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’09 JSC GAZPROM NEFT SUSTAINABILITY REPORT 2009 ENERGY FOR LIFE ENERGY FOR PEOPLE JSC GAZPROM NEFT SUSTAINABILITY REPORT 2009 Presented below is Sustainable Development Report of JSC Gazprom Neft for 2009. Since the year 2007, the Company has been annually summing up the results of this activity, informing the stakeholders of its priorities and achievements. This fourth release of the Report describes the Company’s efforts in achieving the sustainable development goals set in the corporate strategy. In this Report, such terms as JSC Gazprom Neft, Gazprom Neft, the Company, and the Group in various versions mean JSC Gazprom Neft and its affiliates and subsidiaries. The Report describes the financial standing and performance based on the consolidated data of JSC Gazprom Neft. The data describing the activities in the social sphere and labor relations, and environmental protection results, cover JSC Gazprom Neft and its affiliates and subsidiaries in Russia and the CIS, if not otherwise specified in the text. 2 JSC GAZPROM NEFT SUSTAINABILITY REPORT 2009 CONtENts 5 1. LEttER FROm thE ChaIRmaN 71 8. SaFE dEvELOPmENt: INdustRIaL OF thE maNaGEmENt BOaRd aNd ENvIRONmENtaL saFEtY, OCCuPatIONaL hEaLth 7 2. GazPROm NEFt IN 2009 72 Strategy AND management 8 ABOUT ThE Company 73 Occupational health AND SAFETY 12 KEY AChIEvEMENTS OF 2009 76 INDUSTRIAL SAFETY 77 REDUCTION OF ADvERSE ENvironmental 15 3. ImPLEmENtatION OF thE sustaINaBLE impacts AND EFFICIENT USE OF RESOURCES dEvELOPmENt stRatEGY: CONsIstENCY aNd EFFICIENCY 84 9. AppendIx 1. sELECtEd tERms aNd aBBREvIatIONs 23 4. SustaINaBLE dEvELOPmENt maNaGEmENt 24 Integration OF ThE sustainable 86 10. CONtaCts aNd FEEdBaCk DEvELOPMENT PRINCIPLE INTO ThE Company’S practice 25 Corporate GOvERNANCE AND Operations Management 26 Implementation OF ThE SYSTEMIC approach TO management 26 Interaction wITh StakehOLDERS 27 Corporate Communications 31 Sustainability REPORTING 33 5. REsOuRCEs FOR thE FutuRE: ECONOmIC dEvELOPmENt 34 Strategy Implementation: GROwTh AND Efficiency 42 Vector OF INNOvativE DEvELOPMENT 47 6. HumaN REsOuRCEs dEvELOPmENt aNd sOCIaL PROGRams 48 Strategy AND management 50 PERSONNEL Characteristics 51 PERSONNEL RECRUITMENT AND TRAINING 52 MOTIvation AND wages 54 Cooperation wITh TRADE UNIONS 54 SOCIAL PROGRAMS 59 7. CONtRIButION tO REGIONaL dEvELOPmENt 60 Strategy AND management 60 REGIONAL cooperation AND SOCIAL INvESTMENTS 69 ChARITIY 3 JSC GAZPROM NEFT SUSTAINABILITY REPORT 2009 Dear colleagues, In the year 2009, Gazprom Neft confirmed its reputation of a stable and efficient company once again. In a difficult financial and economic environment, the Company increased its oil production and refining outputs, and extended its assets in and outside Russia. Along with this, we strive to ensure the optimal balance of the economic, environmental, and social components of the Company’s activity, to generate an environment friendly for business and for development of our employees’ innovative potential, thus providing a stockpile for stable growth in the future. The sustainable development strategy is an integral part of the Company’s long-term strategy. Creating a firm basis for large-scale growth, for establishment of Gazprom Neft as a world class company, we consistently set and achieve targets both of financial and technological nature and those aimed at increasing the social capital and natural resources conservation. These targets are closely interrelated, for successful modernization is impossible without proper care of the Company’s human resources, and you cannot successfully compete on the world market today without improving your environmental safety. In 2009, our sustainable development activity was aimed at improving the quality and efficiency of the key social and environmental programs. Under the challenging economic conditions, we have learned to manage these programs better, to focus our resources on strategic sectors, and to set our priorities with regard to material issues of the day. Improvement of corporate governance, development and implementation of policies and standards relying on the best international and Russian practice in industrial safety, occupational health and environmental protection, as well as in human resources development and community investments – have raised this work to a higher level, enabling us to retain and develop programs important for our employees and social partners. Among the priorities of the year for the Company were improvement of the employee motivation and professional development system, social support to employees, involvement in the social and economic development of the regions where Gazprom Neft operates, and implementation of large-scale programs aimed at higher industrial and environmental safety. The innovative technological, social, and environmental initiatives of Gazprom Neft presented in this Report have become a material input to implementation of the Company’s long-term development strategy. Many of these initiatives have also won public recognition, receiving awards and prizes of governmental agencies and of public and professional organizations. In these efforts, Gazprom Neft actively cooperates with a broad range of stakeholders: the Government, shareholders, employees, users, and suppliers, as well as with local communities in the regions where the Company operates. we strive to build this interaction upon a basis of mutual trust and responsibility. The Company emphasizes the transparency of its activity. In 2009, the information disclosure quality of Gazprom Neft was recognized both in and outside Russia. The annual report of the Company was named the best in the non-financial sector by the results of the 11th annual competition of annual reports of the Expert RA rating agency. Gazprom Neft was also ranked first among global oil and gas industry companies for best financial disclosure procedures by the IR Global Rankings. The Company’s sustainability reports supplement its financial reporting, reflecting the balance of the financial, industrial, social, and environmental components of the Company’s activity. Oriented at the best international and Russian practice, Gazprom Neft has started implementation of the internationally recognized sustainability reporting guidelines. The dynamic growth of the Company, as well as the developments concerning its structure and business processes, requires careful adaptation of our sustainability reporting to the new conditions. we consider the 2009 Sustainable development report as a step in this direction. Presenting you this Report, I hope for constructive and concerned discussion of both our today’s performance and problems that have yet to be solved. I would also like to express my gratitude to all employees of the Company who took part in the preparation of this Report. Alexander Dyukov, Chairman of the Management Board, Gazprom Neft 5 ENERGY FOR LIFE ENERGY FOR PEOPLE 2 GAZPROm NEFt IN 2009 GAZPROM NEFT IN 2009 Energy for life 2 ENERGY FOR PEOPLE GazPROm NEFt IN 2009 aBOut thE COmPaNY Gazprom Neft, a subsidiary of JSC Gazprom, The Company’s core lines of business COmPaNY’s is one of Russia’s largest and fastest-growing A Oil and natural gas prospecting, BusINEss oil and gas companies. Gazprom Neft is development, production, and sales Russia’s fifth company by oil production A Oil refining and marketing of GEOGRaPhY level, and third, by the oil refining output. petroleum products The Company’s proved hydrocarbon The Company carries out its activities reserves by the SPE (PRMS) classification in Russia’s largest oil- and gas-bearing exceed 1 billion TOE, which positions the stRatEGY regions such as Khanty-Mansiysk Company among the twenty world’s largest Autonomous District, Yamalo-Nenets oil companies. The Company employs over The strategy of JSC Gazprom Neft Autonomous District, Tomsk, Omsk and 50 thousand people. is oriented to increase the scale and Tyumen Regions. expand the geography of the business, and to maintain and improve its The Company’s major oil refining efficiency. The goal of the Company’s facilities are located in Moscow, the long-term Development Strategy until Omsk and Yaroslavl Regions. The 2020 is to establish Gazprom Neft as Gazprom Neft’ distribution network a global company of Russian origin operates countrywide. efficiently competing on the worldwide oil and petroleum products markets. Gazprom Neft is strengthening its positions on international markets. The Company operates in Kazakhstan, Kyrgyzstan, Tajikistan, and the Republic of Belarus. The Gazprom Neft assets outside Russia include companies in Serbia and Italy. The Company stRatEGIC GOaLs implements projects in the Middle East, OF JsC GazPROm NEFt Africa, and Latin America. uNtIL 2020 GROwTh OF PROvED OIL RESERvES: UP TO 2,200 MILLION TONS kEY FINaNCIaL aNd OPERatIONaL REsuLts IN 2009* GROwTh OF OIL PRODUCTION: Proceeds, US$ millions 24 166 UP TO 90–100 MILLION TOE A YEAR EBITDA, US$ millions 5 977 Oil and gas production, millions of barrels, oil equivalent GROwTh OF OIL REFINING (including the interest in subsidiaries assessed by the share 369,8 OUTPUT: UP TO 70-80 MILLION interest method) TONS A YEAR Refining, millions of tons (by corporate refineries, and subsidiary refineries included 33,4 GROwTh OF SALES OF hIGh ADDED by the share interest method) vALUE OIL PRODUCTS: UP TO 40 MILLION TONS A YEAR * For more details of the financial and industrial results of the Company’s activity, see «JSC Gazprom Neft Annual Report for 2009» 8 JSC GAZPROM NEFT SUSTAINABILITY REPORT 2009