Contents Letter from the Chief Executive Offi cer of OAO NOVATEK ..............................................................................................................4 Company Profi le ........................................................................................................................................................................................6 Report Boundary Setting ...........................................................................................................................................................................................................7 Key Activities and Subsidiaries..............................................................................................................................................................................................7 Key Products and Commercial Markets ...........................................................................................................................................................................9 Strategy ...........................................................................................................................................................................................................................................10 Corporate Governance ............................................................................................................................................................................................................12 Stakeholder Engagement .....................................................................................................................................................................................................16 Economic Performance and Sustainability ............................................................................................................................18 Overcoming the Economic Crisis .....................................................................................................................................................................................19 Reliability of Supplies ..............................................................................................................................................................................................................19 Innovations .....................................................................................................................................................................................................................................20 Environmental Protection .................................................................................................................................................................22 Integrated Management System for Environmental Protection, Occupational Health and Safety (IMS) ..........................23 Implementation of Environmental Policy ....................................................................................................................................................................26 Energy Effi ciency ......................................................................................................................................................................................................................28 Air Emissions ................................................................................................................................................................................................................................29 Climate Change ..........................................................................................................................................................................................................................30 Other Environmental Impacts ............................................................................................................................................................................................32 Impact on Biodiversity and Protected Areas ............................................................................................................................................................34 Occupational Health and Safety ..................................................................................................................................................36 Occupational Safety ................................................................................................................................................................................................................37 Industrial Safety .........................................................................................................................................................................................................................38 Fire Safety ......................................................................................................................................................................................................................................40 Human Resources and Social Policies ......................................................................................................................................42 Human Resources Management and Labor Resources.....................................................................................................................................43 Company Social Programs ...................................................................................................................................................................................................46 Collective Agreements and Interaction with Labor Unions .............................................................................................................................51 Local Communities ...............................................................................................................................................................................54 Social Investment Management ......................................................................................................................................................................................55 Corporate Social Programs and Regional Development ...................................................................................................................................57 Assurance statement ..........................................................................................................................................................................62 About the Report and Reporting Process ...............................................................................................................................80 4 Dear Stakeholders, We are very pleased to present our 2008 — 2009 measure our success not only through operational and Sustainability Report for OAO NOVATEK, our third such fi nancial metrics but also on the environmental, employ- report prepared in accordance with the Global Reporting ee and social data included in this report. Initiative (GRI) guidelines. Despite the onset of the global economic crisis, we have successfully completed a series During this reporting period, we have successfully of initiatives aimed at improving the health and safety implemented and completed several projects which are of our employees and the communities where we oper- directly related to improving the sustainability of our ate as well as strengthening our commitment toward operations. For example, we completed the launch of sustainable development principles. an Integrated Management System for Environmental Protection, Occupational Health and Safety at our key During the reporting period, NOVATEK managed to operating subsidiaries allowing us to more eff ectively achieve signifi cantly higher fi nancial and operational monitor and measure the impact of our operations in results despite volatile and diffi cult market conditions, these areas. We also decreased the environmental im- contracting demand for energy supplies in both global pact and improved operational effi ciencies at our largest and domestic markets, increasing competition within the production subsidiary through the launch of a drilling oil and gas industry and substantial volatility in global cuttings processing plant, allowing us to recycle water, hydrocarbon prices. Throughout this period, we have drilling mud and solid wastes. continued to invest in sustainable growth and, as such, we are very proud of our accomplishments. Climate change has continued to be a key concern in the sustainability of companies operating in the oil and gas While we have seen recent improvements in both the industry. We remain committed, as a major producer of global and domestic economic and operating environ- the cleanest hydrocarbon energy source, to minimizing ments there are still substantial challenges ahead in our own carbon emissions and continuing our partici- regards to future energy demand, climate change and pation in the international climate debate. We have environmental and safety issues. We believe that our introduced renewable energy sources at our new gas sound business practices and prudent investments in pro- condensate pipeline to power its linear telemechanic duction and processing capacity will allow us to meet the system and were one of the fi rst Russian companies to challenges ahead and maintain our position as one of the participate in the 2009 Carbon