Corporate governance in Gazprom Neft is underpinned by sustainability and the mission to increase the company’s shareholder value in the long term, to retain existing and acquire new assets, maintain financial stability and profitability, and to safeguard the rights and interests of shareholders and other stakeholders.
Key Gazprom Neft internal documents on corporate governance are the Corporate Code of Conduct and the Corporate Governance Code.
The company corporate governance framework includes all key elements that are standard for public companies with established governance structures, and is fully aligned with the applicable statutory requirements and the Listing Rules of the Moscow Exchange. This helps the company to give its shareholders and investors sufficient confidence about the consistency of its strategy and decision-making.
Corporate governance in Gazprom Neft is characterised by the fact that the company has a single principal shareholder, Gazprom PJSC. It owns 95.68% of the company shares. The remaining ordinary shares are held by minority shareholders, which include both individuals and legal entities, which altogether defines the balance of power between various parties involved in corporate relations.
Sustainability management structure of Gazprom Neft
Sustainability management functions are assigned to the company governance bodies as is appropriate to their competencies.Board of Directors, Human Resources and Compensation Committee, Audit Committee
- Overseeing the implementation of the sustainable development strategy
- Approving sustainable development policies and initiatives
- Formulating a sustainable development strategy
- Overall management of strategy implementation and sustainable development initiatives
- Reviewing progress in strategy implementation
- Strategic planning, goal-setting, overseeing and managing the relevant activities on a day-to-day basis
- Determining sustainable development priorities in the relevant areas of the business
- Overseeing the relevant sustainable development activities in subsidiaries
- Implementing sustainable development programmes in the relevant areas
Gazprom Neft management systems cover all activities in this field and are aligned with international standards.
Health, safety and environment (HSE) management
The company’s HSE Directorate is responsible for formulating the HSE strategy and objectives, developing a company-wide HSE management system, and communicating with stakeholders on these matters, while the HSE Professional Board is involved in formulating and adopting key resolutions, approving programmes, road maps and projects as part of the HSE programme.
HSE units in Gazprom Neft business divisions and subsidiaries implement and operate the HSE management system, and oversee HSE operations in the business divisions and subsidiaries.
The Gazprom Neft Management Board:
- approves the Gazprom Neft Energy Policy;
- approves the corporate Energy Conservation and Efficiency Programme, and reviews progress in its implementation;
- provides general supervision of energy conservation and energy efficiency initiatives;
- approves a target model for the Energy Management System (EnMS), provides general supervision of its development, and reviews its performance.
- develop and update the energy conservation programme, and the relevant KPIs, goals and objectives;
- manage the Energy Conservation and Efficiency Programme;
- monitor the EnMS operation;
- manage the Power Engineering competency centre (in the Downstream Division).
- implementing the Energy Conservation and Efficiency Programme;
- searching for new technologies;
- monitoring the implementation of technical and organisational measures under the Programme.
HR management is coordinated by the Organisational Development and HR Management Directorate of Gazprom Neft. Its functions include:
- overall management of the HR function and strategic management of industrial relations;
- developing the HR management strategy, key programmes and projects, and overseeing their implementation;
- developing a company-wide HR management methodology.
- implementing strategic HR-management programmes and projects in the company subsidiaries;
- developing a methodological framework for HR management;
- operations designed to implement the HR and social policy;
- identifying and introducing best practices within the scope of the relevant business area;
- cooperating with HR business partners.
- HR accounting;
- administering remuneration processes;
- management of compensation and social benefits;
- headcount and personnel costs planning, etc.
Regional policy management
Implementation of the regional policy is coordinated by the Corporate Communications Division of Gazprom Neft. Its functions include:
- preparing standards and arranging measures to implement the regional policy;
- securing support for investment projects from regional authorities;
- collecting and processing regional information affecting the implementation of the regional policy; preparing the relevant reports, reviews and briefing notes;
- auditing relations with regional authorities;
- providing administrative support for social and economic agreements;
- coordinating the activities of the Regional Policy Commission;
- coordinating the social investment programme, developing projects under the programme, and assessing its efficiency;
- expert review of social investment programmes in Gazprom Neft subsidiaries;
- PR support.
- formulating proposals for the implementation of the regional policy;
- formulating proposals for developing the company business in the regions and the scope of social projects;
- implementing resolutions adopted by the Regional Policy Commission.
- collects and reviews proposals for the implementation of the regional policy and the social investment programme from the company business units;
- approves annual social investment programmes of the company subsidiaries;
- develops recommendations for the implementation of proposed initiatives.
Role of the Board of Directors and the Management Board in sustainable development management
The Board of Directors is responsible for the strategic management of the company, determining key principles and approaches to HSE matters, HR management, the regional policy, risk management and internal controls, and supervising the activities of Gazprom Neft executive bodies.
A set of key skills and experience is required for all directors’ roles. The members of the Board of Directors have skills in strategic management, corporate governance, corporate finance, risk management, accounting, and other areas specific to the company business.
In 2019, five new members were elected to the Board of Directors. Twelve out of 13 members of the Board of Directors are non-executive directors, while one is an executive director.
The Board of Directors includes one woman.
The area of competence of the Board of Directors includes such sustainable development matters as:
- prioritising the company initiatives;
- approving long-term plans and key programmes of the company activities;
- approving the company’s internal documents on sustainable development included in the areas of competence of the Board of Directors.
In 2019, the Board of Directors reviewed the following sustainable development matters:
- progress in implementing the Gazprom Neft Development Strategy to 2030, including a large-scale technical and environmental upgrade of Gazprom Neft refineries;
- progress in implementing the Programme on Utilisation and More Effective Use of Associated Petroleum Gas (APG) in 2018, and plans for 2019−2021;
- approving the Gazprom Neft Digital Transformation Strategy;
- approving the Regulation on the Procurement of Goods, Works and Services by Gazprom Neft PJSC;
- approving the Report on the Implementation of the Gazprom Neft Innovative Development Programme for 2018;
- performance assessment of the risk management and internal control system, and updating Gazprom Neft key risks for 2019.
In 2019, the Gazprom Neft Management Board reviewed the following matters related to sustainable development initiatives run by the company:
- improving corporate governance in the Gazprom Neft Group;
- approving the updated Key-Risk Register of Gazprom Neft PJSC;
- reviewing the outcomes of the Partnership Management programme, and proposals for developing the partnership management system in Gazprom Neft PJSC;
- the Gazprom Neft talent management programme;
- information disclosed by Gazprom Neft PJSC.
In 2019, the company approved the fifth version of the Gazprom Neft Corporate Code of Conduct, by order of the CEO.
Etalon Operations Management System
The Etalon Operations Management System (OMS) is a structured set of interconnected practices, procedures and processes used by managers and employees at each organisational level in the course of operations.
The OMS elements are designed to maximise the operational efficiency of the company, to enable reliable and safe operations (Reliability Management, Process Flow Management, Contractor and Supplier Management, Environmental and Social Impact Management), and engage all employees in a culture of continuous improvement (Leadership and Culture, Efficiency Mangement and Constant Improvement).
Pilot projects to implement the OMS at some Gazprom Neft assets have shown that the Etalon OMS is highly efficient. The Etalon Development Code (OMS Code), approved by the company in 2019, sets out common principles that will enable the company to roll out the Etalon OMS across its assets.
Improving corporate governance efficiency
The company is closely monitoring the development of corporate laws and best practices both in Russia and globally in order to improve its corporate governance framework.
Measures to improve corporate governance in 2019 included:
- transition to a two-tier management system to improve the performance of governance bodies in Gazprom Neft subsidiaries;
- approving a new version of the Regulation on Insider Information;
- approving the Regulation on the Procurement of Goods, Works and Services;
- approving the External Audit Policy of Gazprom Neft PJSC, its subsidiaries and organisations.
The company continues to automate corporate procedures related to organising the work of its governance bodies, information disclosure, transaction approval, and control of subsidiaries and joint ventures.