Gazprom Neft Board of Directors reviews associated gas utilization, gas production, and environmental and staffing policies

The Gazprom Neft Board ofDirectors has reviewed issues ofimplementing the company’s policies designed tomake the company anHSE leader inthe industry.

Inall its operations, Gazprom Neft has progressed from cleaning updamage, tothe preliminary assessment ofenvironmental risks and the prevention ofnegative environmental impacts from production processes. The company’s management and production processes are organized insuch away soastominimize environmental impact. After the most recent certification inspection, JSC Gazprom Neft’s environmental management system was declared tobeincompliance with the requirements ofthe advanced international standard ISO 14001:2004.

The company isconstantly developing and putting inplace environmental programs, upgrading its equipment, and introducing new technologies. Inparticular, Gazprom Neft isimplementing oil refining projects with the use ofmodern closed-type mechanical wastewater treatment facilities and upgrading its production units. These measures help reduce oil refineries’ industrial emissions even while production volumes are growing. Furthermore, all Gazprom Neft refineries converted tothe production ofEuro 5grade fuels insummer 2013, two and ahalf years ahead ofthe requirements ofthe Technical Regulations. This will make itpossible not only toprovide consumers with products that meet international quality standards, but also will cut the hazardous substances content inautomotive exhaust significantly and thereby improve environmental conditions.

Inaneffort tominimizeits environmental impact, the company iscarrying out associated gas utilization projects. Gazprom Neft has demonstrated stable growth inits level ofassociated gas utilization. Over the past five years, the percentage ofthe company’s utilization ofassociated gas grew byover 1.6times, and isexpected toreach 80percent in2013. The company isone ofthe industry leaders interms ofits associated gas utilization rates, while the company’s volume ofproduction ofassociated gas during the same period grew by50percent.

Atpresent, pre-commissioning work isunderway atthe compressor station atYuzhno-Priobskoye field, Gazprom Neft’s biggest asset inKhanty-Mansi Autonomous Okrug. The compressor station, which Gazprom Neft and Sibur built together, began taking ingas for the first time insummer 2013. Once the station begins operating atits full capacity, itwill beprocessing upto600 million cubic meters ofassociated gas per year. InOrenburg Oblast, Gazprom Neft isbuilding and expanding infrastructure for the transportation ofassociated gas tothe Orenburg Gas Processing Plant. The companyseeks tofurther grow its production capacity inthat region; its plans include, among other things,bringing innew fields, which will result inbigger volumes ofassociated gas production. Anassociated gas utilization project was launched inthe summer 2013 inthe Tomsk region. Gazpromneft East began constructing agas turbine electric power plant where associated gas will besent from Shinginskoye and Zapadno-Luginetskoye fields. When all the necessary infrastructure isup and running in2016, including gas pipelines, acompressor unit and two vacuum compressor stations, the level ofassociated gas utilization atthose fields will reach 95percent.

The Gazprom Neft Board ofDirectors also reviewed information onthe prospects for the supply ofthe company’s gas tothe unified gas transportation system with account for developing capacities for the production and processing offeedstock. Asassigned bythe Board ofDirectors, the company has looked atthe prospects for developing the gas component ofNovoport field, and isplanning both tobuild infrastructure toinject raw gas back into the formation and anexternal gas transportation system tothe Yamburgskaya compressor station. In2014, work will beunderway for the preparation and completion oflong-term contracts for the sale ofNovoport field gas.

The Gazprom Neft Board ofDirectors took note ofthe company’s progress inits staffing policies. The key task ofthose policies istoemploy and develop highly-qualified specialists who are needed toperform the strategic goalsfacing Gazprom Neft. The priorities inpersonnel management are tofurther perfectcandidate selection methods, which should help identify bestcandidates with unique competencies, todevelop employees’ skills, and toimprove organizational effectiveness.