NOVATEK SUSTAINABILITY REPORT ON THE TERRITORY OF THE RUSSIAN FEDERATION IN 2013 CONTENT

Letter from the Chief Executive Officer 3 Occupational Health and Safety Training 40 Report and Reporting Process 6 Administrative and Operational Control 41 Company Profile 9 Workplace Certification 42 Main Operational and Production Results for 2013 10 Injury Rate 42 Awards 12 Fire Safety 42 Economic Performance and Sustainability 14 Accidents and Incidents 43 Hydrocarbon Exploration and Production 14 Human Resources and Social Policies 45 Yamal LNG Project 15 Human Resources Management and Labor Resources 45 Processing 16 Personnel Profile 45 Transportation 17 Learning and Development 46 Marketing and Sales 19 Social Policy Concept 50 Dialog with Industrial Consumers 21 Local Communities 54 Corporate Governance 22 Cooperation with Regional Authorities and Municipal Entities 54 Environmental Protection 24 License Compliance 57 Environmental Protection Management 24 Cooperation with Indigenous and Minority Peoples of the Far North 57 Stakeholder Engagement 29 Support to National Non-Profit Organizations 58 New Technical Solutions for Environmental Risk Mitigation 31 Educational Initiatives 58 Key Impacts 32 The All-Together Volunteer Movement and Charity Projects 59 Biodiversity Preservation 37 Sports 60 Energy Consumption and Efficiency 38 SGS Vostok’ s report on sustainability activities Occupational Health, Industrial and Fire Safety 40 in the OAO NOVATEK sustainability report for 2013 61 Occupational Health and Safety Goals and Objectives 40 GRI G3.1 Content Index 63 Workforce Engagement in Occupational Health and Safety, Abbreviations 76 and Provision of Protective Clothing 40 Feedback Questionnaire and Contact Details 77 PAGE 3 Letter from the Chief Executive Officer / NOVATEK SUSTAINABILITY REPORT IN 2013

LETTER FROM THE CHIEF EXECUTIVE OFFICER

In 2013, we launched new hydrocarbon largely due to the competitive production facilities and expanded our advantages of natural gas as compared Purovsky Gas Condensate Processing to other energy sources. Natural gas is Plant by completing the construction of cheaper than liquid hydrocarbons and the plant’s third stage. The first and renewable energy sources, and much second stages of the Stable Gas more environmentally friendly than coal Condensate Fractionation and and safer than atomic energy. According Transshipment Complex at the Ust-Luga to independent forecasts, the LNG port on the Baltic Sea were also put into market will continue growing at a rapid operation. The Ust-Luga Complex is pace and by 2025 its volume may equipped with state-of-the-art systems exceed 460 million tons, which is virtually and has become a new link in our two times higher than its current volume. vertically integrated value chain for gas condensate, which enables us to Russia’s share in the global LNG market increase the value added of our currently comprises less than 5%, but is products. With the successful launches expected to increase with the successful we have completed the expansion of our implementation of new LNG projects. In processing segment and have balanced this case, LNG production at the Yamal our gas condensate processing peninsula compares favorably with other capacities with the relevant production projects due to huge conventional potential. resource base, low production costs and high competitiveness in all major The final investment decision on the consuming markets. The development Yamal LNG Project in late 2013 became of LNG production on the Yamal a stand-out event for NOVATEK. As part peninsula will lead to further development DEAR STAKEHOLDERS, of the project, as at year end 2013, main of the Northern Sea Route and create tenders were held and main contracts additional incentives for the development I am very pleased to present our latest on developing our resource base, for equipment supplies and construction of the Russian industry. Sustainability Report for 2013 and our increasing our hydrocarbon production, works concluded, as well as significant ongoing commitment to operating in a expanding our processing facilities and progress was achieved in concluding In 2013, NOVATEK achieved another sustainable manner. The main objective marketing channels by carefully following long-term LNG sales contracts. year of solid financial results and of our corporate development strategy sustainable development principles. continued to demonstrate excellent consists of creating shareholder value The application of these sustainable As part of our long-term strategy we pay operating dynamics. Due to our along with the adherence to the most development principles underlies our special attention to the international LNG successful geological exploration works stringent Health, Safety and management decision-making process markets, as this represents the most the Company managed to record a Environmental (“HSE”) standards. To and is imbedded throughout the dynamic segment amongst all other more than 130% reserve replacement meet our corporate objectives, we work organization and our corporate training hydrocarbon markets. This growth is rate during the past year. Gross natural guidelines. PAGE 4 Letter from the Chief Executive Officer / NOVATEK SUSTAINABILITY REPORT IN 2013

gas production increased by 8.5%, We act in close collaboration with NOVATEK promotes mutually beneficial We would never reach the level of whereas our liquid hydrocarbon stakeholders by developing interaction co-operation and partnership with the success we have achieved without the production increased by 11.4%. with industrial consumers, increasing federal, regional and local authorities, dedication and commitment of our Following the results of the past year, customer service level and arranging for and we are interested in creating and employees, who are truly considered NOVATEK’s share in Russia’s gross a transparent and competitive promoting a mutually favorable social one of our key assets and the foundation natural gas production totaled 9.3%, an procurement system. We discuss environment in the areas of our for implementing our corporate strategy. increase of 0.5 percentage points matters of production development with operation, and accordingly, we invest It is because of their commitment compared with 2012. representatives of local communities. In funds in social infrastructure coupled with our support that we create the reporting year, we put up for public development. In 2013, NOVATEK safe workplaces, various opportunities In implementing our marketing strategy, debates our plans related to the invested RR 197 million in social- for development and growth, social we methodically expanded the share of Utrenneye field development and economic development of the regions protection and a wide range of benefits. end consumers in our overall gas sales Sabetta sea port construction. where it operates. We provide continuous volumes mix by significantly increasing support to indigenous minority Two thousand and fourteen is a special our market presence in the Moscow and To mitigate the negative environmental populations of the Far North through year for the Company as we celebrate Kostroma regions. We also continued impact, we work on associated educational programs and charitable our 20th Anniversary, and throughout expanding our retail chain for liquefied petroleum gas (APG) utilization. The contributions in various areas. this time period we have built a world- petroleum gas, and in 2013, our sales of level of APG use has almost doubled class natural gas company. We are this environmentally friendly fuel through against the previous reporting period sincerely grateful to all those who have our wholly owned stations increased by reaching 93.7% (including 95% at the been with us throughout these past 5%. In the Chelyabinsk Region, East-Tarkosalinskoye field), and as a twenty years, and we look forward to the NOVATEK initiated discussions with the result, NOVATEK ranked among the top next decade with shared optimism as we local administration on the possible five Russian oil-and-gas companies in continue to construct our Yamal LNG replacement of gasoline and diesel fuel terms of APG utilization efficiency. project and begin the process of used by municipal vehicles with liquefied transforming NOVATEK into a global petroleum gas. Demonstrating openness and natural gas company. accountability to society, in 2013, NOVATEK continued its participation in the Carbon Disclosure Project (CDP), which disclosed information on greenhouse gas emissions and energy CHIEF EXECUTIVE OFFICER, production efficiency, as well as the CDP OAO NOVATEK Water Disclosure Project, which LEONID MIKHELSON disclosed information on the use of water resources. REPORT AND REPORTING PROCESS

NOVATEK prepares its Sustainability Reports in accordance with the Global Reporting Initiative (GRI) guidelines. PAGE 6 Report and Reporting Process / NOVATEK SUSTAINABILITY REPORT IN 2013

REPORT AND REPORTING PROCESS

USING NON-FINANCIAL REPORTING PRINCIPLES FOR PRESENTING AND We consider the regular reporting of Report and disclose the information on SYSTEMS AND VERIFICATION SELECTING INFORMATION NOVATEK’s sustainable development our achievements in social and economic The Company uses an Annual Reporting In preparing this Report we were guided practices as one of our fundamental development of the regions where we cycle. This Sustainability Report for 2013 by the principles of balance, responsibilities to stakeholders. operate, our workplace health and safety, (hereafter referred to as the “Report”) is comparability, accuracy, clarity and Therefore, along with information on and our progress towards minimizing the our seventh such report and has been reliability. financial and operating results provided in environmental impact at our production developed using approaches, and our Annual Report, we also report our operations. Implementing human quantitative and qualitative performance When the Report concept was being contribution and progress toward resources and social policies is also an indicators suggested by Sustainability developed, a working group consisting of sustainable development on an annual essential issue. We discuss relationships Reporting Guidelines of the Reporting representatives of our core business units basis. with our industry partners, government Guidelines of the Global Reporting responsible for preparing the report authorities, NGOs and indigenous Initiative (GRI 3.1), and GRI Oil and Gas compiled a list of the Company’s high- We attempt to analyze how the communities. Sector Supplement for the companies in priority issues directly related to the development of our business affects the the oil and gas sector. The present report economic, environmental and social Company’s stability and economic included 19 new indicators previously impact of our operations, which we felt development of the territories of its undisclosed and complies with the was of the highest interest to our operation. We publish our Sustainability Application Level GRI B+. stakeholders. In preparing the report we took into account the analysis of global Verification of the report’s data and an trends in the oil and gas industry, best Assurance Statement of compliance with reporting practices of world industry the principles and requirements of the leaders, stakeholders’ requests and GRI reporting system have been opinions expressed in the course of prepared by SGS Vostok Ltd. An monitoring, regular communications, joint independent review is published on events and dialogs. Media publications page 61 of this Report. about the Company and auditors’ recommendations were also taken into consideration. PAGE 7 Report and Reporting Process / NOVATEK SUSTAINABILITY REPORT IN 2013

REPORT BOUNDARY The Report presents information on To convert natural gas reserves into }} NOVATEK-TARKOSALENEFTEGAS The scope of data on ОАО NOVATEK, NOVATEK activity in the period from 1 barrels of oil equivalent (“boe”) we used a }} NOVATEK-YURKHAROVNEFTEGAS NOVATEK Polska and NOVATEK Gas & January through 31 December 2013, and single conversion ratio: 1,000 cubic }} Yamal LNG Power is limited due to the non-productive essential information outside the reporting meters = 6.54 boe. To convert crude oil }} Terneftegas nature of activities of these companies. period important for evaluation of facts and gas condensate reserves from tons }} Sibneftegas For the purposes of data consolidation for and events, which occurred in 2013. Data to barrels we used various conversion }} YARGEO a number of quantitative environmental from previous years was used to report ratios depending on the liquid }} NOVATEK-Purovsky ZPK indicators these companies have not on trends with respect to a number of hydrocarbon density at each field applied }} NOVATEK-Transervice been included in the reporting boundary. indicators. by DeGolyer & MacNaughton in their }} NOVATEK-Ust-Luga appraisal report of our reserves. }} Nortgas To avoid repetition, information already The key performance indicators in the }} NOVATEK-AZK disclosed in our Annual Report or previous Report, including those making up the The reporting boundaries for 2013 include sustainability reports is referenced in the GRI EC1 indicator are presented OAO NOVATEK, its core subsidiaries and respective documents. The Company’s current corporate structure according to International Financial joint ventures. Information in sections on is provided at our website: http://www. Reporting Standards (IFRS). We also personnel and environmental impact of A table of standard GRI reporting elements novatek.ru/ru/about/company/structure/. used data from management accounts, industrial activity is provided in relation to is presented on page 63 of this Report. financial statements, government Russian assets. In 2013, we additionally included statistics reports and subsidiaries’ Publication of the next report is planned in NOVATEK – Moscow Region, NOVATEK – reports; internal audit reports and Environmental impact assessment in Q4 2015. Hereafter in the Report, the Kostroma, Arcticgas and Nortgas in the inspection reports on subsidiaries from 2013 applies to industrial facilities of the expressions, “Company», “NOVATEK» reporting boundaries as compared with government control and supervisory NOVATEK Group of Companies including: and “we» refer to ОАО NOVATEK, its the previous report. authorities. Proven hydrocarbon reserves subsidiaries and joint ventures, unless are independently appraised according otherwise indicated. to standards promulgated by the U.S. Securities and Exchange Commission (SEC). COMPANY PROFILE

OAO NOVATEK is Russia’s largest independent natural gas producer and the second-largest natural gas producer in Russia. PAGE 9 Company Profile / NOVATEK SUSTAINABILITY REPORT IN 2013

COMPANY PROFILE

NATURAL GAS SALES IN 2013 WITH NOVATEK is Russia’s largest independent During 2013, we supplied natural gas to We sold 94% of naphtha to the Asian- BREAKDOWN BY CONSUMERS, % natural gas producer and the second- 29 regions of the Russian Federation. The Pacific region with the remaining napththa largest natural gas producer in Russia. Company’s primary liquid hydrocarbon volumes sold to South America. The sales volumes in 2013 were comprised of other petroleum products produced from Power generation companies still remain our We are principally engaged in the stable gas condensate, petroleum the Ust-Luga Complex were fully sold on primary consumers for natural gas. exploration, production, processing, products and liquefied petroleum gas. the European markets. transportation and marketing of natural Following the initial launch of the Stable gas and liquid hydrocarbons. Gas Condensate Fractionation and During 2013, we sold 627 thousand tons Transshipment Complex at Ust-Luga in of crude oil, a 41.9% increase as We are ranked number four (4) among June 2013 naphtha became the main compared to the volumes sold in 2012. the public companies worldwide in terms product in NOVATEK’s liquids sales We sold 63.2% of our crude oil volumes of proven natural gas reserves (according volumes mix. We also produce crude oil, on the domestic market, with the Power generation companies 57% to the SEC reserve methodology) and which is sold both on the domestic and remaining volumes exported to Large industrial number seven (7) in terms of natural gas international markets. In 2013, we sold international markets. enterprises 25% production (according to industry 1,078 thousand tons of LPG, of which Traders 11% publications). The Company’s main more than half (53.4%) was sold in the The headcount of OAO NOVATEK, its Other consumers 6% producing and processing assets are international markets – in Poland, subsidiaries and joint ventures (included Population 1% concentrated in the Yamal-Nenets Lithuania, Hungary, Romania, Slovakia in the boundaries of this report) as of Autonomous Region (YNAO), one of the and Finland. 31 December 2013 was 7,784 people. world’s largest natural gas producing regions. Due to the commissioning of our Ust- Luga Complex we began selling NOVATEK plays a significant role in petroleum products rather raw materials. Russia’s energy sector: in 2013, the Since commissioning, a total of 1,606 Company accounted for approximately thousand tons of petroleum products GROSS HYDROCARBON PRODUCTION 9.3% of total Russian natural gas were sold from the Ust-Luga Complex production, 34.5% of natural gas in 2013. 2011 2012 2013 produced by the Russian independent producers and 18.4% of total natural gas Total mmboe 385 411 447 deliveries to the domestic market through the Unified Gas Supply System. Gross production of natural gas bcm 53.54 57.32 62.22

Gross production of liquid hydrocarbons mt 4,124 4,287 4,774 PAGE 10 Company Profile / NOVATEK SUSTAINABILITY REPORT IN 2013

MAIN RESULTS FOR 2013

UST-LUGA COMPLEX OUTPUT MAIN SGC EXPORT REGIONS, % }} Total proved hydrocarbon reserves }} Gross liquid hydrocarbon STRUCTURE IN 2013, % increased by 1.2% to 12.5 billion production amounted to 4.77 mmt barrels of oil equivalent (boe) (of which 84.2%. was unstable During 2013, we sold 2,117 thousand tons of according to the SEC proven de-ethanized gas condensate), stable gas condensate, whereas more than reserve standards. representing an 11.4% increase half of our stable gas condensate export }} In 2013, we added 582 mmboe of over the prior year. volumes (56%) were sold to the proved reserves, inclusive of 2013 }} Crude oil production increased by Asian-Pacific region production, and recorded a 132% 45.8% to 755 thousand tons. reserve replacement rate. }} NOVATEK’s share in Russia’s natural }} At year-end 2013, the Company’s gas production increased from reserve to production ratio (or R/P 8.8% in 2012 to 9.3% in 2013. ratio) was 29 years. }} NOVATEK’s share in gas deliveries }} Our reserve replacement costs over to the domestic market via the Light and the last three years were RR 61.24 UGSS was 18.4% in 2013. Asian-Pacific Region 56% heavy naphta 83% (USD 1.95) per boe and lifting costs }} Total revenues increased to RR

were RR 18.8 (USD 0.59) per boe. 298.2 billion, or by 41.3% as Kerosene 11% Europe 38% }} Gross natural gas production compared to 2012, while natural Diesel fraction (including the Company’s share gas sales volumes increased by fuel oil 6% USA 6% in production of joint ventures) 9.0%, including a 39.7% increase in increased by 8.5% to 62.22 billion volumes sold to end-consumers. cubic meters (bcm) as compared to 2012. PAGE 11 Company Profile / NOVATEK SUSTAINABILITY REPORT IN 2013

OPERATING SCHEME OF NOVATEK IN 2013

PRODUCTION PROCESSING PROCESSING

Fields: Purovskiy Stable Gas Condensate Yurkharovskoye gas condensate Fractionation East-Tarkosalinskoye processing and Transshipment Khancheyskoye plant Complex Severo-Urengoyskoye Unstable Stable at Ust-Luga gas gas License areas: condensate condensate Olimpiyskiy Yumantilskiy Samburgskiy Since July 2013

Naphtha, jet fuel, Natural gas Crude oil LPG gasoil, fuel oil

SALES SALES SALES SALES

100% — on the domestic 63,2% — on domestic market 46,6% — on domestic market 100% — for exports market 36,8% — for exports 53,4% — for exports

Sales to end-customers via Supplies via Transneft trunk Supplies by rail End-customer the UGSS and ex-field sales pipeline system and by road supplies by sea to traders PAGE 12 Company Profile / NOVATEK SUSTAINABILITY REPORT IN 2013

AWARDS

CREATED AND DISTRIBUTED ECONOMIC VALUE, RR MILLION* }} NOVATEK retained its position }} The study “Telemechanics among the top ten fastest growing Management Information System companies in Europe, Middle East at the Yurkharovskoe Field — 2011 2012 2013 and Africa in the “250 major global Purovsky Plant Condensate Generated direct economic value energy companies” rating by Platt’s; Pipeline” won the public prize of the N.K. Baibakov International }} Highly commended in the “Best Fuel-Power Association (IFPA) in Revenues 178 665 212 704 300 499 Investor Relations, Russia” category the realm of power engineering of IR Magazine Awards Europe and community sustainable Distributed economic value 2013; development; }} NOVATEK won in the “Transaction Operating costs 62 464 86 251 143 907 }} NOVATEK’s Project “Drill Cuttings of the Year” nomination as part of Treatment Technology” won the the “Results of the Year in the Urals Employee wages and benefits 7 603 10 677 10 903 tenth commemorative Vernadsky and Siberia” Award of the expert National Environmental Prize information channel UralPolit.Ru Payments to providers of capital 20 588 25 420 30 561 in the Innovative Eco-efficient with the support of the authorized Technologies for Industrial representative of RF President in the Application category. The Payments to governments 29 026 32 988 45 037 Ural Federal District; National Environmental Prize was Community investments 135 177 192 }} NOVATEK is listed among four established by the V.I. Vernadsky Russian companies perceived by Nongovernmental Environmental Retained economic value 58 849 57 191 69 899 investors as the best companies Foundation. in terms of IR and corporate governance according to the results of the study conducted by

* Pursuant to the EC1 (GRI G3.1) indicator and some reclassifications were due to improvement of J.P. Morgan Depositary Receipts methodology on the basis of the consolidated financial statements in accordance with IFRS. Services; ECONOMIC PERFORMANCE AND SUSTAINABILITY

Economic, environmental and social principles of sustainable development are an integral part of our Corporate Strategy. PAGE 14 Economic Performance and Sustainability / NOVATEK SUSTAINABILITY REPORT IN 2013

ECONOMIC PERFORMANCE AND SUSTAINABILITY

HYDROCARBON EXPLORATION AND PRODUCTION

EXPLORATION Venture to almost 60%. The increase of PRODUCTION In 2013, we completed the works on As of 31 December 2013, the Company’s our effective share in this joint venture In 2013, NOVATEK carried out commercial commissioning the second phase of the SEC proved reserves (including our resulted in higher share of liquids in our hydrocarbon production at 10 fields. booster compressor station at our equity ownership interest in the proved proved reserves. Our proved reserves of NOVATEK’s gross production (including Yurkharovskoe field, which included four reserves of joint ventures) totaled 12,537 liquid hydrocarbons increased by 26% as the Company’s share in production of compressor units with a total capacity of mmboe, representing a 1.2% increase as compared to year-end 2012, and their joint ventures) totaled 447 mmboe (439 100 MW, thus increasing the overall compared to proved reserves as of the share in the overall proved hydrocarbon mmboe of sales production), representing compressor capacity at the station to end of 2012, inclusive of production reserves increased to 9%. an 8.8% increase as compared to the 175 MW. The station is essential for totaling 582 mmboe. In 2013, we level of 2012. maintaining plateau gas production level managed to replace our proved reserves Ongoing exploration activities on the at the field. by 132% despite selling a 20% stake in Gydan Peninsula and in the Gulf of Ob Gross natural gas production (including the Yamal LNG project and divesting our are potential reserve replacement drivers the Company’s share in production of A new record was set for the wellbore 51% stake in Sibneftegas. The increase in in the future. In 2013, we continued full- joint ventures) increased by 8.5% to length at the Yurkharovskoye field our proved reserves under international scale exploration works in this region, 62.22 bcm as compared to 2012. In following the completion of an reserve reporting standards was due to including assessment of the resource 2013, the Company’s share in gross 8,495-meter well with a horizontal section successful exploration works at the potential of the license areas and natural gas production in Russia was of 1,500 meters. A total of six (6) new Company’s fields, ongoing production preparatory works for exploration drilling 9%. Gross production of liquid gas condensate wells were launched at drilling, acquisition of a license for the on the Gydan Peninsula. The Company hydrocarbons increased by 11.4% as the field with an average initial flow rate East-Tazovskoye field and an increase of also continued exploration work activities compared to 2012. Sales production of 1.8 mmcm of natural gas per day. our equity stake in the SeverEnergia Joint at its fields and license areas in the totaled 4.75 mmt. Within the pilot oil program the second Nadym-Pur-Taz region, including the oil well was drilled at the field and license areas of SeverEnergia. The growth in our natural gas and gas achieved the initial flow rate of 74 tons condensate production was primarily per day. due to expansion of production capacities at the Yurkharovskoye field In October 2013, NOVATEK launched a and acquisition of an equity stake in the part of the Urengoyskoye field located Nortgas joint venture developing the within the Company’s Olimpiyskiy license North-Urengoyskoye field, as well as the area with the field’s production capacity launch of the second phase of gas estimated at one (1) bcm of natural gas treatment facility at our Samburgskoye per annum. Four (4) production wells field and drilling new development wells were operating at this field as of the end at the field. of 2013. PAGE 15 Economic Performance and Sustainability / NOVATEK SUSTAINABILITY REPORT IN 2013

YAMAL LNG PROJECT

GROSS LIQUID HYDROCARBON PRODUCTION YAMAL LNG`S SHAREHOLDING In 2013, active development of the The Yamal peninsula with its unique (INCLUDING THE COMPANY’S SHARE IN PRODUCTION STRUCTURE AS OF 31.12.2013, % Eastern Dome of the North-Uren- hydrocarbon resource base is one of the OF JOINT VENTURES), % goyskoye field was underway as part of most important strategic centers of the the Nortgas joint venture. The Eastern Russian oil and gas producing industry. Dome was launched in October 2013. Twenty-three (23) production wells have Since 2010, the Yamal LNG project is been completed at the Eastern Dome at being implemented on the peninsula, and year-end and its infrastructure included envisages the construction of an LNG a gas treatment facility with annual plant including three (3) trains with overall capacity of six (6) bcm, gas gathering capacity of 16.5 mmt of LNG per annum. NOVATEK 60 % networks, and gas and gas condensate Gas condensate 84,2 % The final investment decision, or FID, for pipelines connected to the Western the project was made in December 2013 Total 20 % Grude oil 15,8 % Dome of the field. with the planned commercial launch of CNPC 20 % the first LNG train in 2017. In 2013, commercial oil production was conducted at three NOVATEK’s fields – Yamal LNG (a JV between NOVATEK, East-Tarkosalinkoye, Khancheyskoye and Total and CNPC) is the operator of the Yurkharovskoye. Maximum oil volumes project, the license holder and owner of exceeding two (2) thousand tons per day all the assets. The project is based on the were produced at the East-Tarko- resource base of the South-Tambeyskoye salinskoye field, where intensive drilling field, which 2P PRMS reserves are was carried out, which ensured the 4.77 MMT estimated at 927 bcm of natural gas. The significant increase in crude oil production. field development plan provides for In 2013, we drilled and commissioned 21 drilling 208 wells at 19 well pads. oil wells at this field with an average initial Production drilling began at the field in flow rate of 85 tons per day. During the 2013 with eight (8) production wells reporting year, overall crude oil production completed during the year — their testing of NOVATEK increased by 45.8% to 755 confirmed the basic parameters of the thousand tons. geological model.

Works were underway at the In 2013, the main tenders were completed Yarudeyskoye oil field including backfilling and key contracts (including contracts for of well pads, roads, and central oil the long-lead items) were signed as a treatment facility, construction of part of the project implementation. In electricity lines, oil and gas pipelines. particular, the EPC contract has been PAGE 16 Economic Performance and Sustainability / NOVATEK SUSTAINABILITY REPORT IN 2013

PROCESSING

EXPANDING CAPACITY OF THE STRUCTURE AND OUTPUT OF THE awarded to the joint venture of Technip, able to produce more than eight (8) PUROVSKY PLANT PUROVSKY PLANT IN 2013, % JGC and Chiyoda. A slot reservation million tons of stable gas condensate and The Purovsky Gas Condensate agreement was signed with Daewoo three (3) million tons of LPG per annum. Processing Plant is the main processing Shipbuilding & Marine Engineering asset of NOVATEK and the central Company for construction of up to 16 Moreover, in 2013, the automated element in our vertically integrated gas ARC-7 ice-class LNG carriers. process control system of the Purovsky condensate production chain. The main Plant was modernized. The system was products obtained after processing at In 2013, construction sites for the first significantly expanded thus allowing us to the Purovsky Plant are stable gas train of the LNG plant, power plant and combine several production segments condensate (SGC) and liquefied Stable gas LNG storage facilities were prepared. 77 % into a single information space in order to petroleum gas (LPG). condensate Basic infrastructure was being built in control the entire technology process 2013, including the airport, roads, fuel LPG 23 % from a single control center. Due to the planned increase in gas storages, power station, utility networks, Regenerated condensate production volumes the <1 % boiler house, living quarters and methanol Due to production growth at the capacity of the Purovsky plant was canteens. Sixty percent (60%) of the Samburgskoye field, start of deliveries to expanded in 2013 from five (5) to 11 mmt airstrip was completed and the the Purovsky Plant of de-ethanized gas per annum following the launch of four (4) construction of the airport terminal and condensate from the North-Urengoyskoye new gas condensate stabilization trains other specialized operational facilities field and launch of the Eastern Dome of with six (6) million tons per annum overall began. the field in October 2013, the volumes of capacity. The expanded capacities are de-ethanized gas condensate processed In 2013, we sold a 20% stake in the 4,82 MMT at the Purovsky Plant increased to 4.86 project to China National Petroleum million tons in the reporting year, or by Corporation (CNPC). In addition to direct 20.5% compared with the previous participation in the project, the new period. We produced 3,712 thousand partner will annually purchase a minimum tons of stable gas condensate, 1,088 of three (3) million tons of LNG, thus thousand tons of LPG, and 16 thousand providing access for the project to the tons of regenerated methanol. fast-growing Chinese market. Collaboration with CNPC also envisages Since June 2013 substantially all of the the provision of external financing for the stabile gas condensate produced at the project from the Chinese financial Purovsky Plant is delivered by rail to the institutions. Ust-Luga Complex for further processing. PAGE 17 Economic Performance and Sustainability / NOVATEK SUSTAINABILITY REPORT IN 2013

TRANSPORTATION

UST-LUGA COMPLEX The main product of the Ust-luga The Ust-Luga Complex is equipped with MARINE TRANSPORTATION In 2013, we launched the Gas Complex is naphtha, which used as a a modern management information Petroleum products are shipped from the Condensate Fractionation and feedstock for the petrochemical industry. system which ensures maximum Ust-Luga port by tankers to our customers Transshipment Complex located at the possible automation level and includes in Asian-Pacific countries, Europe, South all-season port of Ust-Luga on the Baltic The deeper processing of gas emergency shutdown systems, America. The complex includes two Sea. The complex processes stable gas condensate enabled us to expand the distributed control systems, automatic berths from which different products can condensate delivered from the Purovsky range of higher value-added products, fire extinguishing systems, automated be loaded simultaneously onto two Plant into naphtha, gasoil, jet fuel and diversify markets and extend our power supply control systems, level tankers. In June 2013, the first delivery to fuel oil, and also enables to ship the customer base. Commissioning of the measuring systems, vibration monitoring Brazil was carried out and by year-end refined petroleum products to our Complex also allowed us to optimize systems, alerting systems, information 2013, twenty six (26) tankers of different customers by sea. logistics and reduce mileage of rail multi-display systems (video walls). deadweight were shipped to different transportation by 383 km due to more countries. The complex includes a stable gas favorable geographical location of Ust- In 2013, the Ust-Luga Complex condensate fractionation unit with six (6) Luga compared to the port of Vitino, processed 1,873 thousand tons of stable In 2013, as part of the St. Petersburg mmt per annum capacity, 520 thousand through which we had previously gas condensate into 1,831 thousand International Economic Forum, NOVATEK, cubic meters of storage facilities for exported our stable gas condensate. tons of end products, including 1,522 Sovcomflot and Vnesheconombank feedstock and products, two (2) deep- thousand tons of light and heavy signed a Memorandum of Cooperation water berths equipped with loading For the Leningrad Region, the successful naphtha, 190 thousand tons of jet fuel providing for the construction of two LNG arms, administrative buildings and living launch of the Ust-Luga Complex created and 119 thousand tons of fuel oil and carriers for the Yamal LNG project. quarters, engineering systems and a new large industrial center on its gasoil. Vnesheconombank will finance the networks, and sewage treatment territory, new jobs and additional tax construction of LNG carriers and facilities. The first phase of the Complex revenues. For Russia the Ust-Luga Sovcomflot will operate them. The with three (3) mmt per annum capacity Complex is a contribution to the agreement provides for the transfer of was launched in June 2013, the second development of deeper processing of LNG vessel construction technologies to phase of the same capacity — in hydrocarbons, and a move toward more the Russian party, arrangement for October 2013. value-added goods. Russian specialists training at foreign shipyards and subsequent technological support to organize construction of such vessels in Russia. Daewoo Shipbuilding & Marine Engineering was awarded the contract for the construction of the Arctic class LNG tankers based on tender results. PAGE 18 Economic Performance and Sustainability / NOVATEK SUSTAINABILITY REPORT IN 2013

CONSTRUCTION OF SABETTA PORT At the stage of elaborating design In 2013, operation of the materials RAILWAY TRANSPORTATION The Yamal LNG project implementation documentation, numerous engineering offloading berths began enabling the first The liquid hydrocarbons produced at the envisages construction of transport and ecological surveys and mathematical winter navigation at the port, which Purovsky Plant are transported to our infrastructure near Sabetta village in the simulation-based studies were carried ensures year-round delivery of Ust-Luga Complex by OOO NOVATEK- North-eastern part of the Yamal peninsula, out. In order to increase results accuracy construction materials. In late 2013, Transervice, a 100% subsidiary of which shall include a seaport and an of assessing the project’s anthropogenic construction of the main port facilities NOVATEK. In 2013, 7,900 rail cisterns airport facilty. A new international seaport impact on the environment, investigations began. were owned or leased for these in Yamal is expected to become the have been conducted during a lengthy purposes, of which 4,500 were used for biggest transportation junction on the period of time. Famous biologists also The significance of the new port for the the transportation of LPG and the Northern Sea Route that will provide for took part in this work. The results of such development of Russia’s transport remaining part for the transportation of year-round navigation. The project is surveys, investigations and expert infrastructure is proved by the fact that stable gas condensate. being implemented under a public- evaluations show that the anthropogenic the issues pertaining to the construction private partnership whereby the dredging impact of the construction in the Gulf of of the port and the Yamal LNG project In 2013, NOVATEK-Transservice works and construction of ice-protection Ob would be temporary and would not were discussed in September 2013 at a completed implementation of an walls are financed by the government, lead to irreversible changes in the state of special meeting in Salekhard under the Automated Control System for a Non- while the construction of berths and other the ecosystem and its individual chairmanship of President of Russia. Public Railway Tracks at Zavodskaya main facilities is funded by Yamal LNG. components. Negative impact will be Station. As a result of the system compensated by fish stock restoration For more detailed information on the implementation the Company’s and strict compliance with environmental stakeholders’ engagement regarding the specialists are able to conduct on-line protection arrangements. port construction programs see section monitoring of railway situation, control “Public Hearings on the Port of Sabetta rail cisterns loading process at the In 2013, design documentation for Construction Programs”. loading facilities and monitor rail cars construction of seaport facilities near movement via rail network. The Sabetta village on the Yamal peninsula, implemented ACS is integrated into the including a navigable approach channel automated system of Russian Railways. in the Gulf of Ob, gained approval from It increased the efficiency of transport the state environmental expert review. planning, reduced the human factor impact and facilitated significant savings in resources, in particular, energy. PAGE 19 Economic Performance and Sustainability / NOVATEK SUSTAINABILITY REPORT IN 2013

MARKETING AND SALES

NATURAL GAS SALES, BCM REVENUE FROM NATURAL GAS SALES, NATURAL GAS SALES RR BILLION In 2013, the Company successfully market through the Unified Gas Supply continued implementing its marketing System (UGSS), representing an increase strategy aimed at increasing the share of of 2.1% percentage points as compared end consumers in its overall natural gas to 2012. sales volumes mix and expanding its 205,0 market presence in the regions of During 2013, our total revenues from strategic importance for the Company. natural gas sales increased to RR 205 142,6 The share of end customers in our overall billion or by 43.7%, as compared to 2012, 64,2 gas sales volumes mix increased to due to the combination of higher volumes 58,9 110,9 88.9% as compared to 69.3% in 2012. sold, the increase of sales to the end- 53,7 This became possible due to new customer segment and an increase in the contracts concluded with end customers regulated gas tariff. and acquisition of a 82% participation interest in Gazprom Mezhregiongas INTERACTION WITH INDIVIDUAL 2011 2012 2013 2011 2012 2013 Kostroma in December 2012 (renamed NATURAL GAS CONSUMERS NOVATEK-Kostroma). The Company takes responsibility not Magnitogorsk accounted for a little less customers received the opportunity to only for reliable supply of consumers than a half of the energy carrier volume set in advance the day and time of their In 2013, NOVATEK’s natural gas sales with energy resources, but also strives to supplied. visit to the customer section. Information volumes increased by 9% compared to use modern approaches towards in Customer’s Personal Account is 2012. We increased our natural gas relationships with consumers and NOVATEK-Chelyabinsk customers are updated on a daily basis, and consumers’ supplies to the Moscow region (Moscow constantly improve customer service in able to solve most problems related to personal data are securely protected. In Citi and Moscow Region), Kostroma order to save their money and time. natural gas supply via the customer 2013, more than 20 thousand consumers Region, Vologda Region, Tyumen Region telephone help desk. Calls to the single used this service, while the number of and Perm Territory. In the reporting year The Chelyabinsk Region was the first number of the Contact-center 8-800- incoming calls exceeded 70 thousand. we supplied natural to 29 regions of the one where NOVATEK started working 700-80-74 are free of charge for the Russian Federation. The main regions of with individual consumers as an entire population of the region. One thousand and six hundred inquiries our natural gas sales, including independent supplier. As of the end of Customer’s Personal Account and the on different issues related to regional Chelyabinsk, Moscow, Kostroma, 2013, the number of individual electronic form “Ask a Question” are gas supplier activity were received by Orenburg, Vologda, Sverdlovsk, Tyumen consumers here was 847 thousand available on the website www.novatek74. the Company in 2013 via gaz@rg74. regions, Moscow Citi and St. Petersburg, people. The Chelyabinsk region is ru. The Customer’s Personal Account novatek.ru and the Customer’s Personal Perm Territory and Khanty-Mansiysk supplied by NOVATEK-Chelyabinsk, a enables browsing of payment and Account on the corporate web-page. Autonomous Area accounted for 82% of subsidiary of NOVATEK. charge history, monitoring personal our total gas sales. account balance, entering meter Numbers of daily visits to customer In 2013, we supplied 763 mcm of natural indications, and paying for gas by debit centers varies from 500 to 3,000 people. The Company accounted for 18.4% of gas to the population of the Chelyabinsk card. The number of electronic services In 2013 2,500 legal entities applied to total natural gas deliveries to the domestic Region. Residents of Chelyabinsk and is constantly increasing. In 2013, consumer centers on such matters as PAGE 20 Economic Performance and Sustainability / NOVATEK SUSTAINABILITY REPORT IN 2013

metering station check-up, contractual card of a filling station, and the first visual paid off within a maximum of 6–12 depending on procured volumes and work and bookkeeping documentation. mark, which determines that the filling months while fuel expenses are at least duration of cooperation. Already at the In 2013, a new customer center was station is owned by the Company. One halved. As the number of gas propelled initial stage, the minimal discount for opened in the central office building of hundred and eight thousand tons of LPG vehicles is still insignificant and the daily corporate clients is 7%. Over the course NOVATEK-Chelyabinsk. Here, modern were sold through NOVATEK’s station average number of fueling per one gas of 2013, 279 enterprises became personal reception technologies and network in Chelyabinsk, Volgograd, filling station is incomparable with the corporate clients of NOVATEK, of which services are implemented including: Rostov and Astrakhan regions in 2013, same for filling stations, the Company 206 are in Chelyabinsk Region with sales electronic registry and the “one contact” which is 4.9% more than in 2012. considers the vehicle transfer to LPG to volumes of 1,744 tons, and 73 in the system. be a long-term program. Volgograd and Rostov Regions with PROMOTION OF LPG AS AN sales volumes of 444 tons. Since January 2013 NOVATEK also ENVIRONMENTALLY FRIENDLY AND Increase of maintenance level, service supplies gas to all customer categories COST-EFFICIENT FUEL quality and expansion of services range In Chelyabinsk Region in 2013, NOVATEK in Kostroma Region through NOVATEK- In order to increase LPG retail sales, at gas filling stations is another priority has initiated discussions on replacement Kostroma. NOVATEK launched a program involving area of the Company’s activity. of gasoline and diesel fuel used by transition of the car fleet of legal entities NOVATEK-AZK has ensured favorable municipal vehicles with liquefied LPG RETAIL NETWORK and individuals in the Chelyabinsk, service terms for private car owners and petroleum gas. According to the results NOVATEK has an extensive retail LPG Volgograd and Rostov regions to legal entities with installed gas-cylinder of the meeting, a working group was sales network. In 2013, it consisted of 64 environmentally friendly fuel. Aside from equipment. Individuals, who participate created including managers of refueling stations and seven (7) gas-filling environmental advantages of LNG as a in the Switch to Gas program, are Chelyabinsk Region Transport stations using state-of-the-art equipment. motor fuel, the following technical and entitled to a discount card with a fixed Department, NOVATEK-AZK and OAO economic aspects of motor vehicle discount, partly compensating for GTLK. As part of this project, the In the Chelyabinsk Region, the LPG retail transition to gas-cylinder equipment are equipment installation expenses. Almost decision was taken on Chelyabinsk network of NOVATEK constitutes one fifth important for car owners: extension of 4 thousand drivers residing in Rostov, Region acquiring 100 mid-range PAZ- of the regional market. In 2013, activities engine life and service interval mileage. Volgograd and Chelyabinsk region have class buses, using LPG as engine fuel, on bringing filling station design into The practice of operating motor vehicles already taken advantage of this to transport passengers in Chelyabinsk compliance with the unified corporate using LPG fuel proves high reliability of opportunity. and Zlatoust. Moreover, the issue of style continued. To improve efficiency of gas-cylinder equipment which is transferring municipal motor vehicles to consumer informing on fuel sales constantly improving and allows For corporate clients, the Company LPG was discussed jointly with regional conditions, the price board standard was switching any gasoline car to gas usage. offers a corporate loyalty program, as ministries. changed. The price board is an important At that the same time, even at average part of which they are entitled to a decoration element, a distinctive visiting mileage, the re-equipment investment is discount for fuel, with a discount rate PAGE 21 Economic Performance and Sustainability / NOVATEK SUSTAINABILITY REPORT IN 2013

DIALOG WITH INDUSTRIAL CONSUMERS

INCREASE OF EFFECTIVENESS OF Dialog with Industrial Consumers 2013 a group of Chelyabinsk Region and bid prices. All things being equal, INDUSTRIAL CONSUMER GAS SUPPLY To maintain systematic and open dialog customer service managers, during a preference is given to local suppliers. AND CONSUMPTION METERING with stakeholders, in mid-April 2013 the business trip to Germany, became NOVATEK has a decentralized supply In 2013, NOVATEK-Chelyabinsk started senior management of OAO NOVATEK familiar with the experience of their structure. The tenders are organized by a program on implementation of a unified took part in a meeting arranged by the colleagues – operators from the subsidiaries of the Company, while OAO information system for dispatch control Kostroma regional government to find a European energy company E.On. NOVATEK controls the procurement and operative metering of gas supplied solution to the problem of the low payment process. This approach allows to industrial consumers. The system will discipline of natural gas consumers and NOVATEK-AZK’s gas filling station No. 12 participation of subsidiary representatives allow automating activities of Company’s repayment of accumulated debts to the was declared the winner of the first city in the process of supplier selection, specialists as regards to the collection supplier. Based on the results of the contest for the best refueling station thereby increasing the responsibility level and processing of technological and meeting, decisions were taken to organized by Chelyabinsk government of subsidiaries for the end result. commercial data. At that the same time, eliminate the non-payment problem. jointly with regional administrations in the it will be integrated with external category The Best Gas Refueling Station. Business partner interaction approaches informational resources of gas Customer Service The winner was selected based on a are communicated by Company transmission enterprises, gas- Quality Improvement whole range of criteria, including external representatives to suppliers and distributing organizations and other Increasing the customer service level is and interior appearance, availability of contractors during specialized partners participating in gas production, an important constituent of the overall information for customers. Other factors exhibitions, forums and other public transportation, processing, storage and customer-oriented strategy of the were also considered, including condition events. For example, in 2013 a consumption. All this will help to ensure Company. Regional sales companies and availability of process equipment, representative of NOVATEK made a the accuracy and reliability of data, and pay special attention to the level of work place arrangement, presentation: “Procurement Activities of thereby reduce labor costs and human professionalism of specialists directly development and implementation of new the NOVATEK Group of Companies” at factor impact, increase the manageability interacting with the Company’s end users, types of service, personnel qualification, the Procurement in Oil and Gas Industry level and reduce time of interaction with in particular, to the efficiency of the work availability of discounts and bonus (NEFTEGASSNAB-2013) conference consumers. of gas service inspectors. programs for customers. and reported on organization of a procurement system in the Group and To increase the efficiency of work with PURCHASE OF GOODS AND SERVICES work with suppliers. clients NOVATEK develops its NOVATEK adheres to principles of fair employees’ communication skills, ability competition, and all corporate to clearly present new services. Thus, to procurement is carried out exclusively on develop professional skills and create a a tender basis. team of agents for promotion of the Customer’s Personal Account internet Any company may take part in a tender, service, a seminar-workshop was as long as it complies with the tender carried out for NOVATEK-Chelyabinsk conditions and has filed an application, employees in 2013. About 30 inspectors completed as per the tender from the region center and remote requirements. Counterparties are territories of Chelyabinsk Region selected based on the quality of their underwent such training. Moreover, in products or services, financial stability PAGE 22 Economic Performance and Sustainability / NOVATEK SUSTAINABILITY REPORT IN 2013

CORPORATE GOVERNANCE

SHARE CAPITAL STRUCTURE AS OF NOVATEK considers high standards of Details of NOVATEK’s corporate governance bodies and the functions 31 DECEMBER 2013, % corporate governance as means of governance system are given in the they perform have not changed. The increasing operating efficiency and corresponding chapter of the Company’s Company’s corporate governance business integrity, and raising the Annual Report for 2013, published on structure and current membership in Company’s reputation. the corporate web-page: http://www. governance bodies can be found on our novatek.ru/en/investors/reviews. website at http://www.novatek.ru/en/ The Company has established an about/management. effective and transparent system of NOVATEK strives to consider the corporate governance complying with principles of corporate governance Total dividends accrued for 2013 both Russian and international outlined in the Corporate Governance amounted to RR 23.96 bln (RR 20.8 bln standards. NOVATEK’s supreme Code recommended by the Russian in 2012). Total dividend payments for governing body is the General Meeting Federation’s Federal Commission for the 2013 including the interim dividends of Shareholders. The corporate Securities Market*, as well as follows paid for the first half of the year amounted governance system also includes the recommendations of the UK Financial to RR 7.89 per ordinary share or RR 78.9 Board of Directors, the Board Reporting Council’s Combined Code on per GDR, which exceeds the payments Committees, and the Management Corporate Governance to the extent for 2012 by 15%. Board, as well as the internal control and possible, and suggests to shareholders audit bodies. The Company’s corporate and investors other solutions aimed at Based on results of a research carried Deutsche Bank Trust Company 25 % governance procedures and practices is protection of their legitimate rights and out in August 2013 by the Arsagera Americas governed by the Charter and internal interests. Management Company, NOVATEK documentation, including: Corporate featured in the Top-5 companies with the ООО Santata 13 % Governance Code, Code of Business As of the end of 2013, the Board of best corporate governance. Member of Total E&P Arctic Conduct, etc. The activity of all these Directors was comprised of nine (9) the Board of Directors of NOVATEK, Russia 14 % bodies is governed by the applicable persons including six (6) independent Burckhard Bergmann was considered to Gazfin Cyprus laws of the Russian Federation, directors (as at the election date) be one of the 50 best independent Limited 10 % NOVATEK’s Charter and internal according to the Russian Federal Law directors based on the rating of OOO Levit documents available on our website: On Joint-Stock Companies. professionals in corporate governance 7 % (http://www.novatek.ru/en/about/ in 2013 prepared by Independent OOO Belona 6 % management/doc). In 2013, the structure of corporate Directors Association for Director of the SWGI Growth Year 2013 National Award. Fund (Cyprus) 6 % Limited

Other (share less 5%) 19 %

* Directive No. 421/p of the Federal Securities Commission of Russia of 4 April 2002 ENVIRONMENTAL PROTECTION

NOVATEK’s Integrated Management System for Environmental Protection, Occupational Health and Safety (IMS) is the primary tool for implementing OAO NOVATEK’s HSE Policy. PAGE 24 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

ENVIRONMENTAL PROTECTION

ENVIRONMENTAL PROTECTION MANAGEMENT

To exercise environmental protection the decision-making process from a activity the environmental services were review of any investment project through PROCEDURAL ASSISTANCE IMPLEMENTING ACTIONS established and are operating in every its implementation. Mechanisms were subsidiary of OAO NOVATEK. Depending developed for distinguishing priority on the specifics of production and environmental aspects, based on which NOVATEK’s Environmental economic activity, as well as environmental protection is planned. Environmental, protection services environmental impact level, they were Employees of NOVATEK’s Environmental, Occupational Health and specialists of the formed as independent structural Occupational Health and Safety and Safety Department subsidiaries subdivisions, departments as a part of Department provide guidance to the structural subdivisions/services or environmental services of the represented by individual environmental subsidiaries. specialists. In total, 39 specialists were  Organization of planning  Atmospheric air protection and reporting on against pollutant involved in environmental protection at All our subdivisions operate with due environmental actions; emissions; enterprises of NOVATEK Group in 2013. consideration of NOVATEK’s Health,  Execution of  Rational use and Safety and Environment Policy, the text environmental permits; protection of water and Personnel duties and responsibilities are of which is available on our corporate  Implementation and biological resources; defined throughout the entire website: http://www.novatek.ru/common/ maintenance of  Environmental protection governance system. Procedures were upload/Policy.pdf Environmental Monitoring against production and elaborated for environmental support of System (EMS); consumption waste; To control the governance of our  Organization of industrial  Soil protection against environmental control and industrial impact and land subsidiaries and our own structural monitoring; reclamation; subdivisions in compliance with  Elaboration of  Implementation and international standards ISO 14001:2004 agreements, etc. maintenance of and OHSAS 18001:2007, we have Environmental Monitoring implemented the Integrated Management System (EMS); System (IMS) for Environmental  Organization and carrying Protection, Occupational Health and out of industrial environmental control; Safety, an integral part of the Company’s  Organization of general management system. environmental monitoring;  Creation of environmental protection programs. PAGE 25 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

IMS ORGANIZATIONAL CHART COMPLIANCE WITH IMS helps to follow a comprehensive INTERNATIONAL STANDARDS approach and comply with the In 2013 (the Year of Environmental sustainable development principles Chairman of the Protection) Bureau Veritas Certification while solving the Company’s strategic Management Board carried out in NOVATEK and its tasks on increasing hydrocarbon subsidiaries the audits of the production and processing capacity. Environmental Protection, Occupational Health and Safety Management System A detailed description of IMS is Deputy Chairman for compliance with the requirements of presented in our Sustainability Report for ISO 14001:2004, OHSAS 18001:2007 2008–2009. international standards. In total, 6 subsidiaries of the NOVATEK Group The Company’s subsidiaries have were certified at year end 2013. implemented annually approved IMS working group environmental programs. These Auditors highlighted strong aspects of programs define primary challenges IMS in NOVATEK, including the following: faced by our subsidiaries, the actions on }} High competency and experience environmental management system of the personnel in the management enhancement, decreasing negative Environmental, NOVATEK’s other Specialized and production activities; production impact on the environment, Occupational Health and structural Departments exercising environmental monitoring of Safety Department subdivisions }} Multilevel control of production the sources of such impact, etc. activities;

}} Transparency of the Company’s environmental activities; Subsidiaries }} Implementation of the Corporate Technical Competency Assessment System etc.

Subsidiaries’ Yamal LNG and NOVATEK-Ust-Luga structural also plan to certify their Integrated subdivisions Management Systems (IMS) for Environmental Protection, Occupational Health and Safety. As part of IMS implementation, Yamal LNG has Subsidiaries elaborated and implemented the main personnel procedures of the Integrated Environmental Protection and PAGE 26 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

Occupational Safety Guidelines, taken. We check the conditions of plants, outside the technogenic impact zone, ENVIRONMENTAL PROTECTION Register of Significant Health and Safety animals and microorganisms living in the the conditions of the environment have TRAINING Risks, as well as Environmental Aspects same habitat. We also assess the level of been assessed as stable and Consistent with the Company’s of Yamal LNG’s Activity, etc. atmospheric air pollution. The conditions corresponding to the background level. environmental policy we annually of the fish population and nutritive base In 2013, NOVATEK Group has spent RR implement the program of employees ENVIRONMENTAL MONITORING AND are studied in water areas, whereas 43.5 million on organizing and training and development with further INDUSTRIAL CONTROL hydrological and hydro-chemical conducting environmental monitoring on assessment of acquired knowledge in In order to obtain objective, complete parameters are also analyzed. The its license areas. order to increase their EHS skills and and reliable information on the conditions of environmental components responsibility. In 2013, 51 employees environmental conditions at our and their dynamics throughout the year In order to reduce the negative impact from eight subsidiaries underwent production sites, the Company performs are assessed based on the laboratory on the environment a multistage system training to improve their qualifications annual environmental monitoring in the testing results. of Environmental Monitoring and and skills. A total of 339 specialists were area impacted by its industrial facilities. Industrial Control (EMIC) operates at the trained over the last five years. The Environmental monitoring is carried out Visual inspection and photographing of Company’s enterprises. Every major training was conducted at the country’s by independent specialized the areas along the routes of cross- production entity of NOVATEK has a leading universities and specialized organizations with qualified experts in country vehicles and walking routes is chemical analytical laboratory equipped training centers in Yekaterinburg, Ufa, St. accordance with the approved programs performed during the monitoring. In the with all necessary tools for operational Petersburg and Moscow. and methodologies. This activity was course of the environmental monitoring analysis. Analysis and optimization of also performed on the license areas and in the tundra zone we use transport with technological processes is performed Another important element allowing us to production facilities of NOVATEK Group low-pressure tires to preserve the fragile based on EMIC results. We have reduce environmental risks is internal during 2013. topsoil. implemented extensive monitoring of the audit of the Company’s management environmental conditions during the system; it enables the Company’s We examine the conditions of In general, the studies showed construction and commissioning of our employees with requisite competence environment components in the course predominantly unharmed conditions of Stable Gas Condensate Transshipment and experience to detect imperfections of the monitoring. Soil, ground, water environmental components in targeted and Fractionation Complex at Ust-Luga. in the current management system. In and seabed sediment samples are monitoring areas. At all areas located The eco-analytical laboratory of the February 2013, a group of specialists Complex successfully underwent from NOVATEK-Transervice underwent accreditation procedure. Special training pursuant to the ISO 14001:2004 attention is paid to the conditions of and OHSAS 18001:2007 IMS Internal Luga Bay of the Gulf of Finland and its Audit Program and was awarded water protection zone. Analysis of the respective certificates. In April, an samples taken in the Luga Bay in 2013 environment and labor safety survey was shows that hydro-chemical parameters conducted among the employees, as and concentrations of pollutants in the well as measures were planned and sea water fall within the allowable limits performed on employees’ proposals. for commercial fishing waters. PAGE 27 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

ENVIRONMENTAL EXPENDITURES In November 2013, the representatives ENVIRONMENTAL EXPENDITURES (INCLUDING SUBSIDIARIES AND JOINT VENTURES), RR THOUSAND of NOVATEK’s subsidiaries took part in a In 2013, expenditures of the Company one-day seminar-workshop on updates (including subsidiaries and joint 2013 in the environmental legislation. ventures) on environmental protection 2012 Participants of the seminar discussed activities increased by almost 22% the issues of interaction between the compared to the previous period to RR natural resources users and Federal 363 million. Environmental protection against 109 209 Service for Supervision of Natural production and consumption waste 108 909 Resources Usage of the Yamal-Nenets The main part of expenditures accounts 78 986 Soil protection Autonomous Region in regards to the for disposal of production and 40 624 outstanding aspects of environmental consumption waste comprising of more 53 967 Environmental management audit, reporting, administration of than RR 109 million. Expenses on limiting 11 375 payments and supervisory activity. the negative impact of industrial waste 43 546 Environmental monitoring on the environment (processing and 62 430 The cost of initial and advanced decontamination) including the cost of 26 436 Protection and use of water resources Environment Protection and Ecological drilling waste processing amounted to 18 192 Safety training for specialists and approximately RR 89 million. For Charges for negative environmental 23 069 managers amounted in 2013 to RR 529 example, production wells at our impact 30 222 thousand. Termokarstovoye gas condensate field 9 948 Compensation payments were drilled using pitless drilling 1 324 technology whereby drilling waste is 8 342 Subsurface protection decontaminated and converted into a 0 construction material. 6 550 Other 4 576 Our land care costs almost doubled 2 654 Atmospheric air protection reaching RR 79 million. Such expenses 19 678 were mainly related to the removal from our license areas of scrap metal and other objects left by the previous subsurface users.

Expenditures for environmental management amounted to RR 54 million. Their increase compared to 2012 was mainly due to the involvement of external advisers to provide a large scope of services to the Yamal LNG project. PAGE 28 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

RESULTS OF INSPECTIONS CONDUCTED CHARGES FOR NEGATIVE CHARGES FOR NEGATIVE ENVIRONMENTAL IMPACT АCROSS AT SUBSIDIARIES BY SUPERVISORY ENVIRONMENTAL IMPACT THE NOVATEK GROUP , RR THOUSAND AUTHORITIES The Russian legislation prescribes In 2013, supervisory authorities carried charges payable by natural resources Total environmental payments out 17 inspections for compliance with users for negative impact on Including excessive emissions environment protection and rational environment, including charges for nature management laws at six atmospheric pollutant emissions by enterprises of NOVATEK Group (36 stationary and mobile sources of inspections in 2012). Controlling emissions, wastewater discharges to 25 078 2013 authorities issued 21 prescriptions with surface and subsurface water bodies 18 325 strict deadlines of violations elimination. and production and consumption waste A complex of measures to remedy all disposal. 30 252 violations completely and on time was 2012 implemented based on the issued Since 1 January 2012, new principles for 22 815 orders. calculating fees for flaring associated petroleum gas (APG) have come into 6 033 2011 effect. Companies received permission 62 to dispose this way a maximum of 5% of APG produced. In case this indicator is exceeded, the fine for environmental pollution is calculated as an excessive emission. Since 1 January 2013, the Russian Government has increased penalties for flared APG. This led to an increase of payments for above-limit gas flaring and, as a result, an increase of payments for negative environmental impact by practically all companies in the industry. Due to implementation of Rational APG Utilization Program (see chapter Rational APG Utilization Program) payments of NOVATEK Group for negative environmental impact were reduced by 17.1% as compared to the previous year to RR 25 million. PAGE 29 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

STAKEHOLDER ENGAGEMENT

NOVATEK maintains a dialog with all }} As of the publication date of this NOVATEK also interacts with non- A conference called “Natural Gas — stakeholders on various aspects, report the Company representatives governmental organizations. We worked New History. Alternative Gasification. including the nature resources were taking part in discussing new jointly with I.V. Vernadsky Foundation on Gas-engine Fuel Market” was conducted management. The Company interacts oil and gas reserves classification implementation of our cooperation plan in Chelyabinsk on the Company’s actively with federal and regional elaborated by the Ministry of Natural and on improvements in the initiative. About 250 business authorities of the executive and legislative Resources upon instructions from environmental legislation. A number of representatives from Russia, CIS and branches, as well as local administrations the Russian Government. NOVATEK employees had won awards non-CIS countries, as well as experts in order to improve the conditions of from the Foundation. and representatives of government functioning of the industry and ensure }} In the course of discussions agencies took part in the conference. efficient natural resources use. organized by the Russian Ministry During 2013, the Company’s experts of Natural Resources, NOVATEK have repeatedly spoken at public events In 2014, we plan to continue the practice }} As of the publication date of this developed amendments to the draft (seminars, forums, congresses), which of holding seminar meetings attended by report, Methods of Calculating Lost legislation On the Arctic Zone of the focused on improving land relations in the experts from environmental services Profit for Withdrawal of Reindeer Russian Federation. the course of subsoil use. NOVATEK’s of NOVATEK subsidiaries with Grazing Lands of Indigenous representatives took an active part in the involvement of specialists from the Minority Populations of the Far }} In 2013 we continued ongoing Exploration, Production, Processing Russian Ministry of Natural Resources, North, Siberia and Far East were cooperation with the Open 2013 International Exhibition-Forum and Rosprirodnadzor and various being considered by the Expert Government of Russian events of the 5-th All-Russian Convention environmental institutions. Board of the Russian Gas Society. Federation on improvements to on Environmental Protection held in the environmental legislation. Moscow under the aegis of the Russian Similar work was conducted with Ministry of Natural Resources and the Chamber of Commerce and Ecology. Industry, the Ministry for Economic Development, the Federal Forestry Agency, the Russian Ministry of Natural Resources and the Russian Gas Society.

}} During the reporting year the Company representatives actively cooperated with federal authorities on the issue of the amendments to forestry legislation of the Russian Federation. PAGE 30 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

PUBLIC HEARINGS ON THE PORT OF PUBLIC HEARINGS ON UTRENNEYE FIELD More than 600 people were present at A representative of the Siberian Scientific SABETTA CONSTRUCTION PROGRAMS DEVELOPMENT public hearings in the Tazov district, and Analytical Research Center, the designer At the stage of development of major In April 2013, NOVATEK conducted 400 of them cast affirmative votes for of the field’s development project projects affecting the interests of local public hearings in the town of Tazov, seaport construction. In Gydan, addressed the community members. He populations and having impact on the where Company representatives shared Antipayuta and Tazov tundra, field covered the planned work scope, as well environment, we always assess plans for the development of two oil and community liaison offices were also as the preliminary surveys schedule. environmental, economic and social risks gas condensate fields – Utrenneye and organized. Out of 590 people surveyed, that arise in the course of construction Geofizicheskoye, located in the Gydan 392 local residents spoke in favor of Since the local community is poorly and further operation of our facilities. peninsula. The local residents learned operations, provided that environmental informed about oil and gas companies’ about the declaration of intent on the legislation is observed. activities or possible environmentally In November 2013, the public hearings Utrenneye field development project. In friendly technologies, we conducted an took place regarding the construction of the run-up to the hearings, the Company The need to minimize the negative awareness-raising campaign covering Sabetta seaport and a navigable channel representatives had expected to receive environmental impact of the Sabetta port the residents of intersettlement tundra in the Gulf of Ob in the Tazov district of suggestions on how to build mutually construction was pointed out in the areas. YNAO. It is planned to build special berths beneficial co-operation, revise the course of the hearings. The participants for heavy ships, open storage areas, ice project accordingly and minimize the of the hearings believe that this should Company representatives confirmed barriers, a fire fighting pump station, Company’ footprint on the lifestyle of the primarily be facilitated by restoration of that the opinions and expectations of the electric transformer substation, parking indigenous tundra population, and aquatic habitats and biological resources. town and intersettlement areas residents and many other facilities on the territory among other things, to reduce the would be taken into account in the exceeding 100 hectares. The main impact on traditional folk crafts such as The recommendations and suggestions engineering design. objective of the future complex is to deer breeding and fishing. Also, there made in the course of the public hearings ensure the safety of vessels carrying are 22 sacred and ceremonial sites of were taken into account in the seaport liquefied natural gas and gas condensate. Yamal’s indigenous population within the construction project. boundaries of the Utrenneye field and the adjacent areas. Specific issues related to the field development infrastructure were raised at the hearings: pipeline laying methods, building crossings for deer herds, soil restoration, and creation of jobs for the indigenous population. PAGE 31 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

NEW TECHNICAL SOLUTIONS FOR ENVIRONMENTAL RISK MITIGATION

WASTE UTILIZATION SOLUTIONS ATMOSPHERIC EMISSIONS REDUCTION PREVENTION OF WATER POLLUTION planned to be implemented at the North- A drilling mud and cuttings utilization SOLUTIONS At the Ust-Luga Complex, carriers are Khancheyskoye field as well. Thus, there plant has been in operation at the A new-type flaring system allowing to loaded via special loading arms will be no need for construction of a solid Yurkharovskoye oil and gas condensate reduce the amounts of hazardous designed for loading and offloading household waste dump, water treatment field since 2008. The technology emissions was commissioned at the Ust- liquid hydrocarbons with an airtight or drainage systems, or regular cruises employed allows us to separate and Luga Stable Gas Condensate connection to vessel process pipelines. along the entire facility route. reuse water and drilling mud. The drilling Fractionation and Transshipment There is an automatic system for arms cuttings separated in the process are Complex. Given that the conventional disconnection and closing electrically USE OF RENEWABLE ENERGY stored at a specialized landfill. Over the flaring systems protection zone exceeds driven valves to avoid spills in case of The 326 kilometer long Yurkharovskoye past five years of its operation, the plant 100 meters, which is impossible in the emergency on a berth-moored carrier. field — Purovsky Plant condensate has demonstrated high efficiency, and densely built-up Ust-Luga, we have Here, a comprehensive automation pipeline has a remote control system this technology is planned to be applied chosen an option to build a compact system is also implemented to measure powered by renewable energy sources at other fields. closed fire flaring system. This unit, pipeline pressure, and monitor the on the basis of solar cells and wind serving both the gas condensate condition of valves and pumps. turbines. The system automatically In 2013, the company’s project Drill fractionation plant and berthing facilities, collects and transfers the parameters of Cutting Processing Technology at the produces no smoke, steam, visible UNMANNED TECHNOLOGIES the transported substance, tracks Yurkharovskoye Field won the V.I. flame, odor, noise or thermal plume. The We have developed basic technical cleaning and diagnostics pigs, sends an Vernadsky National Environmental efficiency of combustion product solutions to apply unmanned alert notice in case of leak detection, Award in the Innovative Eco-effective disposal exceeds 99.9% - the top technologies to develop gas fields with a manages final control elements and Industrial Technologies category. performance in terms of reduction of production capacity of up to five (5) bcm feeds process equipment in case of sulphur and nitrogen oxides, and other per annum. The specific feature of this external power supply failures. The TRANSPORTATION RISK MITIGATION hazardous emissions. Benzopyrene approach is uninterrupted and accident- system has proved its efficiency over SOLUTIONS emissions are fully eliminated, and there free operation of the preliminary gas five years of operation. The innovative The only two Arctic Circle small-sized are but small quantities of nitrogen and treatment unit and gas well pads in the solution is patented, and the solution methanol production units with a capacity carbon oxides emitted into the absence of field maintenance personnel. itself is recorded in the Russian State of 40 and 12.5 thousand tons per annum, atmosphere that are significantly lower At the Urengoyskoye and Dobrovolskoye Utility Model Register and won a public operate at the Yurkharovskoye field. The compared to pollution standards. fields, located within the Olimpiyskiy award from the N.K. Baibakov use of these units enables to avoid license area, there is an optical cable International Fuel and Energy Association transportation of this hazardous (subclass laid along the entire gas-gathering for sustainable development of power 6a) cargo to the field, thus minimizing system for real-time equipment engineering and the society in 2013. environmental risks associated with monitoring, leak detection system accidents and spills. control, and visual monitoring by video cameras. The unmanned technology is PAGE 32 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

KEY IMPACTS

EMISSIONS OF MAIN POLLUTANTS The specific feature of the Urengoyskoye ATMOSPHERIC EMISSIONS SHARE OF NOVATEK GROUP’S TYPES OF INTO THE ATMOSPHERE RESULTING BUSINESS ACTIVITIES IN POLLUTANT and Dobrovolskoye fields located within The Company faces a strategic task on FROM NOVATEK GROUP PRODUCTION ATMOSPHERIC EMISSIONS IN 2013, % the Olimpiyskiy license area, is their mitigating specific emissions levels while ACTIVITIES IN 2012–2013, TONS remote location from the existing increasing production and output infrastructure. The Urengoyskoye volumes. Extensive construction reservoir is 20 km long and the activities in 2013 and the commissioning Dobrovolskoye reservoir exceeds 40 of new facilities resulted in an increased km. Well operation technology based on number of sources of atmospheric alternative energy sources such as solar pollutant emissions. The number of such panels and wind generators is sources of emissions by NOVATEK implemented there. It allowed to avoid Group’s facilities increased from 1,618 in building power transmission lines, and 2012 to 1,791 in 2013. As a result, the save operating and maintenance volumes of pollutant emissions into Production 89 % expenses, and mitigate environmental atmospheric air increased by more than risks. a quarter as compared to the previous Processing 10 % period, to 29,435 tons. Emissions of Transportation 1 % gaseous and liquid pollutants prevailed (27,529 tons). At the same time, methane emissions decreased, while solid particles and sulphur dioxide emissions remained unchanged compared to the previous year.

2012 2013 The largest volume of emissions is generated Sulphur dioxide 8 8 by our producing companies. In 2013, overall Solids 1 905 1 906 permitted air pollutant emission levels have not been exceeded across the NOVATEK Group. Nitrogen oxide (as NO2) 2 112 2 892

Hydrocarbons (including methane) 4118 3 136

Volatile organic compounds 2 447 3 272

Carbon oxide 12 787 18 168

Total 23 377 29 381 PAGE 33 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

ASSOCIATED PETROLEUM APG UTILIZATION DYNAMICS AT GREENHOUSE GASES AND GASIFICATION OF TRANSPORT GAS UTILIZATION NOVATEK FIELDS IN 2011–2013, % CLIMATE CHANGE Apart from developing a network of gas Emissions from flared associated On background of general production filling stations for gas-propelled vehicles petroleum gas (APG) represent a growth, greenhouse gas emissions in (see “Retail LPG Network” for details),

significant part of overall atmospheric 2013 increased to 2.5 mmt of CO2 NOVATEK promotes gasification of public pollutant emissions (19.5%). Increasing equivalent. Their major part (92%) is transports. Automobile transport has the overall APG utilization level is our generated by our upstream subsidiaries. become the main source of atmospheric most important environmental objective. 93,7 % pollution in the cities contributing on In 2013, the APG utilization efficiency at The increase of nitrogen and carbon average more than 40% of pollutant NOVATEK-TARKOSALENEFTEGAS 62,1 % oxides emissions was due to growth of emissions. Switching to natural gas will achieved 95% due to carrying out a set production activities by NOVATEK Group, facilitate improvement of the 47,1 % of measures at oil production sites. and, primarily, to increased usage of environmental situation and a significant natural gas at compressor stations, a decrease in operating costs. Developing As part of APG Recovery Program the larger number of well pads and expansion of a network of gas filling stations enabled following facilities have been buil: of flare facilities. the Company to reduce emissions by 53

thousand tons of СО2 equivalent in 2013. }} Intra-field gas pipeline and booster At the same time, efficient implementation 2011 2012 2013 compression station at the central of the APG Utilization Program at our East- To stimulate transition to LPG, in 2013 oil treatment facility (second stage) Tarkosalinskoye field allowed NOVATEK to NOVATEK-AZK implemented a pilot at the East-Tarkosalinskoye field. emissions were reduced since APG reduce greenhouse gases emissions by project on vehicles conversion to LPG in flaring is characterized by a high under- 772 thousand tons of CO equivalent. the town of Zlatoust (Chelyabinsk Region). }} APG booster compression station 2 burning ratio and is followed by The Company assumed all the costs of as a part of the oil treatment significant methane emissions. To meet our commitments to society and gas equipment acquisition and installation facility and a gas pipeline at the stakeholders NOVATEK continued its at 20 buses at the Zlatoust motor transport Khancheyskoye field. The APG utilization rate has also grown participation in the Carbon Disclosure enterprise, and the vehicles owned by the The dehydrated and compressed APG significantly across the NOVATEK Group Project (CDP), which discloses information municipal Children’s Creativity Center. In is now channeled to the gas transmission as a whole. This indicator almost doubled on greenhouse gas emissions and the Chelyabinsk Region, LPG is especially network to be further delivered to our from 47.1% in 2012 to 93.7% in the energy efficiency of production. This attractive as motor fuel, since end consumers. The implemented reporting year, which was much higher information is available for registered environmental pollution issue remains arrangements resulted in 1.5 times less than average across Russia (78.8%). In users on the project’s website. particularly acute for this region. APG flaring than in the previous year, 2013, NOVATEK ranked among the top NOVATEK-AZK plans to continue

while at the same time СО2 and CH4 five Russian oil & gas companies in expanding activities on municipal terms of APG utilization efficiency. transport transition to LPG in the other regions where it operates. PAGE 34 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

WATER WITHDRAWAL VOLUMES BY DYNAMICS OF WATER CONSUMPTION DISCHARGE TO WATER BODIES, WATER USE AND WASTEWATER SOURCES, THOUSAND CUBIC METERS BY OUR SUBSIDIARIES AND THOUSAND CUBIC METERS Production sites of NOVATEK are located JOINT VENTURES in the areas that experience no water scarcity. However, we seek solicitous attitude towards water resources and Water consumption by our upstream focus our subsidiaries’ efforts on companies, thousand cubic meters preserving the territory’s stable water Gross production, mmboe balance. NOVATEK carries out water intake for its industrial (75%) and 1080 domestic purposes (25%) mainly from Surface sources 803 surface and, partly, from subsurface Subsurface sources 564 759 water sources. We use water based on 740 Public utilities licenses for the right to use subsurface 58 resources for groundwater extraction After storage reservoirs 150 and under agreements for water intake hydro-testing from surface water bodies. We constantly 380 405 439 Treated wastewater 33 use metering devices to assess the quality and volumes of water withdrawn Undertreated wastewater 9 and discharged during operations. 2011 2012 2013

The volume of water consumption by our Ust-Luga, including water consumption In the reporting period, water All types of wastewater generated subsidiaries and joint ventures increased during the hydraulic tests of the Complex, consumption limits set for our enterprises undergo treatment from contaminants at by 61.1% in 2013 to 1,425 thousand and commissioning of the third stage of were not exceeded. biological and industrial wastewater cubic meters, including 1,204 thousand the Purovsky Plant. treatment facilities and subsequently cubic meters for production purposes The amount of wastewater discharge in burned at gas flaring systems, and 221 thousand cubic meters for Seventy six percent (76%) of NOVATEK 2013 totaled 818 thousand cubic meters discharged to surface water sources domestic needs. Group’s total water consumption as compared to 575 thousand cubic and intake pits or injected into formations. accounts for our upstream companies, meters in 2012. This growth resulted This indicator increased significantly due which use water mainly for drilling from the overall water consumption The primary record of water use and to the launch of new facilities at our operations. At the East-Tarkosalinskoye increase. The overall discharge of consumption, as well as industrial producing fields and the fields being field, water is also used to maintain wastewater to water bodies totaled 193 environmental control over operation of prepared for launching, including ZAO formation pressure. The volume of water thousand cubic meters across the water treatment facilities and monitoring Nortgas into the boundaries of this report consumption by our upstream companies Group, including 150 thousand cubic of wastewater treatment quality is and the start of operations at the Gas increased to 1,080 thousand cubic meters accounting for the hydro-testing organized at all our enterprises. Condensate Fractionation and meters in 2013. Water intake by our of storage reservoirs. Transshipment Complex at the port of upstream companies does not have any significant effect on the water sources. PAGE 35 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

VOLUME OF WATER CONSUMPTION BY NOVATEK GROUP, WASTEWATER VOLUME AND DISPOSAL IN 2013, THOUSAND CUBIC METERS THOUSAND CUBIC METERS

2013 Sibneftegas, NOVATEK- NOVATEK-Ust-Luga, NOVATEK- 2012 NOVATEK- Tarkosaleneftegas, Yamal LNG Tarkosaleneftegas Tarkosaleneftegas, NOVATEK- NOVATEK-Purovsky Yurkharovneftegas Plant, Nortgas NOVATEK-Tarkosaleneftegas 360 391 Nortgas 268 – NOVATEK-Yurkharovneftegas 244 238 Pretreatment NOVATEK-Ust-Luga 187 0 Yamal LNG 158 84 NOVATEK-Purovsky Plant 157 125 227,8 354,4 192,5 43,1 Sibneftegas 38 42 Terneftegas 12 0 YARGEO 0 Pumped into Burning at horizontal Discharge into waters Discharge into a 4 underground intake gas flare unit of Luga Bay or Ob Bay sewage pit and formations transmission to third parties

We operate our Stable Gas Condensate treatment facility with the capacity of 100 In accordance with the Environmental In 2013, NOVATEK Group’s expenditures Transshipment and Fractionation cubic meters per day. The Complex has Policy, the Company’s subsidiaries and for water resources protection and Complex at Ust-Luga in strict compliance elaborated standards of admissible joint ventures strive to rationally use water rational use increased by 30% as with the existing environmental legislation discharge and obtained appropriate and introduce environmentally efficient compared with the prior period and of the Russian Federation and permits. Wastewater monitoring has been technologies where possible. Since 2011, amounted to RR 26 million. international treaties. Here, we installed organized to check the quality of effluents NOVATEK has been participating in the equipment allowing us to ensure a discharged into the waters of Luga Bay. CDP Water Disclosure Project, which maximum possible level of industrial and Analysis of the samples taken in the Luga discloses information on the use of water environmental safety, in particular, the Bay in 2013 shows that hydro-chemical resources. Ust-Luga Complex is also equipped with parameters and concentrations of an advanced biological wastewater pollutants in the sea water fall within the limits for commercial fishing waters. PAGE 36 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

SHARE OF NOVATEK’S CORE PRODUCING LAND USE AND RECLAMATION WASTE ASSETS IN WASTE GENERATION In 2013, the total area of land plots leased Production and consumption waste for three quarters of the Group’s overall IN 2013, % by the NOVATEK Group of companies management is one of the most important waste. Production and consumption increased by 37% to 24.8 thousand areas of environmental activities at our waste management is carried out in hectares. Forest-covered areas enterprises. The Company set a course accordance with the approved accounted for 57% of the entire leased for reduction of waste generation, as well guidelines. Our own waste disposal sites land area, whereas industrial and other as waste processing and environmentally for low-hazardous and practically non- special-purpose lands accounted for sound disposal. In 2013, the overall hazardous wastes accommodate 43%, and populated land areas – for less amount of waste generation by NOVATEK approximately one half of these types of than 1%. Group was 17.5 thousand tons, which is waste. Environmental monitoring and 30.8% less than in 2012. Drill cuttings industrial control is exercised at our In 2013, we continued to further optimize constitute slightly less than a half (43.5%) waste disposal and temporary waste land use to minimize land withdrawal and of overall waste generation. Drill cuttings storage facilities. We employ innovative ensure maximum preservation of natural may largely be classified as non- eco-efficient waste recycling resources, including forest reserves and hazardous or low-hazardous waste technologies and equipment. reindeer pastures. In 2013 land plots were materials accounting for an overwhelming delineated for geological exploration, majority (approximately 90%) of the A part of waste is passed over for hydrocarbon field production facilities waste produced. The share of class I and disposal by specialized organizations construction and completion of the II hazardous waste (high-hazard) is under agreements. The remaining Purovsky Plant third stage. insignificant and are mainly found in waste, including water separated from mercury lamps and luminescent tubes crude oil during its treatment and gas OOO NOVATEK- Our subsidiaries are also engaged in containing mercury. condensate bearing oil products, are 41 % TARKOSALENEFTEGAS production of commonly occurring used for our own needs and are injected mineral resources, mainly sand Waste generation rates are correlated into the East-Tarkosalinskoye field’s NOVATEK-Yurkharovneftegas 34 % excavation. In 2013, production of with the scale of production activities at reservoirs to maintain pressure levels. NOVATEK-Purovsky Plant 2 % commonly occurring mineral resources our upstream enterprises, which account NOVATEK-Transervice 1 % totaled 19.2 million cubic meters of soil. DRILL CUTTINGS TREATMENT IN A SPECIALIZED WORKSHOP, TONS Sibneftegas 4 % In the reporting period, we continued our Nortgas 15 % efforts to reclaim disturbed and 2011 2012 2013 contaminated land. Land remediation is Others 3 % 7352 6793 4436 one of the most important elements in the environmental programs of the subsidiaries and joint ventures. In 2013, the total remediated land area was 127.8 ha. In the reporting period, expenditures for these purposes totaled RR 97 million. PAGE 37 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

BIODIVERSITY PRESERVATION

In 2013, we remediated land areas at the Environmental protection actions provide Industrial development in the Far North planned to be released into Siberian East-Tarkosalinskoye field disturbed for removal of track machines left near imposes a great responsibility for river tributaries upon completion of during construction of well pads that were wells, cleaning the area from industrial ecosystem preservation on upstream incubation. Preservation of a sufficient to be relinquished as forest land. The waste, chemical and analytical tests of soil companies. With the expansion of quantity of the whitefish population is a environment was rehabilitated on such and water of nearby water basins in order hydrocarbon production geography, the matter of great commercial importance land areas: the area was cleaned from to assess natural habitats pollution levels. problem of water resources preservation for the indigenous ethnic groups of the industrial waste, the vegetation was All program-related work is done in and reproduction in northern rivers north of Western Siberia — the Khants restored and sludge pits were eliminated. coordination with, and under supervision becomes more acute. In 2013, more and Nenets. of the North-Urals Department of than nine million juvenile whitefishes, Within the East-Tarkosalinskoye field we Rostekhnadzor. More than twenty wells including two million of muksun fish, As agreed between the Company and are also implementing a program to cap were capped in 2013 and another 11 were released into the rivers of the the YNAO government, in 2013 idle and failed wells (drilled before the wells were capped over the winter season Ob-Irtysh basin. One of the participants NOVATEK is covering half of the costs for acquisition of the respective license by of 2013–2014. The Company is planning of this project implemented by the the construction of a whitefish NOVATEK). The wells that are not capped to cap all idle and failed wells in 2014. Federal Fisheries Agency of the Russian reproduction plant on the Sob river. The pose a threat to the environment in case Federation is our joint venture company second half will be funded from the of breakouts of mineralized water, various We practically doubled the amounts Yamal LNG, where a water resources district’s budget. The enterprise is solutions or hydrocarbons and pose a risk channeled to finance land protection in support program has been implemented planned to be built within two years. of water breakthrough to productive 2013, which amounted to RR 79 million since 2011. In August 2013, the hydrocarbon-bearing formations. Such (compared with RR 41 million in 2012). Company employees together with Our employees take part in the work of works are mainly carried out at old Such funds were mainly spent to clean the representatives of the Regional Scientific an expert-advisory group for walrus exploration wells often located in areas from metal scrap and other things and Production Fisheries Center preservation and research on the South- impassable and hard-to-reach areas. (drilling rigs, and structures) left by the participated in similar actions within the east of Barents Sea and adjacent water previous subsurface users. Khanty-Mansiysk Autonomous Region. areas. In 2013, two conferences were As a result of monitoring, juvenile fishes held, where ecologists and subsurface successfully naturalized in the Ob River. users learnt the results of population With the participation of Yamal LNG, monitoring, discussed measures for more than five (5) million muksun larvae, walrus preservation under conditions of four (4) million broad whitefish larvae active shelf development and heard oil and 10 million Siberian whitefish larvae and gas companies’ plans to minimize were additionally added for raising. A possible negative impact on these new series of these fish juveniles is animals. PAGE 38 Environmental Protection / NOVATEK SUSTAINABILITY REPORT IN 2013

ENERGY CONSUMPTION AND EFFICIENCY

CONSUMPTION AND PRODUCTION OF ENERGY EFFICIENCY FUEL AND ENERGY RESOURCES The increase in hydrocarbon production In order to ensure sustainable utilization In 2013, 54 2.5kW sets of wind generators In 2013, our gross hydrocarbon and processing volumes inevitably leads of energy and fuel resources, NOVATEK and solar panels were used to produce production totaled 447 mmboe or 2.6 to an increase in the consumption of has developed the Energy Saving renewable energy (vs. 50 sets in 2012), billion GJ of primary energy. A part of the main energy types. In 2012, our electric Program for 2013–2016 based on the installed primarily at the Yurkharovskoye hydrocarbon fuel produced was used for energy and heat energy consumption conducted energy audit. The Company field – Purovsky Plant gas condensate NOVATEK’s own electricity generation grew by 12.7% and 12.0% accordingly. employees annually update the program pipeline. 394 thousand kWh (1,419 GJ) and heat energy generation. Also, a part Consumption of natural gas to produce by introducing economically viable were generated by wind and solar of electricity was produced from the own electrical and heat energy energy-saving arrangements. The energy in 2013. Moreover, possibility for renewable sources of energy (solar and decreased by 8.8% due to installation of program implies calculation of the per- remote control and real-time monitoring wind power generation). Direct energy exhaust heat boilers and heat unit resource consumption rates for of gas condensate pipeline operating purchase, including gasoline, diesel and exchangers on our gas-turbine electric major technological processes and conditions makes it possible to almost other types of fuel, totaled 1.45 mln GJ. power stations and gas compressor auxiliary facilities. fully stop using vehicles for inspection of units. the gas condensate pipeline route, thus At the Yurkharovskoye field, cogeneration reducing indirect energy consumption. gas turbine plants are used. The cogeneration system driven by a gas In 2013, energy savings resulting from CONSUMPTION OF FUEL AND ENERGY RESOURCES turbine makes it possible to efficiently the Energy Saving Program for 2013- recuperate and convert into useful 2016: electricity - 7.4 mln kWh, heat - 8.6 unit 2012 2013 thermal energy heat, which otherwise thousand Gcal, fuel (natural gas for would be lost in the course of electricity thermal generation) - 6.7 thousand GJ. Electricity (total): mln kWh 226,2 255,0 generation. Off-gases go to heat exchangers and are used for heating incl. purchased mln kWh 147,5 203,5 shift camps. Waste heat recovery results in essential fuel gas savings, reduction incl. produced (own) mln kWh 78,7 51,5 of pollutant emissions and makes it thousand possible to significantly increase the Heating energy (own) Gcal 215,4 241,2 overall efficiency of the plant from the conventional 40–50% to 70% and Fuel resources consumption to electric thousand and heating energy production GJ 4 247 3 873 above. OCCUPATIONAL HEALTH, INDUSTRIAL AND FIRE SAFETY

We developed measures to prevent oil and gas condensate spills, and protect the environment, employees and local residents. PAGE 40 Occupational Health, Industrial and Fire Safety / NOVATEK SUSTAINABILITY REPORT IN 2013

OCCUPATIONAL HEALTH, INDUSTRIAL AND FIRE SAFETY

WORKFORCE ENGAGEMENT IN OCCUPATIONAL OCCUPATIONAL HEALTH AND HEALTH AND SAFETY, AND PROVISION OCCUPATIONAL HEALTH AND SAFETY GOALS AND OBJECTIVES OF PROTECTIVE CLOTHING SAFETY TRAINING

The Occupational health and safety Various aspects of occupational safety Sanitary compliance in conditions of All streams and functions conduct safety (OHS) goals and objectives are set out such as providing personnel with exposure of humans to adverse factors training and all types of briefings in the NOVATEK Health, Safety and personal and collective protective is based on international occupational (induction, initial, repeated, unscheduled Environmental Policy adopted in 2005 equipment and compensation for work- safety standards (OHSAS 18001:2007) and targeted); personnel training and and published on the corporate website related harm to health caused by with due regard to feedback from development programs are offered, (http://www.novatek.ru/common/ occupational diseases or otherwise are Company employees. among others, by specialized training upload/80_78.pdf). They were detailed subject to negotiations between the centers, and there is a knowledge in previous reports, in particular, in the company management and the Since 2012, a uniform corporate assessment system. In 2013, 38% of similarly named section of the NOVATEK workforce represented by trade unions protective clothing style has been white and blue-collar workers upgraded 2010 Sustainability Report, and have not and are recorded in collective bargaining adopted by the subsidiaries. Technical their skills, including 58% of the been subjected to any material changes agreements. Specifications for protective clothing are Company’s engineers and technicians in 2013. planned to be revised in 2014 based on who completed certified operational Experts of the Company’s core business the testing results. health and safety courses. All activities planned for 2013, including departments are members of a the purchase of personal protective commission that conducts compre- equipment, personnel safety training hensive HSE compliance audits of and certification, medical checks, streams and functions. improvement of working conditions, etc. was successfully fulfilled.

The 2013 Occupational Health and Safety expenditures amounted to RR 262 million. PAGE 41 Occupational Health, Industrial and Fire Safety / NOVATEK SUSTAINABILITY REPORT IN 2013

ADMINISTRATIVE AND OPERATIONAL CONTROL

OPERATIONAL CONTROL COMPREHENSIVE INSPECTIONS RESULTS OF SUBSIDIARIES’ INSPECTIONS Operational control (OC) programs in all In 2013, the NOVATEK commission Inspection findings are published in BY STATE SUPERVISORY AUTHORITIES NOVATEK subsidiaries have been continued comprehensive inspections of reports recording discovered violations In 2013, state supervisory authorities developed in line with the requirements NOVATEK subsidiaries for occupational and feedback as well as recommended (regional agencies of Rostekhnadzor) of state sanitary regulations. Production health, industrial, fire and environmental remedial actions. Company streams and carried out three scheduled inspections areas, buildings, structures, processes, safety requirements. In the course of functions analyze shortcomings revealed of two Company entities (NOVATEK- transportation, workplaces and the comprehensive inspections, occupational in the course of the comprehensive Tarkosaleneftegas and NOVATEK- environment are all subject to control. health, industrial, fire and environmental inspections and draw up corrective Ust-Luga). safety control systems are audited for action plans. Pursuant to regulatory requirements, all compliance with international standards. All shortcomings and points of criticism Company subsidiaries have developed In 2013, the NOVATEK’s commission were rectified except for those that rules for arrangement and execution of Comprehensive inspections are performed comprehensive inspections require new design solutions and industrial control at hazardous conducted by the commission composed of five Company entities: NOVATEK- material tangible costs that are provided production facilities and have set up of experts from core departments: power Purovsky Plant, NOVATEK-Transervice, for in the 2014 business plans. operational control commissions, which engineering, automatic control systems, NOVATEK-Yurkharovneftegas, conduct regular occupational health and control and measuring equipment, NOVATEK-AZK, and NOVATEK-Ust- safety compliance checks in the streams operating procedures, and Health, Safety Luga. As of the end of 2013, about 70% and functions. and the Environment. of all discovered shortcomings and violations were rectified by the Company In 2013, operational compliance entities and work is in progress to rectify discovered violations of occupational the remaining ones. health and safety requirements with practically all of them rectified. PAGE 42 Occupational Health, Industrial and Fire Safety / NOVATEK SUSTAINABILITY REPORT IN 2013

WORKPLACE CERTIFICATION INJURY RATE FIRE SAFETY

To mitigate the risk of work-related In 2013, the number of injuries more than The Company puts a particular focus on subsidiaries they protect; Sibneftegas injuries the Company’s entities perform halved y-o-y. fire prevention, including: and Arcticgas facilities were safeguarded regular workplace certification. Actions by contracted fire brigades in 2013; and for improvement and sanitation of There were four accidents in 2013, one }} Internal fire safety supervision; Nortgas operating facilities were within working conditions are developed and being a multiple accident (minor injuries). the boundaries of the Yamal-Nenets }} Fire safety training and emergency implemented based on certification Nine people were injured, all of them Region Federal Firefighting Service response drills; results. In 2013, all NOVATEK subsidiaries suffered minor injuries. The key root response area. continued these efforts. In total, 91% of causes of the accidents were established }} Developing standards and existing workplaces were examined at as follows: specifications. The total headcount of fire brigades seven Company entities, including those serving the facilities on a 24-hour basis certified with qualifications. As a result, }} Personal negligence of those Five NOVATEK subsidiaries had licenses increased by 57% y-o-y and stood at no workplaces with unacceptable injured; for firefighting equipment maintenance 401 people. working conditions were identified. }} Disciplinary violations caused by and firefighting operations in 2013. non-compliance with occupational Hazardous industrial facilities for In 2013, the Company’s subsidiaries safety rules as set out in operating production, gathering, processing and developed, amended and adopted 280 procedures and occupational health manufacturing of explosives and local regulatory and administrative fire and safety guidelines; flammable substances are protected by safety documents. 277 construction and }} Inadequate snow removal and ice- 12 private fire brigades. Seven of them upgrading projects for fire safety crusted ground on site. are in-house and belong to the compliance were reviewed.

CERTIFIED WORKPLACES TOTAL ACCIDENTS BREAKDOWN ACCIDENT FREQUENCY RATE ACCIDENT SEVERITY RATE (INCLUDING CERTIFIED WITH QUALIFICATIONS) (NUMBER OF ACCIDENTS/ MILLION WORKING (NUMBER OF HOURS OF DISABILITY/NUMBER HOURS) OF ACCIDENTS)

Accidents by degree 2011 2012 2013 2011 2012 2013 2011 2012 2013 of severity 1930 1864 Minor 4 6 4 214 290 922* 0,30 0,92 0,41

Serious 0 3 0 * The severity rate growth is associated with the Purovsky Plant multiple accident. 1452 Serious, including Based on investigation findings, actions fatalities 0 0 0 were taken to improve work safety to prevent such accidents in the future.

2011 2012 2013 PAGE 43 Occupational Health, Industrial and Fire Safety / NOVATEK SUSTAINABILITY REPORT IN 2013

ACCIDENTS AND INCIDENTS

TRAINING AND EDUCATION In 2013, fire safety inductions were held NOVATEK production facilities classified In October 2013, a fire broke out at the Occupational health and safety (OHS) for 20,496 people (including contractors), as hazardous include the production NOVATEK–Purovsky Plant LPG loading and fire safety briefings and training are and 3,576 were trained in the basics of and storage facilities as well as an rack in the course of gas hazardous mandatory at all subsidiaries. Such fire safety. extensive network of in-field and inter- operations that partially damaged the training sessions and emergency field pipelines. rack. The incident had no impact on the response drills are conducted by Drills are held on subsidiaries’ sites to production process and did not lead to in-house experts and are intended for check emergency response readiness An adequate preventive action system is suspension of production or shipment of newly recruited employees and visitors, of Company’s in-house fire brigades and developed by the Company’s business the products. As a result of the incident, including student interns or contractors’ personnel and assess the effectiveness divisions to ensure safety of hazardous actions were taken to prevent similar representatives (induction) and for of professional emergency response industrial facilities, prevent oil and gas occurrences in the future. employees assuming new functions and rescue teams and other condensate spills, protect the (introductory briefing). organizations engaged in emergency environment, employees and local In 2013, there were eight fires on response. residents. contractors’ sites; therefore, the Company’s fire safety experts are trained Company put a major focus on in the basics of fire safety and attend More than 900 fire and evacuation drills There were no accidents at NOVATEK contractors’ fire safety compliance and refresher courses on a regular basis. All were held in the reporting year. subsidiaries in 2013. No damage to the working conditions and recommended other safe working practices training, environment was registered as a result 1,252 corrective actions to contractors. including certifiable training is provided of four incidents recorded by NOVATEK- by licensed organizations on the basis of Tarkosaleneftegas and NOVATEK- Due to the ramping up of hydrocarbon tailor-made programs. Purovsky Plant. production and the growing number of hazardous sites and infrastructure facilities, it is planned to build three new fire stations, create four new fire brigades and increase the headcount to ensure fire safety by 2015. HUMAN RESOURCES AND SOCIAL POLICIES

The Company encourages the development of leadership skills and provides incentives to employees for personal development and increase professional competencies by creating the necessary conditions for professional training and learning. PAGE 45 Human Resources Management and Labor Resources / NOVATEK SUSTAINABILITY REPORT IN 2013

HUMAN RESOURCES AND SOCIAL POLICIES

HUMAN RESOURCES MANAGEMENT AND LABOR RESOURCES PERSONNEL PROFILE

WORKFORCE BREAKDOWN NOVATEK’s Human Resources In relations with its employees, the In 2013, the number of the Company’s BY REGIONS, % Department carries out overall personnel Company strives to respect the full employees (including OAO NOVATEK, its management. The department also scope of human rights. In so doing, subsidiaries and joint ventures, included provides methodological and practical personnel services are governed by the into the reporting boundaries) increased assistance to subsidiaries personnel following approaches: compared with the previous period from services. 6,023 to 7,784 people, primarily due to }} Equal opportunities for candidates including Arcticgas, Nortgas, NOVATEK- The Company’s Human Resource Policy when applying for a job subject Kostroma and NOVATEK Moscow Region is based on strict compliance with to compliance of a candidate’s into the reporting boundaries. At the same Russian law and the international qualifications with the Company’s time, the share of the people engaged in standards developed by the International requirements. exploration and production increased Labor Organization. from 50,0% to 53.1%. The number of }} No discrimination of employees people involved in processing based on gender, race, nationality Personnel services of the Company insignificantly increased, while the share or any other reason whatsoever. conduct the following missions: of administrative staff and personnel }} Priority to local citizens under involved in transportation and sales }} Human resource planning; otherwise equal conditions; slightly decreased. Almost all employees are staff members, while the share of }} Hiring; }} Material incentives with sole external secondary job employees or consideration of the position, }} Personnel training and people employed under civil law contracts qualification and business qualities development; is insignificant. of the employee. }} Building a pool of successors for }} Maintaining a balance between In terms of geographic location of senior positions and career planning the employer’s and employees’ employees, NOVATEK retained the for all employees; interests. strongest presence in the Yamal Nenets }} Employee evaluation and Autonomous Region. Even though its }} Non-use of child labor or forced performance appraisal; share in the Company’s headcount labor. decreased from 59.2% in 2012 to 56.9% 2011 2012 2013 }} Employee motivation. The Company abides by applicable in 2013, the number of employees in Foreign legislation and adheres to best practices YNAO increased in absolute terms. The entities 1,5 % 1,3 % 1,0 % in labor relations. Learning & instructional regional staff structure changed primarily Other RF meetings for the subsidiaries’ experts on due to the expansion of NOVATEK-AZK regions 9,3 % 12,3 % 15,3 % Human Resources are arranged in activities in Volgograd and Rostov. The Chelyabinsk Moscow on a regular basis. share of headcount in Chelyabinsk region region 4,3 % 14,0 % 11,6 % and our foreign subsidiaries decreased insignificantly. Moscow 13,3 % 13,2 % 15,2 %

YNAO 71,6 % 59,2 % 56,9 % PAGE 46 Human Resources Management and Labor Resources / NOVATEK SUSTAINABILITY REPORT IN 2013

LEARNING AND DEVELOPMENT

COMPOSITION OF NOVATEK’S MATERIAL INCENTIVES In order to increase the management The Company has created a multilevel MANAGEMENT BODIES BROKEN The Company’s subsidiaries have efficiency, bonuses for managers of the system of training and learning for DOWN BY AGE, % introduced an integral approach to Company’s functional units depend on employees, including targeted education compensation and incentive The middle-aged group (35–55 years) compliance with key performance programs. We still give priority to mechanisms in accordance with the prevails in the structure of NOVATEK’s indicators. In some cases, such professional learning and training to corporate Procedures for Employees’ managing bodies indicators are related to efficiency in the ensure a safe environment at our Compensation and Incentives. Salaries area of sustainable development. production facilities. and wages are indexed annually to compensate for the negative impact of To retain and motivate highly qualified inflation. THE COMPANY’S MAIN TASKS IN managers we have also introduced a EDUCATION AND DEVELOPMENT Share-Based Option Program covering The men to women basic salary ratio in the period from 2010 to 2013. Program the executive category (in the YNAO) is participants approved by the NOVATEK on average 1.12. The men to women Top management Management Board generate income basic salary ratio in the specialist Successor management based on the increase in the share price category (in the YNAO) is on average reserve program of NOVATEK’s GDRs . 1.19.

The standard entry level wage for the Company’s employees in the main regions of its presence exceeds the Qualified workers, fixed local minimum wage e.g. in specialists and 2012 2013 Chelyabinsk region it is 1.7 times higher, management while in the Yamal-Nenets Autonomous 25 – 35 years 15,1 % 15,5 %  Technical competency Region - 2.3 times higher. assessment system 35–55 years % % 69,8 67,9  Technical studies program 55 years and over 15,1 % 16,6 %

Young Specialists

 Steps in Discovering Talents adaptation program  Involvement of young specialists in NOVATEK’s “Research-to- Practice Conferences” and the contests devoted to oil and gas industry events PAGE 47 Human Resources Management and Labor Resources / NOVATEK SUSTAINABILITY REPORT IN 2013

WORKING WITH YOUNG SPECIALISTS NUMBER OF YOUNG SPECIALISTS the two-year course. Program graduates The contest commission listened to and Steps in Discovering Talents Program EMPLOYED BY THE COMPANY receive certificates and different types of evaluated 66 research-to-practice The Company annually hires young incentives based on the reports in seven sections, which covered specialists based on open and recommendations of the evaluation almost all of NOVATEK’s lines of competitive employment practices. To 884 commissions. business: geology, production, ensure effective adaptation of this processing, transportation, engineering, category of employees and create The Company continues to form energy, economy and environment. The favorable conditions for their professional mentoring for young specialists. We set 548 548 contest jury consisted of subsidiary development, the Company elaborated a course for the development of representatives and the Company’s a “Steps in Discovering Talents pedagogical skills and interpersonal and heads of departments. To ensure Program”. The Program implies vocal communication of mentors. In objective evaluation of the projects, for assigning a mentor, an experienced 2013, 10 mentors participated in a the first time we engaged expert specialist with high professional Mentorship Practicum, which became a reviewers from specific fields of competencies, to supervise a young 2011 2012 2013 platform for the discussion of new skills expertise. In reviewing the reports, we specialist (who has worked in the of working with young specialists and took into account not only topic Company for less than a year). Recent sharing experience. relevancy, but also report presentation university graduates receive information format, quality of the presentation, and, on the Company’s organizational Foreign Practical Training Research-to-Practice Conference for ultimately, substantiation of the scientific structure, participate in trainings In 2013, two of the Company’s employees Young Specialists conclusion and economic feasibility of designed to develop information underwent practical training in France at The 8th Interregional Research-to- their implementation. technology skills, time management and Total’s Research and Development Practice Conference for the Company’s effective teamwork. They meet experts Center in Pau. An individual plan was young specialists was held in Moscow in Based on the results of the conference from various areas of the Company’s elaborated for each participant; a 2013, which was attended by 74 young 33 laureates received diplomas and business and participate in business personal mentor was assigned from specialists representing 11 enterprises cash prizes, while ten (10) of the first games. At the end of the year, a among world-class experts. Our of the NOVATEK Group. The place winners were also awarded a trip commission consisting of department specialists took part in the implementation representatives of Yamal LNG and to a petroleum-training center in South heads, representatives of personnel of real projects. For example, the activity NOVATEK-AZK participated in the Korea. Moreover, the winner nominated services and mentors assess the of one of the project groups was conference for the first time. The in the category “Best Implemented performance results of all program dedicated to Pazflor–UM2 deep-water oil Conference gathered a record number Project” was awarded a cash prize, and participants. In 2013, the first participants field in Angola, an extremely complicated of participants since its inception. All of the top 14 projects advanced to the graduated from the program: 40 young project, development of which required them were speakers at the regional FEC-2013 Competition for Youth Projects specialists completed the training under employment of unique technologies. conferences conducted earlier at our held by the Russian Federation Ministry the Program, and 58 persons continued subsidiaries and JVs. PAGE 48 Human Resources Management and Labor Resources / NOVATEK SUSTAINABILITY REPORT IN 2013

of Energy. In 2013, a NOVATEK’s TECHNICAL TRAINING One hundred and thirty one (131) yees, and for 55.6% of NOVATEK- representative, who became the winner In 2011, OAO NOVATEK and its core employees have been included in the Yurkharovneftegas employees. of the FEC-2013 Competition, received subsidiaries (NOVATEK-Yurkharov- Technical Training program for 2014 as a commendations from the Ministry of neftegas, NOVATEK-Tarkosaleneftegas result of testing employees. In 2013, the average number of training Energy of the Russian Federation. and NOVATEK-Purovsky Plant) hours increased for all employee introduced the Corporate Technical The training process was organized categories, and most noticeably — for In the unofficial team classification, the Competency Assessment System taking into account the specifics of each workers. team of NOVATEK-Yurkharovneftegas designed for testing professional potential enterprise. Highly qualified employees participants achieved significant results of their engineers and technical possessing theoretical knowledge and AVERAGE NUMBER OF TRAINING and won eight prizes. Over the last three specialists. practical experience of the production HOURS PER EMPLOYEE IN 2013 AND years, 12 projects of conference process were involved in the educational BREAKDOWN BY EMPLOYEE CATEGORY, TRAINING HOURS PER EMPLOYEE participants were implemented at The system allows to monitor the growth process as instructors at NOVATEK– NOVATEK enterprises, including three of employees’ technical competencies Purovsky Plant. The special educational projects in 2013. and to assess them when employing course was developed by the I.M. Gubkin people or promoting them for higher FEC Training and Research Center for the positions. employees of NOVATEK-Yurkharov- NUMBER OF PARTICIPANTS IN THE neftegas. Professors of the Tomsk CONFERENCE FOR YOUNG SPECIALISTS A total of 744 people were tested under Polytechnic University conducted a five- the system during 2013 against 103 in day course in Moscow for the employees 2012 (including 47 people during the of ОАО NOVATEK, NOVATEK- hiring process to fill vacant positions and Tarkosaleneftegas, NOVATEK-Yurkharov- 41 employees promoted to more senior neftegas and several other subsidiaries. positions). Under the Corporate Technical Corporate courses were taught by 74 Competency Assessment System tests Schlumberger and Petroleum Experts for for several new areas were developed in ОАО NOVATEK employees and experts the reporting year: APCS, instrumentation of several other subsidiaries. 46 and metrology, mechanics, and energy 38 sector. In assessing the candidates we A significant number of specialists 2012 2013 use a list of qualifications, which describes demonstrated higher scores in the course Top management 26,2 29,0 compliance of the required level of of reassessment after the training. The specialists’ knowledge in a certain assessment results improved for 68.9% Experts 33,2 36,9 position with a technical competency of ОАО NOVATEK employees involved in Line managers 39,4 41,2 2011 2012 2013 template. In 2013, we started to develop the Technical Training Program, for 54.5% such lists of qualifications for Arcticgas. of NOVATEK-Tarkosaleneftegas emplo- Workers 69,0 84,5 PAGE 49 Human Resources Management and Labor Resources / NOVATEK SUSTAINABILITY REPORT IN 2013

SUCCESSION POOL The Management Board of ОАО completion its participants will defend every three years. Such agreements A traditional area of cooperation among NOVATEK has approved the Successor individual projects before NOVATEK’s apply to all employees irrespective of trade unions and the management of the Program for top management management. their affiliation with trade unions. Open Company’s subsidiaries is the succession training, which provides for discussion of disputable matters and organization of recreational, athletic, and improved management knowledge and PROFESSIONAL CONTESTS issues helps strengthen partnership cultural events. In 2013, the Company skills with a focus on competencies Subsidiaries’ employees participate in relations. An indispensable element of spent RR 4.3 million to support trade required by the Company. The professional contests for specialists and social partnership is feedback received unions (RUB 3.5 million in 2012). Company’s management directly blue-collar workers. The best specialists during townhall meetings, participation in participated in determining the and blue-collar workers are selected trade union committee meetings, and IMPROVEMENT OF WORKING competencies that are part of the based on the results of theoretical and trade union conferences. Due to the CONDITIONS Program’s key elements. practical tests. close ties of the Company’s management The Company places a strong emphasis with trade unions and a constructive on the social and living conditions of its In an assessment undertaken in 2012, 12 The Best in the Field contest was held at dialogue with workers’ representatives employees. In particular, it concerns the out of 56 executives, their deputies and NOVATEK-yurkharovneftegas and any possible social tension is relieved rotational team method, which imposes production department heads were NOVATEK-Transervice in 2013. A total of through negotiations at the earliest special requirements in terms of selected to further participate in the 128 people took part in the contests, and possible stage. Over the entire history of workplace management and staff Program. In 2013, they underwent 30 of them won awards. the Company’s existence, there has recreation. E.g. this is the way the training on the first two modules – never been a single case of stoppages or majority of NOVATEK-Ust-Luga System Analysis & Organization Life In the regional contest for the best strikes due to labor disputes. employees work. A new rotation camp Cycle and Management Organizational occupational safety performance held Function – as a part of the Program by the Purovsky district government NUMBER OF TRADE UNIONS IN 2013 elaborated by the Higher School of NOVATEK-Purovsky Plant won the first

Management on the basis of the Higher prize as the Top Occupational Safety Trade union Subsidiary Headcount, ppl % School of Economics. The Program Organization in the Purovsky District. members, ppl consists of six modules with training NOVATEK-Yurkharovneftegas 785 778 99,1 courses conducted in Moscow and INTERACTION WITH TRADE UNIONS Novy Urengoy. Meetings with the The Company respects the right of NOVATEK-Tarkosaleneftegas 1323 1030 77,8 Company’s top management, employees to freedom of association and involvement in implementing NOVATEK has strong ties with trade unions, which NOVATEK-Transervice 298 155 52,0 projects, performing a senior manager’s operate in the majority of Company’s functional duties during his/her absence, subsidiaries. In 2013, 54.4% of employees NOVATEK-Purovsky Plant 719 415 57,7 and even practical training at foreign oil belonged to a union. All aspects of and gas companies are available for the relations between employees and the OAO NOVATEK 557 32 5,7 program participants. Upon the program employer are regulated by a system of collective bargaining agreements signed NOVATEK-Ust-Luga 510 40 7,8 PAGE 50 Human Resources Management and Labor Resources / NOVATEK SUSTAINABILITY REPORT IN 2013

SOCIAL POLICY CONCEPT

for comfortable accommodation of The Company’s dynamic development is, and benefits provided to employees, their employees’ suggestions for making it rotation teams for 275 people was to a great extent, dependent on the families, and retirees. more effective. New approaches to further commissioned in 2013 ensuring professionalism and skills of its employees. improve employees’ social security are maximum convenience of temporary Production targets can only be delivered, By continuously monitoring the policy we developed consistent with Company’s accommodation. The rooms have if there is a comprehensive solution to are able to promptly respond to workforce capabilities. showers and are equipped with TV sets, staffing and social issues. The policy dynamics, make timely adjustments, and fridges and other requisite household document, which defines NOVATEK’s top define the list of objectives to achieve at In 2013, the Core Concept of the appliances. The camp canteen has priority social initiatives is the Core the next stage. Every year, Management Company’s Social Policy was in effect as state-of-the-art equipment and highly Concept of the Company’s Social Policy. Board members review the approved by the NOVATEK Management skilled cooks offer a wide range of The document defines social guarantees implementation of the social policy and Board and reviewed and discussed with dishes. The camp grounds are the Company workforce in 2012. developed and landscaped. The recreation space has billiard rooms and SOCIAL EXPENDITUES, RR MLN table tennis, and a gym.

2013 2012

Targeted Compensation and Socially Important Payments 540,5 432,4 Repayable Financial Aid 375,9 431,5 Voluntary Medical Insurance 87,4 64,1 Culture and sports 80,0 69,7 Health Resort Treatment and Rehabilitation 68,9 49,8 State Guarantees Support Corporate Pension Program 50,6 46,1 Own Pension Program 24,0 18,1 NOVATEK-Veteran Program 23,4 22,4 Corporate Awards Program 10,0 8,8 Trade Union Financing 4,3 3,5 PAGE 51 Human Resources Management and Labor Resources / NOVATEK SUSTAINABILITY REPORT IN 2013

SOCIAL PROGRAMS IN 2013 NUMBER OF VACATIONERS USING To help mitigate the risk of occupational children aged 18 to 23, inclusively, – for The social package for NOVATEK NOVATEK SANATORIUM-RESORT diseases at facilities located in the Far 50% of their cost. NOVATEK- employees is revised annually. In 2013, VOUCHERS North the Company’s employees Chelyabinsk, NOVATEK-Kostroma, the overall social expenditures increased undergo comprehensive medical NOVATEK-Perm and Arcticgas joined by 9,4% year-on-year and amounted to examinations by mobile teams of highly the program for the first time in the RR 1,265 million*. The biggest portion of qualified doctors once every two years. reporting year. the allocated funds (43%) was 72 employees were referred to hospitals 1876 traditionally used to provide welfare for surgical treatment in 2013. In the Employees were able to choose their assistance to employees in adverse life reporting year, the Moscow office vacation destination out of 38 health circumstances. employees aged 35 and older who had resorts the Company had contracts with 1398 served with the Company for no less located in the most popular resort areas A detailed description of the programs is 1218 than two years underwent an extensive on the Black Sea coast, in Siberia, Altai, given in the Company Social Programs medical examination by Euromedservice Caucasian mineral waters, and the Section of the 2010 Sustainability Report. Clinical and Diagnostic Center. Republic of Bashkortostan. This Report outlines changes in comparison to 2012 and results The 2013 program expenditures In 2013, the program expenditures achieved in 2013. 2011 2012 2013 amounted to RR 87.4 million. amounted to RR 68.9 million.

Targeted Compensation and Socially State Guarantees Support Program Repayable Financial Aid Program Important Payments Program The program applies to employees This program has two focus areas: This program provides targeted free working in the Far North and equal-status support to Company’s employees in }} targeted short-term one-year loans In the reporting year, 38 families made localities and provides for reimbursement adverse life circumstances. – 132 people made use of this use of the interest-free targeted home of vacation travel expenses and luggage program in 2013; loans program; and construction of 156 transportation to/from vacation The 2013 program expenditures }} Interest-free targeted home loans apartments in the town of Tarko-Sale destinations. In 2013, 2,587 employees amounted to RR 540.5 million. to employees residing in Tarko- went on throughout the year. and unemployed members of their Sale, Novy Urengoy, Moscow, and families took advantage of the program. Workforce Voluntary Medical Insurance Tyumen. In 2013, 80 apartments for employees of In 2013, the program expenditures The voluntary medical insurance program NOVATEK-Ust-Luga were commissioned increased to RR 50.6 million. is implemented along with the mandatory The Program was developed and in Sosnovy Bor (Leningrad Region). medical insurance program. The program approved by NOVATEK`s Management Health Resort Treatment and provides maximum coverage for the Board in 2007. Since 2008, it has been The 2013 program expenditures Rehabilitation Program insured and includes full outpatient care, applied to employees residing in Tarko- amounted to RR 375.9 million.. In 2013, 1,876 employees and members dental care, and emergency and Sale and Novy Urengoy, and, since May of their families recuperated using scheduled hospitalization. 2011 - to employees residing in Moscow. Retirement Program subsidized vouchers provided by the Since 2013, employees of NOVATEK The program is implemented both, via the Company. Vouchers are provided to * Without consideration of expenses for charity R&D Center, Tyumen, have also corporate retirement plan and NOVATEK- employees and their children under 18 and sponsorship, and support of unproductive participated in the Program. Loans are Veteran Social Protection Foundation, a for 10% of their cost and to spouses and sphere facilities. granted for a period of up to 10 years. non-profit organization. PAGE 52 Human Resources Management and Labor Resources / NOVATEK SUSTAINABILITY REPORT IN 2013

The Foundation has been operating in the As of 31 December 2013, the number of In 2013, 461 employees were rewarded, On Oil and Gas Men’s Day and City Purovsky region of YNAO since 2005. In participants of the corporate Pension including: Days, the Company organizes events 2013, 936 people were registered with Program increased by 116 people as and concerts attended by not only the NOVATEK-Veteran Foundation. Apart compared to 2012 and counted 481. Corporate awards: employees and their families but also from local oil and gas veterans, the Since January 2013, 43 retirees from }} Honored Employee of NOVATEK — 5 includes all city residents. The Foundation also supports retirees of NOVATEK-Chelyabinsk have joined the }} NOVATEK Certificate of Merit — 113 subsidiaries host events dedicated to NOVATEK-Polimer, Novokuibyshevsk program. }} NOVATEK Letter of Gratitude — 120 the International Women’s Day on 8 (divested in 2010). The Foundation }} Subsidiaries Certificate of Merit — 191 March and New Year parties for makes quarterly welfare assistance The monthly social benefits are calculated employees’ children. The Wits and payments and pays one-off benefits to in accordance with the Regulations on Departmental awards: Humor Panel Game corporate league those in adverse circumstances, gives Social Benefits for Retired NOVATEK }} Letter of Acknowledgement from was launched on 9 December 2013 and vouchers to convalescent centers and Group Employees and depend on the the Russian Ministry of Energy — 15 continued in 2014, the NOVATEK health resorts to veterans, and organizes employee’s length of service with the }} Certificate of Merit from the Russian anniversary year. cultural and leisure activities. Company, income, and the geographic Ministry of Energy — 10 adjustment factor. The amount of aid is }} Honored Employee of the Russian In 2013, there were corporate sports An action group composed of the indexed on an annual basis. In 2013, it Oil and Gas Industry — 5 competitions in cross-country skiing, Foundation employees and keen retirees was indexed by 6%. }} Honored Employee of the Gas swimming, and indoor soccer. actively helps the disabled. Computer Industry —1 courses were offered to the beneficiaries The 2013 average monthly social benefit The NOVATEK-Chelyabinsk team had a of the NOVATEK-Veteran Foundation by paid in Moscow, St. Petersburg, Far North One employee received a government three-day rafting trip on the Ay river the NOVATEK-Tarkosaleneftegas in 2013. A and equal-status localities was RR 5,710 award — Second Class Order of Merit to most lengthy and full-flowing river in comprehensive computer literacy and RR 1,850 in Chelyabinsk, Perm, and the Fatherland. Southern Urals. program for elderly people was Novokuibyshevsk. developed by the Company’s Youth There are one-off bonuses payable with In the reporting year, the fifth Know and Council. Computer skills make it possible The 2013 Pension Program expenditures corporate awards. The 2013 program Love Your Land Youth Festival was to compensate for lack of communication amounted to RR 24 million. expenditures amounted to RR 10 million. conducted in the forest area near Tarko- and contact relatives and friends residing Sale. The festival agenda included a tent in other regions. Corporate Awards Program Corporate Cultural and Sporting camp pitching competition, paddling, Top performers receive government, Events Program and free rope competitions, as well as As of 1 January 2012, quarterly welfare industry and corporate awards and NOVATEK cooperates with the country’s creative contests. assistance payments to pensioners certificates of merit from subsidiaries for famous museums on an ongoing basis registered with the Foundation were professional excellence and meritorious so that employees and their families, The 2013 program expenditures indexed by 6%. The 2013 NOVATEK- service to the Company on the occasion friends, and partners have an opportunity amounted to RR 80 million. Veteran Social Protection Foundation of professional holidays and jubilees. to take part in events organized with the expenditures amounted to RR 23.4 million. Company’s support. LOCAL COMMUNITIES

The Company supports human rights initiatives through corporate policies and projects that create long-term relationships with indigenous peoples and local communities. PAGE 54 Local Communities / NOVATEK SUSTAINABILITY REPORT IN 2013

LOCAL COMMUNITIES

COOPERATION WITH REGIONAL AUTHORITIES AND MUNICIPAL ENTITIES

NOVATEK assumes responsibility for the }} General Cooperation Agreement In partnership with local authorities, the Thus, in 2013 the Company entered into economic and social development of the with the Administration of the Yamal- Company is implementing programs to another cooperation agreement with the regions of its presence and for the Nenets Autonomous Region and improve the living standards of local Tazov district administration. Under the welfare of local communities. The NOVATEK Cooperation Agreements communities in the regions of its presence. agreement, the promising Utrenneye field Company develops cooperation with with the administrations of municipal Largest funds are invested by NOVATEK to located in the same district will be regional authorities, local governments, entities of the district and other facilitate the social and economic developed together with a package of public organizations, and Northern regions; development of the Yamal-Nenets social and economic projects aimed at indigenous minorities’ communities. In }} Cooperation Agreements with the Autonomous Region (YNAO), the further sustainable development of the 2013, NOVATEK geographic spread Yamal for Descendants Regional Company’s core region. territory. In the reporting year, NOVATEK included the Yamal-Nenets Autonomous Association and its district offices, allocated over RR 36 million for the Tazov Region (YNAO) as the Company’s core as well as the Association of The Company has been developing stable district social and economic development. region, the Kingisepp District in the Indigenous Minorities of the Far and mutually beneficial partnership Leningrad Region, the city of North, Siberia and Far East, and relations with YNAO for about ten years Also, the Company continued its Novokuibyshevsk in the Samara region, other public organizations; with reliance on the General Agreement cooperation with the administrations of and the Tyumen and Chelyabinsk }} Direct applications from national renewed every three years. In the reporting Novy Urengoy, Purovsky, Nadym, Yamal, regions. communities to the Company and year, the 2012–2015 Cooperation and the Krasnoselkup regions in Yamal. its subsidiaries for help in solving Agreement signed in 2012 was effective. When implementing the policy of social social issues. This document defines the key areas of Within the framework of the 2012 responsibility in the areas of its interaction, while specific activities and agreement with the administration of the production activities, the Company relies targets for aid are annually itemized in Kingisepp District of the Leningrad Region, on: supplementary agreements made, in the Company is implementing a number of particular, with municipal entities. Regional joint projects to improve the living authorities are well aware of the most standards of the local residents. In the acute needs of the territories, and they reporting year, financial aid was earmarked coordinate the joint development for public utilities and municipal state- programs upon consent of the parties. funded educational institutions. PAGE 55 Local Communities / NOVATEK SUSTAINABILITY REPORT IN 2013

MAIN RECIPIENTS OF SOCIAL INVESTMENTS IN 2013, MAIN AREAS OF SOCIAL INVESTMENTS In August 2013, a trilateral agreement for RR MLN IN 2013, % cooperation in the development of the natural gas motor fuel market and alternative gasification was signed by the Chelyabinsk regional government, Tazov district 39,6 NOVATEK-Chelyabinsk and Energo- techgroup. Purovsky district 33,9

Nadym district 33,4 In 2013, NOVATEK, together with its subsidiaries, allocated RR 192 million as Yamal district 27,8 investment into the socio-economic development of the regions of its presence. City of Novy Urengoy 16,1 RR 12 million was spent on repairs in pre- school and educational institutions in the Kingissep Municipal district 12,0 Leningrad Region, RR 6 million – for the Novokuibyshevsk of Samara Region 10,0 implementation of the Warmth and Infrastructure 34 % Comfort project; and RR 5 million – for the YNAO Olympic Training Center 6,0 support and development of children & Supporting indigeneous and minority people 31 % youth sports in the Tyumen Region. Krasnoselkup district 5,9 Supporting socially vulnerable 15 % CONSTRUCTION AND REPAIR OF VITAL Tyumen Region 5,0 AND SOCIAL INFRASTRUCTURE Supporting sport 14 % «Yamal for Descendants» association of NOVATEK and its subsidiaries provide 2,1 native minority communities of the Far North Supporting education 4 % funding for repairs, improvements, and equipment of educational and health Supporting youth 1 % care institutions, as well as social and Supporting culture 1 % recreational facilities. The Company allocates funds for the construction and repair of municipal facilities, utility The Company financed road concrete sidewalks, storm water drains funds were allocated to a municipal networks and vital infrastructure. construction, installation of utility were constructed and slopes were nursery to repair its swimming pool. networks, and repair of the local clinic, reinforced by a special geogrid. Providers of public utility services in the In the reporting year, the Company nursery, boiler house, a water treatment village of Vistino and in the rural continued financing a large-scale project plant and diesel power plant in the In 2013, NOVATEK, together with the settlement of Kotelskoye received new to construct a refrigerating facility with a national village of Kutopyugan as part of administration of the Kingissep district in equipment with financial support from 100-ton processing plant in the village of the social partnership with the Nadym the Leningrad region, allocated funds for the Company. Gyda, and allocated funds to develop district administration. Wooden walkways a major overhaul of six state-financed trading stations in Gydan in the YNAO in the village were replaced with proper educational institutions. In addition, Tazov District. PAGE 56 Local Communities / NOVATEK SUSTAINABILITY REPORT IN 2013

CULTURAL AND SPORTS PROJECTS FUNDING EDUCATIONAL EVENTS SOCIAL SUPPORT TO SELECTED NOVATEK pays special attention to the Support for cultural and sports projects AND PROJECTS CATEGORIES development of children and youth mainly goes toward public events to In 2013, NOVATEK continued gifted Pursuant to the Cooperation Agreements, sports in the regions of presence. In preserve the national traditions of Far children education and development the Company continued to allocate funds 2012-2013, the Company supported the North indigenous minorities, as well as projects, as well as funding grant to render targeted assistance to welfare first children indoor soccer tournament local and professional holidays such as programs for school students and beneficiaries: children and minors, the Step towards Big Football for the the City Day, Fishermen’s Day, and Oil teachers of the Purovsky District, YNAO. disabled and the elderly, WW II veterans NOVATEK Cup in the Chelyabinsk and Gas Men’s Day. In 2013, the The details of this project are described and home front workers, and large region, Southern Urals. More than Company supported the organization of in Company’s Educational Initiatives. families in 2013. The Company also 10,000 schoolchildren from 40 municipal festivals on the occasion of Fishermen’s financed upgrading facilities of state- areas participated in that first regional Day in the Nadym district. The cultural The Company initiated a new educational funded organizations and institutions, tournament. The Company built five program included a concert featuring project in the Kostroma region. earmarked significant funds for the athletic fields for the winners of the performers from the Nadym Center of NOVATEK-Kostroma specialists drew up needs of the native minority communities NOVATEK Cup. New sporting facilities National Cultures, a National Dress a household gas safety program to train of the Far North and nomadic populace. were constructed in the settlements of competition, and exhibition of folk art. children and gave a master class in the In 2013, as part of the targeted assistance Nasledinsky in the Bredinsky district and There were also boating, archery and Veterok camp in Kostroma. The children for the disabled, the Company provided Krasnogorsky in the Emanzhelinsky lasso throwing tournaments. were told about gas properties and rules funds to purchase rehabilitation district, as well as the towns of Korkino of using gas appliances, how gas fields equipment and special transportation and Yuzhnouralsk, and in the Varnensky In 2013, NOVATEK supported an are developed, and how natural gas vehicles, including those that are not on district. important cultural event, the Art-Arctic gets to houses and plants. the federal list. International Festival of Arctic Countries In 2013, the Company supported an in Salekhard. It is an annual event to In October 2013, the Company was The 2013 largest social projects include annual school sports day for children support and discover talents, develop closely involved in organizing Vocational the Warmth and Comfort project intended with disabilities. During the competitions, culture of music and art, as well as Training Days in the Kostroma region. to improve the quality of life of retirees the children were strongly supported by support dialogue between different There was a guided tour to NOVATEK- from educational, healthcare and cultural professional athletes - volunteers from national cultures of the northern regions Kostroma for 10th-grade students from institutions in the city of Novokuibyshevsk, the Order of Mercy Children Activity of Russia and the world community. The school No. 38, which helped many Samara region. Center located in Tarko-Sale, and the Salekhard festival guests and senior students to make a career choice. Mercy public organization. participants got acquainted with the traditional and modern culture of NOVATEK supported the world’s largest northern peoples and visited the sailboat Sedov around-the-world cruise, Gornoknyazevsk natural and which finished in Saint Petersburg in July ethnographic complex and the Magic 2013. The cruise lasted 14 months and World of the Arctic photography the boat covered 47 thousand miles. exhibition. PAGE 57 Local Communities / NOVATEK SUSTAINABILITY REPORT IN 2013

COOPERATION WITH INDIGENOUS AND MINORITY LICENSE COMPLIANCE PEOPLES OF THE FAR NORTH

Along with funds allocated as charitable YNAO is the home of about 20 minority The Company provides support to the }} Purchase of vehicles (snowmobiles social investments, license holders in peoples of the Far North – the Khanty, indigenous population by financing the and fishing motor boats) for Russia assume social commitments. Nenets, Komi-Izhemets, Selkup, and development and improvement of fishermen and reindeer herders others. Minorities make up 7% of the settlements, including housing in the remote areas of the Tazov In June 2013, in connection with the region’s total population (about 38,000 construction and repair and maintenance district of YNAO; upcoming development of the Utrenneye people). More than a third of them (over of social and public facilities. People }} Construction of a refrigerating field in the Tazov district of YNAO, 13,000 people) are nomads. working in the tundra get free medical facility in the village of Gyda in the NOVATEK-Yurkharovneftegas signed an care, drug deliveries, and snowmobiles Tazov district; agreement with the district administration The Company maintains special and motor-boats maintenance services. for payment of compensation in an operating restrictions in the areas of NOVATEK finances the supply of fuel for }} Repair of houses in the trading amount of RR 36 million. The funds are traditional inhabitance and economic transportation of nomadic communities stations of Tanamo and Razvilka; earmarked for district social and activity of indigenous minorities and in and delivery of foodstuffs to hard-to- }} Construction of a residential economic development programs and the vicinity of their cultural and spiritual reach areas. building in the village of Nyda in the improvement of living standards of heritage sites. In the course of Nadym district; indigenous minorities: construction and commercial development of such In 2013, the Company’s financed the repair of residential housing, municipal territories, NOVATEK takes into account following: }} Development and improvement of schools, social and cultural facilities, the opinions and suggestions expressed the settlement of Seyakha in the infrastructure, and facilities for storing by local residents and ensures maximum }} Legal and consultancy services, Yamal district; and processing traditional products. The preservation of existing ecosystems, as training courses and seminars, and }} Organization and holding of program also envisages education of well as sites, which are sacred for the publication of printed products of national heritage and festive indigenous minorities for employability in indigenous population. NOVATEK has the Association of Russian North, events. A concert on Fishermen’s the Company. been implementing the Company’s Siberia and Far East Indigenous Day featuring performers from the Indigenous Peoples Support Program in Minorities; Nadym Center of National Cultures. accordance with the recommendations }} Upgrading agricultural facilities of of the World Bank. This is the second NOVATEK’s new projects are agreed with the Purovsky and Krasnoselkup largest area of NOVATEK’s social local residents in order to preserve districts; investments. ancestral habitats and wildlife management. For details, please refer to Stakeholder Engagement. PAGE 58 Local Communities / NOVATEK SUSTAINABILITY REPORT IN 2013

SUPPORT TO NATIONAL NON- PROFIT ORGANIZATIONS EDUCATIONAL INITIATIVES

Gifted Children Program In 2013, NOVATEK continued to provide As part of the Gifted Children Program, Over the life of the program, 764 For many years NOVATEK has been financial support to the Association of the Company financed a trip by grade candidates became awardees for their developing a continuous learning project Russian North, Siberia and Far East 7-11 students from Tarko-Sale school academic performance and winning intended to attract highly educated and Indigenous Minorities as well as the No.2 to attend a physics and contests, with many of them receiving qualified young people from the regions Yamal for Descendants Association and mathematics course offered by the Urals grants several times. In November 2013, of the Company’s presence. its district branches. The Company takes Regional Experimental Educational and the “Geolog” Cultural and Sporting an active part in financing events Research Centre at a computing school Center in Tarko-Sale held an anniversary Recruitment and career guidance for focused on fulfilling statutory goals of the in the town of Beloretsk in Bashkiriya. ceremony to award NOVATEK grants to high-potential employees starts with the above organizations and supports their The purpose of the course was to students and teachers. 74 students targeted comprehensive program youth branches. develop children’s creativity and to received Company grants for their entitled Gifted Children, which is focused prepare school students for the Unified academic excellence and creativity. on education and development of NOVATEK helps YAMINE, a children National Exam and participation in intellectually endowed children. High support charitable foundation in YNAO contests. In 2013, the Company spent NOVATEK is implementing a Grants School No. 8 in Novokuibyshevsk and that provides medical and diagnostic RR 3.5 million on the Gifted Children Program for Purovsky district teachers High School No. 2 in Tarko-Sale select, assistance to critically ill and disabled Program in Tarko-Sale. The intended to raise the prestige of the on a competitive basis, talented children children. The Company sponsored high- Novokuibyshevsk classes are financed teaching profession and create favorable from grades 10 and 11 who demonstrate tech treatment of children and their by the Viktoria Charity Foundation. conditions to discover new talents. A above-average academic performance rehabilitation in a dolphinarium. The grant of RR 40,000 is awarded once a and participate in regional, district, and Company representatives were invited Grants Program year to teachers who used up-to-date national contests in core school subjects. for the YAMINE charitable foundation Over ten years, the Company has been education technologies in their work, award ceremony in Salekhard, which implementing the Grants Program for improved their skills, and shared their In 2013, 19 graduates of Tarko-Sale was attended by the Head of the Region schoolchildren and teachers in the teaching experience, and who also school No.2 completed advanced Dmitry Kobylkin. In addition, the Purovsky district. Under the Grants trained at least 5 students to receive a programs in physics and mathematics. Company has sent to the foundation RR Program for grades 5 through 11, NOVATEK grant in the year preceding Based on the final contests, seven of 400,000 earned from recycling metal students are awarded cash bonuses; the the year of the competition. Over the life them were admitted to the Mining scrap and wood collected by NOVATEK Program is intended to support their of the program, 45 teachers participated University as NOVATEK scholarship volunteers during an environmental intellectual development and creativity, in the program and five of them were students and two of them were enrolled expedition to clean the Bely Island. and encourage a responsible attitude to awarded with grants in 2013. at the Tyumen Oil and Gas University. 38 learning. In 2013, a new NOVATEK students finished Novokuibyshevsk Regulation on Grants was adopted In 2013, the Company spent RR 393,000 School No.8. Their school program taking into account feedback from on the Grants Program. included a wide range of academic school principals, the Department of subjects, including special courses in Education, and the Purovsky district N0VATEK-VUZ Program business etiquette, economics, administration. The new document In order to ensure continuous succession draftsmanship, and law. Many increases the size of the grants and and create the conditions for effective participants of the program became expands the list of eligibility criteria. use of university capabilities in participants, winners, and awardees of professional training of students, the national competitions, festivals, Company has developed and is conferences, and contests. PAGE 59 Local Communities / NOVATEK SUSTAINABILITY REPORT IN 2013

THE ALL-TOGETHER VOLUNTEER MOVEMENT AND CHARITY PROJECTS

successfully implementing a NOVATEK- know potential employees better. The Company representatives keep in touch The All-Together Volunteer Movement VUZ Program. The program is an action Company signs an apprenticeship with partner universities’ management founded in 2008 continued its work in plan to train specialists with higher agreement with every participant of the and students. In October 2013, the head 2013. Our volunteers assist orphaned education in disciplines critical for the NOVATEK-VUZ program under which of NOVATEK corporate programs children, children suffering from various development of the Company’s business students receive financial support in the department met with the Mining illnesses, veterans, animal shelters, and meet its staffing requirements. The form of scholarships, compensations, University scholarship students. At the donor initiatives, etc. Company’s subsidiaries, in cooperation and payment of travel expenses to and meeting, the students learned about with NOVATEK departments, define the from the place of internship. As of the Company’s recent achievements and The All Together volunteers have been need for young graduates in specific end of 2013, there were 86 development prospects, its staffing assisting orphanage no. 2 in Vyshny disciplines and their qualifications. Every apprenticeship agreements signed. The policy and opportunities for young Volochok since 2011. The orphanage is year, plan is updated and school leavers program participants were trained in 27 graduates. 1-4-year students’ internship a home for mentally retarded children get career guidance with due regard to disciplines at 11 technical universities. placement and employment of future whose social adaptation requires the business requirements. The 39 students had salaried internship in the graduates were discussed. The meeting continuous communication and Company cooperates with core higher Company’s subsidiaries. was attended by 44 students from first to additional training along with professional education institutions such as the State five-year students. medical assistance. Volunteers regularly Mining Institute in Saint Petersburg In 2013, more than 70 students from the visit the children, watch movies with (technical university), Gubkin Russian leading universities of Samara, Saint Based on academic performance and them, organize sporting events, cooking State Oil and Gas University in Moscow, Petersburg, Moscow, and Tyumen feedback from internship supervisors, and handiwork classes, which facilitate and the Tyumen Oil and Gas University, participated in the VIth forum of the best NOVATEK-VUZ graduates are the development of fine motor skills, among other things, with respect to pre- NOVATEK-VUZ grant holders. Following selected to be employed with the diligence, and a result-oriented attitude. university training. tradition, the participants of the Gifted NOVATEK group and other companies. In 2013, the ten best students of the Children Program and their teachers In 2013, 17 of 19 graduates of this orphanage who showed the best The children of those employed by were also invited to attend the forum. It program who were parties to academic performance and were NOVATEK subsidiaries, the Purovsky was the first time when the Company apprenticeship agreements were actively involved in social life visited the district valedictorians, as well as holders management hosted the participants in employed by NOVATEK and other NOVATEK volunteers. Their program in of NOVATEK grants and Gifted Children the Moscow office. The students met the companies. Moscow was full of cultural events and Program graduates have an opportunity Company CEO, and his deputies. During entertainment and helped adapt the to apply for Company scholarships. the panel discussions the Company In 2013, the Company spent RR 38 children to life outside the orphanage. Students demonstrating good academic grant holders were informed of million on the NOVATEK-VUZ Program. progress receive supplemental monthly opportunities for internship, potential Over the last five years, the Company payments from NOVATEK in addition to employment, terms of future has been organizing the Road to School government scholarships and have an employment, and career prospects. The event prior to each new academic year. opportunity of internship with the event was concluded with a team- An improvised schoolbag-container is Company, which allows them to apply building Sea Battle game and a boat trip installed in the lounge of the Company’s knowledge obtained at lectures and on the Moscow River. central office, where each employee can seminars to real life situations and ’try put school supplies for schoolchildren. their hand’ in the profession, while the Presents from employees were sent to Company gets an opportunity to get to the Vyshny Volochok orphans. PAGE 60 Local Communities / NOVATEK SUSTAINABILITY REPORT IN 2013

SPORTS

In 2013, a family-type child care home In the reporting year, the Company CULTURAL DEVELOPMENT Programs to develop mass sports in was set up in the Petrovsky settlement of continued its partnership with the Gift of NOVATEK continues Russian charity Russia are the Company’s top priority. the Gavrilovo-Posadsky district, Ivanovo Life Foundation. The donor movement and patronage traditions and allocates The Company, its subsidiaries and JVs region as part of the partnership of the organized as part of the foundation’s funds to support events to preserve and hold regular tournaments in the most Company’s volunteer movement with the charity activities gathers more and more revive Russia’s historical and cultural popular sports such as soccer, ROST charity foundation. Charity funds participants every year. In 2013, two heritage. volleyball, swimming, indoor soccer, etc. transferred by NOVATEK to the campaigns were organized at the In the reporting year, the Company NOVATEK’s indoor soccer, volleyball, foundation were spent to buy a three- Company’s Moscow office to donate continued its partnership with the leading and hockey teams take part in annual room apartment to accommodate five blood for the patients of the Russian Russian museums: Russian State corporate tournaments in Moscow. In children from a closed orphanage in Children’s Clinical Hospital. The funds Museum (St. Petersburg), the Moscow 2013, the NOVATEK soccer team won Petrovsky. The children were adopted collected at the events jointly arranged Kremlin Museum, the State Tretyakov the Business Champions League Cup by one of their former teachers. The with the Gift of Life charity foundation are Gallery, the Multimedia Art Museum (the and the volleyball and hockey teams Company volunteers regularly visit that sent to children’s hospitals to purchase Moscow House of Photography), the won medals in various tournaments. family-type childcare home to help modern medical equipment. Moscow Museum of Modern Art, and the children to improve their living conditions Samara Regional Art Museum. The Company supports the following and organize their leisure time. In 2013, NOVATEK also provided clubs: financial and organizational support for In 2013, the following art exhibitions and }} Spartak Basketball Club In 2013, 250 employees of Yamal LNG the cleanup expedition to the Bely Island. cultural projects were organized and (St. Petersburg); took part in a cleanup day in the Talalikhin The volunteers collected around 290 implemented with NOVATEK’s support: }} NOVA Volleyball Club orphanage near Moscow. The outdoor tons of garbage. The expedition cleaned (Novokuybishevsk); territory around the orphanage was the area of the M.V. Popov Polar Marine The Russian State Museum }} Dynamo Joint Hockey Club improved with curbs painted, trees Weather Station located on the island of (St. Petersburg) (Moscow). planted, children-made birdhouses hung old buildings, spilled oil, and other }} Imperial Gardens of Russia Festival; on the trees, flower beds arranged, and chemicals. The money received for the }} Malevich. Before and after the In 2013, NOVATEK signed a cooperation a marked path with traffic signs built. metal scrap was handed over to the Square Exhibition. and partnership agreement with the YAMINE charity foundation. Football Union of Russia and became the In January 2013, NOVATEK- The Moscow Museum of Modern Art General Partner of the Russian national Tarkosaleneftegas organized a New }} Yury Albert’s “I am not…” Exhibition. football team. Year celebration with an entertainment program, surprises, and presents for the NOVATEK also continued acting as the children of the ‘Luch Nadezhdy’ General Partner of the Moscow Soloists orphanage in Tarko-Sale. Chamber Ensemble under the direction of Yuri Bashmet. PAGE 61 GRI content index / NOVATEK SUSTAINABILITY REPORT IN 2013

SGS VOSTOK’ S REPORT ON SUSTAINABILITY ACTIVITIES IN THE OAO NOVATEK SUSTAINABILITY REPORT FOR 2013

NATURE AND SCOPE OF THE STATEMENT OF INDEPENDENCE VERIFICATION/ ASSURANCE ASSURANCE/VERIFICATION AND COMPETENCE OPINION

SGS Vostok Limited was commissioned This report has been assured at a high The SGS Group of companies is the On the basis of the methodology by OAO NOVATEK to conduct an level of scrutiny using our protocols for: world leader in inspection, testing and described and the verification work independent assurance of the verification, operating in more than 140 performed, we are satisfied that the Sustainability Report 2013. The scope of }} evaluation of content veracity; countries and providing services information and data contained within the assurance, based on the SGS including management systems and OAO NOVATEK Sustainability Report }} evaluation of the report against Sustainability Report Assurance service certification; quality, 2013 is accurate, reliable and provides a the Global Reporting Initiative methodology, included the text, and environmental, social and ethical fair and balanced representation of OAO Sustainability Reporting Guidelines 2013 data in accompanying tables, auditing and training; environmental, NOVATEK sustainability activities in 2013. (G3.1 2011). contained in this report. Information and social and sustainability report data on the company website, other than assurance. SGS Vostok Limited affirms The assurance team is of the opinion The assurance comprised a combination that included in the text of this report, our independence from OAO NOVATEK, that the Report can be used by the of pre-assurance research, documen- were not included in this assurance being free from bias and conflicts of Reporting Organisation’s Stakeholders. tation and record review, and interviews process. interest with the organisation, its with employees during visits to the Head subsidiaries and stakeholders. We believe that the organisation has office of OAO NOVATEK, based in The information in OAO NOVATEK chosen an appropriate level of assurance Moscow. Sustainability Report 2013 and its The assurance team was assembled for this stage in their reporting. presentation are the responsibility of the based on their knowledge, experience Financial data drawn directly from directors and management of OAO and qualifications for this assignment, independently audited financial NOVATEK. SGS Vostok Limited has not and comprised auditors registered which accounts has not been checked back to been involved in the preparation of any comprised Sustainability Assurance source as part of this assurance process. of the material included in the Practitioner Auditor, Lead Quality and Sustainability Report 2013. SA8000 Auditor, Environmental, social and sustainability auditor. Our responsibility is to express an opinion on the text, data, graphs and statements within the scope of verification set out below with the intention to inform all OAO NOVATEK stakeholders. PAGE 62 GRI content index / NOVATEK SUSTAINABILITY REPORT IN 2013

GLOBAL REPORTING INITIATIVE REPORTING GUIDELINES (2011) CONCLUSIONS, FINDINGS AND RECOMMENDATIONS

In our opinion, the OAO NOVATEK }} Stakeholder Inclusiveness: More detailed impprovements In our opinion: Sustainability Report 2013 meets the The descriptions and inclusion of opportunities are incorporated to the content and quality requirements of the stakeholder engagement continues Internal Management report for the }} The large increase in the number of Global Reporting Initiative G3 Version 3.1 to improve over previous reports organization. indicators addressed in the report Application Level B+. but would still benefit from clearer compared to the previous reporting presentation from engagement Standard Disclosures — All of the years reflects the organisation’s Principles — In our opinion the content planning to responses. standard disclosures required for commitment to continuous and quality of the report adheres to the reporting at an application level B+ were improvement of reporting and }} Comparability: Comparability year- ten GRI Principles. Opportunities were included or referenced in the report transparency. on-year has improved as history of identified for consideration in future }} Reporting is now more mature performance goes back to 2011. reporting cycles to ensure continual Indicators — More than the required and the organisation is close to This could be improved by including improvement, including: minimum number of indicators including increasing the level of reporting strategic goals and targets for those from the Oil & Gas Sector and assurance against the GRI each area so that the reader can Supplement are included in the report. Guidelines. see performance against targets in addition to history.

SIGNED: FOR AND ON BEHALF OF SGS VOSTOK LIMITED

K. TIMOSCHECHKIN REGIONAL BUSINESS DEVELOPMENT MANAGER FOR EASTERN EUROPE, SYSTEM AND SERVICES CERTIFICATION SGS VOSTOK LIMITED OCTOBER 2014

WWW.SGS.COM PAGE 63 Индекс содержания GRI G3.1 / NOVATEK SUSTAINABILITY REPORT IN 2013

GRI G3.1 CONTENT INDEX

Profile Level of Page Disclosure Description reporting Cross-reference/Direct answer /Comment in the Report     

1. STRATEGY AND ANALYSIS Statement from the most senior decision-maker of the 1.1 Fully 3-4 organization Description of key impacts, risks, and opportunities Fully Additionally please see NOVATEK Annual Report 2013, pp. 12, 1.2 3-4 68-72: http://www.novatek.ru/en/about/strategy 2. ORGANIZATIONAL PROFILE 2.1 Name of the organization Fully OAO NOVATEK 2.2 Primary brands, products and/or services Fully "Company Profile" 9 Operational structure of the organization, including main http://www.novatek.ru/en/about/general/structure 2.3 Fully divisions, operating companies, subsidiaries, and joint ventures 2.4 Location of organization’s headquarters Fully 2 Udaltsova St., Moscow, Russia Number of countries where the organization operates, and "Company Profile" names of countries with either major operations or that are 2.5 Fully 9 specifically relevant to the sustainability issues covered in the report 2.6 Nature of ownership and legal form Fully Part ownership, Joint Stock Company Markets served (including geographical breakdown, sectors "Company Profile" 2.7 Fully 9 served, and types of customers/ beneficiaries) 2.8 Scale of the reporting organization Fully "Company Profile" 9, 22 Significant changes during the reporting period regarding size, "The reporting boundaries" 2.9 structure, or ownership Fully "Natural gas sales" 6, 15, 18 "Yamal LNG project" Rewards received in the reporting period "Company Profile", "Awards", Additionally please see: 2.10 Fully http://www.novatek.ru/en/about/achievements/index. 12 php?quarter_4=0 3. REPORT PARAMETERS Reporting period (e.g., fiscal/calendar year) 2013 calendar year 3.1 Fully for information provided 3.2 Date of most recent previous report (if any) Fully 4Q of 2013 3.3 Reporting cycle (annual, biennial, etc.) Fully Annual 3.4 Contact point for questions regarding the report or its contents Fully "Feedback Questionnaire and contact details" 77 3.5 Process for defining report content Fully "Report and Reporting Process" 6 Boundary of the report (e.g., countries, divisions, subsidiaries, "Report and Reporting Process" 3.6 Fully 6 leased facilities, joint ventures, suppliers) State any specific limitations on the scope or boundary of the "Report and Reporting Process" 3.7 Fully 6 report (see completeness principle for explanation of scope) PAGE 64 Индекс содержания GRI G3.1 / NOVATEK SUSTAINABILITY REPORT IN 2013

Profile Level of Page Disclosure Description reporting Cross-reference/Direct answer /Comment in the Report     

Basis for reporting on joint ventures, subsidiaries, leased ""Report and Reporting Process"" facilities, outsourced operations, and other entities that can 3.8 Fully 6 significantly affect comparability from period to period and/or between organizations Data measurement techniques and the bases of calculations, "Report and Reporting Process" including assumptions and techniques underlying estimations 3.9 Fully 6 applied to the compilation of the Indicators and other information in the report Explanation of the effect of any restatements of information The Report does not contain any restatements 3.10 Fully provided in earlier reports, and reasons for such restatement. Significant changes from previous reporting periods in the scope, No material changes occurred 3.11 Fully boundary, and measurement methods applied in the report Table identifying the location of the Standard Disclosures in the "GRI G3.1 Content Index" 3.12 Fully 63 report Policy and current practice with regard to seeking external The Company applies to a professional auditor for report 3.13 Fully 61 assurance for the report verification. The verification report is enclosed. 4. GOVERNANCE, COMMITMENTS, AND ENGAGEMENT Governance structure of the organization, including committees "Corporate Governance" 4.1 under the highest governance body responsible for specific Fully Additionally please see NOVATEK Annual Report 2013, pp. 60-61 22 tasks, such as setting strategy or organizational oversight Indicate whether the Chair of the highest governance body is No 4.2 Fully also an executive officer State the number of members of the highest governance body As of the end of 2013, the Board of Directors comprised nine that are independent and/or non-executive members (9) persons including six (6) independent directors (as of their 4.3 Fully election date) according to the Russian Federal Law on Joint- Stock Companies Mechanisms for shareholders and employees to provide These mechanisms include Shareholder Meetings, discussion of 4.4 recommendations or direction to the highest governance body Fully Collective Agreements, Company management’s meetings with employees, etc Linkage between compensation for members of the highest The procedure for and criteria of calculating remuneration governance body, senior managers, and executives (including to members of NOVATEK’s Board of Directors, as well as the departure arrangements), and the organization’s performance compensation of their expenses, are prescribed in the Company’s (including social and environmental performance) Charter and Regulations on NOVATEK’s Board of Directors: http://www.novatek.ru/common/upload/us_18-04-14.pdf 4.5 Fully http://www.novatek.ru/common/upload/polsden.pdf NOVATEK’s Corporate Governance and Remuneration Committee is responsible for determining the policy for executive remuneration and for the remuneration and benefits of individual executive directors and senior executives: http://www.novatek.ru/en/about/management/BOD/ PAGE 65 Индекс содержания GRI G3.1 / NOVATEK SUSTAINABILITY REPORT IN 2013

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Processes in place for the highest governance body to ensure Members of the Board of Directors and the Management Board conflicts of interest are avoided shall declare any personal, commercial or other interest (direct or indirect) in the framework of transactions, contracts, and 4.6 Fully projects related to the Company, including the intention to make a deal with its shares or shares of its subsidiaries. Additional information: ОАО NOVATEK’S CODE OF BUSINESS CONDUCT AND ETHICS http://www.novatek.ru/en/about/management/doc Process for determining the composition, qualifications, and Qualification and competence of members, including in expertise of the members of the highest governance body and Sustainability issues, are taken into account to determine 4.7 its committees, including any consideration of gender and other Fully appointment to a post, as well as educational level and indicators of diversity experience on the boards of other companies. The Company has no specific procedures in place for this process Internally developed statements of mission or values, codes of Charter and Corporate Documents: conduct, and principles relevant to economic, environmental, http://www.novatek.ru/en/about/management/doc/ and social performance and the status of their implementation http://www.novatek.ru/common/upload/doc/Code_of_Corp_ 4.8 Fully Governance.pdf http://www.novatek.ru/common/upload/doc/Code_of_Ethics_ ENG.pdf http://www.novatek.ru/common/upload/Anticorpolen.pdf Procedures of the highest governance body for overseeing the Reports on key sustainability areas (such as HSE, human organization’s identification and management of economic, resource management, interaction with local communities) are environmental, and social performance, including relevant submitted to the highest governance body on a regular basis 4.9 Fully risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles Processes for evaluating the highest governance body’s The highest governance bodies evaluate their own performance 4.10 own performance, particularly with respect to economic, Fully annually, in preparation for annual meetings environmental, and social performance Explanation of whether and how the precautionary approach or The precautionary principle is applied in the planning of new principle is addressed by the organization facilities or the introduction of new products in order to avoid serious or irreversible environmental impacts. We use the common approach to the management of environmental risks, taking into account existing regulations and standards of industrial and environmental safety. 4.11 Partially NOVATEK has implemented an Environmental, Health and Safety Policy, while at the same time an Integrated Management System for Environmental Protection, Occupational Health and Safety (IMS) in compliance with requirements of international standards has been implemented at all of our main subsidiaries. "IMS Organizational Chart" PAGE 66 Индекс содержания GRI G3.1 / NOVATEK SUSTAINABILITY REPORT IN 2013

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Externally developed economic, environmental, and social NOVATEK participates in the global Carbon Disclosure Project charters, principles, or other initiatives to which the organization (CDP) and CDP Water Disclosure. The Company shares the subscribes or endorses basic ethical principles of the Russian Code of Business Ethics 4.12 Fully (Chamber of Commerce and Industry of the Russian Federation, 1998), the Charter of corporate ethics (the Russian Union of Industrialists and Entrepreneurs, 2003) Membership in associations Russian Gas Society, Regional Association “The Urals Industrial – 4.13 Fully the Urals Polar” List of stakeholder groups engaged by the organization The Company interacts regularly with the main stakeholder groups, including shareholders, investors, business partners, 4.14 Partially media, employees, indigenous peoples, communities, and legislative and executive authorities Basis for identification and selection of stakeholders with whom Basis for identification and selection of stakeholders are regular to engage business processes, obligations under existing contracts and 4.15 Partially agreements, as well as requirements of the initiatives, in which the Company participates Approaches to stakeholder engagement, including frequency of "Interaction with individual natural gas consumers"; 4.16 Partially 21, 29 engagement by type and by stakeholder group "Dialog with industrial consumers"; Key topics and concerns that have been raised through "Purchase of goods and services"; "Stakeholder engagement"; stakeholder engagement, and how the organization has 40, 49, 4.17 Fully "Interaction with employees on HSE, provision of safety clothing"; responded to those key topics and concerns, including through 54, 57 its reporting "Relations with trade unions"; "Cooperation with regional authorities and municipal entities" ECONOMIC PERFORMANCE Direct economic value generated and distributed, including Main operational and production results for 2013 revenues, operating costs, employee compensation, donations Additionally please see NOVATEK’s IFRS Consolidated Financial and other community investments, retained earnings, payments Statements for the years ended 31 December 2013 and 2012: EC1 Fully to capital providers and governments http://www.novatek.ru/en/investors/results http://www.novatek.ru/common/upload/doc/NOVATEK_ FS_12m2013[1].pdf Coverage of the organization’s defined benefit plan obligations The Company provides for a non-assignable-contributory defined benefit program to employees after retirement, the payment amount depends on the length of employment EC3 Fully and average salary. Additionally please see NOVATEK’s IFRS Consolidated Financial Statements for the years ended 31 December 2013 and 2012: http://www.novatek.ru/en/investors/results PAGE 67 Индекс содержания GRI G3.1 / NOVATEK SUSTAINABILITY REPORT IN 2013

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Significant financial assistance received from government Pursuant to the RF Tax Code, zero oil and gas production tax rate is applied in relation to the crude oil produced in the license areas to the north of 65 degrees north latitude within YNAO. All of the Group’s fields producing crude oil match this definition, therefore zero oil and gas production tax rate is applied to the oil EC4 Fully produced by these fields. Additionally please see NOVATEK’s IFRS Consolidated Financial Statements for the years ended 31 December 2013 and 2012. NOVATEK is also on the list of organizations implementing priority investment projects in the Yamal-Nenets Autonomous Region and benefits from several regional tax privileges MARKET PRESENCE Range of ratios of standard entry level wage compared to local "Material Incentives" EC5 Fully 46 minimum wage at significant locations of operation by gender Policies, practices, and proportion of spending on locally-based "Purchase of goods and services" EC6 Fully 21 suppliers at significant locations of operation Procedures for local hiring and proportion of senior management Given the fact that NOVATEK operates mainly in Russia, the term hired from the local community at significant locations of “local populations” in this Report only applies to indigenous operation peoples of the Far North. Employees living in the YNAO and other EC7 Partially regions of operation have priority during hiring. The Company recruits representatives of indigenous peoples of the Far North who have the required qualifications. No specific procedures are associated with this process INDIRECT ECONOMIC IMPACTS Development and impact of infrastructure investments, "Local Communities" EC8 and services provided primarily for public benefit through Fully 54 commercial, in-kind, or pro bono engagement Understanding and describing significant indirect economic "Construction of the Sabetta port" EC9 Fully 18, 17 impacts, including the extent of impacts "Ust-Luga Complex" ENVIRONMENTAL MATERIALS Materials used by weight or volume "Company Profile" "Production" Along with the extracted natural resources used for conversion EN1 Partially 9, 14 into products, the subsidiaries purchase construction materials as well as drilling and completion materials from third-party suppliers EN2 Percentage of materials used that are recycled input materials Partially "Environmental expenditures" 27 PAGE 68 Индекс содержания GRI G3.1 / NOVATEK SUSTAINABILITY REPORT IN 2013

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ENERGY EN3 Direct energy consumption by primary energy source Partially "Energy Consumption and Efficiency Improvement" 38 EN4 Indirect energy consumption by primary energy source Fully "Energy Consumption and Efficiency Improvement" 38 EN5 Energy saved due to conservation and efficiency improvements Fully "Energy Consumption and Efficiency Improvement" 38 Initiatives to provide energy-efficient or renewable energy based "Use of Renewable Energy Sources" EN6 products and services and reductions in energy requirements as Fully "Energy Consumption and Efficiency Improvement" 31, 38 a result of these initiatives "Energy Efficiency" Initiatives to reduce indirect energy consumption, and reductions "Energy Consumption and Efficiency Improvement" EN7 Fully 38 achieved "Unmanned Production" WATER EN8 Total water withdrawal by source Fully "Water Use and Wastewater" 34 EN9 Water sources significantly affected by withdrawal of water Fully "Water Use and Wastewater" 34 Percentage and total volume of water recycled and reused NOVATEK’s disclosure report for the Water Disclosure Project EN10 Partially www.cdproject.net (The report is available for registered users) BIODIVERSITY Location and size of land owned, leased, managed in, or adjacent The Company does not locate its facilities on internationally to protected areas and areas of high biodiversity value outside important wetlands, important bird areas, or especially EN11 Fully protected areas vulnerable marine areas and marine mammal protection zones, and does not have any significant impact on them. Description of significant impacts of activities, products and "Biodiversity Preservation" EN12 services on biodiversity in protected areas and areas of high Fully 37 biodiversity value outside protected areas EN13 Habitats protected or restored Fully "Biodiversity Preservation" 37 Strategies, current actions, and future plans for managing "Biodiversity Preservation" impacts on biodiversity The Company’s facilities are not located near walrus rookeries, but there is a potential risk of exposure to them during EN14 Partially transportation of hydrocarbons, therefore the Company 37 representatives participate in the Expert Advisory group on the conservation and study of the Atlantic walrus of the southeastern Barents Sea and adjacent waters PAGE 69 Индекс содержания GRI G3.1 / NOVATEK SUSTAINABILITY REPORT IN 2013

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EMISSIONS, EFFLUENTS, AND WASTE EN16 Total direct and indirect greenhouse gas emissions by weight NOVATEK impact on ambient air 2011-2013, tons Company’s overall greenhouse gas emissions in 2013, tons EN17 Other relevant indirect greenhouse gas emissions by weight Additionally please see NOVATEK’s annual disclosure report on Initiatives to reduce greenhouse gas emissions and reductions EN18 greenhouse gas emissions and energy efficiency of the Carbon achieved Disclosure Project at www.cdproject.net (The report is available EN19 Emissions of ozone-depleting substances by weight for registered users) EN20 NO, SO, and other significant air emissions by type and weight Fully EN21 Total water discharge by quality and destination "Water Use and Wastewater" 34 EN22 Total weight of waste by type and disposal method Total weight of waste 17,5, "Waste" 36 EN23 Total number and volume of significant spills No significant spills occurred in the reporting period 36 Weight of transported, imported, exported, or treated waste "Waste" EN24 deemed hazardous PRODUCTS AND SERVICES Initiatives to mitigate the environmental impact of products and "Land Reclamation" services, and extent of impact mitigation "New Technical Concepts for Environmental Risk Mitigation" EN26 Fully 36, 33, 31 "Use of Renewable Energy Sources" "Gasification of transport" Percentage of products sold and their packaging materials that This indicator is irrelevant due to the specific nature of the EN27 Irrelevant are reclaimed by category production activity. The products are not packed COMPLIANCE Monetary value of significant fines and total number of non- Results of inspections conducted at subsidiaries by supervisory EN28 monetary sanctions for non-compliance with environmental Fully authorities laws and regulations TRANSPORT Significant environmental impact of transporting products Product transportation generates only 1% of the total emissions EN29 and other goods and materials used for the organization’s Partially into the ambient air from NOVATEK sites operations, and transporting members of the workforce OVERALL Total environmental protection expenditures, "Environmental expenditures" EN30 Fully 27 and investments by type PAGE 70 Индекс содержания GRI G3.1 / NOVATEK SUSTAINABILITY REPORT IN 2013

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EMPLOYMENT EMPLOYMENT Total workforce by employment type, employment contract, and "Personnel profile" LA1 Partially 45 region, broken down by gender Total number and rate of new employee hires and employee "Working with Young Specialists" LA2 Partially 47 turnover by age group, gender, and region Benefits provided to full-time employees that are not provided "Company Social Programs" LA3 to temporary or part-time employees, by significant locations Fully 51 of operations LABOR/MANAGEMENT RELATIONS Percentage of employees covered by collective bargaining "Interaction with trade unions" LA4 Fully 49 agreements Minimum notice period(s) regarding significant operational 2 months in accordance with the law LA5 changes, including whether it is specified in collective Fully agreements OCCUPATIONAL HEALTH AND SAFETY Percentage of total workforce represented in formal joint Formed on an equal basis with the participation of the LA6 management–worker health and safety committees that help Fully administration and employee representatives monitor and advise on occupational health and safety programs Rates of injury, occupational diseases, lost days, and "Injury Rate" LA7 absenteeism, and number of work-related fatalities by region Partially 42 and by gender Education, training, counseling, prevention, and risk-control "Workforce Voluntary Medical Insurance" LA8 programs in place to assist workforce members, their families, or Fully 51 community members regarding serious diseases Health and safety topics covered in formal agreements with The Collective Agreement effective during the reporting period LA9 Fully trade unions contains an “Occupational health” section TRAINING AND EDUCATION Average hours of training per year per employee by gender, and Average number of training hours per employee and breakdown LA10 Fully by employee category by employee category Programs for skills management and lifelong learning that There were Corporate English courses for employees of support the continued employability of employees and assist OAO NOVATEK in the reporting period. LA11 them in managing career endings Partially Effective Training and Development, Presentation Skills, and Self-Organization training courses were held for the young employees, aimed at developing their personal skills PAGE 71 Индекс содержания GRI G3.1 / NOVATEK SUSTAINABILITY REPORT IN 2013

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DIVERSITY AND EQUAL OPPORTUNITY Composition of governance bodies and breakdown of employees "Composition of NOVATEK’s management broken down by age" LA13 per employee category according to gender, age group, minority Partially 22, 46 group membership, and other indicators of diversity EQUAL REMUNERATION FOR WOMEN AND MEN Ratio of basic salary and remuneration of women to men by "Material Incentive" LA14 Fully 46 employee category, by significant locations of operation Return to work and retention rates afterparental leave, by Virtually all employees return to their job after maternity leave gender upon the expiration of 2 years and remain in the organization. For this purpose the Company assists in the child attending pre- LA15 Partially school or provides monthly financial support of 10 thousand RR for each child between the ages of two to six years if there are no vacant places in the pre-school in the area where the family lives PRODUCT RESPONSIBILITY CUSTOMER HEALTH AND SAFETY Life cycle stages in which health and safety impacts of products Potential negative health and safety implications of the and services are assessed for improvement, and percentage Company’s products and services are assessed at each stage of of significant products and services categories subject to such the life cycle, including hydrocarbon exploration, extraction, and PR1 Fully procedures processing, as well as transportation and sale of the products. This is governed by the law of the Russian Federation and the Company standards Total number of incidents of non-compliance with regulations No cases of non-compliance were detected PR2 and voluntary codes concerning health and safety impacts of Fully products and services during their life cycle, by type of outcomes PRODUCT AND SERVICE LABELLING Type of product and service information required by procedures, Information on the approved quality of the product, including and percentage of significant products and services subject to information on its safe/dangerous characteristics is governed such information requirements by technical regulations and is contained in the regulatory and contractual documents for a specific product type. PR3 Fully Thus, physical values of the rated LNG quality parameters produced by laboratory tests are contained in the quality certificate. The LNG transportation vehicles are marked with warning signs characterizing the transportation hazard of the cargo Total number of incidents of non-compliance with regulations No cases of non-compliance were detected PR4 and voluntary codes concerning product and service information Fully and labeling, by type of outcomes Practices related to customer satisfaction, including results of "Interaction with individual natural gas consumers" PR5 Fully 19, 21 surveys measuring customer satisfaction "Customer service quality improvement" PAGE 72 Индекс содержания GRI G3.1 / NOVATEK SUSTAINABILITY REPORT IN 2013

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MARKETING COMMUNICATIONS Programs for adherence to laws, standards, and voluntary codes While advertising its products and services and promoting the related to marketing communications, including advertising, Company brand by means of sponsor projects, NOVATEK strictly PR6 Fully promotion, and sponsorship adheres to the Federal Law No. 38 “About Advertisement” dated 13 March, 2006 Total number of incidents of non-compliance with regulations No cases of non-compliance were detected and voluntary codes concerning marketing communication PR7 Fully including advertising, promotion and sponsorship, by type of outcomes CUSTOMER PRIVACY Total number of substantiated complaints regarding breaches of No cases of data loss were detected. Information on individuals customer privacy and losses of customer data made available to subsidiaries supplying gas to individual PR8 Fully consumers is stored in accordance with Federal Law No.152 “About Personal Information” COMPLIANCE Monetary value of significant fines for non-compliance with laws The Office of the Federal Antimonopoly Service of Russian and regulations concerning the provision and use of products Federation in Chelyabinsk imposed a penalty of RR 300 thousand PR9 Fully and services to ООО Gazprom mezhregiongas Chelyabinsk the successor of which is OOO NOVATEK-Chelyabinsk, for increasing the gas price HUMAN RIGHTS INVESTMENT AND PROCUREMENT PRACTICES Percentage and total number of significant investment No contracts agreements and contracts that include clauses incorporating HR1 Fully human rights concerns, or that have undergone human rights screening Percentage of significant suppliers, contractors, and other 100% of significant suppliers, contractors. business partners that have undergone human rights screening, The Company has a Tender Committee which is responsible and actions taken for the selection of suppliers of goods (products) and service providers for the needs of NOVATEK and its subsidiaries. The HR2 Fully Committee activities are governed by NOVATEK’s internal Regulations on the organization of competitive tendering, approved in 2006. When selecting suppliers, research is carried out on several items, including credit history, reputation, management practices, and reliability Total hours of employee training on policies and procedures 557 hours HR3 concerning aspects of human rights that are relevant to Fully 21% operations, including percentage of employees trained PAGE 73 Индекс содержания GRI G3.1 / NOVATEK SUSTAINABILITY REPORT IN 2013

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NON-DISCRIMINATION Total number of incidents of discrimination and corrective No cases were recorded in the reporting period HR4 Fully actions taken FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING Operations and significant suppliers identified in which the right No cases were detected to exercise freedom of association and collective bargaining may HR5 Fully be violated or at significant risk, and actions taken to support these rights CHILD LABOR Operations and significant suppliers identified as having No cases were detected HR6 significant risk for incidents of child labor, and measures taken to Fully contribute to the effective abolition of child labor FORCED AND COMPULSORY LABOR Operations and significant suppliers identified as having No cases were detected significant risk for incidents of forced or compulsory labor, and HR7 Fully measures to contribute to the elimination of all forms of forced or compulsory labor INDIGENOUS RIGHTS Total number of incidents of violations involving rights of No cases were detected HR9 Fully indigenous people and actions taken ASSESSMENT Percentage and total number of operations that have been "Stakeholder Engagement" HR10 subject to human rights reviews and/or impact assessments Partially "Cooperation with Indigenous and Minority Peoples of the 57, 29 Far North" REMEDIATION Number of grievances related to human rights filed, addressed, Such activities were not detected during the reporting period HR11 Fully and resolved through formal grievance mechanisms SOCIETY LOCAL COMMUNITIES Percentage of operations with implemented local community "Local Communities" SO1 Fully 54 engagement, impact assessments, and development programs 100% of operations PAGE 74 Индекс содержания GRI G3.1 / NOVATEK SUSTAINABILITY REPORT IN 2013

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CORRUPTION Percentage and total number of business units analyzed for risks The Company’s security office and/or internal audit department SO2 related to corruption Partially carries out regular checking for risks related to corruption, mainly for procurement departments Percentage of employees trained in organization’s The Company’s anti-corruption approach is stated in the Code of SO3 Partially anti‑corruption policies and procedures. Business Conduct and Ethics followed by all employees SO4 Actions taken in response to incidents of corruption Fully Such activities were not detected during the reporting period PUBLIC POLICY Public policy positions and participation in public policy According to clause 4.2.3 of OAO NOVATEK Code of Business development and lobbying Conduct and Ethics, the Company «avoids unlawful efforts to influence the decisions of governmental and/or local authorities” Additionally please see OAO NOVATEK Code of Business Conduct SO5 Fully and Ethics http://www.novatek.ru/en/about/management/doc At the same time the Company’s representatives participate in the work of the advisory bodies and expert councils of the authorities for the purpose of improving the legal basis of the industry and creating a favorable business environment Total value of financial and in-kind contributions to political According to clause 4.2.3 of OAO NOVATEK Code of parties, politicians, and related institutions by country Business Conduct and Ethics, the Company «does not directly (or indirectly) participate in political movements or SO6 Fully organizations” Additionally please see OAO NOVATEK Code of Business Conduct and Ethics http://www.novatek.ru/en/about/management/doc ANTI-COMPETITIVE BEHAVIOR Total number of legal actions for anti-competitive behavior, anti- See comment to PR9 SO7 Fully trust, and monopoly practices and their outcomes COMPLIANCE Monetary value of significant fines and total number of See PR9 SO8 non-monetary sanctions for non-compliance with laws and Fully regulations Operations with significant potential or actual negative impacts "Main impacts" SO9 Fully 32, 29 on local communities "Stakeholder Engagement" Prevention and mitigation measures implemented in operations "Stakeholder Engagement" SO10 with significant potential or actual negative impacts on local Fully "Cooperation with Indigenous and Minority Peoples of the 29, 57 communities Far North" PAGE 75 Индекс содержания GRI G3.1 / NOVATEK SUSTAINABILITY REPORT IN 2013

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OIL & GAS SECTOR SUPPLEMENT OG1 Volume and type of estimated proved reserves and production Fully NOVATEK Annual Report 2013, pp. 47, 50 OG3 Total amount of generated renewable energy by sources Fully "Consumption and Production of Fuel and Energy Resources" 38 Number and percentage of significant operating sites in which "Environmental Monitoring and Industrial Control" OG4 Partially 26 biodiversity risk has been assessed and monitored Volume of formation or produced water "Water Use and Wastewater" OG5 Fully 34 41,4 (maintain formation pressure) Amount of drilling waste (drill mud and cuttings) and strategies "Waste" OG7 Fully 36 for treatment and disposal OG8 Benzene, Lead, and Sulfur content in fuels Fully We do not produce fuels Operations where indigenous communities are present or "Stakeholder Engagement" OG9 affected by activities and where specific engagement strategies Fully "Cooperation with Indigenous and Minority Peoples of the 29, 57 are in place Far North" Number and description of significant disputes with local No cases recorded OG10 Fully communities and indigenous peoples Number of sites that have been decommissioned and sites that None of the sites were decommissioned OG11 Fully are in the process of being decommissioned Operations where involuntary resettlement took place, No cases recorded OG12 the number of households resettled in each and how their Fully livelihoods were affected in the process OG13 Number of process safety events, by business activity Fully "Occupational Health and Safety Training" 40 Volume of biofuels produced and purchased meeting We do not produce/ purchase such fuels OG14 Fully sustainability criteria PAGE 76 Abbreviations / NOVATEK SUSTAINABILITY REPORT IN 2013

ABBREVIATIONS

CDP Carbon Disclosure Project CNG compressed natural gas

CNPC China National Petroleum Corporation EC efficiency coefficient

ISO International Organization for Standardization KPI key performance indicators

OHSAS Occupational Health and Safety Management Systems cu.m cubic meter(s)

PRMS Petroleum Resources Management System M million

SEC United States Securities and Exchange Commission B billion

GFS Gas filling station MNR Ministry of Natural Resources and Environment

AZK Fuel filling complex IUCN International Union for Conservation of Nature

AZS Fuel filling station COMR commonly occurring natural resources

ACS Automated Control System IC industrial control

CAPCS Computer-Aided Process Control System APG Associated Petroleum Gas

APR Asian-Pacific Region IEC Industrial environmental control

boe barrels of oil equivalent. SGC stable gas condensate

ETSF East-Tarkosalinskoye field NSR The Northern Sea Route

GC Group of companies LNG liquefied natural gas

GSM fuel and lubricants LPG liquid petroleum gases

CBS compressor booster station k thousand

USD United States Dollar FEC fuel and energy complex

UGSS Unified Gas Supply System HC Hydrocarbons

ZPK Condensate processing plant OFAS Office of the Federal Antimonopoly Service

ICS Integrated control system SPF Social Protection Fund

sq.km square kilometer FCSM Federal Commission for Securities Market

Instrumentation Instrumentation and automatic control equipment YNAO Yamal-Nenets Autonomous Region

km kilometer(s) EMS Environmental Monitoring System

KMNS indigenous minorities of the Far North PAGE 77 Feedback Questionnaire and Contact Details / NOVATEK SUSTAINABILITY REPORT IN 2013

FEEDBACK QUESTIONNAIRE AND CONTACT DETAILS

FEEDBACK QUESTIONNAIRE CONTACT DETAILS

DEAR READERS, 4. HOW WOULD YOU RATE DATA RELIABILITY AND ADDRESS: You have just read NOVATEK’s seventh Sustainability OBJECTIVITY? 22a Pobedy St., Tarko-Sale, Purovsky District, Report. a. High Yamal‑Nenets Autonomous Region b. Satisfactory Your opinion is important to us, and we would be grateful c. Low MOSCOW OFFICE: for your responses to the questions below so that we 2 Udaltsova St., Moscow 119415, Russia might improve the Report’s quality in the future. If you 5. HOW WOULD YOU RATE THE REPORT’S SEARCH have any questions or comments, please call CONVENIENCE? CENTRAL REFERENCE: +7 495 730 6013. a. High telephone: +7 495 730-6000, fax: +7 495 730-6000 b. Satisfactory Please mail the completed questionnaire to: 2, Udaltsova c. Low PRESS SERVICE: street, Moscow, Russia, 119415. You can also e-mail telephone: +7 495 721-2207, e-mail: [email protected] it to: [email protected]. 6. HOW WOULD YOU RATE THE DESIGN? a. High INVESTOR RELATIONS: 1. WHAT TYPE OF STAKEHOLDER ARE YOU? b. Satisfactory telephone: +7 495 730-6013, e-mail: [email protected] a. Government authorities c. Low b. Investor c. Partner 7. HAS THE REPORT CONTRIBUTED TO YOUR d. Client UNDERSTANDING OF THE SUSTAINABILITY OF NOVATEK’S e. Employee ACTIVITIES? f. Shareholder a. Yes, completely g. Other ______b. Yes, somewhat c. No, not exactly 2. WHAT IS YOUR OVERALL IMPRESSION OF THE REPORT? d. No, totally unclear a. Very interesting b. Interesting c. Not interesting WHAT KIND OF INFORMATION WOULD YOU LIKE TO SEE INCLUDED IN FUTURE SUSTAINABILITY REPORTS BY 3. HOW WOULD YOU RATE DATA COMPLETENESS? NOVATEK? a. High

b. Satisfactory c. Low