No. 1, 2010

A careful attitude toward the unique nature in the North of Russia is a distinctive feature of LUKOIL-Western Siberia’s workstyle

LUKOIL's environmental strategy establishes, with respect to a number of nature protection parameters, more stringent standards than are inherent even in the effective legislation of Russia. In its annual budget each year, the Company allocates funding for environmental projects as a separate item and does not envisage any reduction in relevant investments. Preservation of the unique nature in the North of Russia and its environmental safety are priorities in the activities of LUKOIL-Western Siberia.

Focus on the environment

Natural resource conservation and environmental impact reduction are prioritized by the LUKOIL HSE Policy for the 21st century. The document was drawn up in accordance with the Company's policy priorities and contains a number of commitments and key lines for its development, such as ongoing targeted efforts to reduce the manmade impact on the environment and deploy the latest best practices and natural resources saving technologies. Also included here is implementation of a GHG emissions management system. In addition, the document envisages the need for more effective production control in accordance with the requirements of the ISO 9001, ISO 14001 and other international standards.

For implementation of the HSE Policy principles and objectives, LUKOIL-Western Siberia is developing an Environmental Safety Program for a five-year period.

"On the basis of this Program, we annually draw up a plan of nature-protection measures to reduce manmade impact on the environment and monitor the state of the environment for the purpose of analyzing the effectiveness of the decisions taken," says Head of the Environmental Department of LUKOIL-Western Siberia Igor Krasnov. "Our attention is focused primarily on increased associated petroleum gas recovery, better pipeline accident prevention, polluted and destroyed land reclamation and industrial waste disposal."

The environmental protection measures implemented by LUKOIL-Western Siberia embrace all production processes and ensure that a responsible attitude is taken by each and every employee toward fulfillment of duties and prevention of environmental violations. The Western Siberian holding company has improved its natural environment management system in accordance with the requirements of the ISO 14001 international standard. As a result, in compliance with the international requirements, general principles have been established and obligations determined for each employee in implementation of the company's environmental policy.

Based on the results of the work carried out, the international certification bodies of the Constant management system awarded LUKOIL-Western Siberia a certificate of compliance with the ISO 14001 international standard. In 2007, the international certification center Bureau Veritas Certification confirmed compliance of the management system with the environmental protection requirements.

To improve the environmental management system and to comply with the requirements of the international standards LUKOIL-Western Siberia developed and introduced a HSE management system in December 2006.

Innovation guards the environment

LUKOIL-Western Siberia is vigorously applying innovative technologies for minimizing the manmade impact on the unique nature of the North.

The opportunities offered by such technologies as those applied within LUKOIL-Western Siberia are demonstrated by a specific example. On a license area located in the water protection zone of the River Ob, the drilling slurry produced during drilling operations has to be removed from the drilling area and processed. For this purpose, the Western Siberian holding company uses a technology developed by the Research Institute of Ecology and Sustainable Natural Resources Management, allowing drilling slurry to be successfully processed into a buralite compound by the capsulation method.

In addition, work is under way within the company to decontaminate oil-containing waste that forms as a result of technological processes during oil and gas production and as a result of repairs to deep pumping well equipment. For instance, since 2004, about 9,600 tons of waste have been decontaminated at the company and 66,000 tons reprocessed. In 2009, these figures almost doubled.

The territorial production division Langepasneftegaz has opened a landfill for temporary location of hard domestic and industrial waste. An agreement is signed every year with the Eco Plus company for acceptance, placement and processing of oil sludge, worn out tyres and drilling slurry resulting from drilling secondary wells and drilling slurry resulting from drilling in water protection zones, where the legislation prohibits location of drilling slurry. In order to reduce the risks of liquid production waste finding its way into the ecosystem, production sites at the company's fields have facilities for purifying industrial storm waste in order to prevent its getting into the environment.

In 2009, it is planned to introduce sewerage and purification plant at the Kamenny license area (Urayneftegaz) and the Tevlino-Russkinskoye field (Langepasneftegaz). In total, during 2009, it is planned to spend 15,622 million rubles on performance of water-protection measures. For the purpose of monitoring and analyzing the situation, as well as further forecasting future changes to the state of the environment at all the license areas, the multiple components of the environment are being monitored. Monitoring projects have been developed, as well as time schedules for implementing them. In 2009, monitoring expenditures amounted to 60 million rubles. This year, it is planned to spend 63 million rubles for these purposes.

"One clear example of the impact of environmentally safe technologies used by the company is provided by the development of Urayneftegaz's license area located on the territory of the Kondinskiye Lakes park," Igor Krasnov, Head of the company's Environmental Department, tells us. "The park consists of a system of lakes and marshes covering an aggregate area of 43,900 hectares. The natural park status, unlike that of a nature reserve, permits restricted use of natural resources under such special operating conditions as, for instance, sumpless drilling, non-flame extraction and hydrolization of the foundations of cluster sites. There are 24 cluster sites on the territory of the park and a multi-phase booster pump station."

Since 1999, the park's specialists, together with Tyumen State University, and LUKOIL-Western Siberia have been carrying out comprehensive environmental monitoring. Over the last decade, the company has not received a single complaint with respect to changes in water and soil samples or a threat being created to the environment components.