Risk Management

Effective risk management is a key component of sustainability management. Gazprom Neft has a Risk Management Policy that defines the Group’s corporate goals, objectives, and principles of risk management.

The Company’s risk management goal is to improve the efficiency of management decisions by analysing the respective risks and ensuring the maximum efficiency of risk management activities when implementing these decisions. The risk management system further ensures that Gazprom Neft can achieve its strategic goals, including those in the area of sustainable development. The Company’s risk management scope encompasses all risks, including the risks of an environmental and social nature. The mitigation of the latter is the objective of the corporate policies and management systems in the areas of environmental protection, occupational safety, See the full description of key risks in Gazprom Neft’s Annual Report 2013.human resources and regional development.


Implementation of the integrated risk management system at the Company began in August 2008, when the Company’s management board approved the concept.



2013–2014 (aims)

Developed the IRMS implementation concept and received the Management Board’s approval.

The scope of the IRMS was expanded to include subsidiaries and affiliates, joint ventures and major projects. Risk management procedures were established for major projects.

Continued integration of the IRMS at new assets.

Introduced a new corporate standard, “IRMS: Procedure for identifying and assessing risks, preparing responses, and monitoring compliance”.

Introduced risk-oriented planning for internal audit.

Further improvement of risk assessment methodology, adoption of regulatory and methodology documents for the quantitative assessment of individual risks.

Expanded the scope of the IRMS to cover 29 business entities (20 subsidiaries and affiliates,

and nine sub-divisions at the Corporate Center).

Analysed the IRMS to ascertain its compliance with best international practices (Ernst & Young). The development of the IRMS was recognised as compliant with best practice. Integrated IRMS processes into executive decision-making procedures, an important factor in the current stage of corporate development.

Integration of the IRMS into corporate business processes (business planning, project management, target-based management, and others).

In two phases, in June 2009 and March 2011, the IRMS was analysed to ascertain its compliance with best practices (by Ernst & Young). The risk management system was found to be compliant with best international practice in terms of ERM (Enterprise Risk Management) system building.

Developing an IT system to support IRMS processes.

The Company has developed and formalised a uniform approach to its risk management processes, which is fully contained in the Integrated Risk Management System (IRMS) corporate standard. Gazprom Neft’s IRMS is a systematic, continuous process that identifies, assesses, manages and controls risks.

The IRMS standards and methods are included in the following documents:

  • Risk management policy;
  • The corporate standard “Integrated Risk Management System Procedure for identifying and assessing risks, preparing responses, and monitoring compliance”; and
  • Guidelines for the risk management process, including the Risk Registry, Card and Matrix templates.

Risk management has become an integral part of the corporate environment of Gazprom Neft, by virtue of the following processes::

  • Implementing a risk-oriented approach in all aspects of production and management;
  • Undertaking systematic analysis of identified risks;
  • Building a system to control risks and monitor the efficiency of risk management activities;
  • Making all employees aware of Gazprom Neft’s basic principles and approaches to risk management;
  • Ensuring the required regulatory and methodological support;
  • Distributing authority and responsibility for risk management between the Company’s business units.
Management of key non-financial risks



Risk management activities

Political risks

The political situation in Russia is stable at present, with strong executive departments at the federal and regional levels of government.

OJSC Gazprom Neft is a registered taxpayer in the city of Saint Petersburg, the second-largest city in the Russian Federation, and the capital of the Northwest Federal District, which has enormous natural resource potential, advanced industries, and a dense transportation network.

Subsidiaries of OJSC Gazprom Neft operate in the following Federal Districts: Central, Northwest, Ural, Volga, Siberia, and the Russian Far East.

On the whole, the Company views the political situation in Russia as stable and does not see any risk of negative developments at present.

Risks related to changes in tax law

Gazprom Neft is one of the largest taxpayers in the Russian Federation. It pays federal taxes, regional and local taxes, including value-added tax, corporate income tax, mineral extraction taxes, excise duties, corporate property taxes and land taxes.

In the course of its business, the Company constantly monitors all changes in tax law, and changes in the interpretation and application of existing tax law. The Company also advises the Government on improving legislation and on creating new regulatory acts in the field of taxation.

Risks related to changes in licence compliance for main business lines

Sub-soil legislation is evolving towards a more detailed regulation of sub-soil usage by the Government, more rational use of sub-soil areas, and strict compliance with legal standards for environmental protection.

Gazprom Neft operates its licence areas in strict compliance with the requirements of Russian sub-soil legislation, and updates its licence agreements to ensure their compliance with relevant laws.

The Company analyses and assesses legislative initiatives by relevant ministries and departments in the area of sub-soil legislation and licensing.

Gazprom Neft is not aware of any legal risks directly associated with the loss of sub-soil rights or breaches of current law due to these legislative changes.

Health, safety and environmental risks

Gazprom Neft’s operations have an inherent health risk and a risk of damage to or pollution of the natural environment. This may give rise to civil law liability and require action to mitigate such damage. The Company is fully aware of its responsibility before the public, and its obligation to ensure safe working conditions and protection of the natural environment. The Company ensures that its operations comply with applicable environmental standards and that it implements environmental protection programmes.

Gazprom Neft’s health, safety and environmental policy aims to comply with the applicable laws and regulations by investing considerable funds in injury prevention, transport and fire safety programmes, and environmental activities, including the use of technologies that minimise the environmental risks. As a result, risks related to employee injuries and environmental pollution have been greatly reduced.

Risks related human resources

The oil and gas industry lacks human resources and managers along the entire value chain – from upstream to downstream.

The Company develops and implements succession pool and employee training and development programmes aimed to provide the Company with competent staff at present and in the future. Gazprom Neft employees are offered competitive remuneration that includes a salary, performance-based bonuses, and a social package.

Corruption risks

As the Company actively enters new international markets, there are increasing risks of anti-corruption laws in the US and UK being extended to the Company.

Gazprom Neft is working on a programme to control corruption risks. Essentially, the strategy is to take proactive steps to minimise the risks of liability for any lack of procedures to prevent bribery. The programme will assess the role of corruption risk in the Company’s risk management system, design a corporate policy, and devise a communications strategy and provide appropriate employee training required for the project implementation.