Sustainability Report for 2020 Group 85

OCCUPATIONAL HEALTH AND SAFETY

The Company’s key priorities are As part of the Industrial Safety • Digital video surveillance systems to ensure safe working conditions, Program, measures are taken are installed at the oil refineries to to preserve life and health of its annually to ensure safe working detect and prevent the occurrence employees, as well as employees of conditions and preserve the health of abnormal2 situations. contractor organizations working of employees. The timeframe • Interactive training calendars for at LUKOIL facilities. The Policy for implementation is one year, 2021 named “Safety Culture” have includes the Company’s obligations while some of them are of an been developed. to require all employees of ongoing nature. The main areas • A solution was implemented in LUKOIL Group entities and personnel for the reduction of injuries and the corporate automated control of contracting organizations occupational diseases include the system for fuel stations: i.e., to comply with the established following measures: pop-up windows now remind safety rules, to offer training • Key safety rules and liability personnel of the safety rules and continuously improve the mechanisms for non-compliance before the start of hazardous qualifications of employees, and to by LUKOIL employees and operations (for example, receipt of provide incentives. contractor personnel have been fuel tankers). introduced. • Our actions Best practices in the work of Additional information LUKOIL entities and contractors on occupational health measures can In order to prevent injuries, we are disseminated and replicated. be found on the website. regularly identify risks (including • Digital solutions and equipment critical risks) in accordance with are introduced. the corporate standard and take • The institute of technical labor measures to manage them, take inspectors1 is introduced in key occupational safety measures, contracting organizations with and regularly inform our staff and the participation of the IATUO contractors about the state of association of trade unions. injuries. The COVID-19 pandemic accelerated In the event of accidents, all the introduction of digital LUKOIL Group entities carry out technologies based on remote investigations and the results operations. are communicated to the heads • An automated system for of LUKOIL entities and structural generating and approving work subdivisions of PJSC LUKOIL, permits is used, which made it considered at the meetings of the possible to minimize interaction HSE Committee of the PJSC LUKOIL between employees when issuing Board of Directors and included in hazardous work permits. the annual report to the PJSC LUKOIL • Automated systems for briefing Management Committee and on the projects are being implemented agenda of the Board of Directors’ and full implementation is meetings. planned for 2021.

1. The Institute of Technical Labor — exercise of public control (on behalf of trade union organizations) over compliance with labor laws and other regulations in the field of labor protection by forces of technical labour inspectors. 2. Abnormal situation is the occurrence of conditions and states in the operation of technical systems that differ from those envisaged by projects, standards and regulations and can lead to dangerous conditions. 86 LUKOIL Group

Implementing a safety culture at oil refineries and petrochemical entities

LUKOIL refineries are state-of-the-art production Open Days on safety for employees’ families and facilities with a large amount of complex equipment competitions among employees for best projects are and potentially hazardous technological processes. held. Accident-free work is rewarded both financially Therefore, we are constantly focused on fostering and non-financially. safety culture. At the entities of the PJSC LUKOIL oil 04 refining units, Industrial Safety Committees have Since 2019, a contest has been held annually to create been established, and extensive campaign work has the best video on industrial and occupational safety. been carried out using visual materials, including: • stands with statements of the Company’s President, In 2020, a new tool was tested — the International Vice President and Chief Executive Officers; intellectual game “Occupational Safety Online”. The • leadership visits by the plant management and Unit game aroused great interest not only among the managers; employees, but also among the “fans”, 17 teams from • accident-free counters; nine entities took part in the first game. It is planned • broadcasting of materials on safe behavior on to hold the second game at the Volgograd Oil Refinery monitors in places where employees will see them; in 2021 to coincide with the World Day for Safety and • “Five steps” safety rules; Health at Work. • “Stoppage of unsafe work and self-monitoring of risks” cards.

Liability and compensation contracts that are not mandatory lump sum benefits in accordance in the country of operation (for with collective bargaining In all the countries where example, third-party liability agreements. The terms and amount LUKOIL Group entities operate, insurance contracts, insurance of benefits are determined during the employer’s responsibility for contracts in Iraq or Uzbekistan3). negotiations with trade unions preserving life and health of its In addition to mandatory insurance and representatives of labor employees at the workplace is benefits, employees may be paid collectives. enshrined in law1. Employees who SAFETY SAFETY have suffered from accidents at work, from an illness or disability Case studies of LUKOIL Group foreign operations as a result of an accident, shall be provided with monetary payments, On an annual basis, the oil refinery in Bulgaria takes out “Health” group the amount of which is determined joint policy (supplementary health insurance) and “Life” risk insurance. by the terms of insurance contracts The “Health” policy enables the employee to be reimbursed (up to a certain limit) for inpatient and outpatient treatment, medicines, and and local laws and bylaws2. dental care. The “Life” policy covers the risks of death of the insured, as well as their loss of labor capacity by more than 50% as a result of an In most countries, employers are accident or illness. required to take out individual or group life and health insurance In Iraq, local workers are insured against accidents at work, terrorism policies for their employees. The or mass disorders, and occupational diseases. If the amount of damage Group entities fully comply with the to health is not covered by insurance, an additional lump-sum benefit legislative requirements and apply is paid, the entire period of sick leave is paid, and the cost of medical a uniform approach in accordance services is compensated within the limit. Seconded Russian workers are with the Insurance Coverage also provided with insurance policies and VHI policies. Program for LUKOIL Group entities, including entering on a voluntary basis into certain types of

1. In the Group entities are insured for civil liability under the Federal Law No. 225-FZ “On Compulsory Insurance of Civil Liability of the Owner of a Hazardous Object for Inflicting Damage as a Result of an Accident at the Hazardous Object” dated July 27, 2010. 2. In Russia in accordance with the Federal Law No. 116-FZ of July 21, 1997 “On Industrial Safety at Hazardous Production Facilities”. 3. The legislation of Uzbekistan does not establish the requirement for mandatory conclusion of insurance contracts. However legislative acts provide for mandatory monetary compensation for those injured as a result of accidents at work and for employees with occupational diseases. Sustainability Report for 2020 LUKOIL Group 87

Occupational injuries involving our employees at LUKOIL’s Information on the injury case on entities was a fall from height. 2019 that was investigated in 2020 Ensuring safe working conditions is In contracting organizations, the is provided in Appendix 3. a priority task for all LUKOIL Group accidents occurred as a result entities. Every year measures are of one employee falling from At the end of the year, two LUKOIL taken to prevent workplace injuries height and the others were a entities with fatal injuries were among full-time employees and result of extreme temperatures. found to have failed to meet the KPI contractor personnel. According All accidents involving employees “Ensuring the required level of HSE”. to our internal analysis, LUKOIL’s of LUKOIL Group entities were As a result, the annual remuneration injury rates are lower than those investigated. of the CEOs of those entities was of companies with comparable reduced. production volumes and headcount. Measures taken In order to strengthen occupational In 2020, we note an increase in In order to prevent cases like those safety measures, the circumstances the number of accidents at LUKOIL which occurred in 2020, the following and causes of injuries are entities and the number of injured measures were taken based on the communicated to the LUKOIL Group (mostly in foreign entities). Due to results of the investigations. entities on a quarterly basis via continuous efforts to improve the • LUKOIL-PERM. The circumstances information letters, which provide safety culture, the rate of fatalities and causes of accidents were an overview of injuries and a as a result of work-related injury communicated to employees, description of measures to be taken remains at the same level1. The and unscheduled briefing (including communication with change is mainly due to an increase and extraordinary checks of contractors). When identifying risks in the number of minor injuries (for knowledge of labor safety and hazards in the area of industrial example, as a result of employees requirements for the operation of safety and occupational health and falling on a flat surface). At the wells equipped with sucker-rod safety, the Group entities should same time, LUKOIL Group was able pumps were carried out. apply the results of these analyses to prevent group injuries. Moreover, • Nizhny Novgorod Oil Refinery. in their work. the number of accidents resulting The assignment of personnel from traffic accidents decreased between technological facilities For example, based on the analysis (one case in 2020, nine cases in of the entity according to process of the frequency of injuries to 2019). Based on the results of our characteristics was organized. employees (including contractor investigations, the main causes Additional control over the work of personnel), in 2020 we increased of occupational injuries were the operators using video surveillance our assessment of the probability violation of labor regulations and systems is now exercised; new of exposure to the risk of falling labor discipline by employees and various means of communication from height during high-risk work. personal negligence by the injured, are used and checklists on To mitigate the risk, it is planned i.e. the so-called “human factor”. the actual employment of to equip the Corporate Training technological personnel during Center with a training complex We regret to say that we were the shift are maintained, while where personnel working at heights unable to avoid fatalities in 2020: unauthorized access to the and emergency rescue teams will two of our employees (at LUKOIL- premises of ventilation chambers be trained. Also, stationary safety Perm and the Nizhny Novgorod is excluded. systems for safe passage at height Oil Refinery) and four employees are being installed at production of contracting organizations died. facilities. A project to equip oil tank The cause of both fatal injuries farms with bottom loading systems

1. Further quantitative information on injury rates is given in Appendix 7. 88 LUKOIL Group

is being implemented in Oil Product them access to LUKOIL facilities. If To ensure compliance with the Supply entities. the assessment is unsatisfactory, requirements of safe work at height, the contractor’s personnel will disciplinary measures are applied In addition, it is planned to check the be sent for training to the centers in the event violations are detected knowledge of those responsible for equipped with simulator complexes, or personal protective equipment is organization and safe performance and will not be allowed to work not used. of work at height in contractor at height until positive results on organizations before allowing the knowledge check are obtained. 04 Indicators related to occupational injuries at LUKOIL Group 2018 2019 2020

Lost time accident frequency rate (LTAFR) 0.20 0.19 0.28

Lost time injury frequency rate (LTIFR) 0.12 0.13 0.15

Rate of fatalities as a result of work-related injury 0.01 0.01 0.01

Rate of high-consequence work-related injuries (net of fatalities) 0.03 0.05 0.04

Rate of registered occupational injuries or damage to health 0.15 0.18 0.19

Notes. 1. The lower all indicators the better. 2. The formulae used to calculate the indicators are provided in Appendix 6.

Number of occupational accidents and employees injured in workplace accidents at LUKOIL Group entities SAFETY SAFETY 2018 2019 2020

Total number of occupational accidents 21 19 28

Including:

• fatal 1 2 2

• high-consequence work-related injuries 5 8 7

Number of victims of accidents 23 25 28

Note. If during the reporting period an employee suffered more than one injury, each case is counted as a separate injury.

Measures to prevent injuries in contractor organizations

Injury rates in contractor on a regular basis, and compliance Detailed information can be found organizations have improved checks are performed in the course in the “Supply Chain” section on the (of particular note is that the of work. In addition, representatives website. number of injured has decreased of contractor organizations are significantly), in part due to invited to attend Safety Days and increased cooperation in this quarterly meetings held by the area. Pre-tender assessments of Group entities to analyze injuries contractors for compliance with the and discuss measures to prevent HSE requirements are performed accidents in the future. Sustainability Report for 2020 LUKOIL Group 89

Indicators related to occupational injuries at contractor organizations in Russia and abroad 2018 2019 2020

Including: 9 13 10

fatal

• high-consequence work-related injuries 1 6 3

• Number of victims of accidents 3 1 1

Number of victims of accidents 9 16 11

Note. The detailed calculation can be found in Appendix 7.

Health in the workplace Occupational illnesses are extremely Among other things, this project rare among the LUKOIL Group is intended to improve safety and In 2020, significant efforts of the employees. LUKOIL-Komi is the only working conditions in accordance Company’s medical services were entity where difficult conditions with the Rules for industrial safety focused on protecting employees remain (i.e., in the shaft oil in the mine development of oil from COVID-19 (for details, see the production). fields, which were developed at the section “Our Employees”). initiative of LUKOIL. LUKOIL-Komi implements projects The corporate health control to improve working conditions in Number of LUKOIL-KOMI system for employees is based on oil mines, such as introduction of workers with newly managing the risks of occupational new ventilation systems; purchase diagnosed occupational and work-related diseases. The of equipment that excludes contact illnesses, people risk management system identifies with vibration sources; introduction typical hazards, such as increased of automation equipment; and noise, vibration, chemical exposure, the use of specialized personal 2020 6 labor intensity and others. If the protective equipment. Priority is risks identified at the LUKOIL Group given to the early identification of 2019 11 entity level are assessed as workers predisposed to occupational significant, measures are developed diseases, and their treatment, and 2018 16 to control and reduce their impact. transfer to work that excludes contact with sources of harmful The Company has appointed production factors. a Health Protection Officer to hold regular consultations with In 2020, a priority project was employees on health-related issues; launched to reconstruct the oil trade union organizations are also mines at the Yaregskoye field and the involved in this work. related infrastructure.

Occupational illness trends in Russian LUKOIL Group entities 2018 2019 2020 Occupational disease rate (ODR) 0.19 0.13 0.071 per 1,000 workers per 1,000,000 man-hours 0.11 0.08 0.04 90 LUKOIL Group

SAFETY OF FACILITIES IN THE ARCTIC ZONE

The safety of production operations of nature resource pipelines. The largest production facility in the Arctic Zone is producing companies in the Arctic Zone became particularly the Varandey Terminal. 04 important in 2020 due to a number of major accidents and accelerated climate changes in the region. LUKOIL pays The Company has built an effective management system special attention to environmental and industrial safety that enables timely control of the condition of facilities in the Arctic, applying cutting-edge technical solutions located in the permafrost area. The climatic specifics of the and methods of engineering protection of facilities and northern territories are taken into account at the design, territories. construction and operation stages of all production facilities located in the Arctic Zone; all facilities are insured against Observations of the Arctic climate the risks of property loss or damage.

1 According to estimates of climatic changes in the Arctic, Design and construction stages average surface air temperatures are predicted to rise across a large part of the Arctic over the next decade, At the design stage of production facilities possible and, according to the WWF2, the ice cover may almost thawing of permafrost is taken into account, facilities are completely disappear by the end of the 21st century. These designed with a large safety margin based on engineering trends indicate physical risks primarily associated with the calculations and geological surveys. Engineering degradation of permafrost. The expansion of the area and solutions are used, which make it possible to prevent depth of seasonal soil thawing can lead to critical disruption permafrost thawing, maintain equipment integrity and of the reliability of production processes, equipment and reduce product losses. safety systems at engineering facilities, especially those • Pipelines, buildings, structures and tank farms are built decades ago. built on pile foundations. • Aerial crossings are constructed when water bodies SAFETY SAFETY At the same time, there is3 a growing global interest in are crossed. the Arctic macro-region, since more than a quarter of the • Boreholes are drilled using the slant-hole directional world’s hydrocarbon reserves are located here, and the drilling method (“pipe-in-pipe”), which prevents development of these territories is intensifying rapidly. New intense warming of soils. economic opportunities are also associated with the use of ice-free waters of the Arctic Ocean for transportation. Construction on piles. During construction of facilities, piles This opportunity is already being implemented in the Arctic made of cold-resistant steel are submerged in boreholes. region countries, including Russia4, and, in accordance Cavities within the seasonal freezing and thawing layer are with national objectives, will expand. In 2020, LUKOIL used filled with frost-resistant concrete. The lower ends of the the Northern Sea Route (NSR) for the first time to deliver piles are at least 0.5 m lower than the ice foot. The piles are products to the eastern region. marked with geodetic markers that indicate pile deflection due to settling or movement of the ground. For timely Our actions identification of equipment sludge, the pile substructure and foundation markers are leveled (once every two years). There are 30 fields in the Arctic Zone of the Russian Federation (onshore) developed by LUKOIL Group For example, five oil storage tanks with a volume of organizations (in the Yamal-Nenets Autonomous Area, 10,000 cubic meters each are located at the site of the Nenets Autonomous Area and the Komi Republic5), acceptance and delivery point of Pyakyakhinskoye field (the the largest of which are the Pyakyakhinskoye and Yamal-Nenets Autonomous District). The tanks are installed Nakhodkinskoye fields. The length of the pipelines is on a pile foundation. The base of the tank farm is equipped about 2 percent of the total length of the existing field

1. Sources: The IPCC Fifth Assessment Report on climate change for 2014 (https://www.ipcc.ch/site/assets/uploads/2018/02/SYRAR5FINALfullru.pdf); publication of the Sixth Assessment Report is expected in 2021. Report of the Russian Federal Service for Hydrometeorology and Environmental Monitoring (Roshydromet) on climate change and its consequences in the Russian Federation for 2019 (http://www.meteorf.ru/press/news/20626/). Specialized research projects (https:// www.weforum.org/agenda/2020/08/arctic-sea-ice-global-warming-climate-change-predictions/; https://arctic-rcc.org/sites/arctic-rcc.org/files/documents/ acf-fall-2020/ACF-6ConsensusStatementFinal.pdf); Global Climatic Threat and Russian Economy: Searching for the Way. Energy Center of the School of Management SKOLKOVO, 2020. (https://energy.skolkovo.ru/downloads/documents/SEneC/Research/SKOLKOVOEneCClimatePrimerRU.pdf ) 2. Source: https://wwf.ca/habitat/arctic/last-ice-area/. 3. Source: https://www.cfr.org/emerging-arctic/#!/ 4. The strategic objectives of Russia are outlined in the 2018 Comprehensive Plan for the modernization and expansion of trunk infrastructure for the period up to 2024. The development of the Northern Sea Route is indicated as one of nine federal projects. 5. In 2020, the municipality of was added to the land territories of the Arctic Zone in the . Sustainability Report for 2020 LUKOIL Group 91

with thermometer wells up to 25 m deep. Soil temperature • monitoring of the foundations of buildings and is measured twice a year, and the measurement results are structures; recorded in logs and reviewed. • control of the depth of seasonal thawing and the groundwater level. Thermal stabilization systems. Temperature stabilization systems, plastic-frozen soil stabilizers, thermal insulation Equipment is monitored at least once a year by qualified screens at the base of underground tanks and external specialists engaged on a contractual basis and by thermal insulation of facilities are used to maintain the LUKOIL employees (surveying inspections, geotechnical temperature regime of permafrost soils and eliminate monitoring). In the event any violations of the thermal unforeseen heat releases. regime of soils exceeding the permissible values are identified, additional measures are taken to restore the This approach is also used at the Pyakyakhinskoye field. original temperature. Temperature stabilization systems “GET” and “VET”, which are hermetically sealed structures made of pipes filled with The technical condition of the main gas pipeline of the gas refrigerant, are installed in the base of oil storage tanks. transportation system of the Bolshekhetskaya Depression A similar system was used in the construction of the tank is monitored once a year by helicopter inspection using a farm of the Yuzhnoye Khylchuyu Central Gathering Facility laser gas leakage locator, as well as on a monthly basis by (the Nenets Autonomous Area): temperature of foundation visual inspection driving along line pipes. soils is stabilized using the “GET” temperature stabilization systems and plastic-frozen soil stabilizers. During the entire period of operation of the equipment, buildings, structures and tanks, no significant changes Operation stage related to thawing of permafrost soils have been identified. In the future, we will continue to pay more attention to the At the operation phase, systematic maintenance and risks associated with activities in the permafrost zone as control of the buildings and equipment condition are part of our climate strategy and to developing measures carried out, including: to deal with identified risks and prevent damage to the • control of temperatures of critical units, environment. characteristics and vibration, check of alignment of the main technological equipment; 92 LUKOIL Group

THE KOMI REPUBLIC

“LUKOIL-Komi” is one of the largest subsoil users in the of the Maly Voyvozh stream. The new facilities were Timan- oil and gas province in the north-western commissioned at three sites: in the villages of (near Russia and operates in the Komi Republic and the Nenets oil mine No. 1), Pervomaysky (near oil mine No. 2) and Nizhny Autonomous Area. The entity includes territorial production Domanik (near oil mine No. 3). 04 enterprises (TPE) LUKOIL-Usinskneftegaz, LUKOIL- Ukhtaneftegaz, LUKOIL-Severneftegaz, the Yareganeft oil After the commissioning of the new facilities, the volume and mines division, as well as the Usinsk gas processing of insufficiently treated water discharges was reduced to plant. High-viscosity oil is produced in the region, including a minimum already in 2020 (from over 400 thousand to by means of shafts. Production volume in 2020 was 43 thousand cubic meters), and the mass of pollutants 14 million tonnes, 12 percent less than in 2019 (16 million contained in the wastewater decreased by 94 percent tonnes). The Group also includes the oil refinery (as compared to 2019). At the same time, fresh water located in the region. intake from local surface water bodies was reduced (by three times) due to the fact that wastewater from the Our actions oil mines after deep treatment is sent to a closed cycle for the production of steam required for high-viscosity oil When planning and performing the production activities, production. The operation of the treatment facilities is under we take into account the complexity of issues that need to constant control of the control center. The project cost be resolved in the Komi Republic. LUKOIL is committed to amounted to RUB 1.9 billion. reducing environmental risks for LUKOIL-Komi producing companies and the population, in 2020 the implementation We took a comprehensive approach to the task of improving of the program Comprehensive Organizational and Technical the environmental situation in the area of the oil mines in Measures to Reduce Social and Environmental Risks in Yarega. In addition to the commissioning of new treatment the Komi Republic (2020–2022) started. It is a part of the facilities, two other projects were undertaken to eliminate LUKOIL Group’s investment program and includes measures, liquid waste and pollution accumulated in the pre- that are aimed at significantly reducing the negative privatization period. SAFETY SAFETY environmental impact of LUKOIL-Komi’s operations in the following key areas: • liquidation of the sediment ponds of oil mines 1, 2 and 3 • construction of water pipelines for the injection of wastewater from the combined-cycle plants (Usinskoye field); • implementation of the roadmap to restore water bodies from historically accumulated pollution (the Maly Voyvozh stream); • disposal of accumulated oil-saturated sandstone from the mine workings of oil mines (with the involvement of a qualified contractor), as well as testing of mobile technology for washing this waste at the oil production site; • rehabilitation of contaminated land.

Measures to improve reliability and safety of the pipeline system and improve the environmental situation in the Komi Republic are determined during the annual planning process and are also funded as part of the ISP and the ESP. In 2020, RUB 8.9 billion was allocated to implementation of these.

Treatment facilities at Yarega In 2020, a hallmark event of long-term importance for the region was the completion and commissioning of new treatment facilities at all oil mines of the Yareganeft oil mine production enterprise. The old facilities did not provide the necessary treatment level of wastewater discharged into surface water bodies, which led to chronic pollution Sustainability Report for 2020 LUKOIL Group 93

• Treatment (disposal) of wastewater from the combined the steam was examined and samples of water, bottom cycle plants. The work will be carried out in stages and is sediment and soil were taken. In 2021, it is planned to planned to be completed in 2022. implement the second stage — the treatment of water, • Elimination of old settling tanks of the treatment bottom sediments and the shoreline. The completion of the facilities of oil mines. It is planned to pump out the oil- project is expected in 2023. containing liquid, as well as to remove and dispose of bottom sediments. The pits will then be backfilled with Land remediation the mined-out rock of the oil mines and reclaimed. The completion of the project is expected in 2023. In 2020, 40 hectares of contaminated land were remediated, including in the Ukhta District (near the Maly Voyvozh stream) and the Izhemsky District (in a forest area). Maly Voyvozh The implementation of all those projects will significantly One of the environmental problems in Yarega is pollution improve the environmental safety of oil production at the of the Maly Voyvozh stream (part of the ecosystem of Yaregskoye field. the Yarega and Ukhta rivers) which accumulated both in the pre-privatization period and during LUKOIL-Komi’s Prevention of oil spills operations. LUKOIL set as its goal to carry out a complete cleaning of the stream and return the water body to its LUKOIL continues to act diligently to improve reliable original state if possible. In 2019, a stationary hydraulic operation of our pipelines. Key areas to improve reliability seal was commissioned to prevent the spread of pollution and safety of the LUKOIL-Komi pipeline system include downstream. pipeline corrosion protection, timely current repair and overhaul, pipeline reconstruction, continuous corrosion In 2020, LUKOIL-Komi and the Biological Institute of Tomsk monitoring, in-line diagnostics and cleaning, as well as State University entered into a contract to clean the expert examination of industrial safety and technical water and bottom sediments of the stream of oil and oil diagnostics of pipelines. products. Our partner has its own technology for bottom sediments treatment, which has already been tested on The most stable result is achieved by replacing pipeline Shchuchiy Lake (the Komi Republic). The project underwent sections with corrosion-resistant pipelines. The following a public hearing procedure and then, during the first stage, results were obtained thanks to the measures taken by LUKOIL: the length of corrosion-resistant pipelines has increased by 18 percent since 2018 while during the same period, the specific failure rate of pipelines has decreased by 30 percent. A promising area is the use of corrosion- resistant pipelines (about 200 km of non-metallic pipelines are in operation as part of a pilot project). • In accordance with the roadmap, the reconstruction of the interfield oil pipeline of the central gathering facility Lekkerka, booster pump station V. Masterel, was performed on time. In 2021, the remediation of contaminated lands at the pipeline location will be completed. • Pilot testing of polymer pipes made of polyethylene with higher temperature resistance produced by the Stavrolen complex will begin in 2021. Facilities at Yareganeft’s fields have been selected for testing.

We made an important decision to use UAVs to assess the condition of the pipelines and adjacent infrastructure in addition to the traditional types of monitoring (walk-round checks and snowmobile patrols in winter). UAV flights help to identify even minor oil transportation equipment malfunctions more quickly and with greater area coverage. Flights have been carried out since July 2020 according to an approved schedules, and, based on the results, a database is being formed for further monitoring purposes. 94 LUKOIL Group

THE KOMI REPUBLIC

Environmental performance of LLC LUKOIL-Komi

2018 2019 2020

04 Pollutant emissions, thousand tonnes 72 64 57 Intake of water from surface sources, thousand cubic meters 380 340 122

Discharge of insufficiently treated water, thousand cubic meters 452 416 43

Discharge of polluted water, million cubic meters 0 0 0

Total weight of pollutants contained in wastewater discharged to surface water 571 701 42 bodies, thousand tonnes,

• including hazard classes 1 and 2, tonnes 0.33 0.5 0.03

Waste generated, thousand tonnes 42.2 206.9 421.1

Waste disposed of, thousand tonnes 42.7 209.6 421.4

Volume of oil spilled in accidents, tonnes 19.6 13.8 33.2

Remediated lands, ha 41.2 49.6 40.0

Treatment facilities at the Ukhta oil refinery Social interaction

One of the tasks to be solved is related to the condition We also take actions to improve the social situation of treatment facilities at the Ukhta oil refinery. The in the republic. On an annual basis, LUKOIL supports facility was designed and built in the late 1960s; it projects of local administrations, municipal and public SAFETY SAFETY receives both wastewater from the plant’s production organizations. In 2020, the funding for social projects in processes and municipal wastewater, which accounts the Komi Republic amounted to about RUB 229 million1. for more than 80% of the total wastewater volumes to Examples include purchase of medicines for disabled be treated. After mechanical and biological treatment children, numerous projects to repair schools, hospitals, and disinfection, wastewater is discharged into the cultural institutions and other socially important Ukhta River. facilities.

As part of the investment project to upgrade the oil Applications from local organizations are considered as refinery treatment facilities, this important facility is part of external social programs. When an application being re-equipped to significantly improve the quality is received, the request is evaluated based on the of wastewater treatment. Total investments will exceed following criteria: the cost of implementing the project; RUB 1 billion. territory of implementation; audience coverage; reputation of the organization. LUKOIL-Komi assesses In the first stage, new equipment of settling basins, the effectiveness of the projects by monitoring social aeration systems and biological treatment was networks and mass media for positive feedback. installed, which led to a significant reduction in the pollutant concentrations. The second stage was Interaction with residents and public completed in 2020 with the re-equipping of the organizations mechanical cleaning system. As a result, wastewater treatment quality significantly improved in terms At key stages of projects, LUKOIL holds consultations of phosphorus compounds, nitrates, and organic with residents whose interests may be impacted by substances. corporate plans. Various communication channels are used for this purpose, including public hearings on By the end of 2023, it is planned to complete the last projects, personal meetings between LUKOIL Group stage (i.e., to complete mechanical and biological management and specialists and residents, and a treatment facilities and to equip the facility with an permanent hotline to interact with the public. The automated system of industrial environmental control) opinion of local residents is taken into account when and to bring the quality of wastewater to regulatory deciding on project implementation parameters. requirements.

1. Excluding the costs of the agreement between PJSC LUKOIL and municipal administrations. Sustainability Report for 2020 LUKOIL Group 95

In 2020, 14 applications on environmental issues were Another topic for discussion was the performance received via the hotline (26 applications in 2019). Based of seismic exploration works in the floodplain of the on the review of the applications, all the applicants Pechora River in 2018, which caused concern among were provided with clarifications on LUKOIL-Komi’s residents in connection with forest devastation. production activity plans. After completion of the seismic work, LUKOIL-Komi organized flights over the territories where the work was We regularly hold meetings with local residents and performed, during which time photo and video recordings heads of settlements, cooperate with many public of the disturbed land condition were made. In October organizations, such as Komi Voityr (Komi People), Izvatas 2019 and in August 2020, repeated flights around the (Izhemtsy), Rus Pechorskaya and others. territories were made together with representatives • Interaction with residents of the Ust-Usa village and of supervisory authorities and representatives of the the Novikbozh village (Usinsky District) villages. As a result, formal notes were drawn up on the absence of comments on the quality of cleaning of wood Both settlements are located at a distance of about residues in the cuttings. Seedlings of spruces were then 15 km from the Usinskoye field, so the Company is planted. constantly in contact with the local residents. In • Interaction with the residents of Shellyayur and Diyur 2019, the Company’s plans to construct a production villages (Izhemsky District) facility (prospecting well) were discussed at the public control meetings. Based on the discussion results, LUKOIL’s plans to build a solid and liquid oil sludge LUKOIL decided to move the construction site farther landfill that would enable LUKOIL-Komi to neutralize oil away from the villages. In 2020, as a continuation sludge, without risks to the environment initially led to of the dialogue, a working group was created that protests by the environmental community and residents included representatives of LUKOIL-Komi management, of two villages of the Izhemsky district. Following the administration of the Usinsk urban district and the public hearings, it was decided to move the construction initiative group of the residents. Repeated hearings on of the facility to the territory of the Makaryelskoye field the project were organized and the dialogue continues. of the TPE LUKOIL-Ukhtaneftegaz. The territory where the landfill was supposed to be built is being reclaimed.