Sustainable Development Report 2019 / 2 / 1 as respecting humanrights. regions inwhichthecompany operates, aswell and economic development throughout those and developing personnel, and contributing to social and environmental safety, supporting economic efficiency, ensuringoccupational approaches, activitiesandprogress inachieving The Report discloses thedetails ofmanagement reporting standards, andcorporate media. with theguidelinescontained inthenonfinancial from corporate reports, information requests inline Information provided herein was obtained and controlled entitiesinRussia andtheCIS. to Gazprom NeftPJSC aswell asits subsidiaries initiatives andenvironmental performance relates the data onthecompany’s labourrelations, social consolidated data. Unless otherwisespecified, is presented basedonGazprom NeftPJSC’s The company’s financialandoperating performance Sustainability Repot We are delighted to present Gazprom Neft’s Dear Readers, About theReport 2019 Development Report Online Sustainable 2019 Development Report Sustainable or “thecompany”) for thecalendar year of2019 to inthisReport as“Gazprom Neft” subsidiaries andcontrolled entities(referred about Gazprom NeftPJSC aswell asits The Report discloses information development, andits environmental initiatives. its contribution to sustainable socialandeconomic with theprinciples ofcorporate socialresponsibility, the company’s approaches to complying 12th non-financialpublicreport, whichoutlines
Neft’s AnnualReport 2019. in theCorporate Governance section ofGazprom structure thatoccurred in2019are presented The data onchanges inthecompany’s Hereinafter “theReport” 1 for 2019.Thisisthecompany’s 2 .
CONTENTS 18 12 11 8 in ourstrategy andbusiness model and care for theenvironment are integrated Responsibility for thewell-being offuture generations at a glance Neft Gazprom 4 62 59 49 45 43 42 38 32 28 of economic, environmental andsocialaspects ofbusiness of stakeholders’ interests andbalanced management Management system basedontheaccommodation management development Sustainable
development strategy Company model Business footprint Geographical Neft Gazprom of the management board management of the chairman the from Statement Stakeholder engagement Stakeholder management chain Supply assurance quality Product technologies Sustainability rights human Respecting activities Anti-corruption management risk Sustainability governance Corporate culture Corporate at a and and glance sustainable sustainable Employee Health and safety development Systemic approach to reduce the number Employee social benefits, personnel development of accidents and injuries programmes and education platforms for young specialists
78 HSE management system 114 Human resources profile 80 Occupational health and safety 116 Remuneration and social benefits 85 Occupational health and preventive medicine 118 Training and development for employees 86 Industrial safety 122 Cooperation with schools and HEI 126 Talent pool development
Environmental safety Social policy Mitigating environmental impact, adoption Contributing to regional development, of environmental management systems evaluation and management of social impact and best international practices
93 Climate impact management 132 Implementing social and economic 95 Preserving biodiversity agreements 97 Air quality 135 The “Home Towns” Programme 99 Water resources management 147 Social initiatives abroad 101 Waste management and land use 149 Engaging with indigenous peoples 104 Energy Efficiency of the Russian Far North
Appendices
150 Appendix 1. Additional information 156 Appendix 3: GRI content index and sustainable development metrics 172 Appendix 4. Independent 154 Appendix 2. Identification of the Report’s assurance report material topics 176 Terms and abbreviations 180 Contacts and feedback GAZPROM NEFT
For more details Appendix 4. С. 154 on assessment С. 172 Independent of Material topics refer assurance to Appendix 2. report
Reporting 2019 Report Material topic GRI Standard standards and assurance
In preparing the report, the company Financial stability and operational efficiency relied on the GRI Standards GRI 201 (Core option) and ISO 26000:2010 (Guidance on social responsibility), Supplier relations GRI 204 as well as the Reference Performance Indicators of the Russian Union Anti-corruption GRI 205 of Industrialists and Entrepreneurs (RSPP). Compliance GRI 206 Appropriate disclosure of qualitative and quantitative information Human rights GRI 410 prepared in accordance with GRI Standards was assured in accordance with International Standard Product safety and quality GRI 416 on Assurance Engagements (ISAE) 3000 (Revised) “Assurance Occupational and production safety management GRI 403 Engagements other than Audits and Reviews of Historical Financial Energy economy and efficiency Information”. Independent GRI 302 Limited Assurance Report is presented in Appendix. Water use GRI 303 PricewaterhouseCoopers Audit acted as an independent auditor. Land and vegetation protection GRI 304 The Report contains forward- looking statements on the company’s Emissions GRI 305 mid and long-term plans, and their feasibility depends, Waste generation and management GRI 306 among other things, on a number of economic, social and legal factors Compliance to environmental laws and regulations beyond the company’s control. GRI 307 Consequently, actual results may differ from those plans. Labour relations and employment GRI 401
The Report has been approved Employee – employer relations, freedom of association GRI 402 GRI 407 by Gazprom Neft’s Management Board. Personnel training end development GRI 404
Fair remuneration and social benefits GRI 405
Indirect economic impact GRI 203
Respect for the rights of indigenous people GRI 411
Development programmes for local communities GRI 413
2 SUSTAINABLE DEVELOPMENT REPORT 2019 All Sustainable Development Reports are located on сompany’s website
Report Section UN Sustainable Development Goals (UN SDGs)
GAZPROM NEFT AT A GLANCE
SUSTAINABLE DEVELOPMENT MANAGEMENT
HEALTH AND SAFETY
ENVIRONMENTAL SAFETY
EMPLOYEE DEVELOPMENT
SOCIAL POLICY
3 GAZPROM NEFT
STATEMENT FROM THE CHAIRMAN OF THE MANAGEMENT BOARD
Dear friends!
Gazprom Neft recorded good financial and operational results in 2019 – increasing hydrocarbon production, and delivering a record net profit. It enabled us to meet a new challenge in 2020 – the COVID-19 pandemic and, with it, the sharp drop both in demand for oil, and in the oil price – in a stable and sustainable financial position. The company began implementing its “Antivirus” programme, protecting employees against the disease and ensuring the full continuity of all operational and production processes. In addition to which, the company has also been proactive in helping those locations in which we operate to combat the spread of coronavirus – for example, in donating 1.3 million pieces of personal protective equipment (PPE) to medics throughout eight of Russia’s regions: this being just one of a multitude of such supportive initiatives.
Thanks to our effective work and operational efficiency, the current situation has not impacted our long- term objectives – one of which is to become a global industry benchmark in terms of safety, technological advancement and efficiency, and all of which are fully consistent with the principles of sustainable development. The key priority for Gazprom million billion Neft is safety. A few years ago 1.3 7.5 we had, already, set ourselves the task of achieving “Target pieces of personal protective total social investments Zero” – no harm to people, facilities or the environment in undertaking equipment (PPE) purchased in 2019 our operations. for distribution – free of charge – to medical workers in eight regions of Russia
4 SUSTAINABLE DEVELOPMENT REPORT 2019 The company continues working as a manufacturer and supplier competition, every year: while towards that goal, not only of high-quality petroleum our own “Company University” also in striving to protect our employees, products, advanced technologies offers various forms of training, but also in working proactively and import-substitution products, running more than 156,000 courses with contractors to take and the originator of a number for employees in 2019. It’s no accident their attitudes to safety to a whole of innovative projects. The company’s that Gazprom Neft – for the third year new level. contribution to sustainable in a row – led the Randstad employer development is undertaken through rankings in 2019, winning first place An important objective for Gazprom various social and economic in the oil and gas industry. And that Neft is increasing efficiency agreements, as well as its spring 2020 saw our company rated in utilising associated petroleum gas “Home Towns” corporate social Russia’s No. 1 employer by online (APG). We are committed to further responsibility (CSR) programme, recruitment platform HeadHunter.ru. increasing current utilisation the core objective of which levels, including at new assets. is the consistent improvement There have been significant changes The modernisation of our Moscow of living standards in those regions in how business success is judged, and Omsk Refineries remains in which it has a presence. The Home recently. A modern company, today, ongoing, as does modernisation Towns programme supports cannot focus solely on operational of the NIS plant in Pančevo, educational, cultural and sports and financial performance. Serbia. One of the key objectives projects and, through a dedicated And it is for precisely that reason that in that modernisation is ensuring grant-awards system, promotes Gazprom Neft supports integrating our refineries meet the highest important initiatives put forward the United Nations (UN) Sustainable environmental standards in the world. by local residents themselves Development Goals, designed We have also begun operating in those areas in which the company to address global economic, social the first solar-powered electricity operates. Total CSR investments and environmental issues, into its plant at the Omsk Refinery – in 2019 reached 7.5 billion – a 10% day-to-day activities. “Developing, a major step forward in developing increase on 2018. The company’s to develop the world. Creating, so renewable-energy and energy- proactive development of volunteer that you can be proud of what you efficiency projects. projects is also worth noting – more have created” – this, the Gazprom than 5,700 company employees Neft Mission Statement – The company continues to implement having joined this movement in 2019, is a full and complete reflection its “Green Seismic” project, each of them making a personal of the company’s understanding of its thanks to which more than three- contribution to helping implement responsibilities to the world around and-a-half million trees have, useful community initiatives. it. And we are grateful to all those already, been saved from felling. who, together with us, are making Our enterprises have released The Gazprom Neft team is made a worthwhile contribution to building more than 71 million valuable up of highly engaged professionals, a sustainable future for society. commercial fish fry into various each of whom shares the company’s waters as part of our programme values. We always make that point to support the reproduction that, for us, talent has always of aquatic bioresources. 2019 saw been more important than capital. us successfully complete our first And we strive to create a corporate expedition under the “Narwhal: culture and environment – in every Legend of the Arctic” project, department, everywhere we work – to study that rare marine mammal. in which every employee can reveal Research was also undertaken his or her individual potential on the grey whale population offshore by working towards common goals. from Sakhalin Island. The company supports employees’ Alexander Dyukov efforts in working towards CEO and Chairman Gazprom Neft is an investor, their own training and development. of the Management Board, employer, and a major budget Representatives from Gazprom Neft Gazprom Neft contributor (taxpayer) in those take an active part in the nationwide locations in which it operates, as well “Leaders of Russia” management
5 HOW ARTIFICIAL INTELLIGENCE SUPPORTS OIL PRODUCTION (RUS)
Oksana Osmonalieva Head of intellectual geology and development systems department SUSTAINABLE DEVELOPMENT REPORT 2019
Gazprom Neft at a glance
GAZPROM NEFT AT A GLANCE GEOGRAPHICAL FOOTPRINT BUSINESS MODEL COMPANY STRATEGY AND SUSTAINABLE DEVELOPMENT GAZPROM NEFT
GAZPROM NEFT AT A GLANCE Sustainable business growth is inextricably linked to the well-being of the communities in which Gazprom Neft operates
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
Health and safety
A company committed Environmental protection to sustainable development values Human resources development
Well-being of local communities
8 SUSTAINABLE DEVELOPMENT REPORT 2019 For more details, visit the company website
Over the past 10 years, the company Gazprom Neft is determined Growing Sustainable business has evolved into a major global player to consolidate its position in the top committed to maintaining stable league of global public oil companies relevance long-term customer relationships and become a benchmark for industry and maximising the efficiency peers in terms of safety, efficiency of environmental growth is inextricably of the energy supply for society, all and technological advancement. and social factors the while taking environmental impacts To do so, the company has adopted into account. the Development Strategy to 2030 that is underpinned by digital, cultural, The company acknowledges linked As it progresses towards its strategic operational and organisational society’s growing demands: higher goals, the company works hard transformations. standards and an increasing to create stakeholder value at each insistence on the safety of people stage of its operations. and processes, environmental and other social aspects of the business.
Environmental and social aspects of operations occupy an increasingly high position on the agendas of industrial KEY PRACTICES ADOPTED BY THE COMPANY companies. Often acting in their investors’ interests, such companies lead initiatives – 'Target Zero' as a strategic priority: zero harm to people, to develop low-carbon technologies the environment, or property in our operations and reduce the environmental – Developing the Safety Framework System by selecting and putting impact of their sector. More in place prioritised safety barriers specifically, some major funds – Developing a safety culture have limited their investments – Creating a digital platform for operational risk management in conventional energy or are planning to account for carbon footprint in asset portfolio management. – Environmental management system – Biodiversity preservation programme Gazprom Neft does its utmost – Accounting and monitoring of greenhouse gas emissions to be proactive in responding – Increasing utilisation of associated petroleum gas (APG) to change, and is actively engaged in shaping markets, technologies and the environment in which – Single incentive model for employees it operates. Gazprom Neft is putting – Partnership with trade unions in place HSE, HR management – Training, leadership and career-development programmes and community relations strategies based on international best practice. – 'Home Towns' Social Investment Programme – Supporting indigenous minorities of the Russian Far North – Import substitution and local content programmes
01 GAZPROM NEFT AT A GLANCE 9 GAZPROM NEFT PDF
For more details on the company’s financial and operational performance, see the Gazprom Neft Annual Report 2019
Performance highlights
Gazprom Neft proved reserves under the PRMS1 mtoe classification are comparable to those of global oil majors. As at 31 December 2019, Gazprom Neft 1,583 proved reserves totalled 1,583 million tonnes of oil proved hydrocarbon equivalent (mtoe). reserves
mtoe The company consolidated its Gazprom Neft products are exported market leadership as one of Russia's to more than 100 countries 96.1 top-three hydrocarbon producers worldwide, and sold throughout in 2019, having increased total Russia and abroad through production (including shares in joint an extensive network of directly- hydrocarbon production ventures) to 96.1 mtoe. owned retail outlets. The company’s in 2019 filling station network in Russia, Gazprom Neft also ranks the CIS and Europe has a total in the top three Russian oil of 2,0772 outlets. companies by refining volumes, mt and is an industry leader in terms In 2019, the company sold 26.5 mt of the refining-to-production ratio. of oil and 45.4 mt of petroleum 41.5 The company’s key refining facilities products. Net profit totalled are located in Omsk, Moscow 422.1 billion. and Yaroslavl, as well as in Pančevo refining throughput (Serbia). In 2019, refining volumes totalled 41.5 million tonnes (mt). billion ECONOMIC VALUE GENERATED AND DISTRIBUTED, billion adjusted EBITDA 121 employee wages and benefits
Economic value retained
Direct economic Economic value value generated distributed 422 2,592 2,170
/ 1 / Petroleum Resources Management 749 payments to government System. / 2 / Operating filling stations including 33 2,485 1,376 payments to capital providers franchising. revenue operating costs
10 SUSTAINABLE DEVELOPMENT REPORT 2019 GEOGRAPHICAL FOOTPRINT
Gazprom Neft operates in Russia's major oil and gas regions: the Yamalo-Nenets, Khanty-Mansi and Nenets Autonomous Okrugs, the Orenburg and Tomsk Oblasts, and other regions. The company is also implementing upstream projects outside Russia.
GAZPROM NEFT ON THE WORLD MAP
Upstream assets in 6 countries
Products sold in >100 countries
KEY PRODUCTION REGIONS
50.6 27.8 5.6 4.9 3.2 1.7 1.3 1.0
Total production, mtoe 96.1
Yamalo-Nenets Khanty-Mansi Orenburg Tomsk Oblast Nenets Iraq Serbia Other Autonomous Autonomous Oblast Autonomous Okrug Okrug – Yugra Okrug
01 GAZPROM NEFT AT A GLANCE 11 GAZPROM NEFT
BUSINESS MODEL
Gazprom Neft is a vertically integrated Balanced group of companies operating at all portfolio of upstream stages of the production chain, in both assets
the upstream and downstream segments. – Extensive resource base – Conventional and offshore fields – Projects in Russia and abroad This business model enables the company to remain resilient – Associated petroleum gas utilisation and improve the efficiency of its processes by creating synergies – Safe and efficient production technologies and using state-of-the-art technological solutions.
Developing renewable energy
Gas consumption Direct wholesale for own needs, mtoe distribution, 8.87 mt 18.98 Oil inventories Inventories at year-end , mt at year-end , mt of oil
0.32 Gas sales, 0.23 mtoe
Premium sales, Hydrocarbon 10.86 Output mt production in Russia Refining of petroleum Petroleum 2 and abroad throughput products products balance 26.46 41.47 40.23 45.44 mt of oil mt mt 96.10 Filling stations and tank farms mtoe 19.51 mt
Oil sales, mt 26.39 Jet fuel 100% 3,22 mt
Bunkering Hydrocarbon sales Purchases of petroleum of gasoline 2.99 mt Oil purchases, through joint ventures ¹, products in Russia and compliant with the mt mtoe abroad, mtoe Euro 5 emissions Bitumen3 9.29 0.42 mt 18.33 5.01 standard Motor oils and lubricants / 1 / Sales through the Northgas and Articgas joint venturesю. 0.32 mt
12 SUSTAINABLE DEVELOPMENT REPORT 2019 Modern Directly-owned retail network in Russia and abroad
– Projects to modernise assets and improve performance – Sales to a wide range of customers, from retail – Wide range of high-quality petroleum products consumers to major traders – Optimal geographical location of production facilities, and proximity to end markets
High-technology Biosphere treatment High-quality services and environmentally facilities friendly products
Gas consumption Direct wholesale for own needs, mtoe distribution, 8.87 mt 18.98 Oil inventories Inventories at year-end , mt at year-end , mt of oil
0.32 Gas sales, 0.23 mtoe
Premium sales, Hydrocarbon 10.86 Output mt production in Russia Refining of petroleum Petroleum 2 and abroad throughput products products balance 26.46 41.47 40.23 45.44 mt of oil mt mt 96.10 Filling stations and tank farms mtoe 19.51 mt
Oil sales, mt 26.39 Jet fuel 100% 3,22 mt
Bunkering Hydrocarbon sales Purchases of petroleum of gasoline 2.99 mt Oil purchases, through joint ventures ¹, products in Russia and compliant with the mt mtoe abroad, mtoe Euro 5 emissions Bitumen3 9.29 0.42 mt 18.33 5.01 standard Motor oils / 2 / Including internal consumption and changes in inventories. and lubricants / 3 / Polymer-modified asphalt cement (PMAC) and bitumen emulsions. 0.32 mt
01 GAZPROM NEFT AT A GLANCE 13 GAZPROM NEFT
Value chain
Gazprom Neft's business is underpinned T by its corporate mission and an understanding EN NM of its responsibilities towards society, both now RO VI and in the future EN L A N R E T S X tra E s teg itie y a tun nd or re pp so o ur nd ce a a s l k lo s c i a R t AVAILABLE RESOURCES io Shareholders and investors
n
AND ENVIRONMENT
Employees Financial resources (equity and debt) BUSINESS RESULTS SOCIAL DEVELOPMENT RESOURCES Consumers ACTIVITIES OF OPERATION INPUT
Manufacturing resources (upstream, downstream Government and other assets)
Suppliers and partners
Natural resources and RESOURCE P ecosystems e MANAGEMENT r Local communities in Gazprom (air, water, land, minerals fo k and biosphere) rm o Neft regions of operation – Efficient use of resources a tlo – Care for the environment nc Ou e – Replenishing the resource
base Industry peers
N O SI Non-profit and VI D non-governmental organisations AN N IO SS Governance MI
14 SUSTAINABLE DEVELOPMENT REPORT 2019 Corporate mission 'Evolving, to change the world. Creating, to be proud of our creations' We produce the resources of the future, enriching the world with the energy, knowledge, and technology to advance.
T T EN EN NM NM RO RO VI VI EN EN L L A A N N R R E E T T S S X X tra tra E E s s teg teg itie itie y a y a tun tun nd nd or or re re pp pp so so STAKEHOLDERS o o ur ur nd nd ce ce a a a a s s l l k k lo lo s s c c i i a a R R t t io io ShareholdersShareholders and investors and investors
n n
EmployeesEmployees Financial resourcesFinancial resources (equity and (equitydebt) and debt) BUSINESSBUSINESS RESULTSRESULTS SOCIAL DEVELOPMENTSOCIAL DEVELOPMENT RESOURCESRESOURCES ConsumersConsumers ACTIVITIESACTIVITIES OF OPERATIONOF OPERATION INPUT INPUT
ManufacturingManufacturing resources resources (upstream, (upstream,downstream downstream GovernmentGovernment and other assets)and other assets)
Suppliers andSuppliers partners and partners
Natural resourcesNatural andresources and P P ecosystemsecosystems e e r r BENEFITS PROVIDED Local communitiesLocal communities in Gazprom in Gazprom (air, water, (air,land, water, minerals land, minerals fo fo k k and biosphere)and biosphere) rm rm o o TO STAKEHOLDERS Neft regionsNeft of operationregions of operation a a tlo tlo nc nc Ou Ou BY THE COMPANY e e – Energy supply
– Job creation Industry peersIndustry peers – Dividend payments – Tax payments N N O O – Regional development SI SI Non-profit Non-profitand and VI VI D D non-governmentalnon-governmental organisations organisations AN AN N N SIO SIO MIS MIS
01 GAZPROM NEFT AT A GLANCE 15 GAZPROM NEFT
Principles of sustainable business
Health, safety Employee and environment development
Gazprom Neft seeks to protect its production assets, and to make sure The company performance that its operations cause no damage to the environment or to people's and its ability to achieve sustainable health. development goals depend to a large extent on its employees. Gazprom Safety is one of Gazprom Neft’s three key strategic priorities. Gazprom Neft makes every effort to attract, Neft is working continually to achieve these vital health, safety motivate, develop and retain the best and environment targets: 0 fatalities and 0 industrial accidents. available talent.
For more details, see the Environmental Safety, For more details, p. 74, 88 and Health and safety sections p. 108 see the Employee Development section
2019
– The Fatal Accident Rate (FAR) decreased by 34.1% to a five-year average – The average monthly salary totalled 134,000 – The Lost Time Injury Frequency (LTIF) Rate decreased by 21.3% – Human resources costs totalled – The number of incidents involving equipment decreased by 13.9% year 121.5 billion on year – 1.95 billion was invested in employees’ – Gazprom Neft identified the key risks in work safety - 31 scenarios that could training and development lead to catastrophic consequences – Over 156,000 training programmes – The APG utilisation rate across the company’s assets in Russia reached 89% for employees were implemented (up 11 percentage points year on year) – 1,948 university students were interns – Energy savings achieved through energy conservation programmes totalled at the company 5.3 million GJ – 505 graduates of universities – The first pilot solar power plant was built at the Omsk Refinery and vocational schools were hired
– SO2 emissions decreased by 48% by Gazprom Neft
16 ОТЧЕТ ОБ УСТОЙЧИВОМ РАЗВИТИИ 0 2019 Responsible business - sustainable business
Social policy Technology Corporate and innovative governance development and risk management
Gazprom Neft is building long- New technologies enable The Gazprom Neft corporate term relationships with local the company to improve safety governance system ensures governments, customers, partners, and performance. Gazprom Neft the appropriate allocation suppliers and local communities invests in those technologies that of responsibility in respect in those regions in which it operates. can have the greatest value for its of sustainable development The company participates business now and in the future, and the management of the relevant in the life of local communities in its including refinery upgrades, APG risks. Key tasks and outcomes regions of operation by creating utilisation infrastructure, energy- are reviewed at the meetings jobs, developing education saving technologies, and so forth. of the Board of Directors. and culture, and making other social investments.
For more details, For more details, For more details, p. 128 see the Social Policy section p. 45 see the Innovative Development p. 24 see the Sustainable Development Technologies section Management section
– social investments totalled – Technology Strategy updated – A new version of the Corporate Code billion of Conduct was adopted – Digital Transformation Strategy – 18 new agreements and three side approved – The Anti-Fraud and Anti-Corruption agreements on social and economic Policy, the External Audit Policy, – A project to build a high-technology cooperation with constituent the Regulation on Insider Information, catalyst plant was launched entities of Russia and its and the Regulation on Procurement municipalities were signed – A pilot batch of premium-grade needle of Goods, Work and Services were coke was produced at the Omsk approved – 143 initiatives were supported, Refinery based on grant contests – The Regulation on the Ethics Committee – EAD.OptimA, an AI-based electronic was updated, and the Committee – 675 volunteer campaigns were ran asset development system, was composition was revised successfully tested – Five new members with the necessary – Kapitan ('Captain'), a digital logistics- competencies and experience were management system for Arctic elected to the Board of Directors projects, was implemented
01 GAZPROM NEFT AT A GLANCE 17 GAZPROM NEFT
COMPANY STRATEGY AND SUSTAINABLE DEVELOPMENT 2030 Strategy
A year ago, we set ourselves new goals, Transforming and identified new ways to achieve them, and the past year has the company into proved us right. During the year, the company made significant a world-class progress and had to face many challenges, but it was well industry leader positioned to respond to them. Gazprom Neft is a team of like-minded, proactive, passionate and engaged people. Gazprom Neft is continually integrating the principles Developing a new- of sustainable development and corporate social generation company is our common goal: responsibility into its business strategy. a goal that I have no doubt we will achieve.
Alexander Dyukov Today, an oil company is more than investment in health, safety CEO and Chairman just a combination of reserves, and the environment, employee of the Management Board, equipment and physical assets. development, and the social Gazprom Neft To be at the forefront of the global oil development of those regions industry, the company needs to be in which it operates. aware of its responsibility towards future generations, and to maintain The company complies with Russian a continuous focus on sustainable environmental and social legislation, development. and takes on additional commitments in order to comply with international Gazprom Neft recognises the social corporate social responsibility and environmental impacts of its standards and meet stakeholder operations, and assesses these expectations. impacts. It makes substantial
18 SUSTAINABLE DEVELOPMENT REPORT 2019 UN Sustainable Strategy 2030: Development Transforming Goals the future (RUS)
AREAS OF LEADERSHIP TRANSFORMATIONS
Safety Digital 1 Building a system that 1 Implementing tools prevents our operations and processes to speed causing any harm to people, up the implementation the environment, or property of digital projects
Efficiency Operational 2 Maximising the added 2 Deploying the Etalon system value of every barrel as a basis for the company’s under any development day-to-day operations scenario in the wider world 2030 Organisational Technological advancement 3 Faster and more flexible 3 Searching for, adopting STRATEGY decision-making; and deploying new developing efficient technological solutions cooperation with partners to create added value across the entire value chain Cultural 4 Developing a culture of cooperation and involvement in achieving shared goals; improving productivity
Supporting The UN Sustainable Development Goals (UN SDGs) have been set by the United Nations General Assembly and approved by global leaders as part of the global the UN sustainable development agenda to 2030. Most of the Goals have a list of targets Sustainable with metrics to indicate performance.
Development When developing and implementing its strategy, Gazprom Neft is guided Goals by sustainable development and corporate social responsibility principles and goals. These are integrated into Gazprom Neft’s business strategy, decision-making processes, and operations. The company’s approach to sustainable development and associated commitments are aligned with the UN SDGs adopted in 2015.
01 GAZPROM NEFT AT A GLANCE 19 GAZPROM NEFT
Responsible leadership strategy For Gazprom Neft, responsible business involves focusing on health, safety and the environment, minimising Strategy 2030 is not confined to achieving its negative environmental impact, financial and operational targets, but is also and safeguarding the interests of a wide range of stakeholders, including designed to make the company a leader in terms employees, consumers, suppliers of safety and reliability, as well as environmental and contractors, and local communities performance, efficiency and the use of advanced in those regions in which the company operates. To achieve these goals, technological solutions in production processes. the company is implementing a long- term leadership strategy, which aims to manage process flows and related risks more efficiently.
Company goal
SAFETY 1 Maximising safety and minimising the environmental footprint
EFFICIENCY AREAS OF 2 Improving performance across LEADERSHIP all business areas as a key driver of competitiveness, including in a challenging external environment TECHNOLOGICAL ADVANCEMENT 3 Seizing opportunities for growth by developing and implementing new technological solutions
Continuously developing key competencies
20 SUSTAINABLE DEVELOPMENT REPORT 2019 Key tasks and challenges 2030 targets
Fundamental Managing barriers Competency barrier: 0 fatalities technological barrier: digitally: eliminating ensuring that only ensuring equipment the human factor, competent employees 0 industrial accidents and process reliability where practicable are authorised to perform operations
Maximising the added Strategic initiatives Leadership in Russia in terms value of every barrel of production and incremental under any external Upstream: Downstream: production costs development scenario – improving efficiency – optimising in reserves growth; the product portfolio Achieving a 95% conversion – improving efficiency and improving rate and an 80% light-products in production growth; operational efficiency and petrochemicals yield by 2025 – improving efficiency in refining; in ongoing – improving By 2030, Gazprom Neft intends production efficiency in sales to be a global market leader in terms and distribution of return on average capital employed (ROACE), and to achieve ROACE of 15% or higher through effective asset and project portfolio management
Creating technologies for future Using import substitution 50 mtoe – incremental production development: as a tool to help Gazprom Neft as a result of the use of new technologies – developing multiphase deposits become a technological leader and low-permeability reservoirs; and achieve sustainability. Achieving a 70% share of the Russian – operating in the ice-bound sea Introducing critical technological catalysts market on the Arctic shelf; solutions that the company needs – developing cat-cracking in order to develop under a number Developing technological solutions and hydrogenation catalysts of external scenarios for offshore operations in the ice-bound sea
'Target Zero' in the sphere of import substitution: making sure that no projects are cancelled or abandoned because of a lack of Russian-designed solutions
01 GAZPROM NEFT AT A GLANCE 21 GAZPROM NEFT
Transformation strategy To achieve its strategic goals, the company has identified key transformations: operational (with a focus on efficiency and improvements), cultural The Gazprom Neft 2030 Development and organisational (aimed at continuously developing Strategy involves adapting individual and collective competencies), and digital (focused on creating added value across the entire the management system to a new value chain through data management). These business planning approach and new transformations are interconnected and mutually external challenges. supportive.
Company goal
OPERATIONAL 1 Developing the Etalon Operations Management System (OMS) (a set of interconnected practices, procedures and processes used by managers and employees) ORGANISATIONAL 2 Implementing modern development and management approaches, with the corporate centre focusing on tasks in the Change category, whereas tasks in the Run category (day-to-day operations) are delegated to subsidiaries COMPANY CULTURAL TRANSFORMATION 3 Shaping behaviour in a way that helps the company to achieve its goals; shifting from top-down management to facilitative leadership as part of a new engagement philosophy DIGITAL 4 Improving management efficiency based on data and digital twins of assets. Developing in-house solutions in artificial intelligence (AI), the Industrial Internet of Things (IIoT), robotics, unmanned aerial vehicles, and other Industry 4.0 technologies1
/ 1 / The Industry 4.0 concept (the Fourth Industrial Revolution) involves wide use of digital technologies and tools to proactively manage production facilities and processes across the entire value chain in order to maximise business profitability.
22 SUSTAINABLE DEVELOPMENT REPORT 2019 PDF
For more details on the company Changes are transformation see the Gazprom already underway Neft Annual Report 2019 (RUS)
2019 highlights
The OMS Code was The company Over 4,300 employees Eight production approved continued underwent training assets underwent to implement OMS in the use of regular a diagnostic development tools management assessment practices, lean of compliance production tools with the OMS Code and the operational- reliability management model Why do we need to change? Because the top league of oil companies, where The company The company The company The company we are and where formed more than developed introduced non- completed we want to gain a firm 300 agile teams2 staff relocation financial incentives the transformation foothold, is known mechanisms for flexible-team of its operating for fierce competition, and algorithms members (such model rapid change for training cross- as additional for offshore project and technological functional project training management development. Gazprom managers and priority career Neft has already planning) made great progress on the Russian market The company: and, in order to become a benchmark for industry Updated Updated Continued Launched a project peers globally, it needs the Corporate the Regulation to develop to train a second new approaches to doing Code of Conduct of the Ethics corporate culture wave of change business. The company Committee workshops ambassadors, needs to be even for managers, formed more efficient, flexible and developed a community of 142 and agile, use state- Workshop 2.0 in-house coaches, of-the-art technology, 'Facilitative and arranged and develop a new Leadership training programmes corporate culture. Practices' and an annual forum for them Alexander Dyukov CEO and Chairman of the Management Board, The Gazprom Neft Thirty digital Gazprom Neft Gazprom Neft Gazprom Neft Board of Directors transformation developed and Nexign approved programmes were over 700 forward- established the Digital adopted looking scenarios a joint venture Transformation for the use of digital to develop digital Strategy technologies products for the oil across the entire and gas industry value chain and promote them both in Russia / 2 / Agile teams are multidisciplinary teams formed and abroad quickly to address a specific task; they are able to look for solutions independently, and coordinate their activities with those of other teams. 01 GAZPROM NEFT AT A GLANCE 23 STORIES OF FIVE WOMEN WHO PROVED THAT PROGRAMMING OIL IS POSSIBLE (RUS)
Lidia Shvilkina Member of Gazprom Neft's Ethics committee, head of OMS implementation program SUSTAINABLE DEVELOPMENT REPORT 2019
Sustainable development management
CORPORATE CULTURE CORPORATE GOVERNANCE SUSTAINABILITY RISK MANAGEMENT ANTI%CORRUPTION ACTIVITIES RESPECTING HUMAN RIGHTS SUSTAINABILITY TECHNOLOGIES PRODUCT QUALITY ASSURANCE SUPPLY CHAIN MANAGEMENT STAKEHOLDER ENGAGEMENT GAZPROM NEFT
Gazprom Neft's priorities in the field of sustainable development are determined by its corporate mission and strategic The vision. company seeks to maintain a balance between business development and care for the society The company seeks to maintain a balance between business development and prioritising the interests of society, combining dynamic growth with a reduced impact on ecosystems, ensuring the reliability and safety of production facilities, and improving the efficiency of its social investments.
Employee development
Gazprom Neft's Contributing sustainable to the development of the regions development in which the company IMPROVING Occupational priorities operates THE PERFORMANCE health and safety OF CORE BUSINESSES Energy efficiency and energy conservation Minimising the environmental Sustainable footprint development management
26 SUSTAINABLE DEVELOPMENT REPORT 2019 Key internal documents outlining the company’s commitment to sustainable development principles
Corporate Code Corporate Governance Policies and other regulatory documents on each key of Conduct (RUS) Code (RUS) focus area of sustainable development (RUS) 1
Key principles
Incorporating stakeholder Creating value for stakeholders Well-balanced management interests and the principles at each stage of operations of economic, environmental and priorities of current and social aspects and future generations when of the business planning and implementing the Gazprom Neft Strategy
Supporting global initiatives In 2019, and membership of associations the company:
updated its Corporate p. 28 The company adheres to the principles of the UN Global Compact Code of Conduct
The company’s sustainable development goals and initiatives p. 31 updated the Regulation are linked to the UN Sustainable Development Goals on the Ethics Committee and relaunched the Ethics Committee The company supports the implementation of the Paris Agreement following the revision of its composition and the Conceptual Framework for the Development of a System and membership for Monitoring, Reporting and Verification of Greenhouse Gas Emission Volumes in the Russian Federation. p. 35 adopted a Digital Transformation Strategy Management approaches used by the company in the field of sustainable development and corporate social responsibility p. 35 approved the Regulation are governed by the principles set out in the international ISO 26000 on Insider Information, standard (Guidance on social responsibility) the Regulation on the Procurement of Goods, Works Gazprom Neft now supports the Russian Business Anti-Corruption and Services, Charter and the External Audit Policy Gazprom Neft and the World Wildlife Fund (WWF) have signed a Memorandum of Understanding p. 45 updated the Technology Strategy The company has joined and become an active member of the Scientific and Technical Council under the Federal Service for Supervision of Natural Resources (Rosprirodnadzor)
/ 1 / Key documents for each area are listed in the relevant sections of the Report.
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 27 GAZPROM NEFT
Corporate Code of Conduct (RUS) CORPORATE CULTURE
CORPORATE CULTURE PRINCIPLES SUPPORTING Gazprom Neft embraces SUSTAINABLE DEVELOPMENT responsible business principles, such as the safety of people, the environment Safety 3 Responsible attitude and company property, 1 of people, the environment, to assets and company property respect of human rights, We recognise that equipment, technologies, equal opportunities, Gazprom Neft always prioritises the safety developments, and proprietary data of its employees and local communities, are valuable Gazprom Neft resources, and compliance and environmental safety over any regardless of whether they are physical with business ethics financial, technical or other considerations. or informational. It is our shared standards, and integrates The company seeks to provide a safe responsibility to use and store them them into its corporate working environment for its employees, in the best possible way and ensure that and demands the same of its partners. they are operable, as this is a prerequisite culture. The company has developed a transparent, for achieving the company strategic goals. clear and practicable system of safety We are aware that today, recognising rules. Gazprom Neft always acknowledges and understanding information security the right of its employees to stop threats and being able to respond to them Gazprom Neft has adopted performing and/or refuse to perform any effectively is an important characteristic a Corporate Code of Conduct, operation that can cause harm to people's of a highly qualified professional. in which the company has set out health or the environment. the priorities and principles of its Attention and respect business, stipulating that: Working conditions based 4 to colleagues 2 on respect – we support our country's progress We believe that trust, mutual help and contribute to its intellectual, Gazprom Neft respects human rights and constructive discussion of differing technological and human capital; and provides equal opportunities. points of view are crucial for fulfilling – we consistently implement The company seeks to create a working one's responsibilities efficiently best practice and lead the way environment free from bullying and accomplishing major tasks. in our industry; and harassment. We are always ready to help our colleagues – we create new areas Working relationships are built regardless in any division of the company. of growth in the regions in which of race, ethnicity, religious views, sex, age, we operate, and add impetus social status and background, disability, Compliance health condition, marital status, gender to their development; 5 with antimonopoly legislation self-expression and orientation, or any – we create an environment other characteristics. The company strictly complies conducive to self-fulfilment The company expects its employees with antimonopoly legislation and fully unlocking people's to treat each other with respect and dignity, in all countries in which it operates, potential. working together to create an atmosphere and assesses the consequences of open communication, trust and mutual of its efforts to increase its market share, The Code also reflects Gazprom respect. acquire businesses, and make changes Neft corporate values, which to pricing policy. are an integral part of its business and align the interests of the company and its employees. The values serve as guidelines for decision-making, shape the company’s reputation, and determine the principles governing its operations.
28 SUSTAINABLE DEVELOPMENT REPORT 2019 Kirill Kravchenko: 'By redesigning its values, Gazprom Neft is creating a culture of the future' (RUS)
Clear and equal requirements Prevention of corruption, The company 6 for all business partners, 7 conflicts of interest is now living compliance with business and the use of insider in a culture of change. ethics standards information During the previous decade, Gazprom Neft sets clear and equitable The company has a zero-tolerance it achieved impressive requirements for all its business partners, policy towards any forms of corruption. results, and this success and promotes competition between offers Bribes, kickbacks, expensive gifts, etc. was largely based to select an optimal balance of price, are strictly prohibited. If the company on the corporate culture quality and terms of cooperation. detects any violations of anti-corruption that Gazprom Neft started In the context of communication legislation by its employees or contractors, to develop in 2007, with partner representatives, it immediately takes appropriate measures. as well as other communications related when it formalised its values and principles to the operations of the company partners, Government and community and integrated them into employees should observe generally relations based on long-term 8 its operations. Today, accepted business ethics standards, systematic partnership and avoid overstatements, derogatory the company is at a new comments and personal remarks. Gazprom Neft relations with government stage of development, Employees responsible for communicating bodies are underpinned by the principles and it is indeed with company partners must also inform of long-term systematic partnership, changing in many ways. the partners about ethical standards that as the company seeks to create However, these changes they should be guided by and how they a favourable investment climate. are not reactive should comply with them. The company is improving local business ecosystems, developing the human capital but proactive; they and working to improve the environment. are aligned with Gazprom Neft strategic goals, and the main goal is this: instead of being compared with the best, the company should become the best Cultural and organisational of the best. By redesigning its values, Gazprom Neft transformation of Gazprom Neft is creating a culture of the future. Gazprom Cultural transformation results it to respond more quickly to external Neft is thinking ahead, in shared goals and values, facilitates changes. Its main focus is on shifting and this is what sets it apart cooperation and communication from a management hierarchy from many other companies. between employees and makes to facilitative leadership, which it more efficient. As part of the involves introducing new project Kirill Kravchenko transformation of its corporate management formats, reducing red Deputy CEO for Administration, culture, the company is shifting tape, and revising manager roles. Gazprom Neft from a culture focused on results Organisational transformation should to one of cooperation and creativity. improve decision-making, and ensure that decisions are put into practice Organisational transformation more quickly. in the company is designed primarily to make it more flexible and enable
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 29 GAZPROM NEFT
As a single team: transforming corporate culture at Gazprom Neft (RUS)
Facilitative leadership model
Leaders, guided by corporate values, The facilitative leadership model In today's world, play a key role in the Gazprom Neft consists of three elements: the model where corporate culture. – managers serve as active role a manager just sets a task models for company employees, for an employee and then Gazprom Neft has developed demonstrating behaviour waits and monitors progress a profile of leadership competencies. consistent with corporate values; does not work. Today's Under this model, leaders should: – managers are able to create world and business – think outside the box, look at tasks an engaging environment rely on continuous and problems from different in their teams, and, by doing communication perspectives; so, facilitate progress towards and responses – manage their priorities company goals; to developments in real time. and their time effectively, and be – managers should develop, That is what our employees able to focus on key points; change, transform themselves, expect, so active – motivate other people, create and understand that their personal communication and feedback a climate encouraging them transformation is a prerequisite are becoming the basis to prove themselves; recognise for changes in the company. for creating an engaging the importance of each environment in the company. employee, and give an unbiased The facilitative leadership principles The way that employees assessment of their contribution are universal for managers at all feel in the company, to the common cause; levels, from the Management Board their experience, willingness – be responsible for their own members to heads of small local to be engaged, to act, development, and set an example units. to go the extra mile largely of continuous improvement. depends on managers Continuous improvement, which as facilitative leaders. The facilitative leadership principle, is at the core of leadership whereby the consistent behaviour competencies, is becoming the basis of managers creates a favourable for developing new and updating In the new model, a manager environment for new standards existing corporate training is someone who gets things of work, is becoming the basis programmes. done, a person who is able for corporate culture transformation to respond quickly to any in the company. changes in the situation, not hiding from the world in their office. Managers are active participants in the system, they are its core, able to motivate people and cooperate with them.
Elena Surmeyko Director for the Corporate Culture Transformation Programme, Gazprom Neft
30 SUSTAINABLE DEVELOPMENT REPORT 2019 Ethics Committee
In 2019, as part of corporate Every employee of the company culture transformation, Gazprom may send an enquiry or a report The Ethics Neft the Regulation on the Ethics to the Committee in a dedicated Committee Committeeupdated the Regulation section on the corporate portal, on the Ethics Committee by email or via a hotline. Every is tasked and relaunched the Ethics Committee report is recorded and analysed. with monitoring following the revision of its The Committee provides consultation compliance composition and membership. on interpreting the standards set out in the Corporate Code and, where with the provisions The Ethics Committee is a standing necessary, conducts an investigation of the Gazprom collegial body of Gazprom Neft that and adopts a resolution, which is tasked with monitoring compliance is communicated to the person who Neft Corporate with the provisions of the Gazprom has sent the relevant report. Code of Conduct Neft Corporate Code of Conduct. The Ethics Committee includes In 2019, the Committee provided members of the Management consultations, and conducted several Board under the supervision investigations, which were followed of the Chairman of the Management up with explanatory conversations Board. with employees on business ethics standards adopted in the company.
Corporate culture workshops
In 2019, the Gazprom Neft Corporate Divisions, functions and subsidiaries, Culture Transformation Centre and in-house coaches. Individual created a format called the Corporate support programmes were created Culture Workshop. These are working to help change ambassadors develop sessions for company executives their knowledge and competencies. designed to create a shared 145 in-house coaches underwent information space for understanding training and certification, making the corporate culture, updated values them eligible to conduct workshops. and leadership model, and explain how the corporate culture helps Work with the community of in-house the company to achieve its strategic coaches is a particular area goals. The workshops were attended of cooperation between the Corporate by 6,413 people, which is more than Culture Transformation Centre half of Gazprom Neft executives. and the Corporate University: they have created skills development 6,413 As part of a large-scale initiative programmes for coaches, to cascade corporate culture and conduct training sessions workshops, the company trained and forums to discuss shared managers attended and engaged change ambassadors objectives and issues. Corporate Culture (agents) at two levels: HR managers Workshops at the level of Gazprom Neft
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 31 GAZPROM NEFT
Corporate Governance Code (RUS) CORPORATE GOVERNANCE
Corporate governance in Gazprom Neft is underpinned by sustainability and the mission to increase Gazprom Neft Group structure the company’s shareholder value in the long term, to retain existing Gazprom Neft PJSC is the corporate centre of the Gazprom Neft Group. As at 31 December 2019, the Gazprom Neft structure comprised 135 Russian and foreign and acquire new assets, maintain legal entities. Gazprom Neft PJSC is the parent company of all Gazprom financial stability and profitability, Neft Group entities, regardless of how their charter capital is structured. and to safeguard the rights One of the means used to ensure effective corporate governance and control and interests of shareholders and other of subsidiary operations is the review of key matters related to their operations by the Gazprom Neft governance bodies. stakeholders.
Key Gazprom Neft internal For more details on the corporate governance structure, composition, activities documents on corporate governance and remuneration of the top-level governance bodies, prevention of conflicts of interest, and changes in the company structure, see the Corporate are the Corporate Code of Conduct Governance chapter of the Gazprom Neft Annual Report 2019. and the Corporate Governance Code.
The company corporate governance framework includes all key elements that are standard for public companies Sustainability management structure with established governance structures, and is fully aligned of Gazprom Neft with the applicable statutory requirements and the Listing Rules Sustainability management functions are assigned to the company governance of the Moscow Exchange. This helps bodies as is appropriate to their competencies. the company to give its shareholders and investors sufficient confidence Board of Directors, Human Resources and Compensation Committee, Audit about the consistency of its strategy Committee and decision-making. – Overseeing the implementation of the sustainable development strategy – Approving sustainable development policies and initiatives Corporate governance in Gazprom Neft is characterised by the fact that CEO, Management Board the company has a single principal – Formulating a sustainable development strategy shareholder, Gazprom PJSC. It owns – Overall management of strategy implementation and sustainable development 95.68% of the company shares. initiatives The remaining ordinary shares are held – Reviewing progress in strategy implementation by minority shareholders, which include both individuals and legal Relevant departments in the Corporate Centre and offices in Divisions entities, which altogether defines – Strategic planning, goal-setting, overseeing and managing the relevant the balance of power between various activities on a day-to-day basis parties involved in corporate relations. Relevant offices in Divisions – Determining sustainable development priorities in the relevant areas of the business – Overseeing the relevant sustainable development activities in subsidiaries
Relevant offices in subsidiaries – Implementing sustainable development programmes in the relevant areas
32 SUSTAINABLE DEVELOPMENT REPORT 2019 Gazprom Neft management Key performance systems cover all activities in this field and are aligned indicators (KPIs) with international standards. development are included in the KPI system for Gazprom Neft managers and employees
Health, safety Energy and environment (HSE) efficiency management
The company’s HSE Directorate The Gazprom Neft Management Board: is responsible for formulating the HSE – approves the Gazprom Neft Energy Policy; strategy and objectives, developing – approves the corporate Energy Conservation and Efficiency a company-wide HSE management Programme, and reviews progress in its implementation; system, and communicating – provides general supervision of energy conservation and energy with stakeholders on these matters, efficiency initiatives; while the HSE Professional – approves a target model for the Energy Management System Board is involved in formulating (EnMS), provides general supervision of its development, and adopting key resolutions, approving and reviews its performance. programmes, road maps and projects as part of the HSE programme. Power engineering departments of Gazprom Neft business divisions: HSE units in Gazprom Neft – develop and update the energy conservation programme, business divisions and subsidiaries and the relevant KPIs, goals and objectives; implement and operate the HSE – manage the Energy Conservation and Efficiency Programme; management system, and oversee HSE – monitor the EnMS operation; operations in the business divisions – manage the Power Engineering competency centre (in and subsidiaries. the Downstream Division).
Energy managers and working groups in Gazprom Neft enterprises are responsible for: – implementing the Energy Conservation and Efficiency Programme; – searching for new technologies; – monitoring the implementation of technical and organisational measures under the Programme.
For more details For more details on the company p. 88 on the company HSE initiatives, see p. 104 energy conservation and energy the Environmental Safety, and Health efficiency initiatives, see p. 74 and safety sections. the Energy Efficiency section.
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 33 GAZPROM NEFT
HR management Regional policy management
HR management is coordinated by the Organisational Implementation of the regional policy is coordinated Development and HR Management Directorate by the Corporate Communications Division of Gazprom of Gazprom Neft. Its functions include: Neft. Its functions include: – overall management of the HR function and strategic – preparing standards and arranging measures management of industrial relations; to implement the regional policy; – developing the HR management strategy, key – securing support for investment projects from regional programmes and projects, and overseeing authorities; their implementation; – collecting and processing regional information – developing a company-wide HR management affecting the implementation of the regional policy; methodology. preparing the relevant reports, reviews and briefing notes; HR management units in Gazprom Neft business – auditing relations with regional authorities; divisions are responsible for: – providing administrative support for social – implementing strategic HR-management programmes and economic agreements; and projects in the company subsidiaries; – coordinating the activities of the Regional Policy – developing a methodological framework for HR Commission; management; – coordinating the social investment programme, – operations designed to implement the HR and social developing projects under the programme, policy; and assessing its efficiency; – identifying and introducing best practices within – expert review of social investment programmes the scope of the relevant business area; in Gazprom Neft subsidiaries; – cooperating with HR business partners. – PR support.
HR management units in Gazprom Neft subsidiaries The Corporate Communications Division includes are responsible for HR management operations the Regional Development Department of Gazprom Neft, in accordance with the company Strategy: which is responsible for: – HR accounting; – formulating proposals for the implementation – administering remuneration processes; of the regional policy; – management of compensation and social benefits; – formulating proposals for developing the company – headcount and personnel costs planning, etc. business in the regions and the scope of social projects; – implementing resolutions adopted by the Regional Policy Commission. The Regional Policy Commission: – collects and reviews proposals for the implementation of the regional policy and the social investment programme from the company business units; – approves annual social investment programmes For more details on the company of the company subsidiaries; p. 108 HR management initiatives, – develops recommendations for the implementation see the Employee Development section. of proposed initiatives.
34 SUSTAINABLE DEVELOPMENT REPORT 2019 Role of the Board of Directors and the Management Board in sustainable development For more details on the Gazprom management p. 128 Neft regional policy, see the Social Policy section. The Board of Directors is responsible Twelve out of 13 members for the strategic management of the Board of Directors are non- of the company, determining executive directors, while one key principles and approaches is an executive director. to HSE matters, HR management, the regional policy, risk management The Board of Directors includes one and internal controls, and supervising woman. the activities of Gazprom Neft executive bodies. The area of competence of the Board of Directors includes A set of key skills and experience such sustainable development is required for all directors’ matters as: roles. The members of the Board – prioritising the company initiatives; of Directors have skills in strategic – approving long-term plans and key management, corporate governance, programmes of the company corporate finance, risk management, activities; accounting, and other areas specific – approving the company’s internal to the company business. documents on sustainable development included in the areas In 2019, five new members were of competence of the Board elected to the Board of Directors. of Directors.
Age of the Board of Directors members, % 5 8 new members elected 23 to the Board of Directors
31
38
Younger than 45 Aged between 56 and 65 Aged between 46 and 55 Aged 66 and older
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 35 GAZPROM NEFT
In 2019, the Board of Directors In 2019, the Gazprom Neft reviewed the following sustainable Management Board reviewed development matters: the following matters related Implementation – progress in implementing to sustainable development initiatives the Gazprom Neft Development run by the company: of the Programme Strategy to 2030, including a large- – improving corporate governance on Utilisation scale technical and environmental in the Gazprom Neft Group; upgrade of Gazprom Neft – approving the updated Key-Risk and More Effective refineries; Register of Gazprom Neft PJSC; Use of Associated – progress in implementing – reviewing the outcomes the Programme on Utilisation of the Partnership Management Petroleum Gas and More Effective Use programme, and proposals (APG) of Associated Petroleum Gas (APG) for developing the partnership in 2018, and plans for 2019−2021; management system in Gazprom Gazprom Neft is committed – approving the Gazprom Neft Digital Neft PJSC; to increasing the APG utilisation rate, while simultaneously Transformation Strategy; – the Gazprom Neft talent starting commercial development – approving the Regulation management programme; of greenfields, and increasing oil on the Procurement of Goods, – information disclosed by Gazprom and gas production. Works and Services by Gazprom Neft PJSC. The Board of Directors considered Neft PJSC; the information on actions – approving In 2019, the company approved taken and the company’s plans the Report on the Implementation the fifth version of the Gazprom Neft for APG utilisation at existing assets, and increasing the efficiency of its use. of the Gazprom Neft Innovative Corporate Code of Conduct, by order A pro-active investment policy, together Development Programme for 2018; of the CEO. with the timely implementation – performance assessment of initiatives under the Programme, of the risk management are ensuring that APG-utilisation and internal control system, levels are being maintained, and that productive APG usage remains and updating Gazprom Neft key on course to reach 95% by 2022, in line risks for 2019. with increasing gas production.
For more details on the work of the Board of Directors in the reporting year, see the Corporate Governance chapter of the Gazprom Neft Annual Report 2019.
36 SUSTAINABLE DEVELOPMENT REPORT 2019 Etalon Operations Management System For more details on the Etalon OMS, see the Gazprom Neft Annual Report 2019. The Etalon Operations Management Management), and engage all System (OMS) is a structured employees in a culture of continuous set of interconnected practices, improvement (Leadership procedures and processes used and Culture, Efficiency Mangement by managers and employees at each and Constant Improvement). organisational level in the course of operations. Pilot projects to implement the OMS at some Gazprom Neft assets have The OMS elements are designed shown that the Etalon OMS is highly to maximise the operational efficient. The Etalon Development efficiency of the company, to enable Code (OMS Code), approved reliable and safe operations by the company in 2019, sets out (Reliability Management, Process common principles that will enable Flow Management, Contractor the company to roll out the Etalon and Supplier Management, OMS across its assets. Environmental and Social Impact
Improving corporate governance efficiency
The company is closely monitoring – approving the Regulation the development of corporate laws on the Procurement of Goods, and best practices both in Russia Works and Services; and globally in order to improve its – approving the External Audit corporate governance framework. Policy of Gazprom Neft PJSC, its For more details on corporate subsidiaries and organisations. governance improvement, see the Gazprom Neft Annual Measures to improve corporate Report 2019. governance in 2019 included: The company continues to automate – transition to a two-tier corporate procedures related management system to improve to organising the work of its the performance of governance governance bodies, information bodies in Gazprom Neft disclosure, transaction approval, subsidiaries; and control of subsidiaries and joint – approving a new version ventures. of the Regulation on Insider Information;
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 37 GAZPROM NEFT
SUSTAINABILITY RISK MANAGEMENT
The company has in place management, and to monitor risks For more details on the IRMF, see an Integrated Risk-Management at all levels of the company’s the Gazprom Neft Annual Report Framework (IRMF), which governance. 2019. determines a consistent approach to the risk management process Principal sustainability risks and incorporates standardised tools facing Gazprom Neft include risks and methods for the analysis of risks, associated with health, safety including HSE and social risks. and environment, as well as risks associated with the availability Gazprom Neft risk-management of skilled personnel. The company goals and principles are stipulated takes the relevant preventive in the Risk Management Policy. measures to avoid the risks materialising and to protect people, The Gazprom Neft risk management the environment, equipment framework is based on the integration and production processes. of risk management tools into all key corporate processes, which When managing HSE risks, enables the company to determine the company is guided areas of responsibility for risk by the precautionary principle1.
THE IRMF PROCESS IN THE GAZPROM NEFT GROUP
IDENTIFYING QUALITATIVE DEVELOPING AND REVISING AND QUANTITATIVE MANAGEMENT MONITORING RISKS RISK ASSESSMENT INITIATIVES INITIATIVES
at least once a year at least once a quarter
/ 1 / The precautionary principle is stated in international documents as follows: 'Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.' (Rio Declaration on Environment and Development, 14 June 1992)
38 SUSTAINABLE DEVELOPMENT REPORT 2019 Social and environmental risk management
1 Health, safety and environment (HSE) risks
Risk description Risk management measures
Risks associated with non-compliance In the sphere of HSE, the company strives Digital barrier management with environmental, health and safety to achieve the strategic 'Target Zero': Preventing human error, where legislation (including the laws on fire zero harm to people, the environment, practicable. safety) that may result in a temporary or property in our operations. shutdown of facilities or licence The company is fully aware revocation, as well as risks of accidents The main focus areas outlined of its social responsibility to protect (fatalities and workplace injuries, fires/ in the corporate HSE Policy Statement the environment. Gazprom Neft monitors explosions/emergencies, environmental include: its operations in order to comply disasters on a national scale. – safe production based on risk analysis, with the relevant environmental management and mitigation; requirements and standards, – reducing workplace injury and implements environmental protection and occupational disease rates, programmes. the accident rate and the environmental impact; The company HSE initiatives are designed – consistently implementing the best to ensure compliance with Russian global HSE practices. environmental regulations by investing in environmental protection, including The HSE risk management philosophy technology that minimises its is based on a risk-focused approach environmental footprint. These efforts and the principle of integrating HSE have resulted in a significantly lower risks into all key business processes probability of environmental risks. of the company. As part of the risk- focused approach, the company is focusing on the following solutions:
Fundamental barrier Setting up barriers to prevent prioritised risks across company assets, and ensuring their reliability.
Competency barrier Ensuring that only competent employees are authorised to perform operations.
'Target Zero': zero harm to people, the environment, or property in our operations
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 39 GAZPROM NEFT
2 HR risks
Risk description Risk management measures
Highly qualified personnel is key may intensify due to a shortage The company offers a safe work to effective operation of the company of qualified specialists in the labour environment and competitive salaries, business. A lack of qualified employees, market. Failure to attract qualified opportunities to participate in large- especially engineering and technology employees and/or retain the existing scale projects and exciting challenges, experts, can result in risks associated talent pool may have an adverse effect and provides training for employees with personnel shortages. The company’s on the company’s attractiveness under specially designed programmes. success largely depends on the efforts as an employer. Demand for qualified and expertise of key employees, including personnel and associated costs In addition, the company is improving qualified engineering personnel, are expected to continue to grow, given its recruitment procedures and taking and on the company’s ability to attract the significant need for such employees measures to reduce staff turnover and retain such personnel. Competition in other industries and public projects. and encourage self-development among for the best talent in Russia and worldwide employees.
For more details, see p. 108 the Employee Development section
3 Risks associated with the impact on local communities
Risk description Risk management measures
Company operations entail a risk To minimise the risk of a negative impact To minimise risks associated of a negative impact on the environment on the environment and the health with industrial relations and employment and the health of the local population. of the local population, the company of local residents, the company A potential negative impact is taking measures to ensure industrial is implementing job placement on local communities can be and environmental safety. and development programmes caused by the company abandoning for employees working at its production or streamlining its production projects facilities. and, consequently, downsizing p. 74 For more details, see the For more details, see or transferring employees to other Health and safety, p. 108 the Employee Development regions. p. 88 and Environmental Safety section sections.
40 SUSTAINABLE DEVELOPMENT REPORT 2019 Performance assessment of the risk management system
The Board of Directors considered regulating the functioning and introduce risk analysis and risk information on the company’s risk- of the IRMF. It is based management tools and methods management system, the outcomes on a bottom-up approach, starting (including quantitative risk of risk assessment review, from the company subsidiaries, assessment, simulation modelling, and updates on the main risks and involving all the key managers and the bow-tie and decision-tree for 2019 at a series of face-to-face and experts in subsidiaries methodologies). meetings throughout 2019. Overall, and Divisions, and the Gazprom Neft the company’s risk-management Management Board. The updated and internal-control system was Gazprom Neft key-risk register was For more details on other key risks facing the company, judged to be effective. approved by the Management Board see the Internal Control in 2019. and Risk Management section of the Gazprom Neft Annual The procedure for updating Report 2019. information on the company risks To improve the quality of information is aligned with the requirements set on risks, the company implemented out in regulations and guidelines initiatives in 2019 to develop
Internal control and audit
The internal control system management, heads of business and the corporate-governance is designed to identify and assess units, the Audit Commission, framework, the company performs risks, develop and implement and the Internal Audit Department, an internal audit. control procedures, report control which forms part of the Internal Audit weaknesses to the relevant and Risk Management Directorate. In 2019, the Internal Audit governance bodies and propose Department completed all audit remedial measures, enable Gazprom Neft has developed projects scheduled for the reporting the company to adapt to changes an Internal Control Policy, which period in the field of corporate promptly in the internal and external determines the principles underlying governance, IT and investment environment, improve the IT the organisation and functioning activities, and across Gazprom Neft component of the control system, of the company’s internal-control core operations. An audit of financial and settle conflicts of interest system. statements (accounts) was conducted in a timely manner. as part of the work of audit To conduct systematic commissions. Internal control units in Gazprom independent assessment Neft include the Board of Directors, of the reliability and efficiency For more details on the internal- the Audit Committee, the company of the risk-management control system, see the Gazprom executive bodies and senior and internal-control system, Neft Annual Report 2019.
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 41 GAZPROM NEFT
Anti-Fraud and Anti-Corruption Policy (RUS) ANTI1CORRUPTION ACTIVITIES
Gazprom Neft is committed to ethical The Anti-Fraud and Anti- For more details p. 43 on the functioning of the hotline, and responsible business conduct. Corruption Policy also stipulates see the Respect of Human Rights The relevant statement is included that company employees must section. in the Gazprom Neft Corporate Code be trained in the zero-tolerance of Conduct. approach to fraud, and in the basics of applicable legislation. The company has a policy of zero-tolerance towards any forms The Deputy CEO for Security of corruption, including extortion and the head of the Internal Audit and bribery. and Risk Management Directorate report regularly to company Gazprom Neft has approved an Anti- executives on anti-fraud and anti- Fraud and Anti-Corruption Policy corruption issues. and made it publicly available. This is a fundamental internal anti- Investigation of reports received via corruption directive for the company the company hotline revealed no and its subsidiaries. instances of corruption in 20191.
This Policy defines fraud and other The following courses have terms related to fraud prevention; been developed and are used based on this Policy, the company’s in the corporate training system: senior management sets a single Preventing and Combating Corporate ethical standard of zero tolerance Corruption; Corruption Prevention; towards any type and form Combating Corruption and Fraud. of corruption. The Policy outlines These courses are mandatory methods and procedures used for all employees newly hired by the company to combat fraud by the company. and corruption; these include a hotline, official investigations and prosecution with respect to identified cases of fraud. Gazprom
Special attention is paid to corruption Neft risks specific to the oil industry. The Policy includes a section is committed on the company’s business processes to ethical most exposed to fraud: interacting with officials, accepting and making and responsible gifts, entertainment expenses, charity business conduct and sponsorship, and financial arrangements with third parties.
/ 1 / Under the applicable legislation, investigations into corruption fall within the jurisdiction of law enforcement authorities. Therefore, if any evidence of corruption is found, the relevant materials must be handed over to law enforcement authorities. The findings of investigation of reports received via the company hotline in 2019 showed no need to contact law enforcement authorities.
42 SUSTAINABLE DEVELOPMENT REPORT 2019 RESPECTING HUMAN RIGHTS
Gazprom Neft respects human rights Gazprom Neft complies Human rights matters fall within and provides equal opportunities with legislative requirements the jurisdiction of the following for everyone. The company also and the standards of international company units: respects labour rights, and the rights law on human rights. – The Working Committee on Ethics of local communities and indigenous and Corporate Culture, chaired peoples. The company’s position with regard by the Gazprom Neft CEO; to human rights is formalised – An office for the investigation Gazprom Neft seeks to create in the following corporate documents: of reports received via the hotline a working environment free – The Corporate Code of Conduct; of the Internal Audit Department from bullying and harassment, – The Anti-Fraud and Anti- (part of the Internal Audit and Risk and prohibits discrimination Corruption Policy; Management Directorate). on the grounds of ethnicity, gender, – The Policy on Health, Safety, age, background and so forth. the Environment and Public Gazprom Neft assesses human The company expects its employees Protection; rights risks, and develops measures to treat each other with respect – The Concept on Regional Policy; to prevent them. and dignity. – The Policy on Interactions with Indigenous Northern, Siberian The corporate training system Gazprom Neft does not use child and Far Eastern Peoples; includes materials on respect or forced labour. The company – The Policy on Charitable Activities; for human rights and the rules acknowledges the legal right of its – The Information Policy Regulation. of conduct in mixed groups. In 2019, employees to voluntarily establish 1,388 people received training civic associations to protect in the human rights policy their rights and interests, including or procedures related to any aspects the right to establish and join trade of human rights. unions.
For more details on partnership For more details, see p. 108 with trade unions, see the internal documents the Employee Development on the company website. section.
Support of human rights commitments 1,388
The company supports and respects the protection of internationally declared human rights, and subscribes to the principles set out in essential documents, such as: people received training in the human rights policy in 2019 The UN Global The Universal The International Labour Compact Declaration of Human Organisation (ILO) Declaration
Rights on Fundamental Principles and Rights at Work. Gazprom Neft also subscribes to the principles set out in the Social Charter of the Russian Business adopted by the Russian Union of Industrialists and Entrepreneurs (RSPP).
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 43 GAZPROM NEFT
Hotline feedback form
Handling complaints
To communicate with stakeholders Anyone can submit a report via on human rights matters, the hotline, and it can be anonymous. the company uses feedback channels, All reports are processed on a case- which enable stakeholders to express by-case basis, and are investigated their opinions or make complaints in an unbiased and comprehensive about this subject. manner; following the investigation, decisions are made, and feedback These channels include is provided. a hotline, which can be used to report corruption, fraud, To make sure that all reports and non-compliance with laws are investigated, the company and the Corporate Code of Conduct. engages experts from various The hotline is used to exchange units, including HR managers, information within the company lawyers, and HSE officers. and receive feedback from external The company encourages its stakeholders. employees and partners to actively use the hotline, and informs them A report may be submitted via about its purpose and how it works. the hotline in several ways: by mail, The results of the hotline operation – email or phone, using suggestion including statistics on reports boxes, on the intranet portal, received (processed) and violations or on the corporate website. detected by the company – The hotline is confidential. are regularly reviewed by the Board of Directors.
Anti-Fraud and Anti-Corruption Hotline
Phone: 8 (800) 700-65-00 The hotline Toll-free call all over Russia is used to exchange information Email: within the company [email protected] and receive feedback from external Post: stakeholders 190121, St. Petersburg, PO Box №516
44 SUSTAINABLE DEVELOPMENT REPORT 2019 SUSTAINABILITY TECHNOLOGIES
Today, social and economic well- The company has created modern being depends to a large extent innovation infrastructure that on a reliable and affordable supply includes science and technology Technological of energy resources, as well centres (the Gazprom Neft Science as related technologies improving and Technology Centre, the Bazhenov leadership the safety, productivity, efficiency Technology Centre, the Bitumens strategy and resilience of energy systems. Research and Development Centre), techno-parks (the The company has identified technological leadership Priority areas of technological Industrial Automation Techno-park, as one of the three key priorities of its development include the following: the Corporate Information Technology Development Strategy to 2030. – an increase in the oil recovery Techno-park) and other platforms factor at mature fields; for technological development. – development of multiphase fields; billion – production from low-permeability reservoirs; Gazprom Neft intellectual – efficient and safe offshore property (IP) portfolio invested in 2019 development in the ice-bound sea; under the Gazprom Neft Innovative – developing and producing refining Development Programme catalysts. 47
For each focus area, the company is developing or implementing 98 projects to design, test or apply the necessary technologies. For more details on the Gazprom Neft technology centres, see Essential documents: 30 the Gazprom Neft Annual Report 2019 and the company website. – Upstream Technology Strategy; – Offshore Technology Strategy; – Downstream Research Patent applications and Development (R&D) Strategy; Software – Innovative Development Patents Programme.
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 45 GAZPROM NEFT
Key projects and 2019 highlights
Upstream
As part of a national project Miscible displacement technology, that, because of their small to develop technology which proved highly efficient size or complex structure, have for the Bazhenov Formation, during laboratory tests, will enable not been detected using conventional Gazprom Neft confirmed the viability the company to achieve incremental methods. The company will be able of multistage fracking in horizontal production at fields with a high gas/ to boost production without extra wells. The company continued oil ratio. In 2020, the company plans infrastructure costs by rolling out to explore Domanic deposits to construct surface infrastructure this technology across its sites. in the Orenburg Oblast (the Domanic to implement this technology at its project), develop a technological facilities. Gazpromneft-Yamal has tested solution for hydrocarbon prospecting self-learning software designed in pre-Jurassic horizons (the The implementation of digital to predict changes in rock types Palaeozoic project), and explore tools expands Gazprom Neft’s in the course of drilling. The system the Achimov Formation. key competencies (geological alerts the operator to the possibility evaluation, drilling, production of exiting the productive zone, which The Zapadno-Salymskoye field pilot and construction management). enables real-time drilling trajectory project involving the use of chemical The company achieved incremental adjustment. flooding technology resulted in a 17- oil production at the Vyngapurovskoye percentage point increase in the oil field during pilot tests in 2019, recovery factor. The company plans based on the recommendations to test new surfactant-polymer of the digital system that was Contribution compositions at the Kholmogorskoye designed to identify oil-bearing and Sutorminskoye fields spaces. A machine-learning model of digitalisation in the coming years. is used to process geological data towards and identify promising formations sustainable development In September 2019, the Gazprom Neft Board of Directors approved the Digital Downstream Transformation Strategy to 2030. Gazprom Neft has implemented As part of a national project intended The planned changes are intended to improve flexibility and efficiency Kapitan ('Captain'), a digital to create the first modern refining- in business management, based on data logistic-management system catalyst plant in Russia, Gazprom and digital twins of assets. The company for projects in the Arctic. This Neft is developing efficient catalysts is developing in-house solutions system enables uninterrupted oil to replace imported products. in artificial intelligence (AI), the Industrial shipments from the Prirazlomnoye A state-of-the-art catalyst plant Internet of Things (IIoT), robotics, unmanned aerial vehicles, and other and Novoportovskoye fields. is under construction in Omsk. Industry 4.0 technologies. By implementing the Strategy, the company will be able to achieve considerable safety improvements by significantly reducing human involvement in hazardous production processes, and using unmanned production technologies.
46 SUSTAINABLE DEVELOPMENT REPORT 2019 One of the key import substitution projects— refining-catalyst production in Omsk—has been supported by the government (RUS)
National project to develop new catalysts As part of a national project, Gazprom The project will contribute Neft is creating a new catalyst plant that to regional development by creating will allow the company to meet Russian over 300 high-technology jobs. refineries’ demand for effective catalysts, in full. Gazprom Neft has partnered with leading Russian research centres. Together By developing catalyst production with the Centre of New Chemical at the Omsk Refinery, Gazprom Neft Technologies of the Boreskov Institute is essentially creating a new industry. of Catalysis, which forms part of the Siberian Gazprom Neft Branch of the Russian Academy of Sciences, Russian oil refineries import 70% to 100% the company is continuously updating is the first company of catalysts of various types. the range of cat-cracking catalysts that in Russia to launch 21,000 tonnes – annual production capacity have been used by the company’s refineries large-scale production of the future catalyst plant in Omsk for many years. Hydro-processing catalysts of modern catalytic are being developed by the Boreskov The new 21,000-tonne-per-year plant will Institute of Catalysis (a part of the Siberian solutions for oil refining, produce 15,000 tonnes of cat-cracking Branch of the Russian Academy of Sciences) based on domestic catalysts, 4,000 tonnes of hydrotreatment in Novosibirsk, and the Topchiev Institute technology. In partnership catalysts and 2,000 tonnes of hydrocracking of Petrochemical Synthesis in Moscow. with Russian academics, catalysts per year. The new plant The hydro-processing catalysts have been is an integrated facility, which enables successfully tested at the Omsk Refinery. Gazprom Neft will enable the production of all catalyst components. the production of goods A range of pilot units are being built that greatly outperform at the Omsk Refinery to test new types global alternatives in terms of cracking and hydro-processing catalysts. of functionality. This new production facility will not just be focused on the domestic market; it will also offer high-quality Russian catalytic systems to international customers. The Russian oil refining Ensuring that the Russian oil refining industry is dependent industry is no longer dependent Alexander Dyukov on imported catalysts on imported catalysts CEO and Chairman of the Management Board, % % Gazprom Neft 72 100 Imported New- catalysts 2018 2021 generation Russian catalysts % 28 PLANT COMMISSIONING Russian manufacturers CONSTRUCTION (previous-generation catalysts)
Russian catalyst manufacturing technologies tonnes
Quality that can match the best foreign 300 21,000 catalyst brands high-technology jobs of catalysts per year – Target The Government of the Russian Federation output assigns national status to the project
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 47 GAZPROM NEFT
The company continued to develop new products, such as needle coke the Aroforming technology, which and unleaded aviation gasoline. delivers unmatched efficiency Needle coke by enabling the processing of low- The company is also developing grade raw materials (straight-run processes to convert heavy raw production gasoline) into high-octane motor materials, such as tar, asphalt The first pilot batch of premium- gasoline. Testing was successfully or pyrolysis resin, into high- grade needle coke was produced completed in 2019, and the company quality bunker fuel compliant at the Omsk Refinery in 2019. Needle is developing plans to commercialise with MARPOL 2020 standards, or into coke is a valuable raw material for the metals, nuclear, chemical this technology. materials for catalytic cracking and aerospace industries. and hydrocracking facilities. The technology used in its production Gazprom Neft is also developing is an R&D output patented technologies for manufacturing by the company. The batch was sent to a manufacturing enterprise (Energoprom Group) and will be used to produce the first premium-quality electrodes in Russia made from Russian Promoting the development of high- materials. Plans for the future include developing technologies for producing technology products on the Russian other premium brands of needle coke. market
The company is implementing The development of the seabed solutions available on the market stations demonstrates the successful Once renovated, a delayed and supporting the development partnership between Gazprom coking unit at the Omsk of new Russian-designed Neft, the government, a domestic Refinery will produce products. A substantial number technology developer and equipment of import substitution projects manufacturer, and a Russian service are implemented by partner company. Gazprom Neft is also tonnes companies. implementing a number of other 38,700 joint projects to create home grown Seismic surveys at the Ayashsky technologies for offshore exploration of raw needle coke per year. licence block in the Sea of Okhotsk and production. provide an example of import substitution in practice. During these surveys, Gazprom Neft has become the first oil company in Russia to use the domestically produced standalone 'CRAB' seabed stations for seismic surveys. Previously, these surveys were largely conducted using foreign equipment.
48 SUSTAINABLE DEVELOPMENT REPORT 2019 PRODUCT QUALITY ASSURANCE
A well-designed quality control and regulations and meet consumer and performance management requirements. system is a prerequisite for the successful operation of an oil Responsibility for implementing company. this Policy and fulfilling obligations related to quality rests with the CEOs Gazprom Neft has adopted a Quality and Deputy CEOs of the company’s Policy, which aims to maximise production and sales subsidiaries, the efficiency of production and with executives of business units and sales of competitive high-quality responsible for performing these products that comply with Russian functions. and international standards
Integrated quality-management system
The company has In 2019, follow-up audits in place an integrated quality- of compliance with the ISO management system compliant 9001:2015 standard were conducted with the international ISO at the Omsk and Moscow Refineries. 9001:2015 standard. Executives In addition, NPP Neftekhimiya of the company’s production was recertified for compliance and sales subsidiaries conduct with the ISO 9001:2015 standard. an annual performance analysis Compliance of the quality and assessment of the system. management system at Poliom (a joint venture with SIBUR Holding set Enterprises regularly monitor up on a parity basis) with the ISO the performance of the quality- 9001:2015 standard was confirmed. management system against its targets, and conduct internal audits. In addition, an external audit is conducted by an independent certification agency. The enterprises are also seeking new approaches and best practices in the field of quality control by benchmarking best practices of Russian and foreign peers.
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Petroleum-products quality control
The quality of petroleum products Gazprom Neft refineries is monitored by quality control are implementing a product laboratories at all stages of production. quality control automation Gazprom Neft Key focus areas covered by quality programme, and adopting new control include: control methods involving the use Neftekontrol ('Oil – incoming quality control of raw of new equipment. In particular, Control') System materials, chemicals and auxiliary the SMOTR ('Inspection') process materials, catalysts, adsorbents, monitoring system has been put The Gazprom Neft Neftekontrol ('Oil Control') System is an end-to-end operational and additives used in production; into operation. The SMOTR system efficiency tool for the downstream segment. – in-line quality control at process is designed for comprehensive It was developed in-house to continuously facilities; automated monitoring of deviations monitor and control the volume and quality – quality control of finished products; from standards, covering 12,200 of petroleum products at various stages, – quality control of commercial process parameters and 5,800 quality from the refinery to the customer. products being shipped indicators. The system automatically Smart sensors and systems monitor to consumers; selects corrective measures to be key qualitative and quantitative metrics taken if any deviations are detected. of all petroleum product flows in real time, – quality control of petroleum products sending information to the Neftekontrol at refineries, tank farms, refuelling The system monitors the entire System. System tools build a digital model terminals, and filling stations, production facilities of the Omsk of the movement of petroleum products, and testing as part of production and Moscow Refineries online. identifying potential quantity and quality risks, inspections at process facilities; and improving performance along the value chain by forecasting and reducing the risks – product quality assessment When selling petroleum products, of petroleum products losses. The Ministry against quality targets. These the company continuously monitors of Energy of the Russian Federation processes are documented and maintains their quality by using and the Federal Agency for Technical under the established procedure. a range of instruments for assessing Regulation and Metrology (Rosstandart) product quality at various stages have recognised Neftekontrol as the industry standard for the fuel traceability system for all of the sales process. market participants. Today, 90% of Gazprom Neft assets are connected to this unique system. In 2020, Gazprom Neft plans to roll out Product compliance with Russian the monitoring and control system across 100% of its key assets along the value and international quality standards chain in the downstream segment. After its implementation is completed, the Neftekontrol System will make it possible to receive The company’s products comply – Technical Regulation and process data from more than 50,000 with requirements set out in: of the Eurasian Economic Union sensors, enabling customers to benefit – Technical Regulation (EAEU) TR EAES 036/2016 from effective quality control. of the Customs Union TR TS 'Requirements for Liquefied 013/2011 'On Requirements Hydrocarbon Gases Used as Fuel'. for Motor and Aviation Gasoline, % Diesel and Bunker Fuel, Jet Fuel, Motor gasoline and diesel fuel 90 and Fuel Oil'; manufactured by Gazprom Neft – Technical Regulation refineries comply with requirements of Gazprom Neft of the Customs Union TR TS set out in European standards assets are connected 014/2011 'Road Safety'; for Euro 5 fuel (EN 228 and EN 596 to the Neftekontrol system respectively).
50 SUSTAINABLE DEVELOPMENT REPORT 2019 All bunker fuel complies In 2019, 32 products manufactured with the international ISO 8217:2012 by Gazpromneft-Lubricants were and GOST 32510-2013 standards. officially licensed by the American In addition, bunker fuel complies Petroleum Institute (API), and 29 with requirements set out in Technical products (including four new ones) Regulation TR TS 013/2011. were approved by Daimler AG, one of the key global car manufacturers All bitumen products manufactured shaping industry requirements by Gazprom Neft comply with Russian for lubricants. The company has and international standards: GOST obtained about 500 approvals 33133-2014, GOST 22245-90, GOST for its product portfolio from Russian We are making 9548-74, GOST R 58400.1-2019, GOST and foreign equipment manufacturers. further improvements R 52128-2003, GOST R 52056-2003, EN to the Gazprom Neft 12591:2009 and EN 14023:2010. Neftekontrol system, which is expected to cover all facilities throughout the value chain by 2020. Health, safety and environmental New technologies mean we can collect and process standards large volumes of data in real time, transforming business Environmental performance of the Eurasian Economic Union. processes. Connecting up is monitored in accordance Compliance with environmental cutting-edge algorithms with product standards, regulations standards is confirmed for every batch means we can deliver and specifications (Russian of products. exponential improvements national standards (GOST), in efficiency and stability technical specifications (TU) In addition, in 2018 and 2019, in producing and delivering and in-house standards (STO)). the company developed and reviewed finished oil products The quality of commercial products five Safety Data Sheets (SDSs) to customers, from start manufactured by the company’s for bitumen materials and 213 to finish. refineries is assessed when each SDSs for lubricants in accordance batch is certified by quality control with the Regulation (EC) 1907/2006 Anatoly Cherner laboratories at the refineries, of 18 December 2006 concerning Deputy CEO for Logistics, and the relevant information the Registration, Evaluation, refining and Sales, Gazprom is recorded in product certificates Authorisation and Restriction Neft issued for each batch. of Chemicals (REACH), adopted to ensure a high level of protection Products governed by regulations of human health and the environment. (motor gasoline, jet, diesel and bunker fuel, fuel oil, road bitumen, liquefied No instances of non-compliance hydrocarbon gases) are issued of Gazprom Neft products with declarations of compliance with regulatory requirements with requirements set out in Technical and voluntary codes related to health Regulations of the Customs and safety impacts of products Union and Technical Regulations or services were recorded in 2019.
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Key focus areas for product quality improvement in 2019
Key initiatives implemented – upgrading by the company’s refineries and sales and developing laboratory units in 2019 included: facilities and maintaining – developing, and starting the reliability of testing equipment to produce and sell new high- and instrumentation. quality environmentally friendly products; In 2019, Gazpromneft-Lubricants also Gazprom Neft – standardising introduced a new marine oil for engines is gradually and certifying commercial running on ultra-low sulphur fuel oil implementing products in accordance with sulphur content not exceeding a comprehensive, with Russian and international 0.1%. The Gazpromneft Ocean CCL17 integrated programme regulatory requirements; high-technology product fully meets on the technological – quality-control and business- the new MARPOL requirements1. development of its refineries, process automation; targeted at increasing – adopting new quality-control The Gazprom Neft long-term the production of ultra- methods and best practices strategy involves further developing environmentally-friendly oil for business processes; the production of high-technology products, and increasing – implementing technical, lubricants, and expanding its refining depth. Modernisation technological, organisational international distribution network projects mean the company and managerial measures for selling these products. can respond to changes to improve product quality; in the market quickly, respond – actively cooperating to industry challenges with government bodies, Russian successfully, and increase and international organisations efficiency, throughout establishing quality policies the entire value chain. and standards; Implementing the refinery modernisation programme and improving Gazprom Neft’s bunkering and logistics infrastructure means we can supply our clients Share of environmentally friendly products in the total output between with environmentally- 2015 and 2019, % friendly marine fuels meeting the latest international 2015 2016 2017 2018 2019 standards. Euro 5 motor fuel 95 100 100 100 100 Anatoly Cherner Motor fuel compliant with Euro 4 23 25 26 27 32 Deputy CEO for Logistics, and higher standards Processing and Sales, Gazprom Low-viscosity marine fuel, ultra-low – – 9 25 25 Neft sulphur fuel oil (ULSFO) 0.1
/ 1 / MARPOL - International convention aimed at prevention of pollution from ships. Since January 1st 2020 MARPOL requires prohibition on usage of marine fuel with Sulphur content of more than 0.5%.
52 SUSTAINABLE DEVELOPMENT REPORT 2019 Gazprom Neft starts selling a new Gazprom Neft is ready environmentally for the introduction friendly bunker fuel of new IMO rules (RUS)
Production of new environmentally With the adoption friendly bunker fuel and marine oils of new International In late 2019, Gazpromneft Marine terminal infrastructure and technological Maritime Organisation (IMO) Bunker—the operator of the Gazprom upgrades of its refineries will enable requirements, the product Neft bunkering business—started to sell Gazprom Neft to meet growing demand portfolio of bunker-fuel hybrid bunker fuel with sulphur content for environmentally friendly bunker fuels of less than 0.5%. on the Russian market. suppliers will need to be diversified. Moreover, bunker This new fuel is fully compliant Following testing, this fuel has been fuel with sulphur content with the requirements set out certified as complying with the Eurasian in the MARPOL 2020 international Economic Union (EAEU) requirements. of less than 0.5% will convention. Well-developed bunkering make up the bulk of fuel sales, with a market share of at least 40%. High-quality products meeting the new requirements, in-house VLSFO 0.5: a new environmentally friendly Gazprom Neft fuel compliant with infrastructure, and industry global standards expertise enable Gazprom Neft to meet the demand In 2020, new requirements set out in the International Convention for the Prevention for environmentally friendly of Pollution from Ships (MARPOL) regulating sulphur content in bunker fuels are and highly efficient bunker coming into effect. fuels. Tightening of requirements for sulphur VLSFO 0.5 with sulphur
(SO2) content in fuels, % content of Alexey Medvedev % CEO, Gazpromneft Marine 4,5 Bunker
3,5 3,5 Reducing environmental impact
1,0 1,0 Improving quality 0,5 0,1 0,1 of life
2010 2012 2015 2020 Safeguarding the International waters In Emission Control Areas (ECAs) future of humanity
Fuel alternatives for ship owners
VLSFO 0.5 ULSFO 0.1 Diesel fuel/gas oil
Market share LNG High-sulphur products in 2020
% (for vessels equipped with scrubbers) ~40
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 53 GAZPROM NEFT
Product quality improvement goals for 2020:
– developing and starting – starting to produce synthetic to produce new product types turbine oils and stationary (brands) meeting the regulatory gas engine oils with optimised requirements for quality currently formulations, and putting them adopted by the market; on the market; – continuing to implement refinery – conducting research to develop modernisation and upgrade bitumen production processes, projects; improve bitumen quality – commissioning the unique Euro+ and explore its properties, combined oil refining unit; developing a system for managing – conducting original R&D all stages of bitumen production with G-Base base oils in the motor and sales as part of the BITUM oil segment, developing new MAP project; platforms (formulations) – continuing to implement projects for premium motor oils to automate business processes for commercial and passenger related to aviation fuel sales. vehicles;
Customer relations
Gazprom Neft builds direct and long- query and complaint management term relations with consumers, system. and maintains an open dialogue based on mutual respect. Gazprom Neft conducts regular As a responsible supplier, customer satisfaction surveys, the company informs and responds to feedback received consumers about its products from contractors, including complaint and services in a timely manner, management. and is taking steps to improve its
Relations with corporate and wholesale customers
The company communicates and workshops for partners with corporate and wholesale and consumers, meetings customers through the following and technical sessions channels: with representatives of industry- – information and technical specific ministries of constituent support for products supplied entities of the Russian Federation; to consumers; – publishing information – direct communication between on corporate websites and publicly the management and customers available online resources; during training sessions
54 SUSTAINABLE DEVELOPMENT REPORT 2019 Refined products that were entered in the 'Russia’s 100 Best Products’ competition were included in the catalogue of goods and manufacturers on the competition website: http://www.100best.ru/ (RUS)
– marketing and promotional certifying that the product campaigns; complies with the requirements – loyalty programmes; of standardisation documents – branded packaging. or EAEU technical regulations. In addition, when developing Every batch of products or amending standardisation is issued with a set of accompanying documents, the company always documents, including a quality obtains the relevant approvals certificate, a safety certificate, from consumers. and a statutory document
Relations with retail customers
The company communicates In 2019, the company launched with retail consumers of petroleum an integrated programme, Quality products through a wide range 360˚, to coordinate the work of PR of channels: communications at filling and marketing functions, in-house stations, information materials and external experts and filling published in the media, official station employees to improve community pages of the Gazprom the retail consumer experience Neft retail network on social media, in the Gazprom Neft retail network. the PR office, feedback received on social media and via the Single Quality 360˚ takes into account Support Centre (SSC), face-to-face specific characteristics communication with customers of the audience in terms as part of below-the-line, of their sensitivity to information conventional and digital advertising on quality, and includes content campaigns. and promotion channels that best suit each audience. The company SSC is a 24/7 multi- channel service using various Gazprom Neft efforts to raise conventional and digital awareness among retail consumers communication tools. It enables are focused on: the company to respond promptly – raising consumer awareness to customer enquiries. by explaining the advantages of Gazprom Neft products, All queries are grouped by type eradicating myths and biases, and subject, recorded and processed and integrating quality-related in an integrated system. messages into car racing The quality of customer consultations projects and national promotional is monitored regularly throughout campaigns; the month across all communication – helping the car industry audience channels. If anything is found to have to improve its knowledge gone wrong, corrective measures of fuel quality by implementing are taken. The company conducts educational and expert projects. regular surveys among end users to assess satisfaction levels at all stages of service provision.
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Customer satisfaction surveys
To assess retail consumer – prices at filling stations (as satisfaction with the quality of motor compared to competitors fuel and services, the company and other filling stations within conducts regular surveys, studies the network); feedback received via touch screens – the status of filling station of CRM systems in checkout areas services, equipment and premises. of filling stations, and analyses comments and queries received through hotline channels and on social media. Public recognition
The key indicator of consumer loyalty 'Russia’s 100 Best Products’ competition to the Gazprom Neft retail network is the Net Promoter Score (NPS) Gazprom Neft refineries’ products Best-known retail network participate in the 'Russia’s 100 Best index. In 2019, the situation with price Products’ national competition every According to Ipsos Comcon regulation on the market stabilised year. In 2019, the following products and Romir, the Gazprom Neft as compared to the previous period, were award winners: TS-1 top-grade retail network, the 'On Our Way!' loyalty programme which resulted in a slight increase jet fuel, Euro-95 (Type III) premium- grade unleaded gasoline, Super Euro- and G-Drive branded fuel in the NPS. Moreover, the Gazprom 98 (Type III) unleaded gasoline, grade are the best known in 39 Neft retail network NPS reached E and F EURO inter-season diesel regions in which the company 53 points, exceeding the market fuel all won certificates, while BND operates. average of 46 points. Market price 70/100 and 100/130 viscous petroleum bitumen, and PBV 60, PBV 90 and PBV stabilisation in 2019 also had Top-quality service 130 polymer-modified asphalt cement a positive impact on customer won prizes. BND 70/100 and 100/130 The Gazprom Neft retail experience, with the indicator bitumen, as well as grade E and F network won the 'Consumer returning to the 'pre-crisis' level. inter-season EURO diesel fuel were Rights and Service Quality' recognised as the New Product Award in the 'Retail Services' of the Year. According to the terms In 2019, according to a survey category, and was given and conditions of the competition, the 'Consumers’ Choice' award by Ipsos Comcon, Gazprom Neft quality certificates issued for these for the best service by public ranked second in terms of the NPS, products are marked with the 'Russia’s vote (confirmed by the findings surpassed only by international 100 Best Products’ sign. of an opinion survey conducted by Romir). brands such as Shell and BP. Gazprom Neft bitumen assets— the Omsk Refinery and NOVA-BRIT Key issues raised by consumers (Vyazma, Smolensk Oblast)—won Priznanie ('Recognition') about the company’s products in 2019 the 'Russia’s 100 Best Products’ Award awards (with NOVA-BRIT products included: winning this prize for the first time). The Gazprom Neft – the loyalty programme; The 'Russia’s 100 Best Products’ prize retail network won – operation of automated filling was also awarded to three premium- the annual 'Priznanie' Award stations; grade products from the Omsk in a competition conducted Lubricants Plant. by the Fontanka.ru online – promotional campaigns; newspaper in the form – online payments for fuel; of independent public vote. – service quality; – payment systems; – fuel quality;
56 SUSTAINABLE DEVELOPMENT REPORT 2019 Year-end figures between 2014 and 20191 2014 2015 2016 2017 2018 2019 NPS, RUSSIA 40 32 57 59 51 53 CUSTOMER EXPERIENCE2, RUSSIA, % 49 46 64 68 63 68
In 2019, the total number of contacts in an integrated Open-Source with retail consumers increased Ticket Request System (OTRS) six-fold to 146 million. They and are grouped by subject, type include customer queries received and topic. If a customer is provided by the SSC through voice and non- with online consultation, the script voice channels (chats in the mobile records the relevant query as closed app, on the website, in messaging for the purposes of statistics. services, emails and messages sent Unusual queries and complaints via the feedback form), all activities requiring additional information of the Gazprom Neft retail network in order to reply are routed mobile app users, as well as feedback to the relevant company function, received from customers through which prepares a reply, which is then CRMSensor devices. returned to SSC operators, who communicate it to customers. The number of complaints remains low, accounting for only 0.07% Corporate customer satisfaction of the total number of contacts. levels are assessed through Most complaints are related a questionnaire survey. Analysis to the operation of automated of feedback received from consumers filling stations, while the remainder of aviation and bunker fuel, pertains to service quality, bitumen materials, lubricants the functioning of mobile apps, and petrochemical products shows failures of data terminal equipment an increase in the level of satisfaction used in the loyalty programme, with product quality, the reliability bonus points not being credited, of supplies, and the quality and promotional campaigns. All of additional and customer services. queries and complaints are recorded
/ 1 / Data on the NPS and customer experience is comparable within the periods 2014–2015 and 2016–2019 (a surge in 2016 compared to 2015 was caused by a change in methodology). / 2 / The figure reflects the share of customers who gave the highest score (9 and 10) when answering the question about their customer experience.
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 57 GAZPROM NEFT
An important focus of the company's customer-relations initiatives is the development of digital 'On Our Way!' loyalty programme sales channels and digitalisation of customer services. In 2019, 2019 marked the 10th anniversary card holders in Russia and the CIS of the launch of the 'On Our Way!' countries totalled 12 million (+770,000 the share of digital channels (the loyalty programme. During this time, vs 2018). The programme has been virtual loyalty card, the virtual the programme has evolved from bonus successfully introduced in eight co-branded card and the AZS.GO cards to an online platform providing countries: Russia, Serbia, Belarus, app) in total retail sales through customers with the fullest possible Kazakhstan, Kyrgyzstan, Tajikistan, range of services. Bulgaria, and Bosnia and Herzegovina. the Gazprom Neft network was Card users account for as many as 84% about 6%. The number of active users 'On Our Way!' is one of the largest transactions in the Gazprom Neft retail of the Gazprom Neft retail network loyalty programmes in Russia. At year- network. end 2019, the number of loyalty mobile app reached 1.6 million.
Digital products and services In 2019, Gazprom Neft introduced the first customers in Russia to be an innovative product: NFC- able to operate coffee machines via enabled virtual co-branded Gazprom their smartphones in Drive Cafes Neft-Gazprombank cards, which at Gazprom Neft filling stations. Another are available through the Gazprom addition to the app is the Space.GO Neft retail network mobile app. This game, in which motorists can answer card can now be issued through questions on various subjects to earn the Gazprom Neft retail network mobile additional bonus points under the 'On app, added to a virtual wallet, and used Our Way!' loyalty programme. million as a method of payment for fuel 12.0 ordered through the app and any The digitalisation initiative covered other purchases. In addition, the card not only customer services, the number of loyalty functions as the 'On Our Way!' loyalty but also filling stations themselves: card. In the first five months of 2019, equipment at filling stations was card holders in Russia after this function was made available, integrated into a single smart and the CIS countries customers issued 290,000 virtual system: the Infrastructure Monitoring co-branded cards, which is almost Centre (IMC). The automated by the end of 2019 100,000 more than the number monitoring and predictive analytics of plastic co-branded cards. capacities of the IMC make it possible to monitor the status As part of customer-service of equipment and the operation million development, the functionality of filling stations online, which helps of the Gazprom Neft mobile app to improve the reliability and longevity 1.6 was also expanded. For example, of equipment. users of the mobile app became active users of the Gazprom Neft retail network mobile app
58 SUSTAINABLE DEVELOPMENT REPORT 2019 For more details about current procurement procedures on the company's website (RUS)
SUPPLY CHAIN MANAGEMENT
Gazprom Neft priorities in the sphere restriction of competition among of procurement include transparency, bidders, and building long-term preventing discrimination and unfair relationships with contractors. Audit of the procurement management The company adheres to the following system supplier management principles: In 2019, the Materials and Equipment Division of Gazprom Neft Procurement – transparency; Contractor selection and contractor underwent the annual compliance audit – competitiveness; relations are managed as part of its integrated management system to confirm its compliance with the ISO – equality; of an integrated management system 9001-2015, ISO 14001:2015 and OHSAS – mutual guarantees; compliant with the ISO 9001-2015 18001:2007 standards. – confidentiality; standard. Based on the findings of this inspection, – availability of information. the auditors concluded that Gazprom Neft has a single Central the management system development In the course of procurement Procurement Management was consistent with continuous of works, services, materials Body (CPMB): the Gazprom improvement principles, and that the system was effective and complied and equipment, Gazprom Neft prefers Neft Procurement and Capital with the requirements of the relevant to select contractors on a competitive Construction Directorate. standards. basis. The auditors highlighted the following To maintain the required level strengths of the management system: The company has adopted of competition in procurement, the Regulation on Procurement the CPMB conducts an open pre- – an increase in the customer satisfaction index (CSI) as compared of Goods, Works and Services. qualification procedure. The main to 2018; This is a fundamental document goal of pre-qualification is to form – development of an electronic on planning and conducting a register of potential bidders document management system procurement procedures that can perform works, render as part of supplier management; and selecting suppliers. services and supply goods meeting – transfer of in-house knowledge as part of implementing the stipulated requirements the Regulation on Procurement In addition, Gazprom Neft for production processes, quality of Goods and Services. is committed to increasing and safety, and the outcomes the efficiency of its supply chain of works and services. Potential management1. The company bidders whose qualification meets has approved the Standard the required standards may on Performance Assessment subsequently be invited to participate of Materials and Equipment in the procurement process. Suppliers, and the Instruction for Calculating Key Performance Indicators of Materials and Equipment Suppliers.
/ 1 / A supply chain is a group of organisations cooperating in order to supply enterprises, and control the movement of goods at all stages: procurement of raw materials, production, storage and transportation of goods.
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 59 GAZPROM NEFT
To be included in the company’s In accordance with the company register of potential bidders, pre- standards, potential suppliers' qualification participants must meet compliance with requirements set out Considering SMBs the following key requirements: in corporate standards is monitored – compliance with the mandatory throughout the period when in procurement requirements for bidders set out the company is interacting with them. Procurement from small and medium- in the Gazprom Neft Regulation sized businesses (SMBs)1 in 2019 accounted on Procurement; At year-end 2019, the company for 26% of the total volume of materials – solvency; carried out a diagnostic assessment and equipment sourced by the company. – having the relevant experience, of compliance of its procurement qualifications, production business processes with the Etalon capacities and qualified workforce OMS requirements. The Contractor Share of expenditure on suppliers to manufacture or supply certain and Supplier Management element in key regions of the company types of goods, perform certain was assessed as 'well-developed' operation in 2019, million types of works, and render certain in the OMS terminology. types of services to the required standard; In 2019, 5,800 potential suppliers Procurement – no negative business reputation. participated in competitive bidding volumes procedures initiated by the company. Region (excluding VAT) When competitive procurement Contracts were concluded St Petersburg 10,037 procedures are initiated and held, with 1,700 companies from 65 regions Tyumen Oblast 7,889 bids are analysed to determine if of the Russian Federation and 17 Khanty-Mansi foreign countries (including the CIS), they comply with requirements set Autonomous 3,540 out in competitive procurement with payments totalling 179 billion. Okrug-Yugra documents. The company checks Local (domestic) suppliers accounted the information on the bidders, for 98.4% of the total procurement Tomsk Oblast 3,401 including engaging the corporate volume. In 2019, there were no Omsk Oblast 3,132 security function to assess their legal notable changes in the supply chain. Orenburg Oblast 342 capacity, solvency and business Yamalo-Nenets 194 reputation. These measures enable Autonomous Okrug the company to identify in advance those contractors who do not comply with its requirements.
GAZPROM NEFT MATERIALS AND EQUIPMENT SUPPLY CHAIN
MATERIALS WAREHOUSE PRODUCTION AND EQUIPMENT OF A LOGISTICS WAREHOUSE FACILITY MANUFACTURER / OPERATOR OF A CONSUMER OF A CONSUMER AUTHORISED (GAZPROM NEFT SUBSIDIARY SUBSIDIARY DEALER PROCUREMENT)
/ 1 / Following the competitive selection of materials and equipment suppliers initiated by the company Procurement Directorate and the Materials and Equipment Division of Gazprom Neft Procurement.
60 SUSTAINABLE DEVELOPMENT REPORT 2019 For more details on technological partnership and import substitution
Technological partnerships and import substitution The 'Import Substitution in the Oil The Gazprom Neft Department In 2019, Gazprom Neft entered and Gas Industry 2019' for Technological Partnerships into strategic partnership conference is a great and Import Substitution is tasked agreements with SIBUR Holding platform for developing with systematically monitoring PJSC and the Administration a national supplier base the Russian goods and materials of St Petersburg. The agreement for Russia's oil and gas market to find domestically with SIBUR Holding will enable industry, and its relevance produced replacements for imported the joining of forces to promote was once more confirmed alternatives. the development of Russian by the number and make-up equipment to be used by oil-and- of participants from across One of the most important gas enterprises. The agreement the country. Achieving objectives in this area is to create with the Administration of St technological leadership new competitive production Petersburg is designed to develop is a major challenge facilities in the Russian Federation, a world-class R&D and technology for Russian suppliers, and support existing Russian centre for the energy sector but it is definitely feasible. manufacturers. Gazprom Neft also in the city. The company continues An open discussion seeks to cooperate with foreign to participate in joint working groups between representatives companies on the localisation with Gazprombank and HMS Group. from the government, of production in the Russian the industry and science Federation. In March 2019, St Petersburg hosted has made it possible 'Import Substitution in the Oil to identify the key problems Gazprom Neft is testing state-of- and Gas Industry 2019', a technology and outline the next steps the-art Russian-made equipment, conference supported by Gazprom towards making Russia and creating unique products Neft and attended by representatives a technological leader. to replace foreign alternatives. from government agencies, major In addition, the company upstream and service companies, Sergey Arkhipov also supports applications and some of the country’s leading Head of the Department from development companies research and manufacturing for Technological Partnerships for external financing, including organisations. The conference and Import Substitution, subsidies from the Industrial participants welcomed the company’s Gazprom Neft Development Fund. extensive efforts in the field of import substitution. In 2019, the company started to purchase more than five new import-substitution products that had not previously been manufactured in Russia. For more details p. 45 on the company’s technological development, see the Sustainability Technologies section.
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 61 GAZPROM NEFT
STAKEHOLDER ENGAGEMENT
The company’s stakeholder engagement initiatives are designed Stakeholders to achieve sustainable development goals and take into account reasonable stakeholder expectations are individuals and entities that and interests. by the company’s operations, Gazprom Neft has identified several key stakeholder groups whose products and services or whose interests are most closely linked with its activities and that may ability to successfully achieve its have the most substantial impact on the company’s ability to achieve strategic goals. its strategic goals. The company also takes into account commitments stipulated in laws and regulations.
Key Gazprom Neft stakeholder engagement priorities are reflected Government of the Russian in the following corporate documents: Shareholders Federation and govern- and investors ments of Gazprom Neft – The Corporate Code of Conduct; regions of operation – The Corporate Governance Code; – The Regulation on the General Local communities Employees KEY in regions where Gazprom Meeting of Shareholders; Neft operates – The Dividend Policy Regulation; GAZPROM NEFT – The Information Policy Regulation; STAKEHOLDER – The Policy on Charitable Activities; GROUPS Non-profit Consumers and non-governmental – The Policy on Industrial organisations and Occupational Safety,
Environmental Protection, Fire Industry peers and Transport Safety, and Civil Suppliers and partners in Russia and Defence; worldwide – The Policy on Interactions with Indigenous Northern, Siberian and Far Eastern Peoples. taking into account the company’s – hotlines for employees The company adheres to the following strategic targets and stakeholder and consumers; stakeholder engagement principles: priorities. – opinion polls and surveys among – respecting stakeholders’ interests; employees, consumers and local – constructive cooperation; Key stakeholder engagement communities; – transparency of the company’s mechanisms: – membership in non-governmental operations; – business contracts and expert organisations; – regular communication; and cooperation agreements; – conferences and round-table – fulfilment of commitments. – business meetings meetings; and presentations; – reports. Gazprom Neft maintains a continuous – corporate communications dialogue with stakeholders based system; on an analysis of the internal – public consultations; and external social environment, – joint working groups;
62 SUSTAINABLE DEVELOPMENT REPORT 2019 The Gazprom Neft Board of Directors has approved the Information Policy Regulation (this document is available on the company website)
Transparency
Openness and transparency news, its financial and operating Assessment (notwithstanding the need to protect results, statements and other useful trade secrets and other confidential information about the company’s of information information) play a major role operations, as well as documents policy in the Gazprom Neft corporate regulating the activities of Gazprom governance system. Neft governance and control implementation bodies, such as the Charter, In 2019, the Audit Committee The company seeks to provide all its Regulation on the General Meeting of the Board of Directors reviewed stakeholders with information on its of Shareholders, Regulation the implementation of the company’s operations in a timely and regular Governing the Board of Directors, information policy, in particular, the information disclosed by Gazprom manner, within the scope required Regulation on the Management Neft PJSC to third parties, including to make informed decisions regarding Board, Regulation on the Chief analytical and rating agencies. its operations. Executive Officer, and Regulation on the Audit Commission. The company’s information policy is underpinned by the principles To ensure equitable access of transparency, reliability, to information for all stakeholders, promptness, timeliness Gazprom Neft publishes information and accessibility. The company on the official website in both Russian adheres to these principles, and English. and informs its stakeholders about important events The company prepared its and aspects of its operations Sustainability Report for 2018 in an unbiased and timely in accordance with the GRI Standards manner. Key communication tools (the core 'in accordance' option), used by the company include the ISO 26000:2010 standard the official Gazprom Neft website (Guidance on social responsibility), and the websites of its subsidiaries, and the Basic Performance the Sibirskaya Neft ('Siberian Indicators of the Russian Union Oil') trade magazine, as well of Industrialists and Entrepreneurs as the company’s community pages (RSPP), and posted the Report on its on social media, such as Facebook, website. In 2019, the company Report VK, YouTube and Instagram. for 2018 was audited for the first time by an independent auditor, The primary information channels PricewaterhouseCoopers Audit. available to the widest range of stakeholders include the official company website, the Annual Report and the Sustainability Report, as well as a specialised section of the website dedicated to IR. These resources contain the latest company
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 63 GAZPROM NEFT
Media relations
Media relations are regulated In 2019, the company presented by the company’s information the new Development Strategy policy and the Corporate to 2030 and Digital Transformation Standard on the Procedure Strategy to representatives for Media Relations and Distribution of the industry media. In addition, of Information Materials. Focus Gazprom Neft held a traditional press areas of the company’s efforts conference attended by members to position itself in the media space of the Management Board for key are determined by the Gazprom Neft federal and international media Communication Strategy, which outlets following the Annual is aligned with the Gazprom Neft General Meeting of Shareholders, business goals. as well as other press conferences and briefings, including participation The main goals of Gazprom Neft in major Russian economic communications are to: and industry forums. It also held – help Gazprom Neft a number of important media to build and maintain a first-class tours for Russian and foreign reputation, journalists. Media representatives – maintain an equal, partner-like visited the company facilities in St dialogue with representatives Petersburg, Moscow, Omsk, Khanty- of the federal, international Mansiysk and other regions in which and regional media, and press Gazprom Neft operates, and took offices of government bodies part in press events organised and non-governmental by the company in Serbia. organisations relevant to the company’s operations. Along with conventional communication tools, The Gazprom Neft press office in 2019, the company successfully responds promptly to requests implemented digital projects focused from representatives of the Russian on extending the range of information and international media, provides on the company’s operations and its comprehensive and detailed reach. These included major special information on the company’s projects involving leading Russian projects, and comments on important and foreign media outlets, such subjects on the industry-wide as TASS, RIA Novosti and RBC TV. information agenda. In 2019, Business and industry media outlets the Gazprom Neft press office published op-eds and interviews continued to develop communication with company executives. channels and tools, adopt best communication practices in line with relevant international trends, and implement partner projects with leading media outlets.
64 SUSTAINABLE DEVELOPMENT REPORT 2019 Internal communications
In 2019, Gazprom Neft conducted focus of a corporate forum titled Internal communication a major communications campaign 'Strategy 2030: among the World's to promote the updated Corporate Best', in which Alexander Dyukov, tools Code of Conduct, which includes Chairman of the Gazprom Neft Key internal communication tools include: not only descriptions of the company Management Board, formulated – an integrated system of intranet portals values, but also practical examples the vision of the Gazprom Neft of Gazprom Neft enterprises; illustrating their application. future in the short and long – corporate media (the Sibirskaya Neft term, and described four areas corporate magazine, the Neftegazeta The essence of these communications of the company’s transformation that periodical, and the corporate radio); – a system of digital displays; was reflected in a series of interviews are providing a foundation for future – a system of information boards; with the company top managers changes. – meetings between the management on the subject of corporate and employees; culture development. The interior The forum was broadcast live – discussion platforms (conferences design of the company offices on the corporate intranet website. and round-table talks); – a feedback system. and production facilities was aligned The communications campaign with the corporate values. also leveraged all existing internal communication channels. In September 2019, the company launched a mobile news feed. This Key changes that are underway is an external website providing in the company became the central information on the company, which can be accessed by employees from their personal mobile devices. In addition to the company headlines, the mobile news feed includes competitions, live broadcasts, and employee channels covering professional and corporate topics. >37,000 91% employees took part of employees trust in the employee engagement the management’s decisions survey
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 65 GAZPROM NEFT
Annual employee engagement – surveys (EES) are a key tool used by the company to obtain feedback Employee engagement survey: taking and enabling it to assess employee engagement and satisfaction levels, everyone's opinions into account! identify Gazprom Neft’s strengths One of the highlights of 2019 was and development. At the same time, and weaknesses as an employer, a large-scale employee engagement most respondents expressed a high and outline focus areas. survey in the company, which covered opinion of training quality, and stated 37,000 employees (including over 1,200 that the knowledge and skills that they employees in the corporate centre). had gained were useful and applicable In addition, the company conducts The findings of the survey will become in the workplace. The survey showed pulse surveys to get prompt feedback the basis for new positive changes a positive trend in employee opinion on matters relevant for the company in the company in 2020. on cross-functional cooperation. Focus management. groups also discussed the organisation The findings of the survey showed that of production processes, recognition employees had the highest opinion of employee achievements of the actions of the Gazprom Neft by the company and managers and so management. Ninety-one percent forth. of respondents stated that they trusted the management’s decisions, and eighty- In February 2020, members six percent of respondents felt support of the Management Board discussed from their line managers. There was the survey findings at the Human also an improvement with regard Resources and Compensation We would like to working conditions. Committee meeting. to thank all Training statistics are a major focus employees in the corporate area, with almost a quarter of employees stating that they would like to have more centre who took part opportunities for professional training in the survey. Of course, it takes some time to fill in the questionnaires, but the responses that we have received will Survey in numbers help us understand how to make the company even better. Sixty-six THE KEY INDICATOR % OF THE SURVEY percent of employees 71 in the corporate centre participated in the survey. This is an indirect indicator employee engagement rate reflecting the engagement level: the company prospects matter to its employees, and they are willing to contribute to its development and strive 37,161 172 102 to achieve more.
Dmitry Lobach employees filled focus groups executives were Head of the Corporate in the questionnaire were conducted interviewed Communications Office, Gazprom Neft
66 SUSTAINABLE DEVELOPMENT REPORT 2019 THE COMPANY ENGAGEMENT WITH KEY STAKEHOLDER GROUPS
1 Shareholders and investors
Examples and outcomes of the company stakeholder Key expectations and interests engagement initiatives in 2019
– Increase in the company Members of Gazprom Neft executive about the company business, shareholder value bodies and other key company including about the level of dividends, – Fair dividend policy executives hold regular presentations production portfolio optimization – Transparency and meetings with investors under OPEC+ Agreement, the volume – Respect of shareholder rights and analysts, including events of investments in the implementation accompanying the disclosure of the 2030 Strategy, and performance (publication) of financial statements improvement measures in Gazprom Engagement mechanisms (accounts), or related to key company Neft subsidiaries. investment projects and strategic – General Meeting of Shareholders development plans. – Corporate reports – Meetings, conferences Gazprom Neft management places and conference calls for investors special emphasis on shareholder – On-site meetings with investors and investor relations. It – Investor Day attended by Gazprom held a number of meetings record-high dividends per Neft top managers with representatives of global share1 – Analyst databook and statistics investment funds, and presented digest published by the company the company’s plans and actions – Up-to-date information for the use of the free cash flow, posted in the Investors section the ESG policy, and efforts to increase on the company website dividend payments. – Hotline and email: [email protected] During the Annual General Meeting of Shareholders, shareholders raised questions
For more details on shareholder and investor relations, see the Gazprom Neft Annual Report 2019.
/ 1 / The amount of dividends accrued per Gazprom Neft ordinary share under the resolution of the Annual General Meeting of Shareholders held on 14 June 2019 (including dividends paid for the nine months of 2018, totalling 22.05 per ordinary share).
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 67 GAZPROM NEFT
2 Employees
Examples and outcomes of the company stakeholder Key expectations and interests engagement initiatives in 2019
– Decent compensation package Annual employee engagement Readership of the online version – Safe working conditions surveys (EES) are a key tool used of the Sibirskaya Neft corporate – Opportunities for professional by the company to obtain feedback magazine increased by 63% to 598,000 development and enabling it to assess employee views. – Social support engagement and satisfaction levels, identify Gazprom Neft’s strengths The company launched a mobile Engagement mechanisms and weaknesses as an employer, news feed, which can be accessed and outline focus areas. In 2019, by employees from their personal – System of internal the survey covered 37,000 employees mobile devices. communications (51% of the total headcount). – Meetings between Gazprom Neft employees and management A communications campaign was held to discuss outstanding issues to promote the updated Corporate Code % – Joint health committees of Conduct. 71 – Meetings attended by trade union representatives In 2019, the regular weekly audience employee engagement – Employee engagement surveys of the integrated system of intranet rate (EES) portals of Gazprom Neft enterprises – Forums, conferences, cultural exceeded 15,000 people. and sporting events
For more information on employee emgagement, p. 108 see the Employee development section
68 SUSTAINABLE DEVELOPMENT REPORT 2019 3 Consumers
Examples and outcomes of the company stakeholder Key expectations and interests engagement initiatives in 2019
– Quality, consumer value Twice a year, research companies mobile app users, as well as feedback and environmental performance measure key brand health indicators, received from customers through of products including the NPS1 index, on the retail CRMSensor devices. – High quality service and efficiency petroleum-products market. According of sales channels to a survey by Ipsos Comcon, – Transparent pricing in 2019, Gazprom Neft ranked second – Ethical business practice in terms of the NPS, surpassed only by international brands (Shell and BP). Engagement mechanisms In 2019, the total number of contacts – Contracts with retail consumers increased – Feedback system and services six-fold to 146 million. They million – Complaint management system include customer queries received 12 – System for consumers to assess by the SSC through voice and non- the company voice channels (chats in the mobile participants – Media app, on the website, in messaging – External corporate communications services, emails and messages sent in the Gazprom Neft – Gazprom Neft loyalty programmes via the feedback form), all activities retail network loyalty – Business meetings, including of Gazprom Neft retail network programme on-site – Conferences and forums – Corporate reports
For more details on consumer relations, see the Product Quality Assurance – p. 54 Customer Relations section.
/ 1 / Net Promoter Score.
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 69 GAZPROM NEFT
4 Government of the Russian Federation and governments of Gazprom Neft's regions of operation
Examples and outcomes of the company stakeholder Key expectations and interests engagement initiatives in 2019
– Energy security The company is a permanent member subjects of Russia for building – Tax payments of departmental and interdepartmental and renovating infrastructure facilities, – Technological development advisory and expert bodies developing charitable activities, and supporting of the Russian oil and gas industry. recommendations for government indigenous peoples in the North. Providing alternatives for imported policy in the oil and gas industry. technologies and equipment In the course of its operations abroad, – Minimising Gazprom Neft actively cooperates the company cooperates with local the negative environmental impact with the relevant ministries governments, including on matters of the company’s operations and agencies of the Russian related to supporting socially – Legal compliance Federation, including the Ministry important projects. of Energy, the Ministry of Economic Development, the Russian Energy Engagement mechanisms Agency and others, in developing and discussing target programmes – Agreements on social and strategies of the Russian and economic partnership Federation, and in developing its legal – Joint working groups, round-table and regulatory framework. In 2019, talks and meetings this cooperation included developing – Corporate reports the Energy Efficiency and Energy – Participation in commissions Sector Development programme 18 and conferences and a draft Energy Strategy for Russia to 2035. new agreements on social Gazprom Neft has signed social and economic cooperation and economic agreements with the federal subjects with governments of the federal and municipalities of Russia
For more details on government relations, see the Contribution p. 128 to Social Development of Local Communities section
70 SUSTAINABLE DEVELOPMENT REPORT 2019 5 Suppliers and partners
Examples and outcomes of the company Key expectations and interests stakeholder engagement initiatives in 2019
– Fulfilling mutual commitments – Supporting Russian The company held several manufacturers workshop meetings with Russian – Transparency, openness manufacturers, and with foreign and competitive selection licensors and EPC contractors How do relationships of contractors regarding the implementation within an “ecosystem” – Ethical business conduct of the Quick Access programme differ from traditional and combating corruption to promote accreditation of Russian “client–supplier” manufacturers in vendor lists. relationships? More than anything else, in the lack Engagement mechanisms As part of a number of pilot of any readymade solutions: projects, foreign companies KBR even in terms of trying to find – Competitive tendering procedures and Saipem reported on progress such solutions on the global – Contracts and agreements in the accreditation of proposed market. In the age of “hard- – System for contractors to assess Russian manufacturers. to-recover” oil, the tasks the company facing the oil business have – Business meetings and forums The company entered into become exponentially more organised by the company two strategic partnership complicated – because – External conferences agreements (with SIBUR Holding the conditions pertaining and exhibitions PJSC and the Administration to production have changed, – Corporate website, including of St Petersburg). The agreement fundamentally. An oil the Procurement Portal section with SIBUR Holding will enable company, more often than the joining of forces to promote not, simply has no chance the development of Russian of ordering a standard job, equipment to be used by oil-and- or buying-in a standard gas enterprises. The agreement service, at the lowest price. with the Administration The customer or client, most of St Petersburg intends to develop of the time, can’t just say “I a world-class R&D and technology need to do such and such.” He billion centre for the energy sector in St or she only sees the desired Petersburg. The company continues outcome, and sets the task. to participate in joint working groups As to how to achieve that total payments (with Gazprombank and HMS Group). goal, exactly – that has to be under agreements determined in conjunction with a potential partner concluded in 2019 as part of competitive procurement Vadim Yakovlev procedures Deputy CEO for Exploration and Production, Gazprom Neft
For more details on government relations, p. 59 see the Supply Chain section
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 71 GAZPROM NEFT
6 Local communities in Gazprom Neft's regions of operation
Examples and outcomes of the company stakeholder Key expectations and interests engagement initiatives in 2019
– Improving quality of life in local Gazprom Neft maintains to implement socially important communities a dialogue with local administrations projects in the KRI in 2020. – Job creation for local communities and communities as part of its social – Human capital development programmes. Gazprom Neft also attaches great in Gazprom Neft regions importance to fulfilling its corporate of operation In Russia, the company makes social social responsibility obligations – Developing local manufacturing investments as part of the 'Home to the Government of Iraq. About 1,300 enterprises and suppliers Towns' Programme, which is one Iraqi citizens are involved in the Badra – Promoting community of the most successful and best- project. Since the start of the project, commitment and social known regional development initiatives three schools have been built, entrepreneurship of Russian businesses. Between electricity grids in three neighbouring – Tax payments to local budgets the launch of the Programme localities have been expanded – Health, safety and environment and 2019, about 2,350 social projects and upgraded, and medical equipment have been implemented and about 150 and two ambulance cars have been facilities have been built. supplied for the town of Badra. Engagement mechanisms NIS, a Gazprom Neft subsidiary, – Social projects forming part is one of the leading social investors of the 'Home Towns' Social in education, healthcare, social Investment Programme development, culture and sports – Projects to promote social in Serbia. development and support education, healthcare, culture Gazprom Neft is implementing and sports in Serbia and Iraq a wide-ranging social programme – Public consultations, round-table in the Kurdistan Region of Iraq (KRI). billion meetings and dialogues In 2019, the company almost doubled – Corporate and external media the scope of its social programmes, – Corporate reports and is planning to continue social investments in 2019
For more details on community relations, see the Social policy p. 128 section.
72 SUSTAINABLE DEVELOPMENT REPORT 2019 7 Industry peers in Russia and worldwide
Examples and outcomes of the company stakeholder Key expectations and interests engagement initiatives in 2019
– The company contributing The company and its subsidiaries Economic Forum and the Russian to industry development are active members of Russian Energy Week international forum. – Responsible business conduct and international industry associations. – Respect for human rights, The company cooperates with leading compliance with HSE standards Company representatives take part Russian research centres in the oil – Information exchange in conferences aimed at sharing and gas industry. experience between oil producers, in the work of industry working Engagement mechanisms groups, meetings and exhibitions, and serve on the Board of Chief – Cooperation agreements Power Engineers of Refineries – Participation in industry and Petrochemical Plants in Russia 85 and cross-industry events and the CIS under the Oil Refiners – Membership in industry and Petrochemists Association. requests and draft regulatory organisations’ committees documents on oil refining – Joint projects At the beginning of 2020, Gazpromneft- and petroleum products were – Corporate reports Aero became the first Russian member of the Joint Inspection Group received by the company (JIG), the world-leading organisation from various government for the development of aviation fuel agencies, the RSPP supply standards covering the entire Committee on Technical supply chain for aviation fuels Regulation, Standardisation from refinery to wing-tip. and Conformity Assessment, The company is a regular participant and technical standardisation in the St Petersburg International committees.
8 Non-profit and non-governmental organisations
Examples and outcomes of the company Key expectations and interests Engagement mechanisms stakeholder engagement initiatives in 2019
– Safety of company operations – Conferences and exhibitions Gazprom Neft continued to take part and environmental initiatives – Round-table meetings in the RSPP activities. – The company contributing – Joint implementation of social to regional and industry projects Together with the Russian Geographical development – Corporate reports Society, the company continued – Transparency of operations to participate in a programme to study narwhals, a rare Arctic animal included in the IUCN Red List of Threatened Species (the 'Narwhal: Legend of the Arctic' project).
02 SUSTAINABLE DEVELOPMENT MANAGEMENT 73 TEN QUESTIONS FOR THE REFINERY WORKER
Svetlana Slepneva Chief product technician at Omsk refinery SUSTAINABLE DEVELOPMENT REPORT 2019
Health and safety
HSE MANAGEMENT SYSTEM OCCUPATIONAL HEALTH AND SAFETY OCCUPATIONAL HEALTH AND PREVENTIVE MEDICINE INDUSTRIAL SAFETY GAZPROM NEFT
Corporate documents Policy on Industrial and Occupational Safety, Environmental Protection, Fire and Transport Safety, and Civil Defence (RUS)
The company strives to provide a safe working environment for its employees, and demands the same of its partners. Gazprom Neft values the safety of its employees, local communities, and environment above any financial, Safety technical or other considerations. remains Gazprom Neft's key priority
The company is continually improving HSE1 management by building risk management processes and developing a safety culture among employees and contractors.
Strategic Strategic HSE priority goals2
‘Target Zero’: zero harm to people, the environment, 0 0 or property fatalities industrial accidents in our operations
/ 1 / HSE requirements include (but are not limited to) requirements on Industrial, fire and environmental safety, occupational health and safety, electric safety and emergency preparedness. / 2 / To achieve the Fatal Accident Rate (FAR) and Tier 1 Process Safety Event (PSE) values at or below those of the world's top 10 safest liquid- hydrocarbon producers by 2030.
76 SUSTAINABLE DEVELOPMENT REPORT 2019 Corporate Standard on the Health, Corporate Standard on the Procedure Corporate Standard Safety and Environment and Civil for Managing and Organising on Reporting, Registration, Defence Management System: Communication with Contractors Recording and Internal General Provisions and Framework on Health, Safety and Environment Investigation of Accidents (RUS) (RUS) (HSE) Matters (RUS)
As part of its comprehensive the company takes actions to improve business transformation, its risk management system, Gazprom Neft has set itself makes substantial investments a strategic goal of becoming in cutting-edge technologies one of the safest oil and gas to improve the reliability of its asset, companies by 2030. Accordingly, and is building a culture of safety.
Progress Plans in 2019 for 2020 A focus on HSE and a responsible attitude to the environment FAR decreased by 34.1% Reducing the accident is an important component against the five-year average and injury rates of the new Gazprom in the company Neft strategy. Today, LTIF decreased by 21.3% and in contractor this is a prerequisite organisations by: for becoming a global oil- Number of industrial accidents industry leader. We see that in the reporting period – 0 Introducing over 80 HSE safety and social aspects barriers to improve are becoming increasingly The company completed the reliability of equipment important to investors the first round of practical and production processes. and the industry. Any implementation of a risk- operational achievements focused approach to HSE Developing HSE data or success can be analytics systems eroded or cancelled out Gazprom Neft identified key by consolidating data by workplace fatalities risks at the corporate level: from over 15 automated or an oil spill. And, of course, 31 scenarios that could lead data sources. we must make every effort to catastrophic consequences to prevent it. Building an HSE training The company developed cause- system focused on barrier Alexander Dyukov and-effect models for all mechanisms.Organising CEO and Chairman the scenarios remote knowledge testing of the Management Board, for more than 20,000 Gazprom Neft The Safety Framework company employees. Project was launched across the company to develop and implement barriers to mitigate the key risks
Gazprom Neft formed a series of independent inspection teams, which are tasked with making sure that the barriers forming part of the Safety Framework are in place and robust
03 HEALTH AND SAFETY 77 GAZPROM NEFT
HSE MANAGEMENT SYSTEM
The Gazprom Neft Policy The HSE Supervisory Board In 2019, the company put on Industrial and Occupational is a collegial body made up this plan into action for the first time. Safety, Environmental Protection, of senior executives of operational To manage key HSE risks, Gazprom Fire and Transport Safety, units. It is tasked with reviewing Neft identified, at a corporate and Civil Defence is a framework HSE strategic matters related to safety level, 31 scenarios that could lead regulatory document. improvements in the company, to catastrophic consequences. drawing on the expertise The company engaged Gazprom Neft has in place of operational functions. a large team of experts in this field a comprehensive system of collegial Key decisions are reviewed to develop cause-and-effect models bodies responsible for making by the Management Board at its for all the scenarios. These decisions on key HSE matters. meetings. models indicate the links between The HSE Professional Board root causes, potential accidents is responsible for consolidated In 2018, the company began and their consequences. decision-making supporting a transformation of its HSE system, the development of a company- underpinned by a risk-focused wide HSE management system, approach. As part of this transformation, and for submitting strategic initiatives Gazprom Neft has set up a series For more details on the Gazprom for review to the Supervisory Board of projects based on the iterative PDCA p. 32 Neft HSE governance bodies, and the Gazprom Neft Management (Plan-Do-Check-Act) cycle. see the Corporate Governance section Board.
HSE HSE MANAGEMENT PROFESSIONAL SUPERVISORY BOARD BOARD BOARD
78 SUSTAINABLE DEVELOPMENT REPORT 2019 In order to reduce key HSE risks, subsidiaries started to implement Gazprom Neft has launched the first cycle of this project in 2019. a company-wide project: the Safety It included requirements for defences The company has set Framework. The principal aim to be put up in nine prioritised areas; itself very ambitious of this project is to put in place this means there is a requirement strategic goals in the sphere robust barriers that prevent events for over 60 mandatory barriers to be of HSE. In order to achieve that could lead to catastrophic put in place at all company assets. a zero fatality and accident consequences. As part of the Safety An independent inspection team rate, we must make Framework Project, the company assesses the efficiency of measures changes to a wide range is selecting and putting in place taken by Gazprom Neft enterprises of processes. In the field those barriers that it has identified to determine whether these barriers of HSE, Gazprom Neft takes as priorities. Gazprom Neft are robust. a risk-focused approach, which involves creating the Safety Framework System. The company HSE RISK MANAGEMENT CYCLE has identified key risks, chosen top-priority barriers and started to introduce them. Today, the company is allocating substantial financial and organisational resources to these efforts.
Anton Gladchenko Risk Head of the HSE Directorate, prioritisation Gazprom Neft
Analysis and Selection and adjustment introduction of barriers Safety Framework
Third-party inspection
03 HEALTH AND SAFETY 79 GAZPROM NEFT
OCCUPATIONAL HEALTH AND SAFETY
Gazprom Neft operations, Gazprom Neft is taking systematic LTIF2 by their very nature, involve measures in the sphere of HSE, (Gazprom Neft Group employees) hazardous production processes. and has developed a transparent, The operation of complex equipment, straightforward and practicable 1.0 0.929 0.601 0.640 with production processes system of rules. The company 0.564 0.504 often involving high pressure acknowledges the right of its 0.5 and high temperatures, necessitates employees and contractors to stop the use of particular techniques performing or refuse to perform any 0.0 and technologies to ensure workplace operation that could cause harm 2015 2016 2017 2018 2019 safety. to people's health or the environment. FAR3 (Gazprom Neft Group employees)
4 Changes in Lost Time Injury Frequency 3.093 3.083 1 2.707 (LTIF) and Fatal Accident Rate (FAR) 2 1.461 0.744 The company also took systematic We are profoundly saddened 0 measures to mitigate risks, which led by two casualties involving Gazprom 2015 2016 2017 2018 2019 to a significant decrease in the injury Neft employees in 2019. In one rate, despite large-scale construction instance, there was a road accident, projects being launched in 2019 and in the other, an employee fell Injuries and an increase in the scope of work from a height. In addition, despite Gazprom Neft Group employees done by contractors. In 2019, the LTIF the measures taken by Gazprom Neft, 69 85 68 74 (Lost Time Injury Frequency) rate there were nine casualties involving 100 decreased by 21.3% year on year. the employees of contractors and about which we are also deeply This reflects the effectiveness sad. of measures aimed at systematically building barriers to reduce Such events are unacceptable, 3 4 4 1 2 the likelihood of accidents, ensuring and Gazprom Neft makes 2015 2016 2017 2018 2019 that employees report unsafe every effort to prevent them. If Contractor employees actions and conditions at facilities an accident happens at Gazprom 92 more often, proactively addressing Neft facilities, the company initiates 41 68 64 83 the lower levels of the injury pyramid an investigation, and implements across the company, and developing action plans to minimise the risk a culture of safety. of such accident happening again. The company takes preventive measures at all its assets 11 6 6 5 9 in accordance with the relevant plans. 2015 2016 2017 2018 2019 Accidents Fatalities
/ 1 / In addition to Gazprom Neft assets in Russia, the injury rate is also calculated for joint ventures whose operations are managed by Gazprom Neft, as well as Gazprom Neft assets overseas (in Serbia, Iraq, Italy, Eastern Europe and Central Asia). / 2 / The Lost Time Injury Frequency is calculated as the number of lost time injuries (including fatalities) in the workplace / total hours worked × one million man-hours. / 3 / The Fatal Accident Rate is calculated as the number of fatalities / total hours worked by all employees × 100 million man-hours.
80 SUSTAINABLE DEVELOPMENT REPORT 2019 Description of an accident involving a contractor At about two o'clock in the morning, a drilling crew needed to open the access doors to the rig's winch unit in order to lift drilling equipment up to the rig floor. Since the prefabricated pneumatic cylinders designed to facilitate that process had been dismantled, the crew had to open one of the access doors manually. In order to open the jammed access door, one contractor employee tried to force it – losing his balance and falling from a height of more than nine metres once it opened. Employee sadly died on the spot from the injuries he sustained.
The bow-tie method: cause and effect
ENGINEERING ADJUSTMENTS Repeated clearance HAD BEEN MADE of inadequate equipment the pneumatic cylinders had been dismantled Start-up commissioning Industrial Safety 2014 and 2017 Inspection 2019 Use of fall from height protection A COMBINATION OF FACTORS FALL FORCING EMPLOYEES FROM EMPLOYEE TO IMPROVISE, FATALITY DESPITE IMMEDIATE HEIGHT RISK TO LIFE
Reporting and recording SF4-1 safety permit requirementsfor “Work at height” of hazardous Open doorway Employees must use fall from height protection when SHORTCOMINGS conditions prior protection climbing, descending and working at height to ensure they remain continuously secured IN THE WORKING to starting work (safety chain) Work at height must be undertaken using temporary ENVIRONMENT warning signs, protective or safety barriers (or) tapes and safety signs at the location at which work is being carried out
Measures taken to prevent similar accidents – Independent technical – The company developed – Training programmes – The company is putting experts inspected work sites standard flowcharts on unsafe actions in place a programme to find out if any structural reflecting hazard signage and conditions were of measures to put changes had been made at drilling rigs, including tailored to the relevant in place barriers as part to drilling rigs at the facilities sound alarm systems and/or types of drilling and well- of the Safety Framework operated by Gazprom Neft warning lights, and prepared intervention operations. for working at heights, subsidiaries in the Upstream recommendations The company improved including providing safety Division, and complied for their placement. the modules to include harnesses, installing guard a register of irregularities It also added hazard practical training sessions rails in areas where there and structural changes. signage requirements on detecting hazards is a difference in elevation, The company took measures to checklists for drilling rig at drilling and well- and using warning signs to address the irregularities. commissioning. intervention facilities. for the relevant hazards across all subsidiaries.
/ 4 / Safety framework
03 HEALTH AND SAFETY 81 GAZPROM NEFT
Contractor management
The company is taking action to involve and the safety performance Safety Day contractors in its HSE initiatives. of contractors. If anomalies All contracts include requirements are identified, Gazprom Neft takes in the Upstream for compliance with the codes steps to address them in cooperation Division and rules applicable in the regions with contractors. in which the company operates, as well The Upstream Division held one of its regular Safety Days that was as with corporate HSE requirements. The company continues to implement attended by Gazprom Neft top Before signing agreements on major the Safe Production Project designed managers and included all subsidiaries technical operations, the company to improve workplace safety, in the Upstream Division. assesses the technical condition working conditions and amenities Executives from the Corporate Centre, of equipment, personnel qualifications, for the employees of contractors. subsidiaries and contractor organisations and HSE management systems held an open dialogue with employees implemented at contractors’ facilities. The objective of the project to discuss the requirements of the Safety is to identify 'drivers' of changes in HSE Framework and to review example cases. Gazprom Neft holds joint meetings performance, namely the prerequisites Over 8,000 employees from Gazprom which aim to develop the best solutions for creating a 'perfect production Neft subsidiaries and contractor organisations took part in mini training to improve workplace safety. site', promoting safe behaviour sessions and interactive exercises. and partnership. In addition to lectures, the company In the course of operations, executives conducted behavioural safety the company is continuously monitoring audits at upstream assets and rewarded compliance with safety requirements, employees who take proactive steps to detect unsafe actions and conditions that could lead to accidents. Safety Day participants also discussed their ideas and proposals for improving workplace safety with the executives. Safety culture
Leadership, responsibility Gazprom Neft recognises and continuous development are all the crucial role that employees essential to improving the safety play in maintaining a safe working First SPE Workshop culture in Gazprom Neft. environment. Accordingly, it places a particular emphasis on its internal on Health, Safety In order to develop the safety culture, communications. Every year, and Environment the company has built a training the company holds Safety Days, system that complies with Russian and Gazprom Neft top managers in Russia legislation, Gazprom Neft corporate take part in them. During these In 2019, the Society of Petroleum Engineers standards and best practices. events, Gazprom Neft employees (SPE) held its first Workshop on Health, Safety The Gazprom Neft Corporate University and contractors express their opinions and Environment in Russia. This event was held has a dedicated HSE department, on workplace hazards. This enables in Moscow, with support from Gazprom Neft. where training is provided by both the company to receive high-quality More than 80 specialists from leading oil, external experts and in-house coaches. feedback, and promptly address any service and mining companies attended issues arising in the workplace. the conference, including those Gazprom Neft, Zarubezhneft, LUKOIL, Rosneft, Sakhalin Corporate training programmes cover Energy, Baker Hughes, Halliburton, OMV, Salym not only Gazprom Neft employees, Petroleum, Schlumberger, Shell and others. but also those employed by contractor organisations.
82 SUSTAINABLE DEVELOPMENT REPORT 2019 Using IT solutions in HSE
There is no place for competition when To make substantive progress For example, the design it comes to health, safety in the sphere of HSE, it is vital of a platform for collecting information and environment. We to introduce information and digital from employees at Gazprom Neft were glad to put forward technologies. facilities about unsafe actions an initiative that enabled and conditions means that the company HSE experts from Russian The digital element plays an important can promptly report such actions and international companies role in managing the Gazprom Neft and conditions to the relevant to gather at a single corporate HSE system. The company executives in order to take corrective venue. This initiative is putting a number of projects measures. Process automation not only proved to be successful. in place to introduce digital methods reduces response time, but also It was clear to see that for performance review and HSE risk prevents the risk of loss of sensitive we all speak the same management. information. The platform accumulates language. The issues large volumes of data collected on site. that we are actively In order to assess the effectiveness By analysing this raw data, the company discussing in our company— of HSE measures, the company is able to identify areas of concern development of an HSE is creating a new information system in order to make consistent workplace management system, the role for analysing the status of HSE safety improvements. of the business in ensuring barriers put in place at company safety, a risk-focused facilities. Gazprom Neft plans to put Gazprom Neft continues to research approach, barrier- this system into operation in the first how it can apply advanced digital based thinking, HSE quarter of 2020. The system is based technologies in the sphere of HSE. culture, consistent work on an HSE platform, which consolidates with partners—are part information from existing sources. The company is conducting large- of the current agenda This platform will enable executives scale tests to assess the potential that is being discussed at different levels—from a shopfloor for using video analytics and wearable by professionals nationwide. manager to a director in the Corporate technologies to monitor workplace Centre or the head of a subsidiary—to safety. This includes digital monitoring Anton Gladchenko assess the condition of safety barriers, of the use of personal protective Head of the HSE Directorate, from an individual production site equipment by employees, their health Gazprom Neft to a subsidiary or the Corporate Centre status, and the presence of people level, and make decisions taking into in high-risk areas; detecting falls/ account HSE focus areas. instances of panic among employees; monitoring compliance with operating Production processes need procedures, including during cargo to be digitalised for the HSE handling; air pollution monitoring using platform to operate. Production multi-spectral machine vision and so facilities are the principal source forth. This information helps to identify of data for analysis. The company risks promptly and so prevent accidents. is implementing digitalisation programmes to introduce information Another focus of IT research technologies across the board is on migrating HSE and emergency and actively engage end users behaviour training to a virtual reality in the process. environment, and on automating the monitoring of the effectiveness of training.
03 HEALTH AND SAFETY 83 GAZPROM NEFT
Transport safety
Gazprom Neft's business includes a large-scale transportation section. The company places a particular emphasis on preventing risks related to road accidents.
Road transport Air transport Safety safety safety at sea
As part of its road traffic safety The company is implementing Gazprom Neft has developed management system, the company has a long-term strategy for contracting and introduced a Marine Operations developed and is introducing a Vehicle air transport services. As part Safety Management System. This Tracking System (VTS). of this strategy, Gazprom Neft has system is designed to reduce made the following key changes: the probability of incidents at sea As part of this initiative, Gazprom Neft – The company has stopped that could cause damage to people's is equipping its own vehicles and those using Mi-8T helicopters lives and health, the environment, of its contractors that are in a high-risk because of their thrust deficit the company’s reputation and its group (used for transporting people, and has switched to more property. hazardous cargo and so on) with special advanced Mi-8MTV helicopters; monitoring systems that can identify – Crews have been provided The system is based drivers, record conditions and factors with additional training, using on the requirements of over 100 that have an impact on road traffic a mobile full-flight helicopter international rules, resolutions, safety, and provide feedback to drivers. simulator; federal laws, and industry HSE – Air transportation has been recommendations for sea transport. The company uses this system centralised, and all Gazprom to monitor, on a weekly basis, factors Neft contractors have shifted The new system is integrated relevant to safe driving, including from contracts arranged into the company process model drivers exceeding speed limits, sudden directly with airlines to agency as part of Marine Operations Safety acceleration or braking, driving hours arrangements. Management processes. To support and rest times. It does this using its operation, Gazprom Neft has a traffic light system (with red indicating created a competency centre— drivers in the high-risk group, amber the Maritime Safety Service—and indicating a medium risk level, has appointed employees who and green indicating a low risk level). are responsible for this in the relevant The system also generates monthly subsidiaries. reports on traffic safety performance.
In the future, new data will be added in the VTS, including information received using machine vision technology1.
/ 1 / Machine vision is computer processing of video information received from surveillance cameras. This technology enables automation of certain aspects of production, including monitoring the number, quality and locations of objects.
84 SUSTAINABLE DEVELOPMENT REPORT 2019 OCCUPATIONAL HEALTH AND PREVENTIVE MEDICINE
Gazprom Neft continues to run The company is taking active a corporate programme to set up steps to vaccinate employees an occupational health system. against influenza, pneumonia, Employee meningococcal disease and other As the first preventive barrier, seasonal illnesses. As for ailments rescue operation employees in Gazprom Neft that are endemic in certain regions, at Novoportovskoye subsidiaries and contractor Gazprom Neft attaches particular organisations are authorised to work importance to preventing tick-borne field on Gazprom Neft sites only if no encephalitis, measles, and anthrax; At the Novoportovskoye field operated contraindications or restrictions this latter is a highly dangerous by Gazpromneft-Yamal, an employee was on health grounds have been disease caused by bacteria that taken to the first-aid post complaining identified during the initial or regular can survive in the soil or in animal of burning chest pain radiating to his left arm and shoulder, feeling health examination carried out remains for decades. Gazprom Neft’s faint, sweating, and shortness of breath by a healthcare provider accredited experience has been incorporated on exertion. Medical personnel examined by the company. in the national guidelines titled him, recorded an ECG and promptly used 'Vaccinations in Working Population' telemedicine resources. A cardiologist A major focus of the occupational- (MIA, 2019). These guidelines enable conducted a remote consultation and diagnosed myocardial infarction: risk management strategy companies to design their own a heart attack. is on providing modern immunisation schedule, based During the consultation and affordable medical aid on regional and occupational risks. with the cardiologist, the medical at production sites: providing first-aid personnel decided to inject the patient posts with diagnostic and emergency with a thrombolytic medication medical equipment, ambulances, but, despite their efforts, the patient and robust telecommunication developed ventricular fibrillation, and was declared clinically dead. services, including telemedicine. The doctor and paramedics at the first- aid post managed to resuscitate the patient, restart his heart and keep him alive for the next 20 hours, until weather conditions improved enough for the patient to be transported by an ambulance helicopter. In this case, all elements of the rescue operation worked properly. The employee sought medical help promptly, and the health professionals did everything they could to save his life, with telemedicine technologies playing an important role in stabilising In 2020, the company developed a comprehensive large-scale program the patient's condition. to combat COVID-19. The Anti-Virus program is aimed at protecting employees from the spread of the virus, ensuring the continuity of all production processes, and maintaining the company's financial stability. Under the leadership of the Chairman of the Management Board and CEO of Gazprom Neft, the company established the Anti-Virus Headquarters, which is the central coordinating body for pandemic risk management. The company has developed various scenarios of how damaging events might unfold. Based on best practices (including those of regulators), it identified more than 70 company-wide barriers that would prevent or mitigate the consequences of these scenarios. These barriers are designed to prevent the possibility of a pandemic spreading among company employees and contractors, as well as to minimise the associated risk of a partial or complete shutdown of production.
03 HEALTH AND SAFETY 85 GAZPROM NEFT
INDUSTRIAL SAFETY
Reliability management In the reporting year, the company Changes in accident rates2 is underpinned by risk assessment recorded 920 incidents and no at all stages of the life cycle industrial accidents at its hazardous 2,385 2,183 1,068 920
of a production facility, from design production facilities. 2,512 to dismantling and reclamation. At the operational stage, the company In 2019, Gazprom Neft piloted strives to ensure failure-free a remote safety-monitoring system operation of equipment and reduce at its hazardous production facilities. the frequency of repairs. This is a software and hardware system that enables the company To assess technology-related risks to continuously receive, process in the course of design, construction, and transmit real-time information operation and decommissioning on the characteristics of production of facilities, the company uses processes and processes supporting international methodologies, the operation of hazardous production such as HAZID/ENVID (hazard facilities and ensuring their safety, identification), HAZOP (hazard on the status and activation and operability study), and PHSER of emergency shutdown systems, 1 2 0 1 0 (HSE risk analysis). on the condition of technical equipment, and on accidents 2015 2016 2017 2018 2019 Number of incidents In order to ensure failure-free and incidents recorded at hazardous Number of industrial accidents operation of equipment throughout production facilities. its life, Gazprom Neft uses state-of- the-art approaches and assessment The project was designed, tools: RCM, RBI, and RCA1. They in association with the Federal enable the company to rank Service for Environmental, equipment based on how critically Technological and Nuclear important it is for the production Supervision (Rostechnadzor), 0 process, with a particular focus to create a system that monitors on highly critical facilities. In this way, safety parameters remotely, industrial accidents it introduces a failure analysis transmitting safety data prescribed system for investigating failures by regulations to a Rostechnadzor and classifying their causes, situation centre, and generating % and uses these statistics to manage safety reports. –13.9 this process efficiently. decrease in the number of incidents involving equipment
/ 1 / The RCM (Reliability-Centred Maintenance) methodology makes it possible to identify and carry out maintenance focused on ensuring reliability. The RBI (Risk-Based Inspections) methodology involves monitoring the technical condition of equipment based on the findings of risk analysis of how the equipment is operating. The RCA (Root Cause Analysis) methodology helps to analyse losses that account for most of the damage in order to prevent them from recurring in the future. / 2 / According to the classification of the Federal Service for Environmental, Technological and Nuclear Supervision (Rostechnadzor).
86 SUSTAINABLE DEVELOPMENT REPORT 2019 Emergency preparedness
The company has in place an Emergency – responding to both natural and site-level emergency Prevention and Response System. This and man-made emergencies management teams forming system is used for: in accordance with the relevant part of the National Emergency – planning and deploying emergency action plans. Management System (NEMS); prevention measures; – mobilising professional emergency – protecting employees The company runs an annual drill and rescue teams; and production facilities; and training programme. As part – safe shutdown of equipment; – improving the resilience of this programme, Gazprom Neft – emergency containment; of production facilities; employees and executives rehearse – using personal protective – reducing the risk of man-made the following actions: equipment and basic fire-fighting emergencies; – emergency alerts; equipment; – minimising property damage caused – assembling officials; – providing medical aid by emergencies; communicating with municipal to the injured.
Prirazlomnaya: an island of safety Gazprom Neft has conducted During the drill, particular focus was of the Ministry for Civil Defence, a successful comprehensive spill- given to rescuing and rehabilitating Emergencies and Disaster Relief response drill near the Prirazlomnaya wild birds affected by the oil spill. of the Russian Federation in the Nenets platform in the Pechora Sea, For this purpose, the company engaged Autonomous Okrug, the Administration and on the coast near the town specialists from the Nenets Nature of the Zapolyarny District, and Gazprom of Varandey and Dolgy Island. Reserve, Marine Arctic Geological Neft Shelf. Expedition, and the Marine Research Drill participants practised responding Centre of Lomonosov Moscow State The outcomes of the drill have proved to the largest possible oil spill University. that the logistics management (affecting an area of 10,446 square and specialists working metres) in the vicinity of the platform, A total of 86 people took part on the Prirazlomnaya platform protecting the coastline around the town in this drill, including oil workers, and in the Varandey terminal are well- of Varandey, and transporting rescue rescuers, ecologists, and six observers equipped to respond to an oil spill teams and equipment to Dolgy Island. from the Northern Branch of the Marine and to clean it up. Rescue Service, the Main Office
03 HEALTH AND SAFETY 87 COVERAGE OF GAZPROM NEFT'S EXPEDITION TO RESEARCH NARWAHL ON RUSSIA%24 CHANNEL (RUS)
Dmitriy Glazov Biologist, scientific coordinator of the "Narwahl. The Legend of the Arctic" project SUSTAINABLE DEVELOPMENT REPORT 2019
Environmental safety
CLIMATE IMPACT MANAGEMENT PRESERVING BIODIVERSITY AIR QUALITY WATER RESOURCES MANAGEMENT WASTE MANAGEMENT AND LAND USE ENERGY EFFICIENCY GAZPROM NEFT
The Company evaluates and tries to minimise environmental risks and invests significant amounts of resources in programmes of environmental safety
Gazprom Neft is committed to mitigating human impact on the environment
environmental operating monitoring and an emergency industrial prevention, environmental containment and Strategic control response system priority managing commissioning environmental environmentally ‘Target Zero’: zero safety risks responsible facilities harm to people, KEY the environment, FOCUS AREAS or property employee training, developing and in our operations. and developing deploying biodiversity an environmental preservation safety culture programmes
developing and introducing ‘green’ technologies
90 SUSTAINABLE DEVELOPMENT REPORT 2019 Corporate documents
Policy on Industrial and Occupational Safety, Corporate Standard Biodiversity Preservation Environmental Protection, Fire and Transport on Greenhouse Gas Emissions Programme (RUS) Safety, and Civil Defence (RUS) Control (RUS)
Progress Plans in 2019 for 2020
Climate: Climate:
APG utilisation up by Achieving the medium-term 11 percentage points. goal of increasing the APG utilisation rate. Biodiversity: Environmental safety: The findings of an expedition organised by Gazprom Neft Upgrading the Omsk Refinery confirmed that the grey as part of the federal 'Clean whale population in the Sea Air' project in order to reduce of Okhotsk had increased. pollutant emissions into the atmosphere; Atmosphere: Maintaining a high level of waste
48% reduction in SO2 recycling and treatment; emissions. Developing infrastructure Water resources: for safe industrial-waste management, including 0.7% reduction at remote fields; in the company’s water The company implements consumption. Commissioning state-of- of state-of-the-art the-art Biosphere treatment Waste management and land facilities at the Omsk Refinery technologies that use: in order to reduce water usage protect the environment and wastewater discharge; and lead to sustainable 96% of waste was sent for treatment and recycling. Undertaking a pilot project use of resources, launched by the Federal Service and build a culture Energy efficiency: for Supervision of Natural Resources and the Ministry of environmental safety reduction in electricity of Digital Development, within the organisation. consumption of 5.3 million GJ Communications and Mass as a result of energy Media of the Russian Federation, conservation and energy which involves installing efficiency programmes automated industrial-emissions monitoring systems at two sources of emissions at the Omsk and Moscow Refineries.
Energy efficiency:
Realisation of energy management system development plan
04 ENVIRONMENTAL SAFETY 91 GAZPROM NEFT
The Policy on Industrial and Occupational Gazprom Neft analyses Safety, Environmental Protection, Fire the environmental impact and Transport Safety, and Civil Defence of its facilities at all stages Signing sets the following key goals: of its operations; this is essential – To continually reduce to management and investment a memorandum the company’s environmental decision-making. of understanding footprint; – To ensure the safety of operations In 2019 the following major projects with WWF Russia by analysing and managing were subject to the environmental The Memorandum of Understanding operational risks to minimise impact assessment (EIA) procedure signed by the World Wildlife Fund (WWF) their impact; involving stakeholders: and Gazprom Neft builds cooperation – To consistently adopt the best – construction of a site for oil- in the field of environmental conservation, including efficient and safe development global environmental safety contaminated waste processing, in the Arctic, and joint communications. practices. recycling and treatment at the Gazprom Neft Omsk This document formalises the parties' agreement to maintain a dialogue To continually reduce its environmental Refinery; on environmental conservation, discuss footprint, the company has in place – cargo handling (bunkering) projects relevant to environmental an environmental management system operations involving support conservation and sustainable development, that complies with the international ISO icebreakers, tankers and provide information on best and bunkering vessels operated international standards and practices 14001:2015 standard. for minimising environmental impacts. by Gazpromneft Shipping Certification covers key Gazprom Neft in seaports on the Baltic, Barents, production assets; in addition, separate White, Kara and Black Seas certificates have been issued to 12 and the Sea of Azov; Gazprom Neft subsidiaries. – the construction of gas and condensate compression The company continues and treatment facilities to support national and international at Gazpromneft-Yamal (including environmental initiatives. To maintain a gas pipeline crossing the Gulf a dialogue with stakeholders of Ob). on environmental conservation, in 2019: – Gazprom Neft and the World The company develops action plans Wildlife Fund (WWF) signed to ensure the environmental safety a Memorandum of Understanding; of its facilities based on a risk- – The company joined and became focused approach, taking into account an active member of the Scientific the impact of current and planned and Technical Council operations on ecosystems. under the Federal Service for Supervision of Natural Resources (Rosprirodnadzor). For more details on the risk- This body serves as a platform p. 74 focused approach and the health, for addressing key issues related safety and environment to ensuring the environmental management system, see the Health and safety section safety of oil and gas facilities.
92 SUSTAINABLE DEVELOPMENT REPORT 2019 CLIMATE IMPACT MANAGEMENT
Gazprom Neft supports GHG emissions, the implementation mt of CO2 equivalent of the Paris Agreement, 22.8 26.2 13.2 23.8 which aims to combat climate 31.0 change 9.0
6.2 8.4 6.6 22.0 The company complies Expansion of the company’s 20.0 with the national legislation geographical footprint as it prospected 15.4 16.2 on greenhouse gas (GHG) emissions for and assessed hydrocarbon 2.8 1 measurement. reserves, and the development of its 10.4 upstream and transport infrastructure The assessment of GHG emissions led to there being a greater number is a key element of the climate of facilities that are sources risk management system used of additional GHG emissions; that, 2015 2016 2017 2018 2019 by the company. For this purpose, in turn, resulted in an increase Gazprom Neft has adopted a corporate in direct and indirect GHG emissions Direct emissions Indirect emissions standard on GHG emission monitoring in 2019. and accounting that is aligned with the applicable Russian legislation The company is constantly and international recommendations. searching for technically feasible and economically viable tools APG production and utilisation, The approaches used in the corporate to reduce GHG emissions, principally million m3 standard are fully aligned by implementing projects to increase with the GHG Protocol Corporate APG utilisation. Standard of the World Business 8,134 ,9,436 16,623 Council for Sustainable Development Gazprom Neft is working to increase 11,434 14,398 (WBCSD) and the World Resources the APG utilisation rate, while Institute (WRI), and the ISO 14064- simultaneously starting commercial 1,812 1:2006 (GOST R ISO 14064-1-2007) development of greenfields, 3,114 14,811 standard, which are widely recognised and increasing hydrocarbon in the industry and consistent production. The company’s Board 2,726 11,284 with the Russian legislation. This of Directors has set the goal 1,853 8,708 of achieving an APG utilisation rate 1,636 methodology also takes into account 7,583 additional recommendations included of at least 95% by 2022 in the context 6,498 in the IPIECA/API/OGP Petroleum of growing production. Industry Guidelines for Reporting Greenhouse Gas Emissions, and the Global Reporting Initiative 2015 2016 2017 2018 2019 (GRI) Standards. Utilisation Flaring Production
/ 1 / Order of the Ministry of Natural Resources and Environment of the Russian Federation No. 300 of 30 June 2015; Order of the Ministry of Natural Resources and Environment of the Russian Federation No. 330 of 29 June 2017
04 ENVIRONMENTAL SAFETY 93 GAZPROM NEFT
In 2019, APG utilisation reached 89%, APG flaring decreased considerably, % an increase of 11 percentage points by 42% year on year, as the company –42 year on year, across the company’s completed the construction of gas assets in Russia. Moreover, at mature infrastructure at the Novoportovskoye reduction in APG flaring fields with well-developed gas field and the Archinskaya group infrastructure, the APG utilisation rate of fields. Previously, since 2016, has ranged between 92% and 99% APG flaring had been increasing, since 2016. as greenfields were being developed % and APG utilisation infrastructure there 89 was still under construction. APG utilisation rate
Measures to reduce GHG emissions +11 p. p. increase in APG utilisation Gazprom Neft endorses the key licence block, which forms provisions and goals of the 'Zero part of the Orenburgskoye oil Routine Flaring by 2030' Initiative, and gas-condensate field (with which aims to completely eliminate APG utilisation increasing by 6.2% routine APG flaring by 2030. year on year); – commissioning gas infrastructure The company is implementing at the Urmano-Archinskaya group projects to increase APG utilisation; of fields operated by Gazpromneft- these offset any increases in GHG Vostok (with APG utilisation emissions. Without these projects, increasing by 5.0% year on year). GHG emissions would have significantly exceeded the current As the most environmentally- level. friendly of the fossil fuels, natural gas has an important role to play Solar power Key projects rolled out in 2019 in the development of the low-carbon include: economy of the future and in meeting Construction of a 1 MW solar power plant has been completed at the Gazprom – commissioning gas infrastructure climate targets. GHG emissions can Neft Omsk Refinery. The plant’s for an integrated gas treatment be reduced by the use of natural gas annual electricity output is projected unit at the Novoportovskoye field in power generation. at 1.2 gigawatt-hours (GWh), which operated by Gazpromneft-Yamal is equivalent to the burning of more than 1,800 tonnes of coal. (with APG utilisation increasing Gazprom Neft has already launched by 23.3% year on year); a number of natural gas production – a gas compression projects. The company will contribute and transportation project to sustainable development by further p. 106 For more details, initiated by Gazprom Neft increasing the proportion of gas see the Energy Efficiency Orenburg at the Vostochny projects in its production portfolio. section.
94 SUSTAINABLE DEVELOPMENT REPORT 2019 Find out more about these projects on Discovery website (RUS)
PRESERVING BIODIVERSITY
Gazprom Neft is putting in place Research and monitoring carried biodiversity preservation programmes out in 2019 did not detect any and conducting environmental significant changes in the ecosystems, monitoring to assess its impact and showed that the company’s on ecosystems in the regions in which operations did not have a adverse it operates. impact on biodiversity.
Protecting the biodiversity of the Russian Arctic
The preservation of biodiversity and animal species that serve For more details on Arctic С. 74 is an non-negotiable priority as indicators of the stable condition production safety see the Health and Safety section for the company in its offshore of marine ecosystems in the Russian and onshore projects in the Far North. Arctic. The primary aim of environmental initiatives launched by the company This programme includes measures is to preserve the natural balance implemented by the company around of fragile Arctic ecosystems the Prirazlomnaya offshore ice- “Narwhal: and maintain biodiversity in the region. resistant oil-producing stationary platform and Gazpromneft-Yamal Legend The company is conducting assets; it includes wildlife monitoring of the Arctic” a corporate programme to preserve along oil transportation routes. biodiversity based on a list of plant expedition Leadership in Arctic exploration leads to a high level of responsibility for its unique ecosystem and biodiversity. In the summer of 2019 “Gazprom Neft” has successfully completed first Gazprom Neft's environmental expedition of the “Narwhal: Legend of the Arctic” project. Narwhal is a rare monitoring projects featured type whales, inhabiting the Russian in Discovery magazine Arctic. Narwhals are included in an IUCN Red List. As a result of a four-week scientific An influential wildlife magazine, Tazovskoye field to find out which areas expedition to the area of the Franz Discovery, has published a feature on birds and animals choose as their habitats, Josef Land archipelago researchers new Gazprom Neft projects: biodiversity and why. Based on these findings, the have collected unique data of Narwhals monitoring at the company’s fields in the researchers prepared recommendations inhabiting the Russian Arctic. These Arctic, and the first research expedition that will help oil companies to prevent findings will be used as a core to study the 'sea unicorn'—the narwhal — environmental impacts. for the research to be conducted until which is included in the IUCN Red List of 2022. This project will allow evaluation Threatened Species. Earlier in 2019, the company organised of the Narwhal population in the Western a unique expedition to study the sector of the Russian Arctic zone A project to study plant and animal ecology narwhal, which is included in the IUCN and definition on the population was launched in the autumn of 2019. Red List of Threatened Species. The amount and spread. “Narwhal: Legend Researchers from the Institute of Plant Gazprom Neft team found more than 30 of the Arctic” is an environmental project and Animal Ecology of the Ural Branch narwhals—males, females and calves— of the massive programme of “Gazprom of the Russian Academy of Sciences in the vicinity of the Franz Joseph Land Neft” – “Time of Arctic”. travelled dozens of kilometres across the archipelago.
04 ENVIRONMENTAL SAFETY 95 GAZPROM NEFT
Monitoring the Sea of Okhotsk ecosystem
Environmental monitoring of grey Watch, the indigenous community million whales in the Sea of Okhotsk forms of Sakhalin, the Wrangel Island >71 part of a joint programme being State Nature Reserve, as well carried out by oil and gas companies as the Western Grey Whale Advisory juvenile fish of commercially operating on Sakhalin. Gazprom Panel established by the International valuable species were released Neft joined this programme in 2017, Union for Conservation of Nature into bodies of water in 2019 after starting the development (IUCN), and a working group of the Ayashsky licence block. on biodiversity preservation under the government of the Sakhalin The grey whale monitoring Oblast. programme is being conducted with support from and in close The findings of the 2019 expedition cooperation with non-governmental confirmed that the grey whale environmental organisations, population in the Sea of Okhotsk had Wildlife rescue including WWF, Sakhalin Environment increased. and protection In 2019, Gazprom Neft Shelf compiled a Field Guide on Wildlife Protection Aquatic Bioresources Reproduction and Rescue in Case of Oil and Petroleum- Products Spills in the Course of Operation of the Prirazlomnaya Offshore Ice-Resistant Oil-Producing Stationary Platform. Gazprom Neft is undertaking In 2019, the company The Field Guide provides practical the Aquatic Bioresources and the Government of the Khanty- guidelines on measures to be taken Reproduction Programme, which Mansi Autonomous Okrug- to protect, rescue and rehabilitate marine is an important part of its field Yugra signed an agreement, mammals, and sea- and semi-aquatic development projects. Gazprom Neft under which Gazprom Neft will birds under field conditions, and sets out subsidiaries operating in the Arctic consider as a priority potential the rules for conducting such operations safely. breed rare fish species in northern remedial measures, namely releasing rivers and seas. Millions of juvenile juvenile Siberian sturgeon, sterlet, whitefish are released into the Ob, whitefish and broad whitefish bred Konda and Severnaya Sosva Rivers. at enterprises fisheries in the Okrug. In 2019, company enterprises released a total of over 71 million juvenile fish of commercially valuable species into bodies of water.
The Aquatic Bioresources Reproduction Programme is an important part of the company's
96 SUSTAINABLE DEVELOPMENT REPORT 2019 AIR QUALITY
As Gazprom Neft actively explored by commissioning a state-of-the-art Gross emissions into and developed new fields in 2019, mobile laboratory. It is fitted with air the atmosphere, kt the company took measures that sampling equipment, and can assess enabled it to avoid a year-on-year air quality and record the results 600.8 increase in air pollutant emissions. in real time. The equipment has been 534.9 529.4 508.3 certified and is included in the state 474.3 Atmospheric emissions are caused register of environmental measuring mainly by APG flaring, so projects instruments. to increase APG utilisation are an important way to reduce The new laboratory is equipped emissions. with fixed analysers and a device for measuring the noise levels. In order to reduce pollutant emissions, Gazprom Neft is also introducing Precision equipment can perform 2015 2016 2017 2018 2019 a large-scale programme to upgrade analysis to detect key types of air and overhaul its refining assets, along pollutants, such as hydrogen sulphide, with other environmental initiatives nitrogen oxide, sulphur dioxide, covering all of its operations. carbon monoxide, and hydrocarbons. SHIELD air quality The station can accurately assess monitoring project A significant reduction in SO2 emissions the wind speed and direction, in 2019 was driven by a change and records adverse weather The company has developed SHIELD, in the composition of APG flared conditions. A connected system for data an investment project designed at Gazprom Neft Orenburg sites. collection, processing and transmission to promptly detect and stop gas leaks, enables real-time data processing. and monitor air quality in localities near the Vostochny licence block, which forms In 2019, Gazprom Neft The laboratory can operate part of the Orenburgskoye oil and gas- expanded the capabilities autonomously for an unlimited period condensate field. of time, and can take air samples while of its environmental monitoring As part of the project, fixed system at the Moscow Refinery moving. environmental monitoring stations have been installed in 10 localities; the number of mobile environmental laboratories in the fleet has been expanded to three; and a hardware and software system named SHIELD has 529.4 been developed. This system is designed to collect and analyse data from all fixed environmental monitoring stations Gross emissions into and an air pollution monitoring system, the atmosphere and warn the operator if the hydrogen sulphide concentration in the air exceeds the established limits. The next stage of the project was Gross emissions into the atmosphere, kt approved in September 2019. By 2022, the company plans to install fixed 2015 2016 2017 2018 2019 monitoring stations in another six localities. TOTAL, including: 534.9 600.8 474.3 508.3 529.4
NOX 16.3 19.2 22.1 25.6 26.7
SO2 112.1 128.4 69.0 74.8 38.9 Volatile organic compounds 132.0 128.3 120.3 96.7 102.1 (VOCs)
04 ENVIRONMENTAL SAFETY 97 GAZPROM NEFT
The Gazprom Neft Omsk Refinery In order to carry out the federal has donated a chromatograph—a 'Clean Air' project, the Russian modern gas-analysis device—to Government has approved integrated The Omsk Refinery the Ministry of Natural Resources action plans designed to reduce is participating and the Environment of the Omsk pollutant emissions. These plans in the federal 'Clean Oblast. This gas analyser, acquired include nine upgrade projects Air' project, utilising at the request of the government launched at the Omsk Refinery, which environmentally friendly of the Oblast, will be used in a mobile involve introducing environmental technologies and installing environmental laboratory that technologies and state-of-the-art a unique air quality Gazprom Net donated to the region treatment facilities, building new monitoring system at its in March 2018. This laboratory units, and decommissioning previous- facilities. The Omsk Refinery detects the presence of key types generation facilities. Gazprom Neft has signed a Partnership of air pollutants emitted by vehicles, plans to invest over 100 billion Agreement with the Ministry industrial enterprises and boiler in these projects. of Natural Resources houses. and the Environment To support efficient implementation of the Omsk Oblast. The first phase of construction of the federal 'Clean Air' project Donating the chromatograph of the innovative Biosphere treatment in the Omsk Oblast, senior executives is just one step in that facilities was completed at the Omsk from Gazprom Neft and high- process. Refinery in 2019. Special features ranking officials from the Ministry of the project include modern of Natural Resources and Environment Oleg Belyavsky gas convection chambers used of the Russian Federation, the Federal CEO, Gazprom Neft Omsk for off-gas treatment, the ability Service for Supervision of Natural Refinery to reuse recovered petroleum Resources (Rosprirodnadzor) products in the production process, and the Government of the Omsk and the nitrogen pads that prevent Oblast signed an agreement at the St evaporation into the atmosphere Petersburg International Economic with which the tanks are equipped. Forum. billion For more details Under the Agreement, a unique wet p. 99 on the Biosphere treatment facilities, see the Water scrubber system was integrated planned Gazprom Neft Resources Management section in a cat-cracking regeneration investments in the ‘Clean Air’ gas treatment unit at the Omsk project Gazprom Neft is actively participating Refinery in 2019. This enabled a 100-
in the 'Ecology' project initiated fold reduction in SO2 emissions by the Russian Government in 2018, and a three-fold reduction put forward under the May Decrees in particulate emissions. of the President of the Russian Federation. Part of this nation- wide initiative includes the federal 'Clean Air' project, which is designed to reduce emissions by 20% in 12 large industrial cities, including Omsk, where the company operates, by the end of 2024.
98 SUSTAINABLE DEVELOPMENT REPORT 2019 WATER RESOURCES MANAGEMENT
The sustainable use of water Building Biosphere biological Total water consumption resources, effective wastewater treatment facilities at the Moscow for company needs, million m³ treatment, and preventing and Omsk Refineries are among contamination of natural water the key projects being implemented bodies with oil or petroleum products by the company around water are all key priorities for Gazprom resources management. These 428.9 Neft in the management of water facilities feature a multi-stage 370.0 resources. wastewater treatment system, 316.4 314.2 which includes mechanical, physical 278.9 Gazprom Neft monitors water and chemical, biological, filtration protection zones, surface water, and ultrafiltration stages, as well groundwater and wastewater, as a reverse osmosis unit. and assesses the condition of bed sediments in surface water bodies The Biosphere facilities help to achieve in its regions of operation. wastewater treatment efficiency of 99.9%, and to reduce total water 2015 2016 2017 2018 2019 Water withdrawal and consumption withdrawal three-fold. Closed-loop decreased mainly because water treatment makes it possible of a reduction in water production to reuse more than 75% of treated from the Cenomanian strata which water in the production process. was, in turn, a result of a higher water cut at the company fields.
million 371.2 m3 –0.7 % total water withdrawal reduction in water consumption for company needs
Water use, million m3
2015 2016 2017 2018 2019 Total water withdrawal 297.0 446.1 416.2 372.2 371.2 Total water consumption for company needs 278.9 428.9 370.0 316.4 314.2 Total water discharge 21.9 43.5 47.5 56.3 57.8
04 ENVIRONMENTAL SAFETY 99 GAZPROM NEFT
Up to % Biosphere biological treatment facilities 99.9 The construction of the innovative Biosphere biological treatment facilities wastewater treatment at the Moscow and Omsk Refineries is a central environmental project in the Gazprom Neft refinery upgrade programme. efficiency at the Biosphere A unique facility, designed by Russian flow, wastewater treatment efficiency biological treatment facilities engineers, includes a multi-stage increased to 99.9%, with the refinery wastewater treatment system involving switching to closed-loop water use, mechanical, physical and chemical, and this significantly reduces the load and biological treatment, as well on municipal wastewater treatment as carbon filtration and ultraviolet facilities. disinfection. After the Biosphere treatment facilities were integrated into the refinery process
x After the new treatment facilities were is expected to demonstrate a similar 3 put into operation, the Moscow Refinery performance after the Biosphere reduced total water withdrawal three- treatment facilities are commissioned at reduction in water fold, with more than 75% of treated the site; moreover, the treatment facilities wastewater now being reused in the will occupy a smaller area, even though withdrawal at the Moscow production process. The Omsk Refinery their throughput is projected to increase. Refinery
The first phase of construction of The Biosphere facilities have been the innovative Biosphere treatment designed as a multi-stage water treatment billion facilities was completed at the Omsk complex. The tank battery that forms 19 Refinery in 2019 and the installation part of the Biosphere facilities comprises of tank equipment was completed. In 12 tanks with a capacity of 20,000 to Biosphere project the future, the tank battery will form 100,000 cubic metres; it was produced investment in the part of the facilities and will be used for by Russian manufacturers in accordance the preliminary mixing of all industrial with international standards. When the Omsk Oblast wastewater produced by the refinery water has been mixed in the tanks, it is before it is sent for further treatment. sent for mechanical treatment, which involves removing petroleum products The construction of the Biosphere and other impurities. Then, when it has facilities is part of the ongoing full-scale been physically and chemically treated, modernisation of the Omsk Refinery, and is the water is purified using chemicals, a major element of initiatives launched as and is sent to a special bioreactor, where part of the federal 'Clean Air' project. The the remaining petroleum products are new wastewater treatment system is one of degraded by micro-organisms. Finally, the the most important environmental projects water is passed through carbon filters, being implemented by Gazprom Neft in the disinfected with ultraviolet irradiation, and Omsk Oblast, with investment in the project then reused in the production process. totalling 19 billion. The construction of the Petroleum products recovered during Biosphere treatment facilities is scheduled filtration are sent for processing and to be completed by 2021. recycling.
100 SUSTAINABLE DEVELOPMENT REPORT 2019 WASTE MANAGEMENT AND LAND USE
To minimise the risk of oil The company’s drilling-waste Waste generation, kt and petroleum products contaminating management framework is designed the soil, Gazprom Neft constantly to reduce environmental risks 1,790.3 monitors the reliability of its and standardise waste management 1,539.5 1,564.6 equipment and makes use of new requirements. It takes into account 1,476.1 technologies. In addition, the company the infrastructure of the fields being 1,376.3 recycles waste generated developed by the company, existing in the course of production. drilling waste processing technology, technical and economic indicators, The growth in waste generation and the remoteness of the field in 2019 was driven mainly in question. by an increase in the number of wells under construction at Gazprom Drilling rigs currently used Neft fields, and ongoing refinery by Gazprom Neft are equipped 2015 2016 2017 2018 2019 modernisation, which involves with a drilling-waste cleaning upgrading production capacities and drying system. This ensures that and dismantling old equipment. as much previously used drilling fluids and process water as possible Nevertheless, 96% of waste generated are reused in the production process. % by the company is treated and recycled 96 using environmentally safe methods. The company continues to develop infrastructure for using waste of waste is treated Sludge generated by drilling in the production process, and recycled using in the course of hydrocarbon and to explore technological solutions exploration and production makes up that will help to reduce waste environmentally safe a significant proportion of the waste generation. methods generated by the company. Improving the efficiency of sludge processing is an important environmental priority for Gazprom Neft.
Waste generation and recycling, kt
2015 2016 2017 2018 2019 Waste generation 1,539.5 1,376.3 1,476.1 1,564.6 1,790.3 Total volume of recycled and treated waste 1,410.3 1,310.1 1,298.4 1,517.4 1,720.5 Share of waste sent for recycling, % 92 95 88 97 96
04 ENVIRONMENTAL SAFETY 101 GAZPROM NEFT
In 2019, Slavneft-Megionneftegaz monitoring, forecasting and extending piloted the construction of wells the life of pipeline systems, as well using hydrocarbon-based drilling as proactively replacing pipeline Public recognition fluids. The experiment demonstrated sections, based on the findings that the volume of sludge generated of diagnostic assessments. The Clean Messoyakhaneftegaz—a Gazprom Neft subsidiary—uses flocculation by drilling was more than 29% lower Territory Project also involves and sedimentation units. This Russian- than the estimated volume of that remediating disturbed lands. designed resource-saving equipment generated when using standard drilling is used in the construction of wells to clean techniques. In addition, Slavneft- The programme is centred around drilling mud and reuse process water in the drilling process. These units enable Megionneftegaz commissioned preventative measures enabling the company to reduce the amount of liquid an industrial and consumer waste the timely detection of pipeline drilling waste that it generates. landfill site at the Achimovskoye oil field, defects and potential vulnerabilities In 2019, in the annual Reliable Partner- which includes infrastructure for drilling likely to result in pipeline failure, Ecology national competition for best sludge processing. and thus helping to prevent environmental practices, this project was emergencies. recognised as the Best Project to Recycle Gazprom Neft continues Materials. to implement a targeted programme The implementation of the pipeline which includes the Clean Territory reliability programme has helped Project and is designed to improve to reduce potential risks of pipeline pipeline reliability. This targeted incidents. programme involves assessing, Bed sediment processing technology Clean Territory Project Construction of new wastewater treatment facilities is an important milestone in 2019 in the Omsk Refinery upgrade programme, as the facilities will first help to reduce water consumption and atmospheric emissions, and then to decommission 110 km 4,238 km the buffer pond. The buffer pond forms part of the wastewater treatment facilities of pipeline was renovated of pipeline was protected that are currently in operation; it is used and replaced with corrosion inhibitors to regulate wastewater flow and to pump it steadily into the OmskVodokanal system. To prevent waste generation while decommissioning the buffer pond, the Omsk Corrosion monitoring Diagnostic assessment Refinery has developed a technological covered was carried out on solution that is unique in Russia; it involves using a bioremediation process km km to manufacture products from oil-containing 6,325 3,939 bed sediments in the buffer pond. In 2019, this technology was approved of pipeline of pipeline following a state environmental review.
102 SUSTAINABLE DEVELOPMENT REPORT 2019 To monitor pipeline integrity, As part of R&D implementation the company’s subsidiaries use and roll-out, in 2019, Gazpromneft- various leak detection systems Vostok started a pilot project Remote (such as fibre-optic, parametric to switch to carrying out its own and volume balance systems). in-line inspections of small-diameter environmental pipelines using an in-line defect monitoring detector designed by Gazprom Neft. In 2019, Gazpromneft-Khantos launched a drone-based system to monitor pipelines and production facilities in the Khanty-Mansi Green Seismic project Autonomous Okrug. An unmanned aerial vehicle is used The company is implementing crooked-line geometry, whereby to monitor the condition of more than the Green Seismic project, which uses survey lines deviate around large 250 km of oilfield flowlines at fields seismic survey technology to help trees, which helps to minimise in the Khanty-Mansi Autonomous Okrug-Yugra. It is used to monitor prevent deforestation. A conventional damage to the forest. Pilot testing pipeline integrity and the condition approach requires making wide of this approach has been scheduled of production facilities. This forest clearings to enable heavy all- for 2020. makes it possible to minimise terrain vehicles to pass, as receiver environmental risks, detect potential lines are four metres wide and source Between 2016 and 2019, Green fire hazards during the high fire-risk season, and to monitor flood risks lines are four to five metres wide. Seismic technology was introduced in spring. Modern high-technology 'Green' seismic surveys use wireless at Gazpromneft-Khantos, Slavneft- equipment ensures safer operation recording equipment that can be Megionneftegaz, Gazpromneft- of the company’s infrastructure, installed using lightweight vehicles. Vostok, Gazpromneft-GEO, and enables the company to respond to emergencies much more promptly. This helps to make forest clearings the Bazhenov Technology Centre much narrower or avoid making them and Gazpromneft-Noyabrskneftegaz. at all. More than 3.5 million trees were saved km In 2019, the project team found from being cut down between 2016 >250 another engineering solution and 2019 thanks to the use of Green that helps to provide further Seismic technology. of oilfield flowlines benefits from this technology: monitored by unmanned aerial vehicle
>3.5 million trees were saved from being cut down between 2016 and 2019 thanks to the use of Green Seismic technology
04 ENVIRONMENTAL SAFETY 103 GAZPROM NEFT
ENERGY EFFICIENCY
Improving energy efficiency is one In order to improve its management of the UN’s Sustainable Development of energy conservation, Gazprom Neft Goals to 2030. Efficient utilisation focuses on the following areas: Gazprom Neft of energy resources makes it possible – developing and certifying to improve performance, optimise the energy management system Energy Policy production processes, and reduce to meet the international The company incorporated an energy- environmental impact. ISO 50001:2018 standard; efficiency strategy into its business model; – personnel training in energy the strategy is set out in the Gazprom An energy management system which management and energy Neft Energy Policy. This Policy provides a foundation for an energy management is compliant with the ISO 50001:2011 efficiency; system (EnMS) that complies standard has been put in place – improving the company’s with the international ISO 50001:2018 and is functioning successfully regulatory framework in relation standard. at the Gazprom Neft Corporate to energy conservation and energy Centre, and at 141 major subsidiaries efficiency; and upstream and downstream joint – testing and implementing new ventures. energy-conservation technologies; – implementing digitalisation Every year Gazprom Neft PJSC projects; develops and approves a development – sharing experience with other plan for its energy management industry players. system. This plan includes expanding the scope of the energy management system, adopting new regulatory documents and updating outdated ones, providing personnel training, and adopting a new version of the ISO 50001:2018 standard.
Energy consumption, million GJ
2015 2016 2017 2018 2019 Electricity 56.8 57.0 69.1 66.7 66.9 Heat 43.9 43.7 43.1 44.7 42.4 Gas 96.6 97.7 100.3 112.7 118.2 Diesel fuel 0.8 0.9 2.7 2.4 1.7 TOTAL 198.1 199.3 215.2 226.5 229.2
/ 1 / Gazpromneft Yamal, Messoyakhaneftegaz, Gazpromneft-Noyabrskneftegaz, Gazpromneft-Khantos, Gazpromneft-Vostok, Gazprom Neft Orenburg, Slavneft-Megionneftegaz, the Gazprom Neft Omsk Refinery, the Gazprom Neft Moscow Refinery, NIS, Slavneft-YANOS, the Gazpromneft Moscow Lubricants Plant, the Gazprom Neft Ryazan Bitumen Binders Plant, and the Gazpromneft Omsk Lubricants Plant.
104 SUSTAINABLE DEVELOPMENT REPORT 2019 Key company documents on energy conservation and energy efficiency
Gazprom Neft Energy Policy in Relation to Field Development Downstream Division Technical Policy Energy Policy (RUS) and Oil and Gas Production (RUS) on Energy Efficiency (RUS)
In 2019, the company’s energy operation of wells, performing million GJ efficiency and energy conservation geological and engineering 1.2 initiatives were focused on improving operations to reduce the amount the performance of power- of water produced and reinjected energy savings generation and process equipment, into strata, and introducing energy- in the Upstream Division and optimising the utilisation efficient pumping equipment. Key of energy resources and process organisational measures adopted conditions. include energy audits, an energy- efficiency monitoring system, The Upstream Division saves optimising the cost of electricity a significant amount of energy from external networks, and replacing resources by using technical diesel power plants with gas-turbine measures, such as replacing power plants. The company has also centrifugal pumps, using brushless introduced a number of IT projects DC electric motors, switching relating to energy conservation to short-term or intermittent and energy efficiency.
Upstream For more details on the company’s p. 45 technological development, see the Sustainability Technologies section
In 2019, Gazprom Neft successfully up to % tested brushless DC electric motors, 10 which are smaller, operate at higher voltage, and consume 10% less electricity than asynchronous thanks to new electric submersible motors with the same capacity. motors
After successful tests, electric centrifugal pumps with an expanded up to % working range were included in the 30 energy-efficiency programme. The company has installed 18 of these thanks to electric centrifugal pumps, which can reduce energy consumption by up to 30%. centrifugal pumps
With infrared heaters installed in % modular buildings and facilities, the 20–30 company has been able to reduce the electricity consumed by its heating systems by 20-30% on average, thanks to infrared depending on ambient temperature and heaters heating modes.
04 ENVIRONMENTAL SAFETY 105 GAZPROM NEFT
Key energy-efficiency activities in furnaces; optimising steam- million GJ in the Downstream Division include condensation systems; optimising 4.1 upgrading process furnaces the operation of compressor to improve their performance; equipment; improving energy saved optimising a recovery system the performance of heat-supply in the Downstream Division and using secondary energy systems; upgrading lighting systems resources in production processes; and using electric pumps instead using fuel more efficiently of steam pumps.
Clean energy Public recognition Gazprom Neft promotes is unique in Russian industry, forms the generation of renewable energy. part of the major Omsk Refinery In 2019, teams of Gazprom Neft young specialists were involved The company recognises how development programme. in forecasting the future of technological important it is to transform global development of the Russian fuel energy systems to reduce CO2 The pilot power station supplies and energy sector to 2030, and received emissions. electricity to all administrative various awards from the Ministry of Energy of the Russian Federation. buildings at the Omsk Refinery, Young specialists from Gazprom Neft In 2019, the Omsk Refinery completed including a residential subsidiaries took part in the Youth Day the first phase of the construction complex for 2,600 employees. of Russian Energy Week, organised of a 1 MW solar-power plant. This Based on research results by the Ministry of Energy of the Russian new power plant covers an area and measurements at the power Federation. Gazprom Neft specialists won prizes in an interactive session of 2.5 hectares and comprises 2,500 plant, Gazprom Neft will make on developing youth projects to promote solar panels, produced by Russia’s a decision about constructing a 20 energy conservation. solar-power company, Hevel. This MW solar-power plant at the Omsk The Ministry of Energy of the Russian investment project to introduce Refinery in 2021. Federation and external auditors value green-energy technologies, which highly the company’s activities in energy conservation and energy efficiency, as is evident in their acknowledgement of the significant contribution made by Gazprom Neft employees towards the development of the Russian fuel, energy and gas sector.
106 SUSTAINABLE DEVELOPMENT REPORT 2019 For more details on the solar power plant see the company website.
GAZPROM NEFT FIRST SOLAR POWER PLANT Unique Omsk Refinery project In order to maximise performance, Gazprom Neft is introducing average number of sunny days in Omsk innovations in all areas of its operation as part of the Omsk 308 Refinery development programme. This includes automated production, reliable cleaning and purification systems, as well as energy. There is no doubt that modern industrial enterprises need to be both efficient and environmentally friendly. The Omsk Refinery EFFICIENCY ENVIRONMENTAL SAFETY TECHNOLOGIES solar-power-plant project is a perfect example of such 1 MW to supply electricity Renewable Innovative equipment: an approach. to administrative energy mobile units, solar buildings of the Omsk tracking systems, and Refinery systems for collecting Oleg Belyavsky reflected solar radiation General Director, Gazprom Neft Omsk Refinery
NIS alternative energy projects
The geology of the Pannonian geothermal generation in Serbia Cooperating with partners, Basin means that Serbia is one in 2019: NIS continues construction of the countries in continental Europe – a general geothermal-potential of the Plandiste wind farm, involving which has great geothermal energy map was created based on existing the installation of 34 wind turbines, potential. information on operating with a total capacity of 102 MW temperatures of wells; and expected annual electricity NIS, the Gazprom Neft subsidiary – a preliminary assessment output of 212 GWh. This wind in Serbia, has over 60 geothermal of the potential for creating farm will reduce CO2 emissions wells which can be used commercial cases for power- by 332,000 tonnes per year. for generating electricity and heat. generation was carried out; NIS is now operating four wells – ranges of temperatures and inflow that provide third-party commercial required to set up a profitable projects with heat and hot water. business were determined. Gazprom Neft continued to develop
04 ENVIRONMENTAL SAFETY 107 HOW OIL%INDUSTRY EXPERTS HELP YOUNG MATHEMATICIANS CONQUER SCIENCE AND QUANTUM COMPUTING (RUS)
Vladimir Skripachev Student, participant of the ‘Developing Talent’ Case Tournament SUSTAINABLE DEVELOPMENT REPORT 2019
Employee development
HUMAN RESOURCES PROFILE REMUNERATION AND SOCIAL BENEFITS TRAINING AND DEVELOPMENT FOR EMPLOYEES COOPERATION WITH SCHOOLS AND HEI TALENT POOL DEVELOPMENT GAZPROM NEFT
The way the company is growing encourages the development of professional skills and enables employees to unlock their potential. Gazprom Neft employees have job satisfaction and they achieve impressive Gazprom results, taking part in the company’s ambitious - and often unique - projects both in Russia and abroad, and they take Neft justifiable pride in shaping its future. employees are team of dedicated professionals and like-minded people
The company's employees take on exciting challenges every day, looking for – and finding – new ways to improve how the company operates.
Strategic Systematic recruitment and employee rotation priority programmes Talent management, To contribute to achieving competency corporate strategic development goals by recruiting and training and retaining highly KEY qualified and engaged FOCUS AREAS employees Developing incentive programmes and building a culture of engagement Increasing employee productivity and organisational efficiency
110 SUSTAINABLE DEVELOPMENT REPORT 2019 Corporate documents
Gazprom Neft Corporate Gazprom Neft HR Management Collective agreements, standards Code of Conduct (RUS) Strategy (RUS) and local regulations (RUS)
Progress Plans in 2019 for 2020
Transition to a new grading system Forming new rank evaluation system as a foundation Staff turnover decreased by 1.8 for development of expert career path for every percentage points in 2019 to employee % Talent pool 11.1 Developing the following three key products to support employee development in the company:
Recruitment: introducing an internal recruitment process, mapping the entire process, updating Human resources costs the relevant metrics and the procedure for monitoring them, and strengthening the product team. billion Career: developing a career management system based on in-depth research into the employees’ requirements and the availability of company resources to design and implementneeds The cost of employee benefits, and the company capabilities; developing both financial and non-financial, and adopting implementing career development increased by tools to meet those needs. % Onboarding: developing a programme that will 22.9 enable newly hired employees to reach peak performance within six months and to remain year on year engaged and highly motivated.
Corporate University Securing international accreditation of the Corporate University. Training programmes implemented for employees
156,000 The Gazprom Neft team comprises highly engaged professionals who share the company values. Ensuring the well-being of employees, maximising opportunities for their development, and attracting and retaining the best recruits are important priorities for Gazprom Neft.
Expenditure on training The Gazprom Neft corporate HR policy is founded programmes on the Constitution and the Labour Code of the Russian Federation, and is aligned with international principles set billion out in the International Labour Organisation conventions that govern labour relations.
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Key HR policy principles
SAFETY
The company puts the safety of its employees at work, the public and the environment above any economic, technical or other considerations, providing a safe working environment for employees and requiring the same from its partners.
RESPECT AND NON1DISCRIMINATION Relationships within the company are based on mutual respect and trust. Gazprom Neft values the uniqueness of every employee, and takes their views into account. The diversity of talents, cultures, opinions and experiences, united by a shared goal, enable the company to address large-scale tasks.
INTEGRITY
The company adheres to the highest ethical standards, and treats its employees fairly.
EFFICIENCY
The company seeks to maximise performance, and recruits the best, most motivated and dedicated professionals.
ENGAGEMENT The company has set a goal to become a benchmark in this area by 2023. Annual employee engagement surveys are a key tool used by the company to obtain feedback so it can assess employee engagement and satisfaction levels, identify Gazprom Neft strengths and weaknesses as an employer, and outline focus areas.
Gazprom Neft guarantees its employees equal rights, and takes steps to prevent discrimination
112 SUSTAINABLE DEVELOPMENT REPORT 2019 Announcement Gazprom Neft has of the top employers The сompany's topped the Randstad of Russia (RUS) career page employer rankings (RUS)
Gazprom Neft regularly holds The company operates a hotline that a ‘Best in Profession’ competition can be used to report fraud, corruption for employees of its subsidiaries. and other violations of the Corporate This is a professional skills Code of Conduct. Moreover, employees competition that not only highlights can use the hotline not only to report the importance of manual and trade suspected violations, but also roles and helps to raise their status, to initiate investigations and receive but also provides a platform where feedback on their findings. All reports representatives of various Gazprom are processed on a case-by-case Neft business areas and subsidiaries basis. can share knowledge and experience. The fact that Gazprom For more details on the "Best For more details Neft has won p. 116 in Profession" copetition, see p. 43 on the hotline and measures the international Randstad the Cumulative employee taken by the company to protect compensation model section human rights, see the Respect Award for the third of Human Rights section time in a row reflects the company’s efforts in the sphere of human resources management, and the development of a corporate culture Employer brand that gives employees opportunities to attain job The company is committed concerned, the company’s strategic satisfaction, participate to recruiting, engaging and retaining plans and its competitive position in interesting projects, the best employees. Gazprom Neft in the industry. This value proposition and put forward their ideas. has developed an employer value is integrated into recruitment, Gazprom Neft attaches proposition to meet the demands onboarding and executive training great importance to creating and expectations of the people processes. an engaging environment consistent with company values, and developing a culture that enables the company to recruit the best available talent in the market. Gazprom Neft In 2019, Gazprom Neft topped the Randstad employer rankings ranked "most for the third year in a row. Kirill Kravchenko attractive The company ranked first in the fuel Deputy CEO for Administration, and energy sector, with respondents Gazprom Neft employer" citing the oil, gas and energy sector as the most attractive industry. according The Randstad employer rankings to the Randstad are based on an independent survey among 14,000 representatives rankings of the working-age population across all regions of Russia, undertaken in December 2019 by TNS Global, an international market research company.
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HUMAN RESOURCES PROFILE
At year-end 2019, Gazprom Neft had of new infrastructure facilities, and the continuing implementation 73,251 78,800 employees. 21,400 people joined Gazprom Neft and 17,800 left. of the company’s IT strategy and the expansion of its business, The average headcount increased including joint ventures. 2019 average headcount by 10% year on year in 2019 to 73,300 employees. The increase In 2019, staff turnover was 11.1%, in headcount was due to a rise down by 1.8 percentage points year in production, the introduction on year.
Average headcount by gender, Average headcount by age group ‘000 people in 2019, % 15 19 61,862 62,998 66,500 73,251 63,897
27,046
26,103 26,006 66 24,288 24,349
Under 30 30–50 Over 50
46,204 p. p.
40,397 Turnover rate, % 38,649 1.8 37,574 37,891
16.2 15.2 15.1 decrease in staff turnover in 2019 12.9 11.1
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
Men Women
114 SUSTAINABLE DEVELOPMENT REPORT 2019 To understand more about why Gazprom Neft runs a job placement % employees leave, the company programme for employees 45 uses Robot Vera, an automated of projects and enterprises that interview service for employees are scheduled for closure. Ahead of employees were who are leaving. Phone calls of the shutdown of an enterprise, to employees planning to leave project or development site, covered by collective Gazprom Neft enable the company the company forms a cross- agreements in 2019 to establish and analyse the reasons functional team and prepares a job for their resignation. placement plan, the implementation of which is supervised by the Head The procedure used by Gazprom Neft of the Organisational Development for notifying employees of major and HR Management Directorate. operational changes complies This involves compiling a list with the provisions of the Labour of potential vacancies in the company, Code, which stipulates a minimum communicating the relevant notice period of at least two information to employees, months for major operational and arranging individual changes, and at least three months meetings between the employees for downsizing decisions that may and the heads of business units lead to large-scale redundancies. offering the jobs.
Cooperation with trade unions The company cultivates long-term In 2019, trade union representatives The company recognised partnerships with trade unions. in Gazprom Neft subsidiaries the success of the work Trade union representatives and affiliates, working jointly of trade unions in its subsidiaries are actively involved in developing with the Corporate Centre, and affiliates in the reporting period. the occupational safety culture conducted an awareness campaign Gazprom Neft has in place a collective in the company, and discussing to tell all grades of employees bargaining framework. Collective changes in the Gazprom Neft about changes to the Gazprom agreements and local regulations employee benefits system; they Neft incentive policy, which stipulate the company’s social attend HR management meetings, are designed to achieve a balance obligations to its employees. In 2019, and contribute to occupational between financial and non-financial collective agreements covered 45% safety initiatives. incentives. of Gazprom Neft employees.
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REMUNERATION AND SOCIAL BENEFITS
The company has in place – a consistent approach an integrated incentive system to assessment and development; that is designed to recruit, retain – training and development and develop talented specialists, responsibilities shared average salary of Gazprom and support career advancement between employees, managers Neft employees in 2019, and professional development and the company; +9.3% year on year of employees. The objectives – basic additional training available and principles of financial and non- to every employee. financial incentives for employees are set out in the Unified Corporate Remuneration and social support billion Remuneration Policy. programmes in the company 121.5 are based on a cumulative The Gazprom Neft incentive system compensation model, which includes personnel costs, is underpinned by the following a basic salary, performance- +20% year on year principles: based remuneration, opportunities – market competitiveness; for professional development, – internal fairness; recognition of achievements, – performance-based remuneration; and a workplace environment – objectivity, transparency, extensive (including social guarantees use of a range of communication and benefits, working conditions channels to provide convenient and the corporate culture). access to information for employees;
Cumulative employee compensation model Personnel costs, Specific remuneration components The company seeks to make sure million and their respective importance that its remuneration system within the overall model are tailored is competitive. To do so, it analyses
to different employee groups, the labour market in its regions 76,832 82,576 89,777 depending on their motivational of operation, and adjusts the salary 101,461 121,519 profile. This model enables level accordingly. In 2019, the average 3,743 the company to align its goals monthly salary in Gazprom Neft 117,776 with the needs of individual employees, totalled 134,000. The basic salary 3,596 97,865 and shapes the infrastructure required level is the same for men and women. 3,177 for the flexible implementation of HR 3,260 86,600 2,432 79,316 and business strategies. The company’s social benefits 74,400 system comprises mandatory In 2019, Gazprom Neft introduced (basic) and optional (additional) a bonus system based on integrated benefits. Social benefits provided performance assessment of business by the company include free units and employees at three pilot or subsidised meals, voluntary health assets. This new bonus system insurance (VHI), subsidised travel, will begin to be rolled out across a housing programme, and sporting the company in 2020. and cultural events. Basic social 2015 2016 2017 2018 2019 benefits are provided to all Payroll Social benefits
116 SUSTAINABLE DEVELOPMENT REPORT 2019 Strengthening the cumulative Participants of the 2019 compensation model with a Single Pay 'Best in Profession' Scale professional skills competition know better A Single Pay Scale was introduced is used to match the wages paid than anyone what in the Downstream Division in 2019 to manual workers in the Division it means to be dedicated as the key basic salary component to the level of their qualifications. and innovative, to cooperate, of the cumulative compensation Basic salaries in most of Gazprom and to be committed model. The Single Pay Scale Neft subsidiaries were aligned to ensuring safety is a wage system linked to grades with the Single Pay Scale in 2019, and efficiency. As time goes and levels of sophistication of roles with further steps planned by, the company is facing listed in the Unified Catalogue in the future. new challenges. To be of Manual and Trade Jobs, which able to respond to them successfully, the company needs a team of like-minded people, who progress employees, regardless of the type digital solutions and a complete and develop together, of employment. transition from paper-based with each employee having to electronic data storage media. an opportunity to unlock The company is developing non- their potential. I believe financial incentive programmes, In 2019, the 'Best in Profession' that, in order to achieve and updating their content competition was held in ten its goals, the company and formats to align them with its subsidiaries in the Downstream must remain true to its strategic goals. Division. Competitions in three fundamental values. categories—Chemical Laboratory Professional skills competitions Analysis, Power System Protection Roman Kvitko held in all Gazprom Neft Divisions Equipment Maintenance and Repairs, Head of the Organisational for both individuals and teams and Industrial Automation— Development and HR are an important non-financial were held in accordance Management Directorate, incentive. with the WorldSkills methodology, Gazprom Neft with the latter two professions The competition programme included in the competition is continuously updated to cover programme for the first time. a growing number of professions and those competencies that have Key non-financial incentive the most relevance for the company’s programmes at Gazprom Neft development. The number also include the implementation of participants and the number of target programmes in its of regions and countries represented business units, which reward strong in the competitions are also operating performance. These increasing. include competitions among teams of enterprises, performance-based Participants of the 11th 'Best bonuses for enterprises, teams in Profession' professional skills and individual employees (including competition in the Upstream Division in contractor organisations), included employees of Gazprom Summer and Winter Sports Games Neft subsidiaries and joint ventures. for employees, and leisure activities. The 2019 'Best in Profession' competition was marked by the introduction of state-of-the-art
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TRAINING AND DEVELOPMENT FOR EMPLOYEES
In terms of successfully implementing millon the company strategy, an efficient, highly motivated and professional workforce is just invested in training as important as technological advancement and development or a well-balanced project portfolio. 45 hours Gazprom Neft is developing The Gazprom Neft training and implementing a wide range and development system is open of innovative training programmes to all employees in the company average training hours per for its employees. New training and in contractor organisations, employee per year programmes enable Gazprom Neft as well as target groups employees to acquire technical of prospective employees, namely and managerial skills that are crucial school and university students. for achieving strategic objectives, and provide additional opportunities for job satisfaction.
Corporate University
The company has an integrated perform two functions: as experts, knowledge management centre they help to maintain the high quality that brings together the full range of training content and make sure of corporate training and development that competency models and profiles, practices: the Gazprom Neft tests and training programmes are up Corporate University. to date; as in-house coaches, they DIAGRAM OF THE CORPORATE design and run training courses. UNIVERSITY TRAINING SYSTEM Using an innovative training model, Gazprom Neft has created One of the key objectives an integrated company-wide of the Corporate University ROLE OF THE CORPORATE UNIVERSITY educational environment. In this way, is to engage experts and managers every employee can acquire up-to- in training employees, create Development programmes date innovative knowledge and apply a strong community of in-house it in the workplace. Furthermore, coaches, and generate state-of-the- every employee can be both a student, art knowledge within the company. and a coach or an expert. The platform-based format of the Corporate University means Quality certification The structure of this educational it can engage thousands of coaches environment is based on faculties and experts to provide training and departments. A department for tens of thousands of employees. is a professional community that Data management serves as a key tool for capturing The Corporate University is currently and predictive analytics and sharing knowledge. Within performing the following three key this community, people who have functions within the Gazprom Neft the relevant professional expertise training system:
118 SUSTAINABLE DEVELOPMENT REPORT 2019 – developing and implementing expertise centres. These centres company-wide training bring together industry experts, Corporate programmes; promote the development University – quality certification for Gazprom of professional communities, in 2019 Neft Divisions and corporate and help to achieve professional training providers; excellence by accumulating – data management and predictive knowledge, and developing state-of- analytics for corporate training the-art tools and an approach based 5 systems. on expertise.
In 2019 the company took a number A comprehensive corporate faculties of steps to make sure that order for training is a system employees are equipped to achieve whereby training programmes business objectives, systematise for employees are not selected 32 employee development initiatives independently by employees in the company, harmonise processes based only on their interests (as departments across the Divisions and functions, in the ‘marketplace’ framework), eliminate process duplication, but jointly with their manager, and facilitate cross-functional with a primary focus on business cooperation. It updated the concept process development objectives 2,600 and methodology for cooperating and prospects, as well with professional departments as on processes and technologies of the Corporate University, compiled that the company plans to introduce. courses available a list of key performance indicators on the University portal for the departments, analysed Module-based adaptive training their performance, and outlined is an approach that involves performance improvement structuring a training programme plans. Gazprom Neft has adopted into modules—sections that 72,100 a new approach to training. This are limited in terms of time involves introducing a practice and scope—instead of using a single of comprehensive corporate orders programme. A number of modules employees underwent for training, module-based adaptive can be combined into a programme training in 2019 training, and continuing to develop tailored to specific needs. departments as professional
KEY FOCUS AREAS
– Company-wide training – Certification of programmes – Integrated knowledge- programmes offered and the trainers providing management system – Training for senior executives them – Data analysis system – Programmes for corporate – Replicating successful practices – Integrated digital corporate functions used in Gazprom Neft Divisions training platform – Developing and integrating training – Training in accordance – Cooperation with higher programmes to support company with professional standards education institutions (HEI) transformation – In-house coach training – Operating on the external and certification professional market
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Key achievements of the Corporate University in 2019
Employees attended over 156,000 training courses. All target employee New courses were developed, 906 employees of Gazprom Neft groups and categories underwent covering key areas relating completed foreign language training on a regular basis, to company transformation: Digital courses. in accordance with the Gazprom Neft Literacy; Feedback: Respectful Development Strategy. communication; Motivating Others; Building Efficient Teams; The University organised Product-Based Approach and Agile a Campus for In-House Coaches, The number of employees working; the Human Element which included a competition who completed online training in Business; Change Sponsorship; for the best coach and a forum on the Corporate University portal and four training programmes for in-house coaches involved increased by 50% to 28,000 people, for members of contribution in key transformation processes while the number of manual assessment commissions as part and changes in the company. These and trade employees taking online of implementing the Management events were attended by more than courses on the portal increased by Objectives (MBO) 4.0 System1. 450 participants. five-fold. More than 100 new online courses were developed, with the total number of courses The Corporate Culture 216 employees of Gazprom Neft available on the portal reaching 450. Transformation Centre prepared were trained under the Coaching Workshop 2.0 ‘Facilitative for Coaches programme. Leadership Practices’. This The Educational Environment Forum is a programme for Gazprom Neft was held in St Petersburg; it was senior executives. 6,500 executives The total number of in-house coaches attended by more than 200 human have been trained through in the company exceeded 1,200. resources training and development the programme. specialists, HR business partners, and heads of departments During the year, in-house coaches of the Corporate University. The University ran a number provided training for more than of training courses for manual 19,000 employees, including and trade employees, including more than 8,000 middle and line The following departments were Defensive and Winter Driving; ‘Five managers. opened: the Capital Construction Steps’ Hazard Analysis Technique; Department; the Legal, Property Corporate Culture Workshop, and Corporate Affairs Department; and Energy-Saving Measures. A coach certification procedure a specialist telecommunications was introduced, whereby section in the Information certified coaches are eligible Technology Department; to run programmes supporting key and the Business Continuity transformations in the company. and ITAT Risks Professional Laboratory in the Information Technology, Automation / 1 / The company has adopted the fourth version of the Management by Objectives (MBO) and Telecommunications (ITAT) approach. This approach involves establishing new collegial bodies: Contribution Assessment Department. Commissions. To ensure that all participants have an understanding of their roles within the commissions (e.g. moderator, secretary, etc), four training courses have been developed.
120 SUSTAINABLE DEVELOPMENT REPORT 2019 The Gazprom Neft Corporate University wins the Effective Education Award (RUS)
80 professional communities were established in the company, up by 9% Two research projects were This prestigious year on year. The Digital Learning implemented, with a focus on using award received community, focused on the use artificial intelligence in training, by the company of new technologies in training, using predictive analytics, demonstrates that is the fastest-growing community, and personalised training. Partnership Management with the number of participants up is an innovative by 30% year on year. methodological product that The Corporate University started meets the current needs to develop a Virtual Reality of the Russian business A Corporate Guide to Training (VR) platform for centralised community. The programme Programmes was introduced; management of VR training content. offers a wide range it contains information of benefits: employees gain on 116 compulsory, recommended new knowledge and develop and cross-functional programmes the necessary competencies, assessed by the Corporate while the company University. is creating and developing unique management tools that give it a competitive edge.
Ilya Dementiev Gazprom Neft's Corporate University President of the Gazprom Neft Programme recognised by Effective Corporate University Education Awards The Gazprom Neft Partnership According to the panel Management Programme won of experts, Gazprom Neft has created an award at the third Annual Effective a sophisticated technological Education Conference. This project won educational project which is unique in the ‘Best Educational Programme in Russia. This programme is a product at a Corporate University’ category. in a new format, designed to assist in developing partnership management This award is presented every year approaches. The educational project for the most effective and creative launched by Gazprom Neft enables educational initiatives in business students to study the best Russian development and professional and international partnership education in Russia. Leading Russian management practices, form shared specialists in practical implementation conceptual frameworks, and share of educational and corporate projects the relevant experience. participate in the conference.
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COOPERATION WITH SCHOOLS AND HEI
The company has in place a continuous education system “School, HEI, Enterprise” 42 which is designed to ensure a continuous supply agreements with HEI of young talent, train newly qualified specialists, as part of the cooperation and enable them to acquire the competencies programme they need in order to be ready to respond to future challenges.
This system includes career guidance for high school students, targeted education programmes in universities and vocational schools, and recruitment and career planning for high-potential employees.
Activities to support and develop students’ talents
In 2019, Gazprom Neft held a number which are academic partners of events to support school students of the Tournament, in order 2,800 and help them develop their talents. to study for a degree in technical – Gazprom Neft jointly disciplines. with the Sirius Educational – A training module for school students took part Centre held the ‘Developing students was set up as part in the ‘Developing Talent’ Case Tournament, of the Big Challenges educational Talent’ Tournament with 2,800 high school students programme in the Sirius from Gazprom Neft regions Educational Centre. of operation competing – The company provided support in this event. All cases to be for the XV Baltic Science solved as part of the tournament and Engineering Fair, a national had been designed by specialists competition for school students from the company and the Sirius held in St Petersburg. Educational Centre. In 2020, – The company partnered the finalists of the ‘Developing with the Algoritmika School Talent’ Case Tournament will to launch a new project to provide make a trip to Sochi, where training in computer programming they will complete a special for children and teenagers aged training programme and present 5 to 14. About 30 school students their projects to a panel of experts. from St Petersburg and Omsk took In addition, winners were awarded part in the pilot project. bonus points in the Unified State – The company continued Exam (USE) for admission to St to provide career guidance Petersburg Polytechnic University for school students in its regions or Tomsk Polytechnic University, of operation.
122 SUSTAINABLE DEVELOPMENT REPORT 2019 Gazprom Neft has named one of the most attractive employers once again (RUS)
Public recognition Gazprom Neft was ranked in the Gazprom Neft has won Gazprom Neft was ranked in the top top awards from Universum, five employers in four out of six the employer branding agency, as one fields of study: the company was 5 of the best employers according rated the third most attractive to surveys among both professionals employer by students of business employers in four fields of study and students in Russia. The company and commerce, and was ranked fourth was ranked among the best by humanities and medical students. in the natural sciences category, At the same time, the company was claiming second place in both ranked sixth by IT professionals, rankings. surpassed only by major IT companies top and becoming the only oil company to be ranked in the top ten 10 IT professionals
Cooperation with partner HEIs
Cooperation between Gazprom – to introduce innovative training Neft and its partner HEIs is based methods, such as individual 505 on agreements and memoranda development paths, hackathons, of cooperation, which address case championships, and project the following objectives: work; graduates have been hired – to cooperate with universities – to tailor existing training by Gazprom Neft on master’s degree programmes programmes to the company and continuing professional needs; education programmes – to provide secondment designed to train specialists opportunities in the company with the relevant set for HEI staff; of competencies; – to roll out best practices – to enable sponsored university in the sphere of training formats students to undertake and methods; an internship in the company; – to support students participating – to develop, through new academic in R&D conferences, forums disciplines, competencies and workshops in order to get for the future, such as digital involved in innovative activities. proficiency, systemic thinking and the ability to work in cross- functional teams;
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2019 HEI cooperation Key achievements highlights in cooperation with HEIs in 2019
Gazprom Neft continued ITMO University and Gazprom to implement the ‘On Your Marks!’ Neft organised a joint competition 42 onboarding and accelerator for start-up projects. Winners were programme for young awarded grants from the company agreements with HEIs professionals. This is a competition in the form of scholarships for HEI graduates. Winners for the best start-up project. are hired by the company and undergo an onboarding 4 process. Almost 7,000 people The company launched participated in the competition, the INcorporation Project, which specialised departments with more than 367 applications involves forming cross-functional set up by Gazprom Neft per vacancy. Gazprom Neft teams comprising students at HEIs enterprises hired 18 young of Gazprom Neft partner HEIs. professionals participating The aim of the INcorporation Project in the Programme. is to ensure that students in partner HEIs working on their graduation projects adhere to the principles that 182 Gazprom Neft participated underpin the company’s operations. HEI students sponsored in career fairs and other events for young professionals held at key HEIs. These events included The company continues to provide the ‘Management of the Future’ support for specialised master’s conference held at the Graduate degree programmes run by its 1,948 School of Management partner universities of St Petersburg University, students undertook where the company, as a partner an internship of the university, held meetings with students, including workshops in the company on solving business cases. 53 graduates who studied in specialised departments set up by the company at HEIs were hired by Gazprom Neft
124 SUSTAINABLE DEVELOPMENT REPORT 2019 Gazprom Neft engages experts on education to improve the process for training new talent (RUS)
‘Shaping Our Future’ conference Today, it is crucial Gazprom Neft held the first ‘Shaping Our Future’ conference, attended for highly qualified by representatives of major Russian HEIs and experts on education. employees to be able to make decisions promptly, to act amid uncertainty, Representatives of 25 HEIs At the end of the conference, to work efficiently attended the conference, including Gazprom Neft and the HEIs in cross-functional teams, Gazprom Neft partner universities, signed memoranda of intent to continually evolve such as the Siberian Federal to introduce new disciplines and learn. The ‘Shaping University, Admiral Makarov and new approaches Our Future’ conference State University of Maritime to developing the competencies is designed to bridge the gap and Inland Shipping, the National of the future. The key aim of these between HEIs and business, University of Oil and Gas Gubkin arrangements is to introduce and to promote the development University, Dmitry Mendeleev innovative training methods of an ecosystem that will University of Chemical Technology in order to help students become help to train new employees of Russia, the Ulyanovsk Institute more flexible and to enhance and shape the future of Civil Aviation, and Omsk professional competencies development trajectory State Technical University. of university graduates, to launch of HEIs. The best practices Specialists from the SKOLKOVO new master’s degree programmes presented by Gazprom Neft Education Development Centre, and continuing professional at this event are designed Sberbank School 21, University education programmes, to accelerate progress 20.35, and the Professionals 4.0 and to organise internships in this area. platform also attended and shared at the company. their experience in transforming Roman Kvitko training methods. Head of the HR The participants identified key and Organisational factors in overcoming obstacles Development Directorate, in the path of professional Gazprom Neft training of university graduates, and discussed business requirements for specialists and ways of integrating new technology in the training process.
Representatives of 25
HEIs attended the conference
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TALENT POOL DEVELOPMENT
% The Gazprom Neft approach to talent pool development is centred on recruiting and retaining 34 the right people to ensure that key positions of employees had an annual in the company are filled. To do so, the company performance assessment has formed a succession pool, selecting its members according to objective criteria and providing them with targeted training. Share of employees covered by performance assessment in 2019, To form the talent pool, individuals to fill key positions. This by category, % the management team (the Talent methodology is applied throughout Committee) holds annual meetings the company, including the top 9 at various levels of the company 100 positions. It also stipulates structure. These meetings involve: obligations related to promoting 63 the development of talent pool 20 – identifying key positions members and making further for the purpose of succession staffing decisions with regards to key planning; positions and successors appointed – collectively discussing to these positions. Seventy meetings 3 and approving talent pool members of the HR committees are scheduled identified for key positions; for the second quarter of 2020; 5 – developing an action plan their outcomes will be presented to increase the availability in the third quarter of the year. of people to fill the key positions; Managers Administrators – preparing an action plan In the context of this evolving Chief specialists Experts to facilitate the development methodology, the company Project roles of talent pool members. is designing individual development programmes for talent pool In 2019, Gazprom Neft placed members; preparing development special emphasis on implementing plans and monitoring progress programmes focused on corporate against them is a mandatory transformation, targeted talent pool requirement. In addition, a variety development initiatives, onboarding of training formats and an updated of young professionals, digitalisation, platform of the Gazprom Neft career and adopting the Corporate Code portal have been made available of Conduct. The company launched to employees, who can use the portal a project to develop an onboarding to apply and compete for vacancies programme for new employees. within the company.
In addition, in 2019, the company 34% percent of employees went started to develop a new methodology through the performance assessment for forming a talent pool from among in 2019. current employees. This is a four- level hierarchy of HR committees. In 2019 1,464 employees completed They are tasked with discussing retraining and professional and identifying the most talented development programmes employees, and securing in Gazprom Neft partner HEIs.
126 SUSTAINABLE DEVELOPMENT REPORT 2019 Gazprom Neft, SIBUR, SKOLKOVO For more details Business School and the Administration on Professionals 4.0 of the Leningrad Oblast agree to develop project visit the company the Professionals 4.0 platform website (RUS)
Engaging young employees
Gazprom Neft is implementing The company’s onboarding process the CASE-IN International Engineering the Three Milestones Programme. involves appointing a supervisor Championship, and the Russian Energy This is a three-year development from among the team members Week. In addition, young professionals programme for young specialists, to help a new employee to adapt from Gazprom Neft and the Moscow which enables them to unlock to the workplace, as well as providing Refinery were appointed to the Youth professional and career opportunities. new employees with induction Council under the Ministry of Energy It includes onboarding events, training, and training in health, safety of the Russian Federation. development training sessions, and environment rules all of which and a mentoring system. are mandatory. Twenty seven young professionals The Programme’s best alumni from Gazprom Neft took part are recommended for inclusion In 2019, young professionals in the eighth International Youth R&D in the talent pool of Gazprom Neft from the company took part Conference ‘New Technology in the Gas enterprises. in a number of national youth Industry: Experience and Continuity’. events aimed at promoting the fuel and energy sector, such as the Oil and Gas 2019 Research Conference,
Professionals 4.0 platform
The gig economy — an economy based The platform enables direct Among the platform experts on freelance work and short-term engagement via a website and mobile are winners and participants contracts — is one of the fastest- app, as well as offline networking of the Leaders of Russia, Digital growing global trends. It creates a need and professional development events. Breakthrough, and WorldSkills for a tool to connect corporations After signing up, users can access competitions, talented students and freelancers, customers the database to select tasks of interest and school-leavers, and participants and contractors. Professionals 4.0 to them. Partners including SIBUR, of educational programmes run is a new project platform designed Ruselectronics, Rostelecom, Rosseti, by the Sirius Educational Centre. by Gazprom Neft. SKOLKOVO Business School, EY, the Administration of the Leningrad Oblast and others have already joined the project.
p roje 7 cts 2 co mp 2 y le 4 rw a te de d un PROFESSIONALS 4.0 PLATFORM 124 PROJECTS 5,700 POSTED PARTICIPANTS
72 % 05 EMPLOYEE DEVELOPMENT 127 импорт REINDEER BREEDER'S DAY CELEBRATION AT NOVY PORT (RUS)
Viktoria Khudia Student, participant of the "STEM Science Class" project SUSTAINABLE DEVELOPMENT REPORT 2019
Social policy
IMPLEMENTING SOCIAL AND ECONOMIC AGREEMENTS THE “HOME TOWNS” PROGRAMME SOCIAL INITIATIVES ABROAD ENGAGING WITH INDIGENOUS PEOPLES OF THE RUSSIAN FAR NORTH GAZPROM NEFT
Creating a favourable environment and increasing human potential are among the most important responsibilities for business and for society. Social policy for Gazprom Neft is designed to support the development of those Gazprom regions in which the company operates and is an integral tool for achieving its Neft sustainable development goals. contributes towards regional development as an investor, a supplier of high-quality petroleum products, a customer for Russian high-technology products substituting imported analogues, and a leader and participant in environmental activities.
Cooperating with the governments of constituent entities of the Russian Federation and municipal authorities Strategic to promote sustainable development priority in the regions, and improve quality of life Ensuring environmental To be a driver of qualitative safety, and Creating a competitive change, promoting minimising environment in regional environmental labour markets and supporting the activity impact of local communities KEY in tackling social FOCUS AREAS and economic issues, providing tools, opportunities Ensuring Developing transparency for all cooperation with and benchmarks stakeholders stakeholders for development
Creating a favourable financial, economic and legal conditions for Gazprom Neft operations
130 SUSTAINABLE DEVELOPMENT REPORT 2019 Corporate documents
Policy on Interactions Policy on Charitable with Indigenous Northern, Siberian Activities (RUS) and Far Eastern Peoples (RUS)
Gazprom Neft operates in 30 regions In partnership with stakeholders, in Russia1, six CIS countries, the company is implementing and six non-CIS countries. The company the “Home Towns” programme. This is one of Russia’s largest employers is the social investment programme and taxpayers. aimed at improving quality of life in the regions in which Gazprom Neft operates.
Progress Plans in 2019 for 2020
The company conducted its annual To implement measures provided audit of relations with regional for in agreements on social government agencies, and reached and economic cooperation mutual understanding on difficult with the regions. To hold issues, with regional authorities being at least six meetings with regional supported to address those issues. authorities to consider the results of implementing agreements, The company signed 18 social and to adjust action plans and economic cooperation accordingly. agreements with constituent entities of the Russian Federation To sign at least 10 cooperation and municipal authorities. agreements with municipalities in the key regions of operation. 6 new regions added to a programme on improving road quality. To support at least 50 of the company’s volunteers’ Social investment amounted initiatives. to 7.5 billion. The year-on-year increase totalled 10.3%. To support at least 100 initiatives based on grant competition results, The project portfolio of the “Home including at least 10 initiatives Towns” Programme was assessed involving digital technologies. internally. To continue to streamline projects The company supported under the “Home Towns” 143 initiatives, based on grant Programme. competitions.
The company supported 53 volunteer projects.
5,756 number of volunteers
Gazprom Neft continued to implement the programme to support Siberia’s culture and protect its historical heritage.
/ 1 / Regions where the company only sells its products are not taken into account.
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Gazprom Neft supports the development of the Omsk Oblast IMPLEMENTING SOCIAL AND ECONOMIC AGREEMENTS
Under social and economic agreements with the governments of constituent entities of the Russian Federation, Gazprom Neft is financing the building and renovation of infrastructure, carrying out charitable activities, and supporting indigenous people in the north of Russia.
Social investments by the Gazprom Neft Group under social and economic agreements in 2019 amounted to Today we have signed an agreement that will billion create new opportunities for positive social change. Gazprom Neft has been recognised as a technology leader in the development In 2019, the company signed of the Omsk Oblast. The company is continuing agreements to upgrade the Omsk 18 Refinery, the largest refinery in the country, on social and economic cooperation with constituent and one of the main entities of the Russian Federation and municipal taxpayers in the region. It authorities. Overall, 27 agreements were signed. is implementing a national project to create a state- of-the-art catalyst plant, which has been given a national project status. The Government Key projects in 2019 of the Omsk Oblast will support the running of these and other Supporting the development of the Omsk Oblast investment programmes, which ensure further In 2019, Gazprom Neft to cooperate in environmental growth of the industrial and the Government of the Omsk initiatives, programmes to develop and construction Oblast signed a cooperation agreement. the R&D, technical and industrial infrastructure in the region. Under the terms of that agreement, potential in the region, and job the parties will strengthen creation. The agreement is also Alexander Burkov their cooperation to improve aimed at promoting sustainable Governor of the Omsk Oblast the investment climate and develop development in the region, including the economy of the Omsk Oblast, through investment in the social and to create a favourable sphere, and through charitable environment for addressing social and sponsorship initiatives. problems. The parties will continue
132 SUSTAINABLE DEVELOPMENT REPORT 2019 Read more Read more about about the Technology the oil-industry technology Development Centre cluster in Tyumen in Tomsk
Creating an oil-industry technology cluster in Tyumen
Gazprom Neft, operating in the Tyumen Oblast will the Government of the Tyumen coordinate joint projects. Cluster Oblast, and the Association of Oil projects will be implemented and Gas Service Companies signed in cooperation with an inter-regional an agreement to create a regional research and education centre. oil-industry cluster. The cluster Cooperation in the region is to ensure will include 25 oilfield services a full cycle of technology development, and industrial enterprises, several from R&D to implementation. banks, techno-parks, and universities. Innovations are planned at Gazprom The Gazprom Neft Gazprom Neft and its subsidiaries Neft assets. Development Strategy to 2030 is designed to position the company an industry leader Tyumen Science and Education Centre in technology. To achieve that, we are developing Established jointly by the company, capabilities with those of universities a system in Russia that will the Tyumen Oblast and the University and research centres in the Tyumen Oblast, combine the intellectual of Tyumen, a Science and Education Centre the Khanty-Mansi Autonomous Okrug, and production capacity will be one of 15 world-class research and the Yamalo-Nenets Autonomous Okrug. and education centres to be established The centre will provide a platform for joint of Russian companies. in Russian regions under the federal R&D projects, technology development, A new large-scale oil- National Science Project. The project and human resources training for the oil industry cluster in Tyumen will combine Gazprom Neft research and gas industry. will form part of that system. It will facilitate The Science and Education Centre will focus on the following: the creation of technologies – The Arctic: resources and environmental quality in the "cold world": that are relevant People in the Arctic; for business and sought- – Digital transformation of the oil and gas industry after on the Russian – Bio-security for humans, animals, and plants and international markets. – Individual educational journeys. Alexander Dyukov CEO and Chairman of the Management Board, Gazprom Neft
Establishing the Technology Development Centre in Tomsk
In 2019, the company with universities, research and the administration of the Tomsk organisations, and producers Oblast signed an agreement on joint in the region. Key areas of cooperation measures as part of the Scientific include digitalisation and refining and Technological Development in the upstream segment, and creating Strategy of the Russian Federation. technologies to develop hard-to- The “Cross-industry Joint recover oil reserves. The agreement Technology Development Centre” is an important milestone will be established in the region. for the company and the region, The company plans to develop for which science is a strategic priority. innovative forms of cooperation
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Commissioning of the Sports Complex in Yamalo-Nenets Autonomous Okrug
Expanding partnership with the Yamalo-Nenets Autonomous Okrug
Gazprom Neft and the Government The area of the Ice Centre totals 5,400 of the Yamalo-Nenets Autonomous square metres. The Centre will host Okrug signed a supplementary ice-hockey, figure-skating, and other agreement on partnership winter-sports training sessions in social and economic projects. and competitions. The parties will continue their cooperation to ensure The Polyarny Sports Complex will further economic development allow local residents to swim, Modern sports centres of the region, and improve quality play futsal, basketball, volleyball are an essential of life there. The agreement also and tennis, do aerobics and dance all part of development provides for the development year round. The 7,000-square-metre on Yamal. Sports of energy infrastructure and roads complex also includes a versatile facilities such as Polyarny in the Tazovsky district. gym and a weight room, an aerobics are becoming centres that studio, and a six-lane swimming pool. attract local residents The company implemented several and open up new opportunities major infrastructure projects The company has previously opened for talented children. Together in the Yamalo-Nenets Autonomous such sports facilities in Noyabrsk, with the Avangard Ice Centre, Okrug, designed to promote Myuravlenko, and Tarko-Sale. which we built nearby an attractive urban environment, Construction of the multifunctional in cooperation with regional and develop sport for children Yamal-Arena Sports Complex authorities, it marks and the general public, as part in Salekhard is continuing the completion of sports of the “Home Towns” Programme. with the company support. infrastructure development In 2019, the Polarny (Polar) Sports in this town in the Arctic. Complex and the Avangard Ice Centre Labytnangi residents will were commissioned in Labytnangi. now be able to play sports and take part in competitions 2 2 all year round, as new m m sports facilities offer every 5,400 7,000 opportunity for that. the area of the Avangard the area of the Polyarny Alexander Dybal Ice Centre Sports Complex Member of the Management Board, Deputy CEO for Corporate Communications, Gazprom Neft Improving road quality
Gazprom Neft is developing its climate and operating conditions. effective solutions for transport In 2019, six further regions were infrastructure, allowing the company included in the programme: to build high-quality, durable roads. the Novosibirsk Oblast, the Nizhny Under agreements with local Novgorod Oblast, the Smolensk regions governments, the company is making Oblast, the Kurgan Oblast, the Kursk 26 and supplying innovative bitumen Oblast, and the Khabarovsk Krai. materials, created specifically Overall, the programme covers 26 covered by the Programme for each region, taking into account regions. on improving road quality
134 SUSTAINABLE DEVELOPMENT REPORT 2019 THE “HOME TOWNS” PROGRAMME
The “Home Towns” Programme It covers all Gazprom Neft social projects, from small- is one of the most successful scale volunteer campaigns and best-known regional and town celebrations development initiatives to major international undertaken by Russian business festivals, and the construction of apartment blocks and sports centres.
The “Home Towns” Programme objectives:
– developing basic social infrastructure throughout the regions in which Considering the company operates; – ensuring comprehensive improvement of the urban environment, stakeholder priorities and creating favourable conditions for people to live in; with social projects – supporting local community initiatives; – creating conditions for developing education, culture and sports; The company is planning 1 and implementing its regional policy, – developing creative industries ; which is interrelated with regional goals – popularising science among young people; and development programmes. – preserving the unique culture and traditional lifestyle of indigenous peoples The portfolio of social projects that form in the north of Russia; part of the “Home Towns” Programme – integrating the indigenous peoples in the north of Russia into the modern is being developed in partnership economic landscape. with regional governments, non- profit organisations, local residents, and company employees. Gazprom Neft Particular projects and priority Social investment, billion is taking into account key stakeholder target groups are listed separately 7.5 expectations, allocating resources for each region, based 6.8 for addressing relevant issues in regions, on its relevant development goals, and plans to provide long-term social and the company’s annual social- benefits. 2 This approach means that the company project implementation cycle . 4.3 4.0 4.1 can initiate positive changes, and allocate resources for solving relevant problems in the regions, rather than merely being a sponsor.
2015 2016 2017 2018 2019
/ 1 / Creative industries are industries based on individual creativity, skills or talent, and which can generate added value and create jobs by producing and using intellectual property. / 2 / Read more about implementing social projects, and approaches to assessing their efficiency in the Gazprom Neft Sustainability Report for 2018.
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Assessing the efficiency of Gazprom Neft's contribution to regional social development
Gazprom Neft’s rationale for social of the project’s life cycle, which audit: it is assessing stakeholder initiatives depends on their economic allows flexibility in implementation satisfaction, organising a dialogue and corporate reputational impact in order to achieve the planned social with stakeholders, and analysing as well as on the social impact outcome. the feedback. The effectiveness on a region and local communities. of the social investment is being The company is monitoring Gazprom Neft is assessing assessed at all stages of the annual quantitative and qualitative the efficiency of its regional social-project implementation cycle1. performance indicators at all stages policy by conducting internal
comrehensive analysis of the social and economic situation in the regions, as well as the regions, as well as the state agenda, which affects regional development
PROJECT DEVELOPMENT
internal audit of projects, gathering feedback from monitoring stakeholders, and qualitative and determining best qualitative practices to be rolled performance out in regions indicators ASSESSING SOCIAL INVESTMENT EFFICIENCY
PERFORMANCE PROJECT ASSESSMENT IMPLEMENTATION
/ 1 / Read more about implementing social projects, and approaches to assessing their efficiency in the Gazprom Neft Sustainability Report for 2018.
136 SUSTAINABLE DEVELOPMENT REPORT 2019 The “Home Towns” Programme
To assess the results of the “Home Results of internal evaluation Towns” Programme, the company is using a range of tools for interacting of projects under “Home towns” with stakeholders, and receiving Programme in 2019 feedback from them: – monitoring implementation and achievement of goals, A programme on building a sports grounds in Omsk was expanded. objectives, interim and final In cooperation with Storm MMA school, opened in Omsk by Alexander performance indicators; Shlemenko and the Government of the Omsk Oblast, Gazprom Neft – conducting opinion polls; plans to build three sports grounds every year. The opening of a sports – holding public consultations/ ground was the main part of the StormFest healthy lifestyle festival meetings with residents as part that which was held in the city for the first time. of the planning process for social investment programmes; – conducting professional surveys The location of a knockout stage of the Kustendorf Classic festival of stakeholder representatives, changed: for the first time it took place not only in the regions where including research agencies the company operates, but also throughout the country. In 2019, specialists, non-profit musicians from Belarus also took part in the festival. organisations, and educational institutions that operate similar projects; The procedure for conducting the "Developing Talent” Case – conducting social and marketing Tournament among high-school students was adjusted: an online research; course was developed for all participants; it includes video lectures – gathering feedback on the “Home on oil and gas, and training sessions to develop soft skills. The Sirius Towns” Programme website: Educational Centre, which is the leading Russian campus for gifted rodnyegoroda.ru; children, took part in organising the competition. – online voting/open contests for residents. During the "Home Towns" social investment forum, joint training Timely monitoring and feedback mean involved grant recipients and volunteers for the first time. that the right performance indicators can be set, and allow for flexibility in the programme to achieve The amount of the grant was increased from 70,000 to 150,000 them. Best practices are identified for the volunteering contest. In 2019, that allowed the company and reviewed in consultation to implement larger-scale and more significant social initiatives with stakeholders, so they can be suggested by Gazprom Neft volunteers. Overall, the company rolled out in other regions. supported 53 volunteer projects.
The results of internal assessment of projects under the “Home Towns” Programme, conducted in 2019, allowed the company to adjust particular areas, indicators 150,000 and patterns for implementing them, to streamline work processes, Increased amount of grant and achieve the results it had planned. for the volunteering contest
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Corporate volunteering
Volunteering is an important part The company held its volunteering of Gazprom Neft's “Home Towns” contest for the fifth time in 2019, Programme, and the company’s and 212 applications were submitted. Gazprom Neft corporate culture. Volunteering Gazprom Neft supported allows Gazprom Neft employees the implementation of 53 winning volunteering to help other people, implement projects. The contest was preceded Gazprom Neft employees participate a non-standard corporate project, by a series of training sessions in volunteering initiatives. They put forward and their own ideas relevant for employees who had chosen their ideas, join the team, or implement to a particular region, city, town to take part in the volunteering their own volunteer projects, including as part of a special corporate contest. or village. contest.
Number of volunteers Number of volunteers campaigns
5,756 675 Every year, before launching 4,773 4,567 the volunteering contest, the company aims to prepare the most useful and relevant 2,856 350 2,633 287 training programme, 265 282 to allow all participants to learn about the best social projects and practices. 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 In a significant development in 2019, ambassadors of the “Home Towns” Programme – the most active participants in the programme – took part in the training. Key 2019 highlights These ambassadors did an excellent job: they spoke about important nuances and pitfalls, which may be faced at various 5,756 675 stages of developing and implementing volunteers volunteer campaigns projects, and were able to spark volunteers' interest and motivate them by example. On the first day several projects had already 53 2,035 been submitted.
initiatives supported donors Anna Chesanova, Project manager, as part of the volunteering the “Home Towns” contest Programme
138 SUSTAINABLE DEVELOPMENT REPORT 2019 Heroes of the "Home towns" (RUS)
Key volunteer and charitable projects of Gazprom Neft in 2019
"Good With Your Hands" Blood donation day The mutual aid fund (in cooperation with the "Anton’s In the reporting year, 2,035 people which helps Gazprom Neft employees Right Here" centre) During the year, from eight cities and towns where who have faced a difficult situation, the company volunteers and students Gazprom Neft operates participated collected 23.046 million fully of the centre created souvenirs, in the established campaign. covering five requests for help. which are exhibited at Gazprom The company allocated an additional Neft fairs and put up for a charity 6.5 million for a sixth request. Christmas auction.
Grant contest for funding social initiatives
The grant contest is the key method Key 2019 highlights to support initiatives led by local representatives, non- requests organisations, and state- 833 funded institutions in regions in which Gazprom Neft operates 143
initiatives supported Through the grant contest, Gazprom receive financial, practical and expert Neft is supporting local initiatives support from the company. aimed at systematic, innovative, and effective social change, in line In 2019, the contest was held with the key elements of the “Home in six regions: the Yamalo-Nenets million Towns” Programme. Autonomous Okrug, the Khanty- 37 Mansi Autonomous Okrug-Yugra, The company not only provides the Tyumen Oblast, the Tomsk Oblast, assistance in implementing a project, the Omsk Oblast, and the Orenburg the amount of the grant fund but also seeks to ensure that most Oblast. The company supported initiatives continue to develop 143 initiatives; priority was given and produce results after the grants to projects which used digital have been used. Winners of contests technologies, and the grant fund amounted to about 37 million.
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Movie Read more about the leading about partnerdhip non-profit under-11s between Gazprom Neft international hockey and Russian Ministery tournament (RUS) of Sports (RUS)
Sports development and support projects
The Gazprom Neft Cup
Established in 2007, the international ice arenas, and the opening Kids’ Hockey Tournament, ceremony and the super final match the Gazprom Neft Cup, is the key can rival the best international company project aimed at promoting ice-hockey shows. In 2019, 31 children's sports. It is the leading teams from 10 countries took part non-profit under-11s international in the tournament: there were teams hockey tournament in the world. from Russia, Belarus, Germany, The key aim The Gazprom Neft Cup boasts Latvia, Kazakhstan and Finland, of the “Home Towns” a level of organisation unparalleled with teams from Austria, China, Programme by any other children’s competitions: Slovakia and the Czech Republic is to improve the quality the games are played in world-class joining them for the first time. of life in the regions in which the company operates. Creating opportunities to play sports, and to attend interesting sporting events, undoubtedly facilitates teams Strategic the achievement of that 31 partner goal. Besides, a number of our projects, particularly the Gazprom Neft Cup, have already moved beyond the level of the company countries social programme, 10 and become world-class events.
Alexander Dyukov CEO and Chairman of the Management Board, Gazprom Neft
140 SUSTAINABLE DEVELOPMENT REPORT 2019 Alexander Shlemenko's interview The "Home towns" on importance of loving Programme (RUS) one's job (RUS)
Storm Mixed Martial Arts (MMA) School
Storm MMA School was opened The StormFest healthy lifestyle in 2015 by Alexander Shlemenko who festival was held in Omsk for the first is one of the most successful Russian time in 2019. Over 10,000 Omsk MMA fighters in Omsk. Over 400 residents attended the family sports children and teens aged between six festival. and 17 are being trained at Storm MMA School. In 2019, over 400 MMA In 2019, three sports grounds were We got to know fighters from several federal districts built as part of a project to develop Alexander Shlemenko and from Kazakhstan came to take street sports infrastructure in Omsk, before he had founded part in the annual MMA tournament. which was initiated last year his own school, and training The tournament was organised by Gazprom Neft and Storm MMA took place in a stuffy with the support from the “Home School; their location was chosen basement in an old house. He Towns” Programme. by city residents. demonstrated his approach to training and talked about his principles and plans. Almost immediately it was agreed that we would work >400 >10,000 with him to establish a large MMA school children are receiving Omsk residents attended with a unique approach. Creating a new modern gym training at Storm MMA the family sports festival was the first step towards that School goal. Special exercise machines and an octagon for training (the first one in Siberia) were installed there. Infrastructure is important, but the company’s cooperation with Alexander Shlemenko is based primarily on great confidence and trust. The School is using the company's resources efficiently, and the return on social investment is high. Alexander Shlemenko's school remains one of the most successful projects in the “Home Towns” Programme.
Alexander Dybal Member of the Management Board, Deputy CEO for Corporate Communications, Gazprom Neft
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Seventh Kustendorf The multimedia exhibition CLASSIC Festival "STENOGRAFFIA X" (RUS) (RUS)
Art and culture projects
Kustendorf Classic
The Kustendorf Classic Festival and Serbia. The festival includes of Russian Music, founded a contest for young musicians, and managed by a world-famous masterclasses and performances film director Emir Kusturica, by world-renowned classical is held every year in Serbia. This music stars, such as conductor festival was launched in 2013, Valery Gergiev, and pianist Denis and has been held in cooperation Matsuev. In 2019, the world-famous with Gazprom Neft since its violinist, Yuri Bashmet, was guest inception. The central idea behind of honour of the festival, and 25 the festival is to support talented young Russian musicians took part young musicians, and strengthen in the competition. cultural ties between Russia
The Stenograffia street art festival Bright Cities
Gazprom Neft supports Khanty-Mansiysk, Omsk, Tomsk, Exhibition the Stenograffia street art festival, Kargasok, Parabel, Noyabrsk, In November and December 2019, the free which is the biggest street art event Muravlenko, Orenburg, and towns digital exhibition "STENOGRAFFIA X" was in the country. At this event, artists beyond the Arctic Circle: Novy held in St Petersburg in the "Lumiere Hall" make art objects from ordinary Port, Mys Kamenny, and Tazovsky. Creative Space, to mark the festival’s anniversary. It included the most spectacular urban buildings. Throughout The famous calligrapher Pokras exhibits in the Stenograffia street art festival, the festival, artists have created Lampas joined the festival, and representative examples from the festival’s new places of interest from over 500 and exhibited his large-scale 10 years: for instance, the first graffiti beyond ordinary buildings. The year 2019 work "Metasuprematic Cross" the Arctic Circle, and street art created by a robot using a design built by neural marked the tenth anniversary covering the area of 6,686 square network. Visitors to the exhibition also had of the Stenographia street art metres. The multimedia exhibition a unique opportunity to see a multimedia festival. In 2019, artists drew 35 "STENOGRAFFIA X" was held exposition of works by Banksy, one pieces of graffiti in Gazprom Neft in the "Lumiere Hall" Creative Space of the world’s most famous street artists. "home towns": Yekaterinburg, in St Petersburg. Over 5,000 people attended the exhibition.
13 55 Partner cities and small towns artists 11,400 35 square metres of graffiti art objects
142 SUSTAINABLE DEVELOPMENT REPORT 2019 Omsk Refinery - "The seventeenth partner of the moment of spring" "Where Art Is Born" (RUS) festival (RUS)
International Spirit of Fire film festival
The company has been a supporter Degtyaryova. Events forming part Since 2017 Gazprom Neft of the international Spirit of Fire of the “Home Towns” Programme supports the international festival in Khanty-Mansiysk for 13 were successfully integrated Spirit of Fire film festival years. During that time, the Spirit in the festival programme. As part of Fire festival has become a symbol of Spirit of Fire festival, the play of the region. Sneak previews, "Stikhovarenye" featuring Yulia retrospectives, concerts, meetings Peresild was performed to great with actors and directors, acclaim. A concert entitled "Music and masterclasses are all part of the World Cinema" was held: of the festival. This is the only it included soundtracks of famous festival of film debuts in the country. films performed by the Yugra The celebrated film director, Sergey Concert Orchestra. The "Chitalkin" Solovyov, is the originator of Spirit literary concert for children was of Fire festival, and its president. performed: children from Tomsk, Orenburg, Muravlenko, Noyabrsk, In 2019, a number of celebrities were and Khanty-Mansiysk took guests of honour at the festival: Yulia part in it. It was broadcast Peresild, Elizaveta Arzamasova, over the Internet and received Alisa Grebenshikova, and Dmitry over a million views. There was Khrustalyov among others, along also a joint volunteer campaign with participants of the "Voice. by Gazpromneft-Khantos Children" project: Kirill Skripnik, and the Khanty-Mansiysk Puppet Arina Danilova, and Yaroslava Theatre.
"Where Art Is Born" festival
In 2019, the festival was held The all-Russian "Where Art Is Born" Partner festival is held by the Yuri Rozum in Muravlenko, Noyabrsk, Khanty- International Charitable Foundation, Mansiysk, and, for the first time, established by the famous pianist in Omsk. 165 people attended and the People's Artist of Russia, Yuri Masterclasses in the regions in which Rozum. An individual programme the company operates, and almost is prepared for each region. The “Home 800 people visited concerts in the four Towns” Programme has supported cities. the festival since 2017.
165 800 people attended people visited concerts masterclasses in the four cities
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Establishment of the Department of Mathematics and Computer Masters Science at St Petersburg of Russia (RUS) State University
Educational and science projects
Masters of Russia
Together with the Creative of the contest was "The Present" Practices Foundation, Gazprom and local photographers took part 20,000 Neft is implementing the Masters in it. Members of the MoS Photo Prize of Russia programme which aims jury considered over 600 applications, to support young entrepreneurship. and selected 17 of them: ten individual participants taking courses This project includes a series photos, and seven series. The main of studies, forums and crash courses, prize was a trip to the photography and is focused on the Mastera. festival in Arles in France. Academy online media platform. This resource gives young entrepreneurs As part of the Strategic Planning 45 an opportunity to share experiences, Leaders Forum 2019, Masters develop professional competencies, of Russia held a plenary session entrepreneurs completed and present their products to a wide entitled "Creative Entrepreneurship internships audience, free of charge. Over 20,000 and the New Economy: Regions users have completed online courses during the Industry 4.0". In the youth on the Mastera.Academy platform. section of the Forum, there was an open discussion called "The Partner In the reporting year, the Makers Power of the Village" that related of Siberia Photo Prize contest was to sustainable development held with support from the “Home and creative projects outside cities. Towns” Programme. The theme
"Mathematical Progression"
Gazprom Neft is a partner In 2019, the company gave of the Chebyshev Laboratory at St individual scholarships and prizes 73 Petersburg State University, headed to 73 students and four young by a Fields Medal winner, Stanislav researchers. This project has individual scholarships Smirnov. The “Mathematical now reached international level, Progression” joint project as the Department of Mathematics supports talented mathematicians and Computer Science was at every stage of their studies: established in the Chebyshev high-school students receive Laboratory. In addition, the "Modern invitations to universities; Mathematics" MSc programme students are awarded personal was launched for students Partner scholarships; young researchers from Russia, Eastern Europe receive grants and internships and Asia, with support from Gazprom in Russia and abroad; and scientific Neft. and research teams secure funding for fundamental studies.
144 SUSTAINABLE DEVELOPMENT REPORT 2019 "Developing Talent" Case Tournament In the City (RUS) conference (RUS)
The “Developing Talent” Case Tournament
Every year since 2015, Gazprom Neft Neft. Overall, 2,800 applications has held the "Developing Talent" were submitted for the tournament, Case Tournament for gifted school with 71 high-school students reaching 139 students. High-school students the final. from the regions in which the company teams operates compete to solve business In 2019, the Sirius Educational cases related to the oil and gas sector. Centre, which is the leading Russian The tournament is aimed at making campus for gifted children, joined specialisation in engineering more in the tournament. In 2020, the finalists popular among schoolchildren of the "Developing Talent'" Case 3,000 in the regions in which Gazprom Neft Tournament will make a trip to Sochi, operates, helping the schoolchildren where they will complete a special participants to build their research skills, thus training programme, and will present encouraging the creation of a future their projects to a panel of experts. talent pool for the company. All cases to be solved as part of the tournament were designed In 2019, the tournament was held by specialists from Gazprom Neft Partner in a new format: participants and the Sirius Educational Centre. solved not only problems related to the oil and gas sector, but also digital business cases prepared by Gazprom
Educational programmes with the Strelka Institute
Since 2015, Gazprom Neft has In 2019, over 1,000 people been working with the Strelka attended In the City, a conference 25,000 Institute for Media, Architecture about technologies shaping and Design in educational the future of cities. It includes viewers watching online programmes for representatives lectures and workshops involved in regional development by entrepreneurs, researchers, broadcasts initiatives in Omsk and St Petersburg. and specialists in urban studies The project aims to provide from the USA, the Netherlands, the representatives with the necessary Indonesia and Russia, and has 25,000 competencies to enable them to work viewers watching online broadcasts. together to create a comfortable Partner urban environment.
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Think global act local (RUS)
"Home Towns" Social Investment Forum
In 2019 in St Petersburg, Gazprom part in the discussion included Neft held the sixth annual Alfredo Brillembourg, a specialist international “Home Towns” Social in urban studies and the founder Investment Forum. Over 300 Russian of the Urban-Think Tank design and foreign experts, volunteers, studio; a social entrepreneur For Gazprom Neft, and winners of the Gazprom Neft Guzel Sanzhapova; the head it is important grant contest discussed trends of the “Hermitage 20/21” project to preserve the local in social development in the regions. and art expert Dmitry Ozerkov, identity of the regions Local identity emerged as the main and a member of the Gazprom Neft in which it operates. theme. Experts considered how Management Board Alexander Dybal. Every city, every town, history, culture and the geography Tutta Larsen, the TV host and public and every village has its own of the regions have become factors figure, moderated the discussion. unique history, traditions, in their growth. The people taking and culture. But, in order to strengthen local identity, it is important to promote social development in the regions, and improve quality of life there. This Gazprom Neft is what the "Home Towns" Programme implemented is a recognised leader by Gazprom Neft aims to do: in corporate philanthropy support educational, sports, scientific and cultural initiatives that make people's lives in the regions In 2019, the "Home Towns" Programme won the top more comfortable, eventful prize in Russia’s most prestigious social investment and interesting. That way, contest, the "Leaders in Corporate Philanthropy". people have more reasons The contest is held by the "Forum of Donors" to be proud of and associate association, the international network of firms themselves with the places PricewaterhouseCoopers, and the Vedomosti newspaper. where they live and work. The “Home Towns” Programme also won the first Alexander Dyukov prize for its approach to assessing corporate volunteer CEO and Chairman programmes. of the Management Board, Gazprom Neft
146 SUSTAINABLE DEVELOPMENT REPORT 2019 SOCIAL INITIATIVES ABROAD
Serbia
Gazprom Neft is one of the largest investors in Serbia, and is implementing large-scale social projects there, designed to support the country’s culture and preserve its historical heritage.
NIS, a Gazprom Neft subsidiary, Sports most successful participants were has been one of the leading awarded the "Youth Hero" accolade social investors in education, NIS, a Serbian subsidiary of Gazprom in the following categories: science healthcare, social support, culture Neft, actively supports clubs and education, culture and art, and sports in Serbia for years, acting and athletes in basketball, football entrepreneurship, creative industry, under the maxim "Future in Action". and motorsport, and organises and social activism. basketball mini-tournaments. It Culture and art is also opening tennis schools, where Supporting humanitarian people can train free of charge. projects In the reporting year, the company completed an altar mosaic Science and education As part of its charitable activities, in the central part of the Church NIS is purchasing modern medical of Saint Sava on the Vračar plateau NIS was the first company to win equipment for medical institutions in Belgrade. The mosaic covers the prestigious Saint Sava award in Serbia. about 2,000 square metres. given by the Ministry of Education, The design of the church’s Science and Technological Creating a comfortable interior is one of the most Development, for supporting environment impressive examples of mosaic education in Serbia. in the world. The project became NIS is supporting projects designed part of the Gazprom Neft programme In 2019, in cooperation to make parks and playgrounds to support culture and retain with the Serbian Chemical Society, more beautiful. In 2019, the company historical heritage in Serbia. and the Society of Mathematicians equipped a number of playgrounds and Physicists of Serbia, NIS in Prokuplje, Vrnjačka Banja, Novi Since 2013, the Kustendorf supported the organisation in Serbia Pazar, Novi Bečej and others. Classic music festival founded of Olympiads in mathematics, by Emir Kusturica, has been held physics and chemistry, and funded Environmental protection in cooperation with Gazprom Neft. the winners’ travel to enable them to take part in the international Key priorities for NIS include For the 11th consecutive year, Olympiads. taking care of ecology and safety, the company has supported and environmental protection. the international children's festival For the seventh consecutive year, NIS The company is implementing several "Joy of Europe", and the Belgrade has supported the Science Festival projects in those areas. Dance Festival, which is a unique in Belgrade. international cultural event. The fourth Youth Heroes competition was organised in cooperation with the EXIT Foundation. The 19
06 SOCIAL POLICY 147 GAZPROM NEFT
Republic of Iraq
The Kurdistan Region of Iraq at the same time, two graduates purchased, and the electricity of National University of Oil and Gas networks in three neighbouring Building and retaining good "Gubkin University", who have population centres expanded relationships with local communities finished their postgraduate studies, and upgraded. Medical equipment is crucial to the successful have been employed by the Geology has been supplied, and two implementation of upstream Department of Gazprom Neft Middle ambulances have also been acquired projects abroad. To ensure effective East. for the city of Badra. work in difficult social and political conditions, and taking into account The company makes great efforts the unique culture in the Kurdistan to employ local residents. Currently, Region of Iraq (KRI), Gazprom Neft the company and its contractors have is in a dialogue with the senior employed over 500 people locally, leaders, local administrators which makes Gazprom Neft a major and the local population. This helps employer in the region. to reduce social tension and ensures the sustainability of the production In 2019, the company almost doubled programme. the extent of its social programmes and is planning to continue The social projects implementing socially important are all being implemented projects in the KRI in 2020. in close cooperation with local authorities, and are approved Wasit Governorate by the Ministry of Natural Resources of the KRI. When priority projects Gazprom Neft works hard to meet its for next year are initiated, there corporate social responsibility (CSR) will be consultations with heads obligations to the Government of Iraq, of villages, mayors of nearby towns, and local authorities. the governor of the Garmian region, and the appropriate specialists More than 1,300 Iraqi citizens from the Ministry of Natural are currently involved in the Badra Resources. project, and most of them live in Wasit Governorate. More than Training of local professionals 300 Iraqi employees have taken to work in the oil and gas industry advantage of the professional training is a priority of the company’s social organised by Gazprom Neft, and have policy in the region. This is related found permanent jobs at the project. to cooperation with leading KRI As planned, the company continues >300 universities in various fields, to recruit Iraqi citizens. and to the implemention of the Gazprom Neft Middle East Projects to develop the education Iraqi employees have Scholarship Programme educational system, medical facilities, and power taken advantage initiative. As part of the initiative, 12 supply in Wasit Governorate are being of the professional students from the KRI are receiving successfully implemented. Large- training organised education in the subject of oil scale mine clearance was carried out. by Gazprom Neft, and have and gas at St Petersburg Mining During the project implementation, University, and four of its graduates three schools have been built, two found permanent jobs work at Gazprom Neft Middle East; minibuses for the University of Wasit at the Badra project
148 SUSTAINABLE DEVELOPMENT REPORT 2019 ENGAGING WITH INDIGENOUS PEOPLES OF THE RUSSIAN FAR NORTH
The company operates in the areas Gazpromneft-Zapolyarye LLC, In 2019, Gazprom where indigenous peoples of the Russian and Gazpromneft-Khantos LLC. Far North live: in the Khanty- Neft implemented Mansi Autonomous Okrug-Yugra, All enterprises are supporting those projects involving and the Yamalo-Nenets Autonomous indigenous peoples by concluding representatives Okrug. agreements with municipal administrations or heads of families. of indigenous Recognising the high rate of asset Gazprom Neft is providing financial peoples of the development, and the need to preserve support for families and communities, Russian Far North the local environment and culture, is making efforts to preserve national Gazprom Neft is making every effort identity, establish cultural ties, to meet these people’s needs: it is using and preserve traditional crafts. advanced technologies to take steps it celebrated Reindeer Breeder's Day to protect the environment, supporting In the reporting year, there were no and Fisherman's Day; local residents, and facilitating cases of the company violating the rights their integration in modern social of indigenous peoples. and economic conditions. The company there was a “ Developing Talent” Case is also preserving their traditional Gazprom Neft is implementing projects Tournament for high-school students; culture and lifestyle. and events in the Yamalo-Nenets Autonomous Okrug and the Khanty- the "STEM Science Class" project for Gazprom Neft’s position on such matters Mansi Autonomous Okrug-Yugra as part schoolchildren was implemented; is presented in the Policy on Interactions of the “Home Towns” Programme, as part of that project, children from with Indigenous Northern, Siberian which facilitates establishing remote areas can learn about modern 1 and Far Eastern Peoples . good relationships between technologies; the company and indigenous peoples The company keeps a close watch of the Russian Far North, who have the "Breath of the Arctic" festival was on ensuring the rights of such certain disadvantages as a result held; it creates conditions for self- people in its prospecting and field of the development of the company’s fulfilment of Yamal residents, and development activities. When field operations. supports creative residents of remote development projects are prepared, villages; Gazprom Neft and local authorities The company representatives hold hold public consultations that include regular meetings with representatives the "Soon to School" campaign took those indigenous peoples. This allows of indigenous peoples of the Russian place; backpacks and stationery for the company to take their interests into Far North in cooperation with municipal first-year pupils, including children of account when process facilities are built. administrations in the Yamalo-Nenets indigenous peoples, were purchased; The company representatives hold Autonomous Okrug and the Khanty- regular meetings to provide information Mansi Autonomous Okrug-Yugra, for heads of the families of indigenous to ensure that issues are addressed matinees for children from villages people, and representatives of municipal as soon as they arise. The company took place as part of the "New Year administrations. is purchasing products and items Tale" project, and New Year gifts that are necessary for everyday life, were purchased, including those for The following companies are operating housekeeping, hunting, fishing; children of indigenous peoples; in the areas where indigenous the company is also helping people peoples of the Russian Far North in difficult situations, providing the "Sustainable Use of Historical live: Gazpromneft-Noyabrskneftegaz helicopters for transporting residents, Heritage Disposal" environmental JSC, Gazpromneft-Yamal LLC, and delivering food to hard-to-reach project has continued; the project is areas between towns and villages. improving the appearance of areas, and is making their residents more environmentally conscious.
06 SOCIAL POLICY 149 Appendices
GAZPROM NEFT
APPENDIX 1. ADDITIONAL INFORMATION AND SUSTAINABLE DEVELOPMENT METRICS
Health and safety
Occupational health and safety
2015 2016 2017 2018 2019 LTIF1 (Gazprom Neft Group employees) 0.929 0.564 0.601 0.640 0.504 FAR2 (Gazprom Neft Group employees) 2.207 3.093 3.083 0.744 1.461 Number of injured in the accidents (Gazprom Neft Group employees) 100 69 74 85 68 Fatalities 3 4 4 1 2 Number of injured in the accidents (Contractor employees) 41 68 64 92 83 Fatalities 11 6 6 5 9
Industrial safety
2015 2016 2017 2018 2019 Incidents 2,512 2,385 2,183 1,068 920 Accidents 1 2 0 1 0
Environmental safety
GHG emissions, mt of СО2 equivalent
2015 2016 2017 2018 2019 Total 13.2 23.8 22.8 26.2 31.0 Including: direct 10.4 15.4 16.2 20.0 22.0 indirect 2.8 8.4 6.6 6.2 9.0
/ 1 / The Lost Time Injury Frequency is calculated as the number of lost time injuries (including fatalities) in the workplace / total hours worked × one million man-hours. / 2 / The Fatal Accident Rate is calculated as the number of fatalities / total hours worked by all employees × 100 million man-hours.
150 SUSTAINABLE DEVELOPMENT REPORT 2019 APG production and utilisation, million m3
2015 2016 2017 2018 2019 Production 8,134 9,436 11,434 14,398 16,623 Utilisation 6,498 7,583 8,708 11,284 14,811 Flaring 1,636 1,853 2,726 3,114 1,812
Emissions into the atmosphere, kt
2015 2016 2017 2018 2019 Gross emissions 534.9 600.8 474.3 508.3 529.4 Including:
NOX 16.3 19.2 22.1 25.6 26.7
SO2 112.1 128.4 69.0 74.8 38.9 VOCs 132.0 128.3 120.3 96.7 102.1
Total water consumption, million m³
2015 2016 2017 2018 2019 Total water withdrawal 297.0 446.1 416.2 372.2 371.2 Total water consumption for company needs 278.9 428.9 370.0 316.4 314.2 Total water discharge 21.9 43.5 47.5 56.3 57.8
Waste generation and treatment, kt
2015 2016 2017 2018 2019 Waste generation 1,539.5 1,376.3 1,476.1 1,564.6 1,790.3 Waste treatment and recycling 1,410.3 1,310.1 1,298.4 1,517.4 1,720.5 Waste treatment and recycling, % 92 95 88 97 96
07 APPENDICES 151 GAZPROM NEFT
Employee development
Headcount, people
2015 2016 2017 2018 2019 Average headcount 61,862 62,998 63,897 66,500 73,251 Including: man 37,574 38,649 37,891 40,397 46,204 women 24,288 24,349 26,006 26,103 27,046 Including: under 30 15,004 14,749 13,788 13,575 14,077 30-50 35,415 38,298 40,227 42,698 48,068 over 50 11,443 9,951 9 882 10,227 11,107
Staff turnover, %
2015 2016 2017 2018 2019 Ratio 16.2 15.2 15.1 12.9 11.1
Social benefits, million
2015 2016 2017 2018 2019 Social benefits costs 1,876 2,135 2,515 2,961 3,640
152 SUSTAINABLE DEVELOPMENT REPORT 2019 Human resources costs, million
2015 2016 2017 2018 2019 Total 76,832 82,576 89,777 101,461 121,519 Including: payroll 74,400 79,316 86,600 97,865 117,776 social benefits 2,432 3,260 3,177 3,596 3,743
Employee training, hours
2015 2016 2017 2018 2019 Average training hours per employee per year 31 36 46 33 45
Social policy
Social investments, billion
2015 2016 2017 2018 2019 Amount 4.0 4.1 4.3 6.8 7.5
Corporate volunteering
2015 2016 2017 2018 2019 Number of volunteers, people 2,633 2,856 4,567 4,773 5,756 Volunteer campaigns 265 287 282 350 675
07 APPENDICES 153 GAZPROM NEFT
APPENDIX 2. IDENTIFICATION OF THE REPORT’S MATERIAL TOPICS
In this Sustainable Development Report, Gazprom Neft has identified and addressed the matters most significant to its stakeholders.
Non-financial Reporting Principles: In order to determine the most for the purpose of defining the key – stakeholder engagement; material topics and respective topics of the Report; – sustainability context; indicators to be disclosed, – interviews with the company's – materiality; the company analyses: management and employees; – completeness; – the results of monitoring – materials relating to Gazprom – accuracy; the scope and scale of its Neft’s regular interaction – balance; impact on the economy, society with the key group of stakeholders; – clarity; and environment; – recommendations that – comparability; – stakeholder engagement themes the company received – reliability; and the information requests; from the RSPP's Council – timeliness. – research on Russian on Non-Financial Reporting and international industry in the process of public verification The Report’s disclosures cover management practices in respect of the Sustainable Development business obligations, including those of sustainable development Report 2018; set out in Russian and international and sustainability reporting. – mass media coverage documents (the UN Global Compact on the company. and the Social Charter of the Russian In the process of its interaction Business). Since 2017, the company with stakeholders and identification Based on the identification process, includes the information on its of the Report’s material topics, the company mapped out the most contribution to the achievement the company analysed the following: material topics. of the UN Sustainable Development – GRI guidelines; Goals into the Report. – the results of surveying internal and external stakeholders
154 SUSTAINABLE DEVELOPMENT REPORT 2019 List of topics that were identified to be PRIORITIZATION MATRIX FOR THE REPORT’S the most significant for the company and its MATERIAL TOPICS key stakeholders:
Economic performance 3 1 Financial stability and operational efficiency
Sustainable development management
2 Supplier relations
3 Anti-corruption
4 Compliance
5 Human rights 1 6 Product safety and quality
Health and safety
Occupational and production safety 7 management 6 Environmental safety
8 Energy economy and efficiency
9 Water use 5 3 4 10 Land and vegetation protection 2 11 Emissions 15 12 Waste generation and management 7 2 Compliance to environmental laws 13 13 18 and regulations 14 Employee development 16 12 14 Labour relations and employment 17
Employee – employer relations, freedom 15
of association IMPACT ON STAKEHOLDERS’ OPINIONS AND DECISIONS 20 16 Personnel training end development 11 10 8 17 Fair remuneration and social benefits 19 9 Social policy
18 Indirect economic impact
19 Respect for the rights of indigenous people
20 Development programmes for local communities 1 2 3
COMPANY’S IMPACT ON SUSTAINABLE DEVELOPMENT ASPECTS
07 APPENDICES 155 GAZPROM NEFT
APPENDIX 3. GRI CONTENT INDEX
This Report is primarily focused on the Material topics relevant to the company and its stakeholders. GRI Standards (Core option) and RSPP KPIs were used as a basis for this Report.
Общие стандартные элементы отчетности
GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary GRI 101. FOUNDATION (2016) – About the Report – Appendix 2. Identification of the Report’s material topics GRI 102. GENERAL DISCLOSURES (2016) ORGANIZATIONAL PROFILE 102-1 Name of the organization About the Report 102-2 Activities, brands, products, – Gazprom Neft at a glance / and services Performance highlights – Gazprom Neft at a glance / Цепочка создания стоимости – Company’s Annual Report 2019 102-3 Location of headquarters Contacts and feedback 102-4 Location of operation Gazprom Neft at a glance / Geographical footprint 102-5 Ownership and legal form Sustainable development management / Corporate governance 102-6 Markets served – Gazprom Neft at a glance / Performance highlights – Company’s Annual Report 2019 / Performance 102-7 Scale of the organization – Gazprom Neft at a glance / Capitalisation (total liabilities Performance highlights and equity) = 3,825,483 m, incl. – Employee development / Human current liabilities = 510 694, resources profile non-current liabilities = 1,101,592 m, – Company’s Annual Report 2019 and equity = 2,213,197 m. / Performance
156 SUSTAINABLE DEVELOPMENT REPORT 2019 GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary 102-8 Information on employees Employee development / Human No records of part-time employees and other workers resources profile are kept 102-9 Supply chain Sustainable development management / Supply chain management 102-10 Significant changes Sustainable development to the organization and its supply management / Supply chain chain management 102-11 Precautionary Principle Sustainable development or approach management / Sustainability risk management 102-12 External initiatives Sustainable development management 102-13 Membership of associations Sustainable development management / Stakeholder engagement STRATEGY 102-14 Statement from senior Statement from the Chairman decision-maker of the Management board ETHICS AND INTEGRITY 102-16 Values, principles, standards, Sustainable development and norms of behavior management / Corporate culture 102-17 Mechanisms for advice – Sustainable development and concerns about ethics management / Corporate culture – Sustainable development management / Respecting human rights
07 APPENDICES 157 GAZPROM NEFT
GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary GOVERNANCE 102-18 Governance structure Sustainable development management / Corporate governance STAKEHOLDER ENGAGEMENT 102-40 List of stakeholder groups Sustainable development management / Stakeholder engagement 102-41 Collective bargaining agreements Employee development / Human resources profile 102-42 Identifying and selecting Sustainable development stakeholders management / Stakeholder engagement 102-43 Approach to stakeholder Sustainable development engagement management / Stakeholder engagement 102-44 Key topics and concerns raised Sustainable development management / Stakeholder engagement
158 SUSTAINABLE DEVELOPMENT REPORT 2019 GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary REPORTING PRACTICE 102-45 Entities included Company’s Annual Report 2019 in the consolidated financial (Appendix 1, Appendix 3) statements 102-46 Defining report content and topic – About the Report Boundaries – Appendix 2. Identification of the Report’s material topics 102-47 List of material topics Appendix 102-48 Restatements of information GRI content index The Report does not contain any restatements of information provided in previous reports 102-49 Changes in reporting GRI content index The changes concern Report boundaries and calculation methods. The relevant comments are provided in the notes to the Report 102-50 Reporting period GRI content index 2019. 102-51 Date of most recent report GRI content index July 2019. 102-52 Reporting cycle GRI content index Calendar year. 102-53 Contact point for questions Contacts and feedback regarding the report 102-54 Claims of reporting in accordance GRI content index The Report was prepared in accordance with the GRI Standards with the GRI Standards Core option 102-55 GRI content index GRI content index 102-56 External assurance About the Report
07 APPENDICES 159 GAZPROM NEFT
GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary MATERIAL TOPICS ECONOMIC MATERIAL TOPIC: FINANCIAL STABILITY AND OPERATIONAL EFFICIENCY GRI 201. ECONOMIC PERFORMANCE (2016) 103 Management approach – Gazprom Neft at a glance / Business model – Gazprom Neft at a glance / Company strategy and sustainable development – Company’s Annual Report 2019 201-1 Direct economic value generated Gazprom Neft at a glance / and distributed Business model 201-4 Financial assistance received – GRI content index The Company and its subsidiaries take from government – Appendix 1. Additional advantage of tax benefits as allowed information and sustainable by the applicable tax law development metrics MATERIAL TOPIC: INDIRECT ECONOMIC IMPACT GRI 203. INDIRECT ECONIMIC IMPACTS (2016) 103 Management approach – Gazprom Neft at a glance / Company strategy and sustainable development – Sustainable development management / Corporate governance – Social policy – Employee development 203-1 Infrastructure investments Social policy and services supported 203-2 Significant indirect economic – Gazprom Neft at a glance / impacts Performance highlights – Social policy – Employee development
160 SUSTAINABLE DEVELOPMENT REPORT 2019 GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary MATERIAL TOPIC: SUPPLIER RELATIONS GRI 204. PROCUREMENT PRACTICES (2016) 103 Management approach Sustainable development management / Supply chain management 204-1 Proportion of spending on local – Sustainable development Significant locations of operation suppliers management / Supply chain are the exploration and production management regions – GRI content index MATERIAL TOPIC: ANTI1CORRUPTION GRI 205. ANTI1CORRUPTION (2016) 103 Management approach Sustainable development management / Anti-corruption activities 205-1 Operations assessed for risks – Sustainable development The Company has a corporate risk related to corruption management / Anti-corruption management framework in place that activities covers all business units and operations – GRI content index of the Company. Company routinely assesses all risks. 205-2 Communication and training Sustainable development about anti-corruption policies management / Anti-corruption and procedures activities 205-3 Confirmed incidents of corruption Sustainable development and actions taken management / Anti-corruption activities MATERIAL TOPIC: COMPLIANCE GRI 206. NON1DISCRIMINATION (2016) 103 Management approach Sustainable development management / Corporate culture 206-1 Legal actions for anti- GRI content index The Company does not thwart competitive behavior, anti-trust, competition. and monopoly practices Gazprom Neft has approved an Anti-Monopoly Policy and has been consistently working to prevent and minimise anti-trust and monopoly risks. In 2019, Russia’s Federal Antimonopoly Service did not initiate any antimonopoly proceedings against Gazprom Neft.
07 APPENDICES 161 GAZPROM NEFT
GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary ENVIRONMENTAL TOPICS MATERIAL TOPIC: ENERGY ECONOMY AND EFFICIENCY GR1 302. ENERGY (2016) 103 Management approach – Sustainable development management / Corporate governance – Environmental safety / Energy efficiency 302-1 Energy consumption within Environmental safety / Disclosed except for: the organization Energy efficiency 1. Energy consumed on heating GRI content index or cooling and steam energy consumed; 2. Amount of electric energy and fuel sold / heating and cooling energy sold and steam energy sold.
Total energy consumption disclosed for the Upstream and Downstream Divisions. Fuel consumption disclosed for the Upstream Division. Energy consumption within the organization is disclosed except for renewable energy consumed. Calculations of gas consumed in the Upstream Division exclude gas consumed for heat and electricity production and company’s non-fuel needs. Calculations of gas consumed in the Upstream Division exclude gas used for boilers, gas injections, flares etc. “Methodological provisions for calculating energy mix of Russian Federation in accordance with international practice” were used to convert units of measure. 302-4 Reduction of energy consumption – Environmental safety / Disclosed except for indicating Energy efficiency the amount of reductions in heating, – GRI content index cooling, and steam consumption.
162 SUSTAINABLE DEVELOPMENT REPORT 2019 GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary MATERIAL TOPIC: WATER USE GRI 303. WATER AND EFFLUENTS (2018) 103 Management approach Environmental safety / Water resources management 303-1 Interactions with water Environmental safety / Water as a shared resource resources management 303-2 Management of water discharge- Environmental safety / Water related impacts resources management 303-3 Water withdrawal Environmental safety / Water Disclosed except for the breakdown resources management by sources of water withdrawal 303-4 Water discharge Environmental safety / Water Disclosed except for indicating resources management the quality and destination (excl. discharges into surface water bodies). 303-5 Water consumption Environmental safety / Water resources management
07 APPENDICES 163 GAZPROM NEFT
GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary MATERIAL TOPIC: LAND AND VEGETATION PROTECTION GRI 304. BIODIVERSITY (2016) 103 Management approach Sustainable development management / Corporate governance Environmental safety / Preserving biodiversity 304-1 Operational sites owned, GRI content index The Company has no production assets leased, managed in, or adjacent within the boundaries of specially to, protected areas and areas protected natural areas of federal of high biodiversity value outside or regional significance. No rare protected areas or endangered species of animals, plants or mushrooms were identified. However, when planning its economic activities, the Company thoroughly assesses potential environmental risks and seeks to avoid serious or irreversible environmental violations. 304-2 Significant impacts of activities, – Environmental safety / products, and services Preserving biodiversity on biodiversity – GRI content index 304-3 Habitats protected and restored Environmental safety / Preserving biodiversity 304-4 IUCN Red List species – Environmental safety / No rare or endangered species and national conservation list Preserving biodiversity of animals, plants or mushrooms species with habitats in areas – GRI content index were identified in the areas where affected by operations the Company's production assets are located.
164 SUSTAINABLE DEVELOPMENT REPORT 2019 GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary MATERIAL TOPIC: EMISSIONS GRI 305. EMISSIONS (2016) 103 Management approach – Sustainable development management / Corporate governance – Environmental safety / Air quality – Environmental safety / Climate impact management – Environmental safety / Energy efficiency 305-1 Direct (Scope 1) GHG emissions Environmental safety / Disclosed except for a breakdown Climate impact management by gases included in direct GHG
emissions (С02, СН4, N20, HFCs, PFCs,
SF6 and NF3). Disclosed except for a breakdown by CO2 emissions from the combustion or biodegradation of biomass separately from the gross direct GHG emissions. 305-2 Energy indirect (Scope 2) GHG Environmental safety / emissions Climate impact management 305-5 Reduction of GHG emissions – Environmental safety / Disclosed in regards to total emissions Climate impact management reduction. – Environmental safety / Energy efficiency 305-6 Emissions of ozone-depleting GRI content index The Company does not emit any ozone- substances depleting substances on an industrial scale. 305-7 Nitrogen oxides (NOX), sulfur Environmental safety / Disclosed except for an emission oxides (SOX), and other Air quality of persistent organic pollutants, significant air emissions hazardous air pollutants, aerosols and other standard categories of air emissions.
07 APPENDICES 165 GAZPROM NEFT
GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary MATERIAL TOPIC: WASTE GENERATION AND MANAGEMENT GRI 306. EFFLUENTS AND WASTE (2016) 103 Management approach – Sustainable development management / Corporate governance – Environmental safety / Waste management and land use 306-2 Waste by type and disposal Environmental safety / Disclosed except for a breakdown method Waste management and land use by hazardous and non-hazardous waste and by disposal methods (excluding disposal and neutralization). Basis for disposal method chosen are not disclosed. 306-4 Transport of hazardous waste GRI content index The Company does not transport, import, export or process waste deemed hazardous under the terms of the Basel Convention Annex I, II, III and VIII. MATERIAL TOPIC: COMPLIANCE TO ENVIRONMENTAL LAWS AND REGULATIONS GR1 307. ENVIRONMENTAL COMPLIANCE (2016) 103 Management approach Sustainable development management / Corporate governance Environmental safety 307-1 Non-compliance GRI content index In all cases of non-compliance with environmental laws with environmental laws and regulations and regulations occurred during the reporting period remedial measures were taken within time limits set by the supervisory bodies.
166 SUSTAINABLE DEVELOPMENT REPORT 2019 GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary SOCIAL TOPICS MATERIAL TOPIC: LABOUR RELATIONS AND PMPLOYMENT GRI 401. EMPLOYMENT (2016) 103 Management approach – Sustainable development management / Corporate governance – Employee development 401-1 New employee hire and employee – Employee development / Human New employee hires disclosed except turnover resources profile for a breakdown by gender and age – Appendix 1. Additional group, employee turnover disclosed information and sustainable except for a breakdown by age group, development metrics gender and region. – GRI content index 401-2 Benefits provided to full-time – Employee development / Basic social benefits employees that are not provided Remuneration and social are provided to employees regardless to temporary or part-time benefits; of the employment type employees – Appendix 1. Additional information and sustainable development metrics; – GRI content index MATERIAL TOPIC: EMPLOYEE1EMPLOYER RELATIONS, FREEDOM OF ASSOCIATION GRI 402 LABOUR/MANAGEMENT RELATIONS (2016) 103 Management approach – Sustainable development management / Corporate governance; – Employee development 402-1 Minimum notice periods GRI content index The Company complies regarding operational changes with the Russian Labour Code which sets forth a minimum notice period prior to the implementation of significant operational changes (not later than two months before the start of relevant changes in general case and not later than three months before the start of relevant changes if the decision to reduce the headcount may lead to major layoffs)
07 APPENDICES 167 GAZPROM NEFT
GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary MATERIAL TOPIC: OCCUPATIONAL AND PRODUCTION HEALTH AND SAFETY GRI 403 OCCUPATIONAL HEALTH AND SAFETY (2018) 103 Management approach – Sustainable development management / Corporate governance; – Health and safety / HSE management system; – Health and safety / Occupational health and safety 403-1 Occupational health and safety – Sustainable development management system management / Corporate governance – Health and safety / HSE management system – Health and safety / Occupational health and safety 403-2 Hazard identification, risk – Sustainable development assessment, and incident management / investigation Sustainability risk management – Health and safety / Industrial safety 403-3 Occupational health services – Sustainable development management / Sustainability risk management – Health and safety / HSE management system 403-4 Worker participation, – Sustainable development consultation, and communication management / Internal on occupational health and safety communications – Health and safety / HSE management system – Health and safety / Occupational health and safety – Employee development / Training and development for employees
168 SUSTAINABLE DEVELOPMENT REPORT 2019 GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary 403-5 Worker training on occupational – Health and safety / Occupational health and safety health and safety – Employee development / Training and development for employees 403-6 Promotion of worker health – Health and safety / Occupational health and safety – Social policy / Projects to support and develop sports 403-7 Prevention and mitigation – Sustainable development of occupational health management / Sustainability and safety impacts directly linked risk management by business relationships – Health and safety / Industrial safety 403-9 Work-related injuries Health and safety / Occupational Injurie metric disclosed for Gazprom health and safety Neft Group employees. Fatal injurie metric disclosed for both Gazprom Neft Group employees and contractor emplyees. MATERIAL TOPIC: PERSONNEL TRAINING AND DEVELOPMENT GRI 404. TRAINING AND EDUCATION (2016) 103 Management approach – Sustainable development management / Corporate governance – Employee development 404-1 Average hours of training per Employee development / Training Disclosed except for a breakdown year per employee and development for employees by gender and employee categories. 404-2 Programs for upgrading Employee development / Training Disclosed except for a description employee skills and transition and development for employees of assistance programmes assistance programs to support employees after retirement or termination of employment. 404-3 Percentage of employees Employee development / Disclosed except for a breakdown receiving regular performance Talent pool development by gender and employee categories. and career development reviews Percentage of employees having received regular performance reviews totals 36%. MATERIAL TOPIC: FAIR REMUNERATION AND SOCIAL BENEFITS
07 APPENDICES 169 GAZPROM NEFT
GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary GRI 405. DIVERSITY AND EQUAL OPPORTUNITIES (2016) 103 Management approach – Sustainable development management / Corporate governance – Employee development 405-1 Diversity of governance bodies – Sustainable development Among the members of and employees management / Corporate the Board of Directors, women governance account for 8%. – Employee development / Human resources profile 405-2 Ratio of basic salary Employee development / and remuneration of women Remuneration and social benefits to men MATERIAL TOPIC: EMPLOYEE1EMPLOYER RELATIONS, FREEDOM OF ASSOCIATION GRI 407. FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING (2016) 103 Management approach Sustainable development management / Corporate governance 407-1 Operations and suppliers GRI content index No such operations or suppliers were in which the right to freedom identified during the reporting period. of association and collective bargaining may be at risk MATERIAL TOPIC: HUMAN RIGHTS
GRI 410. SECURITY PRACTICES (2016) 103 Management approach – Sustainable development management / Corporate culture – Sustainable development management / Corporate governance 410-1 Security personnel trained Sustainable development Human rights are part of the mandatory in human rights policies management / Respecting human training programmes that cover 100% or procedures rights employees from the security function (including contractors providing services for the company).
MATERIAL TOPIC: RESPECT FOR THE RIGHTS OF INDIGENOUS PEOPLES
170 SUSTAINABLE DEVELOPMENT REPORT 2019 GRI Indicator GRI Indicator description Section (subsection) of the Report Commentary GRI 411. RIGHTS OF INDIGENOUS PEOPLES (2016) 103 Management approach – Sustainable development management / Corporate culture – Social policy / Engaging with indigenous peoples of the Russian Far North 411-1 Incidents of violations involving Social policy / Engaging rights of indigenous peoples with indigenous peoples of the Russian Far North MATERIAL TOPICS: DEVELOPMENT PROGRAMMES FOR LOCAL COMMUNITIES GRI 413. LOCAL COMMUNITIES (2016) 103 Management approach – Sustainable development management / Corporate culture – Social policy 413-1 Operations with local GRI content index Local community engagement community engagement, impact programmes are implemented by all assessments, and development key operations of the Company. programs 413-2 Operations with significant actual Sustainable development Disclosed except location of operations and potential negative impacts management / Sustainability risk with significant current or potential on local communities management negative effect on local communities. MATERIAL TOPIC: PRODUCT SAFETY AND QUALITY GRI 416. CUSTOMER HEALTH AND SAFETY (2016) 103 Management approach Sustainable development management / Product quality assurance 416-2 Incidents of non-compliance GRI content index In 2019, no cases of non-compliance concerning the health and safety with the international and Russian impacts of products and services quality assurance and authenticity laws were identified.
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APPENDIX 4. INDEPENDENT ASSURANCE REPORT
Independent Limited Assurance Report to the Management of Public Joint Stock Company Gazprom Ne ft
Introduction We have been engaged by Management of Public Joint Stock Company Gazprom Neft (hereinafter – the “Company”) to provide limited assurance on the selected information described below and included in the Sustainability Report of the Company for the year ended 31 December 2019 (hereinafter – the “Sustainability Report”). The Sustainability Report represents information related to the Company and its subsidiaries and controlled entities (hereinafter together – the “Group”). Selected Information We assessed the qualitative and quantitative information, that is disclosed in the Sustainability Report and referred to or included in the GRI Indicators (hereinafter – the “Selected Information”). The Selected Information has been prepared in accordance with GRI Sustainability Reporting Standards (Core option), published by the Global Reporting Initiative (hereinafter – the “GRI Standards”). The scope of our limited assurance procedures was limited to Selected Information for the year ended 31 December 2019. We have not performed any procedures with respect to earlier periods or any other items included in the Sustainability Report and, therefore, do not express any conclusion thereon.
Reporting Criteria We assessed the Selected Information using relevant criteria, including reporting principles and requirements, in the GRI Standards (hereinafter – the “Reporting Criteria”). We believe that the Reporting Criteria are appropriate given the purpose of our limited assurance engagement. The Group’s responsibilities Management of the Group is responsible for: • designing, implementing and maintaining internal control relevant to the preparation of the Selected Information that is free from material misstatement, whether due to fraud or error; • establishing internal methodology, including objective reporting criteria, and guidelines for preparing and reporting the Selected Information in accordance with the Reporting Criteria; • preparation, measuring and reporting of the Selected Information in accordance with the Reporting Criteria; and • the accuracy, completeness and presentation of the Selected Information.
AO PricewaterhouseCoopers Audit White Square Office Center 10 Butyrsky Val Moscow, Russian Federation, 125047 T: +7 (495) 967 6000, F:+7 (495) 967 6001, www.pwc.ru
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, which was prepared in Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all ma tters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.
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Our responsibilities We are responsible for: • planning and performing the engagement to obtain limited assurance about whether the Selected Information is free from material misstatement, whether due to fraud or error; • forming an independent conclusion, based on the procedures we have performed and the evidence we have obtained; and • reporting our conclusion to the management of the Group. This report, including our conclusion, has been prepared solely for the management of the Group in accordance with the agreement between us, to assist management in reporting on the Group’s sustainability performance and activities. We permit this report to be disclosed in the Sustainability Report, which may be published on the Company’s websitei, to assist management in responding to their governance responsibilities by obtaining an independent limited assurance report in connection with the Selected Information. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the management of the Group for our work or this report.
Professional standards applied and level of assurance We performed a limited assurance engagement in accordance with International Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements other than Audits or Reviews of Historical Financial Information’’ issued by the International Auditing and Assurance Standards Board. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement in relation to both the risk assessment procedures, including an understanding of internal control, and the procedures performed in response to the assessed risks. Our Independence and Quality Control We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour, together with the ethical requirements of the Auditor’s Professional Ethics Code and Auditor’s Independence Rules that are relevant to our limited assurance procedures in the Russian Federation. Our firm applies International Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
i The maintenance and integrity of the Company’s website is the responsibility of management; the work carried out by us does not involve consideration of these matters and, accordingly, we accept no responsibility for any changes that may have occurr ed to the reported Selected Information or Reporting Criteria when presented on the Company’s website.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, whic h was prepared in Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.
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Work done We are required to plan and perform our work in order to consider the risk of material misstatement of the Selected Information. In doing so, we: • made enquiries of the Group’s management, including the Sustainability Reporting (SR) team and those with responsibility for SR management and group reporting; • conducted interviews of personnel responsible for the preparation of the Sustainability Report and collection of underlying data; • performed analysis of the relevant internal methodology and guidelines, gaining an understanding and evaluating the design of the key structures, systems, processes and controls for managing, recording, preparing and reporting the Selected Information; • performed limited substantive testing on a selective basis of the Selected Information to check that data had been appropriately measured, recorded, collated and reported; and • reviewed the Selected Information for compliance of the disclosures with the relevant requirements of the Reporting Criteria. Reporting and measurement methodologies The range of different, but acceptable under the GRI Standards, measurement and reporting techniques can result in materially different reporting outcomes that may affect comparability with other organisations. The Selected Information should therefore be read in conjunction with the methodology used by management in preparing the Sustainability Report, described therein, and which the Group is solely responsible for.
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, whic h was prepared in Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of inform ation, views or opinions, the original language version of our report takes precedence over this translation.
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Limited assurance conclusion Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe, that the Selected Information for the year ended 31 December 2019 has not been prepared, in all material respects, in accordance with the Reporting Criteria.
26 June 2020 Moscow, Russian Federation
A.Y. Fegetsyn, certified auditor (licence No. 03-001436), AO PricewaterhouseCoopers Audit
Engaging party: Public Joint Stock Company Gazprom Neft Audit organization: AO PricewaterhouseCoopers Audit Record made in the Unified State Register of Legal Entities on 21 August 2002 under State Registration Number 1025501701686 Registered by the Government Agency Moscow Registration Chamber on 28 February 1992 under N . 008.890 Taxpayer Identification Number 5504036333 Record made in the Unified State Register of Legal Entities on 22 August 2002 Russian Federation, 190000, St. Peterburg, Pochtamtskaya ul., 3-5. under State Registration Number 1027700148431
Taxpayer Identification Number 7705051102
Member of Self-regulatory organization of auditors Association «Sodruzhestvo»
Principal Registration Number of the Record in the Register of Auditors and Audit Organizations – 12006020338
TRANSLATOR'S EXPLANATORY NOTE: This version of our report/the accompanying documents is a translation from the original, whic h was prepared in Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.
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TERMS AND ABBREVIATIONS
"Home Towns" – The Gazprom Neft “Home E EBITDA – earnings before interest, tax, Towns” programme is a corporate social depreciation and amortisation responsibility initiative directed at addressing the most pressing social and economic development issues facing those localities ECG – electrocardiogram in which the company operates, including, among other things, through cooperation with local communities. The programme focuses EIA – environmental impact assessment on urban development (housing construction, neighbourhood enhancement and improvements to public areas), establishing and developing EnMS – The Gazprom Neft Energy Management public and children’s sports infrastructure, System. supporting sports organisation and events, backing and promoting education, preserving and developing cultural potential, locally, EU – European Union and supporting the indigenous minorities of the Russian Far North. F FAR – fatal accident rate – calculated as follows: total number of fatalities ÷ total hours worked A AI – artificial intelligence by all employees × 100 million man-hours.
APG – associated petroleum gas – a mixture G GHG – greenhouse gases of gaseous hydrocarbons dissolved in oil and released during oil production. GJ – gigajoule C CIS – Commonwealth of Independent States – currently comprising Armenia, Azerbaijan, GRI – Global Reporting Initiative – Belarus, Kazakhstan, Kyrgyzstan, Moldova, an international organisation developing Russia, Tajikistan, Turkmenistan, Ukraine and promoting a recognised and credible and Uzbekistan. sustainability reporting framework that can be applied by all organisations regardless of their size, sector or location. COVID-19 – A severe acute respiratory infection caused by the SARS-CoV-2 coronavirus (2019-nCoV). GRI Standards – The most recent version of the internationally accepted sustainability reporting framework developed by the Global CSR – corporate social responsibility Reporting Initiative (GRI).
GWh – gigawatt hour
176 SUSTAINABLE DEVELOPMENT REPORT 2019 H HAZID/ENVID – hazard identification ISO 8217 – The international standard specifying the requirements for fuels for use in marine diesel engines and boilers, prior to conventional HAZOP – hazard and operability study onboard treatment (settling, centrifuging, filtration) before use.
HEI – higher educational institution ISO 9001 – The international standard establishing the criteria for a quality HR – human resources management system, with guidance on achieving sustainable outcomes.
HSE – health, safety and environment IT – information technology I IIoT – Industrial Internet of Things ITAT – The Gazprom Neft Information Technology, Automation IPIECA – International Petroleum Industry and Telecommunications department. Environmental Conservation Association – a global non-profit oil and gas industry association promoting environmental and social IUCN – International Union for Conservation issues. of Nature and Natural Resources – an international organisation working in nature conservation and the sustainable use of natural IRMF – integrated risk management resources. framework – utilised in delivering a continuous streamlined process used in identifying, assessing, monitoring and responding to risks, K km – kilometre at all levels.
kt – kilotonne ISO 14001 – The international standard specifying the requirements for an effective environmental management system. L LTIF – lost time injury frequency – calculated as follows: total number of lost time injuries (including ISO 26000 – The international social fatalities) in the workplace ÷ total hours worked responsibility standard, published in 2010 × one million man-hours. and covering all companies and sectors, providing guidance on the general terms and principles of corporate social responsibility activities.
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M m3 – cubic metre P p.p. – percentage point
material topics – Typically used in the context PDCA – plan-do-check-act – a four-step of economic, environmental or social management method used in business value, this term is applied to issues that for the control and continuous improvement may reasonably be considered important of processes and products. for reflecting an organisation’s economic, environmental and social impacts, or influencing the decisions of stakeholders. PHSER – HSE risk analysis
motor fuel class – Emissions standards PMAC – polymer-modified asphalt cement introduced under Government Decree No. 118 of 27 February 2008, “Technical regulation on requirements for automotive and aviation PR – public relations gasoline, diesel and marine fuel, jet fuel and heating oil”, similar to European emissions standards (Euro 1–6). PRMS – Petroleum Resource Management System
mt – million tonnes PSE – process safety event
mtoe – million tonnes of oil equivalent R R&D – research and development
MW – megawatt RBI – risk-based inspection – an analysis methodology and process N NEMS – National Emergency Management involving the qualitative or quantitative System assessment of the probability of failure (PoF) and the consequence of failure (CoF) associated with a specific process unit.
NOx – nitrogen oxides
RCA – root cause analysis – a problem-solving O oilfield services – Oil- and gas-field services, methodology used in identifying the root causes including well drilling, rig installation, cluster- of faults or problems. pad installation, well workovers, and the repair of drilling equipment. RCM – reliability-centred maintenance – a structured process for identifying problems OMS – operations management system which, once addressed, improve equipment productivity and/or reduce maintenance costs.
178 SUSTAINABLE DEVELOPMENT REPORT 2019 ROACE – return on average capital employed U UN SDGs – United Nations Sustainable Development Goals
Rosprirodnadzor – Federal Service for the Supervision of Natural Resources V VHI – voluntary health insurance (Russian Federation)
VOC – volatile organic compound RSPP – Russian Union of Industrialists and Entrepreneurs VR – virtual reality
SO – sulphur dioxide S 2 VTS – vehicle tracking system
SPE – Society of Petroleum Engineers W WBCSD – World Business Council for Sustainable Development stakeholder – An individual or entity with a direct interest in another organisation’s operations, with the potential to impact or be WRI – World Resources Institute impacted by such organisation’s activities and performance. WWF – World Wildlife Fund
sustainability (non-financial) reporting/ – A sustainability report is a report published by a company or organization about the economic, environmental and social impacts caused by its everyday activities. A sustainability report is the key platform for communicating sustainability performance and impacts – whether positive or negative.
sustainable development – A sustainability report is a report published by a company or organization about the economic, environmental and social impacts caused by its everyday activities. A sustainability report also presents the organization's values and governance model, and demonstrates the link between its strategy and its commitment to a sustainable global economy.
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CONTACTS AND FEEDBACK
Investor Relations We welcome your feedback on this Department report. Your feedback and suggestions on the information we provide help us improve the quality of our non-financial Phone: +7 (812) 385-95-48 reporting - and help improve the company's effectiveness and efficiency, Email: [email protected] as a whole.
If you would like to let us know your views, or if you have any questions on anything of interest to you, please get Gazprom Neft PJSC in touch using the contact information Postal address below.
We will take all comments and Pochtamtskaya ul. d. 3-5, questions on board in preparing next St Petersburg 190000, Russia year's Gazprom Neft Sustainable Development Report. Phone: +7 (812) 363-31-52, 8 (800) 700-31-52
Fax: +7 (812) 363-31-51, 8 (800) 700-31-51
Contacts page Feedback page on the company's on the company's website website
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