AIMING FOR MORE 2014 SUSTAINABILITY REPORT GAZPROM NEFT 2014 SUSTAINABILITY REPORT www.gazprom-neft.com ABOUT THE REPORT 1 Gazprom Neft’s report on sustainable development activities (Sustainability Report) for 2014 outlines the results of implementing the Company’s social responsibility principles and its approaches to achieving social and environmental objectives. Gazprom Neft has published sustainability reports since 2007. Since 2008, these reports have been published at the same time as the Company’s annual reports. This enables the Company to present data about the social and environmental aspects of its activities in the context of its business strategy. The report presents information about JSC Gazprom Neft and its subsidiaries and affiliates (hereinafter referred to as ‘Gazprom Neft’, ‘the Company’, and ‘the Group’) for the 2014 calendar year. The Company's financial position and operating results are presented using consolidated data from Gazprom Neft. The Report draws on the management and audited financial accounts of Gazprom Neft, drafted in accordance with IFRS standards. Unless otherwise indicated in the text, data on the Company’s social and labour relations and its environmental performance include figures for Gazprom Neft and its subsidiaries and affiliates based in Russia and the CIS. The data was gathered and organized within corporate information systems to respond to information requests based on the recommendations of the Global Reporting Initiative (GRI). This report contains standard disclosures from the new version of the Sustainability Reporting Guidelines (GRI-G4). The transition to this new standard began during the reporting year. The standard disclosures index is provided in Appendix 2. The Report was subject to independent public certification by the Non-Financial Reporting Board of the Russian Union of Industrialists and Entrepreneurs. The certificate is published in Appendix 1. The report details the Company's medium- and long-term plans. This information is forward-looking in nature. The feasibility of the declared intentions depends, among other things, on factors (economic, social, and legal) that are beyond the Company’s control or influence. The actual results may therefore differ from those indicated in the plans. The Report is published in Russian and in English, and is also available on the Company's website. KEY SCOPE OF CONSOLIDATION Link to material in In this report, the terms ‘Gazprom Neft’, ‘the the Annual Report Company’, and ‘Gazprom Neft Group’ are used to refer to JSC Gazprom Neft and its consolidated subsidiaries. The report presents Link to interactive consolidated performance information for the content Group. Online version of the 2014 Sustainability Report ABOUT THE REPORT GAZPROM NEFT 2014 SUSTAINABILITY REPORT www.gazprom-neft.com 2 REPORT STRUCTURE: PRIORITY THEMES CONTENTS 3 During the reporting year, the Company placed particular emphasis on determining the core themes to be covered in the Report. As in the previous reporting cycle, the provisions of ISO 26000:2010, MESSAGE FROM THE CHAIRMAN DEVELOPMENT OF WORKFORCE CAPACITY the recommendations in the GRI Sustainability Reporting Guidelines, and discussions with the OF THE BOARD OF DIRECTORS 4 60 Company’s key stakeholders were all taken into account in determining these themes. The process 62 Employee demographics 67 Learning and development of preparing the Report during the reporting year included dialogues with stakeholders in Orenburg 63 Human resources management and 70 Creating a talent pool and Muravlenko. MESSAGE FROM THE CHAIRMAN 6 policy 71 Working with graduates and young OF THE MANAGEMENT BOARD 64 Employee remuneration and social specialists Paramount importance was given to those aspects of sustainable development where the support 72 Employer brand Company's strategic priorities and the interests and expectations of stakeholders intersect. 66 Cooperation with trade unions 73 2015 goals In particular, the Report provides detailed information on the economic, social, and environmental ABOUT THE COMPANY aspects of the Company's business that have the most noticeable effect on the wellbeing and 8 prospects of stakeholders. 10 Mission and strategic vision SAFE DEVELOPMENT: INDUSTRIAL AND ENVIRONMENTAL SAFETY, 13 Core business and geographical reach OCCUPATIONAL HEALTH AND SAFETY, ENERGY EFFICIENCY 74 AND ENERGY CONSERVATION 13 Gazprom Neft Group structure MAJOR ASPECTS 14 Business model 76 Policy and management 90 Water management 16 Geographical reach 79 Cooperation with the state, public 92 Waste management Themes1 Core aspects of themes Report sections 18 Economic performance organizations, and business partners 93 Land use and soil rehabilitation ORGANIZATIONAL Accountability, transparency, ethical behaviour, respect for SUSTAINABILITY MANAGEMENT AND 27 Innovation 80 Industrial and occupational 95 Preserving biodiversity health and safety GOVERNANCE stakeholder interests, respect for the rule of law STAKEHOLDER ENGAGEMENT 31 2015 goals 96 Energy consumption and energy 83 Reducing adverse impacts on the efficiency ECONOMIC Economic performance, market presence, implementation of ABOUT THE COMPANY; environment and making effective use PERFORMANCE innovations, support for domestic producers SUSTAINABILITY MANAGEMENT AND of resources 100 2015 goals STAKEHOLDER ENGAGEMENT 88 Protecting the atmosphere HUMAN RIGHTS Fundamental principles and labour rights, economic, social, and SUSTAINABILITY MANAGEMENT AND cultural rights STAKEHOLDER ENGAGEMENT; DEVELOPMENT OF WORKFORCE CAPACITY; REGIONAL POLICIES AND DEVELOPMENT OF LOCAL COMMUNITIES SUSTAINABLE DEVELOPMENT REGIONAL POLICIES AND DEVELOPMENT OF LOCAL COMMUNITIES STRATEGY 32 102 LABOUR PRACTICES Recruitment, labour relations, working conditions and social DEVELOPMENT OF WORKFORCE CAPACITY; protection, occupational health and safety, professional SAFE DEVELOPMENT: ENVIRONMENTAL SAFETY 34 Strategic outlook 104 Gazprom Neft and the regions: 116 Social programmes outside Russia development AND OCCUPATIONAL HEALTH AND SAFETY 36 Sustainable growth and social strategic social partnership 117 Charitable activities responsibility priorities ENVIRONMENT Prevention of pollution, sustainable environmental SAFE DEVELOPMENT: ENVIRONMENTAL SAFETY 105 Corporate regional policy and volunteer programmes management, environmental rehabilitation, energy AND OCCUPATIONAL HEALTH AND SAFETY 106 Tools of social policy in the regions 119 2015 goals conservation and efficiency 108 Stakeholder engagement 111 Results of the Home Towns FAIR Anti-corruption measures, SUSTAINABILITY MANAGEMENT AND social investment programme BUSINESS PRACTICES promoting social responsibility in the value chain STAKEHOLDER ENGAGEMENT CONSUMER Protection of consumer health and safety, product and service SUSTAINABILITY MANAGEMENT AND ISSUES quality STAKEHOLDER ENGAGEMENT; SAFE DEVELOPMENT: ENVIRONMENTAL SAFETY AND OCCUPATIONAL HEALTH AND SAFETY SUSTAINABILITY MANAGEMENT AND STAKEHOLDER ENGAGEMENT APPENDICES COMMUNITY Socio-economic development of local communities, promotion REGIONAL POLICIES AND DEVELOPMENT OF 38 120 INVOLVEMENT AND of healthcare and sports, education and culture, support for LOCAL COMMUNITIES DEVELOPMENT vulnerable groups 40 Corporate governance 57 Corporate communications 121 Appendix 1. Certification of the 44 Risk management 59 Developing reporting on sustainable report by the Non-Financial development Reporting Board of the Russian Union 47 Stakeholder engagement of Industrialists and Entrepreneurs 56 Corporate culture 122 Appendix 2. Index of GRI standard disclosures 130 Appendix 3. Definition of key terms and acronyms 1 The basic thematic structure is determined by ISO 26000. Economic performance has been added in line 132 Contact information and feedback with GRI recommendations. GAZPROM NEFT 2014 SUSTAINABILITY REPORT www.gazprom-neft.com Gazprom Neft is committed to sustainable development and corporate social responsibility. 5 MESSAGE FROM An important part of this is the Company’s policy of giving back to the communities in which it operates as a major taxpayer, employer, and partner for local and regional governments. Our contribution is more than just financial: we aim to improve quality of life THE CHAIRMAN and strengthen social infrastructure in the communities that Company employees and their OF THE BOARD families call home. OF DIRECTORS Gazprom Neft had a successful year in 2014. The Company continued Upstream production carries with it a great responsibility, which is why to enjoy stable production growth, achieving a 6% improvement in the company consistently acts as a steward of the environment and extraction and a 2% increase in refining activity. Gazprom Neft remains natural resources. One important project in this regard is our effort the industry leader in average daily sales of petroleum products at filling to utilize associated petroleum gas. Gazprom Neft continues to invest stations. Highlights of the year include ship-to-shore delivery of the first heavily in promoting efficient use of this former waste product. In 2014, oil from our offshore Arctic fields at Prirazlomnoye in the Pechora Sea this included construction of a new gas processing facility at the Yuzhno- and Novy Port in the northern Yamalo-Nenets Autonomous District; the Priobskaya compressor station and commissioning new compressor use of new technologies in the Company’s traditional operating areas stations at the Yety-Purovskoye field and in Tomsk Region. Gazprom to boost output from existing