Environmental safety program

According to LUKOIL’s Health, Safety and Environment Policy, environmental protection is one of the Company’s priorities. The integrated management system and the actions taken in 2019 to improve the environment are described in detail in the Safety section.

To enhance our environmental protection management system, LUKOIL systematized biodiversity conservation initiatives in 2019 as part of the expansion of our activities in this area. Criteria and approaches were developed to make our activities more systematic and to obtain more measurable results.

In addition, the Company continued to enhance data preparation methods in line with the GRI Standards, and disclosures are being expanded to better inform stakeholders.

For the first time, this Report includes disclosures on the environmental impacts of the refinery in Italy (ISAB S.r.l.) and oil product supply entities abroad (IOOO LUKOIL Belorussia and LUKOIL-BULGARIA EOOD). As before, the disclosures on the refineries LUKOIL Neftochim Burgas AD (Bulgaria) and PETROTEL-LUKOIL S.A (Romania), as well as the Uzbek production project LUKOIL Uzbekistan Operating Company LLC, data on which are disclosed from 2018, are included.

Most of the budget of the 2019 Environmental Safety Program (RUB 35.9 billion) was spent on measures to increase the sustainable use of associated petroleum gas (around 40% of the costs of the Program) and the reliability of pipeline transport.

Non-standard paymentsNon-standard payments, inter alia, may arise due to delays in obtaining permit documents. in the reporting year accounted for 4% of total penalties based on negative environmental impacts. In 2019, a significant fine of RUB 68.9 million was paid under a lawsuit filed by the Department of the Federal Service for Supervision of Natural Resources Management for the Komi Republic against LUKOIL-Komi for environmental damages.

LLC LUKOIL-Komi’s operating division Yareganeft is developing the Yaregskoye field, one of the oldest sources of high-viscosity oil in Russia. In April 2016, the Yarega River and the Maly Voyvozh stream near the Yarega settlement, Ukhta District, were heavily polluted with oil products, following an oil spill from old wells. The Department of the Federal Service for Supervision of Natural Resources Management for the Komi Republic brought a lawsuit against LLC LUKOIL-Komi for damage caused to the environment. After litigation lasting over two years, the Arbitration Court of the Republic of Komi ruled on 8 April 2019 to satisfy the claimant’s claims, ordering LUKOIL-Komi to pay RUB 68.9 million in damages to the Department of the Federal Service for Supervision of Natural Resources Management of the Komi Republic.

In 2016, a plan of organizational and technical measures for rehabilitation of the disturbed territories and water bodies was drafted, and the Company started to implement it immediately, before the final decision on the case was made. In 2016–2019, LUKOIL-Komi carried out cleaning and remediation of the nearshore zone of the Yarega River and streams flowing into it, with a total area of 20 km. Sediment was cleaned in the area of the crossing of the stream at the «Yareganeft» production site, from the crossing to the mouth of the Maly Voyvozh stream, and at the section of the Yarega River to the inflow into the Izhma River. The cost of the work performed was taken into account when determining the amount of damage in the litigation.

At the same time, the cleaning of bottom sediments was complicated due to the lack of in situ treatment technology. A proposal from Tomsk State University on how to solve this issue was received in 2019 and is currently being considered. Depending on the results, a decision will be taken on the feasibility of this technology.

The measures taken by LUKOIL-Komi to mitigate the impacts of Yareganeft’s activities on water bodies include construction of new treatment facilities. Construction started in 2016 and was completed in 2019. In 2019, the facilities also underwent pre-commissioning and essential retrofitting. Commissioning is scheduled for 2020.

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Indicators of LUKOIL Group’s Environmental Safety Program

Note. Data for LUKOIL Group for 2018 are presented in accordance with 2018 reporting boundaries, and for 2019 – in accordance with 2019 reporting boundaries.