HEALTH, SAFETY AND ENVIRONMENT POLICY IMPLEMENTED BY THE OPEN JOINT STOCK COMPANY "OIL COMPANY LUKOIL" IN THE TWENTY-FIRST CENTURY

The LUKOIL Group strategic objective is to ensure dynamic sustainable development corresponding to that of global oil majors in terms of their efficiency and competitiveness. 

LUKOIL Group social responsibilities consist in an adequate working environment and appropriate remuneration, environmental safety and preservation of the cultural heritage.

Being aware of its social responsibilities related to environmental protection and efficient use of natural resources, the Company hopes the public will understand the complexity and the scale of the tasks it is facing.

OAO LUKOIL top priority objectives include creation of a safe working environment for its employees, health protection of LUKOIL Group personnel and local communities in the areas of LUKOIL Group operations, and environmental protection.

To ensure accomplishment of the aforementioned tasks, the Company has developed and is successfully running its Health, Safety and Environment Management System which includes compliance with fire safety and emergency response requirements. It is in line with the applicable Russian law, is based on the best Russian and global practices and has been certified to comply with ISO 14001 and OHSAS 18001 standards. 

The objectives of the Health, Safety and Environment Policy implemented by the Open Joint Stock Company "Oil Company LUKOIL" in the twenty-first century (hereinafter referred to as the Policy) are to:

·           increase petroleum gas utilization rate through expansion of gas-processing and power-producing capacities;

·           apply the zero-discharge principle while developing offshore fields;

·           increase the output of environmentally friendly fuels compliant with the European standards;

·           comply with greenhouse gas reduction provisions of the Kyoto Protocol;

·           by introducing power efficient techniques and using alternative energy sources ensure efficient management of natural resources in the areas of LUKOIL Group operations and of those used for production;

·           by introducing new cutting-edge techniques, equipment and materials and increased process control automation bring under control and gradually reduce both the amount and toxicity of emissions, discharges of pollutants and waste;

·           ensure continuous improvement of HSE performance, including without limitation, through increased reliability of process equipment, its safe and accident free operation, introduction of new technologies and automated emergency systems;

·           ensure that the management, personnel, rescue services and units of LUKOIL Group organizations are prepared to take accident elimination, fire fighting and emergency response measures, as well as enhance preparedness and provide more advanced equipment to fire-fighting and rescue units;

·           ensure more efficient development and implementation of OAO LUKOIL programs aimed at identifying and achieving the most critical health, safety and environment,  occupational safety and emergency response objectives;

·           reduce anthropogenic environmental load resulting from operation of newly commissioned facilities by ensuring better quality of front end and design documents;

·           exercise more efficient production control, corporate supervision and internal auditing to ensure compliance with the Health, Safety and Environment regulations at LUKOIL Group sites based on cutting-edge information technologies, technical diagnostics and remote monitoring techniques in line with ISO 14001, ISO 17020 and OHSAS 18001 international standards.

To achieve the above-specified goals, OAO LUKOIL commits to the following:

·           implement the entire range of injury and accident prevention and mitigation measures that are practicable and available to it;

·           ensure that scheduled and implemented steps and measures related to prevention of impact upon personnel, population and  environment are viewed as those of higher priority than emergency response measures targeting such impact;

·           ensure that there is continuous and consistent improvement in terms of  how and to what extent the personnel, residents and environment are impacted by the Company’s operations, products and services, as well as consumption of natural resources in line with the current level of scientific, technological and social development;

·           continuously implement task-specific measures aimed at reducing oil and gas losses, as well as oil and gas processing losses, and preventing them from entering the environment; 

·           introduce up-to-date scientific developments and technologies to gradually reduce specific consumption of natural resources, materials and energy and yet maintain the maximum possible production levels;

·           ensure compliance with the applicable Russian law, international treaties, industry-specific and corporate regulations, as well as national laws of the countries of LUKOIL Group operations governing health, fire and environmental safety and emergency response preparedness;

·           assess the impact that the scheduled business activities, products and services may have on the health of the personnel, population and environment;

·           assess production, occupational, and fire-safety risks, develop and implement measures to mitigate and offset such unforeseen losses;

·           make and implement any managerial and production-related decisions that necessarily take account of substantial environmental issues, as well as production and occupational risks;

·           request that all personnel employed by LUKOIL Group perform their work in compliance with the applicable industrial, fire and environmental safety, health and emergency response rules and regulations; introduce respective incentives, provide training and advanced training to the Company’s personnel and LUKOIL Group employees;

·           make best efforts to improve environmental quality in the areas of LUKOIL Group operations; 

·           request that corporate entities contracted by LUKOIL Group comply with the industrial, fire and environmental safety, health and emergency response regulations adopted by LUKOIL Group organizations;

·           publicly report to the Company’s shareholders and personnel on industrial, fire and environmental safety, health and emergency response issues;

·           inform on a regular basis all parties concerned (public at large, executive and legislative bodies, etc.) of LUKOIL Group operations in the field of industrial, fire and environmental safety, health and emergency response;

·           continuously improve the Health, Safety and Environment Management System in compliance with ISO 14001 and OHSAS 18001 standards;

·           exercise control over compliance with the obligations assumed by the Company as part of the Policy.

These Policies shall apply to OAO LUKOIL and LUKOIL Group organizations.

Approved by the Resolution of OAO LUKOIL Management Committee (Minutes No. 7 of 12 March, 2009)