ANNUAL REPORT • 2012
Translation Note The following text in English is a translation from the original Russian version. While every effort is made to ensure that the translation is accurate, there may nevertheless be differences of meaning between this and the original Russian version. Therefore, please note that the following translation is provided for information only and is not intended for any other use.
Introduction
Introduction
This Annual Report (hereinafter referred to as the Report) details the key performance indicators of Severneftegazprom Open Joint-Stock Company operations (hereinafter referred to as OJSC Severneftegazprom, the Company) for 2012 and the development prospects aimed at setting and reaching strategic goals and ensuring the Company’s long-term sustainable development. In the Report we have taken into account all the significant information for the prospected users. The provided information has been officially accepted by the Company and proved by internal documentation as well as publicly available materials. The Report information was processed using the methods comparable to the ones used in the earlier periods. The Report in general contains no professional terminology or data requiring specific knowledge. The data presented in the Report makes it possible for the interested parties to get familiar with the results of Company’s operations in 2012 and evaluate their impact on the economy, environment, and society. Given the responsibility and public interest in its operations, the Company for the second time discloses the information in
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compliance with the provisions of the Global Reporting Initiative (GRI) and integrates them in the Report. The information provided is organized under corporate information requests produced in accordance with the GRI recommendations (version G3.1) and disclosure completeness. Determining materiality of the Report’s content, results of cooperation with the key interested parties have been taken into account. The Report contains evaluations and forecasts of the Company’s authorized management bodies regarding its performance and future events and/or actions, including the Company’s plans and the probability of certain events and actions. The forward-looking statements, by virtue of their nature, are associated with inherent risk and uncertainty of both general and specific character. The Company emphasizes that actual results may differ considerably from those stated, whether directly or indirectly, in these forward-looking statements. In particular, economic, political, social, technology-related and other conditions may affect Company operations.
ANNUAL REPORT • 2012
Message from the Chairman of the Board of Directors................4 Message from the General Director ..............................................6 Key Events 2012 .............................................................................8 Key Events 2013 ...........................................................................11 Key Performance Indicators 2012 ...............................................13 Severneftegazprom’s Position in the Industry and Development Prospects...............................14
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Technology and Innovations ..................................52 Well No. 184 ......................................................................53 The control system for gas process losses and the system for greenhouse gas extraction and collection ....................................................................54 Energy Consumption .........................................................55
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Gas Exploration, Production and Marketing.........30
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Financial Results ....................................................36
Key Risks Associated With the Company’s Business ...............................72 Operational risks ................................................................73 Financial risks.....................................................................75 Legal risks..........................................................................76
Authorized Capital..............................................................27 Report on the Payment of Announced (Accrued) Dividend (Participating Interest Income) on Shares (Participating Interests in the Authorized Capital) of the Company .........................28
Implementation of the Annual Work Programmе and Budget of the Company in 2012 .................................37 Analysis of change in indicators of the Statement on 2012 financial results.....................................................40 Analysis of change in the liabilities structure of the Company in 2012.....................................................44 Analysis of debt liabilities ....................................................46 Analysis of cash flow ..........................................................47 Analysis of Key Financial Ratios..........................................48
Sustainable Development ......................................58 Social policy .......................................................................59 Health and safety ...............................................................62 Environmental protection and industrial safety ....................64 Main indicators of environmental protection activities .........68 Acknowledgement .............................................................71
Authorized Capital Report on Dividend Payments...............................26
Reserve Status...................................................................31 Development of the Cenomanian and Turonian Gas Deposits ................................................32 Exploration .........................................................................33 Production Drilling ..............................................................34 Gas Production ..................................................................34
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Investments ............................................................50
Management Bodies ..............................................18 Financial and Business Operations Management and Control Bodies ............................................................19 Structure of the management bodies ................................19 The General Meeting of Shareholders ................................19 The Board of Directors .......................................................20 Technical Committee .........................................................21 Company’s Board of Directors Report on progress in priority areas ..............................................22 Executive Body ..................................................................23 Information on the Company auditor ..................................23 Audit Commission ..............................................................24
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Code of Corporate Governance Compliance Report ................................................78 General Information ...............................................80 Registration Details ...........................................................81 The Company’s Representative Offices ..............................81
Summary ................................................................82 Report Parameters.............................................................83
Information Disclosure .................................................................84 Appendix 1. Global Reporting Initiative (GRI) Content Index ...................84 Appendix 2. List of Company’s Transactions in the Year 2012 Considered As Major Transactions In Accordance with the Federal Law “On Joint Stock Companies”..............................................90 List of Company’s Transactions in the Year 2012 Considered As Interested Party Transactions In Accordance with the Federal Law “On Joint Stock Companies”..............................................90
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Message from the Chairman of the Board of Directors
Message from the Chairman of the Board of Directors
Dear shareholders!
Alexander Medvedev Chairman of the Board of Directors of OJSC Severneftegazprom
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In 2012, OJSC Severneftegazprom continued to develop its successful activity. The Company demonstrates prominent stability among most efficient exploration and production companies of Gazprom Group. OJSC Severneftegazprom is one of the main resource bases of the international infrastructure project – the Nord Stream pipeline; the fact justifies the responsibility of OJSC Severneftegazprom for development of the Yuzhno-Russkoye oil and gas condensate field effectively and to guarantee stable gas supply to the European countries. In the reporting year the management of the Company continued the Turonian development project in the Yuzhno-Russkoye oil and gas condensate field. The project is considered to be a key one not only for Gazprom, but for the whole Russian gas industry as well, and symbolizes the beginning of the new era of development of hard-to-recover deposits. The Company implements the strategy of resource mobilization to update production technologies and operational efficiency. The management of OJSC Severneftegazprom pays special attention to industrial safety and labor protection, sustainable use of natural resources and policy aimed to minimize ecological risks and save energy.
ANNUAL REPORT • 2012
Commitment and responsibility of the management of the Company, professionalism and hard work of the employees, facilitated the achievements in production and financial indicators and also the shareholders contributed as they defined the strategic direction and supported initiatives of the management.
On behalf of the Board of Directors I would like to express gratitude to the personnel of OJSC Severneftegazprom for their successful work, and wish them new achievements in solution of large-scale tasks of the Company.
Sincerely, Deputy Chairman of the Management Committee of Gazprom Chairman of the Board of Directors of OJSC Severneftegazprom
Alexander Medvedev
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Message from the General Director
Message from the General Director
Dear shareholders, partners, and colleagues!
Stanislav Tsygankov General Director of OJSC Severneftegazprom
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Summarizing the results of the operational activity of OJSCÂ Severneftegazprom in 2012, I would like to point out that we have achieved high production and financial indicators! The last year proved again that industrial and technical potential, elabo-rated forms and methods of corporate management guarantee the steady development of the Company and the achievement of strategic goals and objectives. Despite the fact that only five years have passed since the start of the development of the Yuzhno-Russkoye oil and gas condensate field, the total volume of gas produced by the end of 2012 amounted approximately to 116 billion cubic meters. Nowadays OJSC Severneftegazprom is the fifth in production level of Gazprom Group and also one of good examples of international cooperation in oil and gas industry. The start of the Turonian production highlights the status of the Company as a technological leader in solving a problem of developing hard-to-recover gas deposits. The gained experience in the sphere is the basis of further development of the Company and reflects the global progressive tendencies in effective gas supply. Nowadays OJSC Severneftegazprom plans to expand its production activity in developing the Cenomanian and Turonian gas deposits of the Yuzhno-Russkoye oil and gas condensate field,
ANNUAL REPORT • 2012
aimed to achieve strategic goals of the Company. In 2012, bearing in mind the importance of the projects and the principle of balance between the state and the industry interests, the Company was included in the List of organizations implementing investment projects considered to be priority in the YNAA in accordance with the rules of the law. In 2012 the world financial community distinguished the result of the work on Project Financing with the consortium of international banks and OJSC Gazprombank, the total amount of which equaled to 1,1 billion Euro. The transaction was marked as ‘The Deal of the Year’ by the respectable edition ‘Project Finance Magazine’ (PFM). The Company carries out its commitments to service the loan and had paid approximately one third of it by the end of 2012.
Sincerely, General Director of OJSC Severneftegazprom
Being aware that the team is the most valuable asset and the formula of success in any company, in 2012 OJSC Severneftegazprom took measures to improve the system of labor protection and health of the workers, their training, raising the level of their skills and social protection, which is reflected in the new version of the Collective Agreement. Due to the professionalism of the employees and the partners, with the support of the shareholders, we will be able to ensure further continuous work and development of the Company on a long-term basis.
Stanislav Tsygankov
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Key Events 2012
Key Events 2012 JANUARY Securing project finance for the development of the Yuzhno-Russkoye oil and gas condensate field was named “deal of the year” by the magazine Project Finance International, published by Thomson Reuters, and by Project Finance Magazine, published by Euromoney Institutional Investor plc. The second audit of the integrated management system for compliance with the international standards ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007 was conducted.
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FEBRUARY Stanislav Tsygankov, General Director of the Company , and Ivan Kostogriz, Head of Administration of the town of Novy Urengoy, signed a General Agreement for Cooperation between OJSC Severneftegazprom and Administration of Novy Urengoy.
MARCH Stanislav Tsygankov, General Director of OJSC Severneftegazprom, and Vasily Parshakov, Head of the Administration of the Krasnoselkup District, signed an Agreement on Cooperation between the Company and the District Administration for 2012.
ANNUAL REPORT • 2012
APRIL The ceremony of launching the first production well in the Turonian gas deposit in Western Siberia was held at the Yuzhno-Russkoye oil and gas condensate field developed by OJSC Severneftegazprom in the presence of Alexander Medvedev, Deputy Chairman of Gazprom Management Board and Chairman of the Board of Directors of OJSC Severneftegazprom, and Stanislav Tsygankov, General Director of OJSC Severneftegazprom.
MAY The 100 billionth cubic metre was recovered from the Yuzhno-Russkoye oil and gas condensate field.
JUNE The General meeting of the Company‘s shareholders took place on June 29, at which the Company performance indicators for the year 2011 were reviewed, the Annual report and the Annual accounting statement were unanimously approved, the Company’s auditor for 2012 was appointed, the members of the Board of Directors and Audit commission were elected, and a number of interested party transactions for the next fiscal year were approved. A decision on payment of 2011 dividends was made.
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Key Events 2012
AUGUST A contest was held in OJSC Severneftegazprom among oil and gas field operators on August 8, to select the one to be awarded “The Best Professional� title.
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OCTOBER October 25 was the five year anniversary of the start of the production on the Yuzhno-Russkoye oil and gas condensate field.
NOVEMBER The Company passed the re-certification audit of the integrated management system for quality, health and safety, environmental protection and industrial safety for compliance with the international standards ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007. Based on the audit results, the Company was certified for another three-year period.
ANNUAL REPORT • 2012
Key Events 2013 DECEMBER On December 5, in Tyumen, the results of the regional contest coinciding with the Day of the Inventor and Innovator were announced. To mark the excellent performance indicators, the staff of OJSC Severneftegazprom and its General Director Stanislav Tsygankov were awarded “The Best in Innovations” diploma.
JANUARY OJSC Severneftegazprom was granted the Statement GRI Application Level Check, a certificate of the Global Reporting Initiative (GRI), confirming the compliance of the Company Annual Report for 2011 with GRI level C requirements.
In 2012 OJSC Severneftegazprom fully completed the action plan on gas infrastructure development in the settlement of Krasnoselkup. The gas pipeline launch ceremony was held on December 25, 2012. On December 24, 2012, the Law of the Yamal-Nenets Autonomous Area No. 146-ZAO “On amending the Law of the Yamal-Nenets Autonomous Area “On the list of organizations implementing priority investment projects in the Yamal-Nenets Autonomous Area” (No. 151-ZAO dated 23.12.2011), under which OJSC Severneftegazprom is entitled to profit tax relief for the period of 2013-2017 and property tax relief for the period of 2015-2017, payable into the regional budget.
FEBRUARY According to the results of the re-certification audit of the Company’s integrated management system by international certification authorities, OJSC Severneftegazprom was granted certificates confirming the compliance of the Company’s management system for quality, health and safety environmental protection and industrial safety with the international standards ISO 14001:2004, ISO 9001:2008, OHSAS 18001:2007.
MARCH Stanislav Tsygankov, General Director of OJSC Severneftegazprom, and Dmitry Kobylkin, Governor of the Yamal-Nenets Autonomous Area, signed an Agreement on social and economic cooperation for 2013-2017.
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Key Performance Indicators 2012
Gas collecting system at Yuzhno-Russkoe oil and gas condensate field
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ANNUAL REPORT • 2012
Key Performance Indicators 2012
Production indicators Change, % Indicator, billion m3 Gas reserves
2010
2011
2012 2011 /2010
2012 /2011
1,040. 780
1,122. 427
1,096. 628
+7%
-2%
Gross production
25.359
25.651
25.347
+1%
-1%
Gas sales
25.327
25.581
25.280
+1%
-1%
2010
2011
2012
Key performance indicators Indicator, million rubles
Change, % 2011 /2010
2012 /2011
Sales revenue
36,902
26,038
33,962
- 29%
+30%
Sales profit
24,578
9,558
9,741
- 61%
+2%
Net profit
19,304
5,940
8,978
- 69%
+51%
Net cash from operations (current operations)
23,322
13,796
14,851
- 41%
+8%
Net assets
42,248
34,733
41,879
- 18%
+21%
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Severneftegazprom’s Position in the Industry and Development Prospects
Severneftegazprom’s Position in the Industry and Development Prospects The gas industry is strategically important for the development and economy of Russia, contributing about 10% of the national gross domestic product. In the structure of the fuel balance in Russia, gas accounts for about a half of the total fuel production1. Russia is the most important segment of the global gas industry. The country holds the first position in the global gas production market (over 18%), its share of the global proven reserves of natural gas is 25% and Russia exports about a quarter of the global gas export volume. Natural gas, a highly efficient source of fuel, which has a minimal adverse impact on the environment, satisfies over half of the domestic energy needs. The largest part of the measured natural gas reserves is located in Siberia. The Tyumen Region accounts for 90% of the total gas volume produced in Russia, with Yamal playing a key 1 Source: http://www.bp.com/
OJS Severneftegazprom performs OJSC production pro roductio operations in the YamalNe Nenets Autonomous Area and is part Aut of the Gazprom Gazp Group, which is one of o the la largest vertically integrated ener companies in the world energy role: a large fuel and energy, oil and gas production complex has been established within the autonomous area. OJSC Severneftegazprom performs production operations in the Yuzhno-Russkoye oil and gas condensate field situated in the Krasnoselkup District of the Yamal-Nenets Autonomous Area. The field is over 85 km long and over 14 km wide.
Proven reserves of natural gas, trln m3
Algeria Nigeria Venezuela United Arab Emirates Saudi Arabia USA Turkmenistan Qatar Iran Russia 0
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10
15
20
25
30
35
40
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ANNUAL REPORT • 2012
Natural gas production, billion m3
Export of natural gas, billion m3
Russia (677)
Russia (23)
USA (651)
Qatar (14)
Canada (160)
Norway (12)
Qatar (151)
Canada (8)
Iran (149)
Algeria (6)
Other Countries (1600)
Other Countries (37)
The closest populated area, the Krasnoselkup settlement, is located 135 km to the east of the field. The Company is part of Gazprom Group, which is one of the largest vertically integrated energy companies in the world, having the rights to develop one fifth of the global gas reserves and accounting for one sixth of global gas production. According to the 2012 results, OJSC Severneftegazprom is among the top five gas suppliers in the Gazprom Group. The share of natural gas produced by the Company in 2012 increased to 5% of the total gas produced by the Gazprom Group (4% in 2011). It is worth mentioning that the Yuzhno-Russkoye oil and gas condensate field is the main source of gas supply for the Nord Stream pipeline, through which 11.5 billion m3 of gas were supplied to Europe in 2012. The successful cooperation of western technologies and the Russian experience of working in adverse weather conditions within the framework of the project on developing the Yuzhno-Russkoye oil and gas condensate field, was emphasized at the meeting of the Chairmen of the management boards of JSC Gazprom and E.ON AG, held in June 2012.
The areas of priority for OJSC Severneftegazprom: • fulfilling the license agreement conditions on the use of the Yuzhno-Russkoye subsoil plot; • ensuring the planned gas production level of 25 billion m3 per year; • implementing design solutions and activities for the control of development of the Yuzhno-Russkoye oil and gas condensate field; • accomplishing the planned exploration works and reserve increases; • undertaking works aimed at the reconstruction, modernization and technical upgrade of the Yuzhno-Russkoye oil and gas condensate field facilities; • complying with the agreement on project finance concluded with a consortium of foreign banks and the Russian OJSC Gazprombank;
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Severneftegazprom’s Position in the Industry and Development Prospects
• effective functioning of the integrated management system for quality, health and safety, environmental protection and industrial safety in compliance with the requirements of the international standards ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007; • participating in social and economic development of the local municipal units, the Krasnoselkup and Pur Districts, and implementing of programs aimed at supporting indigenous minorities of the North. OJSC Severneftegazprom is an advanced company, using the latest technical solutions to increase efficiency, save energy and protect the environment. The Company is constantly looking for new technologies and innovative solutions to develop and equip the Yuzhno-Russkoye oil and gas condensate field and to fulfil the existing gas supply contracts.
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Yamal-Nenets Autonomous Area
ANNUAL REPORT • 2012
Yuzhno-Russkoye oil and gas condensate field
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Management Bodies
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ANNUAL REPORT • 2012
Financial and Business Operations Management and Control Bodies Structure of the management bodies
Structure of the management bodies
The issues associated with the establishment, competence and organization of activities of the management and control bodies are determined by the Company’s Charter and relevant internal documents. The Charter is available to all interested parties on the Company’s official website: http://www.severneftegazprom.com/.
The General Meeting of Shareholders
The General Meeting of Shareholders The Board of Directors
The General Director
The General Meeting of Shareholders is the highest governing body, whose competencies cover all the important Company issues. The Board of Directors is the governing body that provides general Company leadership and is responsible for strategic management aimed at accomplishing long-term objectives and goals, as well as controlling the Company’s operating efficiency. The General Director is the sole executive body, managing the current activities of the Company. For the purpose of controlling financial and business operations, the General meeting of shareholders elects the Audit Commission, which is responsible for the audit and analysis of the Company’s financial standings, the operation of the internal control system, and verification of the legality of business operations. The Company engages an external auditor to conduct the annual audit of financial statements, prepared in accordance with the Russian Accounting Standards (RAS) and the International Financial Reporting Standards (IFRS). The independent audit is annually approved by the General meeting of shareholders upon suggestion by the Board of Directors.
Three General meetings of shareholders of the Company were held in 2012 including the annual meeting, at which the shareholders approved the Annual Report and the Annual accounting statement of OJSC Severneftegazprom for 2011, as well as the Company auditor for 2012, elected the members of the Board of Directors and the Audit Commission, and reviewed the issues associated with the distribution of profits and payment of remuneration to the Board of Directors members. The extraordinary General meetings of the shareholders, held on June 24 and December 27, 2012, approved the amendments to gas supply contracts regarding price fixing for the second half of 2012 and the first half of 2013, as well as the volume of gas to be supplied in 2013.
The key principle of workflow management in the Company is corporate governance, based on the clear distribution of the management bodies’ responsibilities in relation to decision making, to safeguard the interests of the shareholders and to increase the investment attractiveness of the Company
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Management Bodies
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The members of the Company’s Board of Directors at the end of the accounting period
Alexander Ivanovich Medvedev, Chairman of the Board of Directors
Born on August 14, 1955 in the town of Shakhtersk, Sakhalin Region. Graduated from Moscow Institute of Physics and Technology. Candidate of Economics. 2002-2008 – Member of the Management Committee of Gazprom, General Director of LLC Gazexport. Since 2008, Deputy Chairman of the Management Committee of Gazprom, General Director of LLC Gazprom Export.
Elena Vladimirovna Mikhailova
Born on April 28, 1977 in the Pskov Region. Graduated from Moscow State Industrial University, majoring in Law, obtained a MBA from the Russian Presidential Academy of National Economy. Since 2003, Deputy General Director for Corporate Relations and Asset Management of LLC Gazprom Mezhregiongaz Since 2012, Member of the Gazprom Management Committee, Head of Asset Management and Corporate Relations Department of JSC Gazprom.
The Board of Directors Pursuant to the Charter, the Board of Directors of the Company shall consist of 8 members.
Vsevolod Vladimirovich Cherepanov
Born on November 25, 1966 in Frunze. Graduated from M.V. Lomonosov Moscow State University. Candidate of Geology and Mineralogy Sciences. 2008-2010 – Deputy Director General and Chief Geologist at LLC Gazprom Dobycha Nadym
Alexander Pavlovich Dushko
Born on June 22, 1964 in Novodruzhesk. Graduated from Saint Petersburg State University of Engineering and Economics. Since 2005, Deputy Head of the Department of Finance and Economics of JSC Gazprom.
Since 2010, Member of the Gazprom Management Committee, Head of the Gas, Gas Condensate and Oil Production Department of JSC Gazprom.
The Chairman and Members of the Board of Directors did not hold any shares in the Company in the accounting year. There were no deals for the acquisition or transfer of Company shares conducted by the Members of the Board of Directors in the accounting year.
Information on changes in the Company’s Board of Directors in the reporting year Board of Directors over the period of January 1 – June 29, 2012
Board of Directors over the period of June 29 – December 31, 2012
Alexander Ivanovich Medvedev
Alexander Ivanovich Medvedev
Olga Petrovna Pavlova
Elena Vladimirovna Mikhailova
Vsevolod Vladimirovich Cherepanov
Vsevolod Vladimirovich Cherepanov
Alexander Pavlovich Dushko
Alexander Pavlovich Dushko
Dr. Rainer Seele
Dr. Rainer Seele
Mario Mehren
Mario Mehren
Alan James Weatherill
Alan James Weatherill
Frank Allan Sivertsen
Frank Allan Sivertsen
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ANNUAL REPORT • 2012
Dr. Rainer Seele
Born on September 2, 1960 in Bremerhaven (Germany). Graduated from the University of Göttingen (Germany), has a PhD in Chemistry 2000-2009 – Executive Director of Wingas GmbH & Co. 2002-2009 – Member of the Board of Executive Directors of Wintershall Holding GmbH. 2005-2009 – Executive Director of Wintershall Erdgas Handelshaus GmbH & Co. KG, Executive Director of WINGAS Holding GmbH. Since 2009, Chairman of the Board of Executive Directors of Wintershall Holding GmbH, Executive Director of Wintershall Erdgas Beteiligungs GmbH.
Mario Mehren
Born on November 24, 1970 in Koblenz (Germany). Graduated from Saarland University (Germany), majoring in Business Administration. 2006-2011 – Head of the Finance and Information Management Department of Wintershall Holding GmbH, Managing Director of Heidkopf GmbH, Managing Director of Nordkaspische Explorationsund-Produktions GmbH, Managing Director of Wintershall Libyen Oil & Gas GmbH, Managing Director of Gewerkschaft Röchling GmbH, Managing Director of Wintershall Russland GmbH. 2007-2011 – Member of the Management Board of Wintershall AG. 2009-2011 – Managing Director of Wintershall Norwegen Explorations-und-Produktions GmbH 2008-2011 – Managing Director of Wintershall Middle East GmbH.
Alan James Weatherill
Frank Allan Sivertsen
Born on December 17, 1955 in Singapore. Graduated with a Bachelor of Mechanical Engineering from the University of Southampton.
Born on 21 August, 1957 in Time (Norway). Graduated from the Norwegian School of Economics and Business Administration. Master of Business Administration (MBA).
2005-2010 – Chief Engineer of Shell Global Solutions B.V. (Netherlands).
2005-2007 – Managing Director of E.ON Ruhrgas UK North Sea (Great Britain).
Since 2010, General Director of E.ON Exploration and Production Russia (the legal successor of E.ON Ruhrgas Exploration and Production Russia).
Since 2008, Chief Executive Officer of E.ON Exploration and Production GmbH (the legal successor of E.ON Ruhrgas E & P GmbH).
Since 2011, Member of the Management Board of Wintershall Holding GmbH.
Technical Committee For the purpose of preliminary reviewing of the most important issues falling under the competence of the Board of Directors and obtaining recommendations for decision-making on such issues, the Company established the Technical Committee. The process of establishing and operating the Technical Committee is governed by the Shareholders’ Agreement of OJSC Severneftegazprom and the Regulations on the Technical Committee, approved by the Board of Directors. The Technical Committee consists of 8 members, who are appointed by the Board of Directors. Candidates are proposed by the shareholders of the Company as follows: 4 candidates from JSC Gazprom, and 2 candidates each from Wintershall Holding GmbH and E.ON E & P GmbH. The function of the Technical Committee is to provide recommendations to the Board of Directors regarding all significant technical aspects of the Company’s business within its competence, including the approval by the Board of the Long-Term Development Plan and Budget, the Additional Field Development Plan Draft, the Additional Field Development Plan and Annual Work Programme and Budget, as well as any amendments and/or supplements thereto.
The establishment of the Committee, which consists of members possessing significant experience and knowledge in specialized areas, increases the efficiency and quality of work of the Board of Directors and consequently provides effective mechanisms of control over activities of the Company’s executive body.
Meeting of Technical Committee
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Management Bodies
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No members of the Technical Committee hold shares of the Company. There were no deals for the acquisition or transfer of Company shares conducted by members of the Technical Committee in the accounting year.
Company’s Board of Directors Report on progress in priority areas The Board of Directors plays the most important role in ensuring shareholders’ rights, planning the development strategy of the Company and ensuring its successful financial and economic operations. The Board of Directors judges the performance of the Company in priority business areas as being generally successful in the accounting year. Eight meetings of the Board of Directors took place in 2012, at which 36 issues regarding various aspects of the Company’s business were considered.
The Board of Directors of OJSC Severneftegazprom focused on the following important issues relating to the current activities of the Company: • reviewing the shareholders’ proposals regarding candidates for the position of member of the Board of Directors, to be appointed by vote at the General meeting of shareholders; • recommendations regarding the amount of dividend on the Company shares and terms of payment, based on the result of the 2011 financial year; • the approval of the Company’s Annual programme of works and Budget for 2013; • the approval of interested party transactions; • the approval of the amount of remuneration for auditor services; • the convocation of extraordinary General meetings of shareholders
The members of the Technical Committee as of December 31, 2012 No.
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Name
Place of work
Position
1
Stanislav Evgenievich Tsygankov
OJSC Severneftegazprom
General Director
2
Yulia Viktorovna Sukhanova
OJSC Severneftegazprom
Deputy General Director of Economics and Finance
3
Egor Alekseevich Efimochkin
JSC Gazprom
Deputy Head of the Directorate – Head of the Division of Mergers and Acquisition of the Department of Foreign Economic Activities
4
Nazhib Abdulkadyrovich Bilalov
JSC Gazprom
Chief Product Engineer of the Unit for Reconstruction and Expansion of the Gas, Gas Condensate and Oil Production Department
5
Dr. Rolf Udo Norbert Pilling
Wintershall Russland GmbH
Deputy Managing Director for Technical Development and Joint Ventures Support
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Ubbenjans Hermann
OJSC Severneftegazprom
Deputy General Director for Development and Strategic Planning
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Alan James Weatherill
E.ON Exploration and Production Russia (the legal successor of E.ON Ruhrgas Geological Exploration and Mining Russia)
General Director
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Dr. Peter Reichetseder
E.ON Exploration and Production GmbH (the legal successor of E.ON Ruhrgas E & P GmbH)
Managing Director for Production and Technology
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ANNUAL REPORT • 2012
As part of preparing for the extraordinary General meetings of shareholders, the Board of Directors considered the following matters: • fixing the selling price of gas for the second half of 2012 and the first half of 2013; • recommendations to the General meeting of shareholders to approve the supplement agreements to the longterm gas supply contracts
Remuneration to the Board of Directors members Members of the Board of Directors received remuneration to the total value of 4,250,000 RUB in 2012, based on the results of work in 2011.
Executive Body
Information on the Company auditor The auditor of the Company is CJSC PricewaterhouseCoopers Audit (CJSC PwC Audit) Address: 10 Butyrsky Val, Moscow 125047, Russian Federation The certificate of state registration of the joint stock company No. 008.890, issued by the Moscow Registration Chamber on February 28, 1992. The certificate of record entry into the Unified State Register of Legal Entities registered before July 1st, 2002 under No. 1027700148431, dated August 22, 2002, issued by the Interdistrict Inspectorate of the Ministry for Taxes and Levies of the Russian Federation No. 39 for Moscow. Member of the Non-Commercial Partnership “Audit Chamber of Russia” (NP APR), a self-regulating organization of auditors – registration number 870 in the registry of NP APR members. The audit was approved by the general meeting of shareholders of the Company on June 30, 2011.
According to the Charter of the Company, there is no collegial executive body of the Company (Management Board). The sole executive body of the Company is the General Director.
Brief personal profile of the General Director Term of office: from 25/02/2011 to the present Born on July 27, 1966 in Moscow. Graduated from the Plekhanov Russian University of Economics, majoring in Finance and Credit. Positions occupied in the last 5 years: 2002-2011 – Head of the International Business Department of JSC Gazprom. Since February 25, 2011 – General Director of OJSC Severneftegazprom.
Stanislav E. Tsygankov
The labour remuneration of the Company’s General Director is based on the Agreement on labour remuneration, a supplement of the Employment Agreement that stipulates the list of social protection and compensation payments.
General Director of OJSC Severneftegazprom
The General Director does not hold any shares in OJSC Severneftegazprom. No transactions for acquisition or transfer of Company shares were executed by the General Director in the accounting year.
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Management Bodies
1
Audit Commission The Audit Commission is a permanent internal control body, independent of the officials, management bodies and management of the Company. In its work, the Audit Commission is guided by the Federal Law “On Joint Stock Companies”, the Charter of the Company and the Regulations on the Audit Commission. Pursuant to the Charter of the Company, the Audit Commission consists of 3 members.
No members of the Internal Audit Commission hold shares in the Company. No transactions for acquisition or transfer of Company shares were executed by members of the Internal Audit Commission in the accounting year.
Members of the Company’s Audit Commission at the end of the accounting period No.
Full name
Place of work
Position
1
Yulia N. Antonovskaya
JSC Gazprom
Chief Economist of the Organizational Directorate of the Department of Internal Audit of the Management Committee Administration
2
Judith Buss
E.ON Exploration and Production GmbH (the legal successor of E.ON Ruhrgas E & P GmbH)
Chief Finance Officer
3
Larissa Janz
Wintershall Russland GmbH
Head of the Department of Finance and Information Technologies
24
1
ANNUAL REPORT • 2012
Yuzhno-Russkoye oil and gas condensate field
25
2
Authorized Capital Report on Dividend Payments
ANNUAL REPORT • 2012
2 Authorized Capital The authorized capital is shown as the sum of the nominal value of ordinary and preferred shares issued by the Company. The Company’s authorized capital is divided into 533,330 shares; it was 39,999,749.40 RUB at the end of the reporting period. The Company’s authorized capital is fully paid. All the Company’s issued shares were state registered by the Federal Service for Financial Markets Regional Office of the Ural Federal District.
The Company mobilized no financial and other assets resulting from the issue of securities in the reporting year. The Company’s securities were not declared for listing with stock market operators, nor have been market quoted.
Information on authorized capital as of December 31, 2012 Issued shares: No
Including:
Shares (pcs.)
Par value (RUB)
Fully paid (pcs.)
Partially paid nominal value (RUB)
Kind of securities
1.
Company’s authorized capital:
533,330
-------
533,330
None
2. 2.1.
Ordinary shares, incl. those accounted in the balance sheet
533,324 None
60.00 None
533,324 None
None None
3.
Preferred shares, incl.
6
None
3.1. 3.1.1.
Type A preferred shares incl. those accounted in the balance sheet
2 None
2,461,620.00 None
2 None
None None
3.2. 3.2.1.
Type B preferred shares incl. those accounted in the balance sheet
3 None
666,692.40 None
3 None
None None
3.3. 3.3.1.
Type C preferred shares incl. those accounted in the balance sheet
1 None
1,076,992.20 None
1 None
None None
6
Information on the Company’s equity securities Nominal value of each security in the issue, RUB
Total number of allotted securities in the issue
State registration issue number
State registration issue date
60
533,324
1-02-31375-D
July 5, 2011
Type A preferred shares
2,461,620
2
2-10-31375-D
October 3, 2011
Type B preferred shares
666,692.4
3
2-08-31375-D
October 3, 2011
Type C preferred shares
1,076,992.2
1
2-09-31375-D
October 3, 2011
Kind and category (type) of securities Ordinary registered shares
27
Authorized Capital. Report On Dividend Payments
2
Company shareholders holding more than 5% of voting shares, at the end of the reporting period Number of shares
Par value, RUB
Interest in authorized capital, %
Percentage of ordinary shares, %
JSC Gazprom Ordinary shares Type A preferred shares Type B preferred shares Type C preferred shares
266,668 266,668 -
16,000,080.00 16,000,080.00 -
40.0004506028 40.0004506028 -
50.00112502 50.00112502 -
Wintershall Holding GmbH Ordinary shares Type A preferred shares Type B preferred shares Type C preferred shares
133,331 133,328 2 1
13,999,912.20 7,999,680.00 4,923,240.00 1,076,992.20
34.9999997750 19.9993252958 12.3081771107 2.6924973685
24.99943749 24.99943749 -
133,331 133,328 3 -
9,999,757.20 7,999,680.00 2,000,077.20 -
24.9995496222 19.9993252958 5.0002243264 -
24.99943749 24.99943749 -
533,330
39,999,749.4
100.00%
100.00%
Shareholder
E.ON Exploration & Production GmbH Ordinary shares Type A preferred shares Type B preferred shares Type C preferred shares
Total
Report on the Payment of Announced (Accrued) Dividend (Participating Interest Income) on Shares (Participating Interests in the Authorized Capital) of the Company According to 2011 results, and in compliance with the decision of the extraordinary General Meeting of Shareholders held on June 29, 2012 (Minutes No. 25/2012 of June 29, 2012) RUB 1,831,884 thousand were allocated to pay dividends.
As of December 31st, 2012, dividends were paid in full, and there are no dividends in arrears.
Report on the Payment of Announced Dividend on Shares of the Company Amount of Dividends Paid, TOTAL, RUB thousand
Dividend Payment Date
1,465,507.20
August 2012
Preferred shares, type A
225,468.28
August 2012
Preferred shares, type B
91,594.20
August 2012
Preferred shares, type C
49,314.32
August 2012
1,831,884.00
August 2012
Category (Type) of Security Ordinary shares
Total:
Information on Changes in the Company’s Capital Reserve In compliance with the the Company’s Charter, the Company forms the capital reserve totaling 5 percent of the Charter capital. The capital reserve was formed in full as of December 31, 2011, equal to RUB 2,000 trousand.
28
Information on Changes in the Company’s Additional Capital As of December 31, 2012, the additional capital was RUB 25,099,046 thousand. In the reporting year, the capital surplus amount did not change.
ANNUAL REPORT • 2012
2
Cluster of wells at Yuzhno-Russkoye oil and gas condensate field
29
3
Gas Exploration, Production and Marketing
ANNUAL REPORT • 2012
Reserve Status The Company holds the SLKh No. 11049 NE license on the geological survey and hydrocarbon raw materials production within the Yuzhno-Russkoye subsoil area. The area includes three fields: the Yuzhno-Russkoye oil and gas condensate field, brought into development in 2007; and the Yarovoye and Zapadno-Chaselskoye ones, registered in the governmental balance sheet as exploration fields. As of December 31, 2012, all the Company’s license liabilities regarding the subsoil geological study were fulfilled in full.
Creating long-term growth potential – im mproving exploration e improving work efficiency using ng state state-of-the-art technologies – is one o of the main principles of the Company’s work
Description of the raw materials base at the end of the reporting period Hydrocarbon reserves as of December 31, 2012. Field
Gas, bln m 3
Condensate, mln tonnes
Crude oil, mln tonnes
АВС1
С2
АВС1
С2
АВС1
С2
912.783
163.182
-
3.823
9.288
30.894
Yarovoye field
2.796
10.468
0.212
0.993
0.057
1.203
Zapadno-Chaselskoye field
7.367
0.032
0.043
-
-
-
922.946
173.682
0.255
4.816
9.345
32.097
Yuzhno-Russkoye oil and gas condensate field
Total:
Reserve flow of the ABC1 and C2 categories in the reporting period
Hydrocarbons
Changes in reserves in 2012
Reserves as of January 1st, 2012 АВС1
С1
Crude oil (mln tonnes)
9.345
32.097
Gas (bln m3)
947.646
Condensate (mln tons)
0.255
Production + losses
Exploration
Reevaluation
Transfer
Reserves as of December 31st, 2012
АВС1
С2
АВС1
С2
АВС1
С2
АВС1
С2
-
-
-
-
-
-
-
9.345
32.097
174.781
25.363
-
-
-
-
0.662
-1.099
922.946
173.682
4.816
-
-
-
-
-
-
-
0.255
4.816
31
3
Gas Exploration, Production and Marketing
3
Development of the Cenomanian and Turonian Gas Deposits Comparative characteristics of project and actual development indexes 2012 Indexes Project
Actual
Annual gas production, total, bln m3/year
25.168
25.363
including: Cenomanian (PK1)
25.100
25.305
Turonian (Т1-2)
0.068
0.058
Total gas production, bln m3
114.868
115.657
including: Cenomanian (PK1)
114.800
115.570
0.068
0.087
Gas production as a share of initial balance sheet reserves, %
11.448
11.527
including: Cenomanian (PK1)
17.300
17.376
0.02
0.026
Gas production in 2012 as a share of initial balance sheet reserves, %
2.508
2.528
including: Cenomanian (PK1)
3.700
3.805
Turonian (Т1-2)
0.02
0.017
0
4
Producing
0
0
Observation
0
4
163
166
Producing
143
143
including active
143
143
18
21
2
2
4*16 MW
4*16 MW
0.95
0.98
1
1
Turonian (Т1-2)
Turonian (Т1-2)
Commissioning of wells, pcs.
Wells stock as of year end, pcs.
Observation Disposal
Power Capacity of the Booster Pump Stations Well utilization rate Well stock utilization rate
32
ANNUAL REPORT • 2012
Exploration The 2012 geological exploration in the YuzhnoRusskoye license area was carried out in accordance with the adjusted geological exploration assignment, as approved by V.A. Markelov, JSC Gazprom Management Board Deputy Chairman on August 21st, 2012. These works were carried out in three main directions: • topical and R&D; • seismic survey; • environmental activities and mitigation of adverse conditions of construction. No exploration wells were constructed in 2012, and no cased hole tests were performed. In 2012, the field stage of the comprehensive seismic exploration works on the basis of 3D common depth point method, with increased density, for 420 km2 of the Turonian-Cenomanian sediments was completed. The comprehensive processing and interpretation of the seismic survey results has started. The environmental activities and mitigation of adverse conditions of construction were performed; eight obsolete geologi-
cal exploration wells from the old well stock (No. 1, 4, 10, 12, 14, 29, 30 and 107) were abandoned. Work was completed on the design of the Additional Exploration Project of the Yuzhno-Russkoye license area (continued from 2011). The Project was reviewed and approved by the Protocol No. 11-z/2012 of April 20, 2011 of the JSC Gazprom Gas Industry Commission for Field Development and Subsoil Use; it also received the positive expert opinion of the WestSiberian Branch of the State Commission for Mineral Reserves, No. 020.12-ZS of March 28, 2012. Within the framework of the adjusted 2012 geological assignment (approved on August 21, 2012), development of the Group Work Project began for the construction of Yuzhno-Russkoye oil and gas condensate field wells No. 50, 51, 52, 53, 54 and 55. The comprehensive engineering surveys for drilling sites and access roads were performed; the assignment for project development was developed and approved; the land allocation surveying and cadastral works are under way. The continuation of the project work is envisioned by the 2013 Geological Assignment of December 18, 2012. In 2012, prospecting and appraisal wells No. 40 and 41 and exploration well No. 113 were reentered and transferred to observation well stock.
The first production well on the Turonian natural gas deposit at Yuzhno-Russkoye oil and gas condensate field
33
3
Gas Exploration, Production and Marketing
3
The C1 and C2 category reserves changed in the Zapadno-Chaselskoye field within the Zapadno-Chaselskiy, KynskoChaselskiy, and Yuzhno-Russkoye license areas and the undistributed Yamal-Nenets Autonomous Area subsoil fund. The review by the State Commission for Mineral Reserves “Rosnedra” resulted in the changed gas reserves of the YuzhnoRusskoye license area (Protocol of State Commission for Mineral Reserves FAN No 18/671-pr of October 18, 2012) being transferred to the OJSC Severneftegazprom balance: Changes in gas reserves accruing to the Yuzhno-Russkoye oil and gas condensate field
ZapadnoChaselskoye field
Total
In 2012, the project for the construction of production well No. 184 at the Yuzhno-Russkoye oil and gas condensate field began. Within the Project framework, the comprehensive engineering surveys for drilling sites and access roads were performed; the design assignment was developed and approved. No drilling was carried out in 2012 (vs. 2,667 metres in 2011). Within the reporting period, Well 2N was included in the observation well stock.
Gas Production
Reserves increment, category С1 Field
Production Drilling
Gas, bln m3
Crude oil, mln tonnes
Condensate, mln tonnes
0.662
0
0
0.662
0
0
The 2012 gas production plan was 25.000 bln m3. The 2012 actual gross production was 25.347 bln m3. The plan assignment was 101.4% (+ 347 mln m3) fulfilled.
Gas Production in 2010-2012, bln m3 Index
2012
2011
2010
25.363
25.667
25.384
0.016
0.016
0.025
25.347
25.651
25.359
Gas for technical needs
0.065
0.068
0.031
Gas losses during exploitation technological equipment
0.002
0.002
0.001
25.280
25.581
25.327
Production (extracted from the reservoir) Process losses Gross production of natural gas
Sales gas volume
34
ANNUAL REPORT • 2012
2007 – 2012 Gross production of natural gas 160
30,000
141
142
143
143
22,584
23,359
25,651
25,347
3
140 25,000
Production wells, pcs.
120
106 100
20,000
15,066
15,000
80 60
10,000
42 40
5,000
1,256
20 0
–
2007
2008
2009
2010
2011
2012
Operating production wells Sales gas, bln m3
Gas-collecting system of Yuzhno-Russkoye oil and gas condensate field
35
4
Financial Results
ANNUAL REPORT • 2012
This section represents the review of the financial status of OJSC Severneftegazprom as of December 31, 2012 and shall be considered in association with the Financial statement of the Company for 2012, formed up in accordance with the Russian accounting standards and available to all concerned parties on the Company’s official web site at: http://www.severneftegazprom.com/ Implementation of the Annual Work Programmе and Budget of the Company in 2012 The Annual Work Programme and the Budget of the Company were approved by the Board of Directors in accordance with the resolution of the Minutes No. 56/2011, dated the 5th of December, 2011. 2012 Annual Programme of Works 2012
Deviation actual / budget 2012
Item Budget
Actual
In thousand m3
%
Gross gas production, thousand m3
25,000,000
25,346,741
346,741
1%
Volume of marketable gas, thousand m3
24,903,619
25,280,292
376,673
2%
Total marketable gas sales, thousand m3, incl.:
24,903,619
25,280,292
376,673
2%
JSC Gazprom
9,961,447
10,112,117
150,670
2%
CJSC Gazprom YRGM Trading
8,716,267
8,848,102
131,835
2%
CJSC Gazprom YRGM Development
6,225,905
6,320,073
94,168
2%
ANNUAL PROGRAMME OF WORKS
All gas produced by the Company is sold under long-term gas supply agreements to the following consumers: • 40% - JSC Gazprom; • 35% - CJSC Gazprom YRGM Trading; • 25% - CJSC Gazprom YRGM Development. The quality requirements of the gas delivered to consumers from the Yuzhno-Russkoye oil and gas condensate field is regulated in accordance with the corporate standard of Gazprom 089-2010 “Combustible natural gas supplied and transported via main gas pipelines. Technical specifications.” The given standard is aimed at improving the quality of production and ensuring the safety and efficiency in the function of gas transportation systems. Current gas quality is measured at the gas measuring station in the Yuzhno-Russkoye oil and gas condensate field using the interference dew point analyzer Kong-Prima-10 and flow chromatograph. Additionally, 4 times a month, according to the Technical Agreement between LLC Gazprom Transgaz Surgut and OJSC Severneftegazprom, gas laboratory analysis is performed in an ac-
Sales of the gas produced by the Company
JSC Gazprom (40%) CJSC Gazprom YRGM Trading (35%) CJSC Gazprom YRGM Development (25%)
37
4
Financial Results
4
credited laboratory in the Yuzhno-Russkoye oil and gas condensate field. Certificate of gas quality is issued based on the laboratory test results. Revenues from gas sales 2012
Deviation actual / budget 2012
In million RUB, excl. VAT Budget
Actual
in million RUB
%
31,545
33,962
2 417
8%
JSC Gazprom
12,618
13,585
967
8%
CJSC Gazprom YRGM Trading
11,041
11,887
846
8%
7,886
8,490
604
8%
TOTAL REVENUE:
CJSC Gazprom YRGM Development
• Increase of gas sale price in the second half of 2012 in accordance with the price calculation formula, settled by the Shareholders’ agreement and Gas supply agree-
Actual revenue in 2012 increased by 8% in comparison with the budget indicator due to: • Increase in the actual volume of gas sales; Current Operating Expenditure
2012
Deviation actual / budget 2012
In million RUB, excl. VAT Budget
Actual
in million RUB
%
26,350
25,890
-460
-2%
331
328
-4
-1%
3
11
8
240%
1,631
1,580
-51
-3%
251
269
18
7%
6,035
6,027
-9
0
126
119
-7
-5%
13,709
13,865
156
1%
12,724
12,901
177
1%
985
964
-21
-2%
Geological exploration (contracting mode)
535
541
6
1%
Expenditure on insurance contracts
296
282
-14
-5%
0
0
0
0
3,433
2,868
-565
-16%
1,811
1,420
-391
-22%
CURRENT OPERATING EXPENDITURE: Materials Energy purchase Payroll, social benefits and payments Insurance premiums Depreciation Lease of fixed assets Taxes and other obligatory payments, incl: Mineral extraction tax (MET) Other taxes included in cost value of gas (works, services)
Overhaul (contracting mode, excl. inventory) Other expenditure, incl.: Interests and one-off payments due on loans
38
ANNUAL REPORT • 2012
ments.
Company.
The actual expenditure of the Company, budgeted under current activity for 2012, amounted to 25,890 million RUB, which is lower by 460 million RUB or 2% lower than budget indicator. The indicated saving is mainly caused by: • Reduction of actual expenditure under the budget clause “Interests and one-off payments due on loans”, caused by early partial redemption of debt in 2012, a decrease of actual inter-bank rates, and also appreciation of the national currency; • Optimization of the operational process and implementation of retrenchment programme, carried out by the
The 1% growth of MET payments against a planned indicator is caused by an increase in the volume of actual gas production. The reduction of capital expenditure by 19% in comparison with budget indicator is due to the refinement of design and engineering arrangements, resulting in adjustments of progress schedule. All ratios under the Annual work programme and Budget for 2012 were fully executed. Deviations of the actual indicators against budget are within the limits of permissible value.
Capital Expenditures In million RUB, excl. VAT
2012
CAPITAL EXPENDITURES:
Gas sales revenue, in mln RUB
Deviation actual / budget 2012
Budget
Actual
in million RUB
%
1,433
1,161
-272
-19%
Annual average gas sale price, in RUR per thousand m3
Sales gas, in bln m3 +2%
+6%
+8%
31,545
33,962
24.904
25.280
1.267
1.343
Budget 2012
Actual 2012
Budget 2012
Actual 2012
Budget 2012
Actual 2012
39
4
Financial Results
4
Analysis of change in indicators of the Statement on 2012 financial results Analysis of change in indicators of the Statement on 2012 financial results Unit of measurement – thousand RUB
Line No.
2012
2011
Deviation 2012 / 2011
Change in % 2012/2011 (+/-)
Revenue
2110
33,961,806
26,038,396
7,923,410
30%
Cost of sales
2120
-23,086,086
-15,217,725
7,868,361
52%
Gross profit
2100
10,875,720
10,820,671
55,049
1%
Commercial expenses
2210
0
0
0
0
Administrative expenses
2220
-1,134,394
-1,262,402
-128,008
-10%
Sale profit
2200
9,741,326
9,558,269
183,057
2%
Interest receivables
2320
809,261
625,677
183,584
29%
Interest payable
2330
-1,414,246
-1,499,582
-85,336
-6%
(2340+2350)
1,172,116
- 1,062,314
2,234,430
210%
Profit before tax
2300
10,308,457
7,622,050
2,686,407
35%
Current profit tax
2410
-1,502,988
-945,966
557,022
59%
Tax on previous years profit
2411
-193,527
380,351
-573,872
-151%
Change in deferred tax liabilities
2430
-563,474
-989,510
426,036
-43%
Change in deferred tax assets
2450
-5,285
-114,057
108,772
-95%
Other
2460
935,010
-12,667
947,677
-
Net profit for the accounting period
2400
8,978,193
5,940,201
3,037,992
51%
Item
Balance of other income and expenses
The following factors influenced the indicators in the 2012 Statement of financial results and accordingly the amount of net profits over the accounting period, in comparison with the previous year: • gas sales revenue increased by 7,923 million RUB or by 30% in comparison with the previous year and amounted to 33,962 million RUB. The growth in gas sales revenue is due to an increase in the gas sales price by 32% as compared to the previous year. The calculation of gas sales price is done according to the gas price formula, fixed by the Shareholders’ Agreement and gas supply agreements; • the cost of gas sold increased by 7,868 million RUB or by 52% as compared to the previous year and amounted to 23,086 million RUB. The increase in expenditure
40
is mainly due to an increase in the mineral extraction tax as the rate has more than doubled (237 rubles in 2011, 509 rubles in 2012); • the balance of other incomes and expenses over 2012 resulted in the positive value of 1,172 million RUB. Positive balance increase of other incomes and expenses of 2,234 million RUB, in comparison with the previous accounting period, is caused by the essential increase of exchange gains from re-evaluation of the Company’s liabilities in foreign currency, as well as reduction over 2012 of one-off payments within project facility agreement obligations; • current profit tax increased by 557 million RUB due to the increase of the tax base caused by gas sales revenue growth and growth of non-operating income
ANNUAL REPORT • 2012
(exchange differences), as compared to the previous year; • a significant growth factor in the Company’s net profit for the accounting period was the right to use the profit tax benefit in accordance with the Law of YNAA No. 146-ZAO, dated 24th of December, 2012 “Concerning the introduction of amendments to the Law of Yamal-Nenets Autonomous Area “About the list of companies implementing the priority investment projects within the Yamal-Nenets Autonomous Area”. Since 2013 and for the next five years the Company has the right to apply the reduced profit tax rate of 15,5% (instead of the common rate of 20%). In conjunction with the applicable tax benefit, the Company restated the deferred tax assets and liabilities in 2012, resulting in an increase in the net profit of the Company for 2012 to the value of 935 million RUB.
As a result, the Company’s net profit for 2012 increased by 3,038 million RUB or 51% as compared to the previous year, and amounted to 8,978 million RUB
4
Flowline of the gas-collecting system at Yuzhno-Russkoye oil and gas condensate field
41
Financial Results
4
Analysis of change in the asset structure of the Company in 2012 Unit of measurement – thousand RUB
Item
I. NON-CURRENT ASSETS
Line No.
At the end of the period
Changes in natural terms
Change of specific weight in assets
Change over the period
Specific weight
At the beginning of the period
in thous. RUB
In %
At the end of the period
At the beginning of the period
Change
1100
52,553,042
57,469,398
-4,916,356
-9%
65%
71%
-6%
Intangible assets
1110
3,192
5,155
-1,963
-38%
0
0
0
Results of research and development
1120
26,885
11,094
15,791
142%
0
0
0
Fixed assets including:
1150
51,253,627
56,332,850
-5,079,223
-9%
64%
70%
-6%
Fixed assets
1151
50,670,566
54,332,838
-3,662,272
-7%
63%
67%
-4%
Capital investments in progress
1154
583,061
2,000,012
-1,416,951
-71%
1%
3%
-2%
Deferred tax assets
1180
115,661
154,525
-38,864
-25%
0
0
0
Other non-current assets
1190
1,151,566
963,595
187,971
20%
1%
1%
0
II. CURRENT ASSETS
1200
27,385,599
23,372,955
4,012,644
17%
35%
29%
6%
Inventories, including:
1210
741,906
673,532
68,374
10%
1%
1%
0
Raw materials, other materials and other similar valuables
1211
730,517
667,359
63,158
9%
1%
1%
0
Finished products for resale
1214
11,389
6,173
5,216
84%
0
0
0
VAT recoverable
1220
0
53
-53
-100%
0
0
0
Receivables including:
1230
4,626,982
5,052,553
-425,571
-8%
6%
6%
0
Receivables due after 12 months
1231
291,172
430,643
-139,471
-32%
0
0
0
Receivables due within 12 months incl:
1235
4,335,810
4,621,910
-286,100
-6%
5%
6%
0
Purchasers and customers
1236
3,902,004
2,748,962
1,153,042
42%
5%
3%
2%
Advances issued
1238
214,768
247,036
-32,268
-13%
0
0
0
Other receivables
1239
219,038
1,625,912
-1,406,874
-87%
0
2%
-2%
Financial investments
1240
3,583,538
0
3,583,538
100%
5%
0
5%
Cash, including:
1250
18,362,514
17,575,679
786,835
5%
23%
22%
1%
Settlement accounts
1252
17,016,715
12,767,517
4,249,198
33%
21%
16%
6%
Currency accounts
1253
192,834
516
192,318
37,271%
0
0%
0
Other cash
1259
1,152,965
4,807,646
-3,654,681
-76%
1%
6%
-5%
Other current assets
1260
70,659
71,138
-479
-1%
0
0
0
1600
79,938,641
80,842,353
-903,712
-1%
100%
100%
0
BALANCE (lines 1100 + 1200)
42
ANNUAL REPORT • 2012
Within the accounting period, the Company’s assets reduced integrally by 904 million RUB (-1%) and equaled to 79,939 million RUB. The assets reduced under the following balance sheets: • fixed assets decreased by 3,662 million RUB or by 7%, due to the accumulated depreciation for the accounting period; • capital investments in progress decreased by 1,417 million RUB or by 71%, due to the completion of construction and commissioning of fixed assets; • receivables decreased by 426 million RUB or by 8%. At the same time, long-term receivables for the accounting period decreased by 140 million RUB, which was caused by JSC Gazprom settling a part of the liabilities (penalty) for failure to take gas off in 2009. According to accepted liabilities within the gas supply agreements, the total penalty amount should to be paid within 5 years from January 1, 2011, to December 31, 2015.
Non-current assets, in million RUB
The reduction of short-term receivables within accounting period by 286 million RUB was mainly caused by the retrenchment of tax payments. Herein, trade receivables (purchasers and customers) increased due to gas sale price escalation. The assets increased under the following balance sheets: • financial investments increased by 3,584 million RUB or by 100% due to the placement of bank deposits for the period of more than 3 months; • cash increased by 787 million RUB or by 5%; • inventories increased by 68 million RUB or by 10% due to the formation of emergency stocks and exchange fund of spare parts, in accordance with industrial safety requirements for the operation of hazardous production facilities.
Current assets, in million RUB
27,386 MRUR
52,553 MRUR
as of 31 Dec 2012
as of 31 Dec 2012
+17%
-9%
813
1,136 2,000
4,626 1,299 583
744
3,584
5,053
54,333
50,671
2011
2012 Fixed Assets Capital Investments in Progrerss Others
17,576
18,363
2011
2012 Cash Finansial Investments Receivables Others
43
4
Financial Results
4
Analysis of change in the liabilities structure of the Company in 2012 Analysis of change in the liabilities structure of the Company in 2012 Unit of measurement – thousand RUB
Item
Line No.
Changes in natural terms
Change of specific weight in assets
Change over the period
Specific weight
At the end of the period
At the beginning of the period
in thous. RUB
In %
At the end of the period
At the beginning of the period
Change
III. EQUTY AND RESERVES
1300
41,879,454
34,733,145
7,146,309
21%
52%
43%
9%
Share capital
1310
40,000
40,000
0
0
0
0
0
Revaluation of non-current assets
1340
47,142
47,142
0
0
0
0
0
Additional capital
1350
25,099,046
25,099,046
0
0
31%
31%
0
Reserve fund
1360
2,000
2,000
0
0
0
0
0
Retained earnings
1370
16,691,266
9,544,957
7,146,309
75%
21%
12%
9%
IV. LONG-TERM LIABILITIES
1400
27,115,017
36,745,629
-9,630,612
-26%
34%
45%
-12%
Borrowed funds, including:
1410
23,778,741
33,004,231
-9,225,490
-28%
30%
41%
-11%
Bank loans repayable after 12 months
1412
23,778,741
33,004,231
-9,225,490
-28%
30%
41%
-11%
Deferred tax liabilities
1420
3,336,276
3,741,398
-405,122
-11%
4%
5%
-1%
V. SHORT-TERM LIABILITIES
1500
10,944,170
9,363,579
1,580,591
17%
14%
12%
2%
Borrowed funds, including:
1510
7,106,006
6,902,967
203,039
3%
9%
9%
0
Current long-term debt
1513
7,106,006
6,902,967
203,039
3%
9%
9%
0
Payables, including:
1520
3,522,755
2,157,728
1,365,027
63%
4%
3%
2%
Suppliers and contractors
1521
299,056
231,606
67,450
29%
0
0
0
Payables to state nonbudgetary funds
1523
21,597
0
21,597
100%
0
0
0
Payables to personnel
1522
34,933
0
34,933
100%
0
0
0
Payable taxes and duties
1524
3,110,142
1,918,818
1,191,324
62%
4%
2%
2%
Other payables
1525
57,027
7,304
49,723
681%
0
0
0
Provisions for liabilities
1540
315,409
302,884
12,525
4%
0
0
0
BALANCE (lines 1300+1400+1500)
1700
79,938,641
80,842,353
-903,712
-1%
100%
100%
0
44
ANNUAL REPORT • 2012
Within the accounting period, the Company’s liabilities decreased by 904 million RUB (-1%) and equaled to 79,939 million RUB. The amount of liabilities decreased due to a reduction in long-term liabilities under bank loans by 9,225 million RUB or by 28% as compared to the previous year. The amount of liabilities increased within the accounting period mainly under the following balance sheets: • retained earnings increased by 7,146 million RUB or by 75%. The retained earnings markup is caused by the
Long-term liabilities, in million RUB
net profit of 8,978 million RUB, earned during 2012. A reduction in profit of 1,832 million RUB for the previous years was due to dividend payment in 2012, according to the results of 2011; • payables increased by 1,365 million RUB or by 63%, which was caused mainly by a 1,191 million RUB increase in tax liabilities under the mineral extraction tax and VAT as of the end of the accounting period, due to the raising of the tax base subject to revenue growth.
Short-term liabilities, in million RUB
Equity and reserves, in million RUB
27,115 MRUR
10,944 MRUR
41,879 MRUR
as of 31 Dec 2012
as of 31 Dec 2012
as of 31 Dec 2012 +21%
+17%
-26%
728 3,741 8,978
542 3,110 1,919 3,336 9,545
7,713 33,004
6,903 23,779
2011
2012
7,106
2011
2012
25,188
25,188
2011
2012
Long-term Credit Loans
Current Long-term Debt
Shareholders’ Equity
Deferred Tax Liabilities
Payable Taxes and Duties
Profit of Previous Years
Other Short-term Indebtedness
Net Profit for the Accounting Period
45
4
Financial Results
4
Analysis of debt liabilities On the 25th of May 2011, financial closure of the transaction was effected, pursuant to the project facility agreement signed in March 2011 for the total amount equivalent to EUR 1.1 bln, provided by the international consortium of banks and “Gazprombank� (Open Joint-Stock Company). The loan repayment date is 31st of December 2018 with the possibility of prepayment (Cash sweep).
Loan liabilities, in mln
The Company executed partial redemption of multi-currency obligations during 2012, which integrally reduced the debt burden by 19% as compared to the previous year.
Loan liabilities -19%
Raised funding under project facility agreement
Settlement in 2011
Settlement in 2012
EUR
474
72
78
USD
657
100
108
RUB
5,993
914
981
Currency, in mln
402 324
557 450
5,079
4,098
2011
2012
Euro USD
The interest rate for foreign currency tranches is determined at the rate of Libor/Euribor + margin (2.35% from 2011 to March 31, 2014; 2.50% from April 1, 2014 to March 31, 2017; 2.75% from April 1, 2017 to December 31, 2018). The interest rate for ruble tranche is fixed at 11.4%.
RUR
Annual average interest rate for loans Interest rate
2011
2012
Deviation 2012/2011
EUR tranche, floating rate
3.79
3.14
- 0.65
USD tranche, floating rate
2.65
2.81
+ 0.16
RUB tranche, fixed rate
11.4
11.4
-
46
ANNUAL REPORT • 2012
Net debt
As of 31/12/2012
As of 31/12/2011
Deviation 2012 / 2011
Change in % 2012/2011 (+/-)
Short-term credits and loans
7,106
6,903
203
+ 3%
Long-term credits and loans
23,779
33,004
-9,225
- 28%
- 21,946
- 17,576
- 4,370
+ 25%
8,939
22,331
- 13,390
- 60%
Indicator, million RUB
Cash and cash equivalents including cash deposited for terms over 3 months and accounted for as financial investments Net debt
Analysis of cash flow Analysis of cash flow 2012
2011
Deviation 2012 / 2011
Change in % 2012/2011(+/-)
Net cash from current operations
14,851
13,796
1,055
8%
Net cash from (used in) investment operations
-4,623
9,878
-14,501
-147%
Net cash from (used in) financial operations
-9,402
-14,050
4,648
-33%
Indicator, million rubles
• Net cash from current operations increased by 8% up to 14,851 million RUB. The increase of net cash from current operations is caused by a growth in gas sales revenue, and also by a decline in profit tax payments due to intake within the accounting period of advance made payments. • Reduction in net cash from investment activity is caused by movements of deposit accounts with more than 3 months maturity. In December 2011, the amounts placed in deposits with maturity exceeding 3 months were received back (reflected in the line Proceeds from investment activities) and were allocated to pay dividends to the Company’s shareholders. As of Decem-
ber 31, 2012, the funds standing to the credit of debt service reserve accounts were placed in fixed term deposits with maturity exceeding 3 months in an overseas bank account in accordance with provisions of project facility agreement. • Net cash used in financial operation decreased by 33% as compared to the previous year and equaled to 9,402 million RUB. This change is mainly caused by a reduction in dividend payments (1,711 million RUB in 2012; 12,329 million RUB in 2011, with the deduction of profit tax). The total amount of credit redemption within accounting period amounted to 7,691 million RUB.
47
4
Financial Results
4
Analysis of Key Financial Ratios Key Financial Stability Ratios As of 31 Dec 2012
As of 31 Dec 2011
Change over the period
Equity Ratio
0.52
0.43
+0.09
Equity to Total Capital
Financial Leverage Ratio
0.91
1.33
-0.42
Borrowed Capital to Equity
-0.39*
-0.97*
+0.58
Own current assets to total current assets
0.86
0.88
-0.02
Equity and long-term liabilities to total capital
-0.25*
-0.65*
+0.4
Current Assets Mobility Ratio
0.80
0.75
+0.05
The most mobile part of current assets to total value of current assets
Reserves to Production Ratio
-14.39*
-33.76*
+19.37
Own current assets to stock (inventories) value
Ratio
Working capital financed by equity to total assets ratio Investment coverage Ratio Current Assets to Equity Ratio
Economic value of ratios
Own current assets to equity sources
* For calculation of the above ratios, long-term liabilities under project financing are taken into account when determining own current assets. In the case of calculation of own current assets without taking into account long-term liabilities under project financing, the ratios have the following values: • - the working capital financed by equity to total assets ratio = 0.48 (as of 31/12/2011 = 0.44); • - the Current Assets to Equity Ratio = 0.31 (as of 31/12/2011 = 0.30); • - the Reserves to Production Ratio = 17.66 (as of 31/12/2011 = 15.24).
Key Liquidity Ratios As of 31 Dec 2012
As of 31 Dec 2011
Change over the period
Current Liquidity Ratio (Asset Coverage Ratio)
2.48
2.45
+0.03
Current assets to short-term liabilities. Shows coverage of short-term liabilities by all current assets
Quick (Intermediate) Liquidity Ratio
2.41
2.38
+0.03
Liquid assets to short-term liabilities. Shows security of short-term liabilities with monetary funds and short-term financial assets and shortterm receivables
Absolute Liquidity Ratio
2.01
1.88
+0.13
High-liquid assets to short-term liabilities. Shows the part of short-term liabilities which may be repaid immediately
Ratio
48
Economic value of ratios
ANNUAL REPORT • 2012
Profitability Analysis Rates of Return
2012
2011
Change over the period
Profit margin (in kopecks per ruble of revenues)
28.7
36.7
-8.0
Return on sales by EBIT, in %
34.5
35.0
-0.5
Return on sales by net profit (in kopecks per ruble of revenues)
26.4
22.8
+3.6
8.3
6.1
+2.2
Interest Payable Coverage Ratio (ICR)
Absorbers of the gas-dehydration complex at Yuzhno-Russkoye oil and gas condensate field
49
4
5
Investments
ANNUAL REPORT • 2012
The Company’s key objectives in capital investing are: • achieving the key indicators of the Long-term Development Plan for the Cenomanian and Turonian Deposits in the Yuzhno-Russkoye oil and gas condensate field; • fulfilling the geological exploration works plan according to the existing license liabilities; • implementing the approved design solutions for commissioning, reconstructing and upgrading the main production facilities at the main and auxiliary production; • minimising risks. The principal directions of investment are: • completing in 2012 the construction and commissioning of the bilateral double bottom operating production gas well for the Turonian field, and several Yuzhno-Russkoye oil and gas condensate field systems and facilities; • continuing in 2012 project development and construction of the facilities envisioned for launching in 2013 and later on;
An essential aspect o of the Company’s activities iis ensuring a reliable basis fo for sustainable development • launching in 2015 Booster Compressor Station #1 stage 2, envisioned in the Company’s long-term development plan; • reconstruction and upgrade of the facilities, equipment, and systems of the Yuzhno-Russkoye oil and gas condensate field to ensure their safe operation according to health and safety, and environmental requirements.
Capital investments Capital expenditure, in million RUB
Indicator in million RUB, excl. VAT
2011
Change 2012 / 2011
2012
13 16
Actual
Plan
Actual
+/-
%
1,062
1,433
1,161
+ 99
+ 9%
128 19
165
Capital investments
272 954
Commissioned fixed assets, in million RUB 625 32
2011
2,384
2012
2,379
Geological Exploration Construction Production Drilling Equipment not Covered by Estimates of Constructions Costs Execution of Scientific-research, Design-experimental and Technological Works R&D of Future Years
535 Actual 2011
Budget 2012
Actual 2012
51
5
6
Technology and Innovations
ANNUAL REPORT • 2012
Well No. 184 In 2010, OJSC Severneftegazprom began implementing a pilot project to construct the first experimental bilateral production well No. 174 for the Yuzhno-Russkoye oil and gas condensate field’s Turonian deposits. In December 2011, the Turonian gas came to the Unified Gas Supply System of Russia. The analysis of well No. 174 operation in 2012 supported the chosen solutions: the well had a large enough horizontal tailing-in (300 m) for productive horizons, which enabled a daily production rate of about 200,000 m3 and about 56 mln m3 of gas production in 2012. It should be noted that the Western Siberia has practically no experience in developing the Turonian deposits, hence the necessity of the pilot works to select the most promising well construction and operation techniques. In 2012, within the framework of the “Yuzhno-Russkoye Field’s Turonian Gas Deposits Reservoir Development Chart”, the OJSC Severneftegazprom Directorate for field geology, development, and licensing and LLC TiumenNIIgiprogaz specialists analysed the various designs of wells for different penetrations of the Turonian sub-layers. The analysis has shown that increasing the wellbore penetration by seam up to 500 m and more will yield a significant increase of the single bottom well. The uprise wellbore wells have the best productivity due to the longer bore and the best among the analysed profiles fluid carryover.
The Company’s gas production principle: applying innovative solutions and state-of-the-art techniques and technologies of field development and exploitation, improving exploration work and efficiency of gas production
To substantiate the new technologies, and clarify the deposit properties, the decision was made to arrange in the vicinity of the cluster No.18 a single bore ascending wellbore well with 800m penetration. The construction of uprise profile Well No. 184 will allow to: • optimise the wells’ design and the earlier solutions for the Yuzhno-Russkoye oil and gas condensate field’s Turonian deposit development; • optimise the expenses and improve the cost efficiency for the Yuzhno-Russkoye oil and gas condensate field’s Turonian deposit development.
The ceremony of official commencing of the first production well on the Turonian natural gas deposit
53
6
Technology and Innovations
6
The control system for gas process losses and the system for greenhouse gas extraction and collection To improve the energy efficiency of the single chain of natural gas production, transport, processing, storage, and distribution processes at all stages of operation, the OJSC Severneftegazprom has, within the R&D framework, developed and patented the innovative control system for
gas process losses after Stationary Gas Unit GPA-16DKS-09 “Ural” in the Yuzhno-Russkoye oil and gas condensate field. The implementation of the innovative System pilot prototype at the R&D stage will allow the general concept of efficient energy saving and environmental safety to be determined in the Russian fuel and energy complex and other industries, where the gas pumping units with dry gas dynamic seals to protect the magnetic bearings and ensure the safe operation conditions of the gas pumping units of booster compressor stations are used.
RUSSIAN FEDERATION UTILITY MODEL PATENT № 122131
RUSSIAN FEDERATION UTILITY MODEL PATENT № 119415
AUTOMATED SYSTEM FOR CONTROL OF PROCESS GAS LOSSES OF GAS PUMPING UNITS OF BOOSTER COMPRESSOR STATIONS
GREENHOUSE GASES REMOVAL AND COLLECTION SYSTEM FROM GAS PUMPING UNITS
Title holder(s): Open Joint Stock Company Severneftegazprom (RU) Author(s): Tsygankov Stanislav Evgenievich (RU), Sorokin Anatoliy Aleksandrovich (RU), Kasyanenko Andrey Aleksandrovich (RU) Application No 2012118165 Utility model priority 03 May 2012 Registered in Russian Federation State Register of utility models on 20 November 2012. Term of patent expires on 03 May 2022.
Title holder(s): Open Joint Stock Company Severneftegazprom (RU) Author(s): Tsygankov Stanislav Evgenievich (RU), Sorokin Anatoliy Aleksandrovich (RU), Kasyanenko Andrey Aleksandrovich (RU) Application No 2012112970 Utility model priority 03 April 2012 Registered in Russian Federation State Register of utility models on 20 August 2012. Term of patent expires on 03 April 2022.
Head of Federal Agency for intellectual property B.P. Simonov
Head of Federal Agency for intellectual property B.P. Simonov
54
ANNUAL REPORT • 2012
Energy Consumption The Company has been working to ensure efficient energy use, and developing and implementing measures for reducing heat and power consumption, as well as programmes for efficient use of energy resources. Key goals for improving energy efficiency: • using advanced energy efficiency management methods and approaches; • optimising the available technological processes and improving the energy efficiency in terms of energy consumption, and maintaining the key parameters of technological processes;
• permanent monitoring of economic and efficient use of energy resources; • improving the energy efficiency in the electricity and heat energy transmission and distribution systems; • employing the energy efficiency criteria to analyse and improve the available business processes and when designing and implementing new production facilities; and • implementing up-to-date systems for the energy and key process parameters of technological accounting.
Consumption of energy resources in physical and monetary terms 2011 No.
Type of the energy resources
2012
report
plan
total
Incl. own production
total
total
Incl. own production
mln. m3
68.24
68.24
93.95
64.87
mln. rubles
43.73
43.73
90.63
thousand. kW*h
26,635
25,573
mln. rubles
216.34
Gcal
UoM.
Deviation from 2011
report +,-
%
64.87
-3.37
-5%
59.44
59.44
15.71
36%
32,401
27,066
25,964
431
2%
213.7
255.35
265.02
262.14
48.68
22%
32,956
31,817
40,916
32,958
29,709
2
0%
mln. rubles
75.56
73.46
99.96
81.96
71.58
6.40
8%
thousand. tonnes
0.75
-
-
0.74
-
-0.01
-1%
mln. rubles
20.17
-
-
22.01
-
1.84
9%
thousand. tonnes
0.19
-
-
0.29
-
0.10
55%
mln. rubles.
5.38
-
-
9.09
-
3.71
69%
thousand. tonnes
0.27
-
-
0.25
-
-0.02
-7%
mln. rubles
6.98
-
-
6.74
-
-0.24
-3%
Natural gas
2
3
4
5
6
Power
Heat energy
Diesel fuel
Car petrol AI-95
Car petrol AI-92
55
6
Technology and Innovations
6
To improve operating efficiency, the Company has been consistently implementing the policy of energy saving and improving the energy efficiency of production processes. This system-based work employs medium and long-term planning mechanisms. The 2012–2014 energy efficiency improvement plan was approved in December 2011.
The Company’s primary targets in this area are: • maximally realising the energy saving potential in all the activities based on the Company’s energy saving policy and improvement in energy saving management; • improving the Company’s energy efficiency based on innovative technologies and equipment use; and • ensuring a reduction in the environmental footprint.
The Company’s Energy Saving Programme performance Resulting saving in fuel and energy resources
Key activities
Natural gas, mln m3 Plan
Actual
Replacing incandescent lamps with energy saving ones
Electric energy, mln kW*h
Heat energy, Gcal
Plan
Actual
Plan
Actual
0.240
0.176
-
-
Fuel and energy resources, tonnes of reference fuel Plan
Actual
Installing a frequency regulator on the electric drive of the fire water supply circulating pump
-
-
0.035
0.035
-
-
-
-
Applying liquid heat insulation onto pipes inheat units of buildings and structures
-
-
-
-
30.420
30.420
-
-
Implementing the “Booster Compressor Station-1 factory control system” algorithm
5.360
5.360
-
-
-
-
6.185
6.185
TOTAL
5.360
5.360
0.275
0.211
30.420
30.420
6.185
6.185
56
ANNUAL REPORT • 2012
6
Yuzhno-Russkoye oil and gas condensate field
57
7
Sustainable Development
ANNUAL REPORT • 2012
Social policy In order to achieve strategic and operational objectives, OJSC Severneftegazprom is relying upon the formation of a competitive, highly professional and cohesive team, whose energy and responsible behavior is the key to efficient and uninterrupted production activities of the Company. The Company has established itself as a socially responsible employer, building a system of governance based on respect for each employee’s rights, as well as ensuring occupational and industrial safety standards, implementation of modern corporate culture and professional ethics. OJSC Severneftegazprom guarantees its every worker unconditional respect towards labor rights in accordance with the Labor Code of the Russian Federation and international laws. The Company has been consistently implementing best Russian and international practices for creating a favorable work environment for its employees, and provides most active and responsible of them with development opportunities and career advancement. OJSC Severneftegazprom staff is provided with various benefits, health insurance and a private pension scheme. The Company’s production activities are concentrated in uninhabited, remote areas with harsh environmental conditions. The rotation method used by the Company for organising labor at the sites of the Yuzhno-Russkoye oil and gas condensate field is the most effective and widely used in the Far North. In 2012, 58% of the workforce was employed on the rotation basis. Procedures for the organisation of work and rest, time tracking and payments are settled in “the Regulations on the organisation of rotational work”, which is a Supplement to the Collective Agreement. Persons under 18, pregnant women and women with children up to three years of age, as well as persons with contraindications to working in the Far North, according to the medical report issued in line with the procedure established by federal laws and other normative legal acts of the Russian Federation, are not permitted to work on a rotational basis. A regular working shift lasts no more than one month. The length of the working shift can be increased up to three months to ensure interoperability in the absence of an employee because of illness or seasonal conditions (seasonal absence of the pontoon bridge crossing over the river Pur, etc.).
In the course of its business, th Compa the Company has been continuously searching sea searchin for the optimal balance of environmental, social and a economic components As of December 31, 2012, 1,024 employees worked for OJSC Severneftegazprom, compared to 991 employees at the end of the previous reporting period. 16 employees were hired by the Company on a fixed-term employment contract. The primary area of Company operations is the Yamal-Nenets Autonomous Area of the Tyumen region. The Company is registered in the village of Krasnoselkup and has offices in the settlement of Urengoy, the town of Novy Urengoy, Tyumen and Moscow.
Number of OJSC SEVERNEFTEGAZPROM employees at the end of reporting period 1050 850 650 450 250 50
668
882
933
963
991
1024
226 56
2005 2006 2007 2008 2009 2010 2011 2012
From a sustainable development point of view, the Company makes the greatest impact on the labor market of Krasnoselkup and Pur districts as well as on the city of Novy Urengoy. At the end of 2012, 940 people (including 168 women and 772 men) worked in these areas. In the reporting period, 98 employees from the Far North regions retired, and 15 employees from other areas of the Company’s presence. The Company’s overall employee turnover rate is less than 4% (see table on the next page).
59
7
Sustainable Development
7
Staff structure HR indicators
2012
2011
Number of employees hired during the year
146
149
Number of employees who left jobs during the year
113
121
Men, %
73
70
Women, %
27
30
Younger than 30 years
62
54
From 30 to 50 years
35
47
Older than 50 years
16
20
4
4
1,024
991
Men, %
79
80
Women, %
21
20
11
12
By gender:
By age:
Labour turnover, % Number of employees, in total Number of employees, by gender:
Retired employees
The Company is actively engaging young professionals. More than half of the team consists of workers under the age of 40.
Staff composition by age Staff composition, by age
Managers
Specialists
Industrial and office workers
Younger than 30 years
10
74
75
From 30 to 40 years
90
124
165
From 40 to 50 years
75
71
192
Older than 50 years
47
26
75
222
295
507
In total
60
ANNUAL REPORT • 2012
Taking into account that the production processes of the Company have a potentially negative social and environmental impact1, OJSC Severneftegazprom, according to Convention 138 of the International Labor Organization, “On the minimum age for employment” of 1973 and the Russian Labor Law, does not hire workers under 18 years of age to work at industrial sites. The Company continues to evaluate the basic needs and problems of workers and strives to provide them with a comfortable and safe work environment, as well as with adequate wages. During the accounting year, the Company successfully implemented a comprehensive programme of human resource management for the period of 2011–2015, aimed at improving the organization of work, the system of staff motivation, corporate communications, as well as staff training and development. In 2012, as part of the programme and in accordance with the current law to carry out a plan for the certification of workplaces’ working conditions, 178 management workplaces in the office and in the new workplaces created in the YuzhnoRusskoye oil and gas condensate field, were certified. During the period from 2009 to 2012, a total of 622 workplaces were certified for having appropriate working conditions. Additionally, as part of increasing staff motivation in 2012, provisions for professional skills contests “The Best in the Profession”, “The Best Department”, “For implementation and invention,” including cash awards for winners, were developed. To encourage staff to participate in the professional skills contests, a system of incentive wage supplements was developed, for winners as well as for all competition participants. 1 A conclusion of Environmental Resource Management, an independent environmental consultant, prepared in accordance with the Equator Principles and Standards of the International Finance Corporation.
The Collective Agreement is the main instrument for ensuring an attractive level of benefits and compensation for all employees and retirees of the Company, in line with the Labor Law of the Russian Federation. In order to improve the provisions of the Collective Agreement, discussions were held in 2012 regarding proposals made by the Company’s employees, as part of the Commission on the regulation of social and labor relations, and staff meetings. The new version of the document, for 2013 to 2015, was registered with the Labor and Social Security Administration of the Krasnoselkup District Municipality, and reflects the agreement reached between the Company’s management and the employees’ representatives. With continuous monitoring of the Collective Agreement conditions, all the employer’s obligations to provide social benefits, guarantees and compensation to employees and pensioners were carried out in 2012, in full in accordance with the financial plan. In addition, OJSC Severneftegazprom has a Commission for the regulation of social and labor relations. The Commission provides the Company’s employees with the opportunity to influence the decisions made by management in the area of labor and social and economic relations. The Commission is formed on an equal basis from the duly authorized representatives of the employer and employees. Creating a management talent pool is the one of the strategic initiatives of the Company’s HR Department. A quality talent pool allows the minimization of staffing risks and simultaneously improves employee motivation. The Company is interested in the personal and professional development of its employees. A training programme
Giving of gifts to «Geologist» ice-hockey team of Urengoy settlement
61
7
Sustainable Development
7
was developed and implemented for these purposes. The training is mostly conducted at the corporate training centers of JSC Gazprom. In 2012, the Company’s employees attended about 32 thousand hours of advanced training. This reflects the
policy of the Company’s management to support the theoretical knowledge and practical skills of employees at a high level at the expense of the enterprise, which is certainly an additional motivational incentive for the employees.
Information on the average number of employee training hours for 2012 Item No
Employee category
Number of employees
Total number of training hours
Average number of training hours per person
1
Managers
216
14,460
67
2
Specialists
136
9,792
72
3
Other employees
4
312
78
4
Workers
64
7,168
112
420
31,732
76
Total
In 2012, 356 professionals and executives of the Company underwent training, including 114 as per the 2012 schedule for training and retraining of managers and specialists of the JSC Gazprom. A competition was carried out for a OJSC Severneftegazprom grant for postgraduate studies and conduct of research on a relevant topic of Company production. A three party agreement with FGBOU VPO “Gubkin Russian State University of Oil and Gas” was signed. In September 2012, together with the NOU “Corporate University of JSC Gazprom”, training for E.ON Ruhrgas AG specialists was carried out at the Company’s production facilities. A Partnership agreement was concluded in 2012 with LLC Wintershall Russland GmbH, under which employees of the Company take part in traineeship on production issues at foreign enterprises. The Company organises practical training for students of energy sector institutions of higher, vocational and basic education. A total of 43 students took part in practical training during the reporting period. There are regularly held sport matches in mini-football, volleyball and other sports, as well as cultural events for the employees. The Company sees its primary objective as ensuring that the replacement of the most experienced and professional retiring employees is done gradually and smoothly, and new workers are consistent with the professional requirements of the Company. In order to guarantee dignity and social protection for retired employees, the Company has an additional pri-
62
vate pension scheme carried out through the NPF “Gazfond” pension fund. In 2012, the Company provided social support to pensioners of the Company, including targeted social assistance if required. Over the years, the Company has proven that its activities are crucial and important to many people, who can be confident in the stability of their future jobs, social support and economy.
Health and safety One of the basics of the Company’s production activities is to ensure industrial health and safety because production efficiency depends on the reliable, trouble-free operation of equipment and actions of workers. Operation of production facilities of the Company is performed on the basis and in accordance with Russian laws, corporate and international standards. The integrated management system of the Company has been certified for compliance with international standards in the field of occupational health and safety OHSAS 18001:2007 “Occupational Health and Safety Management”. The Company regularly monitors the state of the environment at the workplace, the compliance with the safety requirements in the operation of hazardous facilities, and compliance with the rules of labour protection and industrial safety. The organisation of training and knowledge testing for the
ANNUAL REPORT • 2012
protection and safety of workers is performed in accordance with Russian regulations and corporate standards. Employee fire safety training is performed in accordance with the rules of fire safety “Fire Safety Training for employees of organizations”, approved by order No. 645 of Ministry of Emergency Situations on December 12, 2007. During the reporting period, OJSC Severneftegazprom has recorded one minor injury as a result of a road traffic accident. For the registration and investigation of accidents, the Company uses the Ministry of Labor Decree of October 24, 2002 No. 73 “On the approval of document forms required for the investigation and registration of occupational accidents and the provisions of the peculiarities of accidents investigation at work in specific sectors and organizations”. A 24 hour health centre operates at the housing complex, for the purpose of rendering first aid to workers during shifts. The Company annually performs preliminary and periodical medical examinations of workers. To prevent the incidence of SARS and influenza in 2012, workers were immunised with a specific vaccine, as well as receiving non-specific vitamin complexes and antiviral drugs, which helped to avoid an influenza outbreak. In the Far North, it is particularly important for workers to obtain quality health care services. To this end, the Company
signed an agreement for voluntary health insurance with the SOGAZ Insurance Group. The contract provides the following services: • medical care in clinics equipped with advanced medical technologies and modern equipment for diagnosis and treatment; • the provision of dental care, including prosthetics; • inpatient care; • health resorts and rehabilitation treatment. In 2012, all employees of the Company were assigned to various hospitals in the region of their workplace. The voluntary medical insurance programme offers medical care at 1,324 facilities. In cases where medical services could not be provided by the state system of compulsory health insurance, workers were sent to specialized clinics outside the Far North. During the reporting period, the rehabilitative treatment of the Company’s employees was organised at the health centers of the Russian Federation under the contract of voluntary health insurance. Thanks to an integrated approach to the organisation of work and recreation, the maintenance of staff health and performance, the company is able to successfully cope with production tasks.
7
Swimming pool at the Health Center of Yuzhno-Russkoye oil and gas condensate field
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Environmental protection and industrial safety When implementing its key objectives and strategic goals, OJSC Severneftegazprom defines environmental safety as a basis for their activity. While implementing a strategy of environmental friendliness and rational management of natural resources, the Company not only complies with legal requirements, but also consistently extends the application of industry best practices. Under control of production operations, OJSC Severneftegazprom carries out regular environmental monitoring at its facilities, which includes: • identifying the sources of polluting emissions; • recording the types and quantity of pollutants released into the environment from the pollution sources; • monitoring the compliance with established regulations regarding the impact on the environment, discharges and emissions, production and domestic wastes; • analysing the reports of state experts on construction, reconstruction, and modernisation projects;
Day of Reindeer Herder an the settlement of Ratta
64
• determining the availability of licenses and permits required by the environmental legislation of the Russian Federation; • timely provision of reliable reporting documentation required by the state reporting laws; • implementing environmental protection measures, guidelines and recommendations of the authorised state bodies. In June 2012, the Federal Service for Environmental, Technological and Nuclear Supervision reissued the license to the OJSC Severneftegazprom to perform “The operation of flammable and explosive production facilities” for an indefinite period. In 2012, the Company fully implemented the Action plan to ensure industrial safety at OJSC Severneftegazprom, as well as the Company management developing and approving the action plan for 2013. As part of the OJSC Severneftegazprom complex, 16 hazardous industrial facilities were registered in the corresponding state register and insured under civil liability for injury
ANNUAL REPORT • 2012
to life, health or property of other persons and the environment, in the event of accidents at the enterprise facilities. The Company carries out production supervision in accordance with the “Regulations on the production supervision for compliance with industrial safety requirements at hazardous production facilities of the OJSC Severneftegazprom” in agreement with the North Ural Department of the Federal Service for Environmental, Technological and Nuclear Supervision. Since 2010, the Integrated Management System is used in the Company, based on the international ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007 standards. The environmental management system places a great emphasis on the Far North ecosystem. In 2012, the annual surveillance audit of the Company was held, confirming its compliance with international environmental standards. In addition, the Company successfully passed the re-certification process undertaken by Bureau Veritas Certification in November 2012, which demonstrated the effectiveness of the integrated management system and the Company’s commitment to its continuous improvement. One of the most important principles of the Company is to constantly and systematically reduce the impact on the environment by using the latest technologies combined with in-house solutions. This allows the Company to achieve a high level of performance in environmental and ecological safety. In accordance with corporate and international standards, the Company: • controls and monitors greenhouse gas emissions; • implements a programme to reduce gas flaring, which makes it possible to reduce the main part of greenhouse gas emissions; • implements a programme to reduce energy consumption.
Emissions of air pollutants Emissions of air pollutants (tons)
2011
2012
Permitted emissions
11,610.470
3,492.704
Actual emissions
2,023.639
2,054.914
Methane (38,5%) Carbon Monoxide (26,7%) Nitrogen Oxide (28,5)
7
Solid Aerosols and VOC (6,3%)
Mass of hazardous emission 2011-2012 Hazardous substance
Mass of emission (t) 2011
Mass of emission (t) 2012
1,326.783
792.827
Carbon monoxide
337.676
548.830
NOх in terms of NO2
205.167
585.638
93.644
92.860
1.467
0.192
151.774
120.616
0.771
0.537
1,775.160
1,854.533
248.479
200.381
Methane
Methanol Sulphur dioxide Volatile organic compounds (VOC) Solid pollutants Emissions from organised sources Emissions from non-organised sources
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Sustainable Development
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The total volume of air emissions from production sources in 2012 amounted to 2,054.914 tonnes, 31.275 tonnes more than in 2011. The increase in the total mass of emissions is associated with the booster compressor station operating at its full capacity. Permitted emission of pollutants into the atmosphere in 2012 was 3,131.737 tonnes at the operational facilities, 355.531 tonnes at the drilling facilities, and 5.436 tonnes from the settlement of Urengoy. Methane, the major component of the emissions, is formed during venting and emptying of the plant process equipment for integrated gas treatment and gas gathering collectors for the purpose of conducting regular preventive work, as well as the continuously operating flares at the pumping units of the booster compressor station. Significant amounts of carbon monoxide and nitrogen oxides are formed during the combustion of gas on gas stoves while well testing, as well as during gas burning for Company’s own needs (power generation, gas compression). The specific mass of pollutants released into the atmosphere was 0.081 tonnes/mln m3 of gas produced. Out of the total mass of pollutant emissions into the air, emissions from the processes equaled 988.611 tonnes, from the burning of fuel to generate electricity and thermal energy – 267.202 tonnes. Regular checks for toxicity of vehicles exhaust gases are carried out in the mechanical repair workshop of the gas field. In 2012, the Company carried out a number of activities to reduce emissions. In particular, work continued on the reduction of gas flaring at the treatment facility through the use of separated gas as fuel for TEG regeneration. At present, the work on the design and construction documents is completed. Measures were taken to reduce energy consumption during field facilities by replacing incandescent lamps and sodium vapor lamps with energy-saving LED spotlights and lamps, 2,669 pieces in total. In 2012, neither accidents nor essential and nonessential spills occurred at the hazardous production facilities. Accidental emissions and discharges of pollutants into the environment did not occur. No accidents occurred during the reported period in the contracting companies carrying out work for OJSC Severneftegazprom. During the reporting year, total greenhouse gas emissions (the calculation is based on the STO Gazprom 102-2011 “Inventory of greenhouse gas emissions”) made up 167,815 tonnes of CO2-equivalent, 557 tonnes of which were indirect emissions, according to the method of EPMS calculation of The Company Wintershall Holding GmbH. The growth of the indirect emissions is due to changes in the applicable conversion factor for CO2 when receiving electricity from the public grid (old is 0.317, new is 0.639).
66
Energy consumption, mln kW•h 1,6% 1,5%
26,635
25,573
Actual 2011
32,4
31,062
27,065
Plan 2012
25,963
Actual 2012
Power consumption including own generation
As for the ozone-depleting substances included in Appendices A, B, C and E of the Montreal Protocol on Substances that Deplete the Ozone Layer, there were no emissions in 2012. Freon (R404A), which is used in air conditioning and refrigeration (for food storage), has zero ozone depletion potential. At present in Russia there are no planned restrictions on the use of the R404A type Freon up to 2020, which corresponds to the Montreal Protocol requirements. The Company is extracting water from an underground aquifer, with no removal of water from the surface water reservoirs. Water is supplied on the basis of the required permits. Total volume of extracted water in 2012 was 74,202 m3, including: • 67,014 m3 from the underground aquifer (56,440 m3 in 2011, 60,490 m3 in 2010); • 7,188 m3 – stratum water extracted simultaneously with natural gas (8,160 m3 in 2011). Extraction of fresh water from aquifers was only 37.3% of the established limit of 199,180 m3 (28.4% in 2011, 30.4% in 2010). Extracted water has been treated in the Company’s own water treatment plants in accordance with sanitary standards. The increase in water consumption in 2012 compared to 2011 was due to the construction and commissioning of a Health Complex. An on-site wastewater disposal system operates at the gas field, allowing industrial and domestic wastewater to be injected back into the aquifers after they have been cleaned at special facilities.
ANNUAL REPORT • 2012
Volume of extracted water, thousand m3
100%
70 000
90%
60 000
80%
50 000 40 000
Fresh water extraction
70% 87%
90%
60% 50%
30 000
40%
20 000
30% 20%
10 000
13%
2011
10%
2012
10% 2011
2012
Subsoil Aquifier
Allocation
Produced Water
Actual Extraction
The Company maintains the technical condition of the production equipment at an appropriate level, and performs environmental protection measures in order to minimise possible environmental pollution and to reduce the negative impact of industrial activities on wildlife.
Statistical data on the main results of production control and the state of industrial safety of the hazardous production facilities of the Company has been provided to the Novy Urengoy Integrated Department of the North Ural Directorate of the Federal Environmental, Technological and Nuclear Supervision Service every three months.
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7
Sustainable Development
7
Main indicators of environmental protection activities Main indicators of environmental protection activities (continued overleaf) No.
Indicator
Unit of measurement
2010
2011
2012
1.
Gross hazardous emissions into the atmosphere – total
thous. tonnes
1.678
2.023
2.054
Including: within permissible emission limits (PEL)
-«-
1.678
1.996
2.040
within temporarily approved emission limit (TAEL) (above PEL)
-«-
0
0
0
above-limit emissions (above TAEL)
-«-
0
0.026
0.014
0.908
1.326
0.792
Including: gross emissions of methane
2.
-«3
Specific NOx emissions (per transport unit)
tonnes/bln. m •km
0
0
0
Specific NOx emissions (per unit of fuel gas)
thous. tonnes /mln. m3
0.002
0.002
0.008
Intake of water – total
thous. m3
86.57
56.4
67.01
3
3.
Water discharge – total
thous. m
47.87
52.72
59.99
4.
Wastes per year – total
thous. tonnes
3.848
2.093
0.155
thous. tonnes
3.751
1.998
0.076
97.45
95.4
44.23
Including wastes sent for disposal
5.
Waste ratio sent for disposal
% of waste produced during the reporting period taking into consideration the presence of waste at the beginning of the year
6.
Re-cultivated land area per year
hectare
1,687.06
160.7
155.51
7.
Expenses for environmental protection – total
mln.rub
384.7
103.5
208.58
8.
Current expenses for environmental protection measures – total
thous. rub.
103,837
103,502
205,574
9.
Expenses for development and approval of environmental documents
thous. rub.
93.76
1,182
758
10.
Expenses for production environmental monitoring and production ecological control
thous. rub.
6,772.36
6,006
3,612
11.
Expenses for major repairs of fixed assets involved in environmental protection
thous. rub.
10,320.3
0
0
12.
Payment for negative environmental impacts – total
thous. rub.
1,423.68
1,108.4
365.39
environmental impact within permitted limits (emissions, discharges, waste disposal)
-«-
1,423.68
1,026.6
351.97
environmental impact above permitted limits (emissions, discharges, waste disposal)
-«-
0
81.8
13.42
Fines imposed for breaking of environmental regulations
thous. rub.
0
0
0
Legal actions for recovery of compensation of damage caused to environment, including resulting from accidents
thous. rub.
0
0
0
280.94
0
3.036
Including:
13.
Investments into Fixed capital, directed to environmental protection – total
mln. rub.
14.
Number of inspections by state environmental agencies
Number
0
0
0
15.
Number of violations of environmental regulations (according to inspection acts of state environmental agencies)
Number
0
0
0
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ANNUAL REPORT • 2012
Main directions of regional policy and interactions with interested parties
Contractual obligations
Information disclosure
Environmental protection
Labor protection and industrial safety
Charity
•
Legal regulation
State bodies and public offices
Corporate governance
Interested parties
Strategy and development
Subject of interaction
•
•
•
•
•
•
•
•
•
•
Suppliers/buyers Shareholders
•
•
•
•
Non-commercial organizations
•
Media
•
General population
•
•
•
•
Employees
•
•
•
•
• •
7 The strategic priorities of OJSC Severneftegazprom are also important for the territory on which the Company operates. Gas production plays the leading role in the economy of the Yamal-Nenets Autonomous Area. The Company is actively interacting with the federal and municipal authorities to implement environmental, social and cultural projects aimed at improving the quality of life and social welfare. To support economic development in the areas of operation, the Company sticks to the obligations of the license agreement and its own policy of competitive procedures, and, all other things being equal, gives preference to Russian companies, especially local suppliers, who are registered in the Yamal-Nenets Autonomous Area. Interaction with the regions is regulated on the basis of the General Agreements on cooperation concluded between the
Company and the Administration of the Pur and Krasnoselkup Districts and the town of Novy Urengoy, as well as additional annual agreements. The General Agreements on social-economic cooperation with the administration of Novy Urengoy was concluded in 2012 for the first time. The priorities of the General Agreements are activities such as: • the rational and effective use of the subsoil and lands located in the regions, where the Company carries out its economic activities; • creating conditions for successful interaction, aimed at the social and economic development of the municipality population; • respect for the opinion of the interested party;
69
Sustainable Development
7
• timely notification of interested parties; • regular interaction; • preserving the natural environment and ensuring environmental safety. Within the framework of these agreements, OJSC Severneftegazprom implements activities aimed at the social and economic development of these territories, including helping to sustain the cultural traditions of local minorities, providing charitable assistance to fishermen and reindeer herders, providing funding for the development of national settlements, procuring vehicles, fuel, lubricants and equipment, supporting traditional sectors of agriculture, providing funding to the association of indigenous people of the Far North “Yamal – for the future generations!” to carry out statutory activities. Sustainable development of the Company is inextricably linked with maintaining the long-term partnership with opera-
tions areas and interacting with interested parties through the implementation of mutual projects in accordance with the principle of the observance of the common obligations undertaken and the requirement to observe them by the interested parties. In order to determine key interested parties and social integration links, which can influence, or on the contrary, can be influenced in the process of implementing production activities, and to define channels of interaction with such people and organisations, the Company has developed an internal document – the Public Consultation and Disclosure Plan (PCDP). The document describes the procedures of information disclosure in accordance with the requirements of the Russian Law and international standards, of carrying out Company consultations with interested parties, as well as describing the mechanism for recording the responses and opinions of the population and Company employees on a regular basis during the entire life cycle of the project.
OJSC Severneftegazprom interaction with external interested parties in 2012 Scope of finance as part of the General Agreements, RUB
Other charity, RUB
Krasnoselkup District
31,000,000
5,281,912
Pur District
10,000,000
1,284,490
Novy Urengoy
10,000,000
155,977
TOTAL
51,000,000
6,722,379
External interested party
Being aware of its responsibility for the development of operation areas, the Company strives to develop the areas where its industrial and economic activities are carried out. The traditional areas of OJSC Severneftegazprom activities include the Krasnoselkup and Pur districts of the Yamal-Nenets Autonomous Area – the lands originally inhabited by the
70
indigenous peoples of the Russian North. Mutual relations with native citizens, government bodies and local government bodies are regulated by the General Agreements on cooperation, concluded between the Company and the Administration of the Pur and Krasnoselkup districts, as well as regular updates hereto.
ANNUAL REPORT • 2012
7
ACKNOWLEDGEMENT Dear Stanislav Evgenievich! I would like to express you our gratitude for the great contribution into social-economic and cultural development of the Krasnoselkup Municipal District. We highly appreciate your attention and support for children, financing various types of educational, cultural and artistic development, organisation of information visits to the field and trips to Germany. I wish you robust health, well, good-luck and prosperity! Head of Administration of the Krasnoselkup District Vasily Parshakov
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8
Key Risks Associated with the Company’s Business
ANNUAL REPORT • 2012
Operational risks The risk of reduction in sales
The Company is exposed to operational risks when conducting its business, the most important being prices for raw hydrocarbons and technological risks associated with the particulars of the production process. Moreover, general operational risks include transport restrictions of a technological nature, which may become a serious obstacle to achieve the long-term objectives of the Energy Strategy of Russia. Search and development of deposits, transportation and processing of gas and liquid hydrocarbons represents a complicated and capital-intensive process bearing technological and ecological risks. The company strictly observes industry requirements and standards, and implements new technologies and equipment at all stages of the production process, thus minimising these risks.
The risk of reduction in sales is associated with the possibility of a long-term decline in the demand for hydrocarbons, which may adversely affect project indicators. However, according to long-term gas supply contracts, the purchaser pays for the entire volume of contracted gas notwithstanding the actual intake, which excludes the considered risk for the Company until expiration of such contracts.
Structure and assessment of the Company’s risks
Operational risks
Financial risks
Legal risks
Risks associated with application soc and possible changes p in Russian tax laws
The risk of reduction of sales
Inflation risks
The risk of o material change market price for gas in the t m
Interest risk
Risks of Legal Proceedings Le and Restrictions of the Company’s Business th Co
Risks associated with vvalidity of licenses
Currency risk
Legal Risks Associated with Application and Possible Change of Currency Laws
8
Environmental risks E
Low Level of Risk Medium Level of Risk
Technological risks T
High Level of Risk
73
Key Risks Associated with the Company’s Business
8
The risk of significant change in the market price for gas A significant decrease in the market price for gas may affect the cash flows required for stable production and business operations of the Company. The risk is considered low since, according to gas supply contracts, the price of gas is determined according to the formulae taking into account the Company’s expenses and the required rate of return.
Risks associated with validity of licences The Company undertakes activities in relation to the Yuzhno-Russkoye oil and gas condensate field pursuant to the licences for the use of subsoil and other licensed activities. Applicable laws of the Russian Federation and/or licenses provide for possible limitation, suspension or early termination of the right to use the subsoil/exercise a licensed activity in the case of non-observance of conditions of licence agreements or violation of the requirements of applicable Russian laws in the area of licensing. The Company has completely fulfilled the requirements of licence agreements and has taken all the necessary steps to observe the applicable laws governing licensing, in order to minimise this risk.
Environmental Risks The Company’s activities, associated with the development of the Yuzhno-Russkoye oil and gas condensate field, are potentially exposed to the risk of environmental impact. Therefore, one of the priority directions of the Company’s efforts is environmental protection. Key project solutions applied in the course of constructing infrastructural and operational facilities at the deposit comply with Russian environmental standards.
74
Technological Risks The Company’s production activities, associated with the operation of the Yuzhno-Russkoye oil and gas condensate field, may be exposed to the impact of negative factors associated with failure of equipment. Meanwhile, technologies used for mining, treatment and transportation of gas comply with upto-date requirements for reliability and safety in operation of the equipment, which enables minimisation of such risks. In addition, the Company conducts training and certification of staff in the area of occupational health, industrial, fire and well-kill safety, based on the course “Well Control. Control of Wells at Oil, Gas and Water Show”, which also reduces the above risks. For the purpose of resolving the primary objectives associated with planning of efforts for prevention and liquidation of extraordinary situations for hazardous production facilities at the Yuzhno-Russkoye oil and gas condensate field, the following documents were prepared: the Plan for the Liquidation of Possible Accidents, the Plan for the Prevention and Liquidation of Oil Spills at the Site of Technological Capacities of Reagents and Oils at the gas treatment unit of the YuzhnoRusskoye oil and gas condensate field of OJSC Severneftegazprom, the Plan for the Prevention and Liquidation of Oil Spills at Fuelling Stations (stations for the fuelling of motor transport) of OJSC Severneftegazprom, and the Technological regulations “On the operation of the gas treatment unit of the Yuzhno-Russkoye oil and gas condensate field 05.125-TP” with Amendments No.1 and No.2. Pursuant to the above plans, emergency response drills are carried out to train staff on how to respond in an emergency. In addition, in order to minimise and avoid emergency situations, a contract was concluded with LLC “Gazprom Gazobezopasnost” to ensure well-kill safety on the YuzhnoRusskoye oil and gas condensate field wells, and with LLC “Gazprom Transgaz Surgut” for operating the YuzhnoRusskoye oil and gas condensate field sales gas pipeline. Administrative and production control of occupational health, industrial, and fire and well-kill safety has been organized and undertaken. This procedures allow to reduce the aforementioned risks. Certified equipment and technical devices meeting up-todate safety and reliability requirements are applied at hazardous production facilities of the Yuzhno-Russkoye oil and gas condensate field. The equipment and technical devices are maintained in a timely manner by the Company’s personnel or specialised organizations, which also reduces the aforementioned risks.
ANNUAL REPORT • 2012
Financial risks Inflation Risks The inflation rate in 2012 was 6.7%. According to observations, inflation rates are relatively stable and the Russian Ministry of Finance forecasts that inflation in 2013 will correspond to forecasts of about 5-6%. On the basis of this, the conclusion can be made that inflation will not cause any material impact on the financial and economic indicators of the Company in the foreseeable future.
Interest Risk Being a large borrower, the Company is exposed to risks associated with changes in interest rates. The debt portfolio of the Company within the framework of the raised project facility is mainly presented by loans denominated in USD and EUR. The interest rate for the service of such loans is based on internal credit rates (LIBOR/Euribor). An increase in such interest rates may render the service of the Company’s debt more expensive. An increase in the cost of loans for the Com-
pany may affect solvency and liquidity indicators. However, LIBOR is currently at a relatively low historical level and has a medium-term tendency towards stabilisation. Taking into consideration gas supply contracts, in which the gas price is determined according to the formula, which also considers the compensatory component, the risk is deemed as low.
Currency Risk Since the debt portfolio of the Company includes liabilities, which are assessable, accruable and repayable in foreign currencies, fluctuations of exchange rates to the ruble materially affect the result of financial and business operations of the Company. Due to the absence of any revenues in foreign currency, the balanced currency structure of claims and liabilities, used as a hedging mechanism, is not applicable to the Company, taking into consideration that according to gas supply contracts, the gas price is determined according to the formula, which also considers the compensatory component, the risk is deemed as moderate.
8
Recuperators of the boosting compressor station at Yuzhno-Russkoye oil and gas condensate field
75
Key Risks Associated with the Company’s Business
8
Legal risks Risks associated with the application and possible changes in tax laws of the Russian Federation Some laws have been adopted during recent years which introduce significant amendments to tax laws. Amendments introduced into the Russian tax system are aimed at eliminating its deficiencies, and therefore some provisions of the Russian Tax Code may be amended, which may result in a future increase or reduction of the tax burden versus the accounting year. Amendments of Russian Federation tax laws, which negatively affect the taxpayer, do not apply retrospectively as a rule (unlike various interpretations of some provisions of tax laws). Since interpretations of some tax law norms by tax authorities (the Ministry of Finance of the Russian Federation and judicial authorities) may not match interpretations by the Company’s management, the amount of tax liabilities following the results of tax audits at the Company, both in the accounting year and preceding periods, may change and cause tax risks (in particular, additional taxes, penalties and fines may be imposed on the Company). In order to avoid tax risks, the Company regularly monitors any amendments made to the Russian Tax Code and law enforcement practice with further application of the same in its activities. Pursuant to Russian accounting rules, any change in tax liabilities over preceding periods is accounted for in statements over that period when such changes were actually effected.
Risks of legal proceedings and restrictions of the company’s business No change in legal practice in regard to matters associated with the Company’s activities as well as rules of legal proceedings will have a material impact on the Company’s business since the Company tries to settle any disputes extra judicially. At present, the Company is not involved in any significant legal proceedings and does not bear any liability for debts of third parties.
76
Legal risks associated with the application and possible change in currency laws The Company concludes foreign economic transactions and executes currency operations with non-residents, and therefore changes in currency regulation may affect the fulfilment of the Company’s liabilities to foreign counteragents. In particular, changes in currency regulation which may concern enforcement of control over execution of currency transactions and introduction of restrictions, may lead to losses under foreign trade contracts and/or delays in the fulfilment thereof. Due to the existence of foreign economic transactions, the Company is exposed to risks of bringing to administrative liability for violations of currency laws of the Russian Federation and acts of currency regulators, including without limitation, violation of the established unified rules of execution (re-execution) of transaction passports and non-observance of the established procedure or terms of submission of accounting forms and reports on currency transactions. For the purpose of observing the currency laws of the Russian Federation, within the framework of relations with non-resident companies, structural subdivisions of the Company take measures of control over timely and quality submissions of documentation required for the execution of currency transactions.
ANNUAL REPORT • 2012
8
Yuzhno-Russkoye oil and gas condensate field
77
9
Code of Corporate Governance Compliance Report
ANNUAL REPORT • 2012
Code of Corporate Governance Compliance Report OJSC Severneftegazprom, as an open joint stock company, strives to comply with the following provisions of the Code of Corporate Conduct, recommended by the Order issued by the Federal Commission for the Securities Market of Russia under No. 421/r on April 4, 2002: • The shareholders must have access to the list of persons entitled to take part in the general meeting of shareholders, beginning from the date when information about holding the general meeting of shareholders was published, and until the closure of the general meeting of shareholders held in person, and in case of an absentee general meeting of shareholders – prior to the deadline fixed for accepting voting bulletins;
• The presence of the Company’s internal documents approved by the Board of Directors, providing for the procedure of forming and operating standing committees of the Board of Directors;
• The shareholder must have the opportunity to bring in items for the agenda of a general meeting of shareholders or require the convocation of a general meeting of shareholders without presenting an extract from the register of shareholders if the shareholder’s right to shares is registered with the maintenance system of the register of shareholders;
• A special official (the Company’s secretary) in charge of compliance with the procedural requirements guaranteeing the implementation of rights and legal interests of the Company’s shareholders by the Company’s bodies and officials, must be employed by the Company;
• The Charter of the Company must provide for authorities of the Board of Directors related to the annual approval of the Company’s financial and economic plan; • Absence of people found guilty of committing crimes in the field of economic activities or crimes against state authorities, interests of state service and local authorities, on which administrative punishments were imposed for civil injuries in the field of entrepreneurial activities, finances, taxes, charges or securities market, among the members of the Company’s Board of Directors; • Persons holding the position of general director, a member of the management board or an employee of a legal person competing with the Company must not occupy positions in the Company’s Board of Directors; • The Charter of the Company must provide for the requirement to elect the Board of Directors by cumulative voting; • The sessions of the Company’s Board of Directors must be held at least once every six weeks during the year of preparing the annual report;
• The procedure of approving operations exceeding the limits of the Company’s financial and economic plan must be provided in the Company’s inner documents;
• The Charter of the Company or internal documents must provide for the requirement of approval of a large-scale transaction prior to it being implemented; • The Charter of the Company must not exempt the transferee from the obligation to offer shareholders to sell the ordinary shares held by them in the Company upon redemption; • The presence of a special department in the Company ensuring compliance with the internal control procedures (internal audit department); • Absence of people found guilty of committing crimes in the field of economic activities or crimes against state authorities, interests of state service and local governments or people, on which administrative punishments were imposed for civil injuries in the field of entrepreneurial activities, finances, taxes, charges or securities market, among members of the audit service; • Persons, occupying positions as the Company’s executive authorities as well as a general director, member of the management bodies or employee of a legal person competing with the Company, must not occupy positions in the audit service.
79
9
10
General Information
ANNUAL REPORT • 2012
Registration Details Full company name: Severneftegazprom Open Joint Stock Company. Short business name of the Company in Russian: ОАО «Севернефтегазпром». Full business name of the Company in English: Open Joint Stock Company Severneftegazprom. Short business name of the Company in English: OJSC Severneftegazprom. Legal and postal address: Legal address: 22 Lenin St, Krasnoselkup, Krasnoselkup District, 629380, Yamal-Nenets Autonomous Area. Postal address: PO Box 1130, Novy Urengoy, 629300, Yamal-Nenets Autonomous Area. E-mail: sngp@sngp.org. Information sources, in which the Company discloses information in compliance with securities law requirements OJSC Severneftegazprom website at http://www.severneftegazprom.com/. News feed, an information resource updated in real time and provided to the Company by the Interfax Information Agency (CJSC Interfax is a news agency for the securities market) at http://www.e-disclosure.ru/index.aspx. State Registration Date and Registration Number Certificate No. R-16625.16 of registration and entry in the state register of commercial entities, issued to OJSC Severneftegazprom in connection with the reorganization of LLC Severneftegazprom based on Minutes No. 5 of the extraordinary General Meeting of Company Members dated June 1, 2001. Issued on June 15, 2001 by the State Registration Chamber at the Ministry of Justice of the Russian Federation. Certificate of entry made in the Unified State Register of Legal Entities of the legal entity registered before July 1, 2002, under Main State Registration Number 1028900699035 dated 19 December, 2002 was issued by the Interdistrict Inspectorate of the Ministry of Taxation No. 3 for the Yamal-Nenets Autonomous Area.
Information on the Company’s Registrar CJSC “Specialised Registrar – Gas Industry Shareholders’ Registrar” (CJSC SR-DRAGa) Location and postal address: 31/72 Novocheremuskinskaya St, Moscow, 117420 Tel: +7 (495) 719-40-44, Fax: +7 (495)719-45-85. Register maintenance operations licence dated December 26, 2003 No. 10-000-1-00291, issued by the Federal Securities Market Commission of Russia for an indefinite term. Core operations • Yuzhno-Russkoye oil and gas condensate field development and construction of facilities; • recovery, collection, disposition and sales of natural gas; • prospecting and exploration work; • construction management. The Company holds the following main licenses: • a licence for the exploration and production of raw hydrocarbons within the Yuzhno-Russkoye mining site situated in the Krasnoselkup District of Yamal-Nenets Autonomous Area of the Tyumen Region. Series SLKh No. 11049 NE. Issued on June 22, 2001. Valid until December 31, 2043; • a licence for operating explosion-hazardous production facilities, No. EV-00-007716 (DK). Active from August 7, 2007. Valid until August 7, 2012. Moreover, the Company holds over 10 permits (licenses) for other kinds of operations and is a member of Association of Gas and Oil Industry Constructors Non-Commercial Partnership. The Company’s Representative Offices OJSC Severneftegazprom has representative offices in Novy Urengoy, the settlement of Urengoy, Tyumen and Moscow. The Company has no subsidiaries and affiliates.
1
81
11
Summary
ANNUAL REPORT • 2012
Report Parameters The Contents of the Report The report for 2012 provides an analysis of the corporate activity in connection with the exploration and production of natural gas, economic activities, social policy, industrial safety and environment protection. This is the second time that the Company has disclosed information pursuant to the provisions of the GRI and has integrated them into its Annual Report. The cycle of the report’s development is one calendar year.
The Limits and Scope of the Report The report records the activities of the Company in the Russian Federation as well as its relationship with international partners. The information used herein has been prepared using consistent methods as applied in the previous reporting periods. The Company’s management statements and audited financials, developed per Russian Accounting Standards, were used when preparing this Report. Information, presented in the Report, was filed as part of the corporate information systems per lines of activity based on information requests, taking into account GRI recommendations (G3.1 version) and the requirements for complete disclosure. In addition, the results of interaction with key interested parties were also taken into account when determining the key topics. All this enabled the Report to cover a wide range of aspects, which may be interesting to the maximum number of people. The Company tried to balance out the information, when developing the Report. The Report reflects advantages and disadvantages, providing an adequate outlook for the potential users of the Report on the Company’s impact on the economy, environment and society.
Principles Applied to Ensure the Quality of the Report In its Report, the Company has tried to provide a balanced presentation of items required by Russian law and of interest to interested parties. The Report includes data officially recognised by the Company and supported by internal documents and publicly available information. The Report generally does not contain either specific terms or data requiring special knowledge. One of the purposes of the Report is to explain to interested parties the nature of the Company’s activities and the characteristics of its decision making.
Contact Information for Issues Regarding the Report Anatoliy Anatolyevich Vecherka Deputy General Director for Legal Issues and Corporate Management Telephone: +7 (495) 620 63 33 E-mail: VecherkaAA@sngp.org
1 83
Appendix 1
Information Disclosure Appendix 1. Global Reporting Initiative (GRI) Content Index Global Reporting Initiative (GRI) Content Index Page 1.
STRATEGY AND ANALYSIS 1.1
Statement from the most senior decision-maker of the organization about the relevance of sustainability to the organization and its strategy.
1.2
Key impacts, risks and opportunities
2.
4-7 73-76
ORGANIZATIONAL PROFILE 2.1
Name of the organization
2.2
Primary brands, products and services
37, 81
2.3
Operational structure
19-24
2.4
Location of organization’s headquarters and operations
2.5
Number of countries in which the organization operates and name of countries where its main operations are located or are especially relevant to the questions of sustainability covered by the report
2.6
Nature of ownership and legal form
27-28, 81
2.7
Markets served
14-15, 81
2.8
Scale of the organization (headcount, sales, revenue)
13, 59-60
2.9
Significant changes regarding size, structure or ownership during the reporting period
2.10
Awards received in the reporting period
3.
84
Comment
81
81
14-16
No significant changes 8-11, 71
REPORT PARAMETERS 3.1
Reporting period (such as fiscal/calendar year) for the information provided
83
3.2
Date of most recent previous report (if any)
3.3
Reporting cycle (annual, biennial, etc.)
83
3.4
Contact information for issues related to the Report or its contents
83
3.5
Defining report content (essentiality, subjects priorities, needs of interested parties)
2, 83
3.6
Boundary of the report (organizations which the Report have effect on).
2, 83
3.7
Statement about any specific limitations on the scope or boundary of the report
Calendar year June 2012
No limitations
ANNUAL REPORT • 2012
Global Reporting Initiative (GRI) Content Index (continued overleaf) Page
Comment
3.8
Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations.
3.9
Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report.
3.10
Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement.
No re-statements were performed
3.11
Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.
No changes were introduced
3.12
Table identifying the location of the Standard Disclosures in the report.
3.13
Policy and current practice with regard to seeking external assurance for the report.
4.
No activities to be disclosed
84-89
GOVERNANCE, COMMITMENTS AND ENGAGEMENT 4.1
Governance structure of the organization, including main committees within the highest governance body, responsible for specific tasks
4.2
Indicate whether the Chair of the highest governance body is also an executive officer
General Director is not the Chairman of the Board of Directors
4.3
For organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members.
There are no independent members
4.4
Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.
4.14
List of stakeholder groups engaged by the organization.
4.15
Basis for identification and selection of stakeholders with whom to engage.
19-23
21-22, 61, 70 69 69-70, 83
ECONOMIC PERFORMANCE INDICATORS
EC1
Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.
EC2
Financial implications and other risks and opportunities for the organization's activities due to climate change.
EC3
Coverage of the organization's defined benefit plan obligations.
EC4
Significant financial assistance received from government.
EC5
Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation.
EC6
Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation.
EC7
Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.
EC8
Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement.
38-40
11, 41
69, 44
85
Appendix 1
Global Reporting Initiative (GRI) Content Index (continued overleaf) Page
Comment
ENVIRONMENTAL PERFORMANCE INDICATORS
86
EN1
Materials used by weight or volume.
EN2
Percentage of materials used that are recycled input materials.
EN3
Direct energy consumption by primary energy source.
EN4
Indirect energy consumption by primary source.
EN5
Energy saved due to conservation and efficiency improvements
EN6
Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives.
EN7
Initiatives to reduce indirect energy consumption and reductions achieved
EN8
Total water withdrawal by source.
EN9
Water sources significantly affected by the removal of water
EN10
Percentage and total volume of water recycled and reused
EN11
Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas.
EN12
Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas.
EN13
Habitats protected or restored
EN14
Strategies, current actions, and future plans for managing impacts on biodiversity
EN15
Number of IUCN Red List species and national conservation lists species with habitats in areas affected by operations, by level of extinction risk
EN16
Total direct and indirect greenhouse gas emissions by weight.
EN17
Other relevant indirect greenhouse gas emissions by weight.
EN18
Initiatives to reduce greenhouse gas emissions and reductions achieved.
EN19
Emissions of ozone-depleting substances by weight.
EN20
NOx, SOx, and other significant air emissions by type and weight.
EN21
Total water discharge by quality and destination.
EN22
Total weight of waste by type and disposal method.
EN23
Total number and volume of significant spills.
EN24
Weight of transported, imported, exported or treated waste deemed hazardous under the terms of the Basel Convention - Annex I, II , III and VIII , and percentage of transported waste shipped internationally
65-66, 68
65, 68
66
ANNUAL REPORT • 2012
Global Reporting Initiative (GRI) Content Index (continued overleaf) Page EN25
Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization’s discharges of water and runoff
EN26
Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.
EN27
Percentage of products sold and their packaging materials that are reclaimed by category.
EN28
Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations.
EN29
Significant environmental impacts of transporting products and other goods and materials used for the organization’s operations, and transporting members of the workforce
EN30
Total environmental protection expenditures and investments by type.
Comment
PERFORMANCE INDICATORS ON APPROACHES TO LABOR PRACTICES AND DECENT WORK LA1
Total workforce by employment type, employment contract, and region, broken down by gender
LA2
Total number and rate of employee turnover by age group, gender, and region.
LA3
Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations.
LA4
Percentage of employees covered by collective bargaining agreements.
LA5
Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements.
LA6
Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advice on occupational health and safety programmes.
LA7
Rates of injury, occupational diseases, lost days, and absenteeism, and number of workrelated fatalities by region.
LA8
Education, training, counseling, prevention, and risk-control programmes in place to assist workforce members, their families, or community members regarding serious diseases.
LA9
Health and safety topics covered in formal agreements with trade unions.
LA10
Average hours of training per year per employee by employee category.
LA11
Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings
LA12
Percentage of employees receiving regular performance and career development reviews.
LA13
Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity.
LA14
Ratio of basic salary of men to women by employee category.
59-60 60
61
62-63
61-62
87
Appendix 1
Global Reporting Initiative (GRI) Content Index (continued overleaf) Page
Comment
HUMAN RIGHTS PERFORMANCE INDICATORS HR1
Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening
HR2
Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken
HR3
Total hours of employee training on policies and procedures concerning aspects of human rights relevant to operations, including the percentage of employees trained
HR4
Total number of incidents of discrimination and actions taken.
HR5
Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk and actions taken to support these rights
61
HR6
Operations identified as having significant risk for incidents of child labour, and measures taken to contribute to the elimination of child labour
61
HR7
Operations identified as having significant risk for incidents of forced or compulsory labour, and measures taken to contribute to the elimination of forced or compulsory labour
HR8
Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations
HR9
Total number of incidents of violations involving rights of indigenous people and actions taken
SOCIETY PERFORMANCE INDICATORS
88
SO1
Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures.
SO2
Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes
SO3
Type of product and service information required by procedures,procedures and percentage of significant products and services subject to such information requirements.
SO4
Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling by type of outcomes
SO5
Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.
SO6
Programmes for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.
SO7
Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship, by type of outcomes
SO8
Total number of substantiated complaints regarding breaches of privacy and loss of customer data
69-71
ANNUAL REPORT • 2012
Global Reporting Initiative (GRI) Content Index (end) Page
Comment
PRODUCT RESPONSIBILITY PERFORMANCE INDICATORS
PR1
Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures.
PR2
Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes
PR3
Type of product and service information required by procedures,procedures and percentage of significant products and services subject to such information requirements.
PR4
Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling by type of outcomes
PR5
Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.
PR6
Programmes for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.
PR7
Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship, by type of outcomes
PR8
Total number of substantiated complaints regarding breaches of privacy and loss of customer data
PR9
Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services.
37-38
fully disclosed partially disclosed not disclosed
GRI Application Levels communicate the extent to which the content of the G3.1 Guidelines has been used in the submitted sustainability reporting. The Check confirms that the required set and number of disclosures for that Application Level have been addressed in the reporting and that the GRI Content Index demonstrates a valid representation of the required disclosures, as described in the GRI G3.1 Guidelines.
89
Appendix 2
Appendix 2. List of Company’s Transactions in the Year 2012 Considered As Major Transactions In Accordance with the Federal Law “On Joint Stock Companies” No transactions considered to be major transactions under the Federal Law “On joint stock companies” were completed in the accounting year.
List of Company’s Transactions in the Year 2012 Considered As Interested Party Transactions In Accordance with the Federal Law “On Joint Stock Companies” List of Company’s Transactions in the Year 2012 Considered As Interested Party Transactions In Accordance with the Federal Law “On Joint Stock Companies” Management body that took the decision on approval of the transaction
№
Essential conditions
Persons interested in settlement of the transaction
1.
Supplementary Agreement No. 16 of March 21, 2012 to Agreement for maintenance of the inscribed stock holders register No. Э-203-2005 of August 15 2005 concluded with CJSC SR-DRAGa on the change of the Registrar services starting from January 1 2012. The agreement amount is RUB 145,350 per year VAT included.
JSC Gazprom, shareholder of the Company
Board of Directors, Minutes No.59/2012 of March 12, 2012
2.
Supplementary Agreement No. 13 of April 19, 2012 to Gas Supply Agreement Pk-2007 of December 13, 2007 concluded with JSC Gazprom, according to which the change affects the gas supply location (location of gas handover and the change of ownership) from the Supplier (the Company) to the Buyer (JSC Gazprom).
JSC Gazprom, shareholder of the Company, Members of the Board of Directors: A. I. Medvedev, O. P. Pavlova, V. V. Cherepanov
Board of Directors, Minutes No.59/2012 of March 12 2012
3.
Supplementary Agreement No. 14 of June 29, 2012 to Gas Supply Agreement No.25 Pk-2007 of December 13, 12.2007 concluded with JSC Gazprom, on setting the price of gas supplied in the second half of the year of 2012 in the amount of RUB 1,413.25 per 1,000 cu.m. of gas (excl. VAT).
JSC Gazprom, shareholder of the Company, Members of the Board of Directors: A. I. Medvedev, O. P. Pavlova, V. V. Cherepanov
General Meeting, Minutes No. 24/2012 of June 15, 2012
4.
Supplementary Agreement No. 11 of June 29, 2012, 2012 to Gas Supply Agreement No.28 Pk-2007 of December 13, 2007 concluded with CJSC Gazprom YRGM Trading, on setting the price of gas supplied in the second half of the year of 2012 in the amount of RUB 1,413.25 per 1,000 cu.m. of gas (excl. VAT).
JSC Gazprom, shareholder of the Company, Member of the Board of Directors: M.Mehren
General Meeting, Minutes No. 24/2012 of June 15, 2012
5.
Supplementary Agreement No. 7 of June 29th, .2012 to Gas Supply Agreement No.14/ SNGP- 2009 of October 29, 10.2009 concluded with CJSC Gazprom YRGM Trading, on setting the price of gas supplied in the second half of the year of 2012 in the amount of RUB 1,413.25 per 1, 000 cu.m. of gas (excl. VAT).
JSC Gazprom, shareholder of the Company, Members of the Board of Directors F.Sivertsen, A.Weatherill
General Meeting, Minutes No. 24/2012 of June 15, 2012
6.
Agreement No. 12026 of September 3rd, 2012 concluded with OJSC YUZHNIIGIPROGAZ for conducting the design and exploration work for subject ‘Development of the Yuzhno- Russkoye oil and gas field. Gas plant. Booster compressor department No.1 (2 stage)’ in the amount of RUB 182,000,000 incl. VAT. Implementation time from June 28, and until December 31, 2013
JSC Gazprom, shareholder of the Company
Board of Directors, Minutes No.63/2012 of August 7, 2012
7.
Agreement No. 196/SNGP-2012-P-E-8960 of August 10, 2012 concluded with SOJSC Gazproektengineering for developing the single-stage design ‘System of information security of Yuzhno- Russkoye oil and gas field information-management system’. The agreement amount is RUB 14,226,070.56 incl. VAT. Implementation time from August 15, to June 30, 2013
JSC Gazprom, shareholder of the Company
Board of Directors, Minutes No.63/2012 of August 7, 2012
90
ANNUAL REPORT • 2012
List of Company’s Transactions in the Year 2012 Considered As Interested Party Transactions In Accordance with the Federal Law “On Joint Stock Companies” (end) Management body that took the decision on approval of the transaction
№
Essential conditions
Persons interested in settlement of the transaction
8.
Agreement No. 237/SNGP-2012-P-E of September 3 2012 concluded with SOJSC Gazproektengineering for conducting the design and survey on the basis of TOR ‘Upgrade and further equipping of the technical security equipment set implemented at the Yuzhno- Russkoye oil and gas field’. The agreement amount is 25 696 084.86 incl. VAT. Implementation time from September 3, 2012 to June 30 2013
JSC Gazprom, shareholder of the Company
Board of Directors, Minutes No.63/2012 of August 7, 2012
9.
Agreement No. 339-2012 of May 12 2012 concluded with LLC TyumenNIIgiprogaz for development of works based on TOR ‘Design supervision of development of Turonian gas deposit of the Yuzhno- Russkoye oil and gas field’ in the amount of RUB 2 999 973 incl. VAT. Implementation time from 02 April and until November 30 , 2012.
JSC Gazprom, shareholder of the Company
General Meeting, Minutes No.19/2011 of June 30, 2011
10.
Agreement No. 340-2012 of May 12 2012 concluded with LLC TyumenNIIgiprogaz for development of works based on TOR ‘Design supervision of development of Cenomanian gas deposit of the Yuzhno- Russkoye oil and gas field’ in the amount of RUB 4 999 660 incl. VAT. Implementation time from 02 April and until November 30, 2012.
JSC Gazprom, shareholder of the Company
General Meeting, Minutes No.19/2011 of June 30, 2011
11.
Agreement No. 101/SNGP-2012-P-K of April 24, 2012 concluded with OJSC Georesurs for performance of geophysical exploration and works in wells during development control of Yuzhno- Russkoye oil and gas field. The agreement amount is RUB 86 ,522,961.45 incl. VAT. Implementation time from April 24, 2012 and until February 15, 2013.
JSC Gazprom, shareholder of the Company
General Meeting, Minutes No.19/2011 of June 30 2011
12.
Agreements of deposits in Rubles and foreign currency with the maximum amount on each transaction not exceeding RUB 1,000,000,000 pursuant to General Agreement No. 34/SNGP-2009 of March 11, 2009 concluded with Gazprombank (Open Joint Stock Company).
JSC Gazprom, shareholder of the Company
General Meeting, Minutes No. 19/2011 of June 30, 2011
13.
Agent commission No.38-АD-010/46-8 of November 19, 2012, according to which the Company (principal) commissions, and LLC Gazprom komplektatsiya (agent) concludes supply contracts of chemicals for the Company from its own name but at the cost of the principal in the amount of 50,185, 400. Time of delivery 1-4 Q of 2013.
JSC Gazprom, shareholder of the Company
General Meeting, Minutes No. 25/2012 of June 29, 2012
14.
Supplementary Agreement No. 8 of December 10, 12.2012 to Agreement No.13/SNGP-2007 of March 12, 2007 concluded with JSC Gazprom SOJSC Tsentrenergogas, according to which JSC Gazprom SOJSC Tsentrenergogas conducts manufacturing and repair of standard and non-standard equipment of YuzhnoRusskoye oil and gas field’. Cost of works according to the price list. The agreement amount is 800 000 RUB incl. VAT. Implementation time is extended until December 31, 2013.
JSC Gazprom, shareholder of the Company
General Meeting, Minutes No.25/2012 of June 29, 2012
15.
Agreement No. 218/SNGP-2012-P-O of July 25, 2012 concluded with LLC ‘Firma Gazenergonaladka’ OJSC Gazenergoservis for operational tuning of gas burner units BOR-30-1/2 of Yuzhno- Russkoye oil and gas field. The agreement amount is 490,303.05 RUB incl. VAT. Implementation time from 01 September 2012 to November 30, 2012.
JSC Gazprom, shareholder of the Company
General Meeting, Minutes No. 25/2012 of June 29, 2012
16.
Supplementary Agreement No. 15 of December 29, 2012 to Gas Supply Agreement No.25 Pk-2007 of December 13, 2007 concluded with JSC Gazprom on setting the price of gas supplied in the first half of the year of 2013 in the amount of RUB 1,360.27 per 1,000 cu.m. of gas (excl. VAT).
JSC Gazprom, shareholder of the Company, Members of the Board of Directors: A. I. Medvedev, O. P. Pavlova, V. V. Cherepanov
General Meeting, Minutes No.26/2012 of December 27, 2012
17.
Supplementary Agreement No. 12 of 29.12.2012 to29.12.2012 to Gas Supply Agreement No.28 Pk-2007 of December 13, 2007, 2007 concluded with CJSC Gazprom YRGM Trading on setting the price of gas supplied in the first half of the year of 2013 in the amount of RUB 1,360.27 per1,360.27 per 1,000 cu.m. of gas (excl. VAT).
JSC Gazprom, shareholder of the Company, Member of the Board of Directors: М. Mehren
General Meeting, Minutes No. 26/2012 of December 27, 2012
18.
Supplementary Agreement No. 8 of December 29, 2012 to2012 to Gas Supply Agreement No.144/SNGP-2009 of 29.10.2009 concluded with CJSC Gazprom YRGM Development on setting the price of gas supplied in the first half of the year of 2013 in the amount of RUB ,of RUB, 360.27 per360.27 per 1,000 cu.m. of gas (excl. VAT).
JSC Gazprom, shareholder of the Company, Members of the Board of Directors: F.Sivertsen, A.Weatherill
General Meeting, Minutes No. 26/2012 of December 27, 2012
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