4.1 Environmental Sustainability Management and Environmental Control

Environmental sustainability management

PJSC Gazprom Coordinating Committee for Environmental Protection and Energy Efficiency is in charge of comprehensive management of PJSC Gazprom environmental protection activities. The Committee consists of the majority of the Management Committee members and the heads of the relevant departments of PJSC Gazprom Administration. The Committee ensures general coordination of the activities carried out by the organizational units of PJSC Gazprom’s Administration, PJSC Gazprom’s subsidiaries and affiliates, relations with the environmental protection authorities and environmental NGOs.

The Management Committee of PJSC Gazprom reporting to the Board of Directors is the supreme governance body of the Company within the environmental protection management system.

Gazprom Group’s environmental protection management activities are governed by the OJSC Gazprom Environmental Policy approved by Resolution No. 21 of OJSC Gazprom Management Committee dated May 25, 2015. The Environmental Policy sets forth Gazprom obligations, e.g. compliance with the environmental provisions and requirements of the legislation of the Russian Federation and the international law, mitigation of the adverse environmental and climate impact, priority of the preventive measures aimed at environmental protection over the measures aimed at liquidation of the adverse impact.

In course of its operations at the continental shelf and in the Arctic area of the Russian Federation, Gazprom guarantees compliance with the norms and requirements ensuring environmental safety.

Pursuant to the Environmental Policy requirements, Gazprom employees develop their environmental protection capabilities on a regular basis.

PJSC Gazprom became the first Russian oil and gas company to declare self-imposed environmental protection accountability having enacted its Environmental Policy in 1995. In 2015, the Environmental Policy was updated: it reflects the modern environmental protection and energy efficiency trends, as well as climate impact mitigation trends.

The provisions of PJSC Gazprom Environmental Policy are communicated to the employees and the external stakeholders, primarily the contractor organizations and external suppliers.

PJSC Gazprom Environmental Management system (EMS) is the key tool for implementation of the Environmental Policy. As of the end of 2018, PJSC Gazprom EMS application scope included the Administration, PJSC Gazprom Environmental Inspectorate and 34 subsidiaries engaged in natural gas and gas condensate production, transportation, processing and storage, exploration and investment activities, as well as in power and water supply to and operation of the power equipment at UGSS facilities.

In 2018, the independent audit was carried out. It confirmed that PJSC Gazprom EMS was in compliance with the requirements of ISO 14001:2015 Environmental management system. Requirements with Guidance for Use (the system certificate of compliance with the requirements of the ISO 14001:2015 international standard version is effective until December 2020).

Gazprom Group companies that are not covered by PJSC Gazprom EMS implemented their own EMSs, most of which are certified as ISO 14001:2015-compliant. EMSs of such companies take into account specific features of their operations and have certain specifics.

23 subsidiaries hold certificates confirming that their EMSs are ISO 14001:2015-compliant.

In 2018, the Environmental Protection management process was automated at PJSC Gazprom Administration and 21 subsidiaries. The purpose of automation is to improve efficiency of management decisions in this area. The Information Management System (IMS) includes the IMS Subsystem for PJSC Gazprom Administration and the subsystem for the enterprises, IMS P. Automation of the Environmental Protection management process allows to optimize gathering, processing and storage of the environmental reporting data and EMS operation and monitor PJSC Gazprom’s KPIs. In addition, IMS P supports reporting delivery to the IMSs of the government authorities of the Russian Federation.

Gazprom Neft Group EMS is in compliance with the requirements of ISO 14001 international standard. Since 2013, Gazprom Neft is subject to regular compliance audits. In 2018, the independent audit confirmed that Gazprom Neft EMS was ISO 14001:2015-compliant.

GazpromNeft — Sakhalin LLC, JSC GazpromNeft-MNPZ, JSC GazpromNeft-ONPZ, Gazprom Neft-RZBM LLC, GazpromNeft — Lubricants LLC — a branch of the Omsk Lubricant Plant (OZSM), JSC GazpromNeft — MSZM, GazpromNeft Shipping  LLCand GazpromNeft — Snabzheniye  LLChold certificates of the EMS compliance with ISO 14001 standard.

At Gazprom Energoholding, environmental protection management is carried out without certification and generation of the EMS documents required by the ISO 14001:2015 standard. As related to environmental protection management, Gazprom Energoholding adheres to the Environmental Policy adopted in 2017 and the approved environmental targets for 2017–2019.

Environmental control at Gazprom Group

354

checks of compliance

held by PJSC Gazprom Environmental Inspectorate in 2018

RUB 2.6

billion

expenses of Gazprom Group for operational environmental control and monitoring in 2018

Environmental Inspectorate. Gazprom has the only corporate Environmental Inspectorate in Russia, which deals with improving performance of the environmental protection activities, controls compliance with the legislative and corporate environmental protection requirements, carries out internal EMS audits and provides methodological support of the environmental activities of the subsidiaries. In 2018, PJSC Gazprom Environmental Inspectorate held 354 checks of compliance with the environmental legislation.

The results of the checks, including analysis of the results and the recommendations to improve environmental activities were communicated to the management of the entities checked and the steps required to eliminate and prevent violations were identified. The indicator of timely elimination of incompliances was 97%.

Operational environmental control is carried out at each subsidiary of PJSC Gazprom. In the course of the operational environmental control, the subsidiaries also check the contractor organizations for performance of the environmental activities stipulated in the construction and renovation projects.

Operational environmental monitoring is performed to control the state of the natural environment components and environmental impact. The operational environmental monitoring toolkit includes stationary and mobile labs, meteorological and aerologic stations, automatic control stations, monitoring wells. That allows to control emissions of polluting substances to the atmosphere from the organized sources, quality of the atmospheric air at the borders of the sanitary protection zones and within population centres, noise impact, radiation level, quality of surface and subsurface water, bed silt, quality of utility and drinking water supply sources, the state of the geologic environment, soil and snow cover, waste and effluents.

In the vicinity of Prirazlomnaya ice-resistant oil platform (IROP), the operational environmental control of marine environment and atmosphere is carried out. Monitoring the natural environment components is carried out at Novoportovsky License Area, Mys Kamenny oil acceptance and transfer unit, the Ob Bay in the vicinity of the facilities of the Arctic terminal for round-the-year oil shipment; Yamal plant and animal life are monitored due to development of the Novoportovsky OGCF. The results of the monitoring held in 2018 proved that the state of the monitored water areas was within normal limits, the measured indicators matched the natural background, no deviations from the natural functioning of the coastal ecosystems were detected. The ecosystems’ diversity is high enough.

In 2018, the Group’s expenses for operational environmental monitoring and operational environmental control amounted to RUB 2.6 billion. In 2015–2018, Gazprom’s expenses amounted to RUB 10.8 billion.

Gazprom Group's industrial environmental monitoring and control expenses, 2015–2018, RUB million

Plans

In 2019, at least RUB 2-2.5 billion shall be spent on operational environmental control and operational environmental monitoring.

At PJSC Gazprom’s facilities, the automatic operational environmental monitoring systems are operated as elements of an integrated system of operational dispatch management. In certain cases, Gazprom’s operational environmental monitoring systems tracking down the environmental situation are integrated with regional environmental monitoring systems.

At the Black Sea, Gazprom holds regular inspections of the offshore segment of the gas pipeline branch to the automatic Novomikhailovskaya GDS of Jubga — Lazarevskoye — Sochi gas pipeline. During the inspections, the specialists examine the place where the gas pipeline is located and take sea water samples. “GNOM” underwater remotely-operated inspection complex is applied to monitor the state of the undersea areas.

No environmental violations were identified and no contamination of sea water with petroleum products were registered based on the outcomes of monitoring in 2018. The overall marine biota condition remained satisfactory. Fast-growing mussel colonies were discovered at certain sections of the gas pipeline. Colonies of sea plants attached to the protruding parts of the gas pipeline.

Improvement of environmental awareness and environmental culture of Gazprom employees

8,679

Gazprom’s employees participated in environmental trainings in 2018.

Successful environmental protection management is possible only if the companies’ employees have relevant knowledge and strong environmental culture. The Gazprom Group provides environmental protection and EMS trainings for the employees, in particular, at Gazprom Corporate University platform.

Environmental training of Gazprom Group employees, people

Information transparency

Information transparency is one of the principles of Gazprom Group companies’ operations. It applies, in particular, to environmental protection activities. Environmental information pertaining to Gazprom Group is published at PJSC Gazprom official web site in Environment, Media and Investors sections. PJSC Gazprom Annual Report and the corporate Gazprom in Figures Factbook include the sections covering environmental protection and energy saving. The Environmental Report is presented to the shareholders and other stakeholders annually.

Information on the current and future Gazprom activities, as related to environmental protection and energy efficiency, is published continuously in the corporate magazines Gazprom, Gas Industry, in the newspapers and other periodicals of Gazprom Group companies, and in the specialized trade publications.

Pursuant to the requirements of the United Nations Framework Convention on Climate Change (UNFCCC), Gazprom provides information documents to the National Communications of the Russian Federation under the UNFCCC. The Communications disclose the indicators on greenhouse gas (GHG) emissions until 2030, as well as activities aimed at cutting down the emissions.

GRI 102-12

PJSC Gazprom participation in the CDP (Carbon Disclosure Project) international project aimed at disclosing information on GHG emissions is an important indicator of success of the activities in order to improve transparency of the Company operations and one of the drivers of its investment attractiveness. PJSC Gazprom has taken part in that project since 2009. Since 2013, the Company has expanded the set of metrics included in the questionnaire and has provided additional data on indirect GHG emissions.

Over the past seven years, PJSC Gazprom has been the unfailing leader in the Energy sector of the Russian rating of the СDP investment partnership. According to the CDP international rating, PJSC Gazprom has the best (the smallest) products carbon footprint among 26 largest oil and gas companies in the world. The high results are the evidence of the corporate climate-change policy efficiency.

Since 2010, Gazprom publishes sustainability reports where it discloses, in particular, the detailed information on the strategy and tactics of the rational use of natural resources, environmental protection, climate change and stakeholder relations.

The Group’s leadership meets annually with the representatives of the national and regional media actively discussing the rational use of natural resources, environmental protection and energy saving. The Company reviews the stakeholder opinions regarding its environmental activities and takes them into account in course of long-term planning and operational management decision-making.

In 2018, there were 7,327 positive Media and Internet publications covering environmental aspects of Gazprom Group operations.

In 2018, Gazprom published a special booklet on the use of natural gas as motor fuel, and a special issue of the Blue Fuel newsletter discussing the opportunities to achieve the European Union (EU) climate change targets using natural gas.

PJSC Gazprom is among the leaders of Responsibility and Transparency and Sustainable Development Vector indices of the Russian Union of Industrialists and Entrepreneurs. The project is recognized by the Russian companies as a benchmarking tool, and it is included in the international sustainability indices and ratings base The Reporting Exchange. The resulting indices as of 2018 passed the independent audit performed by FBK Grant Thornton.

Precautionary principle

GRI 102-11

PJSC Gazprom shares the key provisions of the precautionary principle (Principle 15 of the UN Rio Declaration on Environment and Development, 1992).

During the FEED and environmental impact assessment development stage, the baseline state of the key ecosystem components is established, the most vulnerable flora and fauna species are identified, and the proposals on mitigating the environmental impact are developed.

In order to identify, assess and respond in a timely manner to the environmental challenges, the Company has developed an efficient risk management and internal control system.