No. 3, 2009

LUKOIL-Komi’s everyday activities provide a shining example of the key principles of socially responsible business

Ten years of working in the Republic of Komi for LUKOIL, the Russian economy's leading company, became a period of consciously displaying good will, based on clear civic principles and a high degree of social responsibility before the public.

A realistic program for charitable work

Since the first years of LUKOIL's existence, operating under a socially oriented policy has been one of the Company's top priorities. Work in this area has gradually been transformed from a variety of charitable actions into a well-defined system of long-term social programs.

One obvious example of this has been the Company's activities in the Republic of Komi, where all the basic principles of socially responsible business have been successfully put into in practice. As LUKOIL President Vagit Alekperov emphasized in one of his statements, "Today, a major oil company is most of all a great responsibility. Throughout its history, LUKOIL has continually reaffirmed its commitment to the principles of doing business in a socially responsible manner. The Company aims to take an active part in the life of society."

To put the principles of LUKOIL's social policy into actual practice, the Company management has drawn up and implemented a three-level system of partnership not just with the constituent subjects of the Russian Federation but also with the municipal units in the areas where LUKOIL operates, and with their budgetary entities.

The first level is an agreement on social partnership between LUKOIL and the Republic of Komi. The second is agreements between LUKOIL-Komi and the Komi municipal authorities. And the third level is agreements between the Company's structural subdivisions and the budgetary organizations they sponsor. It was no accident that a three-level system like this was chosen: it encompasses all facets of life in the Company's area of influence and allows funds to be allocated in the most efficient way.

The LUKOIL-Komi Council for Coordinating Charitable and Sponsorship Activities, which holds its own quarterly meetings and determines specific directions for delivering targeted assistance, has been working successfully within this system for more than five years now. Between 2000 and 2008, LUKOIL-Komi allocated a total of 1.703 billion rubles for charitable purposes.

As part of the annual agreements for social partnership and charitable activities in the cities and towns of the Republic of Komi, substantial aid is given to dozens of schools and kindergardens, children's homes, veterans' councils and societies for the handicapped, sports organizations, agricultural firms, houses of culture, hospitals, and other establishments. Such a system of relationships between socially responsible business and different communities sets an example for other organizations that are involved in the process and trying to make life in municipalities more comfortable for every one of their residents.

Investing in good works

LUKOIL-Komi is focused on developing the public infrastructure and improving the quality of life and medical services in its area of operations. Considerable funds are allocated each year for rehabilitating cultural and health care facilities, and for acquiring new medical equipment.

With the company's help, the city of Usinsk's Central Regional Hospital has been given a complete makeover. With the funds allocated for the task, each section of the hospital was renovated until the wards were almost as comfortable as one's own home, and new equipment was purchased.

Enormous efforts were made to upgrade the Pechora City hospital's gynecological center. In addition, a total of 5 million rubles was allocated in 2008 for the reconstruction of the Pechora House of Culture, which this year celebrated its 60th anniversary in grand style.

LUKOIL-Komi actively supports the region's vitally important agricultural production. Meat and milk processing equipment has been purchased with funds provided by the company. Local agricultural enterprises are now able to work at full capacity, buying their raw ingredients from the local population. This not only guarantees employment for the firms' own personnel, it stimulates the development of the region's private farms. Keeping in mind the great distances of some towns and villages from the regional centers, the company has bought comfortable motor coaches for the towns of Izhma and Ust-Tsilma, and tractors for them to maintain the local ice roads in the winter.

Focusing on children

LUKOIL-Komi has always considered helping children to be the top priority of all its programs - charitable works, sponsorships, and projects for the development of sports and culture for children and youth.

LUKOIL-Komi has assumed responsibility for a number of children's homes, kindergardens, and schools in Ust-Tsilma, Izhma, Nizhny Odes, Yarega, Ukhta, and Usinsk. Under the terms of its charity agreements, the Company gives financial assistance to schools on the Republic of Komi's territory. Students in the upper grades often go on excursions to its oil fields. Much work is also being done to draw talented young people into the Company's various facilities. Results can already be seen: many graduates come to work for LUKOIL after they have finished their studies at universities and other higher educational institutions.

Thanks to the company's assistance, the Faith Children's Rehabilitation Center in the town of Nizhny Odes now has new play modules, a comfortable rest area, and a number of different exercise machines.

Each summer, children from poor families attend the best outdoor health-building camps on the shores of the Black Sea, while handicapped children regularly receive, in addition to the medical care they need, different presents that will help in their spiritual development. All of this is done at the Company's expense.

Not long ago, LUKOIL-Komi's General Director Azat Khabibullin received a letter from a group of local residents, saying: "Thank you for the wonderful presents for our children. You constantly help people in need of support, kindness, and attention. In helping our children, you are helping us as parents, infusing us with faith in our own abilities."

Resurrecting holy shrines

The changes that have taken place over the course of democratic reforms in Russian society have also contributed to the restoration of religious sanctuaries with the help from LUKOIL-Komi. This is fitting, for more than 280 churches and shrines were plundered and destroyed on the territory of the Republic of Komi during the years in which the Orthodox Church was persecuted.

Not long ago, with the help of LUKOIL-Komi, the Resurrection of Christ Cathedral was built for the faithful of Usinsk, to celebrate the anniversary of the founding of the city. With its extraordinarily beautiful porcelain iconostasis, the new church is now the pride and symbol of this city of oilmen.

Earlier this year, work was begun in Ukhta on the construction of the Orthodox Memorial Cathedral of the New Martyrs and Confessors of Russia Who Shane Forth in the Land of Komi. It was the designers' intent that the cathedral be the second largest in the Republic of Komi, after the St. Stefan Cathedral in Syktyvkar, and LUKOIL-Komi will no doubt soon become involved in the project.

Helping indigenous peoples

One characteristic of LUKOIL-Komi's work in the regions of the Extreme North is that its facilities are able to have a positive impact on the small indigenous peoples. The task of increasing the volume of oil and gas production means that industries vitally important to these peoples - deer herding, fishing, and hunting, for example - fall into the zone of active subsoil use. The Company bears the responsibility for preserving these peoples' way of life, and their cultural and spiritual legacies.

In 2008, LUKOIL-Komi lived up to its responsibilities to six deer farms with which it had signed mutual assistance agreements in the area of the socio-economic development of the small peoples of the North. The agreements call for material compensation for the use of native lands. The deer farms are using the Company's funds to buy the equipment they need, plus all-terrain vehicles, fuel and lubricants, and materials for building homes. In 2008, LUKOIL-Komi met its obligations to the deer-farming cooperatives to the tune of 24.013 million rubles.

It was only natural that LUKOIL-Komi should become the winner of this year's Vitus Bering International Prize as Russia's best industrial company in the area of cooperating with the small indigenous peoples of the Extreme North.

On the whole, after analyzing the results of LUKOIL-Komi's decade-long efforts, one might say that the company has taken a systematic approach to implementing the principles of social responsibility in business by working together with regional and local authorities. A great deal of positive experience has been accumulated in this field, offering a solid foundation for further ventures in the area of charity work and social support for the region's people.