ANNUAL REPORT 2020 Contents
INTRODUCTION Address from the Chairman of the Board of Directors...... 4 Address from the CEO...... 5 About the company...... 6 2020 events...... 8 Potential...... 10 CORPORATE GOVERNANCE Board of Directors...... 14 Management...... 16 Investment committee...... 18 Auditing committee...... 19 2020 SUMMARY Key financial indicators...... 23 Key production results...... 23 Resource base...... 24 Geological exploration...... 28 Oilfield services...... 29 Processing associated petroleum gas...... 30 Electric power industry...... 31 Construction...... 32 Supply and logistics...... 34 DEVELOPMENT STRATEGY ANNUAL Business strategy...... 38 Investment programme...... 39 Medium-and-long-term development plans for individual areas...... 40 REPORT Marketing strategy...... 42 CORPORATE VALUES 2020 Value system...... 46 AWARDS FOR THE REPORTING PERIOD RNG JSC employees were awarded for their work benefitting the Republic of Sakha (Yakutia)...... 50 Social programme «RNG to medics» was awarded the all-Russian prize...... 52 RNG JSC’s assistance to the Mirninsky district was noted by local authorities...... 53 SOCIAL RESPONSIBILITY RNG JSC staff...... 56 Resource conservation and ecology...... 60 Contribution to regional development...... 62 Anti-corruption measures...... 66 Partners...... 68 Terminology...... 70
About the company RNG JSC’s annual report for 2020 includes the results of the company’s activities. The report is prepared based on an analysis of operational data, consolidated financial indicators and the recommendations of international GRI standards. There may be errors in the report text when calculating fractions, percentages, and amounts, when rounding calculated indicators. The data presented in the report may differ slightly from previously published data due to the difference in rounding up indicators. RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
2 3 Address from the Chairman Address from the CEO of the Board of Directors
Dear shareholders and investors! Dear shareholders and investors! Federick Matthew Vladimir Thomas Ponsonby In 2020, the oil and gas industry adapted to the changes associated Rakitin In a difficult 2020, RNG JSC achieved positive financial results. The with the COVID-19 pandemic and difficult macroeconomic company has shown the ability to develop steadily, regardless of the conditions. Despite the unprecedented challenges, RNG JSC has impact of external adverse factors. implemented significant projects. The company developed in rapidly changing external conditions, ith the participation of RNG JSC as an exploration operator, a new gas demonstrated internal stability, systematically moved towards condensate field with high resource potential was discovered in the Lensky district of the Republic of Sakha (Yakutia). According to the the intended goals and provided a high level of employee protection. A set of effective measures for the reliable operation of the oil team’s proposal, the field is named in honour of Ivan Mikhailovich industry were quickly developed. Menshikov, a man who made a significant contribution to the development of the company and the industry. RNG JSC, as before, actively invests in the latest technologies, expands partnership with global industry leaders, and develops RNG JSC plays a significant role in the socio-economic activity of staff potential. Yakutia, acting as an investor, taxpayer and employer. By implementing The company makes a significant contribution to the socio- new projects and ensuring the development of existing assets, the economic development of the Republic of Sakha (Yakutia) and company creates thousands of jobs. ensures the constant tax revenue to budgets of all levels. RNG JSC finances social, cultural and educational projects, and always In successfully solving production tasks, we pay close attention to the safeguards natural resources. rational use of natural resources, constantly improving environmental In the reporting year, a promising gas condensate field was and industrial safety programmes. discovered, which RNG JSC was exploring and operating. In addition, Despite the restrictions due to the COVID-19 pandemic, the business a solid waste landfill was built and a project to prepare a system for the return injection of associated petroleum gas was implemented. model of RNG JSC has shown its resilience. The company’s employees All the company’s achievements are provided primarily by the were immediately transferred to a remote work. We have promptly efforts of its highly professional team. implemented preventative measures in offices and production The plans include further exploration and production of facilities, while maintaining the continuity of all operational processes. hydrocarbons, modernising business processes, and long-term RNG JSC adheres to high standards of doing business and fully fulfils all work planning together with the construction and transport- obligations to state authorities, suppliers and creditors. The company logistics divisions of Eastsib Holding. I am confident that RNG JSC will continue its steady progress towards its strategic goals, has confirmed its ability to grow steadily in difficult conditions. The maintaining high rates of project implementation. long-term strategy of RNG JSC will be effectively implemented. RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
4 5 About the company
RNG JSC is an enterprise of the oil and gas industry of the RNG JSC in 2020 is included in the list of backbone enterprises of Far Eastern Federal District of Russia and is a part of Eastsib the fuel and energy complex, compiled by the Ministry of Energy. Holding. The company holds a licence for the exploration and The management of RNG JSC is interested in strengthening staff production of hydrocarbons at the site «Eastern blocks of the potential. The discovery of new deposits and participation in Srednebotuobinskoye oil and gas condensate field» (EB SB infrastructure projects will lead to the creation of new jobs. OGCF), located in the Mirninsky district of the Republic of Sakha (Yakutia).
In August 2019, RNG JSC launched the industrial operation of The company considers its contribution to the socio-economic the EB SB OGCF. The volume of initial recoverable oil reserves is development of Yakutia to be one of its main tasks: it fulfils 32.2 million tons (as of 01.01.2021). Recoverable gas reserves its obligations to state bodies, interacts with the local amount to 12.5 billion m3 (as of 01.01.2021). The company’s administration and conducts production activities in accordance specialists are working both on additional exploration of with environmental standards. In 2020, the company’s employees hydrocarbon reserves in the areas already being developed, and were awarded for their work benefitting the Republic of Sakha on the discovery of new deposits. (Yakutia). RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
6 7 2020 events
20 January 17 November First million tons of crude oil produced RNG JSC completed Rospotrebnadzor inspection The launch of the Eastern blocks of the Srednebotuobinskoye oil and gas condensate According to the results of the inspection, the federal service did not detect any field into commercial operation took place on 29.08.2019. The construction of violations: The company complies with all the requirements for the prevention of production facilities was completed in the shortest possible time. coronavirus infection.
11 March 25 November RNG JSC became a partner of the International Forum A promising gas condensate field was discovered, «Open Data Day» which was named after I. M. Menshikov The company became a sponsor of the international forum «Open Data Day», held Experts highly assess the potential of this area and the possibility of including the on March 6-7 in Moscow at the site of the National Research Technological University object in the resource base of the main gas pipeline «Power of Siberia». According to «MISiS». The event was organized by the NPO «Infoculture» and the Association of the data of the first operational calculation, the initial recoverable gas reserves at the 3 Data Market Participants. new field amount to 27 billion m .
28 April 27 November RNG JSC was included in the list of backbone enterprises of the fuel and RNG JSC acted as the general partner of the Moscow International energy sector Financial and Economic Forum The Ministry of Economic Development has included RNG JSC in the list of strategic The seventh annual forum «Greater Eurasia in search of new ways and directions of enterprises of the fuel and energy sector. The company makes a significant cooperation» was held in the format of a video-conference. Company employees contribution to the development of the Republic of Sakha (Yakutia). spoke at two industry panels.
5 October 2 December A bridge over the Malaya Botuobuya River was opened in Yakutia, the bridge Employees of RNG JSC received awards for their work benefitting is included in the Federal programme for the construction of the Vilyuy highwayy the Republic of Sakha (Yakutia) The route of the highway runs from Tulun, Irkutsk region to Yakutsk, the length of the For their contribution to the socio-economic development of the Republic of Sakha bridge is 192 m and the length of the paved access roads is 2.7 km. Construction work (Yakutia), the Chairman of the Investment Committee under the Board of Directors, began in September 2018 and construction companies belonging to Eastsib Holding Deputy CEO for Drilling and specialists of the construction division of RNG JSC were were involved. The object was completed ahead of schedule. awarded.
23 October 8 December RNG JSC became a partner of the Russian School of Economics RNG Procurement LLC acquired a warehouse base in Lensk A charity project (amounting to $ 1 million) was launched in September 2020 and The acquired warehouse base in Lensk is distinguished by its favourable location: includes a student support programme and two named professorial positions. RNG located near the river port and an oil depot. The object consists of three arched JSC contributes to the development of modern economic education. slopes, a platform of 7 hectares with a hard surface, and a gantry crane with the capability of lifting 12 tons.
9 November 23 December Completion of a solid waste landfill RNG JSC received the All-Russian MediaTek Award on the Eastern blocks of the Srednebotuobinskoye field Since the beginning of the COVID-19 pandemic, the company has been aiding the Thermal neutralisation of solid household and industrial waste will be carried out health care system of Yakutia. The project «RNG to medics» took first place in the at RNG JSC’s new landfill. The landfill is intended not only for the disposal of the «Social and Environmental Initiative» category of the All-Russian MediaTek Award. company’s own waste, but also for the needs of the Mirninsky district. RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
8 9 Potential
Creation of a • Improving the efficiency • The use of modern mil tons 32.2 modern, high- of the development of horizontal drilling initial recoverable oil reserves the licence area of the tech oil and gas technologies and (on the state balance sheet as of 01.01.2021) Eastern blocks of the TASKS company as part GOALS Srednebotuobinskoye the involvement of of the EASTSIB OGCF. leading international MISSION HOLDING group of • Environment preservation contractors Halliburton, 3 12.5 bil m companies, capable and fulfilling all assumed Schlumberger and Baker initial recoverable gas reserves of effectively social obligations. (on the state balance sheet as of 01.01.2021) Hughes to reduce the developing the oil • Human capital operational drilling time. and gas fields in development, increasing remote areas with the level of employment • Rational use of mineral and well-being in the resources. rub bil difficult climatic Republic of Sakha > 50 conditions. (Yakutia). investments in the design • Creating production units • Growing shareholder value and development of infrastructure to minimise dependence and maintenance of stable activity of RNG JSC. on external contractors.
Taxes Payments under contracts and mandatory in favour of state-controlled payments companies
rub 4.74 bil rub 4.03 bil “Over the past few years, RNG JSC ($ 66.22 mil) paid in 2020 ($ 55.55 mil) paid in 2020 has turned from a small geological exploration company into a multiprofile oil group. I am deeply convinced that with such rub 5.4 bil rub 3.7 bil modern approaches to the organisation ($ 84.55 mil) paid in 2019 ($ 56.8 mil) paid in 2019 of work and high social responsibility to local residents, the company will certainly succeed”.
Aysen Nikolayev, Head of the Sakha Republic (Yakutia), rub 3.45 bil rub 2.4 bil December 2020. ($ 55.76 mil) paid from 2014–2018 ($ 39.13 mil) paid from 2014–2018 RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
10 11 Соrporate governance RNG JSC 2020 Report Annual
12 Board of Directors
Biographical information: Biographical information: ∙ Born in 1958 ∙ Born in 1948 ∙ Studied Physics at Cardiff University and Oilfield Engineering at Imperial College London (UK) ∙ Graduated from the Geological and Geophysical Faculty of ∙ Holder of the official hereditary title of Lord Novosibirsk State University (NSU); and completed a postgraduate ∙ Member of the House of Lords of Great Britain course of the Mathematical Faculty of the Higher School of Positions held: Economics ∙ 1981–1984: Data Engineer at Geoservices Frederick Matthew Alferenko Gennady ∙ 1984–1986: Oil Engineer at Charterhouse Petroleum Positions held: Thomas Ponsonby ∙ 1986–1988: Oil Engineer at Petrofina ∙ 1973–1985: Supervisor of the NSU research group for forecasting Member of the Board of Directors ∙ 1988–1989: Senior Commercial Engineer at Texas Eastern oil and gas fields in Eastern Siberia and Sakhalin Chairman of the Board ∙ 1989–1992: Senior oil Engineer at LASMO PLC ∙ 1985–1992: Founder and President, Chairman of the Board of of Directors ∙ 1997–2001: Commissioner of the Council of Europe Directors of the Social Inventions Fund ∙ 1994–1998: Chief Engineer at Phibro Energy ∙ 1992: Chairman of the Board of Directors of the Europe-America ∙ 1998–2002: Executive Chairman at Euroinvest LTD 500 International Consortium ∙ 2001–2005: Independent Director at Acorn Oil & Gas LTD ∙ 2003–2008: Independent Director at Emerald Energy PLC ∙ 1994–1998: Head of the National Fund and the Strategic Resources ∙ 2005–2009: Independent Director at Fairfield Energy LTD of Russia Forum ∙ 2005–2011: Chairman of the Board of Directors and CEO of Rosehill ∙ 1998–2000: Director of Arthur Andersen, organising meetings of Energy PLC leaders of direct investment in the Russian economy ∙ 2010–: Chairman of the Board of Directors at Aladdin Oil & Gas AS ∙ 2001–2002: Advisor to the Chairman of the Management Board of ∙ 2001–2010: Commissioner of the Organisation for Security and Gazprombank JSC Cooperation I Europe ∙ 2002–2007: Director for Strategic Development, Ernst & Young ∙ 2012–2013 Independent Director of Yakut Energy LTD (formerly the ∙ From 2007: Strategic Advisor to PwC, Russia main shareholder of Taas-Yuryakh Neftegazodobycha LLC) ∙ From 2014: Chairman of the Board of Directors of RNG JSC ∙ 2008–2011: Senior Advisor to DLA Piper, Russia ∙ From 2020: Member of the Board of Directors of RNG JSC
Biographical information: ∙ Born in 1986 ∙ Graduated from the G.V. Plekhanov Russian Economic University in 2008 and has a degree in Finance and Credit Biographical information: ∙ PhD in Economics ∙ Born in 1943 Positions held: ∙ Graduated from Sverdlovsk Institute of Law ∙ 2007–2010: Direct Investment Project Manager at Evrofinance ∙ Distinguished Lawyer of the Republic of Sakha (Yakutia) and Russia Rakitin Vladimir Mosnarbank JSCB ∙ Honorary Employee of the Investigative Committee of the Russian ∙ 2010–2014: Senior Tax Adviser at the Moscow office of Lawrence CEO Federation Graham (CIS) LLP ∙ Honorary Employee of the Prosecutor’s Office of the Russian ∙ 2014–2019: Director of Finance at RNG JSC ∙ From 2019: CEO of RNG JSC Federation Kolmogorov Vasiliy ∙ Awarded the Order of Honour Positions held: Member of the Board of Directors Biographical information: ∙ 1990–1994: Prosecutor of the Republic of Sakha (Yakutia) ∙ Born in 1949 ∙ 1994–2004: Deputy Prosecutor General of the Russian Federation ∙ 2000–2004 : Head of the Main Investigative Department at the ∙ Studied organisation management, law at the Moscow Institute of International Economic Relations, and logistics at the NRU HSE Russian Federation Prosecutor General’s Office ∙ 2004–2006: Advisor to the Prosecutor General of the Russian Positions held: Federation ∙ 1999–2000: Deputy Head of Administration for the Russian Ministry of Railways ∙ 2005–2008: Advisor to the President-Chairman of the Management Vilochkin Yury Board of VTB Bank PJSC ∙ 2004–2010: Vice President of Evrofinance Mosnarbank JSCB ∙ 2009-2010: Advisor to the CEO of Rosvino LLC ∙ 2010–2013: Chief Security Officer for Sberbank’s Northwest Branch Member of the Board of Directors ∙ 2010-2015: Advisor to the President-Chairman of the Management ∙ 2013–2014: Vice President of Soyuz Corporation Board of Evrofinance Mosnarbank JSCB. ∙ From 2014: First Deputy Chief Executive Officer of Inter-State ∙ From 2015: Member of the Board of Directors of RNG JSC Development Corporation JSC ∙ From 2020: Chairman of the Auditing Committee of RNG JSC ∙ From 2016: Member of the Board of Directors of RNG JSC RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
14 15 Management
Biographical information: Biographical information: ∙ Born in 1986 ∙ Born in 1988 ∙ Graduated from the G.V. Plekhanov Russian Economic University in ∙ Graduated from Lomonosov Moscow State University (MSU) with a 2008 and has a degree in Finance and Credit Master’s degree in Geology ∙ PhD in Economics Positions held: Positions held: ∙ 2012–2016: Senior Geologist at Roxar Services AS (Emerson Group) ∙ 2007–2010: Direct Investment Project Manager at Evrofinance ∙ 2016–2020: Head of the Department, Deputy Head of the Division, Rakitin Vladimir Mosnarbank JSCB Grechikho Pavel Head of the Geology Division of RNG JSC ∙ 2010–2014: Senior Tax Adviser at the Moscow office of Lawrence ∙ From 2020: Deputy CEO of RNG JSC and Chief Geologist CEO Graham (CIS) LLP Deputy CEO — Chief Geologist ∙ 2014–2019: Director of Finance at RNG JSC ∙ From 2019: CEO of RNG JSC
Biographical information: ∙ Born in 1980 ∙ Graduated from the Tyumen State Oil and Gas University with a degree in Design, Construction and Operation of Gas and Oil Biographical information: Pipelines and Gas and Oil Storage Facilities ∙ Born in 1974 Positions held: ∙ Graduated from the Samara State Technical University with a ∙ 2002–2007: Lead Engineer, Pipeline Construction for degree in Development and Operation of Oil and Gas Facilities Surgutneftegaz’s oil and gas production department, Positions held: Fedorovskneft 2007–2012: Supervisor of Technical Construction at ∙ 1998–2011: Oil and Gas Production Foreman, Lead Technologist the Uvat Project led by TNK-Uvat LLC Cherykayev Evgeny Uskov Alexandr of the Oil and Gas Production Workshop, Shift Supervisor at the ∙ 2012–2014: Head of a Stand-alone Tyumen division at Taas-Yuryakh Central Dispatch Office, and Deputy Head of the Central Dispatch Deputy CEO — Chief Engineer Deputy CEO — Head of the Capital Neftegazodobycha LLC Office at Orenburgneft Construction Department ∙ From 2014: Working for the Eastsib Holding Group ∙ 2012–2014: Head of Oil Production Department, Deputy Chief ∙ From 2020: Deputy CEO of YakutStroyProekt LLC Engineer and Chief Engineer at Taas-Yuryakh Neftegazodobycha LLC ∙ From 2014: Head Engineer of RNG JSC ∙ From 2015: Deputy CEO – Chief Engineer of RNG JSC
Biographical information: ∙ Born in 1974 ∙ Graduated from the Ukhta Industrial Institute in 1998 with a degree in Drilling of Oil and Gas Wells, and graduated from the Russian Presidential Academy of National Economy specialising in Finance Biographical information: and Credit ∙ Born in 1978. Positions held: ∙ Graduated from Moscow State University of Economics, Statistics ∙ 1997: — Assistant Driller of Production and Exploration Drilling of the 4th category in Surgutneftegaz PJSC Goncharov Pavel and Informatics (MESI with a degree in Finances and Credit, and Yakimov Yuri graduated from MSU majoring in Law ∙ 2000–2002: Mud Drilling Engineer of the 1st category in Lukoil Deputy CEO ∙ PhD in Legal Sciences Deputy CEO for Drilling Burenie LLC and Chief Legal Officer Positions held: ∙ 2002–2011: Mud Drilling Engineer, Technical Supervisor and Project Manager in Halliburton Int. Inc. ∙ 2004–2006: Advocate Assistant in Advocate Bureau Reznik, ∙ 2011–2011: Chief Technologist, Head of Chief Process Engineer’s Gagarin Abushakhmin and Partners Office in UF Rn-Burenie LLC ∙ 2006–2008: Senior Legal Advisor for the Legal Consulting Practice ∙ 2011–2012: Head of Drilling and Well Servicing Workover BDO Unicon PJSC Auditors and Consultants Department (WSW) at Taas-Yuryakh Neftegazodobycha LLC ∙ 2008–2009: Senior Lawyer of the Department of Legal Support of ∙ 2012–2014: Head of Drilling Integrated Projects in Russia for Investment Projects of Evrofinance Mosnarbank JSCB Weatherfold Holdings ∙ From 2010: Chief Legal Officer of RNG JSC ∙ From 2020. – Head of Well Drilling Department of RNG JSC RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
16 17 Investment Committee of the Board of Directors Auditing Committee of the Board of Directors
Key objectives of the investment committee: development and Key objectives of the Auditing Committee: ensuring an objective and submission of recommendations to the company’s Board of Directors real representation of the Board of Directors on the current state of on determining the company’s priority areas of activity; development the company’s financial and economic activities and promoting the strategies for annual and long-term investment programmes, annual effective activities of the Board of Directors in terms of monitoring its and long-term business plans and reports on their implementation. implementation. Committee tasks: Committee tasks: • preliminary consideration and preparation of recommendations • assistance in minimising the risks of the company’s activities, to the Board of Directors on strategic planning and investment ensuring the safety of assets, timely and reliable accounting and policy, long- term plans, main activity programmes, annual and reporting, and preventing corruption; long-term business plans of the company and reports on their • preparing recommendations to the Board of Directors on the implementation; financial and economic activities of the company; • assessment of the company’s performance in the long-term • interaction with the CEO, the Board of Directors, departments in the perspective and development of recommendations to the Board of Directors on the correlation of the company’s existing development relevant areas of activity in accordance with their competence. strategy and individual areas of its activities, the results of the company’s activities and its competitors, as well as other factors; • implement activities in accordance with competence, interaction with the CEO, the Board of Directors and divisions of the company in the relevant areas; • monitoring the implementation of the company’s business plan. Committee Chairman Committee Chairman
Bondarenko Alexander Kolmogorov Vasiliy Biographical information: ∙ Born in 1943 ∙ Born in 1972. ∙ Graduated from Sverdlovsk Institute of Law ∙ Studied International Economic Relations in Saint ∙ Distinguished Lawyer of the Republic of Sakha Petersburg State University of Economics and (Yakutia) and Russia Finance ∙ Honorary Employee of the Investigative Committee of the Russian ∙ Completed a Private Equity Course at London Business School ∙ PhD in Law Sciences Federation ∙ Holds CIIA Diploma (Certified International Investment Analyst ∙ Honorary Employee of the Prosecutor’s Office of the Russian Federation Positions held: ∙ Awarded the Order of Honour ∙ 1991–1993: Minority Shareholder and Director of Modern TV and Radio Positions held: ∙ 1994–1998: Managing Director, Head of Department of Monetary and ∙ 1990–1994: Prosecutor of the Republic of Sakha (Yakutia) Financial Operations at the St. Petersburg Branch of the Imperial Bank ∙ 1994–2004: Deputy Prosecutor General of the Russian Federation ∙ 2005–2010: Member of the Board of Directors at PRIME-TASS Business ∙ 2000–2004 : Head of the Main Investigative Department at the News Agency Russian Federation Prosecutor General’s Office ∙ 2000–2014: First Vice President and Deputy Chairman of the Management Board at Evrofinance Mosnarbank JSCB ∙ 2004–2006: Advisor to the Prosecutor General of the Russian Federation ∙ 2008–2013: Member of the Board of Directors, Chairman of the Board ∙ 2005–2008: Advisor to the President-Chairman of the Management of Directors at Taas-Yuryakh Neftegazodobycha LLC Board of VTB Bank PJSC ∙ 2008–2016: Partner at Wragge Lawrence Graham CIS LLP ∙ 2009-2010: Advisor to the CEO of Rosvino LLC ∙ From 2016: Chairman of the Investment Committee of the Board of ∙ 2010-2015: Advisor to the President-Chairman of the Management Directors of RNG JSC Board of Evrofinance Mosnarbank JSCB ∙ From 2015: Member of the Board of Directors of RNG JSC ∙ From 2020: Chairman of the Auditing Committee of RNG JSC Committee Members: Rakitin Vladimir — CEO Perov Denis — Director of the Economic and Analytical Department Committee Members: Uskov Alexandr — Deputy CEO – Head of the Capital Construction Department Vilochkin Yuri — Member of the Board of Directors Yakimov Yuri — Deputy CEO for Drilling Alferenko Gennady — Member of the Board of Directors Grechikho Pavel — Deputy CEO – Chief Geologist RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
18 19 2020 Summary RNG JSC 2020 Report Annual
20 Key financial indicators in 2020
rub 24.48 bil rub 8.34 bil ($ 330.82 mil) ($ 112.71 mil) proceeds from sales cash flow from operating activities
rub 4.74 bil rub 0.22 bil ($ 66.22 mil) ($ 3 mil) taxes and mandatory payments net profit
rub 4.03 bil rub 6.49 bil ($ 55.55 mil) ($ 87.50 mil) payments under contracts in favour cash flow from investment of state-controlled companies activities
Key production results in 2020
132 wells 33 wells total drilled (as of 01.01.2021) drilled in 2020
1 060 mil tons oil produced in 2020 RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
22 23 Resource base
RNG JSC holds a licence for the Suldyukar Nyurbinsky exploration and production "Rosneft" of hydrocarbon raw materials r. Vilyuy lgyattinsky within the Eastern Blocks of the Svetly "Rosneft" r. Vilyuy Srednebotuobinskoye oil and gas Chernyshevsky Arylakh condensate field, and is also an operator South- Bakhchinsky (agent) for the development and "Surgutneftegas" Syuldyukarsky West Kempendyaysky exploration of fields at the following “EastSib Holding” USRF* Bagdynsky licence areas (LAs), affiliated with the "Surgutneftegas" “Live diamonds of Yakutia” companies which are part of Eastsib Mirny Stanahsky Holding: Kuyabylakhsky "Surgutneftegas" Almaznyi r. Vilyuy • Yuzhno-Syuldyukarsky Tuobuya Irelyachsky • Monulakhsky "Irelyakhneft"
r. Ulahan-Botuobuya Suntar • Murbaysky Kempendyaysky Mirninsky Srednevilyuchansky USRF Kubalahsky "INK" Zaria "Surgutneftegas" Suntarsky • Betinchinsky "Rosneft" "INK" Yuryakhsky Tektyuysky "Surgutneftegas" "Alrosa-Gas" Hoptolokhsky Namansky Tas-Yuryakhskoe Vilyuysko- “Tuymadaneftegaz” USRF In 2020, 33 wells were drilled at the The North Blocks eld Dzherbinsky "Alrosa-Gas" "Gazprom" "Surgutneftegas" group’s LA (excluding hydrogeologicalVerhne- Tas-Yuryakh dzhunkunsky Iktekhsky Dzhunkunsky Verhnevilyuchanskoe eld Verkhnemarhachansky wells): "INK" "INK" "Gazprom" "INK" Verkhnebiryuk “EastSib Holding” Ergezheysky “Siberian oil company” Murbaysky The Central Blocks "Lensk-Gas" "Taas-Yuryakh Monulahsky “EastSib Holding” Neftegazodobycha" “EastSib Holding” 1. Eastern blocks of the Mukhtinsky Srednebotuobinskoye oil and gas The Eastern Bloсks “Tuymadaneftegaz” Srednebiryuk “RNG” Ulugursky condensate field: South- "Lensk-Gas" "Rosneft" dzhunkunsky "INK" Otradninskoe eld GDK — 29 exploratory wells, Kurungsky "Lensk-Gas" "Lensk Neft" Srednelensky Marha "Taas-Yuryakh Betinchinsky "Rosneft" of which: Byuksky Neftegazodobycha" Hotogo-Murbaysky “EastSib Holding” "INK" "VSNK" Nizhnegerbinsky • 21 wells without pilot trunk, "Rosneft" “Surgutneftegas” Borulahsky Kaderginsky • 4 wells with pilot trunk, USRF Urinsky USRF “Tuymadaneftegaz” "VSNK" • 1 fishbone with pilot trunk, “Tuymadaneftegaz” • 1 fishbone without pilot trunk,
• 2 horizontal lateral wells (HLW); Chayandinskoye “Power of Siberia”1420 mm gas pipeline Lensk eld Okleminsk “ESPO” oil pipeline Cheredeysky "Gazprom" r. Lena — 1 exploratory well. Horonohsky 1200 mm Nyuya-Iuzhnaia “Siberian oil company” "Surgutneftegas" USRF Cheredey 2. Yuzhno-Syuldyukarsky licence area: — 1 HLW; Irkutsk region — 1 exploratory well.
r. Lena Macha Olekminsky "Rosneft" 3. Murbaysky licence area: KuduKuyol — 1 exploratory well.
Peledui
Dikimda Vitim
Tokkinsky “EastSib Holding”
Chara
* - unallocated subsoil reserve fund RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
24 25 Number of wells drilled (as of 01.01.2021)
No Actual Name w/p number 1 Eastern blocks of the SB OGCF 121 1.1 Without pilot trunk 74 1.2 With pilot trunk 21 1.3 Fishbone 6 1.4 HLW 10 1.5 Exploratory wells 10 2 Yuzhno-Syuldyukarsky LA 5 2.1 Search and exploratory 4 2.2 HLW 1 3 Murbaysky LA 3 3.1 Search and exploratory 3 4 Monulakhsky LA 1 4.1 Search and exploratory 1 Photo Drilling operations 5 Betinchinsky LA 2 at the I. M. Menshikov 5.1 Search and exploratory 2 field Total 132
Oil and gas reserves at the Eastern blocks of the SB OGCF (as of 01.01.2021)
Oil reserves* Units А+В1 В2 А+В1+В2
Geological th. t 88 830 34 750 123 580 Extractable th. t 25 792 5553 31 345 Cost-effectively recoverable th. t 25 792 5553 31 345 Dissolved gas reserves Извлекаемые mil m3 1499 478 1977 Gas caps gas reserves Geological mil m3 7489 1147 8836 Extractable mil m3 6763 1017 7780 Cost-effectively recoverable mil m3 6763 1017 7780 Free gas reserves Geological mil m3 2220 645 2865 Extractable mil m3 1674 506 2180 Cost-effectively recoverable mil m3 294 – 294 Condensate reserves Geological th. t 171 36 207 Extractable th. t 144 28 172 Photo Cost-effectively recoverable th. t 130 19 149 I. M. Menshikov gas condensate field * reserves excluding production for 2020, reviewed and approved by the State Commission on Reserves in 2020. RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
26 27 Geological exploration Oilfield services
Long-term contracts with leading oilfield service companies Since 2014, the following companies have been providing services in the field of well construction: Halliburton, Schlumberger, Baker Hughes and NOV. When drilling horizontal production wells, not only are standard LWD logging systems used, but also advanced high-tech services that allow the remote mapping of reservoir boundaries, measuring the properties and nature of the occurrence of productive strata using the nuclear magnetic method, as well as density and gamma imagers. In 2019-2020, together with Schlumberger, the Geoflex technology for in - depth geological study of the mineralogical composition of the sludge of the Botuobinsky horizon was implemented at three production wells of the EB SB OGCF, which allowed for the lithotyping of sediments and the identification of zones with the best reservoir properties during drilling in order to increase the efficiency of horizontal well drilling. When selecting the core, RNG JSC has experience in using the world’s leading techniques. So, together with Halliburton, the Glider system was implemented, which ensured the safety of sampling and protection of the core from the penetration of drilling mud. In 2020, a number of key exploration projects will be implemented jointly with Schlumberger at the Syuldyukarsoye and Otradninskoye fields (part of the Murbaysky LA). In parallel with Baker Hughes, a project on the processing and interpretation of microseismic monitoring data was 1 launched, which is aimed at improving the efficiency of multi - stage hydraulic fracturing by determining the direction and width of fracking fissures. Photo RNG JSC is an exploration operator NOMAD-65 NEO seismic vibration system manufactured by the French company Sercel In November 2020, a promising gas condensate field was discovered within the Murbaysky licence area in the Lensky district of the republic. Experts highly appreciate the potential of this section and the possibility of including the object in the resource base of the main gas pipeline «Power of Siberia». According to the data of the first operational calculation, the initial recoverable gas reserves at the new field amount to 27 billion m3. RNG JSC acted as the operator for the exploration of the place of birth. The licence for the right to use the subsoil within the site belongs to Murbay Geologorazvedka LLC, which, like RNG JSC, is part of Eastsib Holding.
The RNG team proposed naming the field after Ivan Mikhailovich Menshikov, the former director of most of the group’s companies, who passed away in 2019, in memory of his services to the Company, the oil and gas industry and the public. Under his personal leadership, the Central, Eastern blocks and the Kurung section of the SB OGCF were put into operation. For many years of work, Ivan Menshikov was awarded the titles of «Honorary Oilman» and «Excellent Student of Subsurface Exploration», and his contribution to the economy of the region was awarded the title «Honoured Worker of the National Economy of the Republic of Sakha (Yakutia)». On 04.12.2020 the federal budgetary institution «State Commission on Reserves» (FBU GKZ) officially established the discovery of the field, named after I. M. Menshikov. 2 RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
28 29 Processing associated petroleum gas
Reverse injection of gas into the EB SB OGCF reservoir Gas engine fuel The problem of utilising associated petroleum gas (APG) is one of the most pressing in the RNG JSC supports region wide programmes for the conversion of motor vehicles to gas- industry. Burning APG at flare installations has a negative impact on the environment. The engine fuel. Instead of diesel fuel, compressed (to 200 atm.) gas is used, which has frost company is implementing several projects on the rational use of associated gas. One of the resistance, which is especially important at critically low temperatures in the conditions main projects is the injection of associated petroleum gas back into the reservoir. This will of the Yakutian winter. The transition is due to economic reasons and the environmental simultaneously solve the issue of APG utilisation and maintaining the necessary level of characteristics of the fuel. reservoir pressure, which is important for oil production. The use of eco-friendly fuel is supported by the authorities of Yakutia. There are plans to The project for the reverse injection of APG was developed jointly with the design and expand the network of gas filling stations in the region. In 2020, the company’s employees engineering company «VolgaTEKengineering». It passed public hearings and was supported took part in the rally «From St. Petersburg to Mirny on natural gas», covering the distance by residents and local authorities. The commissioning of the complex of facilities for the reverse injection of APG into the reservoir is planned for the end of 2021. from Lensk to Mirny as part of the route. The campaign, supported by the regional government, was designed to demonstrate the advantages of gas fuel over traditional To ensure at least 95% of the level of utilisation of associated petroleum gas, as well as to fuel. In addition, the event brought practical benefits: the statistical data collected by the maintain reservoir pressure, the following infrastructure is to be created: participants will help to improve the gas supply infrastructure in the region. • Construction of a complex gas treatment plant with a gas compressor station with a capacity of 0.65 billion m3 / year for gas injection and an output pressure of 250 kg / cm2. • Construction of high-pressure gas pipelines to gas injection wells. • Construction of new and conversion of existing wells for gas injection into the reservoir. The project involves more than 40 domestic manufacturers of equipment and materials. The Russian subsidiary of the Chinese company Jereh, one of the leaders in the production of equipment for the development of oil and gas fields, was chosen as the supplier of the gas compression and injection unit. The compressors are manufactured by the leading American mechanical engineering companies Ariel and INNIO (Waukesha trademark, formerly General Electric). Works on the construction of supply infrastructure facilities, as well as on the installation of equipment will be carried out by Eastsib Holding companies.
Photos 1. 3D model of the reverse gas injection project at the RNG JSC field in Yakutia 2.Energy complex 2
Electric power industry
Electricity generation at the EB SB OGCF Since February 2019, the first stage of the energy complex based on five gas-piston units produced by the American company Caterpillar with a total capacity of 5 MW has been commissioned on the territory of the Eastern blocks of the Srednebotuobinskoye field. Associated petroleum gas is used as an energy source, which is supplied via a gas pipeline from the central oil collection point (CCP) at the Eastern blocks of the Srednebotuobinskoye field. In 2020, a tender was held for the supply of equipment for the second stage of the energy 1 complex. RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
30 31 Construction
Industrial construction
In 2020, construction of the main facilities was completed:
Facilities of the EB SB OGCF
Wells at the following well pads were equipped: № 2, 3, 4, 6, 7, 8, 9, 10, 11, 12 and oil wells P502, P89 and P507 with technological communications. A total of 64 wells were equipped and put into operation.
1 Oil treatment facilities Infrastructure projects At the final, third stage of the construction of the CCP, additional equipment was installed and RNG JSC participates in construction and infrastructure projects in Yakutia. One of the strapped to ensure the preparation of marketable most important is the overhaul of the section of the federal highway «Vilyuy», the length oil of stable quality according to the first group of which is 10 km. according to GOST R 51868-2002, the oil discharge and filling point was modernised to ensure the A significant achievement of the Eastsib Holding companies in 2020 was the construction reception of early oil from neighbouring Eastsib of two bridges in the Mirninsky and Suntarsky districts of the Republic of Sakha (Yakutia): Holding sites, and a water heating site was built the bridge over the Malaya Botuobuya River and the bridge crossing over the Sasar- for the PPD system. Yuryakh River. Both objects were included in the federal programme for the construction of the Vilyuy highway. The tasks were successfully completed. The facilities were finished ahead of schedule, despite the coronavirus pandemic, which required significantly large production and financial resources. Facilities for the reverse injection of gas into the In the Mirninsky district, a kindergarten in the village of Tas-Yuryakh was resurfaced. reservoir In addition, the ground around the school building in the village of Syuldyukar was strengthened and the entrance highway and the road section in front of the school in the In May 2020, the construction of a complex of village of Almazy were surfaced. facilities for the main and auxiliary areas began and its completion is scheduled for September 2021.
Auxiliary objects
A fire station to ensure fire safety and a civil defence protective structure were created and put Photos into operation. 1. The bridge over the Malaya Botuobuya River, built by the Eastsib Holding Group of companies in the Sakha Republic (Yakutia), which provided year-round travel on the federal highway. 2. Road filling in the village 2 of Tas-Yuryakh. RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
32 33 Supply and logistics
1 3
Purchase and delivery of materials and equipment Transport and warehouse logistics RNG Procurement LLC purchases and supplies materials and equipment for the projects of An important stage in reducing the delivery time of goods in the work was the acquisition of RNG JSC. The purchase is made on a competitive basis via websites and electronic platforms. RNG Procurement LLC at the end of 2020 of a warehouse complex in Lensk. The favourable Competitive procedures are conducted exclusively between equipment manufacturers. location of the facility (near the river port and the oil depot) gives additional advantages, Purchases are made annually for more than 50 thousand items. Cooperation is conducted namely, independence in the acceptance and goods storage and transport in the Lena basin. With the commissioning of the base in Lensk, cargo at the request of customers is with about 5,000 permanent suppliers, mainly Russian manufacturers, manufacturing sent directly to the objects of work at the fields, bypassing the central warehouse of the companies, which occupy leading positions in their market segments. support base of the field. This increases the speed and efficiency of logistics operations. The choice in favour of foreign companies is made if there is no competitive offer on the In 2020, the operated fleet transported 8,432 tons of goods. The company has at its Russian market. Domestic manufacturers practically provide the company’s facilities with disposal a berth on the Lena River with a PK-810 floating crane, a river fleet and storage construction materials and equipment. bases in the cities of Ust-Kut, Lensk and Mirny. Among foreign suppliers, high-tech enterprises, which produce control and measuring River fleet: devices (instrumentation), automation, control systems, geodetic, seismic equipment and • Tow-pusher — 5 units construction equipment predominate. • Barge cap. 100 t — 2 units Despite the large number of foreign partners, imports account for a small part of the total • Barge cap. 200 t — 2 units volume of purchases. • Barge cap. 500 t — 1 unit • Floating crane FC-810 cap 6t — 1 unit
Photos 1. Unloading equipment for reverse gas injection in the port of Vladivostok 2. Warehouse workers 3-4. Loading equipment in 2 4 the port of Ust-Kut RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
34 35 Development strategy RNG JSC 2020 Report Annual
36 Business strategy
Financing investment activities in 2020 Priorities • Using of modern innovative technologies in the exploration and Oil production at the EB SB OGCF rub. development of deposits. Geological exploration works • Developing the region of activity, support of the local population, provision of jobs. Seismic exploration works 2 700 000,00 • High level of corporate responsibility, compliance with the highest requirements in the production of works and minimising Prospecting and exploration drilling 13 449 432,02 environmental impacts. DSW (GPE) 59 579,47 • Interacting with all interested parties on the basis of high standards Research works (GPE) 35 284 378,19 of industrial safety. • Attracting the largest international and Russian contractors, as Drilling well as leading industry and academic research institutes of the Russian Federation. Exploratory drilling 5 070 914 573,71 Well reconstruction 118 792 860,30 Advantages Construction • Development of one of the largest fields in Eastern Siberia based on proven oil reserves within the Eastern blocks of the SB OGCF. DSW (construction) 68 862 338,33 • The proximity of the field to the strategic main oil pipeline «ESPO» Arrangement of wells and pads 10 068 658,89 and the gas pipeline «Power of Siberia». • Human resources - highly qualified employees who are able to Pipelines 16 134 962,50 effectively organise the work of a large number of suppliers and contractors with experience in the successful implementation of a Site facilities 29 140 058,12 similar project. Energy facilities 57 064 342,03
Off-site facilities 1 533 879,40
Automation, telemechanics, communication 12 687 343,82 Investment programme
Other investment for production purposes 21 657 686,18 RNG JSC strictly follows the principles of responsible investment. The company has adopted a comprehensive approach to solving Quarries 975 500,00 industrial, social and environmental problems. By providing jobs and Non-residential objects 7 871 785,15 decent salaries to employees, 90 % of whom work in Yakutia, the company contributes to the development of all spheres of activity in Equipment included in the construction budget the region.
Equipment (industrial construction) 42 503 029,30 Equipment (exploratory drilling) 217 733 196,00 Investment goals Equipment not included in the construction budget • Further exploration and development of the EB SB OGCF. • Developing the construction and transport and logistics sub- Communication equipment 5 056 065,41 divisions. DTT equipment 9 815 000,00 • Introducing new technological solutions and modernisation of Other equipment 10 888 687,54 business processes. • Developing the staff potential of specialists and new forms of Providing MTR (IA) cooperation. Customer's MTR (industrial construction) 295 703 859,74 • Further participation in the socio-economic development of the Republic of Sakha (Yakutia). Customer's MTR (production drilling) 63 113 794,50 Fuel - DF, petrol (IA) 609 138,40
Purchasing office equipment, furniture and software Investment plans for 2021 Eastern blocks — 8873 million roubles. without VAT. Office equipment, furniture, network quipment 4 633 646,39 Areas Eastsib Holding’s companies — 2968.9 million roubles without VAT. Total 6 117 853 795,39 RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
38 39 Medium-and long-term development plans for different areas
APG processing RNG JSC considers the efficient use of APG not only as an important part of the technological and economic agenda, but also as a representational component and responsibility to society in terms of environmental conservation. The company plans to spend 4.5 billion roubles on environmental protection measures. A significant part of the programme is aimed at the efficient use of the extracted APG.
Electric power industry RNG JSC is implementing a programme for generating electricity using associated petroleum gas. This will make it possible to use APG more profitably. In 2019, an energy complex with a capacity of 5 MW was put into operation at the EB SB OGCF. The APG produced at the field is directed to generate electricity, which provides for the field’s needs. In 2021, the second stage of the project is being launched. After the expansion of the power complex capacity, RNG JSC will be able to abandon the purchased electricity.
Information technologies
Introducing an automated process control system (APCS) of a complex of facilities for the reverse injection of gas (RIG) into the reservoir at the EB SB OGCF in accordance with the requirements of the Ministry of Energy of the Russian Federation to the Decree of the Government of the Russian Federation No. 1148 dated 08.11.2012 «On the specifics of calculating the fee for the negative impact on the environment when pollutants formed during flaring at flare installations and (or) associated petroleum gas dispersion are released into the atmosphere». As of 01.01.2021, a tender was held and an additional agreement was concluded to the contract for the performance of the above works with Emerson. The complete set of the RIG automated control system is being made, the commissioning of which is scheduled for the end of 2021. In addition, RNG JSC plans to implement a production process management system of the MES class (Manufacturing Execution System — production management system). This is a complex system, which combines production (accounting of extracted products / inventory accounting / accounting of shipments). With the help of MES, users can receive information about all production operations at the enterprise in real time, which will make production transparent, Photos and the company’s management can make management decisions 1. Energy Complex 1 mobile. The work is also planned to be completed in 2021. 2. CGP RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
40 41 Marketing strategy
RNG JSC sold 1.059 million tons of oil for export and the domestic market in the company uses Transneft PJSC’s system of trunk pipelines. For this purpose, 2020. A jubilee tanker was shipped for oil consumers in China. a contract was signed with Transneft for the provision of oil transportation The company is conducting preparatory work to expand the possible services. infrastructure for transporting more oil. Deliveries to the domestic market are Transneft — Kozmino Port LLC is a part of Transneft PJSC and is the end point of made to the address of the IOC Group, since IOC-Khabarovsk Refinery JSC is the the Eastern Siberia — Pacific Ocean pipeline system (ESPO). The port is intended only one in the company’s area of operation. for receiving oil by pipeline and railway and its transhipment to sea vessels. A new page of cooperation has opened with the INK Group and its enterprise in On 27.11.2019, Transneft launched new production facilities, which allows Yakutia, Sakhaneft LLC. RNG JSC cooperates with Sakhaneft LLC, buying crude ESPO-1 to be brought to a maximum capacity of 80 million tons and ESPO-2 oil, exporting it from the field to the CCP for preparation to quality according to GOST (Russian national standard) and selling it on to the domestic market. to 50 million tons of oil per year. Transneft — Kozmino Port, LLC, which is the destination of the main oil pipeline, confirmed its readiness to start receiving The main task of the company in the domestic and foreign markets is to ensure increased volumes of Russian ESPO oil. permanent supply while increasing profitability. The basis for obtaining access to the main oil pipelines for oil supplies for China remains the largest consumer of Russian oil shipped through Transneft export is the presence of RNG JSC in the register of oil producers of the Ministry — Kozmino Port LLC, which accounted for 80% of the total volume this year. Photo of Energy of the Russian Federation. In 2018, 30.4 million tons were exported through Transneft — Kozmino Port Loading of the hundredth batch of oil to Transneft — To carry out the delivery of hydrocarbon raw materials to the final consumer on the LLC, and in 2019 — 32.7 million tons. In 2020, according to the statements of Kozmino Port LLC territory of the Russian Federation and to the port for further export shipments, oil companies, the volume of oil shipments amounted to about 34 million tons.
The structure of key consumers of oil shipped The structure of the key consumers of RNG JSC’s through the port of Kozmino in 2020 oil shipped through the port of Kozmino in 2020
South Korea
22 % 8 %
32,7 5 % South Korea 0,81 61 % mil tons Japan mil tons 80 % 7 % 17 % Others Japan 7 % China Others China RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
42 43 Corporate values RNG JSC 2020 Report Annual
44 Value system
RNG JSC adheres to a responsible approach to the implementation of its activities. Among • combating corruption, ensuring a competitive environment and collegiality of the basic values of the company: decisions made;
• ensuring a high production culture, creating safe working conditions and preserving • performing works and services, ensuring labour protection, industrial and the health and safety of employees; environmental safety in accordance with the current regulatory legal acts of the • minimising environmental impact as a result of production activities and rational use Russian Federation, international legislation and internal documents of the company; of natural resources; • increased attention to sponsorship, charitable and socially oriented activities, • using modern technologies and equipment to improve the quality of work and services; including work with indigenous small-numbered peoples of the North RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
46 47 Awards of the reporting period RNG JSC 2020 Report Annual
48 RNG JSC employees were awarded for their work benefitting the Republic of Sakha (Yakutia)
RNG JSC considers the contribution to the socio-economic development of Yakutia one of the main tasks. The company fulfils its obligations to state bodies, interacts with local authorities and responsibly conducts production activities. The priority of RNG JSC is the rational use of mineral resources, concern for the environment and participation in infrastructure projects.
• The State Assembly (Il Tumen) of The Republic of Sakha (Yakutia) awarded the Chairman of the Investment Committee under the Board of Directors of RNG JSC Alexander Bondarenko with a certificate of honour for his contribution to the socio-economic development of the Republic of Sakha (Yakutia).
• The Government of the Republic of Sakha (Yakutia) awarded the Deputy General Director of drilling of RNG JSC, Yuri Yakimov, with a certificate of merit in the field of socio-economic development of the republic. Under his leadership, the company has implemented the most complex projects in the Republic of Sakha (Yakutia) at the Eastern blocks of the Srednebotuobinskoye oil and gas condensate field, which were put into commercial operation in 2019, as well as at other licence areas of Eastsib Holding, where exploration and evaluation drilling is carried out. Photo Awarding A. Uskov for his contribution to the implementing the national project «Comprehensive plan for the modernisation and expansion of the main infrastructure» by the Chairman of the Government of the Republic of Sakha (Yakutia) A. Tarasenko
Employees of the construction division of the Eastsib Holding Group were awarded for their special contribution to implementing a set of measures aimed at improving the efficiency of the domestic economy of the Republic of Sakha (Yakutia). • For contributing to the implementation of the national project “Comprehensive plan of modernisation and expansion of backbone infrastructure” Alexander Uskov, Deputy General Director, head of Department of capital construction of RNG received a commendation of the Head of the Sakha Republic (Yakutia). • Letters of gratitude from the Federal Road Agency were awarded to: employee Viktor Zainudin (production site 4), the head of production site № 1 Kirill Kravchenko and chief engineer Nikolai Smirnov. • Certificates of honour from the FGI “Uprdor “Vilyuy”” were awarded to: Valery Zinin, a steel and railway structure installer of the 6th category; Dmitry Zolotovsky, a steel and railway structure installer, and Andrey Monetchikov a steel and railway structure installer of the 6th category, was awarded with gratitude. • The head of the municipal formation of the Mirninsky district, Rishat Yuzmukhametov, awarded the excavator driver Maxim Shcheglov with a certificate of honour and expressed gratitude to George Omyadze, a worker of the construction and installation site. • At the opening ceremony of the bridge over the Malaya Botuobuya River, Honoured Builder of the Russian Federation Konstantin Kuzmich Shikin, who headed the construction and transport directorate in 2015-2020, was awarded a memorable gift for many years of work. Under his leadership, work was successfully carried out on the arrangement of the Eastern blocks of the SB OGCF. RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
50 51 The social programme “RNG to medics” was awarded the All-Russian prize
Since the beginning of the COVID-19 outbreak, RNG JSC has been aiding the healthcare system of Yakutia. The RNG to medics project took the first place in the nomination “Social and Environmental Initiative” at the regional stage of the All-Russian MediaTek Award. RNG JSC was among the first to help the Mirny Central District hospital. Within the framework of the RNG to medics programme, medicines, personal protective equipment and medical equipment have been regularly supplied to the hospital since April 2020. During this time, the company handed over bedside monitors, a mobile box for transporting patients, protective suits, an artificial lung ventilation device, ultraviolet irradiators, plasma defrosting equipment, etc to doctors. The company intends to continue supporting social institutions in Yakutia and participate in the development of the region.
1
4 2
RNG JSC’s assistance to the Mirninsky district marked by local authorities
In 2020, the contribution of RNG JSC to the educational and social spheres of the region was noted in a letter of gratitude from the head of the Mirny district, Rishat Yuzmukhametov. Photos Also, the head of the Botuobuyinsky nasleg, Agnia Simonova, thanked 1. Mirny Central District Hospital. RNG JSC for its help. 2. Delivery of operating tables to medics. 3. Installation of a multifunctional RNG JSC is taking part in the design of a cultural centre in the city of operating table. Mirny. The company supports social and charitable initiatives in the 4. Tas-Yuryakh Village. 3 republic. RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
52 53 Social responsibility RNG JSC 2020 Report Annual
54 RNG JSC Staff
When forming the staff and social policy, RNG JSC complies with the Recruitment and training requirements of the current legislation of the Russian Federation. RNG JSC pays close attention to staff training. Based on geographical In 2020, the average number of employees of the Eastsib Holding and production-functional factors, it is important to expand the group amounted to 2,746 people, with a combined salary fund pf 3.62 engineering competencies of employees. The issues of digital billion roubles. The total number of employees of RNG JSC in 2020 transformation of the staff training system are coming to the fore, gradually replacing the classical system associated with non- amounted to 1565 people. Most of the employees (83 %) are directly production costs of finance and working time. For several years, the involved in the Republic of Sakha (Yakutia), where the main production company has been implementing and actively using the OLYMPOX facilities of the Company are located. training system developed by Termika, which is currently the best for RNG JSC provides competitive remuneration to its employees. conducting online training and certification in the field of industrial The company’s salary expenses in 2018-2020 amounted to about production. The system uses all the advantages of Internet technology. 2 billion roubles annually. In 2020, the average monthly salary of employees reached 117 thousand roubles. The main part of payments Remuneration system and employee motivation to shift staff is made during the period of work on the shift, the salary In 2019, RNG JSC started implementing a staff motivation system, is on average 190 thousand roubles per working month. within the framework of which a project was launched to pay annual remuneration based on the results of achieving key performance Employee numbers and structure indicators established by the business plan. Number of employees 2020 Insurance programme Total number of employees 1565 All employees of RNG JSC are insured against industrial accidents and occupational diseases in accordance with the Federal Law Percentage of women in the total number of staff 15 «On compulsory Social insurance against industrial accidents and occupational diseases» dated 24.07.1998 No. 125-FZ. Staff turnover rate % 20 There are 5 paramedic stations equipped on the territory of the RNG LAs, which serve 10 paramedics who provide round-the-clock emergency medical care to shift workers. Staff composition by category, people 2020 Type of employee Men Women Labourers 800 64
Specialists 282 135
Administrators 211 73
The structure of RNG JSC staff The structure of staff by region, % by age group, %
27 % 13 % 41 % To 35 years Moscow From 35-45 years 2 % 4 % Working Other regions pensioners
83 % Republic of Sakha (Yakutia) 30 % From 45 to pension age RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
56 57 Occupational health and safety The main mechanism of environmental management is based on and measures taken during the pandemic the requirements of international standards ISO 9001, ISO 14001, The main principle of the company’s work is to ensure occupational and OHSAS 18001. The company operates in accordance with the safety. All employees engaged in work with harmful working current regulatory legal acts of the Russian Federation, international conditions, as well as working in the Far North, undergo an annual standards and internal documents of the company. RNG JSC sets medical examination. increased requirements for contractors in the field of quality, labour The Department of industrial Safety and Labour Protection (IS and LP) protection, industrial and environmental safety, and pays attention to is working to prevent the spread of the new coronavirus infection. From improving the professional level of employees. the beginning of the pandemic to now, all employees of the department Contracts with specialised contractors have been signed for the have been developing, implementing and improving measures to maintenance of RNG JSC’s hazardous production facilities, within prevent coronavirus infection based on the recommendations of the the framework of which field exploration, oil production, processing, Federal Service for Surveillance and the Ministry of Health of the transportation, storage and use of oil and petroleum products are Russian Federation, as well as enhanced monitoring of the health carried out, as well as preventative maintenance to prevent the status of workers arriving from different regions of Russia on the occurrence of gas and oil spills, open gas and oil fountains during the territory of the RS (Ya), etc. construction and well servicing and workover. An action plan for the prevention of coronavirus infection has been The activities of all the company’s staff in the field of IS and LP are developed and implemented, including the following: described in the job descriptions and production instructions. The • conducting briefings on the observance of personal and public main regulatory document in the field of industrial safety and labour hygiene; protection in the company is the regulation on the organisation of • inspecting employees by the heads of departments for the industrial control over compliance with industrial safety requirements detection of symptoms of acute respiratory disease (ARI); at hazardous production facilities of RNG JSC. • preparing applications for the purchase of protective equipment There are also several internal documents (orders) in the field of IS for contact with sick workers with suspected coronavirus infection; and LP, such as “On the implementation of production control” (in • placement of dispenser devices (sanitizers) for hand disinfection in terms of IS and LP), “On the organisation of production control during crowded places on the territory of RNG JSC; the operation of lifting structures”, “On the organization of technical • organising cleaning with the use of disinfectants, increasing the supervision over the safe operation of pressure vessels”, etc. frequency of treatment of premises, etc. The company’s orders regulating the work and arrival of employees arriving from different regions of Russia on the territory of the RS(Ya) The company invests annually in employee training for the prevention of the spread of a new coronavirus infection have and pays for advanced training courses: been developed and implemented. In 2020, sanitisers for convenient and high-quality hand disinfection • labour protection for engineering and technical workers (ETW) were purchased and delivered to canteens, dormitories and other (24 people); places of mass gatherings. More than 1300 litres of antiseptic for hands, 750 litres of disinfectant liquid for cleaning and disinfecting • occupational safety when working at height (82 people); premises, 3200 multi-use masks, and 38,000 pieces of disposable medical masks and other means for compliance with the anti-epidemic • gas and oil production (96 people); sanitary condition and continuous operation at the facilities of RNG JSC were purchased. • first aid (197 people);
• slinging work (44 people);
• training of the sidecar workers (22 people);
• maintenance of pressure vessels (41 people);
• sampling the gas-air environment (56 people);
• training to handle hazardous waste (4 people);
• attestation and certification of welders in the National Welding Control Agency (12 people);
• industrial safety (5 people). RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
58 59 Resource conservation and ecology
Conducting environmental monitoring The landfill consists of areas for the placement and incineration of The company’s responsible attitude to the issues of preserving the waste in a special incineration, as well as a recycling zone. Reliable emission filtration systems and design features of waste storage Federal Budgetary Healthcare Institution ecological balance in the region is a priority goal. “Centre for Hygiene and Epidemiology sites allow for minimising the negative impact on the atmosphere and in the Republic of Sakha” The company conducts environmental monitoring in the Eastern blocks terrain of the landfill area. of the Srednebotuobinskoye oil and gas condensate field according to The landfill is intended not only for the disposal of the company’s own the 2016-2020 programme approved by the General Director of RNG waste, but also for the needs of the Mirninsky district. JSC, agreed with the Ministry of Ecology, Nature Management and During the design and engineering survey work, RNG JSC specialists Forestry of the Republic of Sakha (Yakutia) (dated 06.04.2016 No. 10- Federal State Budgetary Institution Centre considered all the necessary environmental and sanitary requirements. for Laboratory Analysis and Technical 09/6-1665). Measurements in the Far Eastern Federal The construction was carried out according to the latest standards. District - “CLATM (TsLATI) for the Republic of Sakha (Yakutia)” Monitoring is carried out with the support of Scientific and Production Certified equipment was purchased and fire and emergency safety Association «Applied Ecology of the North» LLC. The following were provided. specialised organisations are involved in monitoring (the Research Object data: Institute of Applied Ecology of the North of the North-Eastern Federal University (NEFU) named after M. K. Ammosov, accredited • capacity — 10 th. t; laboratories: the federal budgetary healthcare institution “Centre Institute of Applied Ecology M. K. Ammosov NEFU (SVFU) for Hygiene and Epidemiology in the Republic of Sakha (Yakutia)”, the • operation lifetime — 25 years; federal budgetary institution “Centre for Laboratory Analysis and • total area — 2,29 hectares; Technical Measurements of the Republic of Sakha (Yakutia)”, etc.). • map for waste disposal of hazard class IV, capacity — 17,856 m3;
Waste disposal • sludge accumulators for oil waste — 1600 m3; In 2020, a solid waste landfill was built on the Eastern blocks of the 3 Srednebotuobinskoye oil and gas condensate field. • sludge accumulator of oil contaminated soil — 500 m ; The new landfill is designed for thermal neutralisation of solid • object entering operation in 2020. household and industrial waste during operation on the Eastern blocks of the Srednebotuobinskoye oil and gas condensate field. Protection of ecosystems and biodiversity The company takes care of the aquatic bioresources of Yakutia. In 2018-2020, RNG JSC released more than one million peled fry (from the salmon family) into the rivers of Yakutia. They were grown in the laboratory at the Chernyshevsky fish hatchery. The fry were released into a tributary of the Vilyui reservoir, the Aanaakh River, which flows through the territory of the Mirninsky district. According to the results of research by scientists of the All-Russian Research Institute of Fisheries and Oceanography, it is the Vilyui reservoir and its tributaries which have the necessary feed base for salmon fish, the necessary temperature range and other conditions for survival and reproduction. In 2021, the company’s ecologists plan to release more than 200 thousand fry and starting from 2022, more than 180 thousand fry will be released annually.
Looking after the diversity of the animal world of Yakutia Hunting and fishing are prohibited on the territory of the Eastern blocks of the SB OGCF. The water intake structure is designed in such a way as to manage with minimal use of the resources of the Taas- Yuryakh River, replenishing reserves at the expense of flood waters. The water intake structure on the Taas-Yuryakh River, built by the Photos 3 Company, has a pit volume of 500 thousand m . 1. Incinerator in operation at the 1 landfill 2. Releasing peled fry RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
60 61 Contribution to the development of the region
Support for local communities Social investment
The company’s assistance to local communities in the reporting year was mainly focused RNG to medics on infrastructure issues. In the village of Almazny, the company paved the road in front of RNG JSC aids the healthcare system of Yakutia. Within the framework school No. 4 and the exit route before the start of the school year. of the RNG to medics programme, medicines, PPE and equipment In the village of Syuldyukar with a population of 380 inhabitants, the capital of the Sadyn have been regularly supplied to the Mirny District Hospital since April national Evenki nasleg, the only place in the Mirninsky district of the Republic of Sakha 2020. During this time, the company handed over bedside monitors, (Yakutia), where representatives of indigenous small, numbered peoples of the North live, a mobile box for transporting patients, protective suits, an artificial RNG JSC together with Syuldyukarneftegaz LLC in 2020 carried out work to strengthen the lung ventilation device, ultraviolet irradiators, and plasma defrosting soil around the school building, which was in danger due of flooding from spring flooding. equipment to the doctors. The administration of the Mirninsky district is provided with constant assistance in The company continues to implement the charity program RNG to ensuring the delivery of drinking water to remote settlements. medics.
1 2
Participation in federal projects on the territory of the Republic Assistance to the village of Tas-Yuryakh
RNG JSC financed the creation of an educational centre “Point of Growth” One of the key tasks of RNG JSC is to participate in the development of the Republic of at school No. 9 in the village of Tas-Yuryakh. The project “Point of Sakha (Yakutia) and improve the quality of life of the local population. Transport links in Growth” is aimed at developing digital, technological and humanitarian the region are difficult, so the company is actively involved in infrastructure projects. skills in children and consists of four directions: “Technology”, “Computer $ 4 million was invested in the purchase of a complex of road construction equipment and Science”, “First Aid” and a project plan for three zones, chess, media equipment. The companies of Eastsib Holding have mastered the technology of a durable and coworking. A separate space has been created for each area in the road surface suitable for the conditions of Yakutia. Compliance of the road quality with local climatic conditions is ensured thanks to the purchase and use of a movable asphalt school. Photos concrete plant of the German company Benninghoven, as well as multi-stage construction “Point of Growth” is a federal project aimed at providing education within 1. Asphalt concrete plant of the German control. The production of asphalt is carried out from local stone. the digital and humanitarian profile, developed based on the regional company Benninghoven, acquired by Eastsib Holding In 2020, the companies of Eastsib Holding won a competition for asphalting a section of the system “Modern School” (part of the national project “Education”). 2. Installation of a multifunctional federal highway “Vilyuy” between the cities of Mirny and Lensk. The track is very important The goal of the “Point of Growth” project is to reduce the gap observed operating table delivered within the for residents as it will stretch from the Irkutsk region to the city of Yakutsk, and the city of framework of the RNG to Medics between urban and rural schools. Mirny will be provided with year-round communication with the republic’s capital. programme RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
62 63 RNG JSC is a partner of the New Economic School (NES) In June 2020, RNG JSC provided financial support to the Educational Center «Two Wings», which includes a theatre of the same name, and The charity programme was launched in September 2020 and includes grants for training, a programme to support regional students, as well the school of choreography and performing arts. The centre is in St. as the establishment of two nominal professorial positions. Petersburg. The head of the centre’s Board of Trustees is People’s Artist of the Russian Federation, prima ballerina of the Mariinsky The main grant program will allow gifted students from different Theater Ulyana Lopatkina. regions of the country to get an education at a leading economic Two Wings implements a large number of charitable and missionary university. In addition, partial grants which provide discounts on training from 30 to 100 % are distributed among 20 successful projects: performances, concerts, festive leisure programmes in students of master’s and applied programmes. orphanages, boarding schools, hospitals, nursing homes, in Sunday and general education schools in St. Petersburg, the Leningrad Non-resident students are covered by part of the living expenses. In region and other regions. The educational program is designed for the current academic year, 42 students have already been provided children of different ages. At the moment, 70 pupils are studying at with a hostel: 20 % of them are free, and the rest have a 50 % discount. the school. An important area of cooperation between RNG JSC and NES in 2020 was the creation of two nominal professorial positions for foreign The partners of the Two Wings centre are the well-known charitable professors. This will allow the school staff to continue their research foundations Children’s Mission and Advita. The performances are and teaching activities, making a significant contribution to the performed on the stage of the Russian Orthodox drama theatre «The development of world economic science and education. Wanderer» and the St. Petersburg Puppet Theatre of Fairy Tales.
Educational and awareness-raising projects Interaction with the indigenous peoples of the North The company participates in educational projects of the Mirninsky district. In the project “Factory of processes for training staff of the oil The company conducts production activities on the territory of the and gas industry” of the Mirny Technological College, the company’s indigenous small-numbered peoples of the North (IPN) in the Republic employees act as experts in the field of oil and gas exploration and of Sakha (Yakutia). RNG JSC monitors compliance with the balance production in difficult climatic conditions. between the implementation of its strategic plans and the interests of RNG JSC is also implementing the programme “Managing change indigenous people, the preservation of their cultural heritage and in the system of vocational training for the economy of the region”, the environment. developed by the Moscow School of Management SKOLKOVO “Region- During the development and exploration of deposits, the company pro” together with Mirninsky College. strictly monitors the observance of the rights of the northern peoples RNG JSC employees regularly give lectures on oil and gas in educational and develops dialogue with them. RNG JSC provides financial support institutions. Students of specialised universities annually undergo a to tribal communities of small-numbered peoples, works to preserve paid summer internship in the format of student teams at the field. the national identity of the peoples of the North.
Photo A student of the Mirninsky Industrial Technical School studying welding RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
64 65 Anti-corruption measures
The anti-corruption measures of RNG JSC are carried out in accordance Transparency of purchases plays a serious role. Cooperation is with the legislation of the Russian Federation in the field of anti- carried out only with proven manufacturers, while the price is not corruption. a decisive factor. Open competitions are held both by sending direct To ensure an objective and real representation of the Board of Directors requests to manufacturers, and by posting information on the on the current state of financial and economic activities, an auditing company’s websites. The main criteria for choosing a counterparty committee has been established at RNG JSC. The main tasks are to are the reputation of the manufacturer and the reliability of the help minimise risks in the company’s activities, ensure the safety of supplied equipment. assets, timely and reliable accounting and reporting, and to prevent To confirm the reliability and quality criteria, RNG JSC considers the and combat corruption. experience of supply and operation at the fuel and energy complex Regarding the fight against corruption, procedures have been enterprises and sends its own specialists to the plants to conduct introduced to ensure a competitive environment for all purchases, the production certification. The choice is always made in favour of collegiality of decisions taken, and a significant number of applications quality and reliability. received from manufacturers for each lot offered for purchase. When bidders apply for explanations regarding the completed RNG JSC adheres to the principle of fair business practices and tenders, RNG JSC provides information about the reasons for deciding transparency of doing business. The company implements world in favour of the winner. This practice allows the participants of the standards of procurement activities through RNG Procurement LLC, and special attention is paid to the fight against counterfeiting and corruption. competition to consider their mistakes and take measures to optimise production processes for participation in the next competitions. Global procurement standards are also being actively implemented. The guidelines are the recommendations of the Royal Institute of RNG JSC successfully and timely interacts with contractors and Supply and Procurement. The document was developed in consultation develops for this purpose such important mechanisms as the with an extensive group of 3,000 practitioners and scientists from standard of interaction with contractors, and the contract execution various professional sectors. management system. RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
66 67 Partners Conceptual design Software
OT-Oil LLC ThyssenKrupp AG Geological exploration Geophysical works and field development
OIS Solutions GEOTECH Project work Udmurtneftegeofizika LLC Seismic Exploration PJSC
Hyprovostokneft JSC Geological laboratories ROXAR Syuldyukar Сюльдюкар Geologorazvedka LLC НефтеГаз Koretest Service LLC
ROGII VolgaTEKengineering GeoSeisKontrol NPC CJSC OJSC “Scientific-productional centre “Tvergeophysics” RAS and IFRS Auditors
Geological Center of St. Petersburg State University Oil services LLC VNIPIgazdobycha PJSC Ernst & Young Ltd.
Schlumberger FGBU VNIGNI Technology partners Legal consultants
Allen & Overy Halliburton International Inc. Emerson Legal Services Pangea JSC
Insurance partners
Petrotreis LLC Baker Hughes Yokogawa Electric Corporation SOGAZ JSC
Assessing oil and gas reserves Insurance broker National Oilwell Varco Willis Caterpillar DeGolyer& McNaughton Environmental consultants
East Siberian Engineering Institute of Applied Ecology of Centre for Scientific Research, Company LLC the North design, geology of fossil raw Jereh materials, TsNIP GIS LLC
Institute of Biological Drilling Contractor Scientific Drilling Problems of the Cryolithozone Surveyors SB RAS
Republican Information VPT-Neftemash LLC DNV GL and Analytical Centre for NPF «Zenit» LLC Environmental Monitoring RNG JSC 2020 Report Annual RNG JSC 2020 Report Annual
68 69 Terminology
Abbreviation Transcript
HLW Horizontal lateral wells
Eastern Siberia - Pacific Ocean pipeline ESPO system
WL Well logging
GEP Geological exploration party
ST Sidetracking
CMD Control and measuring devices
Small numbered indigenous people of the IPN North
MWW Major well workover
LA Licence area
OGCF Oil and gas condensate field
APG Associated petroleum gas
DAP Oil delivery and acceptance point
RF Russian Federation
Eastern blocks of the Srednebotuobinskoye EB SB OGCF oil and gas condensate field
SMW and IW Solid municipal waste and industrial waste
WSW Well servicing and workover
Federal Budgetary Institution "State FBU GKZ Commission on Mineral Reserves"
OGPS Oil and gas production shop
Central engineering and technological CETS service
CCP Central oil collection point RNG JSC 2020 Report Annual
70 YakutVzryv
Syuldyukar YakutStroyProekt Geologorazvedka
Member of the Russian Member of Certificate Union of Industrialists and Chamber of Commerce and GOST ISO 9001-2011 Entrepreneurs Industry of the Republic of Quality Management Systems Sakha (Yakutia)
Member of Member of the Certificate GOST Р 54934-2012 (OHSAS Assoneft USA-Russia Chamber of 18001:2007) Commerce Occupational safety and Health Management System
Member of the Russian Member of the Certificate GOST Р ISO 14001-2016 (ISO 14001:2015) Gas Union Russo-British Chamber Environmental management system of Commerce
Member of the Franco- Russian Chamber of Commernce and Industry
Offices in Moscow Office in Yakutsk: Head office: Address: 677007, Yakutsk, Address: 121099, Moscow, Novy Arbat, d. 27 Glukhoy Bl., d. 2, korp. 1, BC Portal, floor 3, cab. 313 Telephone: +7 (495) 662-71-33 Telephone: +7 (4112) 33-50-90 Fax: +7 (495) 287-95-18 Fax: +7 (4112) 33-50-99 E-mail: [email protected] E-mail: [email protected]
Address: 129090, Moscow, Office in Samara 1st Troitskiy Bl., d. 12, korp. 5 Address: 443110, Samara, Telephone: +7 (495) 662-71-33 Lesnaya st, d. 23, korp. 100, office 207 Fax: +7 (495) 287-95-18 Telephone: +7 (927) 761-34-99 E-mail: [email protected] Fax: +7 (495) 287-95-18 E-mail: [email protected] Office in Mirny Address: 678170, Mirny, Office in Lensk Tikhonova st, d. 12, korp. А Address: 678144, Lensk, Telephone: +7 (495) 287-95-19 Pervomayskaya st., d. 32, korp. А, office 1 Fax: +7 (495) 287-95-18 Telephone: +7 (495) 662-71-33 E-mail: [email protected] Fax: +7 (495) 287-95-18 E-mail: [email protected] Office in Ust-Kut Address: 666780, Irkutsk Oblast, Ust-Kut, Office in Irkutsk Lugovaya st., str. 21/22 Address: 664050, Irkutsk, Shiryamova st, d. 38/1 Telephenr: +7 (495) 662-71-33 Telephone: +7 (495) 662-71-33 Fax: +7 (495) 287-95-18 Fax: +7 (495) 287-95-18 E-mail: [email protected] E-mail: [email protected]