5.2. Process Safety at the Gazprom Group

Safe working environment, life and health of employees are the Gazprom Group’s absolute priority. The Group seeks to mitigate fire, emergency and accident risks at hazardous facilities, establish process safety culture, and improve the Process Safety Management System.

Documents governing PJSC Gazprom’s occupational, industrial, fire and road traffic safety activities

• Labor Code of the Russian Federation;
• laws and regulations and other regulatory documents of the Russian Federation;
• PJSC Gazprom’s Occupational, Industrial, Fire and Road Safety Policy;Approved by order of PJSC Gazprom No. 416 dated September 17, 2019.
• PJSC Gazprom’s Process Safety Management System Development Strategy until 2021;Approved by order of PJSC Gazprom No. 432 dated June 22, 2017.
• PJSC Gazprom’s Process Safety Management System Development Strategy for 2021—2030.Approved by order of PJSC Gazprom No. 368 dated September 9, 2020.

The fundamental document governing PJSC Gazprom’s process safety management activities is the Occupational, Industrial, Fire and Road Safety Policy of PJSC Gazprom.

The Occupational, Industrial, Fire and Road Safety Policy of PJSC Gazprom is implemented via the Integrated System of Process Safety Management (ISPSM).

The ISPSM activities are regulated by a set of documents within PJSC Gazprom’s standardization system, with STO Gazprom 18000.1-001-2021 Integrated System of Process Safety Management.Key ProvisionsApproved by order of PJSC Gazprom No. 2 dated January 12, 2021.being the fundamental document in this regard.

The ISPSM development and enhancement activities carried out in 2020 were guided by PJSC Gazprom’s Process Safety Management Development Strategy until 2021.

In 2020, the Company also developed PJSC Gazprom’s Process Safety Management Development Strategy for 2021–2030 which defines the key priorities, as well as the development goals and objectives in process safety management.

Gazprom Neft has a vertically integrated process safety management system. The fundamental by-law regulating process safety at Gazprom Neft is the Policy on Industrial and Workplace Health, Safety and Environmental Protection; Fire and Transport Safety; and Civil Defense.

Gazprom Neftekhim Salavat has the Occupational and Industrial Safety Management System in place that is implemented in accordance with the Occupational, Industrial, Fire and Road Safety Policy of Gazprom Neftekhim Salavat.Approved by order No. 779 dated October 21, 2019.

STO Gazprom 18000.1-003-2020 Integrated System of Process Safety Management. Setting Goals, Developing Action Plans and Monitoring Their ImplementationApproved by order of PJSC Gazprom No. 26 dated January 24, 2020. determines the procedure for setting process safety goals, monitoring their achievement, as well as the procedure for developing and monitoring the implementation of programs and action plans to achieve such goals.

PJSC Gazprom set the following process safety goals for 2020:Administrative document of PJSC Gazprom No. 03-233 dated October 11, 2019.

• to create a safe working environment and to protect the lives and health of the employees of PJSC Gazprom;
• to reduce the risks of accidents and incidents at hazardous facilities;
• to ensure fire safety at PJSC Gazprom’s facilities.

86 subsidiaries, entities and branches of PJSC Gazprom covered by the ISPSM were successful in achieving their process safety goals, while 9 subsidiaries and 1 branch did not achieve them.

In the companies that failed to accomplish the goals, a variable pay serving as an incentive pay was included into their remuneration in line with the Methodology for Assessing Delivery of Occupational, Industrial and Fire Safety Objectives at PJSC Gazprom Subsidiaries and Entities.Approved by order of PJSC Gazprom No. 196 dated April 23, 2018.

The performance against the current goals is monitored on a weekly basis by the authorized Directorate of PJSC Gazprom.

Gazprom Neft Group achieved the goals to reduce the accident and occupational injury rates for its own and the contractors’ employees through adopting a three-level (strategic, tactical, and operational) process safety risk management model, adopting the PSE Tier 1–4 international process safety events classification in line with API-754 and IOGP 456, and introducing the External Assessment of Knowledge, a system of training and knowledge checks, in its Upstream Division.

In 2020, Gazprom Energoholding achieved the following operational process safety goals:

• no fatal workplace injuries of the employees recorded;
• reduction or non-exceedance of the set number of employee workplace injuries.

Gazprom Neftekhim Salavat failed to achieve two of the goals set for 2020:

• to reduce the risks of accidents and incidents at hazardous facilities;
• to ensure fire safety.

The goal “to create a safe working environment and to protect the lives and health of the employees” was successfully achieved at Gazprom Neftekhim Salavat.

The Company’s structural units perform hazard identification, risk assessment and risk management in accordance with STO Gazprom 18000.1-002 Integrated System of Process Safety Management. Hazard Identification and Risk Management for Process Safety Purposes.Approved by order of PJSC Gazprom No. 37 dated January 30, 2020. Compliance with the requirements of this corporate standard is monitored and evaluated by way of administrative in-process control over the adherence to process safety requirements, as well as in the course of the ISPSM audits.

In 2020, process safety risks assessment was carried out in each subsidiary, entity and branch covered by the ISPSM. The assessment revealed no critical risks at PJSC Gazprom and identified 21 process safety risks, including 3 significant risks:

• the risk of injury to employees in road traffic accidents;
• the risk of loss of containment in process equipment and technological devices at hazardous facilities of gas trunklines;
• the risk of fire in motor vehicles.

There are risk response measures and risk mitigation actions stipulated for each risk. In addition, each of the risks was found to be highly responsive to control. The results of hazard identification and risk assessment are taken into account when formulating process safety goals for PJSC Gazprom, its subsidiaries, entities and branches.

To mitigate the key process safety risks, Gazprom Neft launched a company-wide Safety Framework project.

Gazprom Energoholding uses mechanisms of occupational hazard identification and occupational risk assessment, and mechanisms incorporated in the multilayered hazard elimination and risk mitigation system. Employees are trained on the rules and methods of hazard and risk detection, identification and assessment.

Gazprom Neftekhim Salavat ensures continuous hazard identification, risk assessment, risk analysis and risk management for industrial and occupational safety purposes. To determine the procedure for hazard identification, risk assessment and development of measures aimed at managing occupational and industrial safety risks, corporate standard STO 18.02.2019-ISO Hazard Identification and Risk Management was developed.

In 2020, the most common accidents at work were falls and road traffic accidents.

The analysis of the reasons behind accidents at PJSC Gazprom became the foundation for the development of a set of measures, and the implementation of these measures as of the date has made it possible to reduce the possibility of specific significant risks. As a result of this, the risk of injurues in road traffic accidents has reduced by 80% since 2018, and the risk of employee injuries resulting from falls has reduced by 61% since 2018.

Despite precautions taken to the contrary, a number of employee fatalities in the course of production activities occured in 2020.

To identify the reasons behind process safety events and implement the measures for their prevention, Gazprom has in place a procedure to determine and analyse the root causes of incidents (STO Gazprom 18000.4-008-2019 Integrated System of Process Safety Management. Analysis of Root Causes of Incidents. Procedure for their Identification and Development of Preventive Measures).Approved by order of PJSC Gazprom No. 208 dated May 31, 2019.

In 2020, a decrease in injury frequency rate was observed at the companies covered by the ISPSM, Gazprom Energoholding and Gazprom Neftekhim Salavat.

Lost time injury frequency rate (LTIFR) at the companies covered by the ISPSM, Gazprom Energoholding and Gazprom Neftekhim Salavat decreased in 2020 as compared to 2019.

In 2020, fatality rate (FAR) resulting from incidents decreased as compared to 2019 across the subsidiaries of PJSC Gazprom. There were no fatal workplace injuries at the Gazprom Neft Group, Gazprom Energoholding and Gazprom Neftekhim Salavat in 2019 and 2020, and a zero fatality rate (FAR) was achieved.

PJSC Gazprom’s spending on labor conditions improvement, labor safety and occupational health amounted to RUB 130 million.For PJSC Gazprom Administration and its 4 branches.

In 2020, the following measures were implemented to reduce the exposure of workplaces to occupational hazards and, consequently, to improve labor conditions.

Measures Intended to Reduce the Exposure of Workplaces to Occupational Hazards:

• Overhaul of buildings and structures
• Reduction of work time spent in harmful working environments (technological process optimization)
• Renovation, replacement of special equipment
• Improvement of workplace ergonomics (provision of comfortable furniture, installation of drinking water dispensers)
• Renovation of equipment
• Upgrade of climate and lighting systems
• Noise insulation of spaces containing the equipment with increased noise characteristics
• Introduction of remote automatic control systems for technological processes and production activities, etc.

All employees of PJSC Gazprom tasked with jobs exposed to hazardous working environments are provided with personal protective equipment (PPE), which ensures their full protection against harmful and hazardous factors at workplaces.

The Company has in place a comprehensive system of products admission to its facilities. As part of this admission procedure, the PPE needs to show compliance with the requirements of PJSC Gazprom’s standards of series “Personal Protective Equipment Used at PJSC Gazprom”.

Every year, a special labor conditions assessment (SLCA) is carried out across the Gazprom Group companies. Based on its outcomes, activities aimed at the improvement of the employees’ labor conditions are developed and implemented.

199,923 workplaces were covered by the SLCA in the companies covered by the ISPSM, which accounts for 95.4% of the total number of their workplaces. The remaining 4.6% are newly-arranged workplaces scheduled for the SLCA in 2021.

Following the results of the SLCA, 86.3% of workplaces were identified as those with optimal and allowable workplace conditions (Class 1 and 2), and harmful labor conditions (Class 3) were revealed at 13.7% of workplaces. No workplaces exposed to hazardous labor conditions (Class 4) were identified in the companies covered by the ISPSM.

Since 2013, the number of workplaces exposed to harmful and hazardous working environments in the subsidiaries of PJSC Gazprom has declined from 38% to 13.7%. Similar rates for the Russian Federation by type of activity were as follows in 2019: mining — 55.4% , oil and gas — 33.1%. The number of workplaces exposed to harmful working environments was reduced thanks to the implementation of action plans for labor conditions improvement developed by PJSC Gazprom’s subsidiaries.

To improve and ensure sanitation of the working environment, PJSC Gazprom’s subsidiaries developed and implemented over 5,844 activities for a total amount exceeding RUB 1,358.1 million. The working conditions of 8,303 employees were improved.

As of December 31, 2020, PJSC Gazprom operated 4,727 hazardous facilities.

Industrial safety events are classified in compliance with the requirements of Federal Law No. 116-FZ “On Industrial Safety” dated July 21, 1997.

To maintain fixed assets and equipment in a good state of repair and condition, Gazprom implements a number of programs:

• Comprehensive Program for the Reconstruction and Re-Equipment of Gas Production Facilities for 2021–2025;
• Program for Comprehensive Overhaul of Linear Sections of Gas Trunklines of PJSC Gazprom for 2017–2021;
• Comprehensive Action Plan to Improve the Reliability and Safety of Gas Transmission Facilities for 2017–2021;
• Comprehensive Program for the Reconstruction and Re-Equipment of Gas Transmission Facilities for 2021–2025.

PJSC Gazprom has also developed and adopted corporate standard STO Gazprom 18000.2-010-2020 Integrated System of Process Safety Management. Ensuring Preparedness for Emergencies at the Gazprom Group. The standard specifies requirements for training the Gazprom Group’s employees to respond to possible emergencies at hazardous facilities of PJSC Gazprom, its subsidiaries and branches.

Every year, the Company develops a Fire Safety Organizational and Technological Activities Plan for PJSC Gazprom FacilitiesAdministrative Document No. 03-270 dated December 8, 2019. aimed at implementing measures to prevent fires and violation of fire safety requirements.

Development of a strong process safety culture, commitments, behavior models, workplace policies and approaches, including motivation, is one of the key areas of implementing PJSC Gazprom’s Process Safety Management System Development Strategy until 2021.Approved by order of PJSC Gazprom No. 432 dated June 22, 2017.

Process safety culture is characterized by understanding the importance of process safety for personal and social values, prevalence of safe behavior stereotypes in everyday activities and dangerous situations.

Development of leadership skills among managers and promotion of employee commitment are among the Company’s main goals in forging the process safety culture. PJSC Gazprom has in place theGazprom Group Management Leadership Skills Development Program.Approved by Vitaly Markelov, Deputy Chairman of the PJSC Gazprom Management Committee on February 15, 2018. The Company arranges annual leadership workshops for its executives under the Process Safety Leadership special-purpose program. In November 2020, twelve executives of PJSC Gazprom’s structural units took part in a remote workshop.

It is planned to train 62 top executives of subsidiaries under the Process Safety Leadership target special-purpose in 2021.

The ISPSM stipulates vertical and horizontal corporate communications promoting open communication of process safety matters to employees. The interests of employees in process safety matters are represented by Gazprom Trade Union and occupational safety officers.

In 2020, Gazprom Trade Union and its structural units performed trade union (public) control in relation to occupational safety. The work was carried out by 23 in-house technical labor inspectors and 7,267 occupational safety officers.

The technical labor inspectors conducted 305 inspections of the state of occupational safety, identified a total of 464 violations, and issued 61 notices to eliminate the violations of the labor legislation. Eleven written claims from employees concerning the violation of their occupational safety rights were reviewed; all of these claims were resolved in favor of employees.

The procedure of dealing with Hot Line reports, complaints about actual or potential incidents, as well as process safety proposals is regulated by R Gazprom 18000.2-012-2020.Approved by Sergey Menshikov, Member of the Management Committee, Head of Department on October 30, 2020.

The Gazprom Group has set requirements to employees’ process safety skills for each type of activity. Training and Professional Development Programs have been developed for each category of the Gazprom Group employees at both internal professional training centers and specialized educational organizations.

PJSC Gazprom has set up the Central Examination Board to assess occupational safety knowledge and conduct industrial safety certification.

Occupational safety knowledge assessment and industrial safety certification are carried out by Central Examination Boards at PJSC Gazprom subsidiaries and entities, and by Examination Boards at branches.

The executives and specialists of PJSC Gazprom’s Administration undergo training in occupational safety at Gazprom Corporate Institute to prepare for further certification by the Central Examination Board.

In 2020, the Central Examination Board assessed occupational safety knowledge of 348 employees of PJSC Gazprom structural units and 192 executives and members of Central Examination Boards.

In addition, Central Examination Boards and Examination Boards of PJSC Gazprom subsidiaries and entities arranged occupational safety training and knowledge assessment for 228,360 employees, and industrial safety certification for 2,300 employees.

The ISPSM defines general safety requirements for works and services performed by contractorsFor PJSC Gazprom subsidiaries that are part of the Unified Gas Supply System (involved in production, transportation, storage and processing), the main contractor organizations are subsidiaries enabling the functioning of the UGSS, which are covered by the ISPSM. They include, in particular, the subsidiaries and entities performing overhauls, construction, design and survey activities, supplying energy resources and providing motor and railway transport and special machinery and equipment. and subcontractors under any construction or reconstruction project.

Process safety violations by contractors may delay repair and construction and thus result in late commissioning of production facilities. If any violations affecting safety and quality are revealed, the works are suspended until decisions on the elimination of faults are made jointly with the relevant contractor.

During the procurement stage, potential suppliers and contractors are checked for availability of documents certifying their compliance with process safety requirements. Suppliers and contractors working at the Group’s facilities shall strictly comply with all occupational, industrial, and fire safety standards and regulations. Contractors failing to meet the above criteria are not allowed to take part in the procurement procedures.

Gazprom Neft’s relations with its partners in terms of process safety are based on the Code of Upstream Division’s Interaction with Contractors binding upon all existing and new contractors.

Process safety and environmental protection requirements form an integral part of Gazprom Energoholding’s contracts. Contractors’ employees undergo trainings and briefings in labor and occupational safety. Third-party employees also take part in corporate safety activities and meetings.

When selecting contractors, Gazprom Neftekhim Salavat takes into account their compliance with the labor and occupational safety requirements by including such requirements in its procurement documents. In 2020, a total of 41 companies were checked, and 9.7% of their bids were rejected due to non-compliance with the set criteria.