2006 SUSTAINABILITY AND SOCIAL RESPONSIBILITY REPORT The year of continuous growth 2006 4.6 4.6 3.9 3.3 Expenses for environment protection, bln RUB 2006 SUSTAINABILITY AND SOCIAL RESPONSIBILITY REPORT Table of contents Social policy 48 LABOR MOTIVATION 56 PERSONNEL DEVELOPMENT 64 INDUSTRIAL SAFETY AND LABOR 50 SOCIAL PROTECTION 58 COOPERATION WITH EDUCATIONAL PROTECTION OF EMPLOYEES INSTITUTIONS 66 SOCIAL PROGRAMS IN THE REGION 53 SOCIAL SUPPORT OF RETIRED 59 ACTIVITIES FOR THE YOUTH 76 REGISTER OF CORPORATE SOCIAL PROJECTS (CSP) OF OAO TATNEFT, EMPLOYEES 59 CORPORATE CULTURE 2006 46 55 HUMAN RIGHTS PROTECTION 60 HEALTH PROTECTION Message Environmental activities 86 ENVIRONMENTAL POLICY AND 97 RESOURCES CONSUMED 112 FIXED CAPITAL INVESTMENTS INTO 06 FROM GENERAL DIRECTOR, MANAGEMENT IN THE COMPANY 102 DYNAMICS OF EMISSIONS ENVIRONMENTAL PROTECTION CHAIRMAN OF THE MANAGEMENT 89 ENVIRONMENTAL MONITORING AND DISCHARGES OF HARMFUL AND RATIONAL USE OF NATURAL BOARD OF OAO TATNEFT 92 QUALITY OF WATER IN WATER SUBSTANCES AND WASTE RESOURCES BODIES AND ATMOSPHERIC AIR PRODUCTION IN POPULATION AGGREGATES 106 IMPROVEMENT OF TECHNOLOGI- ACCORDING TO ENVIRONMENTAL CAL EQUIPMENT RELIABILITY MONITORING DATA 109 INDUSTRIAL WASTE RECYCLING 06 84 96 ENVIRONMENTAL NORMS AND UTILIZATION AND STANDARDS Company approach Innovation activities to non-financial reporting process 118 SCIENTIFIC AND TECHNICAL BASE OF THE COMPANY 08 REPORT CHARACTERISTICS 13 INDEPENDENT AUDIT REPORT 120 INTELLECTUAL PROPERTY 09 APPLIED STANDARD ON RESULTS OF THE REPORT 123 APPLICATION OF ADVANCED AND RECOMMENDATIONS VERIFICATION TECHNOLOGIES AND EQUIPMENT 10 IMPLEMENTATION 08 OF GRI PRINCIPLES 116 Corporate responsibility and interaction About the company with stakeholders 142 COMPANY STATUS 148 CORPORATE GOVERNANCE 145 MISSION 148 CORPORATE GOVERNANCE 20 PRINCIPLES OF CORPORATE 32 REPRESENTATION IN INDUSTRY 145 STRATEGIC INITIATIVES AND PRINCIPLES SOCIAL RESPONSIBILITY AND PUBLIC INSTITUTIONS OBJECTIVES UP TO 2010 149 COMPANY MANAGEMENT BODIES 22 NON-FINANCIAL RISK MANAGEMENT 34 PUBLIC EVALUATION OF COMPANY 146 SURROUNDING 25 INFORMATION POLICY ACTIVITY 147 SECURITIES MARKET. 18 26 INTERACTION WITH STAKEHOLDERS 140 STOCK MARKET Economic performance Appendices 152 INDEX OF LOCATION 38 BUSINESS PERFORMANCE FACTOR 42 PROGRAMS OF INCREASE OF GRI INDICATORS 40 PROCEEDS FROM SALES OF PRODUCTION EFFICIENCY 158 GLOSSARY OF PRODUCTS AND IMPROVEMENT OF CORPORATE 161 LIST OF ABBREVIATIONS 40 VALUE ADDED GOVERNANCE 36 40 TAXES AND PAYMENTS 45 INVESTMENT PROJECTS 152 Message from General Director, Chairman of the Management board of OAO Tatneft Rich history — great future Dear readers, vides support to medical institutions, furthers development of physical training and mass sport in the regions of its activity. In order to support 2006 was successful for our Company. The volume of produc- the national project “Education” the Company provides charitable tion achieved 25 million 405 thousand tons of oil; this is the maximum assistance to comprehensive schools and preschool educational insti- level for the last thirteen years. 45% of oil was produced due to use tutions and supports gifted children and teenagers. Cooperation with of advanced technologies. Efficient results were reached in the pet- higher educational institutions is carried out at a permanent basis. rochemical industry — Nizhnekamskshina manufactured 12 million Within the framework of the policy of maintenance of the balance 206 thousand tires. The total volume of retail sales of oil products of jobs and strengthening of social sustainability in the region the through the filling station network exceeded 1.1 million tons. Within Company furthers development of small and medium-scale business. the framework of strengthening the oil production base, construc- Starting from 2005 the special corporate project aimed at creation tion of the complex of oil producing and petrochemical plants began of promising innovation projects is being implemented. in Nizhnekamsk. The project will result in over then three thousand jobs. In 2007 we will celebrate production of 3 billion tons in the Along with solving production objectives Tatneft pays special Republic of Tatarstan. A number of charitable projects are scheduled attention to environmental activity. In accordance with the state strat- to mark this momentous occasion. New socially significant objects egy in the sphere of environment protection, ensuring environmental will be built with assistance of the Company in cities and settlements safety and rational use of natural resources in 2006 the Company of the oil region. During the year Tatneft, at its own expense, will pro- adopted the new corporative Environmental Policy. Independent cer- vide the possibility to have a rest and to restore their health in sanatoria tification audit of the integrated system of management of industrial and preventive clinics not only to oil industry veteran workers but also safety, labor and environment protection on the basis of international to those who input greatly into development of the oil-producing com- standards ISO 14001:2004 and OHSAS 18001:1999 was carried out. plex of Tatarstan with their honest work in other industries and in the Expenses for nature conservation activities exceeded the level of the state-financed sphere. preceding year by 20%. The Company has rich history and great future! We are sure that The Company considers provision of social wealth and adequate further successful development of Tatneft will promote implementation living standards for its employees to be one of its most important of new social projects, and each of them is a grateful answer to people tasks. It is reflected in the corporate policy of remuneration and working in our collective and a contribution into the present and the in social guarantees to the personnel. Within nine years Tatneft has future of our country. been implementing the program of voluntary medical insurance guar- anteeing to its employees timely medical assistance and treatment at health resorts. For ten years the Company has been having the program of non-governmental provision of pensions based on the optimum scheme of formation of non-governmental pension with finds of Tatneft and of employees. In 2006 the corporate project of address assistance to retired employees was started. Following the principles of corporate social responsibility Tatneft participates in implementation of the priority national projects. Participation in the republican program of social mortgage is the Company’s contribution into implementation of the project “Affordable and Comfortable Dwelling — to Citizens of Russia”. Today three thou- General Director, sand of our employees take part in this program; one third of them are Chairman of the Management Board young people. Within the national project “Health” the Company pro- SH.F. TAKHAUTDINOV ОАО TATNEFT SUSTAINABILITY AND SOCIAL RESPONSIBILITY REPORT 2006 Company approach to non-financial reporting process REPORT CHARACTERISTICS The Company’s responsibility to stakeholders APPLIED STANDARDS Standard of interaction with stakeholders is independent report verification for which we invited AND RECOMMENDATIONS AA1000SES The 2006 Sustainability and Social Responsibility specialists of Bureau Veritas Certification. The report Standard AA1000SES is a generally accessible Report is the third non-financial report of the Company. contains the audit report on the results of verification Sustainability Reporting Guidelines normative base for planning, execution, estimation, The previous reports — the 2004 Social Report and the (pages 13-17). (Global Reporting Initiative, GRI) informing and non-financial auditing of quality of inter- 2005 Social, Economic, Environmental and Innovation The electronic version of the report is on the of new generation G3 action with stakeholders. The standard is developed for Activities Report — are located in the official website corporate website www.tatneft.ru, the Corporate The Guidelines of GRI (Global Reporting Initiative) those who starts, observes and estimates interaction of OAO Tatneft www.tatneft.ru in the Corporate Social Social Report section. The printed version of the report in the latest version is a document offering a thoroughly with stakeholders and may be used both for internal and Report section. is sent to shareholders, investors, state authorities, developed approach to generation of reports reflect- external interaction and for connection between them. This report was prepared on the basis of the public institutions and other stakeholders. For infor- ing economic, environmental and social performance It provides organizations with the possibility to develop Sustainability Reporting Guidelines of the Global ming own employees the report is placed into the inter- of an organization. and to practice schemes of interaction with stakehold- Reporting Initiative (GRI) of the third generation (ver- nal corporate portal of the Company. The new Guidelines version contains principles ers on the basis of clear principles and criteria. sion G3). In accordance with the principles of deter- Additional information about the Company activ- determining a report structure and quality of presented Use of standard AA1000SES in the process of mination of the GRI report contents and taking into ity may be found in the Annual Report of OAO Tatneft information as well as the set of elements and indica- organization of interaction of the Company with account the already existing