SAKHALIN ENERGY INVESTMENT COMPANY LTD. PUBLIC CONSULTATION AND DISCLOSURE REPORT Issue 03 January 2011 Table of Contents 1 INTRODUCTION ....................................................................................... 4 2 CONSULTATION AND INFORMATION DISCLOSURE ........................... 5 2.1 CONSULTATION CARRIED OUT IN 2010, GENERAL INFORMATION .. 5 2.2 STAKEHOLDERS ENGAGEMENT WITHIN FRAME OF SUSTAINABLE DEVELOPMENT REPORT PREPARATION ................................................................................. 7 2.3 CONSULTATION AND INFORMATION DISCLOSURE IN PROJECT AFFECTED COMMUNITIES ..................................................................... 9 2.3.1 Consultations and Information Disclosure in Regard with Construction and Operations of Gas Transfer Terminals (GTT) ............................................ 9 2.3.2 Consultations and Information Disclosure with Residents in the Vicinity of LNG/TLU Accommodation Facilities .......................................................... 9 2.3.3 CLO Activities in Communities ................................................................ 10 2.3.4 Other Methods of Communication with Affected Communities ................ 10 2.3.5 Consultations and Information Disclosure with Dachas at Prigorodnoye in 2010 ........................................................................................................ 10 2.4 INDIGENOUS STAKEHOLDERS ............................................................ 11 2.4.1 Sakhalin Indigenous Minorities Development Plan (SIMDP) Consultations11 2.4.2 Second Sakhalin Indigenous Minorities Development Plan (SIMDP-2) Consultations ........................................................................................... 12 2.4.3 Consultations with the reindeer herders .................................................. 14 2.5 CONSULTATIONS AND DISCLOSURE IN OTHER SAKHALIN COMMUNITIES ....................................................................................... 14 2.6 ENGAGEMENT WITH COMMUNITY AND OTHER NON-GOVERNMENTAL ORGANISATIONS ................................................................................... 15 2.7 JAPANESE STAKEHOLDER ENGAGEMENT ........................................ 15 2.7.1 Introduction .............................................................................................. 15 2.7.2 Materials available in Japanese............................................................... 16 2.7.3 Public consultation activities in Japan ..................................................... 16 2.8 MEDIA AND OTHER INTEREST GROUPS ............................................ 17 3 FEEDBACK FROM CONSULTATION .................................................... 18 Sakhalin Energy Investment Company Ltd. Public Consultation and Information Disclosure Report Issue 03 2 из 24 0000-S-90-01-Т-0290-00-E 4 COMMUNITY GRIEVANCE PROCEDURE ............................................ 19 4.1 REPORTING GRIEVANCES ................................................................... 19 4.2 GRIEVANCE ADDRESSING IN 2010 ..................................................... 19 4.3 GRIEVANCE PROCEDURE WITHIN THE FRAME OF SAKHALIN INDIGENOUS MINORITIES DEVELOPMENT PLAN .............................. 20 APPENDIX 1 COMMUNITIES, NGOS AND OTHER STAKEHOLDERS AS OF 2010 22 APPENDIX 2 LIST OF EXISTING JAPANESE STAKEHOLDERS ON SAKHALIN ENERGY DATABASE AS OF 2010 ........................................................ 24 Sakhalin Energy Investment Company Ltd. Public Consultation and Information Disclosure Report Issue 03 3 из 24 0000-S-90-01-Т-0290-00-E 1 INTRODUCTION Sakhalin Energy Investment Company Ltd. (Sakhalin Energy) considers regular and meaningful engagement with the public and key stakeholders, as well as the public disclosure of relevant project information, to be important elements for the successful development of the Sakhalin-2 Project (the Project). To this end, since the Phase I component of the Sakhalin-2 Project began in 1992, the Company has actively sought to engage with stakeholders and provide information about its activities. This document describes Sakhalin Energy‟s plans and programmes for public consultation and the disclosure of information undertaken by Sakhalin Energy as of 31 December 2010, and includes: Summary of consultation held in 2010; Summary of consultation held with different stakeholder categories; Summary feedback from consultation; Community Grievance Procedure Implementation; There are two appendices to this document: Appendix 1 provides a summary of non-governmental and community organisations which have been involved to date; Appendix 2 lists the existing stakeholders in Japan, in particular, on the island of Hokkaido, which is situated in relatively close proximity to the southern end of Sakhalin Island. Sakhalin Energy will update this Report on an annual basis. Sakhalin Energy Investment Company Ltd. Public Consultation and Information Disclosure Report Issue 03 4 из 24 0000-S-90-01-Т-0290-00-E 2 CONSULTATION AND INFORMATION DISCLOSURE 2.1 CONSULTATION CARRIED OUT IN 2010, GENERAL INFORMATION The types of consultation Sakhalin Energy has carried out in 2010 are presented in Table 1 below. Table 1: Types of Consultation Carried out in 2010 TYPE EXAMPLES - Public meetings in town halls, culture centres, libraries Public Consultations - Public hearings (arranged in compliance with RF legislation) - Dialogues with stakeholders within frame of Sustainable Development Report preparation - Focus group meetings (e.g., heads of enterprises, indigenous people, vulnerable groups) - Seminars (e.g., with school children, entrepreneurs) Group Meetings - Spontaneous group meetings (e.g., in a shop, school or in the street) often called group discussions - Meetings with experts (e.g., administration, specialists from health, education, social or cultural departments, entrepreneurs, key figures Individual in the community) Meetings - Interviews with local residents - Others Table 4: Community Consultations in 2010 COMMUNITIES or No. No. DATE CONSULTATIONS KEY PURPOSE MEETINGS PEOPLE January - Update on SIMDP Consultations under December implementation and 23 197 SIMDP 2010 others Consultations with IP in Okha, Nekrasovka, st 1 round of consultations Nogliki, Val, Chir-Unvd, Q1 within SIMDP-2 9 298 Tymovskoe, Al- development Sakhalinsky, Smirnykh,and Poronaisk Sakhalin Energy Investment Company Ltd. Public Consultation and Information Disclosure Report Issue 03 5 из 24 0000-S-90-01-Т-0290-00-E COMMUNITIES or No. No. DATE CONSULTATIONS KEY PURPOSE MEETINGS PEOPLE Second dialogue with stakeholders within 2009 Sustainable Q2 frame of GRI report Development report 1 20 development, meeting in preparation* Yuzhno-Sakhalinsk Consultations under 1st round of consultations Q2 SIMDP in Yuzhno- within SIMDP-2 1 30 Sakhalinsk development Public hearings on Public hearings in Q2 expansion of OPF 1 11 Nogliki Accommodation Facilities Update on Sakhalin-2 project progress and most recent information about Community public Project benefits, Project meetings in Nogliki, related local activities, Tymovskoe, Al- social initiatives, SD/SI Q2 Sakhalinsky, Smirnykh, (Sustainable 9 199 Poronaisk, Makarov, Development /Social Dolinsk, Aniva, Investment) projects, Korsakov districts grievance procedure, employment opportunities and local business development Assessment of public attitude towards the July – Public opinion survey Project activities under 23 800 August social impact monitoring programme Public hearings on Public hearings in Q3 Molikpaq platform 1 6 Nogliki modification First round of a dialogue with stakeholders within 2010 GRI report Q4 frame of GRI report 1 20 development development, meeting in Yuzhno-Sakhalinsk Consultations with IP in Okha, Nekrasovka, Nogliki, Val, Chir-Unvd, 2nd round of Q4 Tymovskoe, Al- consultations within 10 212 Sakhalinsky, Smirnykh, SIMDP-2 development Poronaisk and Yuzhno- Sakhalinsk * In 2009 Sakhalin Energy joined the UN Global Compact and decided to follow the public non- financial reporting standard of the Global Reporting Initiative, GRI. Consultation summary under Sustainable Development Report preparation is described in section 2.2 . Sakhalin Energy Investment Company Ltd. Public Consultation and Information Disclosure Report Issue 03 6 из 24 0000-S-90-01-Т-0290-00-E COMMUNITIES or No. No. DATE CONSULTATIONS KEY PURPOSE MEETINGS PEOPLE Discussion on further IP Conference in Q4 cooperation within frame 1 90 Yuzhno-Sakhalinsk of SIMDP-2 Inform on GTT construction plans and potential impact mitigation Community meeting with Q4 measures, Grievance 1 8 Val residents Procedure, No Hunting, Fishing and Gathering Policy Update on Sakhalin-2 project progress and most recent information about Project benefits, Project related local activities, social initiatives, SD/SI Q4 Community in Korsakov (Sustainable 1 6 Development /Social Investment) projects, grievance procedure, employment opportunities and local business development Total 1897 2.2 STAKEHOLDERS ENGAGEMENT WITHIN FRAME OF SUSTAINABLE DEVELOPMENT REPORT PREPARATION In 2009 Sakhalin Energy joined the UN Global Compact and decided to follow the public non- financial reporting standard of the Global Reporting Initiative, GRI. Sustainable Development Report covers the results of Sakhalin Energy activities, including environmental protection, personnel development, stakeholder engagement, social projects and other aspects. Sustainable Development Report is in public domain at the Company‟s official website, Sakhalin