Environmental programs

Management system, impact assessment and priorities of environmental programs

Zarubezhneft JSC’s policy in the area of occupational health, industrial safety and environment protection was approved by decision of the Zarubezhneft JSC Board of Directors (Minutes No.133 dated December 27, 2016.

The subsidiaries of the Zarubezhneft Group of Companies monitor the integrity of inter-field oil pipelines on a monthly basis as one of the priorities of the Company's Environmental Policy.

In 2018, subsidiary companies of the Zarubezhneft Group of Companies operating in the Arctic zone of the Russian Federation (ZARUBEZHNEFT-Dobycha Kharyaga LLC and LLC “JC “RUSVIETPETRO”) continued working on biodiversity preservation as per the approved programs. The observation program for the established lists of indicator types by the Company’s regions of activity is included in the Environmental Monitoring Program.

Caring for the Far North fragile ecosystem has traditionally been one of the Company’s priorities: in 2018, LLC "JC “RUSVIETPETRO” released 154 thousand whitefish juveniles into the Usu River (the Pechora River basin). Since 2014, LLC "JC “RUSVIETPETRO” has facilitated the release of over 800 thousand juveniles of valuable fish species into the Pechora River basin.

Starting from 2014, Zarubezhneft JSC has undergone an independent Ecological Openness assessment, as per the World Wildlife Fund (WWF) rating criteria. Among the 22 largest oil and gas companies in 2018, Zarubezhneft JSC came out second, rising from the 5th place that it occupied in 2017.

As per the “Search and Valuation of New Projects” standard, the Company pays special attention to environmental aspects and environmental risk assessment. All projects undergo the Environmental Audit primarily aimed at establishing the absence of specially-protected natural territories within the selected contract area. Project implementation is accompanied by an environmental impact assessment, with measures being developed to reduce landscape fragmentation and disturbed areas.

Zarubezhneft JSC has uniform HSE requirements for contractors. The regulations establish similar requirements for compliance with environmental standards for both contractors of the Company and Zarubezhneft JSC subsidiaries. Collection of mushrooms and berries, hunting and fishing in the area of the Company's projects is prohibited

Funding of environmental programs

Environment Protection Investments, RUB MM
Indicators 2015 2016 2017 2018
Main capital investments for environment protection 41.360 97.800 270.220 228.210
Fines for negative environmental impact 19.890 27.283 28.509 20.380
Accrued fines for environment pollution 0.937 0.090 0.320 0.507
Current environment protection costs 196.920 142.630 160.600 163.800
including:
for water bodies protection 3.000 4.580 7.680 23.000
for atmospheric air protection 1.580 1.650 3.500 3.700
for land resources protection from production and consumption waste 155.000 111.660 131.520 118.900
Land rehabilitation 31.190 12.990 12.090 17.400
Other environment protection areas 6.180 11.750 0.000 0.000

One of the priority areas of activities in 2018 was the implementation of the Gas Program for rational use of associated petroleum gas (APG) for 2017-2021 within the Zarubezhneft Group of Companies.

The disinvestment of the fixed capital for environment protection in 2018 is associated with the scheduled completion of the subsequent stage of implementation of the Gas Program. The increase in the expenses for the protection of water bodies is associated with an increase in expenses under the biodiversity conservation program – release of juvenile fish into the Pechora River basin, five development projects commissioned for RUB 10 MM, as well as an increase in wastewater disposal costs and an increase in the water bodies monitoring frequency. The article “Expenditures in Other Areas in the Field of Environment Protection” previously took into account environmental monitoring costs; cost redistribution has resulted in these costs now falling under other items. The rising cost of land reclamation is associated with the completion of the drilling cycle and, consequently, the reclamation of drilling sites and sludge pits.

Environmental certification

In 2018, a supervisory audit of the Corporate Center of Zarubezhneft JSC, LLC JC RUSVIETPETRO, ZARUBEZHNEFT-Dobycha Kharyaga LLC was successfully conducted to confirm the certification for compliance with international standards ISO 14001: 2015. The subsidiaries RMNTK Nefteotdacha JSC and Zarubezhneftestroymontazh LLC were introduced into the HSE Management System certification perimeter. A diagnostic audit of ZARUBEZHNEFT-Dobycha Samara LLC was conducted for compliance with the requirements of international standards ISO 14001: 2015 for introduction into the certification perimeter in 2019.

nature

RESOURCES SAVING

Water

Water withdrawal, thous.t/thous. t of oil

Emissions

In 2018, the Company continued its consistent work on controlling atmospheric emissions.

Thus, in the Downstream segment, Brod Refinery JSC continues its work on the gasification of technological processes for improving the energy efficiency of production and reducing the sulfur oxide emissions to comply with EU standards.

One of the priority activities directions in 2017 was the implementation of the Gas Program for the rational use of associated petroleum gas (APG) for the 2017-2021 period at Zarubezhneft Group of Companies.

Atmospheric emissions, t/thou.t of oil
Gross atmospheric emissions of the Zarubezhneft Group of Companies in Upstream segments, thou.t
Indicators 2015 2016 2017 2018
Gross atmospheric emission of harmful substances, including: 11.278 27.483 32. 528 29.2
Solids 0.118 0.865 0.549 0.437
Sulfur dioxide 0.240 3.309 7.507 6.909
Carbon oxide 3.752 9.697 8.874 7.914
Nitrogen oxides 0.581 1.138 1.391 1.213
Carbons (without volatile organic compounds) 4.320 8.952 10.115 8.804
Volatile organic compounds 1.921 3.337 4.069 3.900
Benzopyrene 0.000 0.000 0.0 0.000
Other gaseous and liquid substances 0.346 0.186 0.0 0.000

Implementation of the Gas Program in 2018 allowed to reduce the specifc indicators of harmful substance emissions from 6.94 tons per thousand ton of oil produced in 2017 to 6.09 tons, as well as the specifc emissions of greenhouse gases from 0.2 thousand tons of CO2 equivalent per thousand ton of oil produced to 0.17 thousand tons of CO2 equivalent per thousand ton of oil produced.

Greenhouse gases, MM tons of CO2 equivalent
AG emissions in Russia, thous.t/tous.t of oil

As per the “Methodological Guidelines for Quantitive Determination of Greenhouse Gas Emissions by Entities Carrying out Business and Other Activities in the Russian Federation” (approved by the Order of the Ministry of Natural Resources and Environment of the Russian Federation dated June 30, 2015, No. 300) registered with the Ministry of Justice of the Russian Federation on December 15, 2015, Registration No. 40098, Zarubezhneft JSC has calculated the volume of greenhouse gas emissions in 2018 resulting from the production activities of mining companies. In 2018, the volume of emissions amounted to approximately 0.835 tons of CO2 equivalent. Implementation of the Gas Program has allowed to reduce greenhouse gas emissions.

Production and use of associated petroleum gas at the Zarubezhneft Group of Companies, MM m3
Enterprise of Zarubezhneft Group of Companies APG production APG use for own needs APG use%
LLC “JC “RUSVIETPETRO” 122.2 107.0 87.6
Orenburgnefteotdacha JSC 2.12 1.76 82.9
Ulyanovskneftegaz LLC 0.54 0.51 93.9
TOTAL 122.2 107.0 87.6
For reference: The APG production and use data of Zarubezhneft-Dobycha Kharyaga LLC for 2018 are given below
Zarubezhneft-Dobycha Kharyaga LLC 210.6 60.0 28.5

Solid waste

In the area of environment protection, the subsidiaries have regularly trained its managers under the “Hazardous Waste Handling” program, developed and updated regulatory environmental documentation, carried out environmental audits, identified environmental risks and obtained all the necessary licenses and permits for emissions and discharges of pollutants as well as waste disposal limits.

In 2018, the drilling volumes doubled compared to 2017, which resulted in an increase of the drilling waste generated at the fields of LLC “JC “RUSVIETPETRO” and ZARUBEZHNEFT-Dobycha Kharyaga LLC. The specific waste generation indicators increased from 5.12 t in 2017 to 7,9 t per thousand ton of oil produced in 2018. 90% by weight of the generated waste is made up of class-IV hazardous waste – drilling cuttings. As per the Company's valid internal regulations, all cuttings were processed into inert material.

All waste generated in the subsidiaries is transferred for further use, neutralization and disposal at specialized sites under contracts concluded with specialized enterprises.

Waste generation, t/thous.t of oil

Rehabilitation

One of the most important environment protection objectives to minimize the negative impact of drilling waste is its neutralization and use thereof, with further elimination of sludge pits.

In 2018, four sludge pits were rehabilitated. The Group of Companies encountered no oil and oil products spills in the reporting period. There is no oil-contaminated plot of land belonging to the Zarubezhneft Group of Companies.

Also in 2018, the Brod Refinery in the Republic of Srpska (BiH) continued implementing its plans to process acid sludge into inert materials with further use of the product in reclaiming containment ponds.

Impact on biodiversity

As per the obtained licenses for the right to use subsoil areas, Zarubezhneft Group of Companies performs its operations for the prospecting, exploration and production of hydrocarbon raw materials, infrastructure development of fields outside the designated conservation areas (DCA); in turn, it may be adjacent to the boundaries of the territories of traditional nature management (TTNM) or the DCAs.

In 2018, subsidiary companies of Zarubezhneft Group of Companies performing their operating activities in the Arctic zone of the Russian Federation (ZARUBEZHNEFT-Dobycha Kharyaga LLC and LLC “JC “RUSVIETPETRO”) continued working on biodiversity preservation as per the approved programs. The observation program for the established lists of indicator types by Company activity regions is included in the Environmental Monitoring Program.

Caring for the Far North fragile ecosystem has traditionally been one of the Company’s priorities: in 2018, LLC "JC “RUSVIETPETRO” released 154 thousand whitefish juveniles into the Usu River (the Pechora River basin). Since 2014, by efforts of LLC "JC “RUSVIETPETRO” over 800 thousand juveniles of valuable fish species have been released into the Pechora River basin.

As per the “Search and Valuation of New Projects” Standard, the Company pays special attention to environmental aspects and environmental risk assessment. All projects undergo the Environmental Audit, the main criterion of which is the absence of specially protected natural territories within the contract area. During the project implementation, an environmental impact assessment is carried out, and measures are developed to reduce landscape fragmentation and disturbed areas.

The subsidiaries of the Zarubezhneft Group of Companies monitor the integrity of inter-field oil pipelines on a monthly basis as one of the priorities of the Company's Environmental Policy.

Zarubezhneft JSC has uniform HSE requirements for contractors. The regulations establish similar requirements for compliance with environmental standards both for contractors operating in the Company and for Zarubezhneft JSC subsidiaries.