Social Responsibility

Personnel, Occupational Safety and Health

Gazprom Neft invests in personnel, supporting initiatives and innovations designed to enhance operation and management efficiency. The Company acts as a responsible employer maintaining equal relations with the employees, ensuring decent wages, career opportunities and comfortable working conditions.

Personnel Management Policy and Standards

Personnel development within Gazprom Neft Group is a key to successfully implementing its business strategy until 2020.

Gazprom Neft invests in personnel, support initiatives and innovations designed to enhance operation and management efficiency. The company acts as a responsible employer, maintaining equal relations with the employees, ensuring decent wages, career opportunities and comfortable working conditions.

Average number of personnel, employees

In 2010, we continued a large-scale project to improve the incentives and wages system and to develop the performance management system. Using indicators, this enables various levels of management to appraise and promptly monitor personnel performance. The company began reviewing the bonus system (production enterprises, Gazprom Neft-Lubricants, refining enterprises).

The company designed the main directions to develop intangible incentives and social support. Due to expanding the business geography, the company is developing a concept of mobile personnel for transferring personnel in Russia and abroad.

A grading system continued to be introduced in production enterprises, oil products suppliers, product lines and a number of other SACs. In total, the grading system was introduced in 32 SACs. The system defines unified, clear, and transparent personnel remuneration, training and appraisal principles for all enterprises.

In 2010, work began to introduce a uniform social benefit concept to Gazprom Neft Group.

The concept includes creating an integrated 'corporate portfolio' standard, which would be provided to all JSC Gazprom Neft's employees, and an additional range of benefits. This would be selected by the enterprise depending on needs, the enterprise's productivity and efficiency level ('cafeteria'). The typical portfolio will include such benefits as voluntary medical insurance, accident insurance, childcare allowance, death allowance, etc.

Currently, a list of benefits to be included in the company's social programme has been defined and benefit rates are being developed.

In 2010, the companies paid on average approximately 29,000 RUB of social benefits per employee, which is 6 % less than in 2009. This insignificant decrease relates to optimizing social benefits in a number of SACs. At the same time, all key programmes, such as voluntary medical insurance, accident insurance, free meals, etc. were retained.

Distribution of Gazprom Neft personnel by region in 2010

Under a corporate contract of voluntary medical insurance, the company's employees receive doctors' qualified consultations and treatment in the country's leading clinics, if necessary.

Today, Gazprom Neft enterprises employ over 65,000 people working in more than 20 regions of the Russian Federation, as well as Kyrgyzstan, Kazakhstan, Tajikistan, Belarus, Serbia, Austria and Italy.

In connection with integrating NIS and Sibir Energy into Gazprom Neft's structure, the average number of personnel has increased by 29 %, while the portion of Serbian personnel equals 16.4 %. The largest part of Gazprom Neft personnel -around a third of the company's total headcount (33 %) - is concentrated in the Yamalo-Nenets Autonomous District. The share of Omsk and Omsk region is 13 % of company employees (40 % of them employed at the Omsk Refinery). Moscow and Moscow region account for around 14 % of the employees, and approximately 14 % of them work at the Head Office.

Presonnel costs and wage growth

The company ensures competitive wages and decent social benefits to its employees in line with the market trends. Average wages in the company's enterprises grow continuously on average by 10 % —15 % per year.

Total personnel costs

The 2010 average wage amounted to 50,095 RUB, which is 13.3 % higher than the year before. The overall average wage increase amounts to 72.2 % for the period 2006-2010.

Personnel costs in 2010 increased 44.2 % compared to the year before, and totalled 40.6 bn RUB.

A perfect employee incentive system, providing for effective work by personnel, enables the company to achieve its business objectives. Therefore, the company continues to develop and introduce a comprehensive incentive system based on competitive wages, performance bonuses and intangible elements.

Social Package

Collective contracts and other provisions and regulations providing for various social benefits and payments to employees exceeding those established by law are applicable in the company's enterprises.

Avarage monthly wages

The social package in most enterprises includes voluntary medical insurance, accident insurance, free meals, material aid for certain occasions, payment for business trips, and other allowances.

Set up in 2009, the Trade Unions and Labour Collectives Coordinating Committee, last year reviewed at four meetings the most urgent questions proposed by the chairmen of trade union committees. These committees represent the interests of enterprises' labour collectives in all key business directions of the company. Based on the Committee's initiative during session of the company's Management Board, such issues like providing employees with a second set of PPE and overalls, establishing a non-state pension insurance fund and introducing a mortgage programme were discussed. Respective guidance was given to further study, and introducing and settling recommendations of the Committee were discussed at the Management Board.

In 2010, the social package payments increased by 21.5 % compared to the previous year, due to an increase in the staff of Gazprom Neft Group (on average, 29,000 RUB per employee).

Cooperation with Educational Institutions and Recruitment of Young Specialists

In 2010, the company's management approved Principles of Interaction with Partner Higher Educational Institutions. This aimed to improve the efficiency of the company's cooperation with specialised higher education institutions.

In 2010, the company's management approved Principles of Interaction with Partner Higher Educational Institutions. This aimed to improve the efficiency of the company's cooperation with specialised higher education institutions.

• a list was defined of higher education institutions (partners divided into two categories) comprising strategic higher education institutions and territorial higher education institutions
• the template of a contract for cooperating with higher education institutions was developed and approved
• directions and programmes for financial support were defined.

Last year, Gazprom Neft company was awarded in two categories of the first rating of the Russian higher educational institutions' business partners, which was arranged by the Russian Rectors' Union: the largest Youth Employer' and the largest Investor in Higher Education'.

Opening the base department, the Hydrocarbon Systems Department, in the Gubkin Russian State University of Oil and Gas, was an important event of the year.

In 2010, the company recruited 309 young specialists. Traditionally, young specialists are graduates of such higher education institutions as Tyumen State Oil and Gas University, Ufa Technical Oil and Gas University, Tomsk Polytechnic University, Omsk Technical University and other specialised higher education institutions.

The Step to the Future programme was developed and launched for young specialists in the final year. According to the programme, each young specialist takes target training aimed at developing their competency in accordance with the corporate management competency model. In the framework of the Step to the Future programme, a second corporate workshop of young specialists was held in Moscow region. Such events are a critical component in the young specialists' motivation system developed by Gazprom Neft.

Employee Professional Development

Gazprom Neft is traditionally committed to the professional development of its personnel. In 2010, 1,461 employees received training. The training coefficient has remained high (over 1.1) in the last three years. In 2010, training and professional development costs totalled 106.5 mn RUB.

In 2010, in the framework of professional training and development, the company's employees participated in more than 750 programmes (open programmes in various directions of activities). The company continued developing professional (technical) competence system-building. In the Exploration of Production competency, models were reviewed in accordance with organisational and structural changes. Knowledge assessments using tests were also conducted systematically and the needs of employees' development were defined.

Based on revealed needs, the Expert Review Centre at Gazprom Neft NTC LLC develops and arranges employee training programmes using internal coaches. In 2010, six such programmes were developed. Two programmes previously developed by Gazprom Neft NTC LLC were uploaded into the corporate technical programmes matrix. A project to develop the technical competencies system in Oil Refining was launched.

Last year, the company developed professional competency programmes for six main modules of the Oil Refining Directorate - Omsk refinery, pilot testing of employees was conducted to assess target directions of development. The professional competency matrix for the design office of Business Service LLC's economics and finances block was designed and introduced to assess the level of employees' professional competence and define development needs.

In 2010, in the framework of the company's management, potential development modular programmes for almost all key categories of employees were developed and implemented. The programmes aim to develop key managerial skills, create a common management culture, improve the quality of managerial decisions and strengthen the company's leadership potential. Around 300 employees were trained under modular programmes during the year. Heads of departments/head office directorates, SACs' general directors, SACs' deputy general directors, heads of SACs' directorates/departments, managers of personnel departments and employees reserved to such positions participated in the programme.

Corporate training was also arranged in the form of short-term training, aimed at satisfying needs in certain competencies. Approximately 500 employees took part in this training.

Social Responsibility

The Corporate Regional Policy Concept, adopted by the company's Management Board in 2010, defines a range of principles and mechanisms. These put cooperation with regions on a systematic basis, focus it on solving Gazprom Neft's strategic tasks, and enhance the efficiency of social investment.

The company's implements its regional policy mainly in the form of socio-economic agreements with the territories of presence: constituent entities of Russia and municipal formations. The process of preparing and concluding socio-economic agreements is regulated by the company's standard 'Socio-Economic Agreements Preparation and Conclusion Procedure'. Agreements include mutual obligations of the company and the regions, describe principles of cooperation in solving social and economic tasks, and develop the scientific and technical potential of the region.

In 2010, Gazprom Neft signed socio-economic agreements at the level of constituent entities of the Russian Federation and at the level of municipal formations with the authorities of Khanty- Mansiysk and Yamalo-Nenets Autonomous Districts, Omsk, Tomsk and Leningrad regions.

The Regional Policy Committee coordinates the implementation of JSC Gazprom Neft's divisions' and affiliates' activities related to regional policy. This is organized by the company's corporate communications department. The Committee comprises representatives from operational departments of the head office and Gazprom Neft's largest affiliates. The Committee defines the procedure for charity, sponsorship, grant programmes, and develops recommendations to the company's Management Board on interacting with regions of presence.

The company actively participates in forming a favourable social climate and human capital development in regions through corporate charity and sponsorship programmes. Regional specifics, profile and guidelines for developing the company's specific enterprises are taken into account when designing such programmes.

Priority directions of social activities in the regions of the company's presence include:

• constructing and repairing educational and medical institutions, sports and fitness complexes, and apartment buildings supporting cultural and historical heritage preservation programmes
• assisting in implementing socially critical sports and cultural projects, children and youth support programmes
• implementing special programmes for supporting Russia's indigenous people in the far north

The following important social programmes implemented by JSC Gazprom Neft in the framework of socio-economic agreements with regions in 2010 include:

• completing a sports and fitness centre in Purple settlement of Prove District in Yamalo-Nenets Autonomous District
• completing a multifunctional gym in Muravlenko in Yamalo-Nenets Autonomous District
• supporting the 'Spirit of Fire' 9th International Cinema Festival in Khanty-Mansiysk
• constructing the Chess Academy and sponsoring the World Chess Olympiad in Khanty-Mansiysk
• completely overhauling the district surgery, and building the arts school and secondary school in Tar sky District in Omsk region
• continuing construction of large sports and fitness complexes in Noyabrsk and Tarkio-Sale in Yamalo-Nenets Autonomous District.

In total in 2010, the company spent 1.213 bn RUB on programmes under the aegis of socio-economic agreements within regions of the company's presence.