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OFFSHORE ECO ZERO DISCHARGE PROJECTS PRINCIPLES PRINCIPLE

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SAFETY HUMAN MONITORING MARGIN FACTOR DEMONSTRATES…

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PLATFORM IN HARMONY REEF SPOT WITH NATURE ZERO DISCHARGE  CLEAN SEA

OF THE CLOBAL OF THE WORLD’S CRUDE OIL PROVED OIL LUKOIL: OFFSHORE PROJECTS PRODUCTION RESERVES

Kravtsovskoe (D-6) 2013 depth ~480 m 2004 depth 35 m LUKOIL share in the project is 30% Pl-858 Barents Sea 2008 NORWAY Barents Sea 2016 depth ~230 m LUKOIL share in the project is 20% 2014 depth 13 m Trident (ЕХ-30) 2011 depth 350–1200 m Caspian Sea LUKOIL share in the project is 87.8% 2016 depth 11 m ROMANIA V.I. Graifer’s oilfield Caspian Sea Block 12 2018 depth 5–8 m of 2017 depth 150–400 m LUKOIL share in the project is 60% Block 10 Caspian Sea Gulf of Mexico 1996 depth 50–500 m LUKOIL share in the project is 10% 2019 depth 250–600 m AZERBAIJAN LUKOIL share in the project is 20% MEXICO Block 28 Gulf of Mexico Zhenis 2018 depth 60–600 m Caspian Sea LUKOIL share in the project is 25% 2019 depth 150 m LUKOIL share in the project is 50% KAZAKHSTAN Tano (Atlantic ) Ghasha 2014 depth 1600–3000 m LUKOIL share in the project is 38% GHANA 2019 depth 24 m LUKOIL share in the project is 5% UAE Etinde Gulf of Guinea () 2014 depth 10–75 m Gulf of Guinea (Atlantic Ocean) LUKOIL share in the project is 30% CAMEROON 2014 depth 1200–2000 m LUKOIL share in the project is 18% Marine XII BSWAp Gulf of Guinea (Atlantic Ocean) Gulf of Guinea (Atlantic Ocean) NIGERIA 2019 depth 20–90 m 2014 depth 1200–2000 m LUKOIL share in the project is 25% LUKOIL share in the project is 1.5% REPUBLIC OF THE CONGO 3 ZERO DISCHARGE  CLEAN SEA

SEA PROJECTS BALTIC SEA The Baltic Sea is where LUKOIL produced its first oil from an In 2011, LUKOIL became the first Russian company to get a qualifying permit offshore oilfield. Kravtsovskoe (D-6) was discovered in 1983 and is for the operation in the off Norway as an operator now one of the largest oilfields in the Russian continental shelf in company. Today, the Company is taking part in two offshore geological the southeast part of the Baltic Sea. Oil production is carried out projects in the Norwegian sector of the Barents Sea. from an offshore ice-resistance stationary platform D-6. It is the first Russian oil-producing platform designed and built by Russian design In Russia, LUKOIL built a unique export terminal in the Barents Sea. and organizations using state-of-the-art technologies. Its unique character is primarily due to its natural conditions: the Barents Sea is ice-coated for 247 days a year on LUKOIL plans to continue production in the region due to the average with the ice thickness of 1.25-1.8 m. development of the new oilfields opened by the Company (the principal of which is oilfield D33). OTHER CASPIAN SEA COUNTRIES

The North Caspian is one of the key of oil and gas 2019 was a year of success in participating in new foreign production growth. In 1995-2016, the Company opened 10 oilfields offshore projects for LUKOIL. with the total initial recoverable oil reserves of 7 billion barrels of oil equivalent. The concept of oilfields development effective to 2030 contemplates In October 2019, the Company purchased a share of “Ghasha” the construction of 25 platforms and 1.5 thousand km of pipelines, running oil and gas production confession from Abu Dhabi predominantly under the sea surface. The first oilfield launched into operation ADNOC. was Yu. Korchagin’s oilfield, and in 2016 LUKOIL started the commercial operation of V. Filanovsky’s oilfield. In April 2019, the Ministry of Energy of the Republic of Kazakhstan, JSC NC “KazMunaiGaz” and PJSC LUKOIL signed the Contract for Zhenis Block From 1996, LUKOIL also takes part in the development of offshore hydrocarbons development and production for 34 years. gas condensate oilfield Shah-Deniz in the Azerbaijan shelf of the Caspian Sea. In September 2019, PJSC LUKOIL completed the purchase of 25% share in the block In 2019, Rakushechnoye gas condensate oilfield located in the Russian sector “Marine XII” in the Republic of the Congo from New Age company. Besides, LUKOIL of the Caspian Sea was renamed the V.I. Graifer’s oil field, after the Chairman of the participates in the offshore projects in Nigeria, Ghana and Cameroon. PJSC LUKOIL Board of Directors, who significantly contributed to the oil production of Russia. The projects in Western gave the Company experience in the deepwater fields development.

Further, the Company participates in development of offshore projects in Mexico, Norway, Romania and Azerbaijan.

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LUKOIL ECO PRINCIPLES

NONWASTE STRUCTURAL TECHNOLOGIES INTEGRITY

HIGH CONTINUOUS QUALIFICATION MONITORING

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ZERO DISCHARGE PRINCIPLE THE PRINCIPLE OF «ZERO DISCHARGE»

and collection 1. SORTING OUT of waste

and onshore 2. LOADING transportation of waste

3. WASTE RECYCLING

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KEY SAFETY FEATURES AND SAFETY MARGIN ENGINEERING SOLUTUIONS

CUTTINGEDGE GLOBAL ENGINEERING SOLUTIONS HAVE BEEN INTRODUCED TO THE VARANDEY TERMINAL

ZERO DISCHARGE  CLEAN SEA ZERO DISCHARGE – CLEAN SEA

INTERNATIONAL CERTIFICATES HUMAN FACTOR Accreditation of the international Accreditation of the international JOIFF organization (Ireland) specializing in (Great Britain). The OPITO International brigades, rules of respiratory system LUKOIL HAS BUILT THE Industry Training Organization utilization, etc. FIRST RUSSIAN CORPORATE sets educational standards and TRAINING CENTER TO requirements to personnel training situations on a global scale, as well as sets its PROVIDE THE HIGHSKILLED production. emergency rescue team training. PERSONNEL TO WORK AT OFFSHORE OIL AND GAS FACILITIES

EMERGENCY PREPAREDNESS The corporate training center evacuation from o shore LUKOIL (Ilyinka settlement, Astrakhan platform into the open sea Oblast) provides education in and survival in the open water CORPORATE 95 training programs including (individual survival kit, lifeboat, TRAINING advanced training. rescue raft). CENTER: The training programs provide for About 100 exercises and training practical exercises with di erent sessions aimed at emergency simulators that reproduce real oil and petroleum spill response working conditions at o shore oil are conducted annually. LUKOIL boasts more than Specialized emergency rescue and gas facilities under standard The large-scale exercises at the a decade of accident-free ships carrying equipment conditions, and in extraordinary Company’s o shore facilities to eliminate oil spills at sea facilities (marine terminals, are on duty 24/7 around and emergency situations, are traditionally attended by oil and gas production platforms, as well as in the conditions of the crews from the Russian sub-sea pipelines, and other possible re outbreaks ( re Ministry of Emergency Situations similar infrastructure). ghting in case of gas leaks and and the Ministry of Transport, in ammation at pressurized as well as maritime rescue eet process units, re extinguishment of neighboring countries, the One of the Company’s of a burning helicopter, working countries of the Arctic Council key priorities is to set up in smoke chamber). Personnel and other foreign observers and in house emergency is also trained in evacuation experts. rescue teams (ERT) from a helicopter that has come composed from the most down in the water (helicopter experienced service cabin simulator and rescue hoist), personnel.

THE CENTER IS CAPABLE OF TRAINING MOR E

THAN 2000 PERSONS PER YEAR Safety of the Company’s

by professional emergency and rescue teams (under contracts with Federal State Budgetary Institution “Marine Rescue Service”) who have the best equipment

elimination.

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MODEL STRUCTURE OF LUKOIL’S OPERATIONAL MONITORING DEMONSTRATES… ENVIRONMENTAL MONITORING SYSTEM

PRESERVATION OF FAVORABLE ENVIRONMENTAL CONDITIONS INFORMATION MANAGEMENT IS AMONG LUKOIL’S TOP SUBSYSTEM (IMS) PRIORITIES MONITORING CENTER DATA COLLECTION STATIONS

Regular measurements Primary and state observation Data transfer information of environmental to MIS processing components

INFORMATION MEASUREMENT NETWORK (IMN)

WEATHER LAB VESSELS STATIONS

AUTOMATED AUTOMATED AEROLOGICAL CONTROL INDUSTRIAL EMISSION STATIONS CONTROL STATIONS

AUTOMATED MOBILE AIR QUALITY ECOLABS CONTROL STATIONS AUTOMATED FIXEDSITE WATER QUALITY ASSAY CONTROL STATIONS LABS

Collection, processing, analysis, Information support accumulation, storage and Managerial of environmental distribution of monitoring decision-making activities information ZERO DISCHARGE  CLEAN SEA ZERO DISCHARGE – CLEAN SEA

INTEGRATED COASTAL VESSEL SURVEY INTEGRATED WATER SAMPLING OFFSHORE VESSEL AT COASTAL SURVEY MONITORING STATIONS LITHЛИUAТВNАIA DATA COLLECTION AND WATER SAMPLING ПPOОLЛAЬNШDА LITHUANIA ANALYSIS ALONG KlaipКлайпedaеда PIPELINE ROUTES BOTTOM Klaipeda SAMPLING РRUSSОССIИAЯ RUSSIA FIXEDSITE SURVEYS VISUAL MONITORING METEOROLOGICAL DATA COLLECTION ONSHORE AND COASTAL AND ANALYSIS EN ROUTE ANALYSIS (SPECIES WATER SAMPLING AT COMPOSITION, QUANTITY, ПлаD-6тформа Platform D-6 OFFSHORE FACILITIES MIGRATION, ETC.) D-6 Platform SURFACE FLOW POLLUTION MONITORING ALONG ANALYSIS COASTAL WALKING ROUTES

SEISMIC STATE CONTROL ZЗelenogradskеленоградск VESSEL SATELLITE TRAWLING KaliningradКалининград MONITORING SURVEYS BaltiyskБалтийск IDENTIFICATION OF FISH FAUNA POSSIBLE OIL SPILLS SAMPLING USING THE EUROPEAN SPACE AGENCY METHODOLOGY GdanskГданьск LAB Gdansk PROPAGATION PREDICTION TESTS OF HYPOTHETIC OIL SPILLS (DIRECTION, TRAJECTORY AND TRANSFER RATE) PHYSICAL ПNOОT РЕ A ЗSУINGЛЬLТАEТ SPIАМL СL ПFУROТНMИ OКIОFPВ ОDГ6О O МRОН ИТОРИНГА D6 IN VIEW OF THE CHEMICAL HYDROMETEOROLOGICAL UNDНЕ БEЫRЛWОA ВTЫERЯ PIPELIВЛЕНОN НE ИW ОAДНS RОEVГОEA ПLЯТEDНА ОТ МЛСП D6 CONDITIONS BIOLOGICAL ИЛИ ОТ ПОДВОДНОГО ТРУБОПРОВОДА. НЕФТЯНЫЕ MПЯТOSНTА O БFЫ THЛEИ OСIОLС SРPЕILДLОSТ WОEЧRЕEНЫ НА РЕЙДЕ ПОРТА БАЛТИЙСК И ОСНОВНЫХ СУДОХОДНЫХ ТРАССАХ CONCENTRATED AT THE ROADSTREAD OF NOT A SINGLE SPILL FROM OIFP D-6 OR UNDERWATER PIPELINE WAS REVEALED. MANY YEARS OF OBSERVATIONS WITHIN THE AREA OF COMPANY’S MTHOSET BOAF TLHTEI YOSILK S PPILOLSR WTE AREN CDO NCALEONTNRGAT EMDA ATJ OTHRE ROADSTREAD OF RESPONSIBILITY PROVE THAT ITS OFFSHORE FACILITIES HAVE NO TNHAEV BAIGLTAYTJSIKO PNO RRTOUT AND AELSONG MAJOR NAVIGATION ROUTES. NEGATIVE ENVIRONMENTAL IMPACT

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AN ARTIFICIAL REEF IS A SUBSEA BOTTOM LANDSCAPE ELEMENT, WHICH PLATFORM REEF  HELPS ENHANCE BIO AND FISH PRODUCTIVITY OF THE WATER BODY. ARTIFICIAL REEFS ARE BIO FRIENDLY CONSTRUCTIONS. THEY TURN THE SEAL HOUSE DEAD BOTTOM INTO OASES OF SUBSEA LIFE. THE GREATER BIODIVERSITY IS, THE HIGHER IS THE CHANCE OF THE SEA OR A WATER BODY TO RESPOND TO POLLUTION AND TO RECOVER ITSELF.

SPECIAL ATTENTION IS PAID TO THE STATE OF BIOTA, A HISTORICALLY ESTABLISHED CLUSTER OF SPECIES THAT LIVE IN THE VICINITY OF LUKOIL’S OFFSHORE LICENSE BLOCKS

ONE OF LUKOIL OFFSHORE PLATFORMS (AT THE YU. KORCHAGIN’S FIELD) ACTUALLY IS AN ARTIFICIAL REEF. ITS SUBSEA FOUNDATION BECOMES OVERGROWN WITH SEAWEEDS AND SERVES AS A SUITABLE GROUND FOR FASTENING OF , ARTHROPODS OR OTHER KINDS OF INVERTEBRATES. THE ESTABLISHED STRUCTURE BECOMES INHABITED BY DIFFERENT CRUSTACEANS, AND THE FISH THAT FINDS FOOD, REFUGE AND A SPAWNING AREA HERE. THE FISH IS FOLLOWED BY CASPIAN SEALS.

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FINANCING OF COMPENSATION EFFORTS ON THE REPRODUCTION OF FISH SPOT FISH RESOURCES BY THE COMPANY IN 2019 ≈ RUB 118 MLN

Environmental culture has long become an integral part of LUKOIL’s production activities. Repopulation of valuable fish species is a separate activity area as part of the Company’s environmental program. , A RELICT SPECIES THAT SURVIVED MILLIONS OF YEARS OF EVOLUTION, WHICH ADAPTED TO THE MOST DIVERSE ENVIRONMENTAL CONDITIONS ARE INCLUDED INTO THE ENDANGERED SPECIES LIST (RED LIST). IT IS A KNOWN FACT THAT MOST OF WERE RELEASED THE WORLD’S STOCK (MORE THAN 90%) INTO THE IS LOCATED IN THE CASPIAN BASIN. THEREFORE WATER BODY COMMERCIAL REPRODUCTION OF STURGEONS TO PRESERVE THEIR POPULATION AND BIODIVERSITY IS 2019 GAINING IN IMPORTANCE OVER

ACIPENSERRUTHENUS ENVIRONMENTAL MEASURES TO MINIMIZE THE NEGATIVE EFFECT ON THE FISH FAUNA 35 MLN Sterlet OF PRIME (Acipenserruthenus) FISH FRY is the smallest representative of water intake stations at offshore facilities sturgeons. Its size is are equipped with fish protection systems 1.25 m, it weighs 16 offshore pipeline routes bypass specially THE MEASURES TO PRESERVE BIODIVERSITY ARE kg, its life span is 27 INCLUDED INTO THE DEVELOPMENT PROGRAM TO years. It inhabits the protected natural areas basins of the Black, BE JOINTLY IMPLEMENTED BY THE UN AND THE subsea pipeline construction operations are GLOBAL ENVIRONMENTAL FACILITY Azov, Caspian, White, conducted inview of the sturgeon spawning Barents and Kara . In the wild it feeds on migration routes WHILE LOOKING AT 15CM LONG YOUNG STERLETS ONE CAN water maggots, small participation in young sturgeon HARDLY BELIEVE THAT IN SOME THREE YEARS THEY WILL BE HALF reproduction measures A METER LONG AND TURN INTO A TRUE DECORATION OF THE eggs. BELONGING TO THE CASPIAN BASIN

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CONSERVATION OF BIODIVERSITY

LUKOIL GROUP ENVIRONMENTAL SAFETY PROGRAM LUKOIL has developed and approved the Environmental Safety Program for 2019–2021, which contemplates over 900 activities with the total cost about RUB 106.5 billion with RUB 38.6 billion spent in 2019. This Program incorporates a subprogram «BIODIVERSITY CONSERVATION» as a distinction from past programs.

In 2019, LUKOIL joined the Ministry of Natural Resources and Environment of the Russian Federation working group (the Working Group) on creation and development of the “Business and Biodiversity” Initiative within the federal project “Preservation of biological diversity and development of eco-tourism” LUKOIL’S PROGRAM within the framework of “Ecology” National Project. OF BIODIVERSITY CONSERVATION In 2015, LUKOIL approved its Program of Biodiversity Conservation in pursuance of the instructions given by

The Program was developed in line with statutory and other applicable requirements concerning the TRAINING IN PREVENTION OF ANIMAL DEATHS IN CASE preservation of biodiversity and the joint recommendations of the Project UNDP/GEF-Ministry of Natural OF EMERGENCY OIL SPILLS Resources and Environment of Russia “Mainstreaming Biodiversity Conservation into Russia’s Energy Sector In 2017, at the Naryan-Mar base of LUKOIL Group companies LLC Policies and Operations” and Russian WWF. Varandei Terminal and LLC LUKOIL-Komi the training on the prevention The Program outlines LUKOIL’s principles and approaches to the preservation of biodiversity and the of animal deaths in case of emergency oil spills was held. The event was requirements to documentation drafting, assessment of environmental impact and development of organized by the international SEA ALARM Foundation together with the Ministry of Natural Resources and Environment of Russia and the Project UNDP/GEF- Ministry of Natural Resources and Environment of Arctic Region of the Russian Federation. The Program incorporates the expertise gained in the process Russia «Mainstreaming Biodiversity Conservation into Russia’s Energy Sector Policies and Operations». investments into environmental safety.

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WITH NATURE WWF INTERNATIONAL IN HARMONY ECOREGION PROGRAMS COOPERATION WITH WORLD WIDE FUND FOR NATURE (WWF) AIMED AT THE PROTECTION OF ARCTIC AND BALTIC MARINE ECOSYSTEMS OPERATE SINCE 1990S. WWF BALTIC PROGRAM WITH A HEADQUARTER IN STOCKHOLM () UNITES 9 COUNTRIES INCLUDING RUSSIA. WWF is one of the largest independent international conservation organizations uniting about 5 millions of regular supporters and present in over 100 countries.

Introduction of the Zero Discharge In 2015, WWF and principle by LUKOIL is an example of how LUKOIL entered WWF Rating oil&gas companies can ensure ecosystem into a cooperation approach through the corporate standards system. We should work agreement regarding It is the 6th year running the toward that this principle is implemented the exchange of Company has been participating in the by other companies which operate in Environmental Transparency Rating information, according marine areas (EBSAs) described by the to which the parties of Oil and Gas Companies Convention on Biological Diversity (CBD) carry out bilateral Operating in Russia. in many Arctic and seas in Russia. LUKOIL Group was ranked the 4th The zero discharge principle should also consultations, working be formalized in legislation which would meetings, exchange among 20 oil and gas companies include the responsibility to eliminate information about the in the result of 2019 performance. depositing and discharge into marine environment of waste and raw waste environment protection The Company was awarded the diploma for "Transparency Achievements". water resulting from Russian continental measures and projects. shelf hydrocarbons production. The level of potential environmental Each year, the parties impact of the participating companies approve and sign the is evaluated by the WWF Russia THE EXPEDITION FOR STUDYING THE ATLANTIC WALRUS Roadmap of the actions and the CREON analytical group. OF THE SOUTHEAST PART OF THE BARENTS SEA to be implemented The environmental performance of the fuel As a part of the dialog between LUKOIL and WWF and with participation of the Russian public organization under the Agreement. and energy companies is assessed Marine Mammals Council, an expedition was organized in 2016 for studying the Atlantic walrus in the by a number of criteria such as environmental southeast part of the Barents Sea, in the area of operations of LLC Varandey terminal. It included the monitoring of walruses’ movement and dynamics of their breeding grounds formation with satellite management, scale of impact transmitters and photorecorders, and examination of animals’ tissues for toxicants. on the environment and transparency.

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