Gazprom-AR2014

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Corporate Governance 123 Audit Committee of the Board of Directors The Board of Directors’ Audit Committee of OAO Gazprom was established by resolution of the Board of Directors and is composed of its members. The Committee’s purpose is to support the Board of Directors in supervising the Company’s financial and business operations. In 2014, the Board of Directors’ Audit Committee of OAO Gazprom consisted of three members of OAO Gazprom’s Board of Directors: V. A. Musin (the Chairman), F. R. Gazizullin, and M. L. Sereda. The Committee is accountable to OAO Gazprom’s Board of Directors, and its powers are set forth in the Regulation on the Board of Directors’ Audit Committee of OAO Gazprom approved by Resolution of the Board of Directors of OAO Gazprom No. 2314 dated 25 February 2014. In accordance with the above Regulation, the Committee’s priorities are to conduct a preliminary comprehensive review of selected matters reserved to the Board of Directors of OAO Gazprom and prepare recommendations on resolutions for the Company’s Board of Directors. The Committee’s exclusive functions are to assess proposed auditors for OAO Gazprom, review the auditor’s opinion, assess efficiency of internal control procedures and prepare improvement proposals. The Board of Directors’ Audit Committee of OAO Gazprom operates in accordance with a schedule, with its meetings held at least quarterly. During the reporting year, the Board of Directors’ Audit Committee of OAO Gazprom held five meetings that discussed 14 items including: — review of a new version of the Regulation on the Internal Control System of OAO Gazprom; — review of a new version of the Regulation on the Board of Directors’ Audit Committee of OAO Gazprom; — amendments to the regulations governing the activities of OAO Gazprom’s internal control business unit; — long-term and annual planning of internal control audits; — development of OAO Gazprom’s Internal audit development concept; — holding a tender to select an audit firm for annual audits of OAO Gazprom; — assessment of the audit opinion on OAO Gazprom’s accounting statements; — ZAO PricewaterhouseCoopers Audit’s information on critical issues of the audits of OAO Gazprom and its subsidiaries. In addition, the Board of Directors’ Audit Committee of OAO Gazprom discussed and approved the 2014 report of the internal audit business unit of OAO Gazprom. Internal audit business unit of OAO Gazprom Activities of the internal audit business unit of OAO Gazprom are governed by Russian law, the Articles of Association of OAO Gazprom, resolutions of the management bodies, Professional Ethics Code for Internal Auditors (approved by the Board of Directors’ Resolution), Regulation on the Department (approved by the Board of Directors’ Audit Committee and OAO Gazprom’s Order), and International Standards for the Professional Practice of Internal Auditing. The business unit is administratively accountable to the Chairman of OAO Gazprom’s Management Committee within the Administration of the Management Committee, and functionally accountable to the Audit Committee of the Board of Directors. Its key priority is to provide OAO Gazprom’s Audit Committee and management with independent and unbiased assurances and advice as to the improvement of the Company’s operations. The business unit assists OAO Gazprom in achieving its goals through a consistent systemic approach to evaluation and improvement of risk management, control and corporate governance processes. OAO Gazprom Annual Report 2014
124 Corporate Governance The internal audit BU arranges and conducts internal audits of OAO Gazprom’s business units, subsidiaries and entities in the established procedure and in accordance with the best Russian and international internal audit practices. Results of such internal audits are used to develop and submit proposals on elimination of irregularities, gaps and their causes to OAO Gazprom’s management. Results of internal audits are promptly reported to the Chairman of the Management Committee and, annually, to OAO Gazprom’s Management Committee and Audit Committee of the Board of Directors. The BU’s proposals inform instructions of the Chairman of the Management Committee issued to OAO Gazprom’s business units, subsidiaries and entities to improve the Company’s performance. The internal audit BU monitors the implementaton of such instructions. In 2014, audits were conducted in OAO Gazprom’s business units, subsidiaries and entities to assess efficiency of the internal control of the Company’s critical business lines and business processes (investment in the form of capital investments, sales and procurement operations, overhaul, etc.) in terms of whether — the auditees meet their objectives; — the operations are efficient and profitable; — assets are protected; — operations meet the terms and conditions of contracts, legal requirements and local regulations. Results of such audits were used to prepare internal control improvement recommendations for the Chairman of OAO Gazprom’s Management Committee. The Chairman of the Management Committee gave relevant instructions to the managers of business units, subsidiaries and entities as to initiatives required to improve the gaps revealed by audits. External Auditor OAO Gazprom selects its auditor annually by a public tender in accordance with the applicable laws of the Russian Federation. The public tender for a service contract to audit OAO Gazprom’s accounting (financial) statements, consolidated accounting statements of Gazprom Group and consolidated financial statements of Gazprom Group prepared to International Financial Reporting Standards (IFRS) for 2014 was announced on 14 February 2014. Assessment of proposed auditors of the Company is a key responsibility of the Board of Directors’ Audit Committee of OAO Gazprom. In 2014, ZAO PricewaterhouseCoopers Audit won the public tender among audit firms to conduct statutory annual audits of OAO Gazprom and was approved as auditor by the annual General Shareholders Meeting of OAO Gazprom on 27 June 2014. The contract price offered by the winner was equivalent to RUB 255,000,000 (VAT excluded) and was approved by Resolution of the Board of Directors No. 2384 dated 11 July 2014. To prevent loss of objectivity and, therefore, quality of its audit, ZAO PricewaterhouseCoopers Audit ensures mandatory rotation of its key management during an audit of OAO Gazprom and pursues an employee independence policy. OAO Gazprom Annual Report 2014
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OAO Gazprom Annual Report 2014 The
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Contents 4 Statement of OAO Gazprom
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4 Statement of OAO Gazprom’s Chai
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6 Major results Gazprom Group Resul
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8 Company Information OAO Gazprom
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10 Company Information OAO Gazprom
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12 Company Information Track Record
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14 Company Information Gazprom Grou
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16 Company Information Operations a
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18 Business Development Prospects S
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20 Business Development Prospects G
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22 Business Development Prospects E
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24 Business Development Prospects T
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26 Business Development Prospects E
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28 Business Development Prospects P
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30 Business Development Prospects U
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32 Business Development Prospects S
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34 Board of Directors and Managemen
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42 Board of Directors’ Report on
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48 Trends and Developments on Oil a
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54 Performance Results Exploration
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56 Performance Results Distribution
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58 Performance Results Distribution
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60 Performance Results The company
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62 Performance Results Hydrocarbon
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64 Performance Results Transportati
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66 Performance Results Gas transpor
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68 Performance Results Gas Infrastr
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70 Performance Results Hydrocarbon
Page 73 and 74: 72 Performance Results Gazprom, on
Page 75 and 76: 74 Performance Results OAO Mezhregi
Page 77 and 78: 76 Performance Results Major invest
Page 79 and 80: 78 Performance Results European gas
Page 81 and 82: 80 Performance Results In accordanc
Page 83 and 84: 82 Performance Results Oil and gas
Page 85 and 86: 84 Performance Results Sales of ref
Page 87 and 88: 86 Innovations In 2014, the budget
Page 89 and 90: 88 Innovations — produced a techn
Page 91 and 92: 90 Innovations 14 meetings of coord
Page 93 and 94: 92 Environment and Social Responsib
Page 101 and 102: 100 Environment and Social Responsi
Page 111 and 112: 110 Corporate Governance OAO Gazpro
Page 113 and 114: 112 Corporate Governance Corporate
Page 115 and 116: 114 Corporate Governance Summary of
Page 117 and 118: 116 Corporate Governance Remunerati
Page 119 and 120: 118 Corporate Governance In additio
Page 121 and 122: 120 Corporate Governance Liability
Page 123: 122 Corporate Governance Audit Comm
Page 127 and 128: 126 Corporate Governance Efficient
Page 129 and 130: 128 Corporate Governance Stock Mark
Page 131 and 132: 130 Corporate Governance Dividend P
Page 133 and 134: 132 Risk Management Gazprom has con
Page 135 and 136: 134 Risk Management Customs, curren
Page 137 and 138: 136 Glossary ADR of OAO Gazprom APG
Page 139 and 140: 138 Corporate Governance Units of M
Page 141 and 142: 140 Additional information List of
Page 143 and 144: 142 Additional information 11. Adde
Page 145 and 146: 144 Additional information 27. Bank
Page 147 and 148: 146 Additional information 45. Adde
Page 149 and 150: 148 Additional information 59. Trad
Page 151 and 152: 150 Additional information 68. Trad
Page 153 and 154: 152 Additional information 84. Cont
Page 155 and 156: 154 Additional information 96. Volu
Page 157 and 158: 156 Additional information Inclusio
Page 159 and 160: 158 Additional information Improvem
Page 161 and 162: 160 Additional information These ef
Page 163 and 164: 162 Addresses and Contact Details F
Page 165: www.gazprom.com
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Gazprom-AR2014

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