ANNUAL REPORT 2005 - Lukoil

ANNUAL REPORT, 2005
Work by LUKOIL in the reporting year on protection of the environment was carried out in a
context of strict supervision by the government and social organizations, and tightening of
natural resource and environmental legislation.
In 2005:
the international Kyoto Protocol, which limits atmospheric emissions of greenhouse gases and
which was ratified by the Russian Federation, came into force;
the Russian government approved new levels of compensation payments for pollution of the
environment. Rates payable for some types of pollution grew by dozens of times, and the rate
for methane emissions rose by 1,000 times;
Fines payable for violation of environmental legislation were substantially increased, and offenders
were made liable to suspension of operations for up to 90 days;
the Ecology Code of the Russian Federation, which would increase the level of liability for ecological
violations and tighten environmental requirements, was considered by the State Duma;
worsening of air quality in several regions of the Russian Federation made local authorities
introduce legislative and administrative limitations on sale of environmentally harmful fuels;
the role of Russian and international environmental movements and organizations increased further,
and their influence on economic decision-making processes grew.
The Company has almost completed its program for certification of compliance by subsidiaries with
international standards for quality management (ISO 9000), environmental protection (ISO 14001) and
health and safety (OHSAS 18001).
In 2005 the Company continued implementation of its Ecological Security Program for 2004–2008.
The Program calls for 400 environmental measures to be carried out at a cost of about $1.2 billion.
LUKOIL Group spent about $320 million on ecological security measures in 2005, including over $160
million of capital expenditures invested in environmental protection facilities.
Thanks to these efforts LUKOIL companies achieved lower-than-average environmental impact by
many criteria compared with the rest of the Russian oil sector, and the Group was the best in the sector
by several indicators.
International organizations including the Environment Committee of the Parliamentary Assembly of
the Council of Europe, and UNESCO's World Heritage Committee maintained their interest during
2005 in environmental safety issues connected with development of the Kravtsovskoye field on the
shelf of the Baltic Sea. Company representatives participated directly in work of the joint Russian-
Lithuanian environmental commission and working groups set up by the commission. The Company's
participation enabled significant breakthroughs in discussion of:
a draft agreement between the Governments of Russia and Lithuania on cooperation to counter
pollution of the Baltic Sea;
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