Board of Directors

The Board of Directors is responsible for the Company’s strategic management, determining priority development areas, defining key principles and approaches of risk management and internal controls, exercising control over the Company’s executive bodies, and performing other functions. The scope of authority of the Board of Directors is set out in Gazprom Neft’s Charter and is clearly differentiated from the remit of the Company’s executive bodies responsible for managing its ongoing operations.

The election of executive bodies, termination of their powers and control over the incentive system are all reserved to the Board of Directors. One of the key responsibilities of the Board of Directors is to set up strong executive bodies and exercise oversight over their performance. On top of that, the Board regularly reviews reports on the implementation of the Company’s strategy and business plans.

The Board of Directors approves the Internal Control and Risk Management Policy and ensures implementation of the risk management and internal control initiatives. Also, the Board manages key risks related to the Company’s strategic objectives.

The Board of Directors is also responsible for improving the Company’s corporate governance system and practices, assessing the corporate governance framework, and reviewing reports on progress against the corporate governance improvement programme on a regular basis.

Given the strategic importance of its objectives, it is crucial for the Board of Directors to have trust of the Company’s shareholders and make sure that all of its tasks are fulfilled in the most efficient way possible.

The main functions of the Chairman of the Board of Directors are set forth in the Charter, the Regulation on the Board of Directors, and the Corporate Governance Code. Those include:

  • providing organizational support to the Board of Directors activities, including setting up the work plans;
  • promoting an open discussion of the agenda items and ensuring thoughtful consideration of all opinions expressed by the directors;
  • identifying key matters to be reviewed by the Board of Directors and choosing the right meeting format for the discussion;
  • representing the Board of Directors in relations with shareholders, management and other stakeholders;
  • preparing proposals for the distribution of responsibilities in the Board of Directors and its committees.

The scope of authority of the Board of Directors, its operating arrangements and the existing corporate procedures make it possible to adopt a substantial part of resolutions by a simple majority vote. That said, the Chairman must take into account the opinion of each director and seek to ensure a consensus on key items.

In 2019, the Board of Directors was chaired by Alexey Miller who did not sit on any of the Board’s committees. Even though at that time Alexey Miller served as a director in some other companies and fulfilled the responsibilities of the Management Committee Chairman at Gazprom, the Company believes that these roles did not prevent him from effectively chairing the Board of Directors of Gazprom Neft.


Composition of the Board of Directors

Based on the decision of the Extraordinary General Meeting of Shareholders held on 1 August 2019, the Board of Directors comprises 13 members. With 95.68% of the Company’s ordinary shares held by Gazprom PJSC, the overwhelming majority of Gazprom Neft’s directors are elected upon the recommendation of Gazprom PJSC, the Company’s controlling shareholder. As at the end of the reporting year, the Gazprom Neft Board of Directors did not include independent directors.The independence criteria used by Gazprom Neft are based on recommendations of the Corporate Governance Code of the Central Bank of the Russian Federation (Bank of Russia).

All directors have a balanced set of skills and experience required for their roles. The directors possess skills in strategic management, corporate governance, corporate finance, risk management, accounting, and other areas specific to the Company’s operations.

The current composition of the Board of Directors ensures sufficient independence from the Company’s management and enables effective control over the performance of the Management Board.

Gazprom Neft has a transparent procedure for the board members election, specifically:

  • provides shareholders with two months to propose nominees to the Board of Directors (applicable law only provides for a one-month nomination period);
  • discloses information about the current composition of the Board of Directors, and its nominees in due time;
  • uses cumulative voting and provides comprehensive explanation about the associated voting procedure to the shareholders;
  • provides quorum details and the number of votes cast for each option when announce the voting results;
  • publishes resolutions of the General Meetings of Shareholders on its corporate website.

All members of the company Board of Directors have high professional reputation and extensive experience in the company. They perform the duties in close collaboration with the company management, business units, registrar and auditor.

The Board of Directors is balanced by age; 85% of directors are aged between 40 and 60.

The number of directors is aligned with the company’s current goals and objectives, and industry practices. It also ensures the required balance of competencies in the Board of Directors.

Simultaneous participation of the members of the Board of Directors in other companies’ boards of directors did not affect their performance in respect of Gazprom Neft’s Board of Directors.

Directors are elected in a manner providing shareholders with sufficient information on candidates to get a clear idea of their personal and professional skills. Immediately after drafting the minutes of the relevant meeting, information on nominees to the Board of Directors is communicated to stakeholders by issuing a corporate action notice. Afterwards, full information is published on the corporate website in Russian and English 30 days prior to the General Meeting of Shareholders which will vote on the nominees.

Key competencies of the Gazprom Neft Board of Directors
MEMBER OF THE BOARD OF DIRECTORS PERIOD OF SERVING ON THE BOARD OF DIRECTORS KEY COMPETENCIES
strategy finance and audit oil and gas legal issues and corporate governance risk management PR and GR
Alexey Miller 14 years (starting from October 2005) + + + +
Sergey Kuznets four months (starting from September 2019) + +
Famil Sadygov four months (starting from September 2019) + +
Vitaly Markelov four months (starting from September 2019) + + +
Sergey Menshikov four months (starting from September 2019) + + +
Alexander Medvedev six months (starting from June 2019) + + + +
Kirill Seleznev 14 years (starting from October 2005) + + +
Elena Mikhailova seven years (starting from June 2012) + + +
Alexander Dyukov 12 years (starting from November 2007) + + + +
Vladimir Alisov 10 years (starting from June 2009) +
Mikhail Sereda six years (starting from December 2013) + +
Valery Serdyukov seven years (starting from December 2012) + +
Andrey Dmitriev one year (starting from June 2018) + +
Valery Golubev 12 years (from June 2007 through June 2019) + + +
Andrey Kruglov 14 years (from October 2005 through September 2019) + + + +
Sergey Fursenko six years (from February 2015 through June 2019) +
Igor Fedorov 15 months (from June 2018 through September 2019) + + +
Vsevolod Cherepanov eight years (from June 2011 through June 2019) + +
Composition of the Board of Directors by age
Full name Age
Alexey Miller 57
Sergey Kuznets 49
Famil Sadygov 51
Vitaly Markelov 57
Sergey Menshikov 51
Alexander Medvedev 64
Kirill Seleznev 45
Elena Mikhailova 42
Alexander Dyukov 52
Vladimir Alisov 59
Mikhail Sereda 49
Valery Serdyukov 74
Andrey Dmitriev 45
Age of the Board of Directors members, %
Composition of the Board of Directors in 2019
Members of the Board of Directors from 01/01/2019 through 13/06/2019 Members of the Board of Directors from 14/06/2019 through 01/09/2019 Members of the Board of Directors from 02/09/2019 through 31/12/2019
INDEPENDENT DIRECTORS
Valery Serdyukov Valery SerdyukovLost the status of independent director starting from December 2019, based on seven years membership.
Sergey Fursenko
NON-EXECUTIVE DIRECTORS
Alexey Miller Alexey Miller Alexey Miller
Valery Golubev Vitaly Markelov
Andrey Kruglov Andrey Kruglov Famil Sadygov
Igor Fedorov Igor Fedorov Sergey Kuznets
Kirill Seleznev Kirill Seleznev Kirill Seleznev
Vladimir Alisov Vladimir Alisov Vladimir Alisov
Vsevolod Cherepanov Sergey Menshikov
Mikhail Sereda Mikhail Sereda Mikhail Sereda
Elena Mikhailova Elena Mikhailova Elena Mikhailova
Andrey Dmitriev Andrey Dmitriev Andrey Dmitriev
Alexander Medvedev Alexander Medvedev
Valery Serdyukov
EXECUTIVE DIRECTOR
Alexander Dyukov Alexander Dyukov Alexander Dyukov

Members of the Board of Directors as at 31 December 2019

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1962.
Graduated from the N.A. Voznesensky Leningrad Financial and Economic Institute.
From 2001, Chairman of the Management Board, Gazprom PJSC.
From 2002, Deputy Chairman of the Board of Directors, Gazprom PJSC.
A PhD in Economics.

POSITIONS HELD IN OTHER ORGANISATIONS

From 2003 – Chairman of the Board of Directors of Bank GPB (JSC);
from 2003 – Chairman of the Board of Directors of SOGAZ JSC;
from 2007 – Chairman of the Board of Directors of Gazprom-Media Holding JSC;
from 2010 – Chairman of the Supervisory Board of Gazprom Neft International S.A.;
from 2012 – Chairman of the Board of Directors of Rosippodromy JSC;
from 2012 – member of the Board of Trustees of the Graduate School of Management, St Petersburg University;
from 2012 – member of the Board of Trustees of the All-Russian Non-Governmental Organisation «Russian Geographical Society»;
from 2012 – member of Board of Trustees of the Charitable Fund for the Restoration of the New Jerusalem Resurrection Stavropegial Monastery of the Russian Orthodox Church;
from 2012 – member of the Board of Trustees of the All-Russian Non-Governmental Organisation «Association of Lawyers of Russia”;
from 2012 – member of the Management Board of the All-Russian Association of Employers «Russian Union of Industrialists and Entrepreneurs»;
from 2012 – member of the Management Board of the All-Russian Non-Governmental Organisation «Russian Union of Industrialists and Entrepreneurs»;
from 2012 – First Deputy Chairman of the Board of Trustees of the Russian Cycling Federation;
from 2013 – member of the Supervisory Board of the Global Energy Association;
from 2013 – President – Chairman of the Management Board of the Equipment Manufacturers Association «New Technologies of the Gas Industry»;
from 2013 – member of the Board of Trustees of the Federal State Budget Educational Institution of Higher Professional Education «Lomonosov Moscow State University»;
from 2013 – member of the Board of Trustees of the Moscow City Church Construction Support Foundation;
from 2014 – Chairman of the Board of Trustees of the Federal State Budget Educational Institution of Higher Education St Petersburg State Economic University;
from 2015 – member of the Board of Trustees of the Russian Academy of Education;
from 2016 – President, Chairman of the Presidium of the International Business Congress (IBC) e. V;
from 2017 – member of the Board of Trustees of the Federal State Autonomous Educational Institution of Higher Education “National Research University – Higher School of Economics”;
from 2017 – member of the Board of Trustees of the «Doctors, Innovations, Science for Children» Foundation for Support and Development in Children’s Haematology, Oncology, and Immunology;
from 2018 – member of the Board of Trustees of the Fund for the Conservation and Development of the Solovetsky Archipelago;
from 2018 – member of the Presidential Council of the Russian Federation for the Development of Physical Culture and Sport;
from 2018 – member of the Board of Directors of joint stock company the non-government Pension Fund Gazfond;
from 2019 – member of the Board of Trustees of the Foundation for Support of Scientific and Project Activities of Students, Postgraduate Students and Young Scientists “National Intellectual Development”;
from 2019 – Chairman of the Board of Trustees of the Alexandrinsky Theatre.

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1960.
Graduated from the Law Faculty of the Leningrad State University named after A. Zhdanov.
From 2008 – First Deputy Head of Department, Gazprom PJSC.Member of the Association of Lawyers of Russia, member of the Professional Board for Corporate Governance under FFMS of Russia.
In 2010, under a decree of the President of the Russian Federation, he was awarded an honorary title of the Honoured Lawyer of the Russian Federation.

POSITIONS HELD IN OTHER ORGANISATIONS

From 2007 – member of the Board of Directors of Daltransgaz JSC;
from 2016 – member of the Board of Directors of DRAGA JSC;
from 2018 — member of the Supervisory Board of the Belarusian and Russian.

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Graduated from the Volga State Academy of Water Transport and Stockholm School of Economics (ЕМВА).
2016–2019 – First Deputy Head of Department, Gazprom PJSC.
From 2019 — Chief Executive Officer, Gazprom Gas-Engine Fuel LLC.

POSITIONS HELD IN OTHER ORGANISATIONS

From 2017 – Chairman of the Board of Directors of Himsorbent CJSC;
from 2018 – member of the Board of Directors of OGK-2 JSC;
from 2018 – member of the Board of Directors of PJSC TGC-1;
from 2018 – member of the Board of Directors of JSC Metaclay;
from 2019 – member of the Board of Directors of Mosenergo;
from 2019 — member of the Board of Directors of МIРС JSC.

Interest in the authorised capital (as at 31 December 2019)
0.005357244% (254,003 shares.)

BIOGRAPHICAL DETAILS

Born in 1967.
Graduated from the Order of Lenin Leningrad Shipbuilding Institute.
In 2001, Mr. Dyukov received the IMISP MBA degree.
From 2006 – President, from December 2007 – Chairman of the Management Board, Chief Executive Officer, Gazprom Neft PJSC.

POSITIONS HELD IN OTHER ORGANISATIONS

From 2005 – member of the Board of Directors, Chairman of the Board of Directors, Deputy Chairman of the Board of Directors of «SIBUR Holding» PJSC;
from 2007 – member of the Supervisory Board of the Union of Oil and Gas Industry Organisations «Russian Gas Society»;
from 2008 – member of the Board of Trustees of the Federal State Budget Educational Institution of Higher Education «St Petersburg Mining University»;
from 2010 – member of the Board of Directors of SKA Ice Hockey Club CJSC;
from 2010 – member of the Board of Trustees of the All-Russian Non-Governmental Organisation «Russian Geographical Society»;
from 2012 – member of the Board of Directors of Hockey City LLC;
from 2013 – member of the Management Board, member of the Bureau of the Management Board, Chairman of the Committee on Industrial Security, Co-Chairman of the Commission on Oil and Gas Industry of the All-Russian Non-Governmental Organisation «Russian Union of Industrialists and Entrepreneurs»;
from 2014 – member of the Presidium of the Football Federation of St Petersburg;
from 2014 – member of the Executive Committee, Chairman of the Committee of Football Development Programmes of the Football Union of Russia;
from 2014 – member of the Board of Trustees of the Chess Federation of Russia;
from 2015 – member of the Board of Trustees of the Foundation for Support of Scientific and Project Activities of Students, Postgraduate Students and Young Scientists “National Intellectual Development”;
from 2015 – member of the Board of Trustees of the Federal State Budgetary Educational Institution of Higher Education «Gubkin Russian State University of Oil and Gas (National Research University)»;
from 2018 – member of the Board of Trustees of the Lomonosov Moscow State University High School (a boarding school);
from 2019 – President of the Football Union of Russia;
from 2019 – member of the Presidential Council of the Russian Federation for the Development of Physical Culture and Sport;
from 2020 — member of the Governmental Commission on the Use of Information Technologies for Improving Quality of Life and Business Environment.

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1970.
Graduated from Lomonosov Moscow State University.
2006–2019 – Deputy Head of Department, Gazprom PJSC.
From 2019 – member of the Management Board, Head of Department, Gazprom PJSC.

POSITIONS HELD IN OTHER ORGANISATIONS

From 2018 – Director for Legal Affairs, GAZPROM Germania GmbH;
from 2018 – member of the Board of Directors of Shtokman Development AG;
from 2019 – member of the Supervisory Board, JSC EuRoPol GAZ Transit Gas Pipeline System;
from 2019 – member of the Board of Directors of joint stock company the non-government Pension Fund Gazfond;
from 2019 – member of the Supervisory Board of Moldovagaz JSC;
from 2019 – member of the Board of Directors of Gazprom-Media Holding JSC;
from 2019 – member of the Supervisory Board of Gazprom Holding Coöperatie U. A.;
from 2019 – member of the Board of Directors of South Stream Transport B.V.;
from 2019 – member of the Board of Directors of Lazurnaya LLC;
from 2019 – member of the Board of Latvijas Gāze JSC;
from 2019 – member of the Board of Directors of REP Holding JSC;
from 2019 — member of the Supervisory Board of Gazprom Transgaz Belarus OJSC;

Interest in the authorised capital (as at 31 December 2019)
0.00105456% (50,000 shares)

BIOGRAPHICAL DETAILS

Born in 1955.
Graduated from the Moscow Institute of Physics and Technology.
2013–2019 – Deputy Chairman of the Management Board, member of the Management Board of Gazprom PJSC.
From 2019 – member of the Board of Directors, Chairman of the Board of Directors of FC Zenit JSC.
A PhD in Economics.

POSITIONS HELD IN OTHER ORGANISATIONS

From 2013 – member of the Management Board, member of the Board of Directors, Panrusgaz Zrt.;
from 2013 – Chairman of the Board of Directors, Prometheus Gas S.A.;
from 2013 – Chairman of the Board of Directors, Overgaz Inc. AD;
from 2013 – Chairman of the Board of Directors of OJSC Severneftegazprom;
from 2013 – Chairman of the Board of Directors of KazRosGas LLP;
from 2013 – Chairman of the Supervisory Board of SGT EuRoPol GAZ s.a.;
from 2013 – Chairman of the Supervisory Board of Yugorosgaz AD;
from 2013 – Chairman of the Board of Directors, Deputy Chairman of the Board of Directors, member of the Board of Directors, SKA Ice Hockey Club LLC;
from 2013 – member of the Supervisory Board of Gazprom EP International B.V.;
from 2013 – Chairman of the Supervisory Board, Deputy Chairman of the Supervisory Board, Erdgasspeicher Peissen GmbH;
from 2013 – member of the Management Board, Chairman of the Management Board, Chairman of the General Assembly, Association «JHL»;
from 2013 – Chairman of the Board of Directors, Hockey City LLC;
from 2013 – member of the Supervisory Board, Moravia Gas Storage a.s.;
from 2014 – Chairman of the Supervisory Board, member of the Supervisory Board, GAZPROM Austria GmbH;
from 2015 – member of the Advisory Board, WIGA Transport Beteiligungs-GmbH & Co. KG;
from 2015 – Director of the Autonomous Non-Profit Organisation «Social, Cultural and Sports Club Gazpromexport»;
from 2016 – member of the Board of Directors, Nord Stream 2 AG;
from 2017 – Chairman of the Board, Gaso JSC;
from 2017 – member of the Board of Directors, KHL LLC;
from 2019 – member of the Board of Directors, Chairman of the Board of Directors, BC Zenit LLC;
from 2019 — Chairman of the Management Board, International Business Congress e. V.

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1977.
Graduated from the Moscow State Industrial University, majoring in jurisprudence, received an MBA from the Academy of National Economy under the Government of the Russian Federation.
From 2011 – Head of Department, Gazprom PJSC.
From 2012 – Member of the Management Board, Gazprom PJSC.
2003–2019 – Deputy CEO for Corporate and Property Relations, Gazprom Mezhregiongaz LLC.

POSITIONS HELD IN OTHER ORGANISATIONS

From 2012 – member of the Board of Directors, Chairman of the Board of Directors of Mosenergo;
from 2012 – member of the Board of Directors of Severneftegazprom OJSC;
from 2012 – member of the Board of Directors of Leader CJSC;
from 2012 – member of the Board of Directors of Gazprom Gas-Engine Fuel LLC;
from 2013 – member of the Board of Latvijas Gāze JSC;
from 2017 – member of the Supervisory Board of the Autonomous Non-Profit Organisation «VC Zenit St Petersburg»;
from 2018 – member of the Board of Directors of FC Zenit JSC;
from 2018 – member of the Board of Directors of joint stock company the non-government Pension Fund Gazfond;
from 2019 – member of the Board of Directors, Chairperson of the Board of Directors of Lazurnaya LLC;
from 2019 – member of the Board of Directors of Vostokgazprom OJSC;
from 2019 – member of the Board of Directors of Tomskgazprom JSC;
from 2019 – member of the Board of Directors of Gazprom LNG Technologies LLC.

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1963.
Graduated from the Kuibyshev Aviation Institute.
From 2012 — member of the Board of Directors, member of the Management Board, Deputy Chairman of the Management Board, Gazprom PJSC.

POSITIONS HELD IN OTHER ORGANISATIONS

From 2012 – Editor-in-chief of Gas Industry Magazine;
from 2012 – member of the Board of Directors, Chairman of the Board of Directors of JSC Gazprom Space Systems;
from 2012 – member of the Board of Directors of USC JSC;
from 2012 – President, Pipe Producers Association;
from 2012 – member of the Management Board, Vice-President and Deputy President–Chairman of the Management Board of the Equipment Manufacturers Association «New Technologies of the Gas Industry»;
from 2014 – member of the Supervisory Board of Wintershall AG;
from 2014 – Chairman of the Board of Directors of Gazprom Kyrgyzstan LLC;
from 2014 – Chairman of the Board of Trustees of the V.I. Vernadsky Non-Governmental Ecological Foundation;
from 2016 – member of the Supervisory Board of Gazprom EP International B.V.;
from 2016 – member of the Presidium, International Business Congress (IBC) e. V.;
from 2017 – member of the Board, Chairman of the Board, Association of Gas-Industry Construction Organisations;
from 2017 – member of the Board of Directors, Chairman of the Board of Directors, Gazprom Armenia CJSC;
from 2018 – Chairman of the Board of Directors, Deputy Chairman of the Board of Directors, RusKhimAlyans LLC;
from 2019 – member of the Supervisory Board of the Federal State Budgetary Educational Institution of Higher Education «Gubkin Russian State University of Oil and Gas (National Research University)»;
from 2019 – Non-executive director of Sakhalin Energy Investment Company Ltd;
from 2019 – member of the Board of Directors, Chairman of the Board of Directors of Gazprom Teploenergo JSC;
from 2019 – Chairman of the Board of Directors of RusGazAlyans LLC;
from 2019 – member of the Supervisory Board, First Vice-President of the Union of Oil and Gas Industry Organisations «Russian Gas Society»;
from 2019 – member of the Supervisory Board of Gazprom Transgaz Belarus OJSC.

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1968.
Graduated from the Grozny Oil Institute, the National University of Oil and Gas «Gubkin University».
2008–2019 – Chief Executive Officer of Gazprom Dobycha Nadym LLC.
From 2019 – member of the Management Board, Head of Department, Gazprom PJSC.
A PhD in Economics.

POSITIONS HELD IN OTHER ORGANISATIONS

From 2019 – member of the Management Board of the Equipment Manufacturers Association «New Technologies of the Gas Industry»;
from 2019 – member of the Board of Directors, Sakhalin Energy Investment Company Ltd.;
from 2019 – member of the Board of Directors of Vostokgazprom OJSC;
from 2019 – member of the Board of Directors of Tomskgazprom JSC;
from 2019 – member of the Supervisory Board of joint stock company Wintershall AG;
from 2019 – member, Chairman of the Board of Directors of Achim Development LLC;
from 2019 – member of the Board of Directors of JSC Achimgaz;
from 2019 – member of the Board of Directors of Gazprom Kyrgyzstan LLC;
from 2019 – member of the Board of Directors of LLC «Gazpromviet»;
from 2019 – member of the Supervisory Board of Gazprom EP International B.V.).

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1968.
Graduated from the Sergo Ordzhonikidze State Academy of Management (Moscow).
2009–2019 – member of the Management Board, Deputy Chairman of the Management Board, Gazprombank (JSC);
from April 2019 – member of the Management Board, Deputy Chairman of the Management Board, Gazprom PJSC.
A PhD in Economics.

POSITIONS HELD IN OTHER ORGANISATIONS

From 2019 – member of the Board of Directors of Gazprombank (JSC);
from 2019 – member of the Board of Directors of joint stock company the non-government Pension Fund Gazfond;
from 2019 – member of the Presidium, Chairman of the Law, Banking and Finance working committee, International Business Congress (IBC) e. V.;
from 2019 – Chairman of the Board of Directors of Belgazprombank;
from 2019 – member of the Board of Directors of SOGAZ JSC;
from 2019 – member of the Board of Directors of GAZPROM Germania GmbH;
from 2019 – Chairman of the Supervisory Board of Gazprom Holding Coöperatie U.A.;
from 2019 – member of the Supervisory Board, Chairman of the Supervisory Board of Gazprom EP International B.V.V.;
from 2019 – member of the Board of Directors of Gazprom Gas-Engine Fuel LLC.

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1974.
Graduated from the Baltic State Technical University named after D.F. Ustinov, the St Petersburg State University.
2002–2019 – Head of Department, Gazprom PJSC.
2003–2019 – member of the Management Board, Gazprom PJSC.
2003–2019 – Chief Executive Officer, Gazprom Mezhregiongaz LLC.
From 2019 – Chief Executive Officer, member of the Board of Directors of RusKhimAlyans LLC.
A PhD in Economics.

POSITIONS HELD IN OTHER ORGANISATIONS

From 2003 – member of the Supervisory Board of the Union of Oil and Gas Industry Organisations «Russian Gas Society»;
from 2006 – member of the Board of Directors of FC Zenit JSC;
from 2006 – member of the Board of Directors, Chairman of the Board of Directors of Latvijas Gāze JSC;
from 2009 – member of the Supervisory Board of KazRosGas LLP;
from 2011 – member of the Board of Directors of BANK «ROSSIYA»;
from 2013 – member of the Supervisory Board of Bank RRDB (JSC);
from 2017 – member of the Board of Directors of RusGazAlyans LLC.

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1945.
Graduated from the G.V. Plekhanov Leningrad Mining Institute.
1999–2012 – Governor of the Leningrad Oblast.
A PhD in Economics. He has government and industry awards.

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1970.
Graduated from the St Petersburg State University of Economics and Finance.
From 2002 – member of the Board of Directors of Gazprom PJSC.
From 2004 – Deputy Chairman of the Management Board – Head of the Management Board Administration, Gazprom PJSC.
From 2020 – First Deputy CEO, Gazprom Export LLC; CEO, Gazprom Trading LLC.

POSITIONS HELD IN OTHER ORGANISATIONS

From 2002 – member of the Board of Directors, Chairman of the Board of Directors of Gazprom (U.K.) Limited;
from 2002 – member of the Board of Directors, Deputy Chairman of the Board of Directors of Bank GPB (JSC);
from 2002 – member of the Board of Directors, Chairman of the Board of Directors of OJSC Vostokgazprom;
from 2003 – member of the Board of Directors, Chairman of the Board of Directors of JSC Gazprom Tsentrenergogaz;
from 2004 – Chairman of the Board of Directors of OJSC Tomskgazprom;
from 2005 – member of the Board of Directors, Chairman of the Board of Directors of JSC Gazpromtrubinvest;
from 2007 – member of the Board of Directors of JSC Gazprom Space Systems;
from 2015 – chairman of the Administrative Board of Gazprom Schweiz AG;
from 2016 – member of the Supervisory Board, Chairman of the Supervisory Board of Gazprom Austria GmbH;
from 2016 – member of the Presidium, International Business Congress (IBC) e. V.;
from 2017 – member of the Advisory Board, WIGA Transport Beteiligungs-GmbH & Co. KG;
from 2017 – member of the Board of Directors, Chairman of the Board of Directors of Gazprom Transservice LLC;
from 2018 – member of the Board of Directors of Panrusgas Gas Trading Plc.;
from 2019 — Chairman of the Advisory Board of Gazprom Germania GmbH.

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1952.
Graduated from the V. I. Ulyanov (Lenin) Leningrad Electrotechnical Institute, and the Academy of National Economy under the Government of the Russian Federation.
2006–2019 – Deputy Chairman of the Management Board, Gazprom PJSC.
A PhD in Economics.

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1969.
Graduated from the St. Petersburg Technological Institute of Refrigeration Industry.
2015–2019 – Deputy Chairman of the Management Board, Gazprom PJSC.
From 2019 – Deputy Minister of Finance of the Russian Federation.
A Grand PhD in Economics.

Members of the Board of Directors, whose authority was terminated in the reporting year

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1954.
Graduated from the Leningrad Polytechnic Institute.
2017–2019 – President of FC Zenit JSC.
From 2019 — Vice-President of Gazprombank (JSC).

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1965.
Graduated from the Leningrad State University, the St Petersburg State Academy of Service and Economics, and the St Petersburg International Institute of Management.
A PhD in Economics.
2012–2019 – member of the Management Board,
2017–2019 — Head of Departmen, Gazprom PJSC.

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1966.
Graduated from Lomonosov Moscow State University.
2010–2019 – member of the Management Board, Head of Department, Gazprom PJSC.
A PhD in Geology and Mineralogy.


The members of the Board of Directors made no transactions related to the acquisition or disposal of the company shares, in the reporting year. In 2019, no claims were made against the members of the Board of Directors.

Secretary of the Board of Directors

The Secretary of the Board of Directors ensures effective ongoing communication with shareholders, coordination of the company’s efforts to protect their rights and interests, and supports the effective work of the Board of Directors.

The Secretary of the Board of Directors’ main tasks are to make sure that the Company and its officers comply with the rules and procedures of corporate governance established by Russian laws, the Company’s Charter and internal documents; to prepare and hold the General Meeting of Shareholders and meetings of the Board of Directors and its committees; to disclose information about the Company, and improve its corporate governance practices.

The Secretary of the Board of Directors is responsible for:

  • providing organisational and information support to the Board of Directors and its committees;
  • preparing and running of the General Meeting of Shareholders;
  • assisting the Chairman of the Board of Directors in organising and planning the activities of the Board of Directors;
  • arranging storage of the Board of Directors’ documents;
  • exercising control over the Board of Directors’ resolutions;
  • interacting with members of the Board of Directors, advising them on corporate governance matters, providing them with necessary documents and information;
  • disclosing information about the Company;
  • arranging interaction between the Company and its shareholders;
  • other functions in line with the Regulation on the Board of Directors, the Company’s internal documents and requests from the Chairman of the Board of Directors.

The Secretary of the Board of Directors has sufficient skills, experience and qualifications to perform his/her duties and enjoys impeccable professional reputation, while also continuing to upgrade his/her professional skills on an ongoing basis and being a notable figure in the professional community.

In order to ensure the Secretary’s independence, the Secretary is appointed by the Board of Directors based on recommendations from the Chairman. The Secretary of the Board of Directors and the Secretary of the Management Board are two different persons.

The role of the Secretary of the Board of Directors is formalised by the Regulation on the Secretary of the Board of Directors.

Interest in the authorised capital (as at 31 December 2019)
None

BIOGRAPHICAL DETAILS

Born in 1984.
Graduated from the Université des Sciences Sociales de Toulouse (France), majoring in DU European and International Business Law, and the Russian Law Academy of the Ministry of Justice of the Russian Federation, majoring in jurisprudence.
2009–2011 – Head of the Legal Department, OJSC OC Magma;
2011–2012 – Head of the Legal Section, JSC Moscow Oil and Gas Company;
2012–2014 – Head of the Legal and Corporate Affairs Section, Gazpromneft Marine Bunker LLC;
2014–September 2018 – Deputy CEO for Legal, Corporate and Property Affairs, Gazpromneft Marine Bunker LLC;
September 2018 – June 2019 – Head of the Corporate Governance Department, Gazprom Neft PJSC;
from June 2019 — Head of the Corporate and Project Support Department, Gazprom Neft PJSC.

A member of the Board of Directors of the following companies: Tomskneft VNK JSC, Nortgaz CJSC, Information Technology Service Company (ITSC LLC), Gazpromneft Lubricants Italia, TsentrCaspneftegaz LLC. A member of the Board of Directors of AS Baltic Marine Bunker, a member of the Supervisory Board of Gazpromneft Marine Bunker Balkan S. A. In Gazprom Neft International S.A., she is the member of the Supervisory Board, and its Secretary.

She does not own any shares of Gazprom Neft PJSC, and has no shares and interest in its subsidiaries.
Ms Nenadyshina has no family connections with other persons, who are members of the governance bodies and/or bodies which control financial and business operations of the company.

In 2019, Viktoriya Nenadyshina was included into the Top 50 Corporate Governance Directors Ranking of the KommersantPublishing HouseMore details on the ranking https://www.kommersant.ru/doc/4109977., and became an award winner of the 12th prize of the Russian Corporate Counsel Association (RCCA, non-commercial partnership) nominated in the «Achievement of the Year»For more information on the award, see https://www.rcca.com.ru/about/award-2019.shtml..



Report on progress made by Gazprom Neft’s Board of Directors on priority areas in 2019

As part of its work during the year, the Board of Directors remained committed to addressing the key tasks in Gazprom Neft’s priority areas, including strategic operations, investment case, oversight over asset management, investing and financing activities, improved performance and transparency of governance tools, enhancement of internal controls, and accountability of the Company’s governance bodies.

Gazprom Neft’s Board of Directors operated under the approved semi-annual work plans. The Board held 52 meetings in 2019.

Agenda items reviewed in 2015-2019 by the Board of Directors, by area
Number of meetings held by the Board of Directors in 2015–2019
Attendance at the meetings of the Board of Directors in 2019
Member of the Board of Directors Number of meetings attended by the member of the Board of DirectorsHe also presented a written opinion.
Total number of meetings, which could be attended by the member of the Board of Directors
Alexey Miller Chairman of the Board of Directors
Non-Executive Director
51 52
Vitaly Markelov
Non-Executive Director
17 17
Sergey Menshikov
Non-Executive Director
17 17
Sergey Kuznets Non-Executive Director 16 17
Famil Sadygov
Non-Executive Director
17 17
Alexander Medvedev
Non-Executive Director
28 28
Kirill Seleznev
Non-Executive Director
52 52
Alexander Dyukov
Executive Director
52 52
Vladimir Alisov
Non-Executive Director
51 52
Mikhail Sereda
Non-Executive Director
51 52
Elena Mikhailova
Non-Executive Director
52 52
Valery Serdyukov
Until December 2019 – Independent Director, since December 2019 – Non-Executive Director
51 52
Andrey Dmitriev
Non-Executive Director
51 52
Igor Fedorov
Non-Executive Director
24 24
Vsevolod Cherepanov
Non-Executive Director
24 24
Valery Golubev
Non-Executive Director
24 24
Sergey Fursenko
Independent Director
24 24
Andrey Kruglov
Non-Executive Director
14 24
Strategic development

Key issues:

  • implementation of the Gazprom Neft Development Strategy to 2030;
  • long-term development programme for the Eastern block of the Orenburgskoye oil and gas condensate field, aimed at increasing oil recovery;
  • Gazprom Neft PJSC plans for international business growth;
  • results of Gazprom Neft PJSC production entities portfolio analysis, Upstream Division development plans in terms of current assets and geological exploration projects;
  • prospects of development of the Orenburg cluster, as part of the Gazprom Neft PJSC resource base development strategy;
  • Gazprom Neft PJSC Digital Transformation Strategy approval;
  • Gazprom Neft PJSC bitumen business organisation, its results and perspectives;
  • Gazprom Neft PJSC aviation refuelling business organisation, its results and perspectives.

The Gazprom Neft Board of Directors considered and took note on the information on implementation of the Strategy 2030. Current long-term Strategy was approved by the Board of Directors in November 2018. It defines the key strategic goals in Gazprom Neft development until 2030, and the ways to achieve them, taking into account the changes in the global economy and new challenges for the industry.

The company activities in 2019 and its short-term business development plans are fully aligned with its long-term objectives, set out in the Strategy. In the Upstream segment the company retained its focus on maximising the recovery profitability by introducing new technologies and developing projects. For instance, it is continuing drilling in the Nadym-Pur-Tazovsky district, building new onshore infrastructure and facilities at the Tazovskoye and Severo-Samburgskoye fields, and at the En-Yakhinskoye and Pestsovoye fields. The company conducted seismic survey at the Kheisovsky and Severo-Vrangelevsky licence blocks on the Arctic Shelf. The company also increased its resource base, winning licensing rounds for geological prospecting, exploration and production at several blocks in the Yamalo-Nenets Autonomous Okrug, the Khanty-Mansi Autonomous Okrug-Yugra, and the Orenburg Oblast. Gazprom Neft also obtained the licences for the Blizhnenovoportovskoye field, and for geological prospecting at blocks in the western part of the Taymyr Peninsula.

Gazprom Neft successfully used machine learning to search for additional oil reserves. Based on the geological data, the neural network predicted the blocks, where oil deposits may occur. In the future, the company plans to use the new digital tool at the fields in the Noyabrsk Region – the potential of which is estimated at three million barrels of oil.

In 2019, Gazprom Neft continued to improve the efficiency in value-chain management, increasing the conversion rate and light product yield, developing its petrochemicals sector, and maintaining its market-leading position on the existing and expanding its share on the new product markets.

As part of the large-scale technical and environmental upgrade of Gazprom Neft refineries, construction of a crude oil distillation unit, hydrocracking and delayed coking units is continuing at the Omsk Refinery, the modernisation of the filtration system for a small catalytic cracking unit was completed. Construction of the Euro+ combined oil refining unit (CORU) at the Moscow Refinery is being completed, and a new light products road-transport loading facility was built. Construction of a delayed coking unit at the NIS Pančevo refinery is in its final stage. Construction of the first modern oil-refining catalyst production facility in Russia started, as part of the development of the Gazprom Neft catalyst business in Omsk. Gazprom Neft and SIBUR consolidated 100% of the authorised capital of the Poliom polypropylene plant in Omsk. Integration of assets in the oil refining and petrochemicals segments will improve the efficiency of using feedstock from the company refineries to produce high value-added products.

Gazprom Neft continued to develop its own sales network, and the expansion of its product range. The new “Gladkoye” fuel terminal in the Leningrad Oblast was commissioned as part of integrated development of fuel-supply infrastructure. Gazprom Neft continued the implementation of a strategic project to develop LNG bunkering in the Baltic basin, which is aimed at developing a new bunkering market segment in Russia. The total number of airports, of Gazpromneft-Aero (the operator of the Gazprom Neft aviation refuelling business) presence, exceeded 280. The Gazpromneft bitumen-materials range, and the geography of production and supply were expanded. A company subsidiary was established in Singapore to develop the international marine-lubricants business.

In 2019, the Board of Directors considered and took into account the information on the plans for international business development, and noted the company role as the rightful and prominent participant of the global oil and gas community, which is actively involved in forming the development agenda, and is cooperating at global forums and conferences at the highest level. Currently, the Gazprom Neft PJSC portfolio comprises over 20 projects on upstream and downstream operations outside the Russian Federation. The opportunities for participating in new projects in foreign regions, which are interesting for the company, depend on external environment. In current conditions Gazprom Neft is also considering partnership with foreign companies as an effective tool for developing Russian assets. Gazprom Neft PJSC is partnering with foreign companies in the following areas: capital-intensive assets, mature fields requiring new competencies, and high-risk projects at the prospecting surveys stage.

In 2018, the Board of Directors approved an approach to portfolio analysis of the company upstream enterprises, and ranking geological exploration in terms of priorities and efficiency. That methodology allowed improving the quality of the portfolio analysis, by ensuring additional impact due to integrating projects at early stages of geological exploration and technological analysis, with the current production projects. In 2019, the methodology was developed to implement prioritisation and analysis of uncertainty in a single portfolio-management system, rather than in separate groups of assets, projects and opportunities, taking into account both the project logic and ranking on the basis of individual indicators.

Further development of the tools for portfolio analysis is a priority for making management decisions. The methodology improvement is mainly focused on automating the portfolio analysis. Automated calculation allows improving the quality and speed of portfolio analysis, avoiding repeated work during data collection between the blocks, forming a single information space for all subdivisions, and eliminate discrepancies in the initial data.

Integrating the regular portfolio analysis of production enterprises, and ranking geological survey and production in terms of priority and efficiency of projects allow formulating a balanced plan for developing the company Upstream Division, taking into account strategic goals, and ensuring an immediate and effective response to changes in macroeconomic conditions.

In the reporting year, the Board of Directors also approved the Gazprom Neft Digital Transformation Strategy, which fully complies with the Strategy 2030 and is aimed at achieving its goals and objectives. The Digital Transformation Strategy covers the entire value chain, the management and support systems, and ecosystems of the company partners and customers. The Gazprom Neft PJSC flexibility and performance are to increase due to transforming the company business processes and business models, through systematic use of digital technologies and data-based management. Target vision of the digital transformation:

  • creating an effective organisational structure, which allows swift adaptation and end-to-end optimisation throughout the value chain;
  • achieving the100% asset potential and “Target Zero” in safety through management based on digital twins, and by reducing the impact of human error;
  • opening up new business-development opportunities, due to the partnering ecosystem and platform solutions;
  • achieving a new level in data management, IT, and the development of digital products and solutions.

In 2019, the Board of Directors considered the performance and prospects of the Gazprom Neft PJSC bitumens business. By 2019, Gazpromneft Bitumen Materials (Gazpromneft BM LLC) became a leader on the bitumen, polymer-bitumen binders (PBB) and bitumen-derivative markets, and in terms of the R&D potential in development, technologies and use of bitumen binders and asphalt concrete. Currently, Gazpromneft BM LLC is the most rapidly developing company on the Russian bitumen market. The company strategic goals by 2030: retaining leadership on the bitumen market and the PBB market in Russia, and becoming the industry leader in terms of technologies among bitumen-materials manufacturers. In the medium term, the company aims to develop a highly competitive service portfolio, expand the production and bitumen-logistics geography to ensure maximum coverage of consumers and improve the group performance, and develop innovative products ans technology solutions. The Gazprom Neft PJSC bitumen business is ready for scaling its best practices and coming on new niche markets. Therefore, the possibility of becoming a top-ten global producer of premium bitumen materials is being a key goal.

Besides, in 2019 the Board of Directors took into account the performance and prospects of the company’s aviation refuelling business. Currently, Gazprom Neft Aero LLC is the most efficient jet-fuel company on the Russian market. The company is an acknowledged industry leader in developing and using new technologies and competencies in the aviation refuelling segment, and in unique digital services for consumers. In 2019, Gazprom Neft Aero LLC updated its long-term business strategy to 2030. During that period, it expects to become a top-ten international jet-fuel company, by doubling the volume of retail fuel sales, including by considerable expansion of international business. To achieve that, further expansion of the sales-network geography and digital transformation of business are required — by introducing advanced technologies in production and accounting. Gazprom Neft Aero LLC long-term goals include improving the performance and increasing the scale of business, and achieving strategic competitive advantage, due to digital management of all production processes.

In the reporting year, the Board of Directors considered and took into account the information on implementing the Gazprom Neft PJSC Innovative Development Programme for 2018. The Programme includes the four key innovative projects:

  • developing the alkaline-surfactant-polymer flooding technology;
  • preparing the technologies for developing unconventional oil reserves (the national project to study the Bazhenov Formation);
  • implementing technologies to increase well productivity;
  • developing and starting production of oil refining catalysts – for catalytic cracking and hydrogenation process (the national «Aluminium Oxide-Based Crude Deep Conversion Catalysts» project).
Innovations

Key issues:

  • on approval of the Report on Gazprom Neft Innovative Development Programm implementation for 2018;
  • on the main outcomes and key priority areas in the company’s R&D activities in oil refining
  • on implementing oil-rim projects to ensure production volumes of liquid hydrocarbons at the Severo-Samburgskoye, Pestsovoye and at the En-Yakhinskoye fields, and subsequently sending the feedstock to the Urengoyskaya pumping station, based on the perfomance in 2018;
  • on carrying out the Action Plan to ensure hydrocarbon production during the development of the Achimov Formation blocks at the Urengoyskoye oil and gas field, and oil rims, taking into account the development of facilities, which refine and transport liquid hydrocarbons in northern parts of the Tyumen Oblast, and on the status of building oil-supply infrastructure, metering stations, and facilities supplying liquid hydrocarbons to the Transneft pipeline system and the Gazprom PJSC alternative routes system.

The Gazprom Neft Board of Directors considered and took into account the information on the main outcomes and priority areas of the company R&D activities in hydrocarbon processing. Gazprom Neft currently holds 115 patents for inventions in oil refining, petrochemicals and catalysis, 45 of which are already used in production, while the remaining solutions are prepared for commercial implementation. The company is creating and developing technologies in partnership with the leading Russian R&D institutions, which include the Boreskov Institute of Catalysis (part of the Siberian Branch of the Russian Academy of Sciences), the Center of New Chemical Technologies BIC of the Boreskov Institute of Catalysis, the St Petersburg State Institute of Technology, the Samara Polytech, etc.

As a result of the implementation of the Gazprom Neft R&D programme on catalyst-production technologies, a range of unique oil-refining catalysts for high-quality motor fuels was put into production. The Gazprom Neft highly effective cat-cracking catalysts outperform imported analogues.

The Gazprom Neft R&D programme also includes projects on developing (and improving efficiency in) oil-refining and petrochemicals technologies; such projects form a large part of the programme. In 2019, the company successfully did bench tests of the aeroforming process – the conversion of low-octane fractions into a high-octane gasoline component. The company is also actively developing processes to facilitate the conversion of heavy raw materials – such as tar, asphalt or pyrolysis resins – into high-quality bunker fuel meeting MARPOL 2020 standards, or the raw materials for hydrocracking and catalytic cracking facilities.

Gazprom Neft also formed an effective system for developing and deploying innovative applied solutions, aimed at developing catalytic systems and oil refining technologies, and expanding the product range. The company will continue systematic work on patenting new, highly effective products and technologies, and their further commercial use.

Financial and economic activity, risk management

Key issues:

  • on the debt structure and management of the Gazprom Neft Group debt portfolio;
  • on the performance of the Gazprom Neft PJSC Internal Audit and Risk Management Directorate for 2018;
  • on updating the Gazprom Neft PJSC key risks for 2019;
  • on executing the Investment Programme, the Budget (financial plan), and the financial borrowing programme of the Gazprom Neft Group for 2018, on the basis of the group performance in 2018;
  • on the progress and efficiency of implementing the Budget and the Investment Programme of the Gazprom Neft Group for 2019, on the basis of performance in the first six months of 2019;
  • on the preliminary results of performing the Investment Programme and the Budget of the Gazprom Neft Group for 2019;
  • on the draft Investment Programme and the draft Budget (financial plan), including the Gazprom Neft Group financial borrowings programme, and the Cost Optimisation (Reduction) Programme of the Gazprom Neft Group for 2020, and the forecast to 2022;
  • on loans from Russian banks.

The Gazprom Neft Board of Directors is giving careful attention to control over the Gazprom Neft Group financial and business operations, and its investment activity.

Despite limited opportunities to attract long-term financing in foreign currency, the Gazprom Neft Group achieved considerable results in terms of managing its debt portfolio:

  • optimising the portfolio structure by increasing the share of long-term borrowings in rubles;
  • increasing the average portfolio maturity, and simultaneously reducing the interest rate on the debt in rubles;
  • performing the financial borrowings programme, approved as part of the 2019 budget (financial plan), in the required volume, and using the most effective tools;
  • reducing the Net Debt/Operating Profit ratio as at 31 December 2018, compared to 31 December 2017, to 0.70 (the reduction by 0.03 in absolute terms, and by 4% in relative terms).

In 2019, the Board of Directors also determined the Gazprom Neft Group strategic performance indicators for 2019–2021. The following documents were approved:

  • the Gazprom Neft Group Budget (financial plan) for 2019, including the financial borrowings programme;
  • the Gazprom Neft Group Investment Programme for 2019;
  • the Gazprom Neft Group Cost Optimisation (Reduction) Programme for 2019.

The drafts of the Investment Programme, the Budget and the Cost Optimisation (Reduction) Programme for 2020, and the forecast to 2022 were also considered.

In the reporting year, the Board of Directors carried out the performance assessment of the company risk-management and internal-control system. The Board of Directors considered information on the Gaprom Neft PJSC risk-management system, the assessment results, and updates on the main risks for 2019 at its in-person meetings throughout 2019. In general, the company risk-management and internal-control system was recognised to be effective.

The company main risks were assessed, and information on them was updated due to the work in all areas of the integrated risk-management framework, including development and introduction of tools, methods for analysis and risk management, and increasing the level of risk-management competencies of the staff.

The company is updating the information on its risks in accordance with regulatory and methodological documents, which govern the functioning of the Integrated Risk-Management Framework (IRMF)The Risk Management Policy (SK-11.03.01, approved on 7 February 2013), the Master Standard for the Integrated Risk Management Framework (OSK-11.07, approved on 1 March 2016), and the Methodology Guidelines for the Risk Management Process (M-11.07-01, approved on 1 March 2016).. It is based on a bottom-up approach, starting from the company subsidiaries, and involving all the key managers and experts at subsidiaries, divisions, and the Gazprom Neft Management Board.

The company subsidiaries are reassessing risks, developing measures to manage them, and approving risk registers with respective functions and supervising subdivisions at the Gazprom Neft Corporate Centre. The most significant risks of the company subsidiaries are being consolidated to form the risk registers of divisions, used as a basis for drafting the company key-risk register, to be approved by the Management Board.

To improve the quality of information on the Gazprom Neft PJSC risks, in the reporting period the company implemented initiatives to develop and introduce tools, methods for analysis and risk-management (including quantitative risk-assessment, simulation modelling, and the bow-tie and decision-tree methodologies). To improve staff competencies in risk management, the Monitoring Division of the Risk-Management Framework (MDRMF) developed new training modules, organised and held training events for the company employees.

The report on the areas of developing internal control at Gazprom Neft PJSC in 2018, and the internal-control development plan for 2019, also underwent preliminary consideration by the Audit Committee of the Board of Directors. The main projects to develop internal control, implemented in the reporting period, were related to assisting the business further development of control procedures in the company business processes (selling petrochemicals and liquefied hydrocarbon gas, selling bitumen materials wholesale, conducting geological exploration, and developing the resource base).

Social activity, industrial safety and environment

Key issue:

  • on the programme on utilisation and more effective use of associated petroleum gas (APG) carried out in 2018, and future plans for 2019−2021.

Gazprom Neft PJSC is aiming to ensure a required level of APG utilisation, and simultaneously start commercial development of greenfields, and increase oil and gas production. The Board of Directors considered the information on the company events and plans for APG utilisation at the current assets, and increasing the efficiency of its use in accordance with the programme on utilisation and more effective use of associated petroleum gas. An active investment policy and timely implementation of programme events are to ensure that the utilisation rate is retained, and that the value-added APG use in the company reaches 95% by 2022, with gas production growth.

Corporate governance

Key issues:

  • on approving participation of the members of the Gazprom Neft PJSC Management Board in governance bodies of organisations;
  • on convening General Meetings of Shareholders;
  • on reorganising subsidiaries, and increasing the authorised capital of Gazprom Neft PJSC companies;
  • on approving the Regulations on the Procurement of Goods, Works and Services by Gazprom Neft PJSC;
  • on approving the Regulation on Insider Information;
  • on approving the External Audit Policy of Gazprom Neft PJSC, its subsidiaries and organisations.

The Regulations on the Procurement of Goods, Works and Services of Gazprom Neft PJSC, approved by the company Board of Directors, are the main document governing the procurement of Gazprom Neft PJSC and its subsidiaries. The Regulations provide for establishing and approving a single annual procurement plan for the Gazprom Neft Group, and forming a single responsibility centre to control procurement.

In 2019, the Board of Directors approved the External Audit Policy of Gazprom Neft PJSC, its subsidiaries and organisations. The Policy sets out the main principles of organising and conducting the external audit of Gazprom Neft PJSC and its subsidiaries, the procedure and criteria for selecting auditors, and approaches to ensuring that the auditors comply with the principles of independence and absence of conflicts of interest.

To meet statutory requirements related to insider information, the Board of Directors approved a revised version of the Regulation on Insider Information of Gazprom Neft PJSC, which determines the periods when insiders are prohibited from making transactions with the company shares. The powers of the Chief Executive Officer were expanded in terms of approving the list of the company insider information, and appointing a dedicated subdivision, which is to exercise internal control to prevent and identify unauthorised use of the insider information.

Committees of the Gazprom Neft Board of Directors

The company has two committees of the Board of Directors: the Audit Committee, and the Human Resources and Compensation Committee.

Audit Committee

The Audit Committee supervises the company financial and business operations. Its members are elected by the Board of Directors, and the Committee acts on the basis of the Charter and internal regulations. The Committee competency and duties cover the following key areas: accounting (financial) statements, consolidated financial statements, risk management, internal control and corporate governance (in terms of internal audit), internal and external audit, and combating illegal actions.

The Audit Committee does the following as part of its duties:

  • assisting the Board of Directors controlling the company financial and business operations;
  • assessing the effectiveness of internal control systems, including mechanisms for controlling preparation and submission of financial and other statements, its completeness and accuracy;
  • monitoring the risk-management system;
  • promoting constructive communication with an external auditor, bodies controllling the financial and business operations, and the company internal-audit subdivisions.

The Committee acitvities are directly related to the work plan of the Board of Directors, and include consideration of the following issues: accounting (financial) statements, consolidated financial statements, risk management, internal control and corporate governance, internal and external audit, and combating illegal actions.

The Committee membership, status, work procedures, competency and functions, the procedure for convening and holding meetings, formalising resolutions, and the responsibility of the Committee members are set out in the Regulation on the Committee.

The members of the Board of Directors have sufficient relevant experience and skills in finance, which are necessary for working with financial statements, analysing business, and financial management. The Audit Committee does not include the company senior executives.

The Committee members participated in all meetings. In accordance with the issues under consideration, the following persons were invited to the Committee meeting: representatives of the external auditor, the Management Board members, the chief accountant, the head of the Internal Audit and Risk Management Directorate, and heads of the company departments.

The Committee prepared relevant recommendations on the issues which require recommendations from the Board of Directors.

During the reporting period, the Committee fully carried out its tasks.

The Audit Committee membership

From 22 June 2018 through 13 June 2019:
  • Mikhail Sereda (Chairman)
  • Valery Golubev
  • Elena Mikhailova
From 19 July 2019 through 31 December 2019:
  • Mikhail Sereda (Chairman)
  • Andrey Dmitriev
  • Elena Mikhailova

In accordance with the approved Work Plan for 2019, the Audit Committee held 14 meetings and considered the following key issues:

  • on the performance of the Gazprom Neft PJSC Internal Audit and Risk Management Directorate for 2018;
  • on updating the Gazprom Neft PJSC key risks for 2019;
  • on assessing candidates for becoming the Gazprom Neft PJSC auditors, and providing recommendations for the Gazprom Neft PJSC Board of Directors;
  • on the Gazprom Neft Group consolidated financial statements (IFRS) for 2018;
  • on the results of the external audit for 2018;
  • on the interim condensed financial statements (unaudited) of the Gazprom Neft Group (IFRS) for the three, six, and nine months of 2019;
  • on the areas of developing the internal control in Gazprom Neft PJSC for 2018, and on the plan for developing the internal control for 2019;
  • on the results of measures for ensuring internal-control procedures in the Gazprom Neft PJSC information systems for 2018;
  • on the Gazprom PJSC 2018 draft Annual Report;
  • on the programme of guarantees and improving the internal-audit quality of Gazprom Neft PJSC in 2018;
  • on the results of assessing the Gazprom Neft PJSC external auditor’s work in 2018;
  • on the External Audit Policy of Gazprom Neft PJSC, its subsidiaries and organisations;
  • on information disclosed to third parties, including analytical and rating agencies, and on disclosing indicators not included in the IFRS;
  • on determining the amount of payment for the auditor services for 2019;
  • on the performance of the Gazprom Neft PJSC Internal Audit and Risk Management Directorate for the first six months of 2019;
  • on preparing proposals for a competition commission to select an audit organisation to carry out the mandatory annual audit of Gazprom Neft PJSC;
  • on the Risk Management Policy and the Internal Control Policy of Gazprom Neft PJSC;
  • on the results of internal control, aimed at counteracting unauthorised use of insider information for the first six months of 2019;
  • on preparing the Gazprom Neft PJSC plan of audits for 2020–2022.
Number of meetings of the Board of Directors’ Audit Committee
Indicator 2015 2016 2017 2018 2019
Number of meetings 8 11 12 13 14
Number of issues considered 22 30 34 35 29
Human Resources and Compensation Committee

The Human Resources and Compensation Committee is an advisory body of the Board of Directors. The Committee membership, status, work procedures, competency and functions, the procedure for convening and holding meetings, formalising resolutions, and the responsibility of the Committee members are set out in the Regulation on the Human Resources and Compensation Committee.

In accordance with the Regulation, the Committee main tasks are the following: preliminary comprehensive examination of the issues within the Board of Directors competency, and preparing recommendations for decision-making by the Board of Directors in relation to improving the work procedures of the Board of Directors and its committees, the company work in terms of HR policy and the management succession system, compensation for members of governance bodies and the company Audit Committee.

The Human Resources and Compensation Committee duties are the following:

  • analysing and assessing the Board of Directors membership in terms of specialisation, expertise, independence, and of its members involvement in the Board work;
  • determining the priority areas for strengthening the Board membership;
  • initiating and monitoring self-assessment or external assessment of the Board of Directors and its committees, in terms of their performance in general, and individual contribution of directors in the work of the Board of Directors and its committees;
  • preparing a report on the results of self-assessment or external assessment, to be included in the company Annual Report;
  • approving the programme of an introductory course for newly elected members of the Board of Directors, aimed at effectively making new directors familiar with business practice, organisational structure, the key assets and strategy, the company key employees, and with the work procedures of the Board of Directors; supervising the implementation of the introductory course.

The Committee prepared relevant recommendations on the issues, which require recommendations from the Board of Directors.

During the reporting period, the Committee fully carried out its tasks.

In the reporting period, the Human Resources and Compensation Committee formed an opinion on independence of each candidate for the Board of Directors. According to the Human Resources and Compensation Committee, the following conclusions were made due to analysing the candidates:

  • The expertise and education, knowledge and great professionalism of the candidates for the Board of Directors will enable them to perform the duties of the Board of Directors members, and to directly assist the effective work of the entire Board of Directors in the interests of the company and its shareholders.
  • All candidates have excellent professional and personal reputation, which means, among other things, absence of criminal liability at present or in the past.
  • The Board of Directors is to include one executive director, which complies with the recommendations of the Corporate Governance Code.
  • At the end of the reporting year, no independent directors are to be included in the Board of Directors.
  • The Board of Directors will be sufficiently balanced in terms of gender and age.

The Committee prepared relevant recommendations on the issues, which require recommendations from the Board of Directors.

During the reporting period, the Committee fully carried out its tasks.

Membership of the Human Resources and Compensation Committee

From 22 June 2018 through 13 June 2019:
  • Igor Fedorov (Chairman);
  • Andrey Kruglov
  • Vsevolod Cherepanov
  • Sergey Fursenko (Independent Director).
From 19 July 2019 through 1 September 2019:
  • Vladimir Alisov (Chairman);
  • Valery Serdyukov (Independent Director);
  • Igor Fedorov
From 25 September 2019 through 31 December 2019:
  • Sergey Kuznets (Chairman);
  • Valery Serdyukov (Independent Director until December 2019);
  • Vladimir Alisov

In 2019, the Audit Committee held six meetings and considered the following key issues:

  • on the proposals from shareholders regarding candidates for the Board of Directors and the Audit Committee of Gazprom Neft PJSC;
  • on assessing the candidates for the Gazprom Neft PJSC Board of Directors;
  • on the compensation for the members of the Gazprom Neft PJSC Board of Directors;
  • on the compensation for the members of the Gazprom Neft PJSC Audit Committee;
  • on participation of the members of the Gazprom Neft PJSC Management Board in governance bodies of other organisations;
  • on appointing the First Deputy CEO of Gazprom Neft PJSC;
  • on assessing the performance of the Gazprom Neft PJSC Board of Directors.
Number of meetings of the Board of Directors’ Human Resources and Compensation Committee
Indicator 2015 2016 2017 2018 2019
Number of meetings 6 7 6 4 6
Number of issues considered 10 10 10 5 7

Assessing the Board of Directors work

In accordance with recommendations of the best corporate governance practices, the Board of Directors conducts annual analysis and self-assessment of its performance. The Human Resources and Compensation Committee approved new assessment criteria and deemed it advisable to engage an independent service provider for the Board’s review at least once in three years.

The performance of the Gazprom Neft PJSC Board of Directors is assessed in the form of a survey (questionnaire). The questionnaire includes about 30 questions regarding the main areas of activity: membership, the nature of activity, the Board of Directors procedures, performance assessment of the Chairman of the Board of Directors, its Committees and Secretary, and the level of relations within the Board of Directors, etc.

Analysis of the questionnaires of the Board of Directors members allows quickly understanding the current condition of the key Board of Directors processes, including strategy, the principles of business, the company performance management, organising the work of the Board and its committees, and assessing contribution of the Board of Directors members, including its Chairman and Secretary.

The analysis of the Board of Directors work, conducted in the reporting period, showed improvement of the following: determining the company strategic plans, interaction with executives, and how the Board of Directors members are informed. On the basis of the assessment, the issues related to whether information on implementing development plans, and analysing the company key performance indicators was provided in a timely manner, and regularly, were included in the areas to be developed.

In general, the activity of the Board of Directors, its Chairman and Secretary, the Audit Committee, and the Human Resources and Compensation Committee is highly effective. The number of the Board of Directors members meets the company requirements. The level of the Board of Directors engagement in analysing critical risks, and in analysing the achievement of management performance indicators, is high. The Board of Directors assists and supports its members in developing their competencies and knowledge.

The Board of Directors achieved a high level in many issues related to meeting efficiency. The level of communication between the Non-Executive Director and the Chairman of the Board of Directors is also high. All Committees of the Board of Directors and its Secretary are functioning effectively.

Onboarding of newly elected members of the Board of Directors

To ensure effective work of the Board of Directors, the company has the Onboarding Programme for newly elected members of the Board of Directors. The Programme goals include making the newly elected members of the Board of Directors familiar with the company production, financial and business activities, and with its corporate-governance practice, as quickly and effectively as possible.

The Programme provides for the following measures:

  • meeting with the Chairman of the Board of Directors, discussing the work plan of the Board of Directors, and the company priority activities; determining the future role of a director in the Board of Directors, on the basis of his or her expertise;
  • meeting with senior managers, receiving the main information on the company business, discussing the company operational and financial structure, and introduction to the Management Board;
  • consultations with the Secretary of the Board of Directors. The Secretary of the Board of Directors describes procedural and legal aspects of the work of the Board of Directors and its committees, clarifies the rights and duties of a Board member, issues related to paying remuneration and compensation, and the liability and liability insurance;
  • becoming familiar with the company main documents, and the written Guidelines for the Board of Directors member, with description of the key business issues, internal procedures, and organisation of the work of the Board of Directors and its Committees;
  • the Programme may also include visits to the company main facilities, participation in public events, and meetings with the key managers.

The Human Resources and Compensation Committee is monitoring the Programme implementation.

Throughout 2019, the Board of Directors members were re-elected twice, and five new directors were included in it: V. Markelov, S. Kuznets, S. Menshikov, F. Sadygov, and A. Medvedev; they hold management positions in the Gazprom Group companies, and have the main information on the company business; therefore, they did not have to undergo the entire onboarding programme. The new directors were familiarised with the rules of the Board of Directors work, their rights and duties, issued related to paying remuneration and compensation, and liability insurance.