Risk Management System

Risk Management System

The company’s integrated risk management system establishes a standard procedure for the exposure and evaluation of risks, the development of risk management strategies, and the monitoring of their implementation, as well as the preparation of risk management reports, including risks in those environmentally vulnerable areas in which the company operates. Gazprom Neft’s risk management system has been in place since 2012, allowing potentially dangerous situations to be identified, assessed and analysed, and strategies provided for their prevention.

Gazprom Neft is developing special environmental measures for the extremely vulnerable region of the Arctic. Unique technologies in use at the Prirazlomnaya offshore ice-resistant fixed platform (rig) eliminate any possibility of industrial and domestic wastes being discharged, or of reservoir water or other harmful substances being discharged into the sea. Auxiliary and cargo vessels around the platform take extreme caution when manoeuvering on sight of any marine mammals, with helicopters making sea flights at an altitude of 500 metres in order to reduce noise impacts and ensure a more comfortable noise level for them.

In an effort to establish a uniform company-wide method of identifying, assessing and minimising industrial and environmental risks and labour and civilian health risks, the Company has introduced formal processes aimed at systematically identifying, preventing and reducing hazards and risks. This allows the Company to significantly reduce the likelihood of industrial accidents, major failures of equipment and other incidents and their accompanying environmental impacts.

To date, the Company has not recorded a single incident that has resulted in significant environmental damage.

The assessment of environmental safety for acquired assets and own infrastructure projects are part of the integrated risk management system. This standardised business process allows the Company to identify and mitigate against risk factors when implementing a new project.

Oil Spill Response Plan

The Company’s Oil Spill Response Plan has been developed by the Russian Navy’s Central Research and Design Institute (CNIIMF). The Oil Spill Response Plan has been approved by the Russian Federation’s Ministries of Energy, Emergency Situations, and by the Marine and River Transport Agency of the Ministry of Transport. An abstract of the Company’s Oil Spill Response Plan was published on the corporate website by Gazprom Neft Shelf in August 2013.

The Plan provides for different risk scenarios and estimates the personnel and equipment needs for emergency response units in these scenarios. The Company has also established professional oil spill containment and response units and arranged for communication and collaboration with the government’s emergency response services. The Company has procured special equipment that allows for responding to possible oil spills in the Arctic region and for skimming spilled oil in sub-zero conditions.

The Company frequently conducts training sessions and large-scale exercises at the Prirazlomnaya platform. These exercises are designed to ensure the highest coordination of response teams in case of emergency situations. Training sessions are held both on ice-covered sea and onshore to protect the shoreline in the area of the town of Varandey.

Insurance of Environmental Risks

The Company obtains insurance coverage for environmental damage risk for all of its subsidiaries and business units. This insurance provides for the reimbursement of all expenses that may arise under applicable environmental laws as a result of unforeseen, unintended and unexpected pollution of the environment.

In 2014, a unified corporate system of voluntary insurance of liability to third parties was introduced in the Gazprom Neft Group. This included liability insurance for environmental pollution with extended coverage for laws dealing with damage to the environment.

A contract was signed between the SOGAZ insurance group and Gazprom Neft, with respect to all Gazprom Neft subsidiaries. This insurance provides for reimbursements of all expenses incurred by Gazprom Neft subsidiaries that may arise under applicable environmental laws as a result of unforeseen, unintended and unexpected pollution of the environment.