Appendix
PJSC Gazprom, the Company — the parent company of the Gazprom Group — Public Joint-Stock Company Gazprom — and its 100% subsidiaries and entities involved in exploration, production, transportation, underground storage, processing of hydrocarbons, as well as operation of the Unified Gas Supply System (UGSS):
Gazprom Dobycha Astrakhan LLC, Gazprom Dobycha Irkutsk LLC, Gazprom Dobycha Krasnodar LLC, Gazprom Dobycha Kuznetsk LLC, Gazprom Dobycha Nadym LLC, Gazprom Dobycha Noyabrsk LLC, Gazprom Dobycha Orenburg LLC, Gazprom Dobycha Urengoy LLC, Gazprom Dobycha Shelf Yuzhno-Sakhalinsk LLC, Gazprom Dobycha Yamburg LLC, Gazprom Nedra LLC, Gazprom Transgaz Volgograd LLC, Gazprom Transgaz Grozny LLC, Gazprom Transgaz Yekaterinburg LLC, Gazprom Transgaz Kazan LLC, Gazprom Transgaz Krasnodar LLC, Gazprom Transgaz Makhachkala LLC, Gazprom Transgaz Moscow LLC, Gazprom Transgaz Nizhny Novgorod LLC, Gazprom Transgaz Samara LLC, Gazprom Transgaz Saint Petersburg LLC, Gazprom Transgaz Saratov LLC, Gazprom Transgaz Stavropol LLC, Gazprom Transgaz Surgut LLC, Gazprom Transgaz Tomsk LLC, Gazprom Transgaz Ufa LLC, Gazprom Transgaz Ukhta LLC, Gazprom Transgaz Tchaikovsky LLC, Gazprom Transgaz Yugorsk LLC, Gazprom UGS LLC, Gazprom Pererabotka LLC, Gazprom NGHK LLC, Gazprom Energo LLC, Gazprom Tsentrremont LLC, Gazprom Geotekhnologii LLC, Gazprom Gazomotornoye Toplivo LLC, Gazpromavia Aviation Company LLC, Gazpromtrans LLC, Gazprom Flot LLC, Gazprom Invest LLC, Gazprom Sotsinvest LLC, Gazprom trubinvest LLC.
Gazprom Neft Group and Gazprom Neft mean PJSC Gazprom Neft and its subsidiaries.
Gazprom Neftekhim Salavat means Gazprom Neftekhim Salavat LLC and its subsidiaries.
Gazprom Energoholding means Gazprom Energoholding LLC and its subsidiaries (PJSC Mosenergo, PJSC MOEK, PJSC OGK-2, PJSC TGC-1).
Gazprom Mezhregiongaz Group, or Gazprom Mezhregiongaz, means Gazprom Mezhregiongaz LLC and its subsidiaries.
The Gazprom Group, Gazprom or the Group mean PJSC Gazprom (with all the above subsidiaries and fullyowned entities) and the following companies:
Gazprom Neft Group, Gazprom Energoholding, Gazprom Neftekhim Salavat, Vostokgazprom Group, Gazprom Mezhregiongaz Group, JSC Daltransgaz, Sakhalin Energy Investment Company Ltd. (Sakhalin Energy), OJSC Severneftegazprom, CJSC Purgaz.
The Group’s gas business companies include PJSC Gazprom (100% of its subsidiaries and entities involved in production, transportation, underground storage and refining of hydrocarbons, as well as operation of the UGSS): Gazprom Mezhregiongaz, Vostokgazprom Group (JSC Gazprom Dobycha Tomsk), JSC Daltransgaz, Sakhalin Energy Investment Company Ltd., OJSC Severneftegazprom, CJSC Purgaz.
The environmental impact, ecological and economic indicators are shown for the Gazprom Group’s operations in Russia.
The Gazprom Group’s environmental protection expenditures, RUB million
| Indicator | 2019 | 2020 | 2021 | Change 2021/2020, % |
|---|---|---|---|---|
| Investments in capital assets aimed at environmental protection and rational use of natural resources | 20,421.32 | 13,987.15 | 60,529.57 | 332.8 |
| Current environmental protection expenditures | 32,180.11 | 34,440.66 | 36,303.25 | 5.4 |
| Negative environmental impact fees | 617.68 | 693.11 | 710.64 | 2.5 |
| The Gazprom Group, total | 53,219.11 | 49,120.92 | 97,543.46 | 98.6 |
Environmental penalties paid by the Gazprom Group (excluding joint operations) in the Russian Federation, RUB million
| Indicator | 2019 | 2020 | 2021 | Change 2021/2020, % |
|---|---|---|---|---|
| Penalties paid | 14.63 | 12.38 | 23.86 | 92.7 |
Financial implications and other risks and opportunities due to climate change (in accordance with the TCFD recommendations)
| Risk/opportunity | Type | Exposure | Financial implications before mitigants | Probability | Materiality | Specific impact on the Company |
|---|---|---|---|---|---|---|
| Risk 1: Carbon tax introduction | Transitional | Higher indirect (operating) costs as a result of Russia potentially introducing taxes to ensure the achievement of national commitments to reduce GHG emissions. | Higher costs due to the introduction of GHG emission fees. | Low | Moderately high | Tax payments will increase PJSC Gazprom’s financial burden and impact expenditure restructuring and optimization, in particular resulting in less spending on GHG emission reduction projects. |
| Risk 2: Emissions cap and trade | Transitional | Higher production costs and weaker competitive capacity due to Russia introducing the law on GHG emission reduction in 2021 to determine the accounting mechanism for corporate emissions, and potential caps in this area that may force PJSC Gazprom to cut emissions below economically viable levels and targets. | Higher production costs and weaker competitive capacity. | Low | Moderately high | The new law may have an impact on the Company, for instance, in the form of higher operating expenses as a result of carbon emission taxes, marginal rates or trading mechanisms, and a weaker competitive position. This risk will prompt the Company to look for new markets and target new domains. |
| Risk 3: Emerging laws and regulations for existing products/services | Transitional |
Lower revenues due to weaker demand for products and services. The Paris Agreement is giving rise to new regulatory requirements as countries seek to meet their stated GHG reduction contributions. The countries that rely on natural gas supplied by Gazprom may potentially impose legal requirements or implement measures to support renewable energy to meet their national commitments to reduce GHG emissions, which is likely to result in lower demand for gas. | Lower revenues due to weaker demand for products and services. | Low | High |
The EU’s high subsidies for green hydrogen projects may affect the future demand for blue hydrogen and natural gas. Weaker demand for products and services will reduce PJSC Gazprom’s revenue and force the Company to introduce mitigants and preventive measures, including tapping into new sales markets and niches for natural gas application. This risk will prompt the Company to look for new markets and target new domains. |
| Risk 4: Changes in the average temperature. Snow and ice | Physical | Possible deviations from standard operating procedures and process flows due to changing average temperatures, which translates into seasonal production drops; thawing of the most sensitive frozen soils; weather hazards rising in number and strength; shorter periods of winter roads operation. | Higher operating expenses, lower revenues. | Possible | Moderately high |
At high risk is a major gas production facility with prospective annual volumes comparable to current domestic supplies and twice as much as non-FSU supplies. This risk may translate into higher operating expenses and greater financial burden for the Company, including spending on additional monitoring of infrastructure in the permafrost area and reconstruction of deformed facilities. The Company takes proactive measures aimed at stabilizing soils, among other things, as part of its program to adapt business activities to climate and geocryological changes. |
| Risk 5: Extreme weather hazards rising in frequency and strength | Physical | Lower productivity/downtime and weaker revenues are possible due to risks of adverse weather conditions (wind storms, squalls, hail, steady rain, extreme fire danger, severe flooding, etc.) Hazardous natural phenomena may take place in the location of PJSC Gazprom’s process facilities with varying frequency and duration. | Lower productivity/downtime. Lower revenues. | Possible | Moderately high |
Due to weather hazards, the regions where Gazprom operates extensive infrastructure are potentially exposed to the risks of damage to buildings and structures, higher failure rates of pipeline transportation systems and deformation of water supply and sewerage systems, which may result in emergencies. This risk may translate into high construction and reconstruction costs and a decrease in revenues equivalent to the value of gas lost in an emergency. Updating corporate standards enables the Company to factor in risks during the design and operation of buildings and structures. |
| Risk 6: Changes in the bearing capacity of permafrost soils, emerging dangerous exogenous processes | Physical | Destruction of supporting infrastructure across Gazprom’s production and transportation systems driven by dangerous exogenous processes (water thermal erosion, thermokarst, cryoplanation, solifluction, frost heaving, etc.). | Destruction of supporting infrastructure, higher operating expenses. | Possible | High | The Company’s operating expenses may rise due to damage caused by changes in the permafrost bearing capacity, emerging dangerous exogenous processes and their impact on PJSC Gazprom’s facilities and supporting infrastructure in the Far North. |
| Risk 7: Deterioration of the Company’s reputation (image) due to its failure to meet the stated GHG reduction targets | Transitional |
Lower revenues due to weaker demand for products and services. Weaker market capitalization and investment case if the risk materializes. | Lower revenues due to weaker demand for products and services. | Extremely low | Low | We cannot quantify risk consequences, as responses from various stakeholder groups (investors, customers, government agencies, etc.) may vary significantly depending on other external factors. Our products have a minimum carbon footprint. |
| Risk 8: Changing consumer behaviors | Transitional | Lower revenues caused by weaker demand for products and services on the back of an increased importance of carbon intensity in production, and consumer preferences shifting in favor of renewable energy | Lower revenues due to weaker demand for products and services. | Low | Moderately high | The carbon intensity becomes increasingly important as it affects competitiveness of products in the commodity and financial markets. The onrush of alternative energy sources threatens to shift consumer preferences in favor of renewable energy. |
| Risk 9: Uncertain market environment | Transitional | Higher CAPEX as a result of the EU considering imposing prohibitive customs barriers and duties on products originating from the countries that defy GHG reduction efforts. | Higher CAPEX | Low | Moderately high | The proposed revision of the EU Energy Taxation Directive, carbon border adjustment mechanism for certain local industries, and legislative amendments to strengthen the climate change policy due to changes in the EU Emissions Trading System Directive may bring about additional restrictions on Russian gas supplies to the region. This risk will prompt the Company to look for new markets and enter new niches. |
Financial implications and other risks and opportunities due to climate change (in accordance with the TCFD recommendations)
| Risk/opportunity | Type | Exposure | Financial implications before mitigants | Probability | Materiality | Specific impact on the Company |
|---|---|---|---|---|---|---|
| Opportunity 1: Development and/or expansion of low-emission products and services | Products and services |
Higher revenues driven by stronger demand for lower-emission products and services. Transport migration to natural gas helps significantly reduce emissions during fuel production and along the entire production chain. Growth of Gazprom’s NGV fuel sales correlates directly with reduction of GHG emissions. | Higher revenues driven by stronger demand for a broader offering of lower-emission products and services. | Very high | Moderately low | Natural gas production and sales as motor fuel is a strategic business of PJSC Gazprom. |
| Opportunity 2: Low-emission energy sources | Energy resource | Lower operating expenses (for example, by using the least expensive emission reduction techniques). Potential for increased natural gas consumption in energy generation due to a smaller share of coal-fired generation and stronger demand for natural gas driven by gasoline and diesel replacement by gas motor fuel. | Lower operating expenses (for example, by using the least expensive emission mitigating techniques). | Relatively high | Moderately high | Gazprom Energoholding’s energy mix saw coal and fuel oil replaced by natural gas, which led to a significant reduction of emissions, including pollutants, into the air. The company launched new highly efficient generating capacities while also decommissioning obsolete underperforming equipment. In particular, this helped cut sulphur dioxide emissions and relevant fees as a result. |
| Opportunity 3: Carbon market participation | Markets | Emission quota trading will give a strong push to carbon prices and stimulate replacement of coal as a fossil fuel with natural gas. | Return on investments in lowemission technology. | Possible | Low | PJSC Gazprom is considering participation in pilot climate projects and carbon unit trading (emission quotas and units of emission reduction driven by climate projects). This will enable us to gain experience in such initiatives related to offsetting emissions. |
| Opportunity 4: Lower demand for fuel and energy resources | Energy resource | An increase in the average temperature will cause the Company to produce and purchase less electricity and consumer demand for fuel and energy to drop. | Lower operating expenses. | Relatively low | Low | An increase in the average temperature will cause the Company to produce and purchase less electricity and, therefore, generate less Scope 1 and 2 GHG emissions. |
| Opportunity 5: Higher loyalty and trust from stakeholders | Sustainability | Sustainable corporate reputation (image) translated into higher loyalty and trust from stakeholders and a stronger demand for current products and services. | Higher shareholder value. | More likely than not | Medium | GHG reduction programs and initiatives and publications about GHG emissions in mass media improve stakeholder trust and loyalty and contribute to the alignment of the Gazprom Group’s activities in the regions of operation with stakeholder initiatives. |
| Opportunity 6: Use of new technology and development of hydrogen energy projects | Energy resource | Production and use of hydrogen and methane mixtures significantly reduces GHG and other emissions of heat engines. | Development of hydrogen energy driven by industrial production of hydrogen. Expanding the product range, penetrating new niches. | Relatively high | Medium | PJSC Gazprom patented the most economically viable method to produce hydrogen and methane mixture from natural gas by means of adiabatic conversion using offgas heat. Hydrogen and methane mixture used in the gas turbine unit helps cut СО2 emissions. In 2021, to create and pilot innovative low-carbon technologies in production, storage, transportation and use of hydrogen and methane mixtures and hydrogen produced from natural gas and develop applications for our own processes, we set up a dedicated unit, Gazprom Hydrogen. |
| Opportunity 7: Use of more efficient production and distribution processes | Efficient use of resources |
Carbon footprint of the Russian natural gas tends to decrease due to annual upgrades and energy efficiency improvements in the gas transmission system. Reduction of GHG emissions correlates directly with a decrease in natural gas (methane) losses during transportation and a technology-based reduction in natural gas consumption for internal needs. | Lower operating expenses (for example, by improving efficiency and reducing costs). | Almost surely | High | Innovative technology used by PJSC Gazprom to reduce gas losses during transportation helps shrink the carbon footprint of Russian natural gas. |
Fuel and Energy Savings
The following standards were used to calculate the fuel and energy savings:
- STO Gazprom 3.3-2-044-2016 Standards and Targets of Resource Consumption, Equipment Usage and Inventory Development at PJSC Gazprom. Methodology of Setting Natural Gas Consumption Limits for Internal Process Needs and Technological Losses during Trunkline Gas Transportation;
- STO Gazprom 2-1.20-601-2011 Methodology of Estimating the Effect of Fuel and Energy Savings from Internal Process Needs of the Gas Trunkline Transportation;
- STO Gazprom 2-1.9-191-2008 Methodology of Estimating the Heat Consumption Limits for the Internal Process Needs of OJSC Gazprom’s Gas Transportation Businesses;
- STO Gazprom 2-3.5-113-2007 Methodology for Assessing Energy Efficiency of Gas Transportation Facilities and Systems;
- STO Gazprom 3.3-2-001-2006 Methodology of Setting Power Consumption Limits for Internal Process Needs of Gas Transportation;
- STO Gazprom 3.0-2006 Standards and Targets of Resource Consumption, Equipment Usage and Inventory Development at OJSC Gazprom. Main Provisions;
- STO Gazprom RD 1.19-126-2004 Methodology of Estimating Unit Gas Consumption Standards for Heat Generation and Calculation of Losses in Heating Systems (Boiler Stations and Heat Supply Networks);
- R Gazprom 2-1.20-819-2014 Methodology of Estimating the Amount of Fuel and Energy Savings from Implementation of Energy Saving Initiatives at the Subsidiaries;
- R Gazprom 2-1.20-742-2013 Methodology of Defining the Energy Saving Potential of Process Facilities.
Fuel and energy savings are shown for PJSC Gazprom’s subsidiaries:
Gazprom Dobycha Astrakhan LLC, Gazprom Dobycha Krasnodar LLC, Gazprom Dobycha Nadym LLC, Gazprom Dobycha Noyabrsk LLC, Gazprom Dobycha Orenburg LLC, Gazprom Dobycha Urengoy LLC, Gazprom Dobycha Shelf Yuzhno-Sakhalinsk LLC, Gazprom Dobycha Yamburg LLC, OJSC Gazprom Transgaz Belarus, Gazprom Transgaz Volgograd LLC, Gazprom Transgaz Grozny LLC, Gazprom Transgaz Yekaterinburg LLC, Gazprom Transgaz Kazan LLC, Gazprom Transgaz Krasnodar LLC, Gazprom Transgaz Makhachkala LLC, Gazprom Transgaz Moscow LLC, Gazprom Transgaz Nizhny Novgorod LLC, Gazprom Transgaz Samara LLC, Gazprom Transgaz Saint Petersburg LLC, Gazprom Transgaz Saratov LLC, Gazprom Transgaz Stavropol LLC, Gazprom Transgaz Surgut LLC, Gazprom Transgaz Tomsk LLC, Gazprom Transgaz Ufa LLC, Gazprom Transgaz Ukhta LLC, Gazprom Transgaz Tchaikovsky LLC, Gazprom Transgaz Yugorsk LLC, Gazprom Pererabotka LLC, Gazprom UGS LLC, Gazprom Energo LLC, Gazprom Mezhregiongaz LLC.
| Waste type | 2019 | 2020 | 2021 | Change 2021/2020, p.p. |
|---|---|---|---|---|
| Bottom ash waste | 44 | 37 | 38 | 1 |
| Drilling waste | 27 | 34 | 34 | 0 |
| Oil sludge | 6 | 9 | 5 | -4 |
| Other | 23 | 20 | 23 | 3 |
Gazprom Group companies’ waste generation by hazard class, thousand tons
| Indicator | 2019 | 2020 | 2021 | Change 2021/2020, % |
|---|---|---|---|---|
| Hazard Class I | 0.24 | 0.23 | 0.21 | -8.7 |
| Hazard Class II | 0.83 | 0.79 | 0.95 | 20.3 |
| Hazard Class III | 154.59 | 244.36 | 99.10 | -59.4 |
| Hazard Class IV | 1,293.21 | 1,510.33 | 1,417.81 | -6.1 |
| Hazard Class V (almost non-hazardous waste) | 1,888.21 | 1,474.12 | 1,528.51 | 3.7 |
| Total | 3,337.08 | 3,229.83 | 3,046.59 | -5.7 |
| Class I and II waste in total waste generated, % | 0.03 | 0.03 | 0.04 | 0.01 п. п |
The increase in the Hazard Class II waste generation (up 20.3% year-on-year) was driven by a large number of scheduled maintenance, write-off and disassembly works on motor vehicles, which involve the replacement of automotive batteries, and the replacement of batteries for uninterrupted power supply systems at several subsidiary facilities.
Waste handed over for recycling, thousand tons
| Indicator | 2019 | 2020 | 2021 | Change 2021/2020, % |
|---|---|---|---|---|
| Total, incl.: | 1,173.66 | 1,479.79 | 1,405.75 | -5.0 |
| waste recycled at the facility | 94.71 | 58.58 | 285.01 | 386.5 |
| waste handed over to other business entities for recycling | 1,078.95 | 1,421.21 | 1,120.74 | -21.1 |
Waste handed over to neutralization, storage or otherwise treated, thousand tons
| Indicator | 2019 | 2020 | 2021 | Change 2021/2020, % |
|---|---|---|---|---|
| Total waste managed, incl.: | 126,931.2 | 128,068.5 | 128,814.0 | 0.6 |
| generated as of the beginning of the reporting year | 123,507.3 | 124,735.7 | 125,661.5 | 0.7 |
| generated in the reporting year | 3,337.1 | 3,229.8 | 3,046.6 | -5.7 |
| received from other business entities | 86.8 | 103.0 | 105.9 | 2.8 |
| Processed at the facility | 0.0 | 0.0 | 0.0 | 0.0 |
| Recycled at the facility | 94.7 | 58.6 | 285.0 | 386.3 |
| Neutralized at the facility | 67.4 | 90.2 | 102.9 | 14.1 |
| Indicator | 2019 | 2020 | 2021 | Change 2021/2020, % |
|---|---|---|---|---|
| Handed over to other business entities: | ||||
| for processing | 5.2 | 28.5 | 15.6 | −45.3 |
| for recycling | 1,079.0 | 1,421.2 | 1,120.7 | −21.1 |
| for neutralization | 231.9 | 247.5 | 196.1 | −20.8 |
| for storage | 1.4 | 2.4 | 13,250.4 | 552,000.0 |
| for burial | 335.9 | 285.3 | 186.7 | −34.6 |
| Disposed at operated (own) storage facilities | 1,168.7 | 926.8 | 902.3 | −2.6 |
| Disposed at operated (own) burial facilities | 383.3 | 265.0 | 344.2 | 29.9 |
| Generated as of the end of the reporting year | 124,732.3 | 125,669.8 | 113,312.3 | −9.8 |
Waste handed over to other business entities for storage increased significantly because, as of the beginning of the year, PJSC OGK-2 (Gazprom Energoholding) recorded bottom ash waste transferred to Krasnoyarskaya GRES-2 which, together with its waste accumulated on storage sites, became the property of another legal entity as a result of a sale and purchase transaction.
Handling of oil-contaminated waste at the Gazprom Group, %
| Activity | 2019 | 2020 | 2021 | Change 2021/2020, , p.p. |
|---|---|---|---|---|
| Waste handed over to other business entities for recycling and neutralization | 33 | 63 | 57 | −6 |
| Waste handed over to other business entities for disposal | 32 | 19 | 5 | −14 |
|
Present at the enterprise as of the end of the reporting year, including storage facilities | 35 | 18 | 38 | 20 |
Handling of drilling waste at the Gazprom Group
| Indicator | 2019 | 2020 | 2021 | Change 2021/2020 |
|---|---|---|---|---|
| Total drilling waste managed, thousand tons | 1,065.9 | 1,354.9 | 1,348.73 | −0.46 % |
| Waste handed over to other business entities for recycling and neutralization | 74 | 72 | 54 | −18 p.p. |
|
Present at the enterprise as of the end of the reporting year, incl. storage facilities, % | 21 | 23 | 27 | 4 p.p. |
| Recycled at the enterprise, % | 0 | 3 | 17 | 14 p.p. |
| Disposed of at own storage and burial facilities, % | 5 | 2 | 2 | 0 p.p. |