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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.
Intr
od
uctio
n
2
This Annual Report (hereinafter referred to as the Report) de-
tails the key performance indicators of Severneftegazprom Open
Joint-Stock Company operations (hereinafter referred to as
OJSC Severneftegazprom, the Company) for 2012 and the deve-
lopment 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 in-
formation 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
compliance with the provisions of the Global Reporting Initiative
(GRI) and integrates them in the Report. The information pro-
vided is organized under corporate information requests pro-
duced 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 inte-
rested 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 di-
rectly or indirectly, in these forward-looking statements. In par-
ticular, economic, political, social, technology-related and other
conditions may affect Company operations.
Introduction
3
ANNUAL REPORT • 2012
Message from the Chairman of the Board of Directors ................4Message from the General Director ..............................................6Key Events 2012 .............................................................................8Key Events 2013 ...........................................................................11Key Performance Indicators 2012 ...............................................13Severneftegazprom’s Position in the Industry and Development Prospects ...............................14
1 Management Bodies ..............................................18Financial 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
2 Authorized CapitalReport on Dividend Payments...............................26Authorized 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
3 Gas Exploration, Production and Marketing.........30Reserve Status...................................................................31
Development of the Cenomanian
and Turonian Gas Deposits ................................................32
Exploration .........................................................................33
Production Drilling ..............................................................34
Gas Production ..................................................................34
4 Financial Results ....................................................36Implementation 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
5 Investments ............................................................50
6 Technology and Innovations ..................................52Well No. 184 ......................................................................53
The control system for gas process losses
and the system for greenhouse gas extraction
and collection ....................................................................54
Energy Consumption .........................................................55
7 Sustainable Development ......................................58Social policy .......................................................................59
Health and safety ...............................................................62
Environmental protection and industrial safety ....................64
Main indicators of environmental protection activities .........68
Acknowledgement .............................................................71
8 Key Risks Associated With the Company’s Business ...............................72Operational risks ................................................................73
Financial risks.....................................................................75
Legal risks ..........................................................................76
9 Code of Corporate Governance Compliance Report ................................................78
10 General Information ...............................................80Registration Details ...........................................................81
The Company’s Representative Offices ..............................81
11 Summary ................................................................82Report Parameters .............................................................83
Information Disclosure .................................................................84Appendix 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
4
Message from the Chairman of the Board of Directors
Dear shareholders!
In 2012, OJSC Severneftegazprom continued to develop
its successful activity. The Company demonstrates prominent
stability among most efficient exploration and production com-
panies of Gazprom Group.
OJSC Severneftegazprom is one of the main resource bases of
the international infrastructure project – the Nord Stream pipe-
line; the fact justifies the responsibility of OJSC Severneftegaz-
prom 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 con-
tinued the Turonian development project in the Yuzhno-Russ-
koye 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 mobi-
lization to update production technologies and operational ef-
ficiency. The management of OJSC Severneftegazprom pays
special attention to industrial safety and labor protection, sus-
tainable use of natural resources and policy aimed to minimize
ecological risks and save energy.
Alexander Medvedev
Chairman of the Board of Directors of OJSC Severneftegazprom
Mes
sag
e fr
om
the
Cha
irman
of
the
Bo
ard
of
Dire
cto
rs
5
ANNUAL REPORT • 2012
Commitment and responsibility of the management of the
Company, professionalism and hard work of the employees, faci-
litated the achievements in production and financial indicators
and also the shareholders contributed as they defined the stra-
tegic 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
6
Mes
sag
e fr
om
the
Gen
eral
Dire
cto
r
Message from the General Director
Dear shareholders, partners, and colleagues!
Summarizing the results of the operational activity of
OJSC 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 gua-
rantee the steady development of the Company and the achieve-
ment 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 conden-
sate 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 Gaz-
prom Group and also one of good examples of international co-
operation 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 develop-
ing 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 pro-
duction activity in developing the Cenomanian and Turonian gas
deposits of the Yuzhno-Russkoye oil and gas condensate field,
Stanislav Tsygankov
General Director of OJSC Severneftegazprom
7
ANNUAL REPORT • 2012
aimed to achieve strategic goals of the Company. In 2012, bear-
ing in mind the importance of the projects and the principle of bal-
ance 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.
Being aware that the team is the most valuable asset and the
formula of success in any company, in 2012 OJSC Severnefte-
gazprom 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.
Sincerely,General Director of OJSC Severneftegazprom
Stanislav Tsygankov
8
Key
Eve
nts
2012
Key Events 2012
JANUARY
Securing project finance for the deve-lopment of the Yuzhno-Russkoye oil and gas condensate field was named “deal of the year” by the magazine Project Finance International, pub-lished 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.
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 Sever-
neftegazprom and Administration of
Novy Urengoy.
MARCH
Stanislav Tsygankov, General Direc-
tor of OJSC Severneftegazprom, and
Vasily Parshakov, Head of the Admini-
stration of the Krasnoselkup District,
signed an Agreement on Cooperation
between the Company and the District
Administration for 2012.
9
ANNUAL REPORT • 2012
APRIL
The ceremony of launching the first pro-
duction well in the Turonian gas depo-
sit in Western Siberia was held at the
Yuzhno-Russkoye oil and gas conden-
sate field developed by OJSC Sever-
neftegazprom in the presence of Alexan-
der Medvedev, Deputy Chairman of Gaz-
prom Management Board and Chairman
of the Board of Directors of OJSC Sever-
neftegazprom, and Stanislav Tsygankov,
General Director of OJSC Severnefte-
gazprom.
MAY
The 100 billionth cubic metre was reco-
vered 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 indica-
tors for the year 2011 were reviewed, the
Annual report and the Annual accounting
statement were unanimously approved,
the Company’s auditor for 2012 was ap-
pointed, the members of the Board of
Directors and Audit commission were
elected, and a number of interested par-
ty transactions for the next fiscal year
were approved. A decision on payment
of 2011 dividends was made.
10
Key
Eve
nts
2012
OCTOBER
October 25 was the five year anniver-
sary of the start of the production on the
Yuzhno-Russkoye oil and gas conden-
sate field.
AUGUST
A contest was held in OJSC Severnefte-
gazprom among oil and gas field opera-
tors on August 8, to select the one to
be awarded “The Best Professional” title.
NOVEMBER
The Company passed the re-certifica-
tion audit of the integrated manage-
ment system for quality, health and
safety, environmental protection and in-
dustrial safety for compliance with the
international standards ISO 9001:2008,
ISO 14001:2004, OHSAS 18001:2007.
Based on the audit results, the Compa-
ny was certified for another three-year
period.
11
ANNUAL REPORT • 2012
Key Events 2013
JANUARY
OJSC Severneftegazprom was grant-
ed the Statement GRI Application Level
Check, a certificate of the Global Report-
ing Initiative (GRI), confirming the comp-
liance of the Company Annual Report for
2011 with GRI level C requirements.
FEBRUARY
According to the results of the re-certifi-
cation audit of the Company’s integrat-
ed management system by international
certification authorities, OJSC Sever-
neftegazprom was granted certificates
confirming the compliance of the Com-
pany’s management system for quality,
health and safety environmental protec-
tion and industrial safety with the inter-
national 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.
DECEMBER
On December 5, in Tyumen, the re-sults of the regional contest coincid-ing 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.
In 2012 OJSC Severneftegazprom
fully completed the action plan on gas
infrastructure development in the settle-
ment 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 Sever-
neftegazprom is entitled to profit tax re-
lief for the period of 2013-2017 and pro-
perty tax relief for the period of 2015-2017,
payable into the regional budget.
12
Key
Per
form
ance
Ind
icat
ors
201
2
Gas collecting system at Yuzhno-Russkoe oil and gas condensate field
13
ANNUAL REPORT • 2012
Key Performance Indicators 2012
Indicator, billion m3 2010 2011 2012 Change, %
2011 /2010 2012 /2011
Gas reserves 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%
Indicator, million rubles
2010 2011 2012 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%
Production indicators
Key performance indicators
Sev
erne
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azp
rom
’s P
ositi
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the
Ind
ustr
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evel
opm
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ects
14
Severneftegazprom’s Position in the Industry and Development Prospects
The gas industry is strategically important for the develop-
ment and economy of Russia, contributing about 10% of the na-
tional gross domestic product. In the structure of the fuel balance
in Russia, gas accounts for about a half of the total fuel produc-
tion1.
Russia is the most important segment of the global gas in-
dustry. The country holds the first position in the global gas
production market (over 18%), its share of the global proven re-
serves of natural gas is 25% and Russia exports about a quar-
ter 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 lo-
cated 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/
role: a large fuel and energy, oil and gas production complex
has been established within the autonomous area.
OJSC Severneftegazprom performs production opera-
tions 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.
Russia
Iran
Qatar
Turkmenistan
USA
Saudi Arabia
United Arab Emirates
Venezuela
Nigeria
Algeria
0 5 10 15 20 25 30 35 40 45
Proven reserves of natural gas, trln m3
OJSC Severneftegazprom performs
production operations in the Yamal-
Nenets Autonomous Area and is part
of the Gazprom Group, which is one
of the largest vertically integrated
energy companies in the world
OJS
pro
Ne
the
o
roductio
Nenets Aut
of the Gazp
of the la
ener
15
ANNUAL REPORT • 2012
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 sup-
plied to Europe in 2012.
The successful cooperation of western technologies and
the Russian experience of working in adverse weather con-
ditions within the framework of the project on developing the
Yuzhno-Russkoye oil and gas condensate field, was empha-
sized 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 re-
serve increases;
• undertaking works aimed at the reconstruction, moder-
nization and technical upgrade of the Yuzhno-Russkoye
oil and gas condensate field facilities;
• complying with the agreement on project finance con-
cluded with a consortium of foreign banks and the Rus-
sian OJSC Gazprombank;
Russia (677)
USA (651)
Canada (160)
Qatar (151)
Iran (149)
Other Countries (1600)
Russia (23)
Qatar (14)
Norway (12)
Canada (8)
Algeria (6)
Other Countries (37)
Natural gas production, billion m3 Export of natural gas, billion m3
Sev
erne
fteg
azp
rom
’s P
ositi
on in
the
Ind
ustr
y an
d D
evel
opm
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rosp
ects
16
• effective functioning of the integrated management sys-
tem for quality, health and safety, environmental protec-
tion and industrial safety in compliance with the require-
ments 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 Dis-
tricts, and implementing of programs aimed at support-
ing 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 look-
ing 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.
Yamal-Nenets Autonomous Area
ANNUAL REPORT • 2012
19
1
Financial and Business Operations Management and Control Bodies
Structure of the management bodies
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 pro-
vides general Company leadership and is responsible for stra-
tegic management aimed at accomplishing long-term objec-
tives 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 opera-
tions, 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 inter-
nal 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 Interna-
tional Financial Reporting Standards (IFRS). The independent
audit is annually approved by the General meeting of share-
holders upon suggestion by the Board of Directors.
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 Com-
pany’s official website: http://www.severneftegazprom.com/.
The General Meeting of Shareholders
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 ac-
counting 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 re-
viewed the issues associated with the distribution of profits and
payment of remuneration to the Board of Directors members.
The extraordinary General meetings of the sharehol-
ders, 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 General Meeting of Shareholders
The Board of Directors
The General Director
Structure of the management bodies
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
Man
agem
ent
Bo
die
s
1
20
Alexander IvanovichMedvedev,
Chairman of the Board of Directors
ElenaVladimirovna
Mikhailova
Vsevolod Vladimirovich
Cherepanov
AlexanderPavlovich
Dushko
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.
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.
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
Since 2010, Member of
the Gazprom Management
Committee, Head of the Gas, Gas
Condensate and Oil Production
Department of JSC Gazprom.
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.
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
Information on changes in the Company’s Board of Directors in the reporting year
The members of the Company’s Board of Directors at the end of the accounting period
The Board of Directors
Pursuant to the Charter, the Board of Directors of the Com-
pany shall consist of 8 members.
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.
ANNUAL REPORT • 2012
21
1
Technical Committee
For the purpose of preliminary reviewing of the most impor-
tant issues falling under the competence of the Board of Direc-
tors 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 Techni-
cal 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 recom-
mendations to the Board of Directors regarding all significant
technical aspects of the Company’s business within its com-
petence, including the approval by the Board of the Long-Term
Development Plan and Budget, the Additional Field Develop-
ment Plan Draft, the Additional Field Development Plan and
Annual Work Programme and Budget, as well as any amend-
ments 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 execu-
tive body.
Dr. Rainer Seele Mario Mehren Alan James Weatherill
Frank Allan Sivertsen
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.
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 Explorations-
und-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.
Since 2011, Member of the Management Board of
Wintershall Holding GmbH.
Born on December
17, 1955 in Singapore.
Graduated with a
Bachelor of Mechanical
Engineering from
the University of
Southampton.
2005-2010 – Chief
Engineer of Shell
Global Solutions B.V.
(Netherlands).
Since 2010, General
Director of E.ON
Exploration and
Production Russia (the
legal successor of E.ON
Ruhrgas Exploration and
Production Russia).
Born on 21 August, 1957 in
Time (Norway). Graduated
from the Norwegian School
of Economics and Business
Administration. Master of
Business Administration
(MBA).
2005-2007 – Managing
Director of E.ON Ruhrgas
UK North Sea (Great
Britain).
Since 2008, Chief Executive
Officer of E.ON Exploration
and Production GmbH (the
legal successor of E.ON
Ruhrgas E & P GmbH).
Meeting of Technical Committee
Man
agem
ent
Bo
die
s
1
22
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 en-
suring shareholders’ rights, planning the development strategy
of the Company and ensuring its successful financial and eco-
nomic operations.
The Board of Directors judges the performance of the Com-
pany 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 fo-
cused on the following important issues relating to the current
activities of the Company:
• reviewing the shareholders’ proposals regarding candi-
dates for the position of member of the Board of Direc-
tors, 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 ser-
vices;
• the convocation of extraordinary General meetings of
shareholders
No. Name Place of work Position
1Stanislav Evgenievich Tsygankov
OJSC Severneftegazprom General Director
2Yulia Viktorovna Sukhanova
OJSC Severneftegazprom Deputy General Director of Economics and Finance
3Egor Alekseevich Efimochkin
JSC Gazprom
Deputy Head of the Directorate – Head of the
Division of Mergers and Acquisition of the
Department of Foreign Economic Activities
4Nazhib 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 GmbHDeputy Managing Director for Technical
Development and Joint Ventures Support
6 Ubbenjans Hermann OJSC SeverneftegazpromDeputy General Director for Development and
Strategic Planning
7 Alan James WeatherillE.ON Exploration and Production Russia
(the legal successor of E.ON Ruhrgas Geological
Exploration and Mining Russia)
General Director
8 Dr. Peter ReichetsederE.ON Exploration and Production GmbH
(the legal successor of E.ON Ruhrgas E & P GmbH)Managing Director for Production and Technology
The members of the Technical Committee as of December 31, 2012
ANNUAL REPORT • 2012
23
1
As part of preparing for the extraordinary General meetings
of shareholders, the Board of Directors considered the follow-
ing 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 sharehold-
ers to approve the supplement agreements to the long-
term 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 re-
sults of work in 2011.
Executive Body
According to the Charter of the Company, there is no colle-
gial executive body of the Company (Management Board). The
sole executive body of the Company is the General Director.
Information on the Company auditor
The auditor of the Company is CJSC PricewaterhouseCo-
opers Audit (CJSC PwC Audit)
Address: 10 Butyrsky Val, Moscow 125047, Russian Fede-
ration
The certificate of state registration of the joint stock compa-
ny No. 008.890, issued by the Moscow Registration Chamber
on February 28, 1992.
The certificate of record entry into the Unified State Re-
gister 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 Cham-
ber of Russia” (NP APR), a self-regulating organization of audi-
tors – registration number 870 in the registry of NP APR mem-
bers.
The audit was approved by the general meeting of share-
holders of the Company on June 30, 2011.
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.
The labour remuneration of the Company’s General Director is based on the Agreement on labour remu-
neration, a supplement of the Employment Agreement that stipulates the list of social protection and compen-
sation payments.
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.
Stanislav E. TsygankovGeneral Director of OJSC Severneftegazprom
Man
agem
ent
Bo
die
s
1
24
Audit Commission
The Audit Commission is a permanent internal control body,
independent of the officials, management bodies and manage-
ment of the Company.
In its work, the Audit Commission is guided by the Federal
Law “On Joint Stock Companies”, the Charter of the Compa-
ny 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.
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 BussE.ON Exploration and Production GmbH (the legal
successor of E.ON Ruhrgas E & P GmbH)Chief Finance Officer
3 Larissa Janz Wintershall Russland GmbHHead of the Department of Finance and Information
Technologies
Members of the Company’s Audit Commission at the end of the accounting period
ANNUAL REPORT • 2012
27
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 result-
ing 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.
No Kind of securities
Issued shares: Including:
Shares (pcs.) Par value (RUB) Fully paid (pcs.)Partially paid
nominal value (RUB)
1. Company’s authorized capital: 533,330 ------- 533,330 None
2.
2.1.
Ordinary shares,incl. those accounted in the balance sheet
533,324
None60.00
None533,324
NoneNone
None
3. Preferred shares, incl. 6 6 None
3.1.
3.1.1.
Type A preferred sharesincl. those accounted in the balance sheet
2
None2,461,620.00
None2
NoneNone
None
3.2.
3.2.1.
Type B preferred sharesincl. those accounted in the balance sheet
3
None666,692.40
None3
NoneNone
None
3.3.
3.3.1.
Type C preferred sharesincl. those accounted in the balance sheet
1
None1,076,992.20
None1
NoneNone
None
Information on authorized capital as of December 31, 2012
Kind and category (type) of 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
Ordinary registered shares 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
Information on the Company’s equity securities
Aut
horiz
ed C
apita
l. R
epo
rt O
n D
ivid
end
Pay
men
ts
2
28
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 deci-
sion 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.
Information on Changes in the Company’s Capital Reserve
In compliance with the the Company’s Charter, the Com-
pany 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.
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.
Category (Type) of SecurityAmount of Dividends Paid,
TOTAL, RUB thousandDividend Payment Date
Ordinary shares 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
Total: 1,831,884.00 August 2012
Report on the Payment of Announced Dividend on Shares of the Company
Shareholder Number of shares Par value, RUBInterest in authorized
capital, % Percentage of
ordinary shares, %
JSC Gazprom Ordinary shares
Type A preferred shares
Type B preferred shares
Type C preferred shares
266,668266,668
-
-
-
16,000,080.0016,000,080.00
-
-
-
40.000450602840.0004506028
-
-
-
50.0011250250.00112502
-
-
-
Wintershall Holding GmbH Ordinary shares
Type A preferred shares
Type B preferred shares
Type C preferred shares
133,331133,328
2
-
1
13,999,912.20 7,999,680.00
4,923,240.00
-
1,076,992.20
34.999999775019.9993252958
12.3081771107
-
2.6924973685
24.9994374924.99943749
-
-
-
E.ON Exploration & Production GmbH Ordinary shares
Type A preferred shares
Type B preferred shares
Type C preferred shares
133,331133,328
-
3
-
9,999,757.207,999,680.00
-
2,000,077.20
-
24.999549622219.9993252958
-
5.0002243264
-
24.9994374924.99943749
-
-
-
Total 533,330 39,999,749.4 100.00% 100.00%
Company shareholders holding more than 5% of voting shares, at the end of the reporting period
ANNUAL REPORT • 2012
31
3
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 Za-
padno-Chaselskoye ones, registered in the governmental ba-
lance sheet as exploration fields.
As of December 31, 2012, all the Company’s license liabili-
ties regarding the subsoil geological study were fulfilled in full.
Field
Hydrocarbon reserves as of December 31, 2012.
Gas, bln m3 Condensate, mln tonnes Crude oil, mln tonnes
АВС1
С2
АВС1
С2
АВС1
С2
Yuzhno-Russkoye oil and gas condensate field
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 - - -
Total: 922.946 173.682 0.255 4.816 9.345 32.097
Hydrocarbons
Reserves as of January 1st, 2012
Changes in reserves in 2012 Reserves as of December 31st, 2012
Production + losses
Exploration Reevaluation Transfer
АВС1
С1
АВС1
С2
АВС1
С2
АВС1
С2
АВС1
С2
Crude oil (mln tonnes)
9.345 32.097 - - - - - - - 9.345 32.097
Gas (bln m3) 947.646 174.781 25.363 - - - - 0.662 -1.099 922.946 173.682
Condensate (mln tons)
0.255 4.816 - - - - - - - 0.255 4.816
Description of the raw materials base at the end of the reporting period
Reserve flow of the ABC1 and C
2 categories in the reporting period
Creating long-term growth potential –
improving exploration work efficiency
using state-of-the-art technologies –
is one of the main principles of the
Company’s work
im
ng
is o
mproving e
using state
is one of
Gas
Exp
lora
tion,
Pro
duc
tion
and
Mar
ketin
g
3
32
Development of the Cenomanian and Turonian Gas Deposits
Indexes2012
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
Turonian (Т1-2
) 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
Turonian (Т1-2
) 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
Commissioning of wells, pcs. 0 4
Producing 0 0
Observation 0 4
Wells stock as of year end, pcs. 163 166
Producing 143 143
including active 143 143
Observation 18 21
Disposal 2 2
Power Capacity of the Booster Pump Stations 4*16 MW 4*16 MW
Well utilization rate 0.95 0.98
Well stock utilization rate 1 1
Comparative characteristics of project and actual development indexes
ANNUAL REPORT • 2012
33
3
Exploration
The 2012 geological exploration in the Yuzhno-
Russkoye license area was carried out in accordance with
the adjusted geological exploration assignment, as ap-
proved 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 con-
ditions 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 explo-
ration works on the basis of 3D common depth point method,
with increased density, for 420 km2 of the Turonian-Cenoma-
nian sediments was completed. The comprehensive process-
ing and interpretation of the seismic survey results has started.
The environmental activities and mitigation of adverse con-
ditions 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 Explo-
ration 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 West-
Siberian Branch of the State Commission for Mineral Reserves,
No. 020.12-ZS of March 28, 2012.
Within the framework of the adjusted 2012 geological assign-
ment (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 com-
prehensive engineering surveys for drilling sites and access roads
were performed; the assignment for project development was de-
veloped and approved; the land allocation surveying and cadastral
works are under way. The continuation of the project work is envi-
sioned 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 ob-
servation well stock.
The first production well on the Turonian natural gas deposit at Yuzhno-Russkoye oil and gas condensate field
Gas
Exp
lora
tion,
Pro
duc
tion
and
Mar
ketin
g
3
34
Index 2012 2011 2010
Production (extracted from the reservoir) 25.363 25.667 25.384
Process losses 0.016 0.016 0.025
Gross production of natural gas 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
Sales gas volume 25.280 25.581 25.327
Gas Production in 2010-2012, bln m3
The C1 and C
2 category reserves changed in the Zapad-
no-Chaselskoye field within the Zapadno-Chaselskiy, Kynsko-
Chaselskiy, and Yuzhno-Russkoye license areas and the undis-
tributed Yamal-Nenets Autonomous Area subsoil fund.
The review by the State Commission for Mineral Reserves
“Rosnedra” resulted in the changed gas reserves of the Yuzhno-
Russkoye license area (Protocol of State Commission for Mine-
ral Reserves FAN No 18/671-pr of October 18, 2012) being
transferred to the OJSC Severneftegazprom balance:
Production Drilling
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 en-
gineering surveys for drilling sites and access roads were per-
formed; 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
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.Field
Reserves increment, category С1
Gas, bln m3
Crude oil, mln tonnes
Condensate, mln tonnes
Zapadno-Chaselskoye field
0.662 0 0
Total 0.662 0 0
Changes in gas reserves accruing
to the Yuzhno-Russkoye oil and gas
condensate field
ANNUAL REPORT • 2012
35
3
160
0
20
40
60
80
2007 2008 2009 2010 2011 2012
100
120
140
30,000
–
5,000
10,000
15,000
20,000
25,000
42
1,256
15,066
22,584 23,359 25,651 25,347
106
141 142 143 143
Operating production wells
Sales gas, bln m3
Pro
duction w
ells
, p
cs.
2007 – 2012 Gross production of natural gas
Gas-collecting system of Yuzhno-Russkoye oil and gas condensate field
ANNUAL REPORT • 2012
37
4
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 state-ment of the Company for 2012, formed up in accordance with the Russian account-ing 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.
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 regu-
lated in accordance with the corporate standard of Gazprom
089-2010 “Combustible natural gas supplied and transpor-
ted 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 trans-
portation systems.
Current gas quality is measured at the gas measuring station in
the Yuzhno-Russkoye oil and gas condensate field using the inter-
ference dew point analyzer Kong-Prima-10 and flow chromato-
graph. 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-
Item2012 Deviation actual / budget 2012
Budget Actual In thousand m3 %
ANNUAL PROGRAMME OF WORKS
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%
2012 Annual Programme of Works
JSC Gazprom (40%)
CJSC Gazprom YRGM Trading (35%)
CJSC Gazprom YRGM Development (25%)
Sales of the gas produced by the Company
Fin
anci
al R
esul
ts
4
38
In million RUB, excl. VAT2012 Deviation actual / budget 2012
Budget Actual in million RUB %
CURRENT OPERATING EXPENDITURE: 26,350 25,890 -460 -2%
Materials 331 328 -4 -1%
Energy purchase 3 11 8 240%
Payroll, social benefits and payments 1,631 1,580 -51 -3%
Insurance premiums 251 269 18 7%
Depreciation 6,035 6,027 -9 0
Lease of fixed assets 126 119 -7 -5%
Taxes and other obligatory payments, incl: 13,709 13,865 156 1%
Mineral extraction tax (MET) 12,724 12,901 177 1%
Other taxes included in cost value of gas (works, services)
985 964 -21 -2%
Geological exploration (contracting mode) 535 541 6 1%
Expenditure on insurance contracts 296 282 -14 -5%
Overhaul (contracting mode, excl. inventory) 0 0 0 0
Other expenditure, incl.: 3,433 2,868 -565 -16%
Interests and one-off payments due on loans 1,811 1,420 -391 -22%
Current Operating Expenditure
credited laboratory in the Yuzhno-Russkoye oil and gas condensate field.
Certificate of gas quality is issued based on the laboratory test results.
Actual revenue in 2012 increased by 8% in comparison
with the budget indicator due to:
• Increase in the actual volume of gas sales;
• 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-
In million RUB, excl. VAT2012 Deviation actual / budget 2012
Budget Actual in million RUB %
TOTAL REVENUE: 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%
CJSC Gazprom YRGM Development 7,886 8,490 604 8%
Revenues from gas sales
ANNUAL REPORT • 2012
39
4
ments.
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 in-
dicator. 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 apprecia-
tion of the national currency;
• Optimization of the operational process and implemen-
tation of retrenchment programme, carried out by the
Company.
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.
In million RUB, excl. VAT 2012 Deviation actual / budget 2012
Budget Actual in million RUB %
CAPITAL EXPENDITURES: 1,433 1,161 -272 -19%
31,545
+8%
33,962
Budget 2012 Actual 2012 Budget 2012 Actual 2012
24.904 25.280
+2%
Budget 2012 Actual 2012
1.267 1.343
+6%
Capital Expenditures
Gas sales revenue,
in mln RUB
Sales gas,
in bln m3
Annual average gas sale
price, in RUR
per thousand m3
Fin
anci
al R
esul
ts
4
40
Analysis of change in indicators of the Statement on 2012 financial results
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 amount-
ed to 23,086 million RUB. The increase in expenditure
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. Posi-
tive 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 agree-
ment 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
Unit of measurement – thousand RUB
Item Line No. 2012 2011Deviation
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%
Balance of other income and expenses (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%
Analysis of change in indicators of the Statement on 2012 financial results
ANNUAL REPORT • 2012
41
4
(exchange differences), as compared to the previous
year;
• a significant growth factor in the Company’s net prof-
it 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 “Con-
cerning the introduction of amendments to the Law
of Yamal-Nenets Autonomous Area “About the list of
companies implementing the priority investment proj-
ects 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% (in-
stead 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 Flowline of the gas-collecting system at Yuzhno-Russkoye oil and gas condensate field
Fin
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esul
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42
Unit of measurement – thousand RUB
Item Line No.
Changes in natural termsChange of specific weight
in assets
At the end
of the period
At the beginning
of the period
Change over the period Specific weight
in thous. RUB
In %
At the end
of the period
At the beginning
of the period
Change
I. NON-CURRENT ASSETS 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
BALANCE (lines 1100 + 1200) 1600 79,938,641 80,842,353 -903,712 -1% 100% 100% 0
Analysis of change in the asset structure of the Company in 2012
ANNUAL REPORT • 2012
43
4
Within the accounting period, the Company’s assets re-
duced 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 account-
ing period;
• capital investments in progress decreased by 1,417 mil-
lion RUB or by 71%, due to the completion of construc-
tion 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.
The reduction of short-term receivables within accounting
period by 286 million RUB was mainly caused by the retrench-
ment 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 safe-
ty requirements for the operation of hazardous produc-
tion facilities.
Fixed Assets
Capital Investments in Progrerss
Others
54,333
2,000
1,136
5831,299
-9%
50,671
2011 2012
52,553 MRURas of 31 Dec 2012
Cash
Finansial Investments
Receivables
Others
27,386 MRURas of 31 Dec 2012
17,576
5,053
744
813
+17%
18,363
3,584
4,626
2011 2012
Non-current assets, in million RUB Current assets, in million RUB
Fin
anci
al R
esul
ts
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44
Analysis of change in the liabilities structure of the Company in 2012
Unit of measurement – thousand RUB
Item Line No.
Changes in natural termsChange of specific weight
in assets
At the end of the
period
At the beginning
of the period
Change over the period Specific weight
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 non-
budgetary funds1523 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
Analysis of change in the liabilities structure of the Company in 2012
ANNUAL REPORT • 2012
45
4
Within the accounting period, the Company’s liabilities de-
creased by 904 million RUB (-1%) and equaled to 79,939 mil-
lion 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
net profit of 8,978 million RUB, earned during 2012.
A reduction in profit of 1,832 million RUB for the pre-
vious 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 in-
crease 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.
Long-term Credit Loans
Deferred Tax Liabilities
33,004
3,741
-26%
23,779
3,336
2011 2012
27,115 MRURas of 31 Dec 2012
Current Long-term Debt
Payable Taxes and Duties
Other Short-term Indebtedness
6,903
1,919
+17%
7,106
3,110
2011 2012
542
728
10,944 MRURas of 31 Dec 2012
Shareholders’ Equity
Profit of Previous Years
Net Profit for the Accounting Period
25,188
9,545
+21%
25,188
2011 2012
7,713
8,978
41,879 MRURas of 31 Dec 2012
Long-term liabilities,
in million RUB
Short-term liabilities,
in million RUB
Equity and reserves,
in million RUB
Fin
anci
al R
esul
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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 -
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, pro-
vided by the international consortium of banks and “Gazprom-
bank” (Open Joint-Stock Company). The loan repayment date is
31st of December 2018 with the possibility of prepayment (Cash
sweep).
The Company executed partial redemption of multi-currency
obligations during 2012, which integrally reduced the debt bur-
den by 19% as compared to the previous year.
The interest rate for foreign currency tranches is deter-
mined 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%. Euro
USD
RUR
5,079
-19%
4,098
450
2011 2012
324
557
402
Currency, in mln
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
Annual average interest rate for loans
Loan liabilitiesLoan liabilities, in mln
ANNUAL REPORT • 2012
47
4
Analysis of cash flow
• 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 divi-
dends 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 de-
posits 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 deduc-
tion of profit tax). The total amount of credit redemp-
tion within accounting period amounted to 7,691 mil-
lion RUB.
Indicator, million RUB 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%
Cash and cash equivalents including cash deposited for terms over 3 months and accounted for as financial investments
- 21,946 - 17,576 - 4,370 + 25%
Net debt 8,939 22,331 - 13,390 - 60%
Indicator, million rubles 2012 2011 Deviation 2012 /
2011Change 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%
Net debt
Analysis of cash flow
Fin
anci
al R
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48
Analysis of Key Financial Ratios
RatioAs of
31 Dec 2012As of
31 Dec 2011Change over
the periodEconomic value of ratios
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
Working capital financed by equity to total assets ratio
-0.39* -0.97* +0.58 Own current assets to total current assets
Investment coverage Ratio 0.86 0.88 -0.02 Equity and long-term liabilities to total capital
Current Assets to Equity Ratio -0.25* -0.65* +0.4 Own current assets to equity sources
Current Assets Mobility Ratio 0.80 0.75 +0.05The 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
* 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).
RatioAs of 31 Dec
2012As of 31 Dec
2011Change over
the periodEconomic value of ratios
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 short-
term 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
Key Financial Stability Ratios
Key Liquidity Ratios
ANNUAL REPORT • 2012
49
4
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
Interest Payable Coverage Ratio (ICR) 8.3 6.1 +2.2
Profitability Analysis
Absorbers of the gas-dehydration complex at Yuzhno-Russkoye oil and gas condensate field
ANNUAL REPORT • 2012
51
5
The Company’s key objectives in capital investing are:
• achieving the key indicators of the Long-term Develop-
ment 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 com-
missioning, reconstructing and upgrading the main pro-
duction 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 construc-
tion of the facilities envisioned for launching in 2013 and
later on;
• 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 con-
densate field to ensure their safe operation according
to health and safety, and environmental requirements.
An essential aspect
of the Company’s activities
is ensuring a reliable basis
for sustainable development
o
i
fo
Indicator in million RUB, excl. VAT
2011 2012Change
2012 / 2011
Actual Plan Actual +/- %
Capital investments
1,062 1,433 1,161 + 99 + 9%
Capital investments
535
2,379
2,384
Actual 2011 Budget 2012 Actual 2012
Geological Exploration
Construction
Production Drilling
Equipment not Covered by Estimates of Constructions Costs
32
19
16
13
Execution of Scientific-research,
Design-experimental and Technological Works
R&D of Future Years
625
272
165
954
128
2011 2012
Commissioned fixed assets, in million RUB
Capital expenditure, in million RUB
ANNUAL REPORT • 2012
53
6
Well No. 184
In 2010, OJSC Severneftegazprom began implementing a
pilot project to construct the first experimental bilateral produc-
tion well No. 174 for the Yuzhno-Russkoye oil and gas conden-
sate 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, de-
velopment, 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 penet-
ration 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.
To substantiate the new technologies, and clarify the de-
posit properties, the decision was made to arrange in the vici-
nity 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 Turoni-
an deposit development;
• optimise the expenses and improve the cost efficiency
for the Yuzhno-Russkoye oil and gas condensate field’s
Turonian deposit development.
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
The ceremony of official commencing of the first production well on the Turonian natural gas deposit
Tech
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gy
and
Inno
vatio
ns
54
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 Rus-
sian 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 FEDERATIONUTILITY MODEL PATENT
№ 122131
AUTOMATED SYSTEM FOR CONTROL OF PROCESS GAS LOSSES
OF GAS PUMPING UNITS OF BOOSTER COMPRESSOR STATIONS
Title holder(s): Open Joint Stock Company Severnefte-
gazprom (RU)
Author(s): Tsygankov Stanislav Evgenievich (RU), Sorokin
Anatoliy Aleksandrovich (RU), Kasyanenko Andrey Aleksandro-
vich (RU)
Application No 2012118165
Utility model priority 03 May 2012
Registered in Russian Federation State Register of uti-
lity models on 20 November 2012.
Term of patent expires on 03 May 2022.
Head of Federal Agency for intellectual property
B.P. Simonov
RUSSIAN FEDERATIONUTILITY MODEL PATENT
№ 119415
GREENHOUSE GASES REMOVAL AND COLLECTION SYSTEM FROM GAS PUMPING UNITS
Title holder(s): Open Joint Stock Company Severnefte-
gazprom (RU)
Author(s): Tsygankov Stanislav Evgenievich (RU), Sorokin
Anatoliy Aleksandrovich (RU), Kasyanenko Andrey Aleksandro-
vich (RU)
Application No 2012112970
Utility model priority 03 April 2012
Registered in Russian Federation State Register of uti-
lity models on 20 August 2012.
Term of patent expires on 03 April 2022.
Head of Federal Agency for intellectual property
B.P. Simonov
ANNUAL REPORT • 2012
55
6
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 con-
sumption, and maintaining the key parameters of tech-
nological 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.
No.Type of the energy resources
UoM.
2011 2012 Deviation from 2011
report plan report
+,- %total
Incl. own
productiontotal total
Incl. own
production
Natural gas mln. m3 68.24 68.24 93.95 64.87 64.87 -3.37 -5%
mln. rubles 43.73 43.73 90.63 59.44 59.44 15.71 36%
2 Power
thousand.
kW*h26,635 25,573 32,401 27,066 25,964 431 2%
mln. rubles 216.34 213.7 255.35 265.02 262.14 48.68 22%
3 Heat energyGcal 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%
4 Diesel fuel
thousand.
tonnes0.75 - - 0.74 - -0.01 -1%
mln. rubles 20.17 - - 22.01 - 1.84 9%
5 Car petrol AI-95
thousand.
tonnes0.19 - - 0.29 - 0.10 55%
mln.
rubles.5.38 - - 9.09 - 3.71 69%
6 Car petrol AI-92
thousand.
tonnes0.27 - - 0.25 - -0.02 -7%
mln. rubles 6.98 - - 6.74 - -0.24 -3%
Consumption of energy resources in physical and monetary terms
Tech
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gy
and
Inno
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ns
56
6
Key activities
Resulting saving in fuel and energy resources
Natural gas, mln m3
Electric energy, mln kW*h
Heat energy, Gcal
Fuel and energy resources,
tonnes of reference fuel
Plan Actual Plan Actual Plan Actual Plan Actual
Replacing incandescent lamps with energy saving
ones 0.240 0.176 - -
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” algorithm5.360 5.360 - - - - 6.185 6.185
TOTAL 5.360 5.360 0.275 0.211 30.420 30.420 6.185 6.185
The Company’s Energy Saving Programme performance
To improve operating efficiency, the Company has been
consistently implementing the policy of energy saving and im-
proving 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.
ANNUAL REPORT • 2012
59
7
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 un-
interrupted 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 cor-
porate culture and professional ethics. OJSC Severneftegaz-
prom guarantees its every worker unconditional respect to-
wards 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 provid-
ed with various benefits, health insurance and a private pen-
sion scheme.
The Company’s production activities are concentrated in
uninhabited, remote areas with harsh environmental condi-
tions. The rotation method used by the Company for organis-
ing labor at the sites of the Yuzhno-Russkoye oil and gas con-
densate field is the most effective and widely used in the Far
North. In 2012, 58% of the workforce was employed on the ro-
tation 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 chil-
dren up to three years of age, as well as persons with contrain-
dications 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.).
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 regis-
tered in the village of Krasnoselkup and has offices in the settle-
ment of Urengoy, the town of Novy Urengoy, Tyumen and Moscow.
From a sustainable development point of view, the Com-
pany makes the greatest impact on the labor market of Kras-
noselkup and Pur districts as well as on the city of Novy Uren-
goy. At the end of 2012, 940 people (including 168 women and
772 men) worked in these areas. In the reporting period, 98 em-
ployees 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).
In the course of its business,
the Company has been continuously
searching for the optimal balance
of environmental, social
and economic components
th
sea
In
the Compa
searchin
a
2005
1050
56226
668 882 933 963 991 1024850
650
450
250
502006 2007 2008 2009 2010 2011 2012
Number of
OJSC SEVERNEFTEGAZPROM employees
at the end of reporting period
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HR indicators 2012 2011
Number of employees hired during the year 146 149
Number of employees who left jobs during the year 113 121
By gender:
Men, % 73 70
Women, % 27 30
By age:
Younger than 30 years 62 54
From 30 to 50 years 35 47
Older than 50 years 16 20
Labour turnover, % 4 4
Number of employees, in total 1,024 991
Number of employees, by gender:
Men, % 79 80
Women, % 21 20
Retired employees 11 12
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
In total 222 295 507
Staff structure
Staff composition by age
The Company is actively engaging young professionals. More than half of the team consists of workers under the age of 40.
ANNUAL REPORT • 2012
61
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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 com-
fortable 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, cor-
porate communications, as well as staff training and develop-
ment. 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 Yuzhno-
Russkoye 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 Pro-
fession”, “The Best Department”, “For implementation and in-
vention,” including cash awards for winners, were developed.
To encourage staff to participate in the professional skills con-
tests, 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 independentenvironmental consultant, prepared in accordance with the Equator Principlesand Standards of the International Finance Corporation.
The Collective Agreement is the main instrument for ensur-
ing an attractive level of benefits and compensation for all em-
ployees and retirees of the Company, in line with the Labor Law
of the Russian Federation.
In order to improve the provisions of the Collective Agree-
ment, discussions were held in 2012 regarding proposals
made by the Company’s employees, as part of the Commis-
sion 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 Administra-
tion 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 obliga-
tions 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 in-
fluence 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 strate-
gic 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 profes-
sional development of its employees. A training programme
Giving of gifts to «Geologist» ice-hockey team of Urengoy settlement
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was developed and implemented for these purposes. The train-
ing 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 theoreti-
cal 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.
Item No
Employee category Number of employeesTotal number of training
hoursAverage 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
Total 420 31,732 76
In 2012, 356 professionals and executives of the Compa-
ny 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 Severneftegaz-
prom 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 Uni-
versity of JSC Gazprom”, training for E.ON Ruhrgas AG spe-
cialists was carried out at the Company’s production facilities. A
Partnership agreement was concluded in 2012 with LLC Win-
tershall Russland GmbH, under which employees of the Com-
pany take part in traineeship on production issues at foreign
enterprises. The Company organises practical training for stu-
dents 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, vol-
leyball and other sports, as well as cultural events for the em-
ployees.
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 protec-
tion for retired employees, the Company has an additional pri-
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 assis-
tance if required.
Over the years, the Company has proven that its activities
are crucial and important to many people, who can be con-
fident 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 effi-
ciency depends on the reliable, trouble-free operation of equip-
ment and actions of workers.
Operation of production facilities of the Company is per-
formed on the basis and in accordance with Russian laws, cor-
porate 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 environ-
ment at the workplace, the compliance with the safety require-
ments 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
Information on the average number of employee training hours for 2012
ANNUAL REPORT • 2012
63
7
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 Com-
pany uses the Ministry of Labor Decree of October 24, 2002
No. 73 “On the approval of document forms required for the in-
vestigation 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 com-
plexes 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 medi-
cal 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 fa-
cilities. 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 cen-
ters 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 per-
formance, the company is able to successfully cope with pro-
duction tasks.
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 en-
vironmental friendliness and rational management of natu-
ral resources, the Company not only complies with legal re-
quirements, but also consistently extends the application of
industry best practices. Under control of production opera-
tions, OJSC Severneftegazprom carries out regular environ-
mental 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;
• determining the availability of licenses and permits re-
quired by the environmental legislation of the Russian
Federation;
• timely provision of reliable reporting documentation re-
quired 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, Tech-
nological and Nuclear Supervision reissued the license to the
OJSC Severneftegazprom to perform “The operation of flam-
mable 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 ac-
tion plan for 2013.
As part of the OJSC Severneftegazprom complex,
16 hazardous industrial facilities were registered in the corre-
sponding state register and insured under civil liability for injury
Day of Reindeer Herder an the settlement of Ratta
ANNUAL REPORT • 2012
65
7
to life, health or property of other persons and the environment,
in the event of accidents at the enterprise facilities. The Com-
pany carries out production supervision in accordance with
the “Regulations on the production supervision for compliance
with industrial safety requirements at hazardous production fa-
cilities of the OJSC Severneftegazprom” in agreement with the
North Ural Department of the Federal Service for Environmen-
tal, 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 em-
phasis on the Far North ecosystem.
In 2012, the annual surveillance audit of the Company was
held, confirming its compliance with international environmen-
tal standards. In addition, the Company successfully passed
the re-certification process undertaken by Bureau Veritas Cer-
tification in November 2012, which demonstrated the effective-
ness 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 sys-
tematically reduce the impact on the environment by using the
latest technologies combined with in-house solutions. This al-
lows the Company to achieve a high level of performance in en-
vironmental 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 green-
house gas emissions;
• implements a programme to reduce energy con-
sumption.
Emissions of air pollutants (tons)
2011 2012
Permitted emissions 11,610.470 3,492.704
Actual emissions 2,023.639 2,054.914
Emissions of air pollutants
Methane (38,5%)
Carbon Monoxide (26,7%)
Nitrogen Oxide (28,5)
Solid Aerosols and VOC (6,3%)
Hazardous substance Mass of emission (t) 2011 Mass of emission (t) 2012
Methane 1,326.783 792.827
Carbon monoxide 337.676 548.830
NOх in terms of NO
2205.167 585.638
Methanol 93.644 92.860
Sulphur dioxide 1.467 0.192
Volatile organic compounds (VOC) 151.774 120.616
Solid pollutants 0.771 0.537
Emissions from organised sources 1,775.160 1,854.533
Emissions from non-organised sources 248.479 200.381
Mass of hazardous emission 2011-2012
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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 as-
sociated 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 boo-
ster compressor station. Significant amounts of carbon mono-
xide 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 atmo-
sphere 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 re-
duction 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 com-
pleted. 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. Acciden-
tal emissions and discharges of pollutants into the environ-
ment did not occur. No accidents occurred during the report-
ed period in the contracting companies carrying out work for
OJSC Severneftegazprom.
During the reporting year, total greenhouse gas emis-
sions (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 calcula-
tion of The Company Wintershall Holding GmbH. The growth of
the indirect emissions is due to changes in the applicable con-
version factor for CO2 when receiving electricity from the public
grid (old is 0.317, new is 0.639).
As for the ozone-depleting substances included in Appen-
dices 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 refrige-
ration (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 inject-
ed back into the aquifers after they have been cleaned at spe-
cial facilities.
Power consumption
including own generation
26,635 25,573 32,4 31,062 27,065 25,963
Actual 2011 Actual 2012Plan 2012
1,6%1,5%
Energy consumption, mln kW•h
ANNUAL REPORT • 2012
67
7
The Company maintains the technical condition of the pro-
duction equipment at an appropriate level, and performs envi-
ronmental 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 Uren-
goy Integrated Department of the North Ural Directorate of the
Federal Environmental, Technological and Nuclear Supervision
Service every three months.
Subsoil Aquifier
Produced Water
10 000
20 000
30 000
40 000
50 000
60 000
70 000
20122011
87% 90%
13% 10%
Allocation
Actual Extraction
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20122011
Volume of extracted water, thousand m3 Fresh water extraction
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Main indicators of environmental protection activities
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
Including:
gross emissions of methane -«- 0.908 1.326 0.792
Specific NOx emissions (per transport unit) tonnes/bln. m3•km 0 0 0
Specific NOx emissions (per unit of fuel gas) thous. tonnes /mln. m3 0.002 0.002 0.008
2. Intake of water – total thous. m3 86.57 56.4 67.01
3. Water discharge – total thous. m3 47.87 52.72 59.99
4. Wastes per year – total thous. tonnes 3.848 2.093 0.155
Including wastes sent for disposal thous. tonnes 3.751 1.998 0.076
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
97.45 95.4 44.23
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
Including:
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
13.Investments into Fixed capital, directed to environmental protection – total
mln. rub. 280.94 0 3.036
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
Main indicators of environmental protection activities (continued overleaf)
ANNUAL REPORT • 2012
69
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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 active-
ly interacting with the federal and municipal authorities to im-
plement 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, es-
pecially 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 coopera-
tion 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 munici-
pality population;
• respect for the opinion of the interested party;
Subject of interaction
Str
ate
gy
an
d d
eve
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nt
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rate
go
vern
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on
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tio
ns
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tio
n d
isc
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re
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viro
nm
en
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rote
cti
on
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r p
rote
cti
on
an
d in
du
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al s
afe
ty
Ch
ari
ty
State bodies and public offices • • • • • • •
Suppliers/buyers • • • •
Shareholders • • • •
Non-commercial organizations • •
Media •
General population • • •
Employees • • • • • •
Main directions of regional policy and interactions with interested parties
Interested parties
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• timely notification of interested parties;
• regular interaction;
• preserving the natural environment and ensuring envi-
ronmental safety.
Within the framework of these agreements, OJSC Sever-
neftegazprom 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, pro-
viding funding for the development of national settlements,
procuring vehicles, fuel, lubricants and equipment, supporting
traditional sectors of agriculture, providing funding to the asso-
ciation 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 prin-
ciple 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 in-
tegration links, which can influence, or on the contrary, can be
influenced in the process of implementing production activi-
ties, and to define channels of interaction with such people and
organisations, the Company has developed an internal docu-
ment – the Public Consultation and Disclosure Plan (PCDP).
The document describes the procedures of information
disclosure in accordance with the requirements of the Rus-
sian 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.
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-Ne-
nets Autonomous Area – the lands originally inhabited by the
indigenous peoples of the Russian North. Mutual relations
with native citizens, government bodies and local government
bodies are regulated by the General Agreements on coopera-
tion, concluded between the Company and the Administra-
tion of the Pur and Krasnoselkup districts, as well as regular
updates hereto.
External interested partyScope 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
OJSC Severneftegazprom interaction with external interested parties in 2012
ANNUAL REPORT • 2012
71
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
ANNUAL REPORT • 2012
73
8
Operational risksThe Company is exposed to operational risks when conduct-
ing its business, the most important being prices for raw hydro-
carbons 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 objec-
tives of the Energy Strategy of Russia. Search and development
of deposits, transportation and processing of gas and liquid hy-
drocarbons represents a complicated and capital-intensive pro-
cess bearing technological and ecological risks. The company
strictly observes industry requirements and standards, and im-
plements new technologies and equipment at all stages of the
production process, thus minimising these risks.
The risk of reduction in sales
The risk of reduction in sales is associated with the possi-
bility of a long-term decline in the demand for hydrocarbons,
which may adversely affect project indicators. However, ac-
cording to long-term gas supply contracts, the purchaser pays
for the entire volume of contracted gas notwithstanding the ac-
tual intake, which excludes the considered risk for the Compa-
ny until expiration of such contracts.
Operational risks Financial risks Legal risks
Low Level of Risk
Medium Level of Risk
High Level of Risk
Structure and assessment of the Company’s risks
The riskof reduction of salesof Inflation risks
Risksassociated with application
and possible changesin Russian tax laws
socassociatedand p
in
Legal RisksAssociated
with Applicationand Possible Change
of Currency Lawsand
Risksof Legal Proceedings
and Restrictionsof the Company’s Business
of Le
the Coof th
The riskof material change
in the market price for gaso
the min t Interest risk
Risks associatedwith validity of licenseswith v Currency risk
Environmental risksE
Technological risksT
Key
Ris
ks A
sso
ciat
ed w
ith t
he C
om
pan
y’s
Bus
ines
s
8
74
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 ope-
rations of the Company. The risk is considered low since, ac-
cording 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 pro-
vide 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 po-
tentially exposed to the risk of environmental impact. There-
fore, 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.
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 asso-
ciated with failure of equipment. Meanwhile, technologies used
for mining, treatment and transportation of gas comply with up-
to-date requirements for reliability and safety in operation of the
equipment, which enables minimisation of such risks.
In addition, the Company conducts training and certifica-
tion 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 asso-
ciated 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 fol-
lowing documents were prepared: the Plan for the Liquidation
of Possible Accidents, the Plan for the Prevention and Liqui-
dation of Oil Spills at the Site of Technological Capacities of
Reagents and Oils at the gas treatment unit of the Yuzhno-
Russkoye oil and gas condensate field of OJSC Severneft-
egazprom, 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 emergen-
cy situations, a contract was concluded with LLC “Gazprom
Gazobezopasnost” to ensure well-kill safety on the Yuzhno-
Russkoye oil and gas condensate field wells, and with
LLC “Gazprom Transgaz Surgut” for operating the Yuzhno-
Russkoye 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 aforemen-
tioned risks.
Certified equipment and technical devices meeting up-to-
date safety and reliability requirements are applied at hazardous
production facilities of the Yuzhno-Russkoye oil and gas con-
densate field. The equipment and technical devices are main-
tained in a timely manner by the Company’s personnel or spe-
cialised organizations, which also reduces the aforementioned
risks.
ANNUAL REPORT • 2012
75
8
Financial risks
Inflation Risks
The inflation rate in 2012 was 6.7%. According to observa-
tions, inflation rates are relatively stable and the Russian Minis-
try 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 fa-
cility 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 cur-
rencies, 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 cur-
rency, the balanced currency structure of claims and liabilities,
used as a hedging mechanism, is not applicable to the Compa-
ny, taking into consideration that according to gas supply con-
tracts, the gas price is determined according to the formula,
which also considers the compensatory component, the risk is
deemed as moderate.
Recuperators of the boosting compressor station at Yuzhno-Russkoye oil and gas condensate field
Key
Ris
ks A
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he C
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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 provi-
sions 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 nega-
tively 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 authori-
ties (the Ministry of Finance of the Russian Federation and ju-
dicial authorities) may not match interpretations by the Com-
pany’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 im-
posed on the Company).
In order to avoid tax risks, the Company regularly monitors
any amendments made to the Russian Tax Code and law en-
forcement 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 proceed-
ings 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.
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 fulfil-
ment 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 vio-
lations 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 transac-
tion passports and non-observance of the established proce-
dure or terms of submission of accounting forms and reports
on currency transactions. For the purpose of observing the cur-
rency laws of the Russian Federation, within the framework of re-
lations with non-resident companies, structural subdivisions of the
Company take measures of control over timely and quality sub-
missions of documentation required for the execution of cur-
rency transactions.
ANNUAL REPORT • 2012
79
9
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 per-
sons entitled to take part in the general meeting of share-
holders, beginning from the date when information about
holding the general meeting of shareholders was pub-
lished, 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 shareholder must have the opportunity to bring in items
for the agenda of a general meeting of shareholders or re-
quire the convocation of a general meeting of share-
holders without presenting an extract from the regis-
ter of shareholders if the shareholder’s right to shares is
registered with the maintenance system of the register
of shareholders;
• 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, finan-
ces, taxes, charges or securities market, among the
members of the Company’s Board of Directors;
• Persons holding the position of general director, a mem-
ber 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 require-
ment 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 presence of the Company’s internal documents ap-
proved by the Board of Directors, providing for the proce-
dure of forming and operating standing committees of the
Board of Directors;
• 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;
• A special official (the Company’s secretary) in charge of
compliance with the procedural requirements guarantee-
ing 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 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 trans-
feree from the obligation to offer shareholders to sell the
ordinary shares held by them in the Company upon re-
demption;
• 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 govern-
ments 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 execu-
tive 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.
ANNUAL REPORT • 2012
81
1
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 requirementsOJSC 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 Severneftegaz-
prom in connection with the reorganization of LLC Severnefte-
gazprom 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 Le-
gal 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 Inspecto-
rate of the Ministry of Taxation No. 3 for the Yamal-Nenets
Autonomous Area.
Information on the Company’s RegistrarCJSC “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 develop-
ment 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 Associa-
tion of Gas and Oil Industry Constructors Non-Commercial
Partnership.
The Company’s Representative OfficesOJSC Severneftegazprom has representative offices in Novy
Urengoy, the settlement of Urengoy, Tyumen and Moscow.
The Company has no subsidiaries and affiliates.
ANNUAL REPORT • 2012
83
1
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 Rus-
sian Federation as well as its relationship with international part-
ners. The information used herein has been prepared using con-
sistent methods as applied in the previous reporting periods.
The Company’s management statements and audited fi-
nancials, 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 require-
ments for complete disclosure. In addition, the results of inter-
action 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 ba-
lanced presentation of items required by Russian law and of
interest to interested parties. The Report includes data offi-
cially recognised by the Company and supported by inter-
nal documents and publicly available information. The Report
generally does not contain either specific terms or data requir-
ing special knowledge. One of the purposes of the Report is to
explain to interested parties the nature of the Company’s activi-
ties and the characteristics of its decision making.
Contact Information for Issues Regarding the Report
Anatoliy Anatolyevich VecherkaDeputy General Director for Legal Issues
and Corporate Management
Telephone: +7 (495) 620 63 33
E-mail: VecherkaAA@sngp.org
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1. STRATEGY AND ANALYSIS
1.1Statement from the most senior decision-maker of the organization about the relevance of
sustainability to the organization and its strategy.4-7
1.2 Key impacts, risks and opportunities 73-76
2. ORGANIZATIONAL PROFILE
2.1 Name of the organization 81
2.2 Primary brands, products and services 37, 81
2.3 Operational structure 19-24
2.4 Location of organization’s headquarters and operations 81
2.5Number 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
14-16
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 No significant changes
2.10 Awards received in the reporting period 8-11, 71
3. REPORT PARAMETERS
3.1 Reporting period (such as fiscal/calendar year) for the information provided 83 Calendar year
3.2 Date of most recent previous report (if any) June 2012
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 No limitations
Global Reporting Initiative (GRI) Content Index
Information Disclosure
Appendix 1. Global Reporting Initiative (GRI) Content Index
85
ANNUAL REPORT • 2012
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3.8Basis 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.
No activities to be disclosed
3.9Data 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.
3.10Explanation 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
3.11Significant 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. 84-89
3.13 Policy and current practice with regard to seeking external assurance for the report.
4. GOVERNANCE, COMMITMENTS AND ENGAGEMENT
4.1Governance structure of the organization, including main committees within the highest
governance body, responsible for specific tasks 19-23
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
4.3For 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
4.4Mechanisms for shareholders and employees to provide recommendations or direction to
the highest governance body.21-22, 61, 70
4.14 List of stakeholder groups engaged by the organization. 69
4.15 Basis for identification and selection of stakeholders with whom to engage. 69-70, 83
ECONOMIC PERFORMANCE INDICATORS
EC1Direct 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.
38-40
EC2Financial 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. 11, 41
EC5Range of ratios of standard entry level wage compared to local minimum wage at
significant locations of operation.
EC6Policy, practices, and proportion of spending on locally-based suppliers at significant
locations of operation.69, 44
EC7Procedures for local hiring and proportion of senior management hired from the local
community at significant locations of operation.
EC8Development and impact of infrastructure investments and services provided primarily for
public benefit through commercial, in-kind, or pro bono engagement.
Global Reporting Initiative (GRI) Content Index (continued overleaf)
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ENVIRONMENTAL PERFORMANCE INDICATORS
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
EN6Initiatives 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
EN11Location and size of land owned, leased, managed in, or adjacent to, protected areas and
areas of high biodiversity value outside protected areas.
EN12Description 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
EN15Number 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. 65-66, 68
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. 65, 68
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. 66
EN24Weight 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
Global Reporting Initiative (GRI) Content Index (continued overleaf)
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EN25Identity, size, protected status, and biodiversity value of water bodies and related habitats
significantly affected by the reporting organization’s discharges of water and runoff
EN26Initiatives 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.
EN28Monetary value of significant fines and total number of non-monetary sanctions for non-
compliance with environmental laws and regulations.
EN29Significant 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.
PERFORMANCE INDICATORS ON APPROACHES TO LABOR PRACTICES AND DECENT WORK
LA1Total workforce by employment type, employment contract, and region, broken down by
gender59-60
LA2 Total number and rate of employee turnover by age group, gender, and region. 60
LA3Benefits 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. 61
LA5Minimum notice period(s) regarding significant operational changes, including whether it is
specified in collective agreements.
LA6Percentage of total workforce represented in formal joint management-worker health
and safety committees that help monitor and advice on occupational health and safety
programmes.
LA7Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-
related fatalities by region.62-63
LA8Education, 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. 61-62
LA11Programmes 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.
LA13Composition 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.
Global Reporting Initiative (GRI) Content Index (continued overleaf)
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HUMAN RIGHTS PERFORMANCE INDICATORS
HR1Percentage and total number of significant investment agreements that include human
rights clauses or that have undergone human rights screening
HR2Percentage of significant suppliers and contractors that have undergone screening on
human rights and actions taken
HR3Total 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.
HR5Operations identified in which the right to exercise freedom of association and collective
bargaining may be at significant risk and actions taken to support these rights61
HR6Operations identified as having significant risk for incidents of child labour, and measures
taken to contribute to the elimination of child labour61
HR7Operations 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
HR8Percentage of security personnel trained in the organization’s policies or procedures
concerning aspects of human rights that are relevant to operations
HR9Total number of incidents of violations involving rights of indigenous people and actions
taken
SOCIETY PERFORMANCE INDICATORS
SO1Life 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.
69-71
SO2Total 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
SO3Type of product and service information required by procedures,procedures and
percentage of significant products and services subject to such information requirements.
SO4Total number of incidents of non-compliance with regulations and voluntary codes
concerning product and service information and labelling by type of outcomes
SO5Practices related to customer satisfaction, including results of surveys measuring customer
satisfaction.
SO6Programmes for adherence to laws, standards, and voluntary codes related to marketing
communications, including advertising, promotion, and sponsorship.
SO7Total number of incidents of non-compliance with regulations and voluntary codes
concerning marketing communications, including advertising, promotion, and sponsorship,
by type of outcomes
SO8Total number of substantiated complaints regarding breaches of privacy and loss of
customer data
Global Reporting Initiative (GRI) Content Index (continued overleaf)
89
ANNUAL REPORT • 2012
Page Comment
PRODUCT RESPONSIBILITY PERFORMANCE INDICATORS
PR1Life 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.
PR2Total 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
PR3Type of product and service information required by procedures,procedures and
percentage of significant products and services subject to such information requirements.37-38
PR4Total number of incidents of non-compliance with regulations and voluntary codes
concerning product and service information and labelling by type of outcomes
PR5Practices related to customer satisfaction, including results of surveys measuring customer
satisfaction.
PR6Programmes for adherence to laws, standards, and voluntary codes related to marketing
communications, including advertising, promotion, and sponsorship.
PR7Total number of incidents of non-compliance with regulations and voluntary codes
concerning marketing communications, including advertising, promotion, and sponsorship,
by type of outcomes
PR8Total number of substantiated complaints regarding breaches of privacy and loss of
customer data
PR9Monetary value of significant fines for non-compliance with laws and regulations
concerning the provision and use of products and services.
Global Reporting Initiative (GRI) Content Index (end)
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.
Ap
pen
dix
2
90
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”
№ Essential conditionsPersons interested in settlement of the transaction
Management body that took the decision on approval 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
List of Company’s Transactions in the Year 2012 Considered As Interested Party Transactions In
Accordance with the Federal Law “On Joint Stock Companies”
91
ANNUAL REPORT • 2012
№ Essential conditionsPersons interested in settlement of the transaction
Management body that took the decision on approval 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 Yuzhno-
Russkoye 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
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)