Gazprom-AR2014

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Risk Management 135 OAO Gazprom’s operating risks Subsoil license non-renewal risks The Company explores and produces hydrocarbons under subsoil licenses. Most of its licenses may be suspended, altered or revoked in case of non-compliance with the license agreements. Risk management/mitigation. The Company complies with the license requirements and takes all necessary steps to mitigate the risk of license revocation, suspension or alteration. Cost risk Increased prices for equipment, technical devices, spare parts, as well as works and services, which form the actual cost of capital construction projects, constitute one of the most significant investment risks. Such price increases are driven mainly by changes in the foreign exchange rates. Risk management/mitigation. Competitive procurement, when the suppliers offering goods of adequate quality and submitting the lowest price bids are selected, is used to cut the costs of procurement and sourcing of feedstock, materials, spare parts, works and services. Facilities risks The key operations, including hydrocarbon production, transportation, refining and storage, carry a wide range of process and engineering, natural and climatic risks, as well as risks of adverse actions by personnel or third parties, inter alia, due to human error, embezzlement, terrorist attacks or sabotage. Risk management/mitigation. The Unified Gas Supply System (UGSS) ensures reliable gas supplies. Stable operation of the system is achieved by implementing advanced diagnostic methods, and reconstructing and upgrading existing facilities. Insurance coverage is provided to protect subsidiaries’ property interests, which includes property insurance (including offshore facilities), business interruption insurance for GPPs and liability insurance for construction, repair and operation of production facilities. Hydrocarbon reserve estimation risks Accuracy of reserve estimates depends on the quality of available information, as well as on interpretation of engineering and geological data. Risk management/mitigation. The Company’s reserves estimated under Russian reserves classification standards are recorded in its books only after the annual review and approval by the State Reserves Commission of the Russian Ministry of Natural Resources. Independent reserves estimation procedures have been developed and are implemented in accordance with the PRMS standards. Environmental risks Environmental risks, if realised, may have legal implications, including suspension of business, financial costs related to penalties and compensation for damages, and damage to business reputation. Risk management/mitigation. The Company pursues a consistent environmental policy, implements programmes and initiatives to reduce its environmental footprint, finances environmental activities, takes out environmental risk insurance, and introduces advanced environmental protection technologies. Most of subsidiaries have in place and continuously improve environmental management systems certified under ISO 14001:2004. OAO Gazprom Annual Report 2014
136 Glossary ADR of OAO Gazprom APG ARCO BCS bcm Brent BTU BU CCGT CDP CDU TEK Central Asia CEO CGTU CHPP CIS countries CNG CS CSA CSP Dollars, USD Eastern Gas Programme EEU EMS EU Far abroad countries FER FSU countries FTS of Russia Gcal GCF GDS GHG GPP GPU GRES GTS HR HPP American depository receipt issued on OAO Gazprom’s shares Associated petroleum gas Arctic Oil Booster compressor station Billion cubic meters Reference crude oil for the North Sea British thermal unit Business unit Combined Cycle Gas Turbine Carbon Disclosure Project Central Dispatching Department of Fuel and Energy Complex Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan Chief Executive Officer Comprehensive gas treatment unit Combined Heat and Power Plant Countries of the Commonwealth of Independent States Compressed natural gas Compressor station Capacity supply agreements Condensate Stabilisation Plant US dollars Programme to build an integrated gas production, transportation and supply system in Eastern Siberia and the Russian Far East taking account of potential gas export supplies to China and other APR markets, as approved by Order of the Ministry of Industry and Energy of Russia No. 340 of 3 September 2007. Eurasian Economic Union Environmental Management System European Union Foreign countries, excluding FSU Countries Fuel and energy resources Former USSR republics, except for the Russian Federation Federal Tariff Service of Russia Gigacalorie Gas Condensate Field Gas distribution subsidiary / Gas distribution station Greenhouse gases Gas and/or condensate processing plant Gas pumping unit State district power station Gas transportation system Human Resources Heat and power plant 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
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72 Performance Results Gazprom, on
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74 Performance Results OAO Mezhregi
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76 Performance Results Major invest
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78 Performance Results European gas
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80 Performance Results In accordanc
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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 and 124: 122 Corporate Governance Audit Comm
Page 125 and 126: 124 Corporate Governance The intern
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: 134 Risk Management Customs, curren
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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