4.2 Environmental Protection and Sustainable Use of Natural Resources

Annually, PJSC Gazprom identifies significant environmental aspects that are taken into account when the environmental targets are defined. In 2018, methane emissions in the atmosphere during the repairs of gas trunklines and nitrogen oxides emissions from the operation of compressor stations, effluents discharge, waste disposal and noise emission were deemed significant environmental aspects.

PJSC Gazprom set six Corporate Environmental Targets for 2017–2019 taking the values of 2014 as baseline indicators.

In 2018, four out of six established target indicators were achieved. Growth of the fees for excessive environmental impact vs 2014 baseline level was driven by late receipt of environmental permits and it was not associated with additional environmental impact. Growth of the fuel and energy resources consumption for internal operating needs is driven by disproportionate increase in fuel and energy resources consumption as natural gas transportation increased (in 2018, goods transportation activities increased by 15.5%). Energy intensity analysis of trunkline gas transportation in comparable conditions of goods transportation activities confirms that unit indicators of fuel and energy resources consumption tend to decline.

Gazprom Neft set four environmental targets for 2018. Three of them were achieved. During the reporting year, the APG use level reached 78.32%.

Gazprom Energoholding set three targets for 2018–2019 and two out of them were achieved in 2018. The share of excess fees for negative environmental impact increased in 2018 by 2.3% vs the baseline level as of 2014. The reason was the use of mark-up factors for assessing the payments due to temporary absence of the permits caused by lengthy projects approval by the supervisory authorities.

Gazprom Neftekhim Salavat selected the indicators as of 2015 as the baseline. All five targets set for 2018 were achieved.

The amount of the Gazprom Group’s investments in capital assets aimed at environmental protection and rational use of natural resources declined by 18% vs 2017 due to completion of major investment projects by Gazprom Neft Group, such as construction of innovative waste treatment facilities at Moscow Refinery and the pressure-tight petroleum products loading rack at Omsk.

In 2018, the majority of the Gazprom Group’s investments were aimed at atmospheric air protection (RUB 15,815 million, or 54% of the total Group’s investments in environmental protection and rational use of natural resources).

RUB 6, 647 million (23%) were invested in protection and rational land use, including RUB 3,082 million spent on reclamation.

RUB 6,107 million (21%) were spent on protection and sustainable use of water resources, including RUB 4,323 million spent on construction of water treatment facilities and recirculated water systems.

RUB 620 million (2%) were spent on performing other tasks, including RUB 308 million spent on waste recycling, treatment and dumping units and landfills, RUB 35 million spent on protection and sustainable use of forests, RUB 33 million spent on fish stock protection and replacement, and RUB 244 million spent for other purposes.

In 2018, Gazprom Group commissioned in operation:

• 49 wastewater treatment units and facilities with 52,31 thousand m³ per day capacity;
• 3 recirculated water systems with 0.27 thousand m³ per day capacity;
• 18 waste treatment and recycling units with the annual capacity of 6.81 thousand tons;
• 1 landfill for recycling, treatment and dumping of toxic industrial, household and other waste with the annual capacity of 17.02 thousand tons.

In 2018, the Gazprom Group’s current environmental protection expenditures increased by 14% vs 2017.

A larger share of costs is traditionally accounted for by wastewater collection and treatment. The Gazprom Group’s current expenditures structure as of 2018:

• Wastewater collection and treatment — RUB 20.38 billion or 52%;
• Land, surface waters, and subterranean waters protection and reclamation — RUB 6.14 billion;
• Atmospheric air protection and climate change prevention — RUB 4.88 billion;
• Waste handling — RUB 5.70 billion;
• Biodiversity preservation and designated natural areas protection — RUB 0.49 billion;

Other environmental protection purposes (environment protection against noise, vibration and other types of physical impact, ensuring radiation safety of the natural environment, research and development aimed to reduce negative environmental impact and other) — RUB 1.57 billion

In 2018, the fees for pollutant air emissions (58%) and for dumping of production and consumption waste (36%) prevailed in the structure of negative environmental impact fees.

In 2015–2018, Gazprom Group’s negative environmental impact fees became 3 times lower. The decline is driven mainly by reduction of fees for pollutant emissions in course of APG flaring at Gazprom Neft fields, elimination of mark-up factors, offset of previous excessive payments made when advance payments were performed, as well as by the activities aimed at ensuring timely receipt of permits and authorization documents.

Excess fees accounted for 32% of the negative environmental impact payments of the Gazprom Group in general, 21% at PJSC Gazprom, 59% at the Gazprom Neft Group, 26% at Gazprom Energoholding, 27% at Gazprom Neftekhim Salavat. In the vast majority of cases, the excess fees were accrued due to organizational reasons — late receipt or extension of environmental permits.

In 2018, government supervisory agencies held 753 checks of compliance with environmental requirements in course of the Gazprom Group’s facilities operation and identified 435 breaches. No breaches were identified as a result of 503 checks.

Out of 435 breaches identified, 35 breaches (8%) were overturned by courts of law, 253 breaches (58%) were remedied within the established term, and the term for remedying 106 breaches did not expire during the reporting year. The total of 357 breaches were remedied during the year, including 104 breaches identified in course of checks held in the previous years.

275 breaches (63%) posed no threat to the environment and did not entail any penalties for legal entities.

During the reporting year, the penalties paid amounted to RUB 17.12 million, including RUB 3.46 million paid based on the results of checks of the previous years. No information is available on non-financial sanctions imposed by supervisory agencies pursuant to the Administrative Offences Code of the Russian Federation.

In 2018, the Gazprom Group compensated the damage inflicted to the natural environment for the total of RUB 188.64 million, including the damage inflicted during the previous reporting periods for the total of RUB 177.14 million. The damages assessed due to accidents in 2018 amounted to RUB 1.74 million. Most of the compensation was accounted for by damage inflicted as a result of incidents at the Gazprom Neft Group’s pipelines in 2017 and minor (by the territory affected) land contamination in the YaNAA. As the petition to reduce the amount of claim less the cost of reclaiming the land plots was considered at the court of law, the compensation for damage was paid in 2018.

The main Gazprom’s objective as related to water management is to reduce wastewater disposal to surface water bodies and enhance wastewater treatment.

PJSC Gazprom Water Resources Utilization System Development Program for 2016–2020, “Water of Life”, is in effect at PJSC Gazprom. It stipulates the following targets:

• Ensure sustainable high-quality water supply to PJSC Gazprom’s production and other facilities;
• Ensure efficient wastewater disposal from PJSC Gazprom’s production and other facilities;
• Ensure environmental safety and rational use of natural resources as related to PJSC Gazprom’s water supply and wastewater disposal.

Implementation of the Water of Life Program will improve efficiency of water purification and water treatment through increase of the share of water purification plants (WPP) achieving sanitary and epidemiological potable water standards from 70% WPP in 2014 to 90% WPP by 2020.

The share of wastewater purified to match the standard parameters at water treatment facilities (WTF) in the total volume of wastewater disposed to the water bodies shall be increased from 60.7% in 2014 to 72% by 2020.

Pursuant to the Water of Life Program, water intensity of commercial products manufacturing shall be reduced by 6% and the volume of water reused for process purposes shall be increased by 25% by 2020.

In addition, as related to water resources protection, PJSC Gazprom EMS stipulates the Corporate Environmental Target for 2017–2019 to decrease discharge of polluted and crude wastewater in surface water bodies by 40.13% vs the baseline level. The status of achieving the Corporate Environmental Target is evaluated annually. In 2018, the target was achieved, the indicator was reduced by 23.5%.

In 2018, Gazprom Group companies withdrew and received 4,280 mcm of water for water supply purposes, which is 5.4% less than in 2017. Water withdrawal from natural sources declined by 5.1%, i.e. to 4,065 mcm.

Natural sources account for 95% of the Gazprom Group’s water withdrawal, surface water bodies account for 96.2% of it, and ground water sources — for 3.8%. The Group’s water consumption structure by types of sources depends upon specific features of operations and location of the facilities. Most of the water consumption (3,997 mcm) is accounted for by Gazprom Energoholding’s generating entities.

Gazprom Group disposes wastewater to surface water bodies pursuant to Decisions on Granting Water Bodies for Use in accordance with Pollutants Discharge Norms.

There are no water bodies and associated habitats subject to significant impact of water disposal.

Out of 3,658 mcm of wastewater discharged into surface water bodies in 2018, 3,579 mcm is partially clean water and effluents treated to standard quality.

At Gazprom, Gazprom Energoholding companies account for the majority of wastewater discharged into the surface water bodies: out of the total volume of 3,658 mcm, they dispose in the surface water bodies 3,587 mcm of water. In 2018, Gazprom Energoholding total wastewater disposal amounted to 3,713 mcm and included disposal to surface water bodies (3,587 mcm), storage lagoons (0.36 mcm), public utility systems (106.6 mcm) and other systems (18.7 mcm).

In course of operational environmental monitoring, the Gazprom Group’s entities control the state of water bodies in the regions of operations. For example, at Bovanenkovskoye OGCF in the Yamal peninsula, the design solutions exclude wastewater disposal to surface water bodies completely in order to preserve fish resources. Fish protection devices are used in course of water withdrawal from the water bodies.

In 2018, water zone monitoring was carried out in the Prirazlomnaya IROP district; it showed that the state of the water zone is within the normal limits, measured parameters match natural background, and no variances from the natural performance of the coastal ecosystems were detected. Species diversity of the cenosis is at a sufficiently high level.

Gazprom Neft completed construction of «Biosphere» biological treatment plants at Moscow Refinery and commenced construction of similar facilities at Omsk Refinery. State-of-the-art technological solutions ensure 99.9% purification of wastewater discharge and 2.5 times decline of river water consumption. More importantly, wastewater is not disposed into natural water bodies after treatment, instead over 70% of it is reused in production processes. The technological solutions reduce the total space of treatment facilities significantly, make them more compact and ensure absolute pressure-tightness of the water treatment process stages.

At Gazprom Neftekhim Salavat, recycling water supply is organized on the basis of 20 water recycling units for all process plants and facilities in order to reduce river water consumption. The overall company water recycling indicator is 98.1%, which is the evidence of technical excellence of Gazprom Neftekhim Salavat’s recycling water supply systems and high percentage of recycled water use in the total industrial water supply volume. In 2018, recycled water supply amounted to 1,195 mcm.

In 2018, 25,787 ha of lands were disturbed in course of the Gazprom Group entities operations, which is significantly less than in 2017 (42,162 ha). During the year, 15,767.5 ha were reclaimed.

The Gazprom Group also takes preventive measures in order to reduce the territory of disturbed lands. For example, the Group’s companies apply advanced methods of green seismic exploration, horizontal and directional drilling, which prevent disturbance and pollution of lands, reduce the amount of waste and the space required for their storage. Blockwork construction technologies used for field facilities construction out of ready components, cluster well patterns in the fields, construction of multiline gas pipeline systems in the single right-of-way facilitate reasonable use of lands where the Group’s companies carry out construction.

In 2018, the total amount of oil and petroleum product spills resulting from 917 pipeline ruptures equalled 70 tons . The majority of oil and petroleum product spills is accounted for by the Gazprom Neft Group — 69 tons were spilled as a result of 884 pipeline ruptures. At Gazprom Neft, pipeline ruptures were registered at the line sections of infield pipelines. In most cases, the ruptures were caused by internal corrosion (94%) being the result of corrosive substances transmission at oil and gas fields.

Oil spill management and response bodies are established at Gazprom Neft. Volunteer emergency response teams exist at all production facilities and they are in constant preparedness. Members of Emergency Situations (ES) Coordination Teams are on duty on a 24 X 7 basis in case of emergencies or crises. The Duty Dispatcher Service operates on a 24 X 7 basis. Classroom trainings, drills and emergency response exercises are held regularly at different levels and representatives of executive authorities are involved in them.

The activities of Gazprom Neft Shelf  LLCaimed at containment and liquidation of the consequences of emergency oil spills are defined in the Oil Spills Prevention and Liquidation Plan in Prirazlomnaya IROP Operational Area of Responsibility in Pechora Sea Water Zone. In order to prevent and liquidate petroleum products spills in course of the IROP operation, Gazprom Neft Shelf  LLCensures constant emergency response readiness involving the appropriate resources and manpower of professional emergency response teams. In case of a spill, the support vessels that are on constant duty near the IROP are to immediately begin operational activities aimed at oil spill containment.

In 2018, no significant direct or indirect impact of the Group companies’ operations on vulnerable ecosystems and biodiversity was registered.

While implementing the most complex oil and gas production projects, Gazprom is fully aware of its responsibility for preserving ecological balance. Gazprom Group companies apply modern technological solutions allowing to mitigate environmental impact of the operations, carry out continuous environmental monitoring, implement biodiversity preservation programs both in the areas that are directly affected by the facilities and outside them at all regions of operations in Russia and abroad.

Fish protection devices are installed at water intakes, and overhead transmission lines are equipped with bird protection devices. Trees are planted in the areas of Gazprom Group companies’ operations and in their areas of influence.

The EMS of PJSC Gazprom stipulates the target to reduce the share of waste dumping in 2017–2019 vs the baseline level of 43.6%. Achieving of the Corporate Environmental Target is evaluated annually. In 2018, the target was achieved.

Gazprom’s priority is to reach maximum possible use of resulting waste in the industrial process. Best available technologies that reduce the waste volumes or zero waste best available technologies are implemented. Those measures would help reduce the amount of waste delivered for dumping or recycling.

In 2018, the Gazprom Group produced 3,555 thousand tons of waste, which is significantly (14%) less than in 2017 — 4,130 thousand tons.

The reduction is driven by decline of bottom ash waste production (Hazard Class V) at Gazprom Energoholding facilities by 18.8% (predominantly due to substituting coal with natural gas in the fuel mix) and drilling waste production decline by 21.1% at the Gazprom Neft Group.

The majority of the Gazprom Group’s production and consumption waste (97.6%) belong to low-hazard and virtually non-hazardous waste categories. Most of the Group’s waste consists of bottom ash waste of Gazprom Energoholding, as well as drilling waste and oil sludge that are mostly produced at oil and gas production and processing facilities.

The key objective of the Gazprom Group oil and gas production companies is environmentally sound disposal of drilling waste in course of wells construction and operation. In 2018, the total of 866,080 tons drilling waste were in circulation (including 108,930 tons of waste existing as of the beginning of the year, 748,000 tons of produced waste, 9,140 tons of waste produced from other entities), including 79.5% (688,880 tons) that were handed over to specialized licensed organizations for recycling and treatment, as well as for safe dumping.

One of the key requirements to well construction process is to prevent negative environmental impact of drilling waste, especially in harsh natural environment and climatic conditions of the Far North. In order to achieve that, design solutions facilitating reduction of drilling works environmental impact are used actively in course of field development. Thus, pit-free drilling technique is applied in course of producing wells construction. The Gazprom Group expands the practice of applying drilling waste recycling technologies that produce mineral construction materials, which are used for general construction works in course of fields development.

In 2018, Gazprom Neft recycled 616,800 tons of waste and neutralized 286,660 tons of waste using its own resources or through third parties. There were 144,700 tons of waste left as of the end of the year.

Gazprom Energoholding recycled 147,300 tons of waste using its own resources or through third parties, 305,130 tons were exported. In order to dispose of bottom ash waste from the Troitsk SDPP of OGK‑2, the dump established at Shubarkol salt lake is used. It is located in the Kustanai Region of the Republic of Kazakhstan, therefore, all environmental activities pertaining to it are carried out in compliance with the Environmental Code of the Republic of Kazakhstan. During the reporting period, OGK‑2 exported bottom ash waste (Hazard Class V) to the Republic of Kazakhstan (Shubarkol lake):

• 2016 — 504,300 tons;
• 2017 —419,400 tons;
• 2018 — 305,130 tons.

Gazprom Neftekhim Salavat handed over to third parties 82,200 tons of waste for disposal, 28,600 tons of waste for recycling and 1,470 tons of waste for neutralization. The year-end balance was 23,330 tons of waste.

Waste is transported and handed over to third parties for use, neutralization or dumping by specialized organizations that hold waste handling licenses.

The Gazprom Group’s emissions composition is driven by the specifics of its companies’ business.

In 2018, pollutant emissions from the Gazprom Group’s stationary sources amounted to 2,894 thousand tons, which is slightly above the previous year level. Insignificant pollutant emissions growth is driven by increase of natural gas extraction, transportation and injection/ withdrawal volumes.

In 2018, 1,839.41 thousand tons of pollutants were collected and neutralized at tail gas treatment units of the Gazprom Group. Gazprom Energoholding accounted for 1,722.14 thousand tons of that amount, PJSC Gazprom — for 108,300 tons, and other Gazprom Group companies — for 8,970 tons. The collected and neutralized pollutant substances consisted of 93% of solid particles, predominantly solid fuel ash of power industry facilities, and of 7% of gaseous and liquid substances (including 95% of sulphur dioxide).