GAZPROM GROUP’S SUSTAINABILITY REPORT 2018 2018 | Gazprom Group’s Sustainability Report TABLE OF CONTENTS Message from Gazprom CEO 4 Focus on the Person. People at Gazprom About the Report Definition of Material Topics to Be Covered in the Report 9 Stakeholder Engagement 13 Energy for People 2.1. HR Management at Gazprom 72 2.2. Gazprom Group’s Personnel 73 2.3. Respect for Labour Rights About Gazprom Group and Human Rights 75 2.4. Social Partnership 76 Gazprom Group’s Business Model 20 2.5. Corporate Culture Gazprom Group’s Strategy 22 and Communications 77 Gazprom Group’s Key Performance 2.6. Financial and Non-Financial Indicators 23 1.1. Gazprom Group’s Role Incentives for Employees 77 in National Development 34 Corporate Governance 24 2.7. Gazprom Group’s Social 1.2. Gas Supplies to Russian Policy 79 Sustainability Management 29 and International Consumers 36 2.8. Employee Training 1.3. Crude Oil and Petroleum and Development 80 Products Supplies 54 2.9. Collaboration with Universities, 1.4. Electricity and Heat Supplies 60 and Young Employees 82 1.5. Gazprom Group’s Contribution 2.10. Process Safety 84 to National Industrial Development 63 2 Life in a Favourable Environment Focus on the Person. People Next to Us Appendices Appendix 1. GRI Content Index 14 0 Appendix 2. For the Section “About Gazprom Group” 150 Appendix 3. 4.1. Environmental Sustainability For the Section “Energy for People” 164 Management and Environmental Control 108 Appendix 4. For the Sections “Focus 4.2. Environmental Protection on the Person. People at Gazprom” and Sustainable Use of Natural and “Focus on the Person. People Next Resources 112 to Us” 174 4.3. Climate: Greenhouse Gas Appendix 5. Emissions Management 128 For the Section “Life in a Favourable 3.1. Partnership with the Regions 94 Environment” 184 3.2. Dialogue with Local Appendix 6. Communities 97 Reporting Principles and Boundaries 193 3.3. Helping Those in Need 100 Appendix 7. 3.4. Linking Times and Nations: Glossary of Abbreviations and Code Support of Culture and Arts 102 Names used in the Report 194 3.5. Sponsorship of Business Appendix 8. and Public Events 103 Assurance of the Russian Union of Industrialists and Entrepreneurs 197 3.6. Sports for Adults and Children 103 Appendix 9. Approval from FBK 198 Contacts and Feedback 200 3 2018 | Gazprom Group’s Sustainability Report Message from Gazprom CEO Dear friends, The Gazprom Group is among the leaders of the global energy market. Our operations influence the lives of millions of people both in Russia and abroad. Therefore, the needs and interests of society are at the core of our large-scale activities. Gazprom’s top priorities include reliable gas supply to consumers, environmental protection, ensuring safe labour conditions and staff development, as well as facilitating social and economic development of the Russian regions. Consumer access to natural gas is a prerequisite for a high quality of life. Gazprom is the key supplier of this energy source to the Russian market and its largest exporter globally. In 2018, we sold 201.9 bcm of gas abroad. The share of our gas consumed in Europe increased to 36.8%. Domestic supplies increased as well: in 2018, they amounted to 239.7 bcm. The gas penetration rate in the Russian regions reached 68.6%. Gazprom takes due care of energy resources replenishment. In 2018, we added 796.6 bcm of gas in Russia as a result of geological exploration activities, which is 1.6 times more than was produced during the Reporting Year. For 14 years running, we have maintained gas reserves growth rate above production rates. We focus a lot on environmental matters: improvement of the energy efficiency of our operations, sustainable use of natural resources, and minimization of environmental footprint. To that end, Gazprom implements a comprehensive set of activities, 4 in particular, it develops the Environmental Management provides financial support to the St. Petersburg State System, upgrades production facilities, introduces Autonomous Healthcare Institution “Hospice for Children” energy-efficient equipment and innovative green in order to ensure the procurement of pharmaceuticals technologies, and consistently reduces greenhouse and expendable medical materials. gas emissions. Gazprom is also paving the way for converting motor vehicles to natural gas as the most We pay the utmost attention to the preservation efficient and environmentally friendly type of fuel. of the original living environment, local economy and trade In 2018, Gazprom built more than 20 NGV refuelling of the indigenous peoples of the North where the core stations in Russia, and the Company’s country-wide resource base of Gazprom is located. For example, we network of refuelling stations now comprises more build our production facilities in such a way that they than 300 facilities. would not interfere with the traditional lifestyle of the local population. Our environmental protection efforts are highly appreciated by reputable experts. Gazprom has For more than ten years, we have been implementing the lowest carbon footprint among the leading global the “Gazprom for Children” Program which is a unique oil and gas companies according to the international project in terms of its scale. In 2018, the Program covered climate ranking of the Carbon Disclosure Project (CDP). 25 regions of Russia, and the construction of 51 sports Moreover, the Company traditionally holds the top position facilities was completed within its framework. in the “Energy” Section of the CDP ranking for Russia. Gazprom develops steadily and shows strong financial Gazprom does not rest on its laurels. During the Reporting performance. In 2018, we achieved record-high levels Year, the Company signed the Guiding Principles of revenue, EBITDA and net income. The positive free cash on Reducing Methane Emissions Across the Natural Gas flow was preserved amid simultaneous implementation Value Chain. We will continue working in this direction of several large-scale infrastructure projects. The total and promoting these ideas among other market taxes and fees of similar kind paid by Gazprom exceeded participants. RUB 3.2 trillion in 2018, which is 28% more than in 2017. The Gazprom Group is one of the largest employers On the basis of the outcomes of the Reporting Year, it was in the Russian Federation, with its team comprising over resolved to pay record-high dividends to shareholders 466,000 people. We ensure advanced labour safety in the amount of RUB 393.2 billion, or RUB 16.61 per and strictly adhere to regulatory requirements. We carry share, which is an unprecedentedly high dividend payout out comprehensive work aimed at advanced training in the history of Gazprom. and professional retraining of our employees. Dear friends, Gazprom is a socially responsible Company. We support sports, culture and arts, and provide assistance Sustainable development remains an invariable guiding to educational and healthcare institutions. For instance, principle for us. We will continue pursuing it in our work the Gazprom Group participated in the construction for the sake of the present and future generations. and launch of the first Palliative Care Centre in the Toksovo settlement, Leningrad Region, for children suffering from oncological diseases and infant cerebral palsy, Alexey Miller, which was opened in 2018. Gazprom on an annual basis Chairman of the Gazprom Management Committee 5 2018 | Gazprom Group’s Sustainability Report GAZPROM GROUP’S Pioneer in the development 12% POSITION IN 16% of Russia’s NATIONAL AND Arctic offshore World’s largest of Russia’s crude oil Largest domestic GLOBAL ENERGY natural gas resources and gas condensate heat energy INDUSTRY Global leader by natural exporter output producer gas reserves First among local Operator of OVER peers to commence Russia’s Unified underwater gas Gas Supply 69% extraction System (UGSS) 50% 14% Key natural gas of Russia’s natural supplier in Russia of domestic and associated gas and the FSU electric power of Russia’s natural generation gas output processing Russia’s best energy Owner of the world’s Owner of the company in terms of largest network of world’s largest corporate climate reporting 12% high-pressure natural 10% underground and greenhouse gas gas trunk natural gas storage 18% emission reduction strategy pipelines capacity rated in the CDP Climate Performance Leadership Global leader by natural of domestic of domestic oil refining Index gas production heat energy and stable gas generation condensate processing 6 GAZPROM GROUP’S Pioneer in the development 12% POSITION IN 16% of Russia’s NATIONAL AND Arctic offshore World’s largest of Russia’s crude oil Largest domestic GLOBAL ENERGY natural gas resources and gas condensate heat energy INDUSTRY Global leader by natural exporter output producer gas reserves First among local Operator of OVER peers to commence Russia’s Unified underwater gas Gas Supply 69% extraction System (UGSS) 50% 14% Key natural gas of Russia’s natural supplier in Russia of domestic and associated gas and the FSU electric power of Russia’s natural generation gas output processing Russia’s best energy Owner of the world’s Owner of the company in terms of largest network of world’s largest corporate climate reporting 12% high-pressure natural 10% underground and greenhouse gas gas trunk natural gas storage 18% emission reduction strategy pipelines capacity rated in the CDP Climate Performance Leadership Global leader by natural of domestic of domestic oil refining Index gas production heat energy and