Supply chain management

Gazprom Neft priorities in the sphere of procurement include transparency, preventing discrimination and unfair restriction of competition among bidders, and building long-term relationships with contractors.

The company adheres to the following supplier management principles:

  • transparency;
  • competitiveness;
  • equality;
  • mutual guarantees;
  • confidentiality;
  • availability of information.

In the course of procurement of works, services, materials and equipment, Gazprom Neft prefers to select contractors on a competitive basis.

The company has adopted the Regulation on Procurement of Goods, Works and Services. This is a fundamental document on planning and conducting procurement procedures and selecting suppliers.

In addition, Gazprom Neft is committed to increasing the efficiency of its supply chain managementA supply chain is a group of organisations cooperating in order to supply enterprises, and control the movement of goods at all stages: procurement of raw materials, production, storage and transportation of goods.. The company has approved the Standard on Performance Assessment of Materials and Equipment Suppliers, and the Instruction for Calculating Key Performance Indicators of Materials and Equipment Suppliers.

Contractor selection and contractor relations are managed as part of an integrated management system compliant with the ISO 9001-2015 standard.

Gazprom Neft has a single Central Procurement Management Body (CPMB): the Gazprom Neft Procurement and Capital Construction Directorate.

To maintain the required level of competition in procurement, the CPMB conducts an open pre-qualification procedure. The main goal of pre-qualification is to form a register of potential bidders that can perform works, render services and supply goods meeting the stipulated requirements for production processes, quality and safety, and the outcomes of works and services. Potential bidders whose qualification meets the required standards may subsequently be invited to participate in the procurement process.

Audit of the procurement management system

In 2019, the Materials and Equipment Division of Gazprom Neft Procurement underwent the annual compliance audit of its integrated management system to confirm its compliance with the ISO 9001-2015, ISO 14001:2015 and OHSAS 18001:2007 standards.

Based on the findings of this inspection, the auditors concluded that the management system development was consistent with continuous improvement principles, and that the system was effective and complied with the requirements of the relevant standards.

The auditors highlighted the following strengths of the management system:

  • an increase in the customer satisfaction index (CSI) as compared to 2018;
  • development of an electronic document management system as part of supplier management;
  • transfer of in-house knowledge as part of implementing the Regulation on Procurement of Goods and Services.

To be included in the company’s register of potential bidders, pre-qualification participants must meet the following key requirements:

  • compliance with the mandatory requirements for bidders set out in the Gazprom Neft Regulation on Procurement;
  • solvency;
  • having the relevant experience, qualifications, production capacities and qualified workforce to manufacture or supply certain types of goods, perform certain types of works, and render certain types of services to the required standard;
  • no negative business reputation.

When competitive procurement procedures are initiated and held, bids are analysed to determine if they comply with requirements set out in competitive procurement documents. The company checks the information on the bidders, including engaging the corporate security function to assess their legal capacity, solvency and business reputation. These measures enable the company to identify in advance those contractors who do not comply with its requirements.

In accordance with the company standards, potential suppliers' compliance with requirements set out in corporate standards is monitored throughout the period when the company is interacting with them.

At year-end 2019, the company carried out a diagnostic assessment of compliance of its procurement business processes with the Etalon OMS requirements. The Contractor and Supplier Management element was assessed as 'well-developed' in the OMS terminology.

In 2019, 5,800 potential suppliers participated in competitive bidding procedures initiated by the company. Contracts were concluded with 1,700 companies from 65 regions of the Russian Federation and 17 foreign countries (including the CIS), with payments totalling ₽179 billion. Local (domestic) suppliers accounted for 98.4% of the total procurement volume. In 2019, there were no notable changes in the supply chain.

Considering SMBs in procurement

Procurement from small and medium-sized businesses (SMBs)Following the competitive selection of materials and equipment suppliers initiated by the company Procurement Directorate and the Materials and Equipment Division of Gazprom Neft Procurement. in 2019 accounted for 26% of the total volume of materials and equipment sourced by the company.

Share of expenditure on suppliers in key regions of the company operation in 2019, million ₽
Region Procurement volumes (excluding VAT)
St Petersburg 10,037
Tyumen Oblast 7,889
Khanty-Mansi Autonomous Okrug-Yugra 3,540
Tomsk Oblast 3,401
Omsk Oblast 3,132
Orenburg Oblast 342
Yamalo-Nenets Autonomous Okrug 194

Gazprom Neft materials and equipment supply chain

Technological partnerships and import substitution

The Gazprom Neft Department for Technological Partnerships and Import Substitution is tasked with systematically monitoring the Russian goods and materials market to find domestically produced replacements for imported alternatives.

One of the most important objectives in this area is to create new competitive production facilities in the Russian Federation, and support existing Russian manufacturers. Gazprom Neft also seeks to cooperate with foreign companies on the localisation of production in the Russian Federation.

Gazprom Neft is testing state-of-the-art Russian-made equipment, and creating unique products to replace foreign alternatives. In addition, the company also supports applications from development companies for external financing, including subsidies from the Industrial Development Fund.

In 2019, the company started to purchase more than five new import-substitution products that had not previously been manufactured in Russia.

In 2019, Gazprom Neft entered into strategic partnership agreements with SIBUR Holding PJSC and the Administration of St Petersburg. The agreement with SIBUR Holding will enable the joining of forces to promote the development of Russian equipment to be used by oil-and-gas enterprises. The agreement with the Administration of St Petersburg is designed to develop a world-class R&D and technology centre for the energy sector in the city. The company continues to participate in joint working groups with Gazprombank and HMS Group.

In March 2019, St Petersburg hosted 'Import Substitution in the Oil and Gas Industry 2019', a technology conference supported by Gazprom Neft and attended by representatives from government agencies, major upstream and service companies, and some of the country’s leading research and manufacturing organisations. The conference participants welcomed the company’s extensive efforts in the field of import substitution.

The 'Import Substitution in the Oil and Gas Industry 2019' conference is a great platform for developing a national supplier base for Russia's oil and gas industry, and its relevance was once more confirmed by the number and make-up of participants from across the country. Achieving technological leadership is a major challenge for Russian suppliers, but it is definitely feasible. An open discussion between representatives from the government, the industry and science has made it possible to identify the key problems and outline the next steps towards making Russia a technological leader.

Sergey Arkhipov Head of the Department for Technological Partnerships and Import Substitution, Gazprom Neft