innovation process Rosneft received 875 improvement management. suggestions from 1,082 authors, In 2015, the Company and General recognizing 410 suggestions as sound Electric founded the Advanced The introduction of a one-stop-shop and implementing 251 to improve Research and Technology Center mechanism for driving innovation was production processes. Inventors tasked with enhancing existing one of the key initiatives implemented received monetary rewards. technologies for partner companies in 2015. Small and medium-sized and developing new technologies enterprises are invited to use this The economic effect from the for the benefit of both parties to the mechanism to share their innovative implementation of improvement arrangement. ideas with Rosneft, with the framework suggestions in 2015 totaled also establishing the procedure for RUB 1.7 billion. ROSNEFT Occupational health and safety SUSTAINABILITY REPORT 2015 52

OCCUPATIONAL HEALTH AND SAFETY

OCCUPATIONAL HEALTH •• The health and safety of workers were completed in 2015; 44 were a AND SAFETY (OHS) takes precedence over operational continuous improvement process and MANAGEMENT SYSTEM performance 33 were in the preparation phase.

As Russia’s top oil and gas producer •• All levels of management play In mid-2014, Rosneft adopted the and a leading global industry player, a crucial role in strengthening Occupational Health and Safety Rosneft responsibly manages the scale workplace safety Standards to establish a framework and nature of the impact caused by its for all levels of management at Group business, products and services, and •• Each Rosneft employee and entities to build and develop strong maintains a strong focus on accident- contractor recognizes their leadership skills in OHS. The Company free operations and workplace safety. individual responsibility for their believes that its successful operational own and other people’s safety and performance is contingent on OHS While striving to adopt industry best is aware of their right to intervene excellence in line with identified practices in occupational health and in unsafe actions targets. All Rosneft managers are safety (OHS), including health care, responsible for achieving robust road safety, fire prevention, radiation •• Each Rosneft employee plays their safety, blowout prevention, production part in the safety effort aimed IN 2015, ROSNEFT UNDERWENT asset integrity, management of fire at the prevention of industrial ANOTHER AUDIT OF ITS INTEGRATED and explosion hazards, accident and injuries, fire and explosion hazards, OCCUPATIONAL HEALTH, SAFETY incident prevention and response, accidents and incidents, and AND ENVIRONMENTAL MANAGEMENT Rosneft aspires to become a company occupational diseases SYSTEM, OHSAS 18001:2007, WHICH with: TARGETED COMPANY MANAGEMENT •• Prevention comes before incident AND 21 GROUP ENTITIES •• zero industrial injuries and detection and management. occupational diseases, and In 2015, the Company also worked on •• zero incidents and accidents, refining its draft OHS Strategy. performance in OHS by demonstrating including fires. safe behaviors and leadership, In addition, Rosneft continued to defining and segregating related In 2015, Rosneft’s Board of Directors promote a culture of safety and duties and responsibilities, mobilizing adopted a new version of the informed leadership in OHS under resources and enabling the continuous Company’s Occupational Health a dedicated program adopted for improvement of processes through and Safety Policies. Rosneft revised the period until 2020. The program regular assessment and monitoring. these policies to adjust them for its is intended to prioritize operational The leadership role in OHS is above operational growth driven by new safety above everything else, stimulate all about promoting a culture of asset integration, global footprint employees to use safe behaviors on the compliance among employees by expansion and regulatory changes, job and establish rigorous control over personal example, awareness raising while establishing a framework for safety performance by employees and activities, guidance and inspiration. promoting a culture of safety and contractors. The program envisages developing leadership skills in OHS the implementation of 100 initiatives The Company adopted leadership management. in industrial safety, fire prevention, criteria for all managers to build workplace health, health care, and hone their leadership skills in The policies set out the following top health education, social security and OHS. The key marks of leadership priorities in OHS: other employee support activities. include a clarity of vision, passion, Twenty-three program initiatives professionalism and integrity. There ROSNEFT Occupational health and safety SUSTAINABILITY REPORT 2015 53

IN MID-2014, ROSNEFT ADOPTED THE OCCUPATIONAL HEALTH AND SAFETY STANDARDS TO ESTABLISH A FRAMEWORK FOR ALL LEVELS OF MANAGEMENT AT GROUP ENTITIES TO BUILD AND DEVELOP STRONG LEADERSHIP SKILLS IN OHS

are well-defined performance occupational injury frequency rate. applied and received such certification indicators and criteria for each In addition, the Company introduced independently. management level and skill. Rosneft restrictions on the payment of annual conducts regular assessments of OHS executive bonus for employee safety In addition, the OHS Department leadership performance demonstrated to withhold it for failures to prevent a regularly performs walkthroughs of by managers. fatal or non-fatal accident at a facility the HSE information management classified as Hazard 1 or 2. The weight system for conformity to legislation, To increase employee engagement of this indicator in individual and team internal regulations and the and awareness of OHS issues, the performance assessment was revised requirements of the OHSAS 18001 Company introduced checklists for upward. standard. Such inspections result OHS inspections conducted by Group in the development of proposals for managers. Rosneft also holds an annual enhancing the OHS management competition to pick the Best Entity framework. In 2015, Rosneft also adjusted its of the Group in OHS management, key performance indicators (KPI) to providing an additional source of Employee training is an important motivate managers, ranging from vice motivation. The 2015 winners across component of the OHS management president equivalents to executives the Company’s business segments framework. Rosneft organized special at Group entities and HSE leaders in were Verkhnechenskneftegaz (Oil training sessions in 2015, apart from the Company’s business segments, and Gas Production), Neftegorsk Gas running its ongoing comprehensive to better performance. The list of Processing Plant (Oil Refining and training program in OHS. The KPIs was amended to include the Petrochemicals), Rosneft-Stavropolye Company’s grassroots organization of (Distribution and Sales) and the the Russian Oil, Gas and Construction Orenburg division of RN-Bureniye Workers’ Trade Union initiated a (Oilfield Services). Group entities training course for 1,150 OHS Officers also regularly win awards for safety of more than 55 Group entities. In 2015, performance at local competitions members of certification commissions among companies. responsible for compliance at the level of business and functional units In 2015, Rosneft underwent another underwent the training and attestation audit of its integrated occupational process at the Federal Service for health, safety and environmental Environmental, Technical and Nuclear management system, OHSAS Oversight (Rostekhnadzor), while 18001:2007, which targeted Company in-house commissions assessed management and 21 Group entities. the safety competencies of Rosneft The certification authority established employees. the conformity of the system to the standard, as well as identified the The Company also engaged Company’s strengths in OHS and areas international experts of BP Exploration for potential improvement. In 2015, Operating Company Limited to Rosneft and 48 Group entities obtained evaluate Rosneft’s Industrial Safety certification to OHSAS 18001 as part Management System. The expert team of the Company-wide certification met with top managers and staff of processes. Twenty-two Group entities two Group entities, Ryazan Oil Refinery and RN-Yuganskneftegaz. They ROSNEFT Occupational health and safety SUSTAINABILITY REPORT 2015 54 1,150

OHS OFFICERS WERE TRAINED IN THE THE COMPANY’S GRASSROOTS ORGANIZATION OF THE RUSSIAN OIL, GAS AND CONSTRUCTION WORKERS’ TRADE UNION

COOPERATION WITH ROSTEKHNADZOR

In 2015, Rosneft and the Federal evaluated Rosneft’s Industrial Safety Rosneft also contributed to discussions Service for Environmental, Technical Management System against the BP on HSE bills which were held by and Nuclear Oversight (Rostekhnadzor) production management system and the Rostekhnadzor Science and signed a cooperation agreement to reviewed the existing approaches to Technology Council’s Subpanel combine efforts toward improving equipment integrity management, on Oil and Gas Industry Safety and Russia’s legal framework on risk assessment and the promotion the Industrial Safety Committee of occupational safety. The agreement of a culture of safety. As a result of the Russian Union of Industrialists commits the two parties to provide their comprehensive assessment, and Entrepreneurs. In 2015, the each other with technical, scientific the experts issued a report and Company submitted proposals for the research and technology support in recommendations that Rosneft elaboration of 22 draft laws and other initiatives aimed at increasing the relied on when developing an action regulations governing industrial safety safety of crude oil and petroleum plan to improve its Industrial Safety and fire prevention. product pipelines, and hydrocarbon Management System. production, storage and processing The Company is committed to facilities. Rosneft also pledged to The OHS Department made significant providing substantial financial support share its experience in upstream and progress in developing automated for activities aimed at improving downstream operations. business processes in OHS under OHS management practices. In the the Company’s dedicated project in reporting period, it spent a total Bilateral cooperation provides 2015. It produced conceptual design of RUB 44 billion on OHS activites, Rostekhnadzor with access to Rosneft’s for IT solutions, ran tests and held including fire prevention and blowout expertise and massive regulatory procurement procedures to buy server prevention. database, while Rosneft can make hardware for installation and pilot and an important contribution to work on commercial operation. enhancing legislation and aligning it with international industry standards. ROSNEFT Occupational health and safety SUSTAINABILITY REPORT 2015 55

OHS PERFORMANCE IN 2015 drivers, a lack of experience in non-core activities and unsafe cargo rub 44 BILLION Workplace safety handling operations. The higher injury rate was also partially attributed to ON OHS ACTIVITIES INCLUDING In 2015, Rosneft recorded a total of the acquisition of new assets and the FIRE PREVENTION, BLOWOUT 127 incidents at work, in which 158 subsequent extension of the perimeter PREVENTION AND RADIATION workers were injured and 23 were for OHS data collection. SAFETY INITIATIVES killed. Contractors reported 114 incidents, in which 126 people were The most fatal accident for Rosneft injured and 22 were killed. in 2015 was the crash of a Mi-8t helicopter owned by the air company There was an increase in injuries in Turukhan which carried workers of 2015 due to the fault of third parties, Rosneft’s subsidiary Vankorneft on traffic violations by contractors’ board from the town of Igarka to Oil

CONTEST «BEST OCCUPATIONAL SAFETY OFFICER OF ROSNEFT’S GRASSROOTS TRADE UNION»

In 2015, the Inter-regional Trade contest had two stages: participants Union Organization “Rosneft” held a made presentations about their contest, entitled “Best Occupational achievements in occupational safety Safety Officer of Rosneft’s Grassroots at enterprises and at the level of Trade Union.” The winners were the Inter-regional Trade Union honored at a ceremony held on Organization “Rosneft.” the sidelines of a Moscow meeting between the CEOs and Chief HSE They were judged on a combination Officers of Group entities. of criteria: the non-occurrence of collective injuries and fatalities at This contest was the first of its their division over the last year and a kind organized by the Company’s reduction in the industrial injury and grassroots trade union as part of its occupational disease rate at their fundamental commitment to reduce enterprise over the last two years. industrial injuries and occupational The key criterion was compliance diseases across Rosneft and motive with all occupational safety policies its trade union cells to perform better and procedures. The winners were in occupational safety. awarded certificates and monetary prizes. 1,299 officers of different Rosneft entities competed for the title. The ROSNEFT Occupational health and safety SUSTAINABILITY REPORT 2015 56

INJURY PREVENTION IS A TOP CONCERN FOR THE COMPANY WHICH IS STRIVING TO BUILD A STRONG CULTURE OF SAFETY AND PROMOTE INFORMED LEADERSHIP IN OHS UNDER A DEDICATED PROGRAM

Pumping Station 2. The accident, of safety activities based on the nature which occurred on 26 November 2015, of their business to prevent road left 12 people killed and 13 injured. accidents or otherwise improve safety Rosneft’s Emergency Response performance across the Group, its Center responded quickly by setting contractors and subcontractors. up search and rescue operations to transport injured workers to hospitals The prevention of contractor injuries and provide other assistance to victims is another critical issue for Rosneft. and their relatives as necessary. The According to its internal regulations, search and rescue patrol included the Company must include safety 170 people and was equipped with 42 clauses in all contracts, requiring vehicles. the contractors to comply with HSE standards as provided for in Injury prevention is a top concern applicable legislation and Rosneft’s for the Company which is striving to policy documents. Around 116,000 build a strong culture of safety and occupational safety violations were promote informed leadership in OHS detected as a result of inspections under a dedicated program. Rosneft’s conducted across the Company’s upstream entities pursue a wide range contractors in 2015.

Injury rates at the Company and its contractors

Indicator 2013 2014 2015

Total occupational injuries – employees 92 149 158

including fatalities 9 18 23

Total occupational injuries – contractors 70 97 126

including fatalities 15 19 22

Incidence rate of fatal injuries (per 100 million hours worked) 2.14 3.98 4.76

the same rate per million hours worked 0.021 0.04 0.048

Incidence rate of non-fatal injuries (per million hours worked) 0.219 0.33026 0.327

the same rate per 200.000 hours worked 0.044 0.066 0.065

Incidence rate of road injuries (per million kilometers of mileage)27 0.075 0.053 0.055

excluding injuries due the fault of third parties 0.02 0.005 0.02

Lost-time incident rate (days away from work due to an incident 10.874 12.015 18.267 or occupational disease per million hours worked)

the same rate per 200.000 hours worked 2.175 2.403 3.653

Incidence rate of occupational diseases (per million hours worked) 0.045 0.097 0.118

the same rate per 200.000 hours worked 0.009 0.019 0.024

26 The 2014 incidence rate of non-fatal injuries was 0.3295, if rounded to four decimal places. 27 Data on the 2013 mileage is presented only for the fleet of RN-Service; 2014 and 2015 data was collected across the entire Company. ROSNEFT Occupational health and safety SUSTAINABILITY REPORT 2015 57

MORE THAN 50,000 OCCUPATIONAL SAFETY INSPECTIONS WERE CONDUCTED AT GROUP ENTITIES BY INTERNAL AND ROSNEFT’S INSPECTORS IN 2015

Occupational safety 50,000 occupational safety inspections Company focuses on not only their were conducted at Group entities by immediate and underlying causes but Rosneft takes a disciplined and internal and Rosneft’s inspectors in also the root causes. Based on the structured approach to delivering 2015. HSE teams at the Company’s results of such probes, Rosneft shares strong safety performance. The business units regularly perform lessons learned with employees Company regularly shares incidents both integrated and special-purpose and communicates the action plan. through an organization-wide network safety audits to assess compliance Subsequent checks are conducted to ensure that entities learn lessons with applicable legislation and the at the Group entities to monitor the and take corrective action. It keeps Company’s policy documents. implementation of the action plan. rigorous records of all incidents, Such initiatives led to a y-o-y reduction investigates their causes and develops Incidents and accidents in accidents and incidents by 10% and action plans to prevent future at Rosneft’s facilities 22%, respectively, in 2015. However, in occurrences. 2015 the Company failed to avoid a few Rosneft takes every and each step serious accidents that caused fatalities Rosneft uses a five-step control to prevent incidents and accidents and serious damage. procedure highlighting its commitment at work. When investigating every to strong OHS programs. More than serious incident, accident or fire, the

Accidents at Rosneft’s facilities

Indicator 2013 2014 2015

Total accidents, cases28 3 10 9

including with environmental effects29 1 0 5

Total fires, cases 22 18 19

Total accidents and incidents relating to oil, gas 10 6 2 and water inflows and blowouts, cases

28 Total accidents, excl. blowouts and uncontrolled flows of oil, gas and water. 29 According to the classification of the Federal Service for Natural Resource Management (Rosprirodonadzor), an environmental effect occurs when environmental damage extends beyond the industrial site. ROSNEFT Occupational health and safety SUSTAINABILITY REPORT 2015 58

AS COMPANY PLACES AN INCREASED FOCUS ON THE QUALITY OF FIRE PROTECTION SERVICES AT ITS EXPLOSIVE AND FLAMMABLE UPSTREAM AND DOWNSTREAM FACILITIES, A DEDICATED COMPANY CALLED RN-FIRE SAFETY WAS SET UP TO PROVIDE SUCH SERVICES TO The number of fires caused by process Emergency preparedness THE MOST OF GROUP ENTITIES violations dropped by 33% in 2015 from a year earlier, while the fire rate due In 2015, Rosneft continued to to unsafe hot work halved. Rigorous concentrate efforts on preventing prevention measures made it possible man-made disasters, eliminating the to avoid vehicle fires altogether in the possibility of natural disasters and reporting period. increasing the Company’s overall emergency preparedness to minimize Safety measures taken in 2015 potential damage. included inspections that were performed at Moscow-based office The Emergency Response Center buildings owned and leased by Rosneft completed work on drawing up the to assess fire hazards and develop a Company’s policy framework on civil corrective action plan. Safety briefings defense, emergency prevention and were held for fire safety officers emergency management to ensure appointed at the Company’s business the Company’s full compliance with units, with Rosneft also organizing the respective requirements laid out regular evacuation drills at its by Russia’s emergency management corporate headquarters. authorities.

As Company places an increased To reduce the chance of emergencies Fire safety focus on the quality of fire protection and prevent them from escalating into services at its explosive and flammable man-made disasters, the Company In 2015, Rosneft drafted, refined and upstream and downstream facilities, engaged in the following activities approved new fire safety regulations, a dedicated company called RN-Fire in 2015 as part of the continuous including: Safety was set up to provide such improvement of its core operations and services to the most of Group entities. HSE performance: •• Regulation on the Preparation of the Company’s Facilities for Safe In addition, the HSE teams across the •• Upgrading core production assets Operations in the Fire Season Company’s business segments take with more reliable equipment extensive measures under a wildfire •• Guidelines for Hot Work at the preparedness and response program •• Monitoring compliance with Company’s Facilities and Checklist to timely prevent forest fires around oil process requirements on a regular for Safe Hot Work, an information production sites and other facilities in basis aid for risk assessment and self- the fire season. control •• Performing regular checks to In 2015, the Company continued inspect units and hazardous •• Guidance on the Inspection and strengthening and upgrading its fire production facilities, as well as Performance Assessment of Fire fighting capabilities under a dedicated routine maintenance on tanks and Brigades Providing Fire Prevention program for 2013-16. Rosneft bought pipelines and Fighting Services to Rosneft 67 fire engines, 118 firefighting and Group Entities equipment units and 161 tonnes of •• Maintaining technical preparedness foam-generating agent in the reporting for the containment and •• List of Standard Measures to period. management of fires and other Improve a Culture of Fire Safety. emergencies The Company’s 2015 spending on Group entities implement initiatives fire safety and blowout prevention/ •• Organizing process simulations to bring their facilities in compliance radiation safety totaled RUB 10,475 and drills for the personnel of with fire safety regulations under a million and RUB 1,106 million, hazardous production facilities and dedicated program for 2015-19. respectively. search-and-rescue patrols. ROSNEFT Occupational health and safety SUSTAINABILITY REPORT 2015 59

Command post exercise

In the reporting year, the Company emergency response teams or response in 2015. The spending was held a command post exercise to outsource emergency management down compared with the previous year, enhance the emergency readiness services. primarily due to the establishment of management and on-site teams of emergency response teams at that are part of the Company’s Rosneft has also built up extensive many Group entities and improved Unified State Emergency Prevention financial and technical capabilities, procurement procedures. and Response System and ensure as well as an emergency alert system trouble-free operations, as well as the and a notification and alert system to The Company strives to minimize the safety of workers and assets during transmit messages to managers and impact of emergencies, maintaining a spring floods. Action was also taken on-site teams. Work is under way to strong focus on the competencies of its to reduce the risk of flooding at the upgrade local-level alert, firefighting employees, as well as the managers Group’s production sites in summer and alarm systems, while the and on-site teams of the Unified State and fall when floods are frequent. The Company’s explosive and flammable Emergency Prevention and Response measures allowed the Company to facilities have been equipped with System. Around 145,000 managers avoid flooding during the flood season. emergency management and and workers participated in training shutdown systems. and on-site drills in 2015. Rosneft To maintain high emergency organized a total of 30 comprehensive preparedness, Group entities mobilize Rosneft spent a total of RUB 3 emergency training exercises, 133 their own permanent and ad hoc billion on emergency prevention and command post exercises, 29 special

Rosneft’s spending on emergency prevention and response

Indicator 2013 2014 2015

Expenditures for emergency prevention and response, RUB million 2,970.0 3,540.630 2,951.7

including expenditures for financial and technical capabilities, RUB million 1,507.8 1,662.4 1,664.57

including expenditures for the maintenance 1,462.2 1,878.2 1,287.13 of emergency response teams, RUB million

30 Total expenditures exclude emergency management expenditures which amounted to RUB 349 million in 2014. Emergency management expenditures in 2013 and 2015 were zero. ROSNEFT Occupational health and safety SUSTAINABILITY REPORT 2015 60

tactical training exercises and 12,935 and estimated, installation and fit-out on-site drills. phases and procurement procedures were organized to perform engineering Rosneft organized a large-scale and construction work. educational event at Novokuybyshevsk Refinery in June 2015, which featured Pipeline safety an exhibition of innovative products and a forum on the efficiency and In 2015, Rosneft launched a large- effectiveness of emergency prevention scale program for the period until 2019 and management actions in war to strengthen the safety requirements and peace times. A demonstration for its network of pipelines in order 48 TONNES emergency exercise was conducted to minimize environmental and to demonstrate the oil spill and fire economic risks inherent in the LESS OF OIL SPILLS COMPARED response capability in deployed Company’s operations. The key goal TO 2014 conditions at the refinery. of the program is to reduce pipeline accidents by at least 30% by the end In 2015, the Emergency Response of 2019 from the 2013 level. The Center inspected 29 Group entities to rate dropped by 6.4% y-o-y in 2015 examine their emergency prevention as a result of program initiatives practices. implemented in the reporting period. There were 8,841 pipeline ruptures, Work also continued to develop with 5,688 of them causing oil spills and deploy a risk management IT that released 855 tonnes of oil into the solution for applications in emergency environment, 48 tonnes less than in management. The following activities 2014. were carried out: a risk management IT solution infrastructure was Rosneft regularly conducts the designed, equipment specifications diagnostics of the external and were drawn, design and documentation internal surfaces of its pipelines to for the construction were developed monitor their technical condition.

Pipeline ruptures and associated oil spills

Indicator 2013 2014 2015

Total pipeline ruptures (in-field oil pipelines, gas pipelines and water pipelines) 10,425 9,450 8,841

Total pipeline ruptures per million tonnes of oil and gas condensate produced 50.4 46.1 43.6

Total pipeline ruptures causing oil spills 6,782 6,048 5,688

Crude oil and petroleum product spills due to ruptured pipelines, tonnes 1,015 903 855

Crude oil and petroleum product spills due to ruptured pipelines 4.9 4.4 4.2 per million tonnes of oil and gas condensate produced

The rate of pipeline ruptures per kilometer 0.17 0.15 0.14

Pipelines: basic characteristics and safety improvements, kilometers

Indicator 2013 2014 2015

Total length of in-field pipelines 83,245 84,352 85,652

Total length of in-field pipelines in operation at period-end 61,006 61,481 61,522

Reconstruction and repair projects at in-field pipelines 1,120 1,140 1,320

Inhibition of in-field pipelines 21,261 22,713 24,118

Internal cleaning of in-field pipelines 10,141 10,85531 10,968

Diagnostics and examination of in-field pipeline safety 15,923 18,991 21,233

31 Data on the length of sections subject to cleaning was updated. ROSNEFT Occupational health and safety SUSTAINABILITY REPORT 2015 61

ROSNEFT’S SPENDING The results of such diagnostics show operations and rehabilitation projects UNDER ITS PIPELINE SAFETY whether the pipeline can be safely as necessary. The Company uses PROGRAM STOOD FOR RUB operated further or whether it needs corrosion resistant pipes, as well as 21.2 BILLION IN 2015 repairs. The Company invested around corrosion inhibitors and anti-corrosion RUB 0.5 billion in the diagnostics and technologies. Overall, Rosneft’s examination of in-field pipelines in the spending under its pipeline safety reporting period, which also included program increased by 12.7% y-o-y to pilot tests of unmanned aircraft before RUB 21.2 billion in 2015. their launch into full-scale operation in regions of Rosneft’s presence. Pilot However, despite its great focus on projects were launched in the Tomsk the safe performance of pipelines, region, Stavropol Krai and the Udmurt Rosneft failed to prevent two serious Republic. The Company uses two oil spills that occurred in the Sakhalin automated record-keeping solutions region and Khanty-Mansi Autonomous – Poryv and OIS Pipe – for registering Okrug in 2015. In both instances, the failure events. The OIS Pipe solution spills were promptly captured, with the was rolled out to five more Group Company holding public hearings and entities in 2015. taking extensive measures to restore the physical and biological attributes of In 2015, Rosneft also carried out the area. routine and major repairs at its pipelines, including large-scale repair ROSNEFT Environment SUSTAINABILITY REPORT 2015 62

ENVIRONMENT

ENVIRONMENTAL MANAGEMENT SYSTEM

MINIMIZING ANY POTENTIAL •• Zero tolerance to environmental corrective action to navigate risks difficulties. NEGATIVE IMPACT ON THE ENVIRONMENT IS A NUMBER •• Deployment of innovative In 2015, the Company developed and ONE PRIORITY FOR ROSNEFT, environmental technologies adopted a program for the preservation WITH ENVIRONMENTAL of biological diversity in marine •• Focus on prevention rather than ecosystems at its license blocks SUSTAINABILITY LYING AT detection and management in Russia’s Arctic region. The key THE HEART OF ITS DOING objective of the program is to ensure BUSINESS APPROACH. •• Open and transparent safe and responsible operations in environmental reporting the Arctic and minimize the adverse In 2015, Rosneft’s Board of Directors impact on the environment from adopted the organization-wide •• Commitment and consistency in any economic activity. The program Environmental Protection Policies environmental sustainability. envisages the following: that set forth the Company’s mission – environmentally sustainable In the reporting period, the Company •• Planning environmental protection production operations in the interests continued work toward fulfilling initiatives in line with regulations of present and future generations its environmental stewardship and based on design solutions – and its goal of becoming a top strategic plan approved by the Board environmentally friendly producer in of Directors and meeting quantity •• Studying plant and animal the oil and gas industry. The policies targets across its environmental species at Rosneft’s license also confirm Rosneft’s key priorities in protection activities. Rosneft set blocks in Russia’s Arctic region environmental management. quantity indicators for environmental and implementing research and management for the period until 2025 preservation projects focusing on The Company’s environmental when updating the HSE section of its Arctic ecosystems management framework is based on Long-term Development Program in the following principles: 2015. •• Developing mechanisms for the creation of a database and •• Full compliance with applicable Pursuant to its Growth Strategy and a comprehensive analysis of legislative and regulatory Long-term Development Program, environmental parameters and environmental requirements, Rosneft developed and approved the biological diversity. including international law Environmental Management Efficiency Program for the period until 2025 to The goals of the program are to •• Preservation of a favorable natural outline key activities that will enable it study the species diversity, identify environment and biodiversity to achieve environmental sustainability flagship species whose abundance targets set by the Board of Directors. in a marine ecosystem is believed to •• Striking a balance between By monitoring the progress toward indicate its overall health, define and development and resource the achievement of quantity indicators minimize environmental risks through protection in the interests of local under the Long-term Development preventive action, determine steps to communities Program, the Company is able to conserve biodiversity, and leverage promptly develop and implement technical, scientific research and ROSNEFT Environment SUSTAINABILITY REPORT 2015 63

ROSNEFT ALSO RUNS VOLUNTARY ENVIRONMENTAL PROGRAMS, INCLUDING A VOLUNTARY ENVIRONMENTAL LIABILITY INSURANCE SCHEME USING A RISK MANAGEMENT TOOL TO SHIFT THE POTENTIAL FINANCIAL BURDEN FROM THE OCCURRENCE OF environmental protection capabilities INSURED EVENTS TO THE INSURER to support exploration operations.

In accordance with its accounting policies, the Company conducted a stocktaking of its environmental financial burden from the occurrence The Company contributed RUB 44.6 liabilities for accounting purposes in of insured events to the insurer. The billion in direct and indirect investment 2015, adjusting liabilities arising from Company’s ongoing 2014-16 general into environmental protection both production operations in 2015 and liability insurance program covering initiatives in 2015. The overall emissions produced in prior periods. environmental liability is designed 2015 spending on environmental to protect Rosneft, its entities and sustainability totaled RUB 71.6 billion. In 2015, an independent certification affiliates, including foreign projects, authority performed an audit to assess against the potential liability that may Rosneft’s operating expenses went the compliance of the Company’s arise across its current and future up, largely due to the extension of integrated HSE system to the ISO operations. the perimeter for environmental 14001 standard for environmental data collection to include Slavneft- management systems and identify its Rosneft also strives to build strong Krasnoyarskneftegaz, Slavneft- strengths. technological and other capabilities Megionneftegaz, Novokuybyshevsk under its environmental innovation Petrochemical Company and other Rosneft also runs voluntary program to address the environmental Group entities, and as a result of environmental programs, including challenges that Group entities are increased charges for gas flaring that a voluntary environmental liability faced with. are calculated using a multiplier. insurance scheme using a risk management tool to shift the potential

Environmental expenditures, RUB million

Indicator 2013 2014 2015

Environmental capital expenditures 36,843 36,930 44,64632

Operating environmental expenditures 16,986 21,803 27,000

Payments to budgets at all levels associated with environmental 3,872 4,134 5,153 protection and the sustainable use of natural resources

including charges for adverse environmental effects 3,028 1,819 2,621

including compensation for environmental damage 664 969 997

Pollution fines 55 88 201

Non-financial sanctions, cases 0 0 0

32 The value was increased by one by rounding up. ROSNEFT Environment SUSTAINABILITY REPORT 2015 64

rub 44.6 BILLION

THE COMPANY CONTRIBUTED IN DIRECT AND INDIRECT INVESTMENT INTO ENVIRONMENTAL PROTECTION INITIATIVES IN 2015

International collaboration and As part of consistent realization of the SAMARANIPINEFT’S SUPPORT cooperation with environmental Action Roadmap, in 2015 the parties OF WATERWAYS CLEANUP advocacy groups held a series of bilateral consultations CAMPAIGNS to discuss work on a draft program In 2015, Rosneft conducted for the preservation of biological For the fourth year in a row, environmental monitoring of marine diversity of marine ecosystems at SamaraNIPIneft joined the volunteer mammals in Russia’s Arctic region Rosneft’s license blocks in Russia’s effort organized on the International and undertook an effort to repopulate Arctic region, which aims to reduce Day of Action for Rivers to clean up native aquatic species under the the environmental impact of in-field oil the river Volga. Employees are always Declaration on Environmental spills. Summarizing work undertaken enthusiastic about doing their part in Protection and Biodiversity in the reporting period the parties were the clean-up of this popular attraction Preservation in Exploration and satisfied with development of their with locals in the city of Samara. The Development at Russia’s Continental cooperation. event is usually held the first weekend Shelf inked by the Russian oil in June when the warm season begins. producer, ExxonMobil, Eni and Statoil. Pursuant to a bilateral cooperation The company supports the campaign agreement with the Russian National in partnership with local aqua clubs In 2015, Rosneft and the World Wildlife Committee for the United Nations whose members dive for rubbish in the Fund (WWF) in Russia continued their Environment Program (UNEP), Rosneft Volga and clean the coastline. work together and an Action Roadmap closely cooperates with the Russian was signed in June, 2015. The key Academy of Sciences under its board- actions outlined in the roadmap level fundamental studies program for include sharing of best practices, Russia’s Arctic region (the task force bilateral consultations on social and on the Arctic, Environment Section) environmental commitments, and and with the Coordinating Research activities to mitigate the negative Council at the Russian Federal Agency environmental impact of ongoing of Research Organizations. operations and preserve biodiversity in the key habitats of Arctic birds and mammals.

Environmental capital expenditures, RUB million

Indicator 2013 2014 2015

Environmental capital expenditures, including 36,843 36,930 44,64632

Special Environmental Program 832 340 210

capital construction of major environmental protection facilities 12,953 9,343 7,653

materials and equipment 2,343 38 83

associated investment 15,698 22,977 29,919

other 5,017 4,232 6,780

32 The value was increased by one by rounding up. ROSNEFT Environment SUSTAINABILITY REPORT 2015 65

Cooperation with regulators

In 2015, Rosneft actively cooperated COLLABORATION WITH MGU IN PERSONNEL TRAINING with stakeholders to gather AND ENVIRONMENTAL TECHNOLOGY DEVELOPMENT their support for its projects and environmental policy. This included Retraining course in Sustainable Offshore Oil and Gas Development collaboration with the Civic Chamber of the Russian Federation, the public The education program for the organizational aspects of integrated councils at federal-level executive retraining course in Sustainable environmental protection activities and government agencies that comprise Offshore Oil and Gas Development was environmental impact assessments. representatives of the UNEP developed by MGU’s Department of Rosneft’s personnel retraining Russian National Committee (the Biology under an agreement between programs focus on exploring Ministry of Natural Resources and Russia’s leading university and different scenarios for addressing the Environment, Federal Service Rosneft. It was prepared by leading specific operating challenges in for Natural Resource Management, academicians of the university’s offshore development, improving Federal Agency for Mineral Use, five departments (Biology, Geology, competencies in environmental Committee on Hydrometeorology, Law, Geography and Business research and sustainable offshore oil Federal Marine and River Transport School) and visiting professors who and gas development, and providing Agency, Federal Consumer Rights provide assistance with delivering practical training in marine ecology and Welfare Service, and Ministry of the program. The program includes and industry-specific environmental Health), as well as the Expert Council theoretical and practical training protection activities. at the Government of the Russian in planning, management and Federation. Development of oil-eating bacteria for cold waters In the reporting period, the Company also took part in meetings held by The Microbial Biotechnology degrading abilities in low temperatures federal-level executive authorities Laboratory at MGU’s Biology from 265 samples, using an innovative to discuss work on Best Available Department is working on developing method to select microbes with the Techniques Reference Documents. an oil spill bioremediation product highest oil degradation rates. Rosneft contributed to the for Arctic waters. The oil-degrading development of a reference document product is intended for use in marine The bacteria selected from natural for wastewater treatment technologies environments, at shorelines and at sources and bacterial consortia at large companies engaged in tankers and offshore platforms. It is are being tested at MGU’s White manufacturing and service operations. based on cold-adapted psychrophilic Sea Biological Station. The year- The Company also started work under oil-degrading bacteria that are round, permanent research station its Long-term Development Program naturally occurring in polluted allows conducting bioremediation for 2015 to formalize assessment environments. A group of researchers experiments in an Arctic physical processes for technologies used to at the Microbial Biotechnology environment. The microorganisms are determine best available techniques, Laboratory conducted expeditions kept in a flow-through seawater basin developing an internal guide on the to chronically contaminated Arctic in which oil contamination is simulated. assessment of technologies used. areas – large ports and shorelines around big cities in the north part The team is expected to come up with of Russia (Murmansk, Vladivostok, a safe product for the efficient and Petropavlovsk-Kamchatsky, etc.). The efficient cleanup of oil spills. team screened 73 bacteria with good ROSNEFT Environment SUSTAINABILITY REPORT 2015 66

Participants of the first All-Russian Ecological Children Festival

Rosneft’s environmental art and photo competitions, tree Environment of the Russian Federation education and awareness and flower planting campaigns, and and Federal Service for Natural initiatives participation in academic and research Resource Management and intends conferences on environmental topics. for development of environmental As the Company strives to become a culture and education of the younger recognized leader in environmental The Company actively supports generation as well as drawing public sustainability among global oil significant ecological projects. In attention to conservation initiatives in producers and improve its overall 2015 Rosneft participated in the the sphere of national environmental environmental performance in the All-Russia Saturday Volunteer Clean- heritage. In the course of the Festival interests of present and future Up “Green Spring – 2015” and was the Company was announced to be generations, it places a strong focus honored with award for “Contribution an eco-friendly company and was on environmental education and to Improving Environment and Raising awarded a commemorative diploma. awareness initiatives. Rosneft sits Environmental Awareness”. The event on the Environmental Awareness aims at supporting new formats of In 2015, Rosneft conducted its regular and Education Commission at the environmental education and shaping corporate event called the Ecologists’ Federal Environmental Council of environmental culture among children Day for environmental officers of the the Ministry of Natural Resources and young people. corporate headquarters and Group and the Environment. Group entities entities who were invited to participate run an array of programs to improve Group entities and the corporate in dedicated workshops and training environmental awareness and provide headquarters played an active role courses. The event program also education to employees, their families, in the first All-Russian Ecological included a rhododendron planting preschool and school age children, Children Festival which unites two big event at the Peter the Great Botanical including kids in foster care. These holidays – Children’s Day and Earth Garden in St. Petersburg. include workshops and lectures, Day. Festival was organized by the excursions to museums and parks, Ministry of Natural Resources and ROSNEFT Environment SUSTAINABILITY REPORT 2015 67

GROUP ENTITIES AND THE CORPORATE HEADQUARTERS PLAYED AN ACTIVE ROLE IN THE FIRST ALL-RUSSIAN ECOLOGICAL CHILDREN FESTIVAL WHICH UNITES TWO BIG DEVELOPMENT OF AN HOLIDAYS – CHILDREN’S DAY AND EARTH DAY ENVIRONMENTAL CONTROL SYSTEM WITH A SUBMERSIBLE UNMANNED VEHICLE FOR OFFSHORE PROJECTS

Key environmental initiatives in waste. The project capital expenditures The Company has launched a special 2015: exploration and production in 2016-17 are estimated at RUB 643 innovation project to develop a control million. In 2015, East Siberian Oil system with an unmanned underwater In 2015, RN-Purneftegaz completed a and Gas Company also continued to vehicle for performing environmental successful reclamation of 20 hectares support Siberian Federal University’s checks at the heads of offshore of heritage sites contaminated with oil project aimed at preserving the wild exploration wells in Russia’s Arctic at as a result of operations. reindeer population in Evenkia (see the a depth of 20 to 300 meters. The goal Society section for additional details). of the project is to develop Russia’s RN-Uvatneftegaz injected more than The company also teamed up with the own unmanned underwater vehicle 88,000 cm of drilling waste deep into Research and Development Institute of for environmental tests in ice-covered formations. Sustainable Fish Farming to support waters that will be able to stay out for its Hucho taimen artificial rearing at least 10 months at a time. Activities Another subsidiary of Rosneft, project in the river Podkamennaya in in 2015 included the development of Tyumenneftegaz, prepared project Tungusk in the Evenk Autonomous technical specifications for the Arctic documentation and obtained regulatory Okrug, Krasnoyarsk Krai. and sub-Arctic offshore underwater environmental approval for the control system and potential solutions construction of a waste disposal site at In 2015, RN-Exploration undertook to customize existing and advanced the Russkoye field. a rehabilitation effort to mitigate the models to project needs. environmental impact of marine 3D Samaraneftegaz reached the 90% seismic, gravimetric and magnetic The project plan for 2016 covers the milestone in the construction surveys at the Yuzhno-Chernomorsky development of design solutions, of a facility for the treatment of license block. In partnership with a including a schematic drawing and a oily waste originating from the fish farm in Dinskaya, the company 3D model of the vehicle, which will be Gorbatovskoye field, providing more released 50,707 baby Russian followed by experimental prototyping than RUB 98 million in finance. sturgeon into the river Kuban. In and field studies, planned as the next Work was also completed to prepare addition, the company obtained stage. project documentation for the regulatory environmental approval construction of similar facilities for required by law for an engineering and the Kuleshovskoye and Yablonevskoye geochemical survey program at the fields. A total of RUB 104 million is Yuzhno-Chernomorsky license block, expected to be spent in 2016-17 on the including an environmental impact completion of the first project and the assessment. implementation of the other two. In 2015, Priazovneft received East Siberian Oil and Gas Company environmental permits for the drilling completed construction and of an exploration and appraisal well, installation work to start Phase 1 Geologicheskaya 1, with all drilling in the Sludge Collector 2 Project waste taken ashore for treatment and at the Yurubcheno-Tokhomskoye disposal and action taken to repopulate field, providing more than RUB 111 marine species disturbed by offshore million in finance. The company also activities. In addition, environmental conducted a pre-project survey for monitoring activities were conducted the construction of Sludge Collector 3 at the Temryuksko-Akhtarsky license to store oily sludge and other drilling block. ROSNEFT Environment SUSTAINABILITY REPORT 2015 68

Underwater survey of exploration wells in the Pechora Sea

In 2015, RN-Shelf-Arctic carried out In 2015, RN-Shelf-Arctic obtained IN 2015, ARCTICSHELF an underwater survey of the heads regulatory environmental approval for NEFTEGAZ CONDUCTED AN of exploration wells drilled in the 12 engineering and geochemical survey UNDERWATER SURVEY OF THE Barents Sea in Russia’s Arctic region programs and several geophysical HEADS OF EXPLORATION WELLS in 1985-2001. The survey that covered and electrical exploration programs, the Zapadno-Prinovozemelsky, Yuzhno- including an environmental impact DRILLED AT THE MEDYNSKO- Russky and Pomorsky license blocks assessment. When preparing the VARANDEYSKY LICENSE BLOCK allowed the company to get a high- programs, the company aimed to IN THE PECHORA SEA. THE precision 3D model of the contours of benefit from synergies by including SURVEY ENABLED THE COMPANY the surrounding seabed and a video adjacent blocks in the scope of a of downhole equipment. The wells did combined survey. The environmental TO GET A HIGH-PRECISION 3D not have any negative impact on the permits were issued for five years. MODEL OF THE CONTOURS OF environment, with no hydrocarbon THE SURROUNDING SEABED spills or man-made hazards identified. In 2015, Arcticshelfneftegaz conducted AND A VIDEO OF DOWNHOLE an underwater survey of the heads RN-Shelf-Arctic also undertook an of exploration wells drilled at the EQUIPMENT effort to repopulate river and lake Medynsko-Varandeysky license species as compensation for damage block in the Pechora Sea. The survey caused to the local ecosystems by enabled the company to get a high- geophysical studies at the Zapadno- precision 3D model of the contours of Prinovozemelsky and Zapadno- the surrounding seabed and a video Matveyevsky license blocks in 2014 and of downhole equipment. No incidents at the Zapadno-Matveyevsky block in were reported. 2015. As a result of the project in the Vologda region, the company released In the same year, Arcticshelfneftegaz over 2.6 million nelva larvae into the also implemented a comprehensive river Kubena, over 300,000 Sterlet environmental monitoring program on fingerlings into the river Sukhona and the population of an Atlantic walrus 150,000 nelma fingerlings into Lake subspecies at the Nenetsky State Kubenskoye (the estuary of the river Nature Reserve during exploration Kubena). operations at the Medynsko- ROSNEFT Environment SUSTAINABILITY REPORT 2015 69

Monitoring program of the population of an Atlantic walrus subspecies at the Nenetsky State Nature Reserve

Varandeysky license block. The Under joint projects with Eni, on 28 and of baseline monitoring stations (a monitoring activities were conducted 29 May 2015, the company released survey of the fish fauna structure from ship, aircraft and land observation 227,560 juvenile Atlantic salmon into and the distribution of native platforms to study transects along the rivers Kola and Srednyaya in the fish species with a description of the coastline of the islands of Golets, Murmansk region to compensate for their community indicators such Matveyev and Dolgy that are part of the damage caused to the ecosystems by as density, age, size and weight nature reserve. The objective of the field operations at the Fedynsky license structure, habitat conditions, program was to assess the potential block under a geophysical survey physiological and epizootic impact of geophysical studies on the program in 2014. A comprehensive condition and depth distribution. Atlantic walrus population and other environmental monitoring program mammal species inhabiting the islands was undertaken at the Zapadno- Under joint projects in the Sea and marine ecosystems adjacent Chernomorskaya Area license block of Okhotsk, Rosneft and Statoil to the nature reserve. As many as to study the baseline conditions of the undertook an environmental effort in 887 Atlantic walrus species were marine ecosystem and assess potential accordance with Russian legislation registered, with observers failing to natural and man-made influences that to compensate for damage caused to detect any rapid changes in movement future exploration operations may have the marine ecosystem by operations at patterns or behavior or other signs on the site-specific environment. The the Lisyansky and Magadan 1 license of anxiety among the mammals. The program included the following stages: blocks by releasing juvenile Chum environmental monitoring did not salmon into the sea at the former block reveal any visible signs that exploration •• Baseline monitoring conducted and carrying out rehabilitation activities activities in the area were disturbing from 20 stations, including to build artificial Pacific herring the animals. hydrometeorological observations, spawning grounds at the latter block. hydrochemical surveys, air, In 2015, Arcticshelfneftegaz obtained salt water and seabed pollution In accordance with project design, regulatory environmental approval for surveys, hydrobiological surveys, Vankorneft, along with Suzun and three engineering and geochemical radiological air and seabed Tagulskoye, repopulated valuable fish survey programs and several sediment surveys, marine mammal species in aquatic ecosystems affected geophysical and electrical exploration and bird observations by infrastructure construction and programs, including an environmental operation, releasing more than 460,000 impact assessment. The environmental •• Ichthyological surveys conducted baby Coregonus and more than 300,000 permits were issued for five years. from 10 stations which are part baby Thymallus. ROSNEFT Environment SUSTAINABILITY REPORT 2015 70

Natural gas business

Key environmental initiatives in Discussions were held to consider 2015: natural gas business the possibility of drilling wells without using a pit at the Kynsko-Chaselstkoye In 2015, Rosneft’s air pollutant field as part of pilot infrastructure BY 38% emissions decreased by a total of development at the license block. 13.5% compared with 2014 despite its FROM 463 TO 336 TONNES PER hydrocarbon production y-o-y growth. Work was completed to prepare basic THOUSAND METERS DROPPED design documents for the construction DRILLING WASTE Rosneft’s subsidiary RN-Service- of a landfill at the Novo-Chaselstkoye Ecology assisted its another subsidiary, field for the disposal of all kinds of Rospan International, with reducing industrial and municipal solid waste the accumulated volume of drilling produced at construction and operation BY 13% waste by 14% as part of ongoing waste stages. The landfill is to be built management activities. during Phase 1 of the infrastructure DROPPED WATER CONSUMPTION development project. AND DISPOSAL With new reserves increasingly coming onstream, drilling waste dropped 38% Investment in environmental from 463 to 336 tonnes per thousand protection activities rose by 32% meters. y-o-y in 2015, primarily due to greater associated investment into the design, 35% Water consumption and disposal construction and reconstruction of dropped by 13%, resulting in a 35% Rospan International facilities. TOTALED DECREASE IN POLLUTANT decrease in pollutant emissions to EMISSIONS TO WATER AFTER water after treatment. TREATMENT ROSNEFT Environment SUSTAINABILITY REPORT 2015 71

Key environmental initiatives RN-TUAPSE REFINERY CONTINUED CONSTRUCTION WORK (PHASE 2) in 2015: oil refining and IN ITS PROJECT TO BUILD WASTEWATER TREATMENT FACILITIES, A petrochemicals UNIT FOR PRIMARY WASTEWATER TREATMENT PRIOR TO BIOLOGICAL TREATMENT AT THE TUAPSE PUBLIC UTILITY, WATER REUSE SYSTEMS, While building environmental A FLOODING-RESISTANT DRAINAGE SYSTEM protection infrastructure and improving environmental compliance is central to reducing the overall impact of downstream operations on •• RN-Tuapse Refinery continued completed an upgrade project to the environment, Rosneft is working construction work (Phase 2) in connect its sewage pipes to the under a multilateral agreement with its project to build wastewater treatment facility at the plant’s the Federal Antimonopoly Agency, treatment facilities, a unit for Shop Floor No. 23. This will help the Federal Agency for Technical primary wastewater treatment to perform industrial wastewater Regulation and Metrology and the prior to biological treatment at treatment of the Novokuybyshevsk Federal Service for Environmental, the Tuapse public utility, water CHPP-2 using biological treatment Technical and Nuclear Oversight to reuse systems, a flooding- equipment of Shop Floor No. 23 improve its capabilities: resistant drainage system and and significantly reduce pollutant a water-carrying element, emissions into the river Krivusha •• Angarsk Petrochemical water-carrying element (No. 3) Company is building an advanced at the On-site Water Supply and •• Eastern Petrochemical Company wastewater treatment facility on Sewage Disposal Network. In obtained regulatory environmental its premises. Project activities addition, work was completed to approval for its project planned for the 2015 phase put into operation water-carrying documentation to construct a included design development, elements (Nos. 1 and 2) at this marine tank terminal in Vostok equipment and material network Bay, Primorsky Krai procurement, and the beginning of construction work. In particular, •• Novokuybyshevsk Oil and •• Nizhny Vartovsk Oil Refinery 10 Russian-made UV systems for Additive Plant finalized design continued to build an enclosed the disinfection of wastewater documentation and began the flare system that offers many were additionally installed at the construction of an industrial advantages compared with company’s wastewater treatment wastewater treatment plant open, elevated flares such as plant to boost its capacity. The and a water reuse unit (No. 3). no smoke, no steam, no visible new systems added more than In 2015, the company mounted flame, no odor, no thermal plume, 30% of the plant’s installed filters, pumping equipment at no radiation and controlled capacity. The UV disinfection the mechanical and chemical emissions. plant of Angarsk Petrochemical treatment unit and pretreatment Company is one of the largest settling tanks, planning to facilities of the kind in Siberia commence the facility in 2016 and is capable of treating up to 250,000 cm of both industrial and •• The Novokuybyshevsk CHPP-2 municipal wastewater combined heat and power plant ROSNEFT Environment SUSTAINABILITY REPORT 2015 72

Angarsk Petrochemical Company

Key environmental initiatives in material procurement, and the 2015: distribution and sales beginning of construction work. The total costs are estimated at around In 2015, Irkutsk-Terminal, a company RUB 66 million. Phase 1 of the project incorporated into Irkutsknefteproduct, is to be completed in 2016. completed a pre-project survey and started the reconstruction of treatment In 2015, Sheremetyevo Filling Station facilities at its division in Ust-Kut. The finalized project design to begin in 2016 total costs of the project are estimated the reconstruction of the industrial at around RUB 60 million, with the stormwater runoff facility at its fuel project completion date set for 2017. and lubricant warehouse. The total costs are estimated at around RUB 114 RN-Tuapsenefteproduct completed million, with the project completion the upgrade of the treatment plant date set for 2018. “Coalescent,” investing RUB 16 million in the project. In 2015, RN-Arkhangelsknefteproduct completed a pre-project survey to build RN-Nakhodkanefteproduct started a RUB 200 million waste treatment unit construction and installation work scheduled to be put into operation in under a treatment plant reconstruction 2018. project scheduled to be completed in 2018. Project activities in 2015 included Key environmental initiatives in design preparation, equipment and 2015: oilfield services

The remediation of affected lands and IN 2015, THE COMPANY mud pits under drilling agreements CONDUCTED AN and the safe waste disposal according ENVIRONMENTAL to the type and class of hazards are an The register is updated annually. MONITORING PROGRAM ON integral part of robust environmental In 2014, the Company operated 237 THE POPULATION OF POLAR management that Group entities are facilities which were either located BEARS (SHIP, AIR, AND striving to achieve by contracting third within and near protected areas or LAND-BASED MONITORING) parties that are licensed to provide had a significant impact on their INHABITING THE NENETSKY such environmental services. biodiversity. Biodiversity risks were STATE NATURE RESERVE. evaluated for 31 major facilities in NO IMPACT ON MARINE In 2015, RN-Bureniye acquired and operation. Group entities regularly MAMMALS WAS IDENTIFIED put into operation an on-site sewage conduct on-site environmental FROM GEOPHYSICAL STUDIES treatment facility, intending to buy monitoring activities to assess the DURING THE ENTIRE PERIOD more such units in 2016 and build a impact of their production facilities OF OBSERVATIONS thermal treatment plant. on biodiversity and develop corrective action to eliminate environmental Special protection and damage. environmentally sensitive areas In 2015, the Company also conducted Rosneft employs a rigorous approach studies on polar bears (ship, air, to evaluating and mitigating its overall and land-based monitoring) and impact on biodiversity in line with implemented an environmental major international and Russian monitoring program on the population regulations that govern economic of Atlantic walrus subspecies and activities at special protection and other mammal species inhabiting environmentally sensitive areas. The the Nenetsky State Nature Reserve. Company keeps its own register of No impact on marine mammals special protection areas which it uses was identified from geophysical as a framework for regular analysis studies during the entire period of and monitoring of their ecosystems. observations. ROSNEFT Environment SUSTAINABILITY REPORT 2015 73

Air pollutant emissions by business segment33, thousand tonnes

Indicator 2013 2014 2015

Total air pollutant emissions, including: 1,802 1,619 1,575

oil and gas production 1,610 1,436 1,393

oil refining 156 144 139

gas business 11 18 16

distribution and sales 18 17 19

oilfield services 6 3 8

Air emissions by pollutant, thousand tonnes

Indicator 2013 2014 2015

Total air pollutant emissions, including 1,802 1,619 1,575

particulate matter 94 86 87

sulfur dioxide 63 58 55

carbon monoxide 948 828 810

nitrogen oxide 53 49 50 BILLION hydrocarbons (excl. volatile rub 15,6 328 326 282 organic compounds)

TOTALED CAPITAL volatile organic compounds 313 266 288 EXPENDITURES UNDER THE APG UTILIZATION PROGRAM benz(a)pyrene 0.000014 0.000011 0.000014

other 3 6 3

ENVIRONMENTAL PROTECTION PERFORMANCE IN 2015 Rate of air pollutant emissions, tonnes per thousand tonnes of coal equivalent Air pollution Indicator 2013 2014 2015 The flaring and venting of associated SO2 emissions petroleum gas and its derivatives is the most significant source of oil and gas production 0.06 0.05 0.05 air pollution from the Company’s oil refining and petrochemicals 0.34 0.33 0.29 operations. In 2015, the Company scaled down its total emissions as a NOX emissions result of measures taken under its Gas Investment Program. oil and gas production 0.11 0.1 0.09

oil refining and petrochemicals 0.1 0.1 0.13 It also continued to implement initiatives aimed at improving Hydrocarbon emissions (incl. volatile organic compounds) associated gas utilization and reducing pollutant emissions into the oil and gas production 1.51 1.39 1.24 atmosphere. oil refining and petrochemicals 0.79 0.66 0.63

33 Numbers may not add up to totals due to rounding. ROSNEFT Environment SUSTAINABILITY REPORT 2015 74

35 At the same time, sulfur dioxide and heat at 28.1 million tonnes of CO2 rate of associated petroleum gas emissions from the Company’s equivalents. (APG). The APG utilization rate in the downstream operations dropped reporting period increased to 87.9%, by 11% y-o-y as a result of refinery When calculating its greenhouse 7.1 percentage points above the 2014 upgrade projects, including the gas emissions, the Company relies level. Capital expenditures under the conversion of coal boilers to natural on the Quantitative Greenhouse Gas APG utilization program totaled RUB gas and the installation of floating Emission Estimation Methodologies 15.6 billion39. roofing at tanks. for Organizations Engaged in Business and Other Activity in the Russian In 2015, the Company launched 20 Greenhouse gas emissions Federation, approved by the Russian projects to increase its APG utilization Ministry of Natural Resources and the rate, which primarily included the The Company is working to lower Environment by Order No. 300 of 30 construction and reconstruction of the its greenhouse gas emissions June 2015. following surface infrastructure: through initiatives provided in its Gas Investment Program and Energy Indirect emissions from the use of •• Gas final-stage compression Efficiency Program. In 2015, Rosneft’s the Company’s products totaled 292.3 facilities: a low-stage compression 36 greenhouse gas emissions totaled million tonnes of CO2 equivalents . facility at the Gorbatovskoye

74.1 million tonnes of CO2 equivalents, field (Samaraneftegaz), a low- with direct emissions34 standing at Use of associated petroleum gas stage compression facility at

46.0 million tonnes of CO2 equivalents Booster Pump Station No. 5 at and indirect emissions from the In 2015, Rosneft continued with its the Malobalykskoye field (RN- consumption of purchased electricity dedicated program to achieve the Yuganskneftegaz), a compression 95%38 milestone in the utilization station at the Ust-Kharampurskoye field (RN-Purneftegaz) and Greenhouse gas emissions by sector, tonnes of CO equivalents per 2 compressor facilities at the thousand tonnes of coal equivalent37 Uzunskoye and Zapadno-Ust- Indicator 2014 2015 Balykskoye fields (Slavneft- Megionneftegaz) Greenhouse gas emissions •• Power generation facilities: a oil and gas production 0.161 0.141 natural gas-fueled piston engine oil refining 0.138 0.175 power plant at the Zapadno- Asomkinskoye and Arigolskoye gas business 0.102 0.067 fields (Slavneft-Megionneftegaz) and on-site power plants at distribution and sales 0.014 0.007 the Verkhnechonskoye field (Verkhnechonskneftegaz) APG utilization40

Indicator 2013 2014 2015

APG utilization CAPEX, RUB billion 28.7 21.8 15.6

APG well production, billion cubic meters 32.8 35.5 37.7

APG utilization, billion cubic meters 22.9 28.7 33.1

APG utilization rate, % 69.8 80.8 87.941

APG (hydrocarbons) flared as part of usual operations, billion cubic meters 9.9 6.8 4.6

APG flared, % of total APG production 30.2 19.2 12.242

Hydrocarbons venting, billion cubic meters 0 0 0

34 Scope 1 as defined in the Corporate Accounting and Reporting Standard of the Greenhouse Gas (GHG) Protocol, developed by World Resources Institute (WRI) and World Business Council on Sustainable Development (WBCSD) 35 Scope 2 as defined in the above standard 36 Other indirect GHG emissions (Scope 3) were calculated based on the sales of oil products in 2015 37 These calculations were made taking into account both direct (Scope 1) emissions and indirect (Scope 2) emissions from the consumption of purchased electricity and heat 38 The target is set for the Company’s active fields and is to be achieved by 2020 39 The total value is adjusted for VAT and includes 100% of expenditures incurred by all Group entities irrespective of the equity size held by the Company. 40 The utilization rates across the Company’s assets in Russia 41 If calculated using the data presented in this table, the utilization rate will be 0.1% lower due to rounding 42 The percentages of APG utilization and flaring do not add up to 100 due to rounding. ROSNEFT Environment SUSTAINABILITY REPORT 2015 75

•• Gas pipelines (Samaraneftegaz, •• RN-Uvatneftegaz increased its APG Water consumption and RN-Stavropolneftegaz and production by 0.1 bcm after the wastewater discharge Orenburgneft). launch of a gas-turbine thermal power plant at the Tyamkinskoye Water consumption levels The Company’s APG utilization field as a gas utilization option at Rosneft rose in 2015 as program spans its regions of the Company extended its presence, with most developed APG •• More gas was transported from perimeter for environmental data utilization infrastructure concentrated the RN-Purneftegaz and RN- collection to include Slavneft- in West Siberia and central and south Yuganskneftegaz fields to Sibur’s Krasnoyarskneftegaz, Slavneft- Russia. Rosneft takes a rigorous facilities (an increase of 0.3 bcm). Megionneftegaz, Novokuybyshevsk approach to planning the full cycle Petrochemical Company and other of exploration and development The Company is determined to Group entities. Another factor behind operations at new fields, which continue with the program in the greater use of water resources includes the preparation of project 2016. The key initiatives scheduled was an increase in the production documentation for setting and for the next year include the of well water that is used as an achieving targeted APG utilization launch of a compressor for gas injection fluid after treatment to rates. reinjection into formations and the maintain formation pressure. temporary storage facility at the The improved APG utilization rate in Verkhnechonskoye field operated Rosneft recognizes its responsibility 2015 was due to a combination of the by Verkhnechonskneftegaz. The for the sustainable use of natural following: compressor will have an annual resources, including water, and capacity of up to 1 bcm of gas. maintains a strong focus on •• Vankorneft increased its APG achieving better environmental utilization rate by 3.2 bcm of APG outcomes. By reclaiming and reusing to 88% after the launch of facilities more water in 2015, the Company in April 2014 to transport gas to reduced withdrawals from surface the Unified Gas Supply System and ground water sources compared operated by Gazprom with the previous year – by 7 % in upstream operations and by 5% in downstream operations. ROSNEFT Environment SUSTAINABILITY REPORT 2015 76

Water consumption, million cubic meters

Indicator 2013 2014 2015 Use of water from all sources (total 1,444.7 1,514 1,754.1 consumption), including

In line with its commitment to use oil and gas production 1,339.5 1,411 1,642.6 natural resources in a responsible, oil refining 98.3 96.8 105.2 sustainable manner, the Company released 41% less produced water gas business 0.1 1.9 1.6 into soils in 2015 compared with 2014. distribution and sales 2.5 3 2.3 oilfield services 4.3 1.3 2.4 In 2015, the disposal of third-party wastewater using the Company’s Water withdrawals from all sources43, million cubic meters facilities increased by 76%, or around 17,698,000 cm, with Ryazan Oil Indicator 2013 2014 2015 Refinery accounting for more than 90% of such disposal operations. Water withdrawals from all sources 1,713.1 1,778.6 2,055 The disposal by the Company of its ground water 85.4 83.9 94.2 own wastewater remained at a flat level. However, Rosneft produced surface water 204.5 203.4 222.3 more wastewater in 2015, which led to the increased release of third-party water supply networks 38.4 35.7 36.1 undertreated wastewater into the own reservoirs 1.1 1.2 1.3 environment. There were two more contributing factors - the scaled stormwater 8.9 8.4 7.1 down operations of the biological treatment plant at Syzran Oil wastewater 112.2 106.1 113.3 Refinery due to a reconstruction produced water 1,229.8 1,310.7 1,563.4 project and the extension of the data collection perimeter to include bottom water 32.8 29.2 17.2 Novokuybyshevsk Petrochemical Company. 43 Сумма цифр в некоторых строках может не совпадать с общим итогом вследствие округления. ROSNEFT Environment SUSTAINABILITY REPORT 2015 77

The Company is highly concerned Waste management and Reused and recycled water, about the wastewater management contaminated land remediation million cubic meters issue and continues a large- scale effort to build and upgrade In 2015, the Company met its targets centralized wastewater disposal for the non-accumulation of waste. 1,467 systems at its oil refineries to Despite the significant increase in 1,157 1,159 improve their environmental the volume of drilling waste, which sustainability. more than doubled due to heavier exploratory drilling, Rosneft managed to effectively remove such waste

Produced water 2013 2014 2015

Indicator 2013 2014 2015

Total produced water, million cubic meters 1,229.8 1,310.7 1,563.4

Injection without treatment, million cubic meters 26.1 28.5 13.2

Injection after treatment, million cubic meters 1,117 1,193.9 1,438.5

Produced water use, million cubic meters, including 86.7 88.06 111.2

injections into formations 84.5 86.13 110.1

discharges into waterways 0 0 0

discharges into soils 2.2 1.93 1.1

Total hydrocarbons in oil and gas wastewater, thousand tonnes 17.5 17.5 18.5

Total wastewater discharges, thousand cubic meters

Indicator 2013 2014 2015

Wastewater discharges into third-party networks for reuse 401 356 307

Domestic wastewater discharges 98,757 92,835 71,906

Industrial wastewater discharges, including 161,263 167,498 190,792

into surface waterways 90,835 91,037 110,719

into formations 68,366 74,681 78,655

into soils 2,062 1,780 1,417

including:

properly treated wastewater 110,629 111,987 112,456

contaminated and poorly treated wastewater 50,634 55,511 78,336

Wastewater discharges into surface waterways, thousand cubic meters

Indicator 2013 2014 2015

Wastewater discharges into surface waterways, including 90,835 91,037 110,719

oil and gas production 33 59 106

oil refining 89,462 90,434 110,058

gas business 0 21 20

distribution and sales 674 452 425

oilfield services 666 71 110 ROSNEFT Environment SUSTAINABILITY REPORT 2015 78

from the environment. The volume Waste management, thousand tonnes of accumulated oily waste rose as a Indicator 2013 2014 2015 result of a more accurate count of Waste stored at the beginning of waste stored at evaporation ponds 7,56744 11,28944 10,34945 the year, thousand tonnes operated by RN-Stavropolneftegaz, which led to the upward revision of the including oily waste 1,420 5,988 5,975 volume of third-party oily sludge by including drilling cuttings 3,992 3,109 2,140 around 4,174,000 tonnes. Adjustment for waste in the current period 4,913 29546 4,694 The total area of oil-contaminated lands decreased, though the total area including oily waste 4,732 120 4,22647 of newly contaminated lands slightly including drilling cuttings 155 187 391 expanded. Ruptured oil pipes were the main source of soil contamination. To Waste produced during the year 3,056 3,25346 5,393 prevent soil pollution, the Company implements comprehensive measures including oily waste 458 755 591 to enhance pipeline safety and improve including drilling cuttings 1,484 1,357 3,186 oil spill response strategies, including containment and clean-up techniques. New waste inventories (third-party waste and waste taken over as a result of a 1,34848 94548 1,578 reorganization of another legal entity)

including oily waste 222 164 271

including drilling cuttings 1,121 777 1,304

Waste used during the year 348 46946 995

including oily waste 142 152 100

including drilling cuttings 78 112 487

Waste treated and recycled 154 23546 266

including oily waste 129 128 236

including drilling cuttings 18 0 0

Waste buried 152 125 95

including oily waste 3 2 3

including drilling cuttings 91 67 28

Waste transferred to third parties 4,94048 5,06948 5,925

including oily waste 570 886 602

including drilling cuttings 3,456 3,437 4,164

Waste at the end of the year 11,28944 9,88344 14,73449 11,719 including oily waste 5,988 5,858 10,122 HECTARES including drilling cuttings 3,109 1,813 2,342

44 Data for the beginning of 2013 was slightly revised to include third-party oily sludge accumulated on the site of OF LANDS REMEDIATED DURING 2015 Ryazan Oil Refinery. Waste data for the end of 2013 and the beginning of 2014 and 2015 was updated accordingly 45 Data for the beginning of 2015 differs from data for the end of 2014 due to the extension of the environmental reporting perimeter 46 Waste management data for 2014 was slightly updated 47 The adjustment was due to the updated volume of third-party oily waste that was revised upward by around 4,174,000 tonnes following the 2015 physical count of waste stored at the evaporation ponds of RN‑Stavropolneftegaz 48 Data on waste taken over from, or transferred to, third parties in 2013-14 was updated to include waste taken over from legal entities that are part of the Rosneft group. 49 The volume of waste at the year-end was revised upward after the physical count of oily waste (see footage 47 above) and the extension of the environmental reporting perimeter. ROSNEFT Environment SUSTAINABILITY REPORT 2015 79

Crude oil and petroleum product spills, tonnes

Indicator 2013 2014 2015

Total crude oil and petroleum product spills 4,226 8,815 4,581

Land contamination and remediation, hectares

Indicator 2013 2014 2015

Contaminated land at the beginning of the year 4,715 4,344 4,22250

Contaminated land as adjusted after a pre-project survey 84 6551 212

Newly contaminated lands 439 378 413

Contaminated lands at the end of the year 4,344 4,17151 4,136

Lands remediation during the year 14,143 13,78951 11,719

Including contaminated lands 792 603 707

Natural recovery of disturbed and contaminated lands 105 12 72

Total mud pits

Indicator 2013 2014 2015

At the beginning of the year 1,30452 99252.53 80850

At the end of the year 98052 76452 719

Built during the year 240 311 327

Remedied during the year 564 539 416

50 Data for the beginning of 2015 differs from data for the end of 2014 due to the extension of the environmental reporting perimeter 51 Data on the total area of contaminated and remedied lands in 2014 was updated 52 Data on mud pits at the beginning of 2013 was slightly updated. Data for the end of 2013 and the year 2014 was updated accordingly 53 Data for the beginning of 2014 differs from data for the end of 2013 due to the extension of the environmental reporting perimeter. ROSNEFT Environment SUSTAINABILITY REPORT 2015 80

and Achinsk Refinery – converted to the production of Euro 5 fuel in 2015. Earlier, such programs were Green fuel production More than 30 plants with a total completed at the Company’s refineries installed capacity of 60 million tonnes in Komsomolsk-on-Amur, Kuybyshev, In 2009, the Company launched a long- a year are to be built or reconstructed Novokuybyshevsk, Syzran, Ryazan and term effort to upgrade its refineries. under the program until 2020, Saratov. The dedicated program provides for excluding auxiliary facilities. the reconstruction and construction In 2015, the Company also launched of new facilities and the deployment In 2015, Rosneft completed major isomerization units at its refineries of world-class measurement and upgrades across its refineries in Kuybyshev, Novokuybyshevsk and automated process control systems. to convert them to the exclusive Ryazan. In addition, it completed the The goal of the program is to ensure production of Euro 5 gasoline and reconstruction of a catalytic reforming the Company’s compliance with new diesel fuels for the domestic market, unit at the Syzran refinery and the technical regulations and create meeting its commitment to launch reconstruction of a reforming unit at capabilities for increasing the depth the production of environmentally the Kuybyshev refinery. of refining and converting to the friendly fuels as scheduled. Rosneft’s production of Euro 4 and 5 fuel to fully two Siberian-based refineries – The Company will focus on efforts to satisfy domestic demand for such fuel. Angarsk Petrochemical Company increase refining complexity.

Output of diesel fuels, thousand tonnes

% of total output Indicator 2013 2014 2015 product

Class 3 8,095 4,989 —

Class 4 3,617 4,341 6,051 34.7%

Class 5 11,337 12,337 11,386 65.3%

Total output of motor gasolines above Class 2 23,049 21,667 17,437 100%

Production of motor gasolines, thousand tonnes

% of total output Indicator 2013 2014 2015 product

Class 3 3,915 2,600 —

Class 4 1,973 2,566 2,101 19%

Class 5 7,410 7,350 8,584 76%

Total output of diesel fuels above Class 2 13,298 12,517 10,685 95%54

54 The 2015 output of Euro 2 motor gasolines totaled 581,000 tonnes, or 5% of all gasolines produced. ROSNEFT Environment SUSTAINABILITY REPORT 2015 81

ENERGY CONSUMPTION AND ENERGY EFFICIENCY

Rosneft continues to invest resources Board of Directors. In monetary terms, •• Oil and gas processing: 335,000 tce, in achieving better production the Company saved around RUB 7.3 or 9.3 million GJ, 21%58 above the efficiency, an imperative to become billion, 19% more than it planned, target a global industry leader. Energy while its expenditures under the efficiency is an integral part of this energy efficiency program totaled RUB •• Distribution and sales: 5,400 tce, process. The Company met its energy 1.1 billion. or 0.07 million GJ, 20%59 above the efficiency targets set for 2015 as a target result of initiatives implemented under Under its energy efficiency program, its dedicated program. Rosneft achieved the following energy •• Drilling and oilfield services: 1,300 savings in 2015: tce, or 0.03 million GJ, 11%60 above In particular, the Company reduced its the target. energy consumption55 by 1,014,00056 •• Oil and gas production: 673,000 tce, tce, or 17.3 million GJ, which was 18% or 7.9 million GJ, 16%57 above the above the target level set by Rosneft’s target

Energy consumption, million gigajoules

Indicator 2013 2014 2015 Total consumption of renewable and non-renewable energy resources in 257.8 283.9 290.1 energy production

Total consumption of electricity 127.3 154.2 160.0

Total consumption of heat 76.0 79.9 90.6

Total energy consumption61 391.0 442.8 450.3

55 Hereinafter the total energy saving indicators are cited in accordance with the “Methodological Provisions for Russian Federation Fuel and Energy Balance Estimations in Accordance with the International Practice procedure” (approved by the State Statistics Committee of the Russian Federation Resolution No. 46 dated June 23, 1999), accepted in the Company, which provides for recalculation of electric energy by taking into account the electric energy generation efficiency factor. The total energy saving, calculated by conversion of units in accordance with GOST R 51750-2001. “Energy Saving. Procedure for Determining Energy Consumption in Manufacturing Produce and Rendering Services in Technological Energy Systems. General Provisions” is given in the footnotes 56 This equals 589,110 tce in accordance with the GOST R 51750-2001 Standard 57 This equals 269,010 tce (124.1% of the target) in accordance with the GOST R 51750-2001 Standard 58 This equals 316,620 tce (121.4% of the target) in accordance with the GOST R 51750-2001 Standard 59 This equals 2,540 tce (1.0% of the target) in accordance with the GOST R 51750-2001 Standard 60 This equals 940 tce (0,1% of the target) in accordance with the GOST R 51750-2001 Standard. 61 The values in the above lines do not add up to total energy consumption, as total electricity and heat consumption includes energy produced by assets owned by the Group The indirect consumption of primary energy from all sources totaled 504.4 million GJ in 2015, 491.7 million GJ in 2014 and 406.8 million GJ in 2013. ROSNEFT Environment SUSTAINABILITY REPORT 2015 82

FORUM ON ENERGY EFFICIENT OIL PRODUCTION

The Company annually holds a corporate conference, entitled “Forum on Energy Efficient Oil Production,” intended to provide an organization- wide platform for discussing energy efficiency issues. At the forum hosted 18% ABOVE by RN-Krasnodarneftegaz in 2015, participants discussed reports on pilot THE TARGET LEVEL REDUCTION IN tests of energy efficiency equipment ENERGY CONSUMPTION IN 2015 and technologies, as well as technology solutions for reducing energy costs without heavy investment. In 2015, the Company implemented committee developed and approved The forum, held under the theme many energy efficiency initiatives in model terms of reference for the “Energy Efficient Oil Production: 2016 accordance with its energy efficiency implementation of, and certification Goals and Objectives,” for the first policies and the Corporate Standard to, the ISO 50001 standard, as well as time featured delegations of energy “Energy Management System: developed implementation processes intensive equipment manufacturers Procedures and Guidance.” In addition, for Group entities. Two Group entities and engineering companies who the Company updated its roadmap for were certified to the standard in presented innovative energy efficiency deploying the Energy Management 2015. Twenty-seven entities more are solutions and equipment. The Company System and improving energy expected to obtain such certification by considers turning the 2016 forum into efficiency levels in 2015-17. the end of 2016. an industry-wide event by inviting Russia’s all major oil producers to it. Rosneft’s Committee on Energy The Company also continued work on Efficiency continued work in enhancing its internal energy efficiency accordance with energy management regulations, approving energy procedures, approving at its two consumption guidelines for upstream meeting in 2015 steps toward achieving and downstream entities. better energy efficiency and building a strong Energy Management System In 2015, Rosneft introduced an across the Company. In particular, the employee motivation system using ROSNEFT Environment SUSTAINABILITY REPORT 2015 83

TWO GROUP ENTITIES WERE CERTIFIED TO THE ISO 50001 STANDARD IN 2015. TWENTY-SEVEN ENTITIES MORE ARE EXPECTED TO OBTAIN SUCH CERTIFICATION BY THE END OF 2016

annual KPIs in energy efficiency for developed and approved a guidance and recognize top performers in the top managers of the corporate on the selection of well pumping energy efficiency. The 2014 top headquarters and Group entities. equipment manufacturers based performers were Samotlorneftegaz on their energy efficiency, planning and Varyeganneftegaz in the upstream It also instituted the position of energy to extend such sustainability segment and Saratov Refinery, Ryazan manager across its upstream and requirements to manufacturers of Refinery and RN-Tuapse Refinery downstream entities in accordance other core power equipment used in in the downstream segment. They with the 2014 and 2015 staffing plan. Rosneft’s operations. received monetary awards.

Rosneft continues to implement its The Company conducts regular energy centrally managed program on the efficiency checks in accordance with deployment of an energy efficiency its internal regulations, which are control IT system spanning 13 critical to the implementation of a upstream and 10 downstream entities. strong energy management system. In 2015, such checks were performed at An important milestone was the 29 upstream and downstream entities inclusion of energy efficiency accounting for 95% of the Company’s requirements in bidder qualification total energy consumption to share criteria. In 2015, the Company also energy efficiency recommendations ROSNEFT Employees SUSTAINABILITY REPORT 2015 84

EMPLOYEES

HR MANAGEMENT SYSTEM a specialized holding company, A key measure to optimize HR was created and integrated into business processes in 2015 was the In 2015 Rosneft confirmed its status the Company. In addition, Rosneft development and implementation of as one of the largest employers in the made the transition to in-house model organizational structures in the Russian Federation. The headcount servicing of energy assets and in- following functions and subsegments: of Group entities increased by 15,800 house drilling supervision in 2015, reaching a total of 258,800 •• Geology and Field Development by year end. This increase was due •• To facilitate the integration of (in the Oil and Gas Production largely to newly acquired assets and Novokuybyshevsk Petrochemical segment) new employees hired from third-party Company, a new organizational service contractors. structure and staffing plan were •• Personnel and Social Programs (a developed and approved model organizational structure was In 2015 Rosneft continued to pursue introduced in key Group entities its HR and social policy in accordance •• To enhance the regional sales other than oil and gas companies) with the HR Strategy to 2020. As business, an organizational part of the strategy’s focus on structure was designed for RN •• Tax Management. labor efficiency management, labor Regional Sales, positions were efficiency indicators were approved evaluated, and a matrix of pay In 2015 the model organizational in 2015 for the Company as a whole ranges was prepared structure of the Health, Safety and and for individual business segments. Environment segment was updated. All approved indicators were •• A project was completed to transfer communicated to Group entities for the logistics services of six oil In 2015 a plan was approved for the use in business planning and included refineries to a specialized company, automation of HR business processes in the performance indicators of RN Trans to 2020, including ongoing efforts Rosneft’s top managers and the heads to create and implement a single of Group entities, effective in 2016. •• A standard filling station structure corporate template for personnel In 2015 a list of initiatives to enhance was developed for implementation accounting and payroll. A project was the Company’s labor efficiency was at Group entities in the retail launched to roll out the previously prepared and added to the updated business created single corporate template on Long-Term Development Program. the SAP platform in five Group entities: •• 15 terminal companies were Angarsk Petrochemical Company, To improve manageability and optimize combined with companies in the Angarsk Polymer Plant, Angarsk business processes as well as to cut Oil Product Supply Segment, and Catalyzer and Organic Synthesis Plant, Group entities’ costs in the segments their operational management was RN Purneftegaz and RN Northern Oil. of Exploration and Production, transferred Work was begun on a similar template Refining, and Commerce and Logistics, solution on the 1С platform for small the following structural changes were •• HR support was provided for Group entities. made in 2015: a project to restore the power divisions at four oil refineries: •• In the Exploration and Production Angarsk Petrochemical segment, RN Drilling and the RN Company, Novokuybyshevsk Service Group were reorganized; Refinery, Kuybyshev Refinery and TsEPiTR BN RiD, a branch of Novokuybyshevsk Oil and Additive RN Management in Tyumen, Plant. was liquidated; and RN-GRP, ROSNEFT Employees SUSTAINABILITY REPORT 2015 85

Staff structure employees) of the total year-end headcount. The percentage of women In 2015 Rosneft’s staff structure was employees remained at the level of not significantly different from the 2014: 34%. Women held 24% of the year before. The majority of Company Company’s management positions at employees (97%) were located in the end of 2015 and represented 17% Russia, while the largest share outside of top management. of Russia (2%) were employed in Group entities in Ukraine. The decline in the HR MANAGEMENT percentage employed in Ukraine had to PERFORMANCE IN 2015 do with a partial transfer of employees to entities in Russia. Employee remuneration

The average age of Rosneft employees Social and benefit payments and one- also remained practically the same at time bonuses included in gross payroll 39.7 years. Employees in management averaged RUB 41,700 per employee in EMPLOYEE SURVEYS positions made up 12.6% (32,500 2015. The average monthly salary for To monitor employee satisfaction with social and personnel programs, periodic surveys are done of Company employees. 8,326 employees of 35 Group entities in various regions of Russia were surveyed in 2015, representing at least 10% of the total headcount of each participating company.

These surveys give employees the opportunity to evaluate the work environment in Group entities. The criteria that received the highest ratings were “observance of safety regulations,” “constructive relations with immediate supervisors,” “teamwork” and “benefits package.” Surveyed employees noted such corporate initiatives as the Spartakiad sports tournament, the Best in the Profession Competition, science and technology conferences and such social programs as voluntary health insurance, corporate pension schemes and personnel training and development. ROSNEFT Employees SUSTAINABILITY REPORT 2015 86

Staff breakdown by country, employees

240,507 Russia 5,018 Ukraine 1,931 Other countries

RATING OF DEPUTY CEOs RESPONSIBLE FOR PERSONNEL AND SOCIAL PROGRAMS Staff breakdown by country, employees In 2015, to enhance HR management, a procedure was developed for monitoring the quality of HR functions 617 Belarus in Group entities. Based on the 567 Venezuela monitoring and analysis of HR 300 Kyrgyzstan indicators for 2015, an annual rating 157 Vietnam will be generated for deputy CEOs 118 Abkhazia responsible for personnel and social 34 Armenia programs (heads of HR services) in 32 Brazil Group entities. Annual ratings will be 44 Latvia generated for each of four groups of 26 Switzerland 11 UK entities: 9 Poland 8 Mongolia •• oil and gas production companies 8 Norway

•• oil refineries and oil and gas chemical companies all Group entities reached RUB 69,900 collective results in 2015, Rosneft’s in 2015, and the great majority of these local rules for tallying the results •• oil product supply companies entities have traditionally paid higher were substantially revised. One key (regional sales) salaries than other companies in the change was a significant increase in same regions. the rewards for first-place rating and •• corporate service companies and and the introduction of second- and other Group entities Effective 1 April 2015, to enhance the third-place rewards. The revised rules real value of salaries and compensate are currently in the process of being The winners in each group will receive for inflation, salaries were indexed approved. honorary certificates and a money 7.5% for employees of Group entities in reward; those who place second and Russia (with the exception of upper- Another important effort in 2015 to third will receive certificates. level managers). By a decision of improve the incentive system and Rosneft management, the salaries motivate employees to meet ambitious of employees at the corporate targets was the development of project headquarters and upper-level rewards for employees. At the end of managers of Group entities were not 2015, the concept of project-oriented indexed in 2015. rewards was in the process of being approved. Each year Group entities take part in an integral rating to determine which A system of key performance THE AVERAGE MONTHLY entity is the best in various business indicators (KPIs) is an essential SALARY FOR ALL GROUP sectors: oil and gas production, element of the Company’s HR policy. ENTITIES REACHED RUB oil refining, gas processing, Pursuant to directives of the Russian 69,900 IN 2015 petrochemical and lubricant government, a number of new KPIs production, oil product supply and R&D were developed in 2015, including the Institute. To improve the rating method following in the area of sustainable and provide incentives for Group development: entities’ employees to achieve high ROSNEFT Employees SUSTAINABILITY REPORT 2015 87

Social payments (social payment fund), benefit payments and one-time bonuses included in gross payroll in 2015, RUB million SOCIAL AND BENEFIT PAYMENTS AND ONE-TIME BONUSES INCLUDED IN GROSS PAYROLL AVERAGED

RUB 41,700 954.70 Wellness programs for employees and members of their families PER EMPLOYEE IN 2015 492.34 Employee termination 833.93 Retirement 1,731.61 Voluntary health insurance 1,885.05 Other social payments 4,415.40 Benefit payments and one-time bonuses included in gross payroll

•• fuel and energy savings – added to •• injury frequency rate – added to the •• purchasing efficiency of small and the list of personal performance collective performance indicators medium-sized businesses – added indicators of the vice president for of all production segments to the performance indicators energy and localization of the top manager in charge of Rosneft’s procurement function.

Comparison of monthly salaries in select Rosneft Group entities and their regions of operation, RUB

Ratio of the Average salary Average salary subsidiary’s average paid by the Key regions of operation Subsidiary in the same salary to the average subsidiary region in 2015 salary in the same in 2015 region in 2015, %

Arkhangelsk Region RN Arkhangelsk Nefteprodukt LLC 35,908 38,193 94%

Angarsk Petrochemical Company OJSC 61,229 32,625 188%

Angarsk Polymer Plant OJSC 54,389 32,625 167% Irkutsk Region Irkutsknefteprodukt CJSC 35,666 32,625 109%

Verkhnechonskneftegaz OJSC 105,305 32,625 323%

RN Krasnodarneftegaz LLC 44,557 26,706 167%

RN Tuapse Refinery LLC 50,600 26,706 189% Krasnodar Territory RN Tuapsenefteprodukt LLC 39,592 26,706 148%

RN Kubannefteprodukt OJSC 23,747 26,706 89%

Vankorneft CJSC 127,678 35,737 357%

East Siberian Oil and Gas Company CJSC 111,532 35,737 312% Krasnoyarsk Territory Achinsk Refinery VNK OJSC 61,113 35,737 171%

RN Krasnoyarsknefteprodukt LLC 49,577 35,737 139%

Buguruslanneft LLC 37,883 24,935 152% Orenburg Region Orenburgneft OJSC 50,268 24,935 202%

Eastern Petrochemical Company CJSC 116,857 33,819 346% Primorsky Territory RN Nakhodkanefteprodukt LLC 50,088 33,819 148%

Rosneft-Dagneft PJSC 24,365 19,046 128% Republic of Dagestan Dagneftegaz OJSC 20,059 19,046 105% ROSNEFT Employees SUSTAINABILITY REPORT 2015 88

Comparison of monthly salaries in select Rosneft Group entities and their regions of operation, RUB (continued) Ratio of the Average salary Average salary subsidiary’s average paid by the Key regions of operation Subsidiary in the same salary to the average subsidiary region in 2015 salary in the same in 2015 region in 2015, %

RN Ingushneft OJSC 23,376 21,784 107% Republic of Ingushetia RN Ingushnefteprodukt LLC 22,646 21,784 104%

Komi Republic RN Severnaya Neft LLC 93,582 40,766 230%

Ryazan Refinery CJSC 69,611 25,385 274% Ryazan Region Ryazannefteprodukt OJSC 28,764 25,385 113%

Samaraneftegaz OJSC 50,548 27,277 185%

Kuybyshev Refinery OJSC 53,299 27,277 195%

Novokuybyshevsk Refinery OJSC 50,536 27,277 185% Samara Region Syzran Refinery OJSC 52,446 27,277 192%

Novokuybyshevsk Oil and Additive Plant LLC 49,254 27,277 181%

Samaranefteprodukt OJSC 24,149 27,277 89%

Saratov Refinery OJSC 57,931 22,541 257% Saratov Region Saratovnefteprodukt OJSC 25,965 22,541 115%

RN Sakhalinmorneftegaz LLC 83,835 61,217 137% Sakhalin Region RN Shelf Far East JSC 262,721 61,217 429%

RN Stavropolneftegaz LLC 40,027 23,677 169% Stavropol Territory Rosneft–Stavropolye Oil Company PJSC 28,082 23,677 119%

Tyumenneftegaz OJSC 224,486 56,810 395%

Tyumen Region RN Uvatneftegaz LLC 108,962 56,810 192%

Tyumen Oil Scientific Center LLC 153,148 56,810 270%

Khabarovsk Territory RN Komsomolsk Refinery LLC 69,532 38,067 183%

RN Yuganskneftegaz LLC 80,925 60,270 134%

Varyeganneftegaz OJSC 118,408 60,270 196%

RN Nyaganneftegaz OJSC 98,940 60,270 164% Khanty-Mansi Samotlorneftegaz OJSC 85,519 60,270 142% Autonomous District Krasnoleninsky Refinery LLC 88,074 60,270 146%

Nizhnevartovsk Refinery LLC 88,439 60,270 147%

Zapsibnefteprodukt LLC 51,359 60,270 85%

Grozneftegaz OJSC 28,922 22,101 131% Chechen Republic RN Chechennefteprodukt LLC 13,068 22,101 59%

RN Purneftegaz LLC 88,662 77,540 114% Yamalo-Nenets Autonomous District Rospan International CJSC 212,353 77,540 274% ROSNEFT Employees SUSTAINABILITY REPORT 2015 89

Accommodation for Rosneft employees in Grozny

IN 2015 THE CORPORATE MORTGAGE PROGRAM INVOLVED ONGOING COLLABORATION WITH PARTNER BANKS: THE RUSSIAN REGIONAL DEVELOPMENT BANK AND THE FAR EASTERN BANK

Quality living conditions Rosneft provides temporary housing Employee training to highly qualified employees from and development For many years Rosneft has had a other cities. In 2015 such company comprehensive housing program, apartments were provided to 289 Rosneft has a single corporate system including corporate mortgages, families of employees. A regulation of career development across all housing construction and housing developed in 2015 and expected to business sectors and categories of provided by the Company. In 2015, 839 take effect in 2016 establishes a personnel. Rosneft meets its legal Rosneft employees improved their mechanism – common to all Group requirements in terms of education living conditions under the program, entities – for compensating rental and works to raise the competency with program-related expenses expenses incurred by employees level of employees in line with totaling RUB 740.5 million. hired from other cities. The document business needs, corporate policies calls for the formation of a housing and procedures and the best Russian In 2015 the corporate mortgage committee or other standing and international practices. 325,900 program involved ongoing committee in Group entities to man-courses were provided in 2015, collaboration with partner banks: consider employees’ applications including mandatory, occupational and the Russian Regional Development for benefits and compensation. The management training. Bank and the Far Eastern Bank. The regulation is designed to facilitate general mortgage rate was 12.5% in housing rental, eliminate tax risks Development of the in-house training 2015, and the rate for young employees and minimize ineffective expenses by system was a key achievement in was 11.5%. The mortgage period was Group entities. 2015. Catalogs of in-house seminars increased from 17 to 20 years. In and training courses for 2015 addition to loans from partner banks, In order to attract the most qualified were prepared for the corporate employees who take advantage of the employees, the Company builds headquarters and Group entities, the mortgage program are granted an housing for employees. In 2015, such former containing 181 offerings and interest-free loan covering 25%-35% construction was carried out in the the latter, 780. Seminars and courses of the estimated value of an apartment cities of Tuapse, Komsomolsk-on- were led by 558 in-house trainers in accordance with Rosneft’s internal Amur and Achinsk, with expenses at Group entities and 133 in-house documents. 695 such loans were totaling RUB 192.2 million. trainers at corporate headquarters: provided in 2015 for a total of RUB these are employees who are experts 546.1 million. in their fields and have also been ROSNEFT Employees SUSTAINABILITY REPORT 2015 90

ROSNEFT IS WORKING ON A PROJECT TO INTRODUCE CORPORATE EDUCATIONAL STANDARDS FOR BLUE-COLLAR OCCUPATIONS. TOOLS FOR EVALUATING KNOWLEDGE AND SKILLS IN 10 KEY PROFESSIONS WERE INTRODUCED IN THE OIL REFINING SEGMENT, AND OVER 1,500 EMPLOYEES WERE EVALUATED PARTICIPATION IN THE WORLDSKILLS COMPETITION

The Company took part in Hi-Tech 2015, the second National WorldSkills Competition for Multi-Application Blue-Collar Occupations in High-Tech Industries, in the City of Ekaterinburg. Training plays a key role in developing professional competencies facilitates The Rosneft team took second place in a culture of job safety. As part of the following key business tasks: the Chemical Testing category. Rosneft’s program to promote job safety and informed leadership •• planning of employee training and in occupational health and safety, development training is provided for employees at all levels. Two distance learning •• formation of a talent pool and courses were developed in 2015: expert communities “Safe Use of Electrical Appliances and Office Equipment” and “The Golden •• hiring and job reassignment. Rules of Job Safety.” In-house trainers trained in methods of developing and were recruited and trained to lead the The Company has launched a target conducting training. corporate training courses “Leadership innovation project: “Introduction of in Occupational Health and Safety,” competency-based performance In-house trainers at corporate “Incident Investigation” and “Risk evaluation and career development headquarters led 245 seminars/ Assessment and Management.” across all business segments.” The courses for over 4,000 trainees. Corporate programs were launched, project, to be completed in 2017, is Training provided by in-house trainers and in-house trainers at corporate a collaborative effort with Gubkin at corporate headquarters and Group headquarters trained over 500 section Russian State University of Oil and entities in 2015 amounted to over heads from corporate headquarters Gas (National Research University), 69,000 man-courses, representing 21% and Group entities. Tomsk Polytechnic University and of total training. leading advisory firms in Russia. Rosneft has traditionally put special In 2015, competency maps were Group entities’ own training platforms emphasis on managing its employees’ actively developed in a number of the were actively developed in 2015. 24 knowledge and skills. In 2015 a Company’s business segments. Based simulators were purchased and used project was completed to update the on the materials developed, around in training 96 trainers/instructors. model of corporate and management 2,000 employees were evaluated in the Two new training centers were competencies, taking into account segments of Oil and Gas Production, opened at Ulyanovsknefteprodukt and the experience and best practices Geology and Exploration, Corporate Krasnoyarsknefteprodukt. In 2015 the of Russian and international oil and R&D Institute, Oil Production, and Company had a total of 59 corporate gas companies. The new competency Commerce and Logistics. training units: training centers, rooms, model was used to begin evaluating areas and practical training areas. candidates for Rosneft’s talent pool. Along with the target innovation The corporate system for evaluating project, Rosneft is working on a project corporate, management and to introduce corporate educational ROSNEFT Employees SUSTAINABILITY REPORT 2015 91

standards for blue-collar occupations. Tools for evaluating knowledge and skills in 10 key professions were introduced in the Oil Refining segment, and over 1,500 employees were evaluated.

Company-wide, a total of some 17,000 COMPETITION OF PROFESSIONAL EXCELLENCE «THE BEST IN THE employees were evaluated in 2015, PROFESSION» including their professional, corporate and management competencies. For more than 10 years Rosneft ecological safety. In 2015 competitions has been organizing professional took place at «Samaraneftegaz», Rosneft is involved in a state project competition «The Best in the «Novokuybyshevsk Refinery», to develop a system of national Profession», aiming at increasing «Samaranefteprodukt» and «Samara- qualifications and contributes prestige of workers and engineers, Terminal». Moreover, competitions to the work of task forces of the encouraging use of best practices were held among engineers and National Council for Professional and strengthening corporate culture technical workers of production Group Qualifications under the President of of the Company. The Competition entities with such awards as «Best the Russian Federation. In 2015 the evaluates both theoretical and Geologist», «Best Technologist». National Council created a Council for practical knowledge of participants. Overall more than 460 employees Professional Qualifications in the Oil An emphasis is put on expertise in from 101 Group entities participated in and Gas Sector, and the new council the area of industrial, health, fire and competitions. included representatives of Rosneft.

Comprehensive performance evaluation system

Description 2013 2014 2015

Number of profiles developed (cumulative total) 942 1,100 1,712

Evaluation of vocational competencies, persons 506 812 6,493

Evaluation of corporate and management competencies, thousand persons 11.9 13.1 11.3

Training and development of Rosneft staff in 2015, man-courses

Description 2013 201462 201563

Total for the year 201,500 261,247 325,890

By category

Managers 38,038 46,403 74,443

Talent pool 2,547 2,009 2,259

Professionals 46,809 69,549 81,855

Young professionals 3,122 5,268 6,556

Workers 110,984 138,018 160,777

62 Including Tomskneft VNK. 63 Within the perimeter of centralized business planning, including Tomskneft VNK. ROSNEFT Employees SUSTAINABILITY REPORT 2015 92

BUSINESS GAMES FOR YOUNG PROFESSIONALS

To identify young professionals with leadership potential аnd form a pool of young talent, five business games (“Measure Thrice, Cut Once”) were conducted in 2015. 312 young professionals from 59 Group entities took part. Work with young professionals concluding interregional workshop in A business game was specially Moscow. developed for Rosneft’s purposes and Rosneft puts great emphasis on work conducted in the form of a business with recent university graduates, A focus of Rosneft’s youth policy in simulation. The game, distinguished promoting their work and career 2015 was a comprehensive program by its maximum realism and high growth via accelerated adaptation; of career planning and training of intensity, let players try their hand at involvement in innovation, research young engineers in the Exploration the helm of a production company and and project activities; and the and Production segment for experience some of the challenges development of professional, corporate 2015‑25. A task force was created they may face in their future careers. and management competencies. In to realize the program, including 40 2015, 90 Group entities employed employees from six business sectors 3,667 young professionals, 1,398 of – Geology, Drilling, Well Intervention, whom were hired in 2015. Councils of Development, Production and Offshore young professionals and a mentoring Projects – and a plan of action was program help young employees developed. Training targets were set adapt in Group entities. Training and for two categories of personnel: young career growth are in line with young engineers for strategic projects and professionals’ development plans. positions requiring scarce skills as 6,556 man-courses were provided in well as an internal succession pool for 2015 as part of programs to develop key management positions. 71 target the professional and management competency profiles were prepared for competencies of young specialists and approved positions, and recruitment their mentors. sources and selection criteria were

3,667 determined. Work was begun to The Company holds annual workshops develop training programs in the six YOUNG PROFESSIONALS WERE for young professionals. 1,632 young business sectors. EMPLOYED BY 90 GROUP ENTITIES IN 2015 professionals participated in 2015, and 86 of these were winners at the

Young professionals at Rosneft

Description 2013 2014 2015

Number of young professionals hired after completing their higher education 1,069 1,197 1,398

Number of young professionals in the Company 3,515 3,324 3,667

Number of young professionals who participated 1,828 1,862 1,632 in science and technology conferences Expenditures on corporate programs targeting 77.8 88.2 84.3 young professionals, RUB million ROSNEFT Employees SUSTAINABILITY REPORT 2015 93

Employee training for strategic Talent pool program •• quarterly performance monitoring projects and appointment of reservists. The Company forms an internal Targeted corporate training is provided talent pool to ensure the long- 806 reservists were approved in to ensure qualified personnel for term availability of valuable human 2015: 359 for top-level management strategic projects at Rosneft. resources. The talent pool program positions. identifies talented employees so that In 2015 70 professionals received the Company can make maximum use Systematic development of the talent training in innovative modular of their potential and retain the best pool included two continuing MBA continuing education programs at people by giving them opportunities for programs in collaboration with the Moscow State University and Gubkin development and career growth. International Institute for Energy Russian State University of Oil and Policy and Diplomacy of Moscow State Gas: “Russian Offshore Oil and Gas The talent pool cycle at Rosneft Institute of International Relations Geology,” “Environmental Protection includes the following stages: (under the Russian Ministry of on Offshore Oil and Gas Fields” and Foreign Affairs) and St. Petersburg “Offshore Oil and Gas Fields.” The •• analyzing the numerical strength State University’s Graduate School Moscow State University programs of the talent pool for first- and of Management as well as a third included internships at the Pertsov second-tier management positions MBA program launched with Gubkin White Sea Biological Station in the Republic of Karelia.

Flow control measures included mandatory corporate training for supervisors, industrial safety specialists, foremen, and drilling and workover specialists in international Well Control courses. Managers and professionals went through five training programs with instructors of GE’s Crotonville Corporate University under the strategic partnership agreement between Rosneft and General Electric.

In 2015 the CEO University program was launched to develop the management competencies of CEOs. 87 CEOs of Group entities and CEO reservists received training at St. Petersburg State University’s Higher School of Management.

•• evaluating employees and Russian State University of Oil and Gas. proposing candidates for the talent The MBA programs had 64 students in pool 2015.

87 •• deciding on a list of key positions In 2015 a Regulation on “Rotation of and the composition of the talent the Company’s First- and Second- CEOs OF GROUP ENTITIES AND CEO pool Tier Managers” was developed and RESERVISTS RECEIVED TRAINING AT approved. In the rotation program, ST. PETERSBURG STATE UNIVERSITY’S HIGHER SCHOOL OF MANAGEMENT •• evaluating the competencies employees who are effective in their of reservists and formulating current positions and ready to take on individual development plans new challenges in Rosneft’s regions of operation are appointed to first-tier •• determining reservists’ categories management positions in the Company and their degree of readiness to fill and second-tier positions at corporate the target positions headquarters. The program has two key goals: •• targeted training and development of reservists. ROSNEFT Employees SUSTAINABILITY REPORT 2015 94

IN 2015 A WORKSHOP WAS HELD AT MOSCOW STATE UNIVERSITY FOR DIRECTORS OF GENERAL SCHOOLS THAT OFFER ROSNEFT CLASSES. THE WORKSHOP WAS ATTENDED BY 40 DIRECTORS FROM 37 RUSSIAN CITIES

skill-upgrading workshops for school directors and instructors of Rosneft Classes. In 2015 a workshop was held at Moscow State University for directors of general schools that offer Rosneft Classes. The workshop was attended by 40 directors from 37 Russian cities.

Rosneft Classes include active career guidance. In 2015, nine Ladder to Success workshops were attended by •• meeting the Company’s needs regions of operation. In 2015 Rosneft 1,112 tenth-graders from 48 schools. for highly qualified and motivated Classes were offered to tenth-graders “Career Guidance in Rosneft Classes,” personnel in the Village of Turtas (Uvat District, a compilation based on the experience Tyumen Region), the City of Yuzhno- of participating schools, was prepared •• effective managerial and Sukhokumsk (Republic of Dagestan) and published for more effective professional development and also in Moscow, where a Rosneft career guidance. of managers and reservists Class was introduced at General earmarked for those positions. Secondary School No. 199 as part of Rosneft puts special emphasis on a project of the Moscow Department employing graduates of Rosneft Work with youth in the of Education: “An Engineering Class Classes in its companies. In 2015, after Company’s regions of operation for a Moscow School.” The Company’s completing their higher education, 91 partner on this project is Gubkin young professionals who took Rosneft In accordance with Rosneft’s HR Russian State University of Oil and Gas. Classes in career-related areas were policy and to ensure an influx of highly hired by Rosneft. qualified young professionals, the In 2015 a total of 98 Rosneft Classes Company has a corporate continuing were attended by 2,359 students in 52 As part of its School–University– education program, School–University– schools in 46 cities and villages in the Company continuing education Company, which is designed: Central, Southern, North Caucasus, program, Rosneft is actively developing Volga, Northwestern, Ural, Siberian partnership relations with leading •• to create an external talent pool and Far Eastern federal districts. Russian universities. In 2015 the for the Company and ensure that number of universities with which graduates of Rosneft Classes To establish uniform requirements Rosneft and Group entities have provide a steady influx of highly for Rosneft Classes at key general signed long-term package agreements educated young people with good schools in the Company’s regions grew to 47, of which 18 are partners professional training of operation, a Company regulation, of Rosneft and 29 are regional “Organization of Rosneft Classes,” institutions. In 2015 Rosneft signed •• to identify and support gifted was developed in 2015. This regulation five new partnership agreements children governs the procedure for establishing with universities: Admiral Makarov and organizing Rosneft Classes and State University of Maritime and •• to support the university education for supporting the education of gifted Inland Shipping, St. Petersburg of successful Rosneft Class young people. State Maritime Technical University, graduates and potentially bring the Gorny National Mining and them into the Company as new The high quality of Rosneft Classes Mineral University, Tyumen State hires. is the result of an in-depth study University and Ukhta State Technical of physics and mathematics, University. These agreements promote The first step in the corporate additional instruction in career- cooperation in the areas of education, continuing education system is setting related subjects by instructors from science and technology, innovation and up Rosneft Classes in Rosneft’s partner universities, and annual infrastructure. ROSNEFT Employees SUSTAINABILITY REPORT 2015 95

OVER 4,500 1,398

STUDENTS ARE PROVIDED WITH JOB UNIVERSITY GRADUATES WERE PLACEMENTS EACH YEAR AT ROSNEFT HIRED BY THE COMPANY IN 2015 ENTITIES

(Organic Chemical Technology) at Ryazan State Radio Engineering University.

With the support of Novokuybyshevsk Petrochemical Company, an oil and gas processing laboratory was opened at Samara State Technical University’s Novokuybyshevsk branch. The laboratory has all the required equipment and will be used to study the properties of catalyzers, the composition of oil fractions and oil refining processes as a whole.

Each year Rosneft entities provide job placements to over 4,500 students, and the Company hired 1,398 university graduates in 2015.

Rosneft and Group entities support gifted students by awarding corporate scholarships to the most talented. 508 such scholarships were disbursed in 2015. Scholarship holders receive priority consideration for internships with Group entities and subsequent employment with the Company.

IN 2015, AS PART OF WILL BE THE CORE FACILITY To promote the corporate School– University–Company continuing ROSNEFT’S PARTNERSHIP TO TRAIN PROFESSIONALS education system in Rosneft’s WITH UNIVERSITIES, FOR THE COMPANY’S regions of operation and to support WORK WAS CONTINUED TO OFFSHORE PROJECTS. participating educational institutions, ESTABLISH AN OFFSHORE Rosneft and Group entities provide Ten core departments were developed charitable assistance to schools, DRILLING SCIENCE AND as part of infrastructure cooperation technical schools, colleges and EDUCATION CENTER, USING with partner universities. Two new universities. This assistance goes THE RESOURCES OF GUBKIN departments were opened in 2015: an toward: RUSSIAN STATE UNIVERSITY RN KrasnoyarskNIPIneft department (Design of Oil and Gas Facilities) at •• establishing and supporting OF OIL AND GAS. THE CENTER, Siberian Federal University’s Oil and Rosneft Classes, including costs TO BE OPENED IN LATE 2016, Gas Institute and an RNPK department for additional student education, ROSNEFT Employees SUSTAINABILITY REPORT 2015 96

Rosneft Classes project

Description 2013 2014 2015

Number of Rosneft Classes 82 87 98

Number of students 2,023 2,050 2,359

Number of regions 20 20 23

Investments in Rosneft Classes, RUB million 109.2 126.1 147.6

Partnerships with universities

Description 2013 2014 2015

Number of partner universities 30 34 47

Number of students who received work placements 3,822 4,833 4,839

Expenditures on partnerships with universities, RUB million 216.2 492.3 769.4

Financing of the Company’s continuing education system in 2015, RUB million

Activity 2015

Skill upgrading programs at universities 42.1

Training at the school level 147.6

Partnership with universities (development of university infrastructure, work placements and internships, stipends, 769.4 grants for instructors)

Work with young professionals 84.3

Conferences: 26.0

TOTAL 1069.4 ROSNEFT Employees SUSTAINABILITY REPORT 2015 97

Visit of students from Cuba to RN-Yuganskneftegaz production sites

upgrading the qualifications of instructors, acquiring equipment for dedicated rooms and career guidance. These expenditures totaled RUB 139.4 million in 2015

•• developing partnership relations with vocational and higher educational institutions, including: the modernization of education programs, the maintenance of core departments and specialized master’s programs at partner ROSNEFT DAY AT SIBERIAN FEDERAL UNIVERSITY universities, the development of infrastructure and the academic A key focus of Rosneft’s HR policy in Students had a chance to prove base of educational institutions, Krasnoyarsk Territory is to ensure that themselves in three categories: best at scholarships for gifted students Group entities in the region are staffed solving business cases, best creative and grants for teaching staff. At with qualified professionals. Siberian video on their future profession, and total of RUB 654.9 million was Federal University is one of the Company’s best personal application. In addition donated to technical schools, key partners in training students in to academic excellence, practical work colleges and universities in 2015. specializations needed in the oil and gas and community service, students were sector. In 2015 the traditional Rosneft asked in the applications to describe In 2015, programs to train staff for Day at Siberian Federal University’s their personal characteristics from the Company’s international projects Oil and Gas Institute took the form of the standpoint of Rosneft’s needs. was continued. In 2015, with Rosneft’s a competition among high-achieving, The applicants were judged by a panel support, 35 citizens of Cuba and creative and motivated students who representing Rosneft and Group entities Venezuela studied at Gubkin Russian aspired to join the Rosneft team. Rosneft and the administration of Siberian Federal State University of Oil and Gas as part Day was attended by some 300 students University’s Oil and Gas Institute. of a three-year language and master’s and by representatives of Rosneft preparation program. Nine citizens and Group entities: Vankorneft, East The 56 winners received priority of Mongolia pursued bachelor’s Siberian Oil and Gas Company, Achinsk consideration for paid internships at degrees at Moscow State University, Refinery, the East Siberian branch of RN Group entities in Krasnoyarsk Territory. Moscow State Institute of International Drilling, RN Krasnoyarsknefteprodukt, Relations (under the Russian Ministry RN KrasnoyarskNIPIneft and RN of Foreign Affairs) and Gubkin Russian Yuganskneftegaz. State University of Oil and Gas. ROSNEFT Employees SUSTAINABILITY REPORT 2015 98

rub 5.8 BILLION

EXPENDITURES FOR THE DEVELOPMENT OF SHIFT CAMPS, FIELD SUPPORT BASES, AREAS AND SHOPS IN 2015

Education support for employees and members of their families

Rosneft’s social policy includes also done to update the Instruction on social programs. 2015 was no financial support for the education the Application of Standard Technical exception, and work continued in all of employees and their children. Solutions to the Design of Shift Camps the traditional areas: occupational The education loan program was for the Oil and Gas Complex and the medicine, voluntary health insurance, continued in 2015, and 176 education Instruction on the Standard Design of personal injury insurance, treatment loans totaling RUB 11.75 million were the Company’s Field Support Bases, at sanatoriums and resorts, and the granted to employees or their children Areas and Shops. promotion of a health lifestyle. Rosneft over 16 years of age who are full- spent RUB 3.1 billion to support its time students at higher or specialized In 2015, the health, safety and employees’ health in 2015. secondary educational institutions. environmental due diligence committee did field audits of work- The membership and rules of Creation of favorable working related social facilities at East Siberian procedure of the Industrial Medicine conditions Oil Company and Samotlorneftegaz. Advisory Board were approved in 2015 for purposes of coordinating In 2015 Rosneft continued its In 2015 the Company continued efforts to develop industrial comprehensive program to create its efforts to fulfill the Plan for the medicine and employee health care. favorable working conditions for Modernization of Work-Related Social The board includes 13 industrial employees. A key element of this Facilities, including the construction, medicine specialists from corporate program is the development and reconstruction and capital repairs of headquarters and ten Group enhancement of 95 shift camps and dormitories, cafeterias, administration entities. The board’s efforts focus on trailer camps that in 2015 housed buildings, brigade points, stores, methodological support and expert some 22,000 employees of Rosneft and bakeries, sports and fitness centers, evaluation of emergency medical aid its contractors. trailer camps, and bathing and laundry at the Company’s production sites, facilities. The work planned for 2015 control over the training of medical In 2015, methodological guidelines was fully completed. staff, the development of preventive were approved and implemented on measures and a number of other meal requirements for shift workers Expenditures for the development of medical issues. in the Group’s oil and gas production shift camps, field support bases, areas entities as well as for employees of the and shops came to RUB 5.8 billion in The Company puts great emphasis Group’s oil and gas processing entities. 2015. on providing guidance for health Methodological work was done in 2015 professionals in Group entities. As to unify the functions and structure of Support for employee health part of a project carried out jointly Group entities’ divisions responsible with Moscow State University to train for the program to develop the The health of Rosneft employees is medical staff for the Company’s industrial and social base. Work was a key component of the Company’s medical stations, six distance ROSNEFT Employees SUSTAINABILITY REPORT 2015 99

THE COMPANY CONTINUED TO DEVELOP ITS TELE MEDICINE SYSTEM. IN ADDITION TO TRAINING, TELEMEDICINE TECHNOLOGIES WERE ALSO USED FOR CONSULTATIONS AND CHECKUPS AT REMOTE LOCATIONS

PARTNERSHIP WITH MOSCOW STATE UNIVERSITY

One of the key areas under development in 2015 was a program – part of a joint project with Moscow State University – for comprehensive quality review and monitoring of learning courses were provided to a In 2015, requirements for services employees’ health. total of 392 professionals in over 20 provided by shop medical practitioners Russian regions. The training – in were developed, approved and To organize the systemic work of videoconference format and involving communicated to Group entities. To experts in charge of occupational the use of telemedicine technologies create and develop organizational medicine at Group entities, an – covered the emergency medical capacity, work was done in 2015 to expanded meeting was held in Moscow treatment of injuries, cardiopulmonary standardize the functions of medical on 27-28 May 2015 on employee and cerebral resuscitation and staff. In 2016 Rosneft plans to test medical services at Rosneft production advanced pre-hospital assistance in 460 medical workers to ensure that sites, attended by experts from the cases of circulatory arrest. Rosneft the staff of all medical stations meet Occupational Medicine Research experts responsible for industrial modern emergency medical standards. Institute (Federal Scientific Institution) medicine and a group of outside and Moscow State University. experts and scientists were involved in In 2015, medical services were the training. provided by 171 medical stations, Key occupational-medicine issues were 168 of which were at shift camps, discussed at the meeting: emergency The Company continued to develop plants and remote industrial sites. medical aid and evacuation of the its telemedicine system. In addition In 2015 a comprehensive audit was sick and injured by special road and to training, telemedicine technologies done of all medical departments in air transport, equipment standards were also used for consultations and Group entities. Prior to the audits, a at industrial medical stations and the checkups at remote locations. uniform evaluation methodology was training of medical staff. developed and standardized in the To regulate the procedure for form of a checklist, and evaluation emergency medical services in criteria were developed for medical

IN 2015, MEDICAL SERVICES WERE PROVIDED BY 171 MEDICAL STATIONS, 168 OF WHICH WERE AT SHIFT CAMPS, PLANTS AND REMOTE INDUSTRIAL SITES

Rosneft entities, a regulation, “The stations, including requirements with Organization of Emergency Medical Aid respect to the condition of equipment at Group Entities,” was put into effect and materials as well as licensing and in 2015, and guidance was provided reporting requirements. throughout the year on implementing this document at Group entities. The In 2015, as part of the Program of rub 3.1 BILLION regulation sets requirements for the Enhanced Job Safety and Informed organization of emergency medical Leadership in Health and Safety, a ROSNEFT SPENT TO SUPPORT ITS services provided by the staff of list of licensed regional health care EMPLOYEES’ HEALTH IN 2015 medical stations at Group entities’ providers for preliminary and periodic production sites, the equipping of employee checkups was developed, medical stations and the medical approved and communicated to Group emergency response plan. entities. ROSNEFT Employees SUSTAINABILITY REPORT 2015 100

WELLNESS DAY AT UDMURTNEFT

A Wellness Day with the theme “Live Healthfully!” was held at Udmurtneft in July 2015. Preventing cardiovascular disease, giving up smoking and promoting a healthy lifestyle were the event’s key focuses. The idea was to identify potential risks and eliminate hazards to the life and health of employees and, where necessary, to recommend further consultations with physicians. For three and a half hours employees could consult medical personnel from local health care institutions at seven stations and have their blood pressure, pulse, In 2015 Rosneft focused in particular signed for the medical treatment vision and other measures checked. on setting requirements for medical of employees of subsidiaries and Based on the day’s results, employees services provided to the employees contractors at remote production could evaluate their cardiovascular of contractors, and the approved sites. This medical institution serves response and obtain consultations on a requirements were communicated most Group entities in Irkutsk Region, healthy lifestyle. Some 200 Udmurtneft to Group entities. These provisions, including shift camps. employees took advantage of the included in appendices to agreements opportunity to be checked and obtain with contractors and binding on the Voluntary health insurance (VHI) is recommendations from specialists. counterparties, require, among other a key part of the benefits package things, that a contractor’s employees provided to Rosneft employees. receive checkups and medical Since 2013, the Company’s partner in services, have at least RUB 400,000 providing VHI plans has been SOGAZ in voluntary insurance against injury, Insurance Company. including the risk of death and total permanent disability due to injury, Rosneft has consistently worked to and take first aid training. Rosneft expand its VHI plans in accordance employees do regular monitoring to with the collective agreements of ensure that contractors comply with Group entities and to bring an ever- these requirements, and contractors growing number of employees into the who fail to do so are fined. VHI system. In 2015 all employees in the production sphere had insurance ROSNEFT HAS CONSISTENTLY WORKED TO EXPAND ITS VHI coverage. By the end of 2015, 200,000 PLANS IN ACCORDANCE WITH THE COLLECTIVE AGREEMENTS employees were insured under VHI agreements and 220,000 under OF GROUP ENTITIES voluntary personal injury insurance agreements. In 2015, medical services above and beyond the VHI plan were provided to 83 people, including 41 In 2015 work continued on schedule retirees. to develop the Occupational Medicine and High Technology Center, using the To standardize the VHI process in resources of Medical Unit No. 36 in the Group entities, conceptual approaches City of Angarsk: Essential equipment to VHI for employees of Group entities was acquired, and agreements were were formulated and approved in 2015. ROSNEFT Employees SUSTAINABILITY REPORT 2015 101

These approaches have the force of recommendations and apply to such LIVE LONGER! issues as VHI in newly acquired assets and health insurance for foreign employees. THE PURPOSE OF THE LIVE LONGER! PROGRAM IS TO PROMOTE AN ACTIVE AND HEALTHY LIFESTYLE. IN 2015 A VARIETY OF Rosneft assigns high importance EVENTS WERE HELD TO GET EMPLOYEES INVOLVED IN FOUR to the treatment of employees at KINDS OF SPORTS: NORDIC WALKING, RUNNING, SKIING AND sanatoriums and resorts. In 2015 the Company’s health improvement and TRIATHLON recreation program continued along the same lines as before. Over 54,000 employees, members of their families and retirees improved their health, Company headquarters and over 40 including over 2,000 in Cuba. Group entities.

The Company believes in the The purpose of the Live Longer! importance of sports and a healthy program is to promote an active and lifestyle for its employees. Inasmuch healthy lifestyle. In 2015 a variety of as 2015 was the Year of the Fight events were held to get employees against Cardiovascular Disease in involved in four kinds of sports: Nordic Russia, the Company’s program to walking, running, skiing and triathlon. promote a healthy lifestyle focused Employees received training and met on the prevention of cardiovascular with experts, and efforts to promote disease. In 2015 the program a healthy lifestyle were explained and concentrated on two areas: Wellness publicized. Days and the Live Longer! program.

Wellness days – one-day events held in offices and Group entities – were dedicated to staying healthy and preventing illness, disability and early death due to illness. In 2015, wellness days were held in four offices of ROSNEFT Employees SUSTAINABILITY REPORT 2015 102

IN 2015 THE UNITED RITUO HAD A TOTAL MEMBERSHIP OF AROUND 160,000

THE FOURTH ELECTION CONFERENCE OF THE ROSNEFT Collective bargaining agreement Group entities’ employees. Proposals INTERREGIONAL TRADE UNION made by RITUO and primary trade ORGANIZATION (RITUO) In 2015 Rosneft continued to union organizations are considered implement its model collective and taken into account as far In 2015 RITUO held its fourth election bargaining agreement. Group entities as possible in the development conference, attended by over 250 switch to the corporate template when and implementation of corporate delegates from regional trade union their previous agreements expire. At standards. Representatives of trade organizations, CEOs of Group entities the end of 2015, 282 Group entities union organizations are permanent and executives of Rosneft and the had standard collective bargaining members of the organizing committees Russian Oil, Gas and Construction agreements, with 164 entities adopting of the Best in the Profession Workers’ Union. The delegates new agreements in 2015. Competition, the Rosneft Lights Up gathered in the Company’s central the Night Festival and the corporate office on Sofiysky Embankment to As part of the Company’s social summer and winter Spartakiads. discuss and sum up the trade union’s partnership program, Rosneft and work from 2010 through 2015. the Rosneft Interregional Trade As part of the program to promote Union Organization hold preliminary a culture of job safety and informed The RITUO’s chairman provided a discussions of amendments and leadership in the area of health and comrephensive report on all the additions to the Model Collective safety, RITUO is active in developing activities of the organization in the Bargaining Agreement. This practice and implementing measures to past 5 years, analyzed joint work in the yields a better understanding of popularize the principles of safe and sphere of social partnership – putting problems faced by workers and results accident-free work, injury prevention into practice provisions of the collective in solutions that are optimal for both and minimization of accident risks. bargaining agreement, progress in sides. Following a joint review in the Trade union organizations monitor the work of social corporate projects, course of 2015, the template was compliance with health and safety solution of issues related to industrial revised to provide employees with regulations via the institution of health safety, employee training, defense of additional social benefits. and safety monitors. employee rights. Partnership with trade union The speakers expressed satisfaction organizations with RITUO’s efforts and made proposals for further improvement. Rosneft Interregional Trade Union After the speeches, the delegates Organization (RITUO), an equal partner proceeded to elect RITUO’s chairman of the Company, and its constituent and deputy chairman and determine primary trade union organizations the membership of the board and at Group entities play an important its presidium as well as the audit role in the area of HR and social committee. policy. The Company currently has constructive relations with trade union organizations. In 2015 the united RITUO had a total membership of around 160,000.

RITUO is actively involved in shaping the Company’s social policy and is active in the areas of health and safety, career development and motivation of ROSNEFT Employees SUSTAINABILITY REPORT 2015 103

Corporate pension benefits and attended by over 420 employees at the functioning of the Company’s corporate care for veterans Company’s corporate headquarters. pension system. As a result, a new version of the standard was drafted The corporate pension program – a Training was also provided in 2015 to and is to be approved and implemented key element of the Company’s HR upgrade the qualifications of Group in 2016. and social policy – is designed to entities’ employees in charge of enhance the corporate pension pension programs. Representatives The Rosneft Veterans Council benefits of Rosneft employees. In 2015 of Neftegarant and the Interregional continued its important mission Rosneft and Group companies paid Trade Union Organization took part in to support retired oil workers. a total of RUB 5.38 billion in pension three two-day seminars in Krasnodar, The Council’s work was especially contributions to Neftegarant Non- Raduzhny and Izhevsk, where meaningful in 2015, when Russia State Pension Fund, of which RUB participants were acquainted in detail marked the 70th anniversary of its 0.45 billion went to the Veterans Social with corporate pension programs, victory in the Great Patriotic War. Support Project. 2,100 VETERANS64 OF NEW ASSETS WHO WERE INCLUDED Pensions are indexed on an annual IN THE PROJECT IN 2015 RECEIVE CORPORATE PENSION basis. The average monthly corporate PAYMENTS VIA NEFTEGARANT pension grew to RUB 5,090 in 2015. Corporate pension payments made by Neftegarant in 2015 reached RUB 1.7 billion under two programs: the corporate pension program and the pension fund software and the latest In 2015 the Company paid veterans of Veterans Social Support Project. Some changes in corporate pension benefits Group entities some RUB 340 million 62,200 persons received corporate for Rosneft employees. The seminars for holidays, treatment at sanatoriums pensions in 2015: around 34,200 had over 160 participants, all of whom and resorts and other critical retirees and 28,000 veterans. noted the high information content and purposes. relevance of these events. The Company has made consistent efforts to develop the Veterans Social In 2015, due to changes in Russian Support Project64. 2,100 veterans pension law and in order to enhance of new assets who were included in the corporate pension program in the project in 2015 receive corporate light of its practical implementation pension payments via Neftegarant. in the period of 2011-14, the Company needed to update the Standard of Four expanded information sessions Corporate Pension Benefits for held in 2015 to inform employees employees of Rosneft and Group about corporate pension benefits were entities. The purpose of this standard is to establish uniform rules for the

Corporate pension benefits in 2015

Description 2013 2014 2015

Rosneft’ contributions to Neftegarant under the pension plan, RUB million 3,934 5,093 5,380

Number of persons receiving corporate pensions 57,654 59,702 62,207

Pension payments, RUB million 1,321 1,513 1,706

Total value of personal pension plans with Neftegarant, RUB million 2,178 3,133 3,963

Number of persons with personal pension plans 41,348 48,715 51,996

Number of Rosneft employees covered by the pension system over 182,000 over 187,000 over 206,000

64 Veterans are former employees who were employed at Rosneft or a Group entity for 10 or more years, who left before Rosneft or the Group entity concluded a pension agreement with a private pension fund under the uniform corporate pension program, and who qualified for pension benefits under Russian law when their employment was terminated. ROSNEFT Employees SUSTAINABILITY REPORT 2015 104

The 70th Anniversary of Victory in the Great Patriotic War

In 2015 Russia celebrated the 70th anniversary of its victory in the Great Patriotic War. Rosneft’s numerous projects in Russian cities made an important contribution to the celebration. The tour of Moscow’s Sretensky Monastery Choir, along with the Lyudmila Zykina Academic Russian Folk Ensemble “Russia” and New Opera soloist Alexey Tatarintsev, was a key holiday event. The tour, whose theme was “Rosneft: To the Great Victory,” featured works dedicated to the Great Patriotic War. Between 28 April and 9 July 2015, the tour reached an audience of over 13,000 in 20 cities where the Company operates as well as Milan, Beijing and cities in Venezuela.

Rosneft has always given special Group entities were also active consideration to war and labor in celebrating the holiday and veterans, and veterans are honored commemorating the Soviet victory. guests at all of Rosneft’s corporate events. In 2015 the Company also gave Ahead of the holiday, oil workers of extra financial assistance to former Rosneft-Dagneft made a gift to the employees who were soldiers or war City of Yuzhno-Sukhokumsk: the workers during the Great Patriotic Company financed the construction War as well as to concentration camp of the Eternal Glory Memorial survivors. Complex. Employees of Group entities in Krasnodar Territory organized The Company supported “Pages of military-historical marches. Victory,” a photo exhibition on Tver Boulevard in the capital that featured In the Republic of Ingushetia, 300 materials from the archive of Ogonyok oil workers took part in a march magazine as well as photographs from sponsored by RN Ingushneft. Marching Rosneft’s own archive. The photos with local residents and high school showed military operations, the labor students from Rosneft Classes in the of Soviet citizens on the home front, cities of Malgobek and Karabulak, > 13,000 including in the oil industry, the Victory they honored the memory of those Parade in Moscow on 24 June 1945, who died in the Great Patriotic War PEOPLE ATTENDED PERFORMANCE and a special place was given to photos and paid tribute to oil workers who OF THE SRETENSKY MONASTERY illustrating the role of women on the fought on the front lines and labored CHOIR front lines and in the rear. in the rear. After the march, war and labor veterans were presented with commemorative badges from Rosneft ROSNEFT Employees SUSTAINABILITY REPORT 2015 105

in honor of the Seventieth Anniversary In Samara, Victory Day was heralded of the Great Victory. by a flower-laying ceremony at the Eternal Flame on the Square of Glory. The employees of Angarsk Among those who came to pay tribute Petrochemical Company put together were veterans, management and young a whole program of events. Employees professionals of Samaraneftegaz. The in Angarsk took part in a city parade, enterprise’s veterans also took part and the Company helped to beautify in holiday celebrations in Otradnoye, the burial places of those who fought Neftegorsk, Pokhvistnevo, Zhigulevsk, in the Great Patriotic War. In 2015, Sukhodol and Bezenchuk and received therapeutic stays at sanatoriums and commemorative gifts. In 2015 the recreation centers were arranged for Veterans Council of Samaraneftegaz war and labor veterans. Veterans were put out its 13th edition of the Veterans’ given additional financial assistance Glory collection. Ahead of the and awarded “70th Anniversary of the holiday, young professionals from Great Victory” medals. The Angarsk Samaraneftegaz met with war and Victory Museum dedicated an exhibit labor veterans. to veterans of the Great Patriotic War who worked at Angarsk Petrochemical Company.

Orenburgneft sponsored a number of events to mark the holiday in cities of Orenburg Region. War veterans and equivalent categories of citizens received commemorative gifts and medals as well as financial assistance. The holiday preparations included the restoration of monuments, obelisks and memorial sites dedicated to the Great Patriotic War. Orenburgneft’s regional veterans councils in the cities of Buzuluk, Orenburg, Buguruslan and Sorochinsk organized wreathe-laying ceremonies at memorials to fallen oil workers. Russian popular music stars and local amateur groups performed at holiday concerts for veterans, and there were city parades, holiday games and competitions and a museum exhibit in Buzuluk. ROSNEFT Society SUSTAINABILITY REPORT 2015 106

SOCIETY

SOCIAL IMPACT MANAGEMENT Russian Federation. The policy calls for SYSTEM involvement in social and charity programs in a wide range of areas, includ- Rosneft takes an active part in ing health care, education and patriotic socioeconomic programs in its areas upbringing, support for sports, culture of operation under various agreements and the arts, assistance for disadvan- and provides funding for individual taged groups, job creation, etc. charity projects. Rosneft takes a systemic approach to social issues In its charitable activities, the Company and social investments. In its charity pursues the following objectives: rub 2.3 TRILLION programs and support for local areas, the Company adheres strictly to the •• promotion of socioeconomic WERE ROSNEFT TAX AND principle of opposing any involvement development in regions where CUSTOMS PAYMENTS in corruption. Rosneft has a presence

In 2015 Rosneft implemented a policy •• development of partnerships with for regional development and partner- local regions ship with constituent entities of the ROSNEFT Society SUSTAINABILITY REPORT 2015 107

•• support for state policy in the field of education IN 2015 ROSNEFT SPENT RUB 4,069 BILLION TO FINANCE SOCIOECONOMIC PARTNERSHIP •• support for public health AGREEMENTS WITH VARIOUS REGIONS programs, physical education and sports, science and technology, environmental protection, etc. Irkutsk Region, the Kabardino- In the Chechen Republic, funds In 2015 Rosneft maintained its status Balkar Republic, Yamalo-Nenets were allocated under a partnership as one of Russia’s largest taxpayers, Autonomous District, Magadan Region, agreement for the construction and making tax and customs payments of Krasnoyarsk Territory, Stavropol reconstruction of waterworks and RUB 2.3 trillion, including RUB 212.9 Territory, Primorye Territory, flood-control installations. billion to regional budgets. Khabarovsk Territory, Saratov Region and the Chechen Republic. The In Primorsky Territory, Rosneft is SOCIAL PERFORMANCE IN 2015 parties to these agreements are to financing the construction of ice cooperate on a number of specialized arenas. Regional partnerships industrial, financial, investment and social programs. Agreements with 35 In the Republic of Karelia, the Company Rosneft has a large number of socially Russian regions were in effect during is supporting state-funded educational oriented projects in its key regions 2015. and cultural institutions and is helping of operation. These efforts help to to restore Blagoveschensk Cathedral create favorable economic, legal and In 2015 Rosneft spent RUB 4,069 billion in the City of Kem. organizational conditions for broad to finance socioeconomic partnership regional development and to promote agreements with various regions. In Saratov Region, funding was the Company’s business in constituent provided to complete the construction entities of the Russian Federation. In Khanty-Mansi Autonomous District, of a new section of Saratov Regional a kindergarten building for 260 Children’s Clinical Hospital. The programs are largely financed children is under construction in the under partnership agreements with Central District of Nizhnevartovsk, In Murmansk Region, funds were government bodies in regions of key the bridge over the Ryazanka River allocated for the construction of an importance for the Company. These is being thoroughly repaired, a open sports and recreation center are framework agreements concluded section of Municipal Multidisciplinary in a residential area of Roslyakovo for several years. The obligations High School No. 1 in Izluchinsk Administrative District in the City of assumed under these agreements are (Nizhnevartovsk District) is being Murmansk. performed in accordance with agenda rebuilt, streets and access drives in that indicate the specific projects to be the City of Nefteyugansk are being In Samara Region, funds are realized in a given region. upgraded, and construction has begun traditionally provided to municipal on a dormitory for small families. administrations for the development In 2015 Rosneft signed partnership Funding was provided for a number of of social infrastructure. The agreements with the governments events: The 12th Boxing World Cup for Company continues to finance the of the Republic of Ingushetia, the Oil-Producing Countries in Memory construction of ice rinks in the cities of Republic of Karelia, the Republic of Farman Gurban oglu Salmanov, Novokuybyshevsk and Syzran and the of Sakha (Yakutia), Murmansk the 2014 World Free Pyramid Billiard renovation of Neftyanik Cultural Center Region, Samara Region, Khanty- Championship, a stage of the Biathlon in Kuybyshev Subdistrict of Samara Mansi Autonomous District–Yugra, World Cup, etc. Urban District. ROSNEFT Society SUSTAINABILITY REPORT 2015 108

In the Republic of Ingushetia, under a social financing initiative. The Park of partnership agreement, the Company Culture and Leisure and the downtown provided substantial funding for the riverside were landscaped in Tuapse, construction of a kindergarten building and funding was provided for the for 240 children and a school for 540. construction of a children’s playground on Rabfakovskaya Street as well as In Khabarovsk Territory, funding was for the illumination of buildings and allocated for the development and streets in the city center. A portion of popularization of football in the region. the funds was used to repair public road surfacing and ensure good In Krasnodar Territory, the bus fleet sidewalks on city streets. in Tuapse District was upgraded as a

CONSTRUCTION OF A SCHOOL IN THE REPUBLIC OF INGUSHETIA

Expenditures for regional social projects, RUB million In 2015, under a partnership agreement between Rosneft and the Republic of 2013 2014 2015 Ingushetia, RUB 360 million in funding was provided for the construction of a Financing of regional social projects 3,684.7 1,667.0 4,069.1 school.

Expenditures for regional social projects by area in 2015, RUB million The general school for 540 children is located on 2.99 ha of land in the Areas of regional social financing RUB million Village of Ordzhonikidzevskoye, Sunzha Municipal District, Ingushetia. In the Health care 147 floor plan, classroom areas are laid Education and science 404.3 out by age and department. Recreation facilities are located adjacent to Sports 1,380.7 classroom areas.

Culture 93.2 The school, designed for Preschools 282.7 23 classrooms, is a three-story H-shaped building with sections Renewal of the cultural heritage 50 divided by aseismic joints. It is to have Infrastructure development 1,676.9 elevators, a gymnasium, a basement and an underground crawl space, Other expenses 34.365 and the elementary school will have a separate entrance. 65 Including support for veterans, the disabled, retirees, low-income families, youth organizations, city events and social and agricultural institutions. ROSNEFT Society SUSTAINABILITY REPORT 2015 109

Charity •• the development of social •• support for indigenous peoples of infrastructure in the Company’s the North Key charity initiatives, in accordance regions of operation with Federal Law No. 135-FZ “On •• support for education, science, Charity and Charitable Organizations” •• support for veterans and the culture, the fine arts, patriotic and the Company’s goals, are as disabled, including retirees as well upbringing and personal follows: as employees and members of development their families •• support for general, occupational Rosneft’s charity expenditures, RUB million and higher educational institutions as well as Rosneft’s own training Description 2013 2014 2015 centers used for its corporate continuing education program, 66 Charity expenditures 1,429.9 2,572.8 2,282.5 School–University–Company

Charity expenditures by category in 2015, RUB million •• support for health care and disease prevention, promotion of a healthy Description RUB million lifestyle and improvement of the Health 36.1 psychological climate

Education and science 809.5 •• environmental protection and wildlife preservation Sports 44.6

Culture 84.3 •• support for physical education and amateur sports. Preschools 2.5 In selecting specific projects and Support for veterans, the disabled and people in need 144.9 initiatives for funding, Rosneft gives Orphanages 15.8 priority to social and infrastructure projects that have the maximum social Charities, NGOs, humanitarian aid 585.5 impact and directly affect the quality of life of the local population in its Renewal of the cultural heritage 435.7 regions of operation (including the Support for indigenous peoples of the North 39 employees of Group entities). Charity projects are undertaken by decision of Other 84.667 an authorized Rosneft management

66 In the 2015 annual report, charity provided to educational institutions in 2015 was indicated separately in the Youth body in accordance with the approved Policy section and not included in Rosneft’s total charity expenditures for 2015. business plan. 67 Including support for retirees, low-income families, youth organizations, city events and social and agricultural institutions. ROSNEFT Society SUSTAINABILITY REPORT 2015 110

The Company spent a total of RUB of the North and works to preserve 2,283 million for charitable purposes the traditional way of life and cultural in 2015. traditions of the indigenous population. Group entities in Sakhalin and Yamalo- Support for indigenous peoples Nenets Autonomous District as well of the North as in Krasnoyarsk and Khabarovsk territories make a valuable Support for indigenous peoples of the contribution in this area. For example, North in Rosneft’s regions of operation to preserve the culture of indigenous has traditionally been an important peoples, the Company helps in focus of the Company’s charitable organizing traditional events such as activity. Rosneft actively promotes the Reindeer Herder’s Day in the Village of socioeconomic development of areas Kharampur on Yamal Peninsula. POLAR BEAR PRESERVATION that are home to indigenous peoples PROGRAM

Rosneft has a program for the preservation of endangered animal species, including polar bears. The world’s polar bear population currently stands at 20,000-25,000 and may fall to a third of that by 2050 due to human interference. In 2015 Rosneft supported Russian zoos that have polar bears in Omsk Region, the Udmurt Republic, Krasnoyarsk Territory, Sverdlovsk Region, Perm Territory, Chelyabinsk Region and the Sakha Republic (Yakutia). The species preservation program includes improving the living conditions and care of the animals, enlarging and maintaining cages, monitoring the animals with modern equipment, improving security, etc.

Expenditures to support indigenous peoples of the North by category in 2015, RUB million

Description 2015

Expenditures for housing construction 0.08

Expenditures for infrastructure construction and maintenance 3.6

Software expenditures 47.4

Expenditures to preserve the native culture and for health-improvement programs 3.1

Expenditures to support indigenous peoples of the North, RUB million

Description 2013 2014 2015

Expenditures to support indigenous peoples of the North 57.6 102.468 54.1

68 The value for 2014 includes payments of RUB 49.8 million to compensate losses incurred by traditional users of natural resources and reclamation work in connection with the construction of Company facilities. ROSNEFT Society SUSTAINABILITY REPORT 2015 111

SUPPORT PROVIDED BY EAST SIBERIAN OIL AND GAS COMPANY FOR INDIGENOUS PEOPLES OF THE NORTH

East Siberian Oil and Gas Company 85 kilometers is for sleds with teams information on reindeer migration was supports the indigenous population of of 4–6 dogs and skijoring, a form of gathered and analyzed. Evenk District, Krasnoyarsk Territory, mushing in which a skier covers the and works to preserve their traditional distance in free style, assisted by one The Evenk Reindeer Project was culture, way of life and ecosystem. or more dogs. The long distance of launched in 2014. The first stage of the 340 kilometers, divided into five legs, program involved a series of efforts East Siberian Oil and Gas Company is for sleds with teams of 6–8 dogs. to collect key data on the reindeer has supported the Sled Dog Sport The pace was fast, and the mushers population: land and air surveys Federation of Krasnoyarsk Territory covered the route in five days. Each were done to determine the borders since its founding. In 2015 the company leg of the race crossed several passes of the reindeer’s winter ranges and acted as the general partner of the with differences in elevation of 300–400 the size of the animal population; the first Krasnoyarsk Open Cup (Siberia meters. findings of air surveys were analyzed,

Quest Dog Sled Races). The race In 2015 East Siberian Oil and Gas and information was gathered from is distinguished by its unique route Company continued its work with the local people. As a result of these which follows the Sayan Mountains, Siberian Federal University on efforts, a lost population of Evenk the Stolby Nature Reserve and the the Evenk Reindeer social and reindeer was found. In the second Yenisei and Mana rivers. There were environmental project to preserve the stage of the project, scientists were seven competitors from Krasnoyarsk largest population of wild reindeer. able to trace the reindeer’s migration. Territory and Irkutsk, Omsk and Research on the wild reindeer, which In future, experts will do a detailed Tyumen regions. The safety of the forms the basis of the ecosystem assessment of current threats to the dog sledders in the taiga was ensured in the Evenk and Taimyr districts of reindeer, and a joint plan of action will by two snowmobile brigades of the Krasnoyarsk Territory, is vital for the be developed to reduce these risks. Emergency Situations Ministry. indigenous peoples of the North. This is the first large-scale study of the The Krasnoyarsk Open Cup includes reindeer population in Russia in over two distances. The short distance of twenty years, and a large volume of ROSNEFT Society SUSTAINABILITY REPORT 2015 112

Sports and cultural events luge. The Achinsk Oil Refinery VNK team came in first for the second year Summer and Winter Spartakiads in a row, followed by the Angara team set up by several Rosneft entities in Summer and winter multi-event East Siberia and the RN Fire Safety competitions, known in Russia team. as Spartakiads, are an essential component of the Company’s The Eleventh Summer Spartakiad program aimed at promoting a was held in two stages: regional and healthy lifestyle among employees. corporate-wide events. The finals of Corporate sports events allow Rosneft the summer games were held in Sochi employees to be active and give them from 22 to 26 September. Seventeen an opportunity to demonstrate their employee teams and one management sporting achievements. Around 25,000 team comprising more than 700 employees of 92 Group entities took participants competed in 14 events: part in the 2015 Spartakiads. futsal, volleyball, basketball, sprints, relay races, table tennis, tug-of-war, The Fifth Winter Spartakiad was held weightlifting, chess, shot put, billiards in Krasnoyarsk from 1 to 7 March, and bowling. The Angara team walked with venues including the Biathlon away with the gold prize for the third Academy’s ski runs and the ice rinks year in a row. The Samaraneftegaz of the Rassvet and Pervomaysky team came in second, and the RN sports arenas. Around 400 employees Security team was third. The jury also of 21 Group entities and Rosneft’s selected winners in three special management team competed in four categories: Best Disciplined Team, events: ice hockey, cross-country Most Committed Team and Most skiing, speed skating and team relay Progressive Team. ROSNEFT Society SUSTAINABILITY REPORT 2015 113

MORE “Rosneft Lights the Stars” Festival THAN 5,000 In 2015, Rosneft held its fifth annual EMPLOYEES PARTICIPATED corporate festival “Rosneft Lights the IN «ROSNEFT LIGHTS THE STARS» Stars”, which brought together more IN 2015 than 5,000 employees from 89 Group entities. Also involved were employees’ children from 7 to 18 years of age, Rosneft Class participants, students studying industry disciplines at the Company’s partner universities and holders of Rosneft scholarships. The participants showcased their talent in the categories of vocal and instrumental music, dance, magic, circus art, fine arts and photography.

The festival was held in three stages: a qualifying round at Group companies, local contests in Krasnodar, Moscow, Samara and Krasnoyarsk, and finals that featured a gala event at the Russian Army Theater in Moscow. The 2015 event was held in commemoration of the 70th anniversary of the Soviet Union’s victory in the Great Patriotic War. ROSNEFT Independent Assurance Report SUSTAINABILITY REPORT 2015 on the Sustainability Report 2015 114

Independent Assurance Report Our responsibilities on the Sustainability Report 2015

To the Board of Directors and Stakeholders of Rosneft Oil Company

Identification and description of the subject matter

Summary of work performed

Assurance Engagements Other than Audits or Re- views of Historical Financial Information

Identification of the criteria

Management responsibilities ROSNEFT Отчет о независимой проверке SUSTAINABILITY REPORT 2015 Отчета в области устойчивого 115 развития за 2015 год

Conclusions

Moscow 26 August 2016 ROSNEFT Annex 1 SUSTAINABILITY REPORT 2015 116

ANNEX 1

PROGRESS AGAINST THE 2015 OBJECTIVES SET IN THE 2014 SUSTAINABILITY REPORT. OBJECTIVES FOR 2016-19

Objective Progress

INNOVATION Undertake the activities included in the Innovation The majority of the Program’s KPIs set for 2015 were achieved. Program Implement Program Innovation Projects as scheduled A project was completed to develop a computer-aided technology for the processing of 3D seismic data from unconventional hydrocarbon plays in fractured-cavernous reservoirs. Rosneft developed and introduced a 3D reservoir modeling tool and a geosteering program for horizontal and sidetrack drilling using an innovative technology that outperforms competing techniques. The Company developed a mini-channel reactor and technology for small-scale Fischer-Tropsch-based GTL processes for the conversion of natural/associated petroleum gas into synthetic crude oil. Two expeditions, Kara-Winter 2015 and Kara-Summer 2015, were organized by Rosneft in cooperation with the Arctic Research and Design Center for Offshore Developments and the Arctic and Antarctic Research Institute. A project was completed to develop catalysts for hydrotreating diesel fraction and pre-hydrotreating gasoline fraction. Rosneft developed an advanced technology to produce synthetic oils based on polyalphaolefin (PAO) with a high viscosity of 140 to 170, a low freezing point from minus 50 degrees Celsius to minus 65 degrees Celsius, and improved thermal and oxidative stability. The Company developed an experimental technology for manufacturing ruthenium catalysts using diethyl for the metathesis polymerization of dicyclopentadiene (DCPD) with an annual capacity of 6 kg. Implement the Innovative Technology and Pilot Testing Under the 2011-14 Innovative Technology and Pilot Testing Program, the Program Company deployed 137 tested technologies worth a total of RUB 15.9 billion. The technologies helped to increase oil production by 2,668,000 tonnes and yielded an economic effect of RUB 1,642.7 million.

ENVIRONMENTAL SAFETY Develop a Biodiversity Preservation Program The Company developed and adopted a Program for the Preservation of the Biological Diversity in the Marine Ecosystems for its license blocks in Russia’s Arctic region. The Program was presented and discussed in the context of relevant program tasks and development policies of Russia’s energy sector at a joint forum staged by UNDP/GEF and the Russian Ministry of Natural Resources. A monitoring framework was implemented to analyze progress toward the Program’s objectives. ROSNEFT Annex 1 SUSTAINABILITY REPORT 2015 117

Objective Progress Develop an algorithm for integrating environmental The Company established an environmental target-setting mechanism that was targets adopted as part of its Long-term Development Program. The Company’s environmental targets were integrated into 2016-20 business plans across the Group. The Company drafted an internal Regulation to integrate environmental targets into strategic planning. Establish uniform environmental requirements for The Company established and approved standard environmental requirements contractors for contractors engaged by Rosneft or its entities for the following services: •• Environmental supervision services •• Full remediation of disturbed and/or contaminated land (technical and biological phases) •• Waste management services •• Baseline environmental conditions monitoring and laboratory testing •• Sludge pit removal, including the burial, decontamination and/or disposal of drilling wastes (mud and cuttings), and the remediation of adjacent land. The Company developed a concept for managing HSE aspects of its contractor relations, with such concept reflected in a relevant draft internal document. Raise APG utilization at Russian upstream assets to As a result of measures taken under the Gas Investment Program in 2015, the 84.3% Company raised APG utilization to 87.9%. Meet the minimum energy efficiency target of 862,00069 The energy efficiency in 2015 was 1,014,00070 tce, or 17.3 million GJ. tce, or 14.1 million GJ

OCCUPATIONAL HEALTH AND SAFETY Reduce the incidence rate of non-fatal injuries per Incidence rate of non-fatal injuries was reduced to 0.327 from 0.330 in 2014. million hours worked Arrange for a re-certification audit of the occupational Following the ISO 14001 and OHSAS 18001 compliance audit on the integrated health and safety management system to assess its HSE system, the Company received an unqualified audit report and registration compliance with the requirements of the OHSAS 18001 certificates No. OHS 634066 and No. OHS 634065. standard in specific manufacturing or service operations for the purposes of obtaining and maintaining accredited certification during a certification period of 3 years Perform walkthroughs of the integrated OHS A detailed schedule of inspections was established, all inspections were management system across Group entities and performed on schedule, with relevant findings and recommendations recommend improvements communicated to relevant recipients Implement the 2015 target programs for upgrading The Company approved specifications for fire engines to be purchased by Group and enhancing fire protection capabilities across (i) oil entities under relevant target programs. and gas production entities, and (ii) gas processing, oil refining and distribution entities Revise internal regulations and standards and develop The activities scheduled for 2015 were completed. new ones in accordance with the established schedule Achieve at least a 5% annual reduction in pipeline As a result of program initiatives implemented in 2015, the rate dropped by 6.4% accidents in line with the four-year program to improve from the level reported in 2014. the safety of the pipeline network

EMPLOYEES Develop labor efficiency indicators for business segments High-level labor efficiency indicators for business segments and for the and for the Company as a whole and integrate them into Company as a whole were discussed and approved. business plans for 2016-20 An action plan to improve labor productivity was drawn up and incorporated into the Company’s Long-Term Development Program. The target 2016 labor efficiency indicator for the Company as a whole (expressed as EBITDA per employee) was calculated and included as one of the metrics in the Company’s Business Plan. The approved labor efficiency indicators for the Company’s core business segments were communicated to Group entities for use in business planning. Effective in 2016, labor efficiency indicators across relevant job duties were included in annual KPIs of the Company’s top managers and heads of Group entities. Roll out the single corporate template for personnel A project was launched at five Group entities to roll out the previously created accounting and payroll that was earlier introduced at a single corporate template on the SAP platform. The solution was put into pilot selected group of entities on a trial basis operation after the completion of pre-project studies, which included a gap- analysis. Work was started to create a similar template solution on the 1C platform for small Group entities.

69 This equals 480,960 tce in accordance with GOST R 51750-2001 Standard. 70 This equals 589,11 tce in accordance with GOST R 51750-2001 Standard. ROSNEFT Annex 1 SUSTAINABILITY REPORT 2015 118

Objective Progress Continue work to develop and introduce model The model organizational structure for the Tax Management function was organizational structures for business functions introduced. The model organizational structure for the Personnel and Social Programs function was introduced across business segments, with the exception of Exploration and Production. The updated model organizational structure for the Health, Safety and Environment function was communicated to Group entities. The model organizational structure was approved for the Geology and Development sub-segment of the Oil and Gas Production segment. Approve and adopt a draft Regulation on Rotation of the Approve and adopt a draft Regulation on Rotation of the Company’s First- and Company’s First- and Second-Tier Managers Second-Tier Managers Continue with the special innovation project to introduce The Company continued work on the special innovation project to introduce competency-based performance evaluation and career competency-based performance evaluation and career development across all development across all business segments: business segments in collaboration with Gubkin Russian State University of Oil and Gas, Tomsk Polytechnic University and leading advisory firms in Russia. •• Implement competency-based performance Work is in progress to develop competency maps. evaluation and career development across Geology and Development, Site Survey and Investigation, Employee performance evaluation was conducted on a trial basis across Oil and Gas Production, Oil Refining, and Offshore Production (Supporting Business Processes), Distribution and Sales, and Projects Logistics and Transport, covering over 2,000 employees. •• Develop a methodology for Drilling, Distribution and Sales, Logistics and Transport, Materials and The Company continued to develop competency maps for Supplies, Logistics and Supplies, Procurement, Economics and Finance, and Transport, Capital Construction, Economics and Finance, and Energy Efficiency. HR Management Tools for evaluating knowledge and skills in 10 key professions were introduced in Downstream segments, with over 1,500 blue-collar staff evaluated. Build group-wide occupational medicine capabilities. The Company built occupational medicine capabilities, with relevant competency Develop a methodology for conducting a comprehensive plans developed and introduced. In 2015 a comprehensive audit was done of all audit of on-site medical services across the Company’s medical departments in Group entities. Prior to the audits, a uniform evaluation production facilities. methodology was developed and standardized in the form of a checklist, and evaluation criteria were developed for medical stations, including requirements with respect to the condition of equipment and materials as well as licensing and reporting requirements. Adopt a Regulation on the Organization of Emergency Regulation No. PZ-09 Р-0127 (version 1.00), “The Organization of Emergency Medical Aid at Group entities Medical Aid at Group Entities” was adopted by Order No. 162 of 20 April 2015. Develop and phase in a corporate program to promote a An annual program to promote a healthy lifestyle among Company employees healthy lifestyle was approved in March 2015 by the vice president in charge of that activity. Unify voluntary health insurance (VHI) plans for Moscow- VHI plans were unified into four standard levels, with two additional plans based employees of Group entities established for children. The unified criteria are planned to be applied to 2017-19 VHI services for Group entities to be acquired in 2016 through a centralized process.

SOCIETY Continue engagement with local communities, including In 2015 Rosneft signed partnership agreements with the governments of the through agreements with local authorities on social and Republic of Ingushetia, the Republid of Karelia, the Republic of Sakha (Yakutia), economic partnership Murmansk Region, Samara Region, Khanty-Mansi Autonomous District–Yugra, Irkutsk Region, the Kabardino-Balkar Republic, Yamalo-Nenets Automonous District, Magadan Region, Krasnoyarsk Territory, Stavropol Territory, Primorye Territory, Khabarovsk Territory, Saratov Region and Chechen Republic. The parties are to cooperate on a number of specialized industrial, financial, investment and social programs. ROSNEFT Annex 1 SUSTAINABILITY REPORT 2015 119

OBJECTIVES FOR 2016-19

2016 2017–2019

INNOVATION Undertake the activities included in the Innovation Maintain the reserve replacement rate at or above the 100% benchmark Program Achieve maximum allowable recovery rates from new fields and take systemic steps to increase recovery rates from mature fields Develop technologies to promote the economic viability of unconventional hydrocarbons Increase refining complexity

Introduce new residue-conversion and petrochemical technologies

ENVIRONMENTAL SAFETY Develop a package of measures to Achieve environmental targets established in the improve environmental awareness 2025 Long-term Development Program Develop standards for production and consumption waste management and the remediation of disturbed and contaminated land Contribute to a re-certification audit to establish the conformity of the integrated HSE system to ISO 14001 and take steps to align corporate practices with the requirements to ISO 14001:2015 “Environmental Management Systems” Raise APG utilization at Russian upstream assets to 88% Raise APG utilization at current fields to 95% by 2020

OCCUPATIONAL HEALTH AND SAFETY Reduce the incidence rate of non-fatal Implement the 2020 Program of Enhanced Job Safety and injuries per million hours worked Informed Leadership in Health, Safety and Environment Enhance hazard identification and risk assessment processes Implement the target program for upgrading Develop a target program to bring the Company’s facilities in compliance and enhancing fire protection capabilities with fire safety regulations and implement it until the end of 2020 across Group entities until the end of 2016

EMPLOYEES Develop and approve a standard Staff Handbook for Establish a Corporate Training Center as a key enabler for Group entities developing and maintaining a sustainable talent pipeline and realizing the Company’s innovative and intellectual potential Develop a system of project rewards for employees Develop and introduce a personnel retention program, including the retention of personnel in remote and disadvantaged regions Update existing bonus plans across Group entities Establish a single HR data management system, leveraging automation based on integral industry ratings and unification capabilities to the greatest extent possible Continue to roll out the single SAP/1C corporate Optimize HR processes to meet the Company’s needs. Develop/ template for personnel accounting and payroll that was update internal regulations governing HR management processes earlier introduced at a selected group of entities on a trial basis Promote the Company’s active involvement in establishing a national system of competencies and qualifications

SOCIETY Continue engagement with local communities, including through agreements with local authorities on social and economic partnership ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 120

ANNEX 2

GRI CONTENT INDEX. CORRESPONDENCE BETWEEN THIS REPORT AND SUSTAINABILITY REPORTING GUIDELINES OF GLOBAL REPORTING INITIATIVE (GRI G4), THE OIL AND GAS INDUSTRY GUIDANCE ON VOLUNTARY SUSTAINABILITY REPORTING BY IPIECA/ API (2010), UN GLOBAL COMPACT ‘TEN PRINCIPLES’ AND THE RUIE BASIC PERFORMANCE INDICATORS FOR NON-FINANCIAL REPORTING (2008)

Excluded External Aspect71 Indicator Definition Report section Page information assurance

GENERAL STANDARD DISCLOSURES

Strategy and analysis G4-1 Statement from the Chairman Message from the Chairman of the 4-5 ^ of the Management Board about Board of Directors the relevance of sustainability to the organization and the Message from the Chief Executive organization’s strategy for Officer

addressing sustainability G4-2 Description of key impacts, Message from the Chief Executive 4-5, ^ risks, and opportunities Officer IPIECA-HS4 34-47, Management of sustainable development 52-55, Risk management and internal 62-72, control 84-85, Stakeholder engagement 106, Occupational health and safety 116-119 Environment Employees Society Annex 1. Progress against the 2015 objectives set in the 2014 Sustainability Report. Objectives for 2016-19

For more information, please visit https://www.rosneft.ru/.

Organizational profile

G4-3 Name of the organization Contacts 140 ^ G4-4 Primary brands, products, and The Company in 2015: general 14-18 ^ services information

Primary products include oil, gas and refined products. G4-5 Location of the organization’s The Company’s head office is 140 ^ headquarters located in Moscow.

71 Unless stated otherwise, the aspect boundaries comprise Rosneft and Group entities in accordance with the scope indicated in the Reporting boundaries section. ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 121

Excluded External Aspect71 Indicator Definition Report section Page

information assurance G4-6 Number of countries where The Company in 2015: general 14-18 ^ the organization operates, information and names of countries where either the organization has significant operations or that are specifically relevant to the sustainability topics covered in the report

See the 2015 Annual Report (1.1. Assets and regions of operation in 2015, and 1.2. Company structure, pp. 12-15) G4-7 Nature of ownership and legal The Company in 2015: general 14-18 ^ form information

See the 2015 Annual Report (Section 5: Information for shareholders and investors — 5.1. Share capital, pp. 152-

153) G4-8 Markets served (including ^ geographic breakdown, sectors served, and types of customers and beneficiaries)

See the 2015 Annual Report (Improving sales efficiency of oil, gas, petroleum products and petrochemicals, pp. 102-109; Appendix 1: Consolidated financial statements, Note 9: Segment information, pp. 223-224; Appendix 6:

Audit report on the financial statements, Note 25: Segment information, pp. 305-306) G4-9 Scale of the organization Key sustainability performance 6-8, ^ indicators 84-85 Employees

See the 2015 Annual Report (Operating and financial highlights in 2015, pp. 45-48; Appendix 1: Consolidated financial statements, Note 9: Segment information, pp. 223-224, Note 40: Key subsidiaries, p. 243; Appendix 6: Audit report on the financial statements, Note 25: Segment information, pp. 305-306, and Balance sheet at 31

December 2015, p. 276) G4-10 Number of employees Key sustainability performance 6-8, ^ indicators RUIE – 3.1.1 84-86 Employees — HR management system — Staff structure

91.4% of Company employees are hired under permanent employment contracts and 99.5% of employees work on

a full-time basis. 66% are men and 34% are women. G4-11 Percentage of total employees Employees — HR management 102 ^ covered by collective bargaining performance in 2015 — Collective UN GC agreements bargaining agreement Principle 3

RUIE – 3.1.4 G4-12 Description of the organization’s ^ supply chain

See the 2015 Annual Report (Business model, pp. 36-37) G4-13 Description of any significant The Company in 2015: general 14-18 ^ changes during the reporting information period regarding the organization’s size, structure,

ownership, or its supply chain G4-14 Reporting whether and how ^ the precautionary approach or IPIECA- principle is addressed by the EN5, HS4 organization

The Company considers it important to conduct an environmental impact assessment that provides inputs for measures to mitigate any negative environmental impact from future operations. ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 122

Excluded External Aspect71 Indicator Definition Report section Page

information assurance G4-15 Externally developed economic, ^ environmental, and social RUIE – 3.3.4 charters, principles, or other initiatives to which the organization subscribes or which it endorses

In 2009, the Company joined the UN Global Compact and the Social Charter of Russian Business, and it has

endorsed the Anti-Corruption Charter of Russian Business since 2013. G4-16 Memberships of associations ^ (such as industry associations) RUIE – 3.3.5 and national or international advocacy organizations

The Company is a member of the following initiatives and organizations: UN Global Compact Social Charter of Russian Business Russian National Committee of the World Petroleum Council Union of Oil & Gas Producers of Russia Board of Trustees of Gubkin Russian State Oil and Gas University Chamber of Commerce and Industry of the Russian Federation Canada-Russia Business Council Nonprofit Partnership Russian National Committee for UNEP (UNEPCOM)

Identified material aspects and boundaries G4-17 List of all entities included in About the Report — Reporting 11 ^ the organization’s consolidated boundaries financial statements or equivalent documents. Report on whether any entity included in the organization’s consolidated financial statements or equivalent documents is not covered by the report.

See the 2015 Annual Report (Appendix 1: Consolidated financial statements, Note 40: Key subsidiaries, p. 243). G4-18 Process for defining the About the Report 10-11 ^ report content and the Aspect Boundaries. Reporting principles for defining report

content G4-19 List of all the material Aspects About the Report 10-11 ^ identified in the process for

defining report content This Annex G4-20 Description of the Aspect About the Report 10-11 ^ Boundary within the organization for each material This Annex

Aspect G4-21 Description of the Aspect About the Report This Annex 10-11 ^ Boundary outside the organization for each material Aspect

The boundaries for OHS comprise both the Rosneft Group and the contractors working at the production facilities of Group entities. ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 123

Excluded External Aspect71 Indicator Definition Report section Page

information assurance G4-22 Description of any restatements About the Report 6-8, ^ of information provided in previous reports, and the Key sustainability performance 10-11, indicators reasons for such restatements 60, Occupational health and safety — OHS performance in 2015 78-80 Environment — Environmental protection performance in 2015

The development and improvement of the corporate reporting system and changes in the reporting boundaries

and retrospective information are the key reasons for the restatements of information provided in the Report. G4-23 Significant changes from About the Report 10-11 ^ previous reporting periods in the Scope and Aspect Boundaries

Stakeholder engagement G4-24 List of stakeholder groups About the Report 44 ^ engaged by the organization

Stakeholder engagement G4-25 Basis for identification and Stakeholder engagement 44 ^ selection of stakeholders with whom to engage

The Company engages with all stakeholder groups which influence the Company’s activities and which are

influenced by the Company’s activities. G4-26 Organization’s approach to Corporate Governance 32-33, ^ stakeholder engagement, including frequency of Stakeholder engagement 44, engagement by type and by Employees 84-85, stakeholder group 106

Society G4-27 Key topics and concerns that Stakeholder engagement 44-47 ^ have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting

Report profile

G4-28 Reporting period About the Report 10 ^ G4-29 Date of most recent previous ^ report

Rosneft Sustainability Report 2014 was published in October 2015.

G4-30 Reporting cycle About the Report 10 ^ G4-31 Contact point for questions Contacts 140 ^ regarding the report or its

contents G4-32 ‘In accordance’ option the About the Report 10-11, ^ organization has chosen The external assurance statement 114 GRI Content Index for the for 2015Sustainability Report chosen option This Annex Reference to the External

Assurance Report G4-33 Policy and current practice About the Report 10-11, ^ with regard to seeking external assurance for the report The external assurance statement 114 for the 2015 Sustainability Report This Annex ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 124

Excluded External Aspect71 Indicator Definition Report section Page information assurance

Governance G4-34 Governance structure of Corporate governance 28-32 ^ the organization, including IPIECA-HS4 committees of the highest governance body and committees responsible for decision-making on economic, environmental and social impacts

See the 2015 Annual Report (Corporate governance system, pp. 114-149, Rosneft Board of Directors, pp. 124-127) G4-36 Report on whether the Corporate governance 28-31 ^ organization has appointed an executive-level position or positions with responsibility for economic, environmental and social topics, and whether post holders report directly to the highest governance body

Ethics and integrity

G4-56 The organization’s values, Management of sustainable 34-36 principles, standards and norms development UN GC of behavior such as codes of Principle 10 conduct and codes of ethics

For more information, please visit https://www.rosneft.ru/Investors/corpgov/ Sustainable Development Policy https://www.rosneft.ru/upload/site1/document_file/174291/1.pdf

Code of Business and Corporate Ethics https://www.rosneft.ru/upload/site1/document_file/Kodeks_rus(2).pdf G4-57 Internal and external Management of sustainable 34-37 ^ mechanisms for seeking development — Ethical UN GC advice on ethical and lawful management framework; Principle 10 behavior, and matters related to Prevention of fraud and corruption organizational integrity, such as

helplines or advice lines G4-58 Internal and external Management of sustainable 34-37 ^ mechanisms for reporting development — Ethical UN GC concerns about unethical or management framework; Principle 10 unlawful behavior, and matters Prevention of fraud and corruption related to organizational integrity, such as escalation through line management, whistleblowing mechanisms or hotlines ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 125

Excluded External Aspect71 Indicator Definition Report section Page information assurance

SPECIFIC STANDARD DISCLOSURES

CATEGORY: ECONOMIC G4-DMA Disclosures on management ^ approach RUIE – 1.1

See the 2015 Annual Report (Assessment of meeting KPIs, pp. 44-48) G4-EC1 Direct economic value Key sustainability performance 6 ^ generated and distributed, indicators IPIECA- including revenues, operating SE4, SE13 costs, employee compensation, RUIE – 1.2, donations and other community 1.3, 1.4, 1.5, investments, retained earnings, 1.6, 1.7 and payments to capital

providers and governments G4-EC3 Coverage of the organization’s Employees — HR management 103 ^ defined plan obligations performance in 2015 — Corporate RUIE – 1.8 pension benefits and care for veterans

According to the findings from the actuarial valuation of Neftegarant Non-state Pension Fund in 2015, the fund’s current financial position is stable and it is virtually certain that the fund will be able to meet its obligations (see

http://www.neftegarant.ru/pokazateli/act.php). G4-EC4 Financial assistance received ^ from government

In a number of regions, the Company and Group entities benefit from tax reliefs, mainly for MET, income tax and

Economic performance property tax, in accordance with federal and regional legislation G4-DMA Disclosures on management Message from the Chairman of the 2-5, ^ approach Board of Directors 106 Message from the Chief Executive Officer

Society G4-EC7 Development and impact of Key sustainability performance 8, ^ infrastructure investments and indicators IPIECA-SE7 services supported 107-111 Society — Social performance in

2015 G4-EC8 Significant indirect economic Message from the Chairman of the 2-5, ^ impacts, including the extent of Board of Directors IPIECA-SE6 impacts 22, Message from the Chief Executive Officer 107-111 Import substitution and localization

Indirect economic impacts Society G4-DMA Disclosures on management The Company in 2015: general 21-22 ^ approach information — Import substitution and localization The Company uses competitive bidding procedures to select vendors. All other factors being equal, preference is

given to local bidders G4-EC9 Proportion of spending on local The Company in 2015: general 21-22 ^ suppliers at significant locations information — Import substitution IPIECA-SE5

Procurement and localization practices of operation and localization G4 OG-DMA Disclosures on management ^ approach See the 2015 Annual Report (Rosneft resource base and production map and Exploration and reserves

replacement, pp. 56-61) GRI G4 OG1 Volume of proved reserves and Key sustainability performance 6 ^

Proved reserves production indicators ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 126

Excluded External Aspect71 Indicator Definition Report section Page information assurance

CATEGORY: ENVIRONMENTAL (UN GC Principles 8 and 9) G4-DMA Disclosures on management Environment — Energy 81-83 ^

approach consumption and energy efficiency G4-EN3 Energy consumption within the Environment — Energy 81-83 ^ organization consumption and energy efficiency UN GC Principles Group entities use various fuels, primarily natural gas and associated petroleum gas, as well as fuel oil (87% and 7, 8 10% of total fuel consumption, respectively). IPIECA-E2

RUIE – 2.2 G4-EN6 Reduction of energy Environment — Energy 81-83 ^ consumption consumption and energy efficiency UN GC Principles 8, 9 The implementation of the Energy Saving Program resulted in energy savings of 17.3 million GJ in 2015 (heat, electricity and fuel).

IPIECA-E2 GRI G4 OG3 Total amount of renewable The indicator is ^ energy generated by source disclosed partially. IPIECA-E3 Information is not available due to insignificant volumes of renewable energy generation. The Company intends to start recording this type of energy when it begins using it more extensively. At present, the amount of generated renewable energy represents an insignificant portion of total energy

Energy consumption generation. G4-DMA Disclosures on management Environment — Environmental 75-76 ^ approach protection performance in 2015 — Water consumption and

wastewater discharge G4-EN8 Total water withdrawal by Key sustainability performance 76 ^ source indicators UN GC Principles Environment — Environmental 7, 8 protection performance in 2015 — Water consumption and IPIECA-E6 wastewater discharge RUIE – 2.3 According to its data collection methodology, the Company publishes data on total water withdrawal, including

rainwater, wastewater and bottom water. G4-EN9 Water sources significantly ^ affected by withdrawal of water UN GC Principle 8 The Company identified no significant impacts of water withdrawal on water sources. The volume of water

IPIECA-E6 withdrawn from surface and ground sources is within the allowable level. G4-EN10 Percentage and total volume of Environment — Environmental 77 ^ water recycled and reused protection performance in UN GC 2015 — Water consumption and Principle 8 wastewater discharge IPIECA-E6 In 2015, the percentage of water recycled and reused was around 45.58% (1.467 mcm). RUIE – 2.4 Water ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 127

Excluded External Aspect71 Indicator Definition Report section Page

information assurance G4-DMA Disclosures on management Environment — Environmental 72 ^ approach management system — Special protection and environmentally

sensitive areas G4-EN11 Operational sites owned, leased, Environment — Environmental 72 ^ managed in, or adjacent to, management system — Special UN GC protected areas and areas of protection and environmentally Principle 8 high biodiversity value outside sensitive areas IPIECA-E5 protected areas The Company conducts exploration activities in some nature reserves of the Yamalo-Nenets Autonomous District, Krasnoyarsk Territory, Arkhangelsk Region and the Republic of Sakha, and in the Sea of Okhotsk, the Kara Sea and the Barents Sea. It also extracts, treats and transports oil in the wildlife sanctuaries and wetlands of Krasnodar Territory, in the Verkhnee Dvuobye wetlands, in the Yugansky state nature reserve in the Khanty-Mansi Autonomous District, in various specially protected areas in the Samara region, including the Sprygin Zhigulevsky state nature reserve, and near the More-Yu wildlife sanctuary and the Pym-Va-Shor natural monument in the Nenets Autonomous District. In addition, the Company conducts oil and gas extraction, treatment and transportation activities in the areas with natural resources traditionally used by indigenous peoples of the North and sells oil products in the vicinity of, or in, various specially protected areas, including the Utrish state nature reserve, the Losiny Ostrov, Samarskaya Luka, Tunkinsky and Pribaykalsky national parks, the Baikal nature reserve, the Teberdinsky state nature reserve, the Kumysnaya Polyana nature park and the Vysokovsky Bor natural monument. The Company is committed to full compliance with regulatory requirements and observes stricter environmental

standards when working in these areas. G4-EN12 Description of significant Environment — Environmental The indicator is 72 ^ impacts of activities, products management system — Special disclosed partially. UN GC and services on biodiversity in protection and environmentally Principle 8 protected areas and areas of sensitive areas Due to the scale of the Company’s IPIECA-E5, high biodiversity value outside protected areas operations, it is HS4 impossible to indicate all affected species and the extent of the impacted areas.

The main impacts on biodiversity come from Rosneft’s exploration, production, treatment, transportation and marketing activities and generally last for as long as the Company leases or operates production facilities. The Company does not exert any irreversible impact on biodiversity. The most common impacting factors are the

pollution of areas and the construction and use of production facilities. G4-EN13 Habitats protected or restored Environment — Environmental The indicator is 78-79 ^ protection performance in disclosed partially. UN GC 2015 — Waste management and Principle 8 contaminated land remediation Due to the scale of the Company’s IPIECA-E5 operations, it is impossible to indicate the location and status of all protected and restored habitats.

The final stage of land remediation is an independent assessment. Land remediation is evidenced by certificates

Ecosystem services, including biodiversity of acceptance to be submitted to local authorities. ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 128

Excluded External Aspect71 Indicator Definition Report section Page

information assurance G4-EN14 Total number of IUCN Red ^ List species and national UN GC conservation list species with Principle 8 habitats in areas affected by operations, by level of extinction risk

Areas affected by the Company’s operations are home to 246 species from the IUCN Red List and the national conservation list: Critically endangered (IUCN): 5 species Endangered (IUCN): 1 species Vulnerable (IUCN): 12 species Near threatened (IUCN): 27 species Least concern (IUCN): 41 species Threatened with extinction (Russia): 10 species Rare (Russia): 103 species Decreasing in number (Russia): 25 species Uncertain status (IUCN, Russia): 22 species Species with habitats in areas affected by the Company’s operations include gray whale, cachalot, reindeer, grey heron, golden eagle, Eurasian otter, pond turtle, sturgeon and others. The Company analyzes its impact on the

above species and strives to mitigate it. GRI G4 OG4 Number and percentage of Environment — Environmental 72 ^ significant operating sites in management system — Special IPIECA-E5, which biodiversity risk has been protection and environmentally HS4 assessed and monitored sensitive areas

In 2015, the percentage of significant operating sites in which biodiversity risk has been assessed was 13.08%

Ecosystem services, including biodiversity (31 sites). G4-DMA Disclosures on management Environment — Environmental 72-73 ^ approach protection performance in 2015 —

Air pollution G4-EN15 Direct greenhouse gas Environment — Environmental 74 ^ emissions (Scope 1) protection performance in 2015 — UN GC Greenhouse gas emissions Principles 7, 8 IPIECA- E1

RUIE – 2.5 G4-EN16 Energy indirect greenhouse gas Environment — Environmental 74 ^ emissions (Scope 2) protection performance in 2015 — UN GC Greenhouse gas emissions Principles 7, 8 IPIECA- E1

RUIE – 2.5 G4-EN17 Other indirect greenhouse gas Environmental protection — 74 ^ emissions (Scope 3) Environmental protection UN GC performance in 2015 — Principles Greenhouse gas emissions 7, 8

IPIECA- E1 G4-EN18 Greenhouse gas emissions Environmental protection — 74 ^ intensity Environmental protection UN GC performance in 2015 — Principle 8 Greenhouse gas emissions

Air pollution IPIECA- E1 ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 129

Excluded External Aspect71 Indicator Definition Report section Page

information assurance G4-EN20 Emissions of ozone-depleting ^ substances UN GC Principles The Company does not use any ozone-depleting substances on an industrial scale. 7, 8

IPIECA-E7 ^

G4-EN21 NOX, SOX and other significant Key sustainability performance 73 air emissions indicators UN GC Principles Environment — Environmental 7, 8 protection performance in 2015 — Air pollution IPIECA-E7

Выбросы в атмосферу RUIE – 2.6 G4-DMA Disclosures on management Environment — Environmental 75, ^ approach protection performance in 2015 — Water consumption and 78 wastewater discharge — Waste management and contaminated

land remediation G4-EN22 Total water discharge by quality Key sustainability performance The indicator is 77 ^ and destination indicators disclosed partially. UN GC Principle 8 Environment — Environmental Due to the scale protection performance in of the Company’s IPIECA-E9 2015 — Water consumption and operations, it RUIE – 2.7 wastewater discharge is impossible to present information by destination. According to its data collection methodology, the Company publishes data on total effluents (those of its own and of third parties) discharged via a centralized wastewater disposal system of its own and of third parties. The

Company also publishes data on domestic wastewater discharge. G4-EN23 Total weight of waste by type Environment — Environmental 78 ^ and disposal method protection performance in UN GC 2015 — Waste management and Principle 8 contaminated land remediation IPIECA-E10

Air pollution RUIE – 2.8 G4-EN24 Total number and volume of Key sustainability performance 7, ^ significant spills indicators UN GC 60, Principle 8 Environment — Waste management and contaminated 79 IPIECA-E8 land remediation RUIE – 2.9 Occupational health and safety — OHS performance in 2015 —

Pipeline safety G4-EN25 Weight of transported, ^ imported, exported, or treated UN GC waste deemed hazardous Principle 8 under the terms of the Basel IPIECA-E10 Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally Oily sludge and drill cuttings are the main types of waste produced by the Company. Rosneft does not transport,

import, export or treat waste deemed hazardous under the Basel Convention Annexes I, II, III, and VIII. G4-EN26 Identity, size, protected status, ^ and biodiversity value of water UN GC bodies and related habitats Principle 8 significantly affected by the IPIECA-E5 organization’s discharges of water and runoff

The Company’s discharges in 2015 had no significant impact on water bodies. Effluents and waste ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 130

Excluded External Aspect71 Indicator Definition Report section Page

information assurance GRI G4 Volume and disposal of Environment — Environmental 77 ^ formation or produced water protection performance in OG5 2015 — Water consumption and

IPIECA-E10 wastewater discharge GRI G4 Flaring Key sustainability performance 7, ^ indicators OG6 74 Environment — Environmental IPIECA-E4 protection performance in 2015 — Use of associated petroleum gas

In 2015, associated petroleum gas was flared only by upstream entities in Russia. GRI G4 Amount of drilling waste Environment — Environmental 78-79 ^ (drill mud and cuttings) and protection performance in OG7 strategies for treatment and 2015 — Waste management and IPIECA-E10 disposal contaminated land remediation In 2015, the total amount of drill cuttings from the use of water-based and non-aqueous muds was 3,165,000

Effluents and waste tonnes and 21,000 tonnes, respectively. G4-DMA Disclosures on management Environment — Environmental 62-63 ^ approach management system RUIE –

3.4.1, 3.4.2 G4-EN29 Monetary value of significant Key sustainability performance 7, ^ fines and total number of indicators UN GC non-monetary sanctions for non- 63 Principle 8 compliance with environmental Environment — Environmental management system RUIE – 2.10 laws and regulations Some Group entities faced administrative fines for non-compliance with environmental regulations. The amounts

Compliance of individual fines are insignificant. There were no non-monetary sanctions in 2015. G4-DMA Disclosures on Environment — Environmental 62-63 ^

management approach management system G4-EN31 Total environmental protection Key sustainability performance 7, ^ expenditures and investments indicators UN GC by type 63 Principles Environment — Environmental 7, 8, 9 management system IPIECA-E5

Environmental investments RUIE – 2.12

CATEGORY: SOCIAL RUIE – 3.1.9 Occupational health Key sustainability performance 7, ^ expenditures indicators 55 Occupational health and safety — Occupational health and safety (OHS) management system ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 131

Excluded External Aspect71 Indicator Definition Report section Page information assurance

Sub-category: Labor practices and decent work G4-DMA Disclosures on management Employees — HR management 84-86 ^

approach system G4-LA1 Total number and rates of new Key sustainability performance The indicator is 8-9, ^ employee hires and employee indicators disclosed partially. UN GC turnover by age group, gender 85-86 Principle 6 and region Employees — HR management Information on system new employee RUIE – hires and turnover 3.1.2, 3.1.3 by gender and age is currently not available. The Company intends to collect such information after all Group entities implement a single automated HR administration system within the scope of centralized business planning (not earlier

than 2020). G4-LA2 Benefits provided to full-time Employees — HR management 87, ^ employees that are not provided performance in 2015 — Employee to temporary or part-time remuneration; Quality living 89, employees, by significant conditions; Creation of favorable 98-102 locations of operation working conditions; Support for employee health; Collective

Employment bargaining agreement G4-DMA Disclosures on management Occupational health and safety — 87, ^ approach Occupational health and safety IPIECA- (OHS) management system 89, HS1, HS2,

HS3 98-102 G4-LA6 Type of injury and rates of Key sustainability performance The indicator is 7, ^ injury, occupational diseases, indicators disclosed partially. IPIECA-HS3 lost days, and absenteeism, and 55-56 Occupational health and safety — The information RUIE – total number of work-related fatalities, by region and gender OHS performance in 2015 — required to 3.1.5, 3.1.6, Workplace safety calculate the 3.1.7, 3.1.8 absenteeism rate is currently not available, as no such records are kept by the Company. It is planned to begin collecting such data not later

than in 2016. G4-LA7 Workers with high incidence or ^ high risk of diseases related to their occupation

The Company performed an analysis of historical data on injuries and occupational diseases to identify jobs with the highest risk rates. Jobs with the highest risk of injury include drilling rig and other machine operators, filling station attendants and oil and gas field workers; jobs with the highest risk of occupational diseases include machine operators, bulldozer operators and drivers of special-purpose vehicles. Rosneft makes every effort to

mitigate negative impacts on these jobs. G4-LA8 Health and safety topics covered Occupational health and safety — 52-55, ^ in formal agreements with trade Occupational health and safety IPIECA- unions (OHS) management system 102 HS1, HS2, Employees — HR management HS3, SE16 performance in 2015 — Partnership with trade union

Occupational health and safety organizations ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 132

Excluded External Aspect71 Indicator Definition Report section Page

information assurance IPIECA- Programs and processes for Employees — HR management 98-101 ^ HS2, HS3 identifying and addressing performance in 2015 — Support significant workforce health for employee health

issues G4-DMA Disclosures on management Occupational health and safety — 52-55 ^ approach Occupational health and safety 72 IPIECA-HS1 (OHS) management system

Occupational health and safety G4-DMA Disclosures on management Employees — HR management 84-86 ^ approach system RUIE –

3.1.11, G4-LA9 Average hours of training per Occupational health and safety — The Report 54, ^ year per employee by gender, Occupational health and safety presents data on UN GC and by employee category (OHS) management system the number of 90-91 Principle 6 trained employees. Employees — HR management Currently, the IPIECA- performance in 2015 — Employee SE16 Company does not training and development collect data on RUIE – the hours (days) 3.1.10 of training, but it plans to begin collecting such data not later

than in 2016. G4-LA11 Percentage of employees Employees — HR management The indicator is 91 ^ receiving regular performance performance in 2015 — Employee disclosed partially. UN GC and career development training and development Principle 6 reviews The Report presents data on IPIECA- the total number SE16 of employees who have been subject to reviews. Currently, the Company does not collect data on reviews by category and gender, but it plans to begin collecting such data in 2016. Company-wide reviews were conducted for a total of some 17,000 employees in 2015.

Training and education G4-DMA Disclosures on management Management of sustainable 34-36 ^ approach development — Compliance framework — Ethical management

framework G4-LA16 Number of grievances about Management of sustainable 35 ^ labor practices filed, addressed, development — Compliance and resolved through formal framework — Ethical management grievance mechanisms framework All grievances received in 2015 were considered and analyzed. There were a total of 358 ethical conflicts in Group

Labor practices grievance mechanisms entities in 2015, of which 282 conflicts were resolved and 116 remain pending.

72 The aspect boundaries comprise the Rosneft Group and the contractors working at the facilities of the Group’s production entities. ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 133

Excluded External Aspect71 Indicator Definition Report section Page information assurance

Sub-category: Human rights73 G4-DMA Disclosures on management Employees — HR management 102 ^ approach performance in 2015 — Collective IPIECA- bargaining agreement; SE8, SE9 Partnership with trade union IPIECA- organizations

SE15 G4-HR4 Operations and suppliers ^ identified in which the right to UN GC exercise freedom of association Principle 3 and collective bargaining may be violated or at significant risk, and measures taken to support these rights The Company is committed to comply with the requirements of legislation on freedom of association and collective bargaining. The Company has no business units or suppliers that may violate these rules. IPIECA – Labor disputes SE18 RUIE – 3.2.1 The Company is committed to comply with the requirements of labor legislation. The Company seeks to resolve all labor disputes by means of negotiation.

Freedom of association and collective bargaining G4-DMA Disclosures on management Society — Social performance in 110-111 ^ approach 2015 — Support for indigenous IPIECA- peoples of the North

SE15 G4-HR8 Total number of incidents of ^ violations involving rights of UN GC indigenous peoples and actions Principle 1 taken The Company is committed to comply with the requirements of legislation prohibiting any forms of human rights RUIE – 3.2.3

violation. No violations involving the rights of indigenous peoples were reported in 2015. GRI G4 Operations where indigenous Society — Social performance in 110-111 ^ communities are present or 2015 — Support for indigenous OG9 affected by activities and where peoples of the North specific engagement strategies are in place In some regions, the Company carries out oil and gas production operations in the areas where indigenous communities are present. In all such regions, the Company has programs to engage with, and provide support to,

Rights of indigenous peoples such communities. G4-DMA Disclosures on management Management of sustainable 34-36 ^ approach development — Compliance RUIE – framework — Ethical management

3.1.12 framework G4-HR12 Number of grievances about ^ human rights impacts filed, UN GC addressed, and resolved Principle 1 through formal grievance RUIE – 3.2.2 mechanisms The procedures and mechanisms in place at the Company revealed no grievances related to human rights in 2015. Human rights grievance mechanisms

73 UN GC Principles 2, 4 and 5, RUIE – 3.2.2: The Company does not conduct any activities involving the use of child labor or forced labor. In 2015, the Company recorded no incidents of human rights violations and/or discrimination ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 134

Excluded External Aspect71 Indicator Definition Report section Page information assurance

Sub-category: Society G4-DMA Disclosures on management Society — Social impact 106-111, ^ approach management system; Social RUIE – performance in 2015 — Regional 44-47 3.3.1, 3.3.3 partnerships; Support for indigenous peoples of the North

Stakeholder engagement G4-SO1 Percentage of operations Society — Progress against the 107-113 ^ with implemented local 2015 objectives set in the 2014 UN GC community engagement, impact Sustainability Report Principle 1 assessments, and development IPIECA- programs SE1, SE2, SE3, SE4, The Company implements procedures for stakeholder engagement and community impact assessment and SE5, management in key regions of operation, including when developing new projects. Such approaches affect the

Local communities absolute majority of the Company’s operations. RUIE – 3.3.2 Engagement with government Society — Social impact 106-111 ^ authorities when handling management system; Social publicly important tasks performance in 2015 — Regional

partnerships Social investments Key sustainability performance 8, ^ indicators 106-111 Society — Social impact

management system G4-SO2 Operations with significant ^ actual and potential negative UN GC impacts on local communities Principle 1 The relocation of the Company’s employees and contractors in connection with the development of new projects may have an adverse impact on local communities. Other adverse factors may include environmental impacts and threats to the safety of the facilities. The Company takes action to avoid adverse impacts of employee relocation on local communities and implements

measures to mitigate adverse environmental impacts and enhance safety management performance. GRI G4 Number and description of ^ OG10 significant disputes with local communities and indigenous RUIE – 3.2.3 peoples

There were no significant disputes with local communities and indigenous peoples in 2015. Local communities ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 135

Excluded External Aspect71 Indicator Definition Report section Page

information assurance G4-DMA Disclosures on management Management of sustainable 35-36 ^ approach development — Compliance

framework G4-SO3 Total number and percentage The indicator is ^ of operations assessed for not disclosed. UN GC risks related to corruption, and Principle 10 significant risks identified The data on the exact number of IPIECA- Group entities SE11, SE12 analyzed for corruption-related risks related is confidential.

Countering corruption is part of the Code of Business and Corporate Ethics adopted by the Company. The Company has developed and adopted the Policy for Countering Corruption and the Policy for Countering Corporate Fraud. Relevant implementation activities took place in 2015 as part of the Comprehensive Fraud and

Corruption Prevention Program. G4-SO4 Communication and training Management of sustainable 35-36 ^ on anti-corruption policies and development — Compliance UN GC procedures framework Principle 10 IPIECA-

SE11 G4-SO5 Confirmed incidents of Management of sustainable 36-37 ^ corruption and actions taken development — Prevention of UN GC fraud and corruption Principle 10 IPIECA- Anti-corruption issues are also handled by the Company’s Security Function and the Internal Audit and Control SE11, SE14 Function.

Anti-corruption G4-DMA Disclosures on management Stakeholder engagement 44-47, ^ approach Society — Social performance in 107-109

2015 — Regional partnerships G4-SO6 Total value of political ^ contributions by country and UN GC recipient/beneficiary Principle 10 The Company does not provide finance for political purposes. IPIECA- SE11, SE14

RUIE – 3.3.1 Position on the public policy, Environment — Environmental participation in public policy management system — development and lobbying Cooperation with regulators Employees — HR management performance in 2015 — Employee training and development Occupational health and safety — Occupational health and safety

Public policy (OHS) management system ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 136

Excluded External Aspect71 Indicator Definition Report section Page information assurance The following results were achieved through the Company’s close cooperation with the authorities in 2015: •• Rosneft updated its long-term development program by detailing the measures aimed at achieving long-term goals, including import substitution, localization of equipment production and technologies and human resource development, and the measures developed in accordance with the directives of the Russian Government (No. 4955p-P13 dated 17 July 2014, No. 7558p-P13 dated 12 November 2014, No. 1346p-P13 dated 5 March 2015 and No. 2303p-P13 dated 16 April 2015, and No. 7389p-P13 dated 31 October 2014) in order to improve the quality of planning •• In 2015, pursuant to Decision No. Pr-1553 of Russian President Vladimir Putin dated 11 July 2013 and in accordance with Regulation No. 243-p of the Russian Government dated 18 February 2015, the Rosneft Group completed the purchase of 100% - 1 share in 82 Sudoremontny Zavod JSC located in the residential area Roslyakovo in Murmansk. •• In 2015, the Board of Directors of Rosneft made a number of decisions pursuant to the instructions of the Russian President and the Russian Government with respect to the following issues: - Approve an action plan (road map) to implement the recommendations of the Corporate Governance Code, and adopt a number of internal regulations in accordance with the approved road map - Review the results of the analysis of the Company’s internal regulations for their compliance with the Methodological Guidelines approved by the Russian Government pursuant to Instruction No. Pr-3013, and approve mandatory internal regulations - Approve the analysis of the implementation of Rosneft’s Program for the Disposal of Non-core Assets as at the beginning of 2015 - Approve measures aimed at increasing the Company’s efficiency and transparency, reducing operating expenses and ensuring import substitution - Review the Company’s report on charity and sponsorship principles; based on the results of the review, the Company is to develop and implement internal regulations for charity and sponsorship •• In 2015, the Company obtained approval for the internal regulations covering the key processes of the Company, and some of them were implemented in 2015 pursuant to the instructions of the Russian President and the Russian Government (for the full list of adopted documents, see the Annual Report, Chapter 4.4: Rosneft executive bodies, pp. 135-136). •• In 2015, Rosneft fully met the demand for oil products from the military units of the Russian Ministry of Defense deployed in the Central and Eastern military districts as well as from the Ministry of the Interior, the Ministry of Emergency Situations and the Federal Security Service. In 2015, the Company expanded its cooperation with federal clients and became the only supplier of motor fueIs for more than 50 structural units of the investigative authorities based on a decree of the Russian Government. Also see the 2015 Annual Report (Appendix 4: Delivery of instructions and directives of

the President and the Government of the Russian Federation, pp. 266-271). G4-DMA Disclosures on management Occupational health and safety — 58-60 ^ approach OHS performance in 2015 — IPIECA-HS1 Emergency preparedness Emergency preparedness ROSNEFT Annex 2 SUSTAINABILITY REPORT 2015 137

Excluded External Aspect71 Indicator Definition Report section Page

information assurance G4-DMA Disclosures on management Occupational health and 57-61 ^ approach safety — OHS performance in 2015 — Occupational safety; Fire safety; Emergency preparedness; Pipeline safety

GRI G4 Process safety Occupational health and safety The indicator is 59-61 OG13 disclosed partially. IPIECA- The Company does HS1, HS5 not register loss of containment events according to the methodology implied by this indicator. Currently, such events are recorded and classified in accordance with the requirements of Russian

Asset integrity and process safety legislation.

Safety is a number one priority for the Company. To prevent accidents, the Company regularly conducts OHS reviews at Group entities, and it has also built an OHS personnel training system and practices emergency skills during training exercises and on-site drills. There were nine accidents at the Company’s facilities in 2015, including five accidents with environmental consequences. The crash of a Mi-8t helicopter owned by the air company Turukhan which carried workers of Vankorneft on board from the town of Igarka to Oil Pumping Station 2 is classified as an emergency. ROSNEFT Annex 3 SUSTAINABILITY REPORT 2015 138

ANNEX 3

The terms Rosneft Oil Company, Rosneft, the Company used GRI Guidelines – Sustainability Reporting Guidelines (Version in this Report mean either Rosneft Oil Company PJSC or G4) developed by the international organization Global Rosneft Oil Company PJSC with its subsidiaries and affiliates Reporting Initiative. depending on a particular context. The 2015 Sustainability Report provides information as of December 31, 2015 unless stated otherwise. The terms TNK-ВР and ТNК-ВР Company used in this Report mean TNK-ВР Group.

LIST OF ABBREVIATIONS

International Financial Reporting AGM annual general shareholders’ meeting IFRS Standards

APG associated petroleum gas ILU Interregional Labor Union

International Petroleum Industry API American Petroleum Institute IPIECA Environmental Conservation Association

CHPP central heating and power plant International Organization for ISO Standardization

CJSC Closed Joint-Stock Company KPI key performance indicator

CRMS Corporate Risk Management System LLC Limited Liability Company

CSR corporate social responsibility LNG liquefied natural gas

GRI Global Reporting Initiative MICEX Moscow Interbank Currency Exchange

gas to liquids, a process to convert GTL natural gas into liquid hydrocarbon Moscow State Institute of MGIMO products International Relations

HR human resources MGU Lomonosov Moscow State University

HSE Health, Safety, and Environment N/A not available

ICS internal control system NGO non-governmental organization ROSNEFT Annex 3 SUSTAINABILITY REPORT 2015 139

OFS oilfield services VAT value-added tax

OHS Occupational Health and Safety VHI voluntary health insurance

OJSC Open Joint-Stock Company WWF World Wildlife Fund

PJSC Public Joint-Stock Company bcm billion cubic meters

risk management and internal control RM&ICS system GJ gigajoule

R&D research and development

ha hectare Rosneft interregional trade union RITUO organization

mboe million barrels of oil equivalent Russian Union of Industrialists and RSPP Entrepreneurs

mcm million cubic meters U.S. Securities and Exchange SEC Commission

mmt million metric tons UN United Nations

mmtoe million metric tons of oil equivalent UNEP UN Environmental Program

Russian National Committee UNEPCOM tce tonnes of coal equivalent for UNEP ROSNEFT Contact information SUSTAINABILITY REPORT 2015 140

CONTACT INFORMATION

ROSNEFT OIL COMPANY PUBLIC JOINT STOCK COMPANY

Address 26/1 Sofiskaya Embankment, Moscow 117997 Russia

Telephone +7 499 517–73–33

E–mail [email protected]

Corporate website www.rosneft.ru www.rosneft.com

Feedback For any questions related to our Company’s Sustainability Report, please contact the Social Development and Corporate Culture Department E-mail: [email protected]