Geography of operations(1)
GRI 102-4GRI 102-6

(1) See PJSC Gazprom Annual Report as of 2018.

PJSC Gazprom’s shareholding structure, %
Shareholder As of December 31, 2017 As of December 31, 2018
The Russian Federation represented by the Federal Agency for State Property Management 38.37 38.37
JSC ROSNEFTEGAZ(1) 10.97 10.97
JSC Rosgazifikatsiya(1) 0.89 0.89
ADR holders(2) 25.20 24.13
Other registered persons 24.57 25.64
(1) As of December 31, 2017, and December 31, 2018, the cumulative stake in PJSC Gazprom directly or indirectly controlled by the Russian Federation equals 50.23% and is secured by a 100% stake of the Russian Federation in JSC Rosneftegaz, which also holds a 74.55% stake in JSC Rosgazifikatsiya.
(2) The issuing bank of ADRs for PJSC Gazprom stock is the Bank of New York Mellon.
Key corporate documents governing the Company’s activities as related to sustainability
Sustainable development area Key corporate documents
Economic performance Corporate Governance Code of PJSC Gazprom
Anti-Corruption Policy of PJSC Gazprom
Risk Management and Internal Control Policy of PJSC Gazprom
Long-Term Development Program of PJSC Gazprom
Innovative Development Program of PJSC Gazprom until 2025
Regulation on Procurement of Goods, Works and Services by PJSC Gazprom and Gazprom Group Companies
Quality Management Policy of PJSC Gazprom
Wellbeing of people Code of Corporate Ethics of PJSC Gazprom
HR Management Policy of PJSC Gazprom, Its Subsidiaries and Entities
Comprehensive Program for Improvement of HR Management at PJSC Gazprom, Its Subsidiaries and Entities in 2016–2020
General Collective Labour Agreement of PJSC Gazprom and Its Subsidiaries for 2016–2018
PJSC Gazprom’s Process Safety Management System Development Strategy until 2020
PJSC Gazprom’s Occupational, Industrial and Fire Safety Policy
Regional Policy Concept of OJSC Gazprom
Environmental protection Environmental Policy of PJSC Gazprom
Energy Efficiency and Energy Saving Policy of PJSC Gazprom
Energy Saving and Energy Safety Improvement Program of PJSC Gazprom for 2017–2019

Values, Principles, Standards and Norms of Corporate Ethics

GRI 102-16

The values, principles, standards and norms of behaviour at PJSC Gazprom are governed by the Corporate Governance Code of PJSC Gazprom, the Code of Corporate Ethics of PJSC Gazprom and the Anti-Corruption Policy of PJSC Gazprom.

  • Corporate Governance Code of PJSC Gazprom (the current version approved by the resolution of the annual General Shareholders Meeting in 2017) ensures effective protection of the shareholders’ rights and interests;
  • Code of Corporate Ethics of PJSC Gazprom (approved by resolution of the Board of Directors in 2014 and amended in 2018) governs the norms of business ethics for employees of the Company and the legal entities controlled by the Company;
  • Anti-Corruption Policy of PJSC Gazprom (approved by resolution of the Board of Directors in 2016) defines the measures for corruption prevention and countering for the sake of the civil society, PJSC Gazprom’s shareholders and its employees.

The Corporate Governance Code of PJSC Gazprom, the Code of Corporate Ethics of PJSC Gazprom and the Anti-Corruption Policy of PJSC Gazprom are available in Russian and in English at the official web site of the Company.

GRI 102-25

The Code of Corporate Ethics of PJSC Gazprom sets forth the important rules of business behaviour preventing conflicts of interest and corruption. They stipulate restrictions for work of the relatives at competing companies, participation of the relatives in competing companies and elected government bodies, restrictions on accepting presents, etc. The Code defines the procedure to be followed by the employees in case of a conflict of interest, formalizes the potential penalties in case of a breach of its provisions: public warning, public censure, forfeit of the bonus (in accordance with the by-laws), disciplinary sanctions (if there are indications of a disciplinary offense).

Proceeding from the provisions of the Code, not amending, but being able to supplement those provisions, the legal entities controlled by PJSC Gazprom shall develop and approve their own codes of ethics applicable to the employees of those legal entities.

In 2018, the Code of Corporate Ethics of PJSC Gazprom was amended: the provision on regular checks of the employees’ knowledge of corporate ethics was enacted. To this end, the electronic training course Corporate Ethics at PJSC Gazprom was developed based on the Code provisions. In 2019, distance learning was arranged for PJSC Gazprom’s employees with the final knowledge testing.

The permanent Corporate Ethics Commission is entrusted with arranging  activities aimed at ensuring compliance with the Code requirements and provisions. Every year, the Commission ensures that PJSC Gazprom’s management makes written commitments to comply with the Code provisions. In 2018, PJSC Gazprom’s management team, including the members of the Management Committee of PJSC Gazprom and the members of the Board of Directors of PJSC Gazprom, who are employees of PJSC Gazprom, signed and submitted to the Commission for safekeeping written commitments to comply with the Code.

The information on the Commission’s activities is communicated annually to the Chairman of the Management Committee of PJSC Gazprom. The Chairman of the Management Committee may pass the resolution to apply the sanctions stipulated in the Code on his own initiative, or as proposed by the Commission or the immediate supervisor of the employee breaching the Code of Corporate Ethics of PJSC Gazprom.

GRI 102-17GRI 102-25

For clarification of the provisions of the Code of Corporate Ethics of PJSC Gazprom, as well as its application (including information on the breach of the Code provisions), the employees may contact:

  • the Corporate Ethics Commission;
  • their immediate supervisors.

The Commission reviews the messages as they are received in accordance with the requirements of the effective legislation of the Russian Federation. In certain cases, the messages received are referred to the subsidiary to be considered on their merits by the local Corporate Ethics Commissions and the results of such consideration shall be communicated to the members of the Commission.

The Commission may be contacted by e-mail at, by Hot Line phone +7 (495) 719-11-71 or by letter sent directly to the Chairman of the Corporate Ethics Commission of PJSC Gazprom.

In 2018, the Commission received several messages from individuals, including two messages from the subsidiary employees. All messages received by the Commission were considered. During the reporting period, the Commission received no messages from legal entities.

In case of a conflict of interest, employees shall contact their immediate supervisors. Should the immediate supervisor fail to take steps in order to prevent or resolve a conflict of interest, or should the steps taken fail to resolve the conflict of interest, such employee shall notify the Commission accordingly.

GRI 205-1

The fundamental document related to corruption prevention and combating is the Anti-Corruption Policy of PJSC Gazprom. The document reflects commitment on the part of the Company’s leadership and employees to complying with the ethical standards of legal, open and honest business, improving the corporate culture, adhering to the best corporate governance practices and maintaining a good business reputation.

Pursuant to the Anti-Corruption Policy, PJSC Gazprom implements a set of comprehensive activities aimed at preventing and countering corruption, risks are identified and assessed, and areas where corruption risks are inherent are monitored.

The most significant corruption risks identified in course of risks assessment are:

  • Corruption risks in the course of procurement;
  • Corruption risks in the course of contracting.
GRI 205-2

All stakeholders, in particular the Company’s employees, members of the governance bodies, business partners, suppliers and contractors may consult the AntiCorruption Policy of PJSC Gazprom at the official web site of the Company.

In 2018, PJSC Gazprom approved the Anti-Corruption Plan for 2018–2020. The electronic version of the Plan is available at the information portal of PJSC Gazprom’s Corporate Protection Service and is freely accessible to the heads of PJSC Gazprom’s organizational units, subsidiaries and entities so that they could perform and develop their own anti-corruption measures based on their specificities.

The key anti-corruption activities include:

  • Monitoring the employees’ compliance with the legislation of the Russian Federation and the regulations on preventing and countering corruption;
  • Training employees on preventing and countering corruption, as well as enhancing the skills of employees whose job responsibilities include participation in countering corruption;
  • Legal due diligence of the draft regulations and other documents taking into account the relevant compliance practices as related to preventing and countering corruption;
  • Prompt response to and resolution of potential conflicts of interest;
  • Ensuring transparency of procurement activities;
  • Setting up and ensuring efficient operation of the internal control system.
GRI 102-17

One of the tools to counter corruption is the Gazprom Group’s Hotline for fighting fraud, corruption, and embezzlement that has been in operation since 2014. Separate Hot Lines are operated at PJSC Gazprom and several of its core subsidiaries. Any stakeholder may provide information on corrupt practices such person is aware of and the activities of the employees giving rise to his/her concern.

The initial information provided to the Hot Line is received by the Hot Line support team in a 24/7 mode by phone, e-mail, mail and fax, and through stationary Hot Line boxes installed at the office buildings of the Company.

The Hot Line contacts are available at PJSC Gazprom official web site and at the official web sites of the subsidiaries.

In 2018, the Hot Line received 211 messages containing information on potential fraud committed by third parties and complaints regarding the gas sales to population. All messages were received, and appropriate decisions were passed regarding them.

PJSC Gazprom’s Approach to Sustainability Risks Management
GRI 102-15
Economic risks
Risk Description Risk Management/Mitigation
Risks related to the global economy development Adverse economic conditions, deceleration of energy demand growth rates. Seeking to boost revenue from energy sales, PJSC Gazprom diversifies markets and sales channels, and expands the scope of natural gas applications.
Sanction-related risks Since 2014, Russia has been under sanctions imposed by the EU, the U.S. and other countries. There is a high probability that the restrictions will be expanded and will remain in effect for a long time. PJSC Gazprom pursues the policy of technological self-sufficiency and import substitution to reduce the Company’s exposure to economic restrictions imposed on or enacted against Russia.
Natural gas transit risks Natural gas transit through the territory of a third country is subject to the risk of default on transit obligations, entailing the risk of  the Gazprom Group failing to properly perform its obligations under gas supply contracts. In order to reduce dependence on transit countries, the Company is taking steps to diversify export routes, to broaden access to underground gas storage (UGS) facilities outside Russia, and to develop LNG trade.
Government regulation risks There remains the risk of changes in currency regulations and tax laws in the Russian Federation and other countries of the Gazprom Group’s operations. New requirements may be imposed by customs authorities, resulting from changes in rules of customs control and export duty payment procedures. The Company interacts on a regular basis with government authorities on improvements of the pricing and tariff policy, corporate taxation and customs law.
Amendments to tax and currency legislation are monitored systematically, and strict compliance is ensured. PJSC Gazprom interacts with government authorities for the purpose of timely adjustment of its operations in compliance with legislative amendments in the Russian Federation and abroad.
Financial risks PJSC Gazprom’s operating results are exposed to significant exchange rate volatility along with the multicurrency structure of its revenues and expenditures. Delayed or incomplete performance of contractual obligations by banks and financial institutions is always a possibility. To minimize losses due to exchange rate volatility, the Company applies hedging strategies to address the risk of market-driven shifts in exchange and interest rates. Transactions with credit institutions stay within credit risk limits, which are reviewed regularly, in particular with regard to the credit rating calculated by PJSC Gazprom and the Gazprom Group entities. Performance of contract obligations is monitored. PJSC Gazprom achieves financial stability by optimizing its debt burden.
Credit risks Late or incomplete discharge of the contractual obligations by the counterparties PJSC Gazprom and its subsidiaries assess and monitor creditworthiness of the counterparties assigning them internal credit ratings. The results are taken into account while determining the payment terms under the contracts.
Market risk Possible oil price and mercantile exchange gas price decline and/or stagnation at low levels give rise to risks that, if materialized, could result in revenue loss. The risk is managed by adjusting contract terms or entering into new contracts with terms and conditions corresponding to the current market environment, defining permitted transaction types and financial instruments, as well as counterparties qualified for such transactions.
Risks of tariff (pricing) regulation by natural monopolies Risks associated with state regulation of the wholesale prices for gas produced by PJSC Gazprom and its affiliates and sold at the domestic market, as well as the tariffs for gas transportation services using gas trunklines, affecting PJSC Gazprom’s operations and discharge of its obligations.
Manifestation of that risk could result in a failure to receive the planned revenue from gas sales and gas transportation services at the domestic market.
The Company maintains relations with the federal executive authorities in order to justify and defend the regulated gas prices and the tariffs for gas transportation services.
In order to mitigate the said risks, PJSC Gazprom continues active relations with the federal executive authorities as related to improvement of gas pricing, including development of the justified pricing principles, which enable the Company to have sustainable economic conditions for supplying gas to the domestic market.
Production risks Key business operations involving hydrocarbon production, transportation, processing and storage are associated with technological, technical, natural and climate risks, as well as the risk of inappropriate actions by employees or third parties. The UGSS ensures overall reliability of gas supplies. Its operational stability is achieved through implementation of up-to-date and innovative diagnostic methods, on-schedule general repair and maintenance operations, modification and upgrading. Subsidiaries are provided with a property and liability insurance coverage, which encompasses physical property (including offshore facilities), interruption of business at gas processing plants (GPPs), and industrial construction, contractor’s liability for repair and operation
Risks associated with the development of unconventional gas production Since the mid-2000s, increasingly large volumes of gas have been produced from unconventional sources, primarily U.S. shale formations. Extensive development of shale gas production in other regions could have an adverse impact upon demand for Russian pipeline gas supplied by PJSC Gazprom, in particular to the European and Chinese markets. PJSC Gazprom monitors, on a regular basis, the progress of the shale gas sector and other unconventional hydrocarbons industries throughout the world. The results of that monitoring, including economics of unconventional gas and its competitive potential in the Company’s existing and prospective markets, are regularly reviewed by PJSC Gazprom’s Board of Directors.
Environmental risks
Risk Description Risk Management/Mitigation
Risk of noncompliance with environmental legislation in the course of construction and operation of PJSC Gazprom’s facilities The main types of business operations involved in hydrocarbon production, transportation, processing and storage are associated with environmental pollution risk that has legal, financial and reputational implications. The Company implements its Environmental Policy, as well as programs and activities aiming to reduce its environmental footprint; engages in environmental protection activities; obtains environmental risk insurance; adopts green technologies.
The majority of subsidiaries have in place and continuously improve their respective environmental management systems (EMS) certified for conformity with ISO 14001:2015.
Environmental damage risk resulting from accidents/incidents associated with PJSC Gazprom’s business operations Accidental exposure resulting from PJSC Gazprom’s business operations may have an adverse impact on stakeholder, investor and government relations and may entail administrative or criminal liability that involves payment of applicable indemnities for environmental damage. PJSC Gazprom carries out the following activities:
  • Analysis of the potential adverse environmental impact and its implications resulting from the identified accidents and other emergencies at the Gazprom Group entities;
  • Presenting suggestions on activities for prevention, localization, impact mitigation and elimination of their consequences;
  • Approval of the corresponding documents;
  • Environmental damage assessment in case of accidents and other emergencies;
  • Development of the activities aimed at eliminating environmental damage.
Natural and climate-related risks
Risk Description Risk Management/Mitigation
Risks associated with climate change and greenhouse gas emissions There are risks stemming from temperature changes, high sensitivity of frozen soil, and adverse weather causing deformation of buildings and structures, pipeline transportation systems and service lines. Cutting GHG emissions is part of PJSC Gazprom corporate strategy. The Company is executing an action plan aiming to minimize the adverse impact of climate change on the Company’s operations. It takes steps to reduce (cease) flaring of associated petroleum gas, while also developing and implementing energy efficiency and energy saving programs.
Risks associated with climate conditions Prevailing climate conditions in the Gazprom Group’s key regions of operation affect its business performance in a significant way. A major part of the natural gas produced by Gazprom comes from Western Siberia, where production is difficult and relatively costly because of harsh climate. The Company has designed and implemented effective operating procedures adapted to severe climatic conditions. Programs are underway to boost efficiency of production and transportation systems, as well as of the gas transmission network.
Risks associated with adverse impacts on natural ecosystems Industry-specific operations give rise to the risks of land and water pollution, deterioration of soil and vegetation, and erosion. This may lead to degradation of natural ecosystems and loss of habitat for rare and endangered plant, animal and fungi species. Gazprom is implementing a Biodiversity Preservation Program based on a list of plant and animal species pertaining to the sustainability of marine ecosystems within the Arctic zone of the Russian Federation. Coordinated activities are underway, including those related to the enhancement of reliability of pipeline systems, landscape stabilization, soil reclamation and vegetation rehabilitation.
Social risks
Risk Description Risk Management/Mitigation
Occupational health and industrial safety risks PJSC Gazprom’s business operations are exposed to risks of adverse impacts on employees’ health and safety. The risk factors may have a material adverse effect on PJSC Gazprom’s financial condition, operating performance and reputation. The Gazprom Group has implemented and operates the Integrated System of Process Safety Management. That system is part of the PJSC Gazprom integrated management system. It is designed to manage occupational health and industrial safety risks, achieve targets and fulfil obligations in the area of occupational health, industrial and fire safety.
GRI 102-30

Pursuant to the Risk Management and Internal Control Policy of PJSC Gazprom (approved by Resolution of the Board of Directors of PJSC Gazprom No. 3195 dated December 25, 2018) and as related to risks identification in the context of sustainable development, the Board of Directors of PJSC Gazprom:

  • Approves the internal documents of PJSC Gazprom that set forth PJSC Gazprom’s policy as related to risk management and internal control, including the principles and approaches to RMICS organization, operation and development;
  • Sets maximum allowable and threshold risk levels for PJSC Gazprom and the Gazprom Group;
  • Considers the matters pertaining to organization, operation and performance of the RMICS, including the results of the RMICS assessment and self-assessment and issues RMICS improvement recommendations, if necessary.

RMICS performance assessment and monitoring is carried out through self-assessment, internal assessments and external assessments in compliance with the procedures stipulated in the local regulations of PJSC Gazprom and the local regulations of the Gazprom Group entities developed on the basis thereof.

Internal Audit

The Internal Audit helps achieve PJSC Gazprom’s goals through a systematic and consistent approach to assessment and improvement of risk management, control and corporate governance processes.

In order to enhance the Internal Audit function and in accordance with the directive of the Government to the agents acting on behalf of the Russian Federation dated June 24, 2015, No. 3984п-П13, in 2015 the Company developed and approved the Regulation on Internal Audit of PJSC Gazprom (Resolution of the Board of Directors No. 2621 dated November 6, 2015).

The Regulation sets forth the goals, objectives, status, powers and responsibilities of the Department that performs internal audit functions at PJSC Gazprom, as well as the scope and the content of internal audit activities.

Pursuant to the Regulation, organization and execution of internal audit at the Company is entrusted to the organizational unit of PJSC Gazprom — the Department, and at PJSC Gazprom’s subsidiaries and entities it is entrusted to the internal audit units of the subsidiaries and entities.

The key objective of the Department is to provide to the Board of Directors (via the Audit Committee of the Board of Directors) and the leadership of PJSC Gazprom independent and objective assurance and advice aimed at improving the Company’s performance.

The Department is a part of the Management Committee Administration and reports administratively to the Chairman of the Management Committee of PJSC Gazprom and functionally to the Board of Directors (via the Audit Committee of the Board of Directors). The Head of the Department is appointed and relieved from office by the Chairman of the Management Committee of the Company pursuant to the recommendation of the Deputy Chairman of the Management Committee — the Head of the Management Committee Administration of PJSC Gazprom approved by the Board of Directors (via the Audit Committee of the Board of Directors).

The organizational structure of the Department shall be agreed with the Audit Committee of the Board of Directors and approved by the Chairman of the Management Committee. The Department consists of three Directorates.

PJSC Gazprom's Internal Audit Structure

The activities of the Department are governed by the Regulation on Internal Audit of PJSC Gazprom, the Code of Professional Ethics of the Internal Auditor (approved by Resolution of the Board of Directors No. 1956 dated March 14, 2012), the Concept of Internal Audit System Development of OJSC Gazprom (approved by the Audit Committee on June 25, 2015), the Regulation on the Department (approved by the Audit Committee and enacted by the Order of PJSC Gazprom No. 419 dated June 23, 2016, as amended on March 22, 2017, No. 163), the international framework of professional internal audit practices and the methodological guidelines of the Federal Agency for State Property Management on internal audit.

PJSC Gazprom’s internal audit system is in compliance with the corporate governance principles set forth in the Russian Code of Corporate Governance (Guidelines 263-273).

The Department arranges and holds internal audits in compliance with the established procedure in the organizational units, subsidiaries and entities of PJSC Gazprom proceeding from the Russian and international best practices of internal audit. In 2018, the Department held the audits aimed at identifying the risks and assessing performance of the lines of business and business processes important for the Company as related to:

  • Achieving the targets by the audited units;
  • Efficiency and productivity of the activities;
  • Safeguarding the assets;
  • Compliance with contracts, laws and local regulations in the course of activities.

Proceeding from the outcomes of the audits, the Department develops and submits to PJSC Gazprom’s leadership the suggestions on eliminating violations and shortcomings, as well as their root causes. Based on the suggestions of the Department, the Chairman of the Management Committee issues orders to the organizational units, subsidiaries and entities of PJSC Gazprom aimed at improving the Company’s operations. Implementation of the orders is controlled by the Department.

In December 2015, an external assessment was carried out and an opinion was received on the compliance of PJSC Gazprom’s Internal Audit function with the Definition of Internal Audit, the Code of Ethics and the International Internal Audit Standards.

The Department has developed and put into practice the Internal Audit Quality Assurance and Improvement Program covering all aspects of the internal audit. In 2018, the Program was updated.

Every year, the internal performance assessment (self-assessment) is carried out and its results are presented to the Audit Committee of the Board of Directors.

The Department’s plan of internal audits for 2019 was approved by the Order of PJSC Gazprom.

The following internal audit matters were considered at the meetings of the Audit Committee of the Board of Directors in 2018:

  • Report on the results of the Department of PJSC Gazprom Management Committee Administration activities in 2017;
  • Amendments to the Regulation on Internal Audit of PJSC Gazprom;
  • Amendments to the Action Plan of the Department of PJSC Gazprom Management Committee Administration in 2018;
  • Draft Action Plan of the Department of PJSC Gazprom Management Committee Administration for 2019.
PJSC Gazprom’s membership in international organizations
GRI 102-13
International organization Form of participation
Global Gas Center (GGC) Participates in governance bodies and activities of the committees

The Gazprom Group’s companies are also members of the Russian Gas Society (RGS), the Union of Oil Exporters of Russia (UOER), the All-Russia Industrial Association of Energy Sector Employers, the Refining and Petrochemical Companies Association (RPCA), the European Association for the Streamlining of Energy Exchange (EASEE-gas), Association Technique de l’Industrie Européenne des Lubrifiants (ATIEL) and other associations.

Supply chain

GRI 102-9

For more details on PJSC Gazprom’s supply chain see Annual Report.

Procurement Management

The key documents governing the Gazprom Group’s procurement activities are:

  • Federal Law No. 223-FZ of July 18, 2011, On Procurement of Goods, Works and Services by Certain Types of Legal Entities;
  • Regulation on Procurement of Goods, Works and Services by PJSC Gazprom and Gazprom Group Companies (hereinafter referred to as Regulation on Procurement)(1).

The Regulation on Procurement sets forth the rules of procurement by PJSC Gazprom and the Gazprom Group companies. It is available in the Unified Information System in the area of public procurement (UIS) and at the Company’s web site.

For the purposes of implementing a common procurement policy throughout the Gazprom Group, in accordance with the principles set out in the Regulation on Procurement, the Gazprom Group has established the Central Procurement Management Body of the Gazprom Group (CPMB).

In order to perform procurement, the Gazprom Group uses the Automatic Electronic Procurement System of PJSC Gazprom (AEPS) covering the whole procurement cycle, from requirements planning to contract execution and performance.

The Gazprom Group’s electronic procurement is carried out through Electronic Trading Platform of GPB LLC (GPB ETP) (“Procurement of Gazprom Group Companies” section) integrated with the UIS and the AEPS.

Gazprom’s procurement system is based upon the following principles: timely and complete coverage of the needs; ensuring safe operation of hazardous production facilities; information availability, equity, fairness, non-discrimination; targeted and efficient use of funds; facilitation of a competitive environment; balance between the costs and the expected economic benefits.

In the course of procurement, sourcing is carried out and potential suppliers are invited to participate in procurement. Public pre-qualification is arranged in order to establish the supplier network. That enables the potential suppliers who passed the pre-qualification procedure and were included in the Register of Potential Bidders of the Gazprom Group to receive invitations for participation in procurement. Proceeding from the pre-qualification results, 530 entities were included in the Register as of December 31, 2018, including 292 SMEs.

In 2018, electronic procurement exceeded 99% of the total competitive procurement volume of the Gazprom Group.

(1) Regulation on Procurement of Goods, Works and Services by PJSC Gazprom and Gazprom Group Companies, as amended, approved by Resolution No. 3168, dated October 19, 2018, of the PJSC Gazprom Board of Directors, effective since November 2, 2018. Prior to November 1, 2018, the Regulation on Procurement approved by Resolution No. 1969, of April 19, 2012, of the PJSC Gazprom Board of Directors (as subsequently amended) was in force.

Number and value of contracts signed pursuant to the outcomes of competitive procurement in 2018
Number of contracts Value of the contracts signed, RUB billion
M&E procurement6,915169.8
Investment activities 567 88.0
Current business activities 6,348 81.8
Works, services 11,436414.3
Investment activities 421 162.5
Current business activities 11,015 251.8
Total 18,351584.1

Over 18,000 contracts were concluded based on the outcomes of competitive procurement for the total of RUB 584.1 billion with RUB 22.1 billion savings achieved.

Cost reduction by the Gazprom Group companies due to concluding contracts based on the outcomes of competitive procurement (efficiency of competitive procurement)(1) in 2018, RUB billion
M&E procurement 9.65
incl. under the Investment Program 4.93
Works, services 12.49
incl. under the Investment Program 1.05
Total 22.1
(1) Difference between the initial (maximum) prices and the contractual prices less the conventional costs of procurement organization and implementation.

If necessary, Gazprom CPMB could pass a resolution on expediency of non-competitive procurement to be performed using the methods stipulated in the Regulation on Procurement.

Products, Works and Services Quality Management

In order to ensure seamless and safe operation of the Group’s facilities, reduce the number of incidents and mitigate the adverse environmental impact, it is important to set up the quality assurance mechanism for procured products and services.

The corporate Quality Management System (QMS) was implemented and certified at Gazprom. QMS is an integral part of the supply chain established at the Gazprom Group.

In order to facilitate further QMS improvement the key Gazprom corporate standards 9000-2018 Quality Management System. Key Provisions and Glossary and 9000-2018 Management Systems. Quality Management Systems. Requirements were updated in 2018.

PJSC Gazprom Quality Policy is effective at the Company. That document defines the mission and the strategic goals and reflects the key priority areas of quality-related activities.

In order to evaluate compliance of the procured products with Gazprom’s standards, the corporate acceptance of piping products is carried out by the special Commission consisting of the relevant specialists of Gazprom and its subsidiaries and the INTERGAZCERT voluntary certification system is used. It supplements the statutory system of mandatory certification effective in the Russian Federation as related to products’ safety indicators. The Unified M&E Register is operated as the centralized source of information on equipment and materials permitted for use at the Group’s facilities. The suppliers pass multi-level quality control of products supplied. The supplier assessment procedure includes, in particular, assessment of business reputation, technological capabilities, supplier products and QMS compliance with Gazprom’s requirements.

Gazprom declared 2018 the Year of Quality, during which 365 activities were implemented. The subsidiaries organized and held over 110 thematic conferences, workshops and forums. The Year of Quality events were covered extensively by the media: over 270 articles were published in the regional media and the corporate publications, 8 news items were shown on corporate TV, materials were published at the subsidiaries’ web sites and official accounts in the social media.

In 2018, PJSC Gazprom monitored customer satisfaction with the quality of products and services as related to production, transportation and processing of gas, gas condensate, oil and petroleum products. The average Gazprom Group customer satisfaction index was 4.97 on a five-point scale.

QMS Development Plans

The Company aims to create an integrated QMS of PJSC Gazprom and its subsidiaries, which will improve the efficiency of the Gazprom Group’s operations in general.