RNG SUSTAINABLE DEVELOPMENT REPORT

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RNG SUSTAINABLE DEVELOPMENT REPORT
RNG
SUSTAINABLE
DEVELOPMENT REPORT

      2019
RNG SUSTAINABLE DEVELOPMENT REPORT
Contents                                         6   Development strategy
                                                                 6.1 Mining development
                                                                 6.2 Innovation
                                                                 6.3 Quality control system

                                                     38-58       6.4 Safety and labor protection
                                                                 6.5 Fire safety
                                                                 6.6 Industrial and technical safety
                                                                 6.7 Traffic safety service
                                                                 6.8 Digitalization of process control systems
                                                                 6.9 Environmental care

 1   Sustainable Development Priorities
     and reporting principles                    7   Regional presence

     4-7                                             59-63        7.1 Climatic and environmental conditions
                                                                  7.2 Infrastructure projects
                                                                  7.3 Social projects
                                                                  7.4 Educational projects

 2   Key Sustainability Indicators
                                                 8   Corporate Social Responsibility

     8-11                                            64-73        8.1 Personnel Management
                                                                  8.2 Social projects in Mirny
                                                                  8.3 Interaction with the small indigenous minorities of the North
                                                                  8.4 Assistance to the villages of Suldyukar and Tas-Yuryakh
                                                                  8.5 Natural Park Support
                                                                  8.6 Participation in cultural projects

 3   Message from CEO of RNG company
                                                 9   Social Activity

     12-15                                           74-77       9.1 Quality Day Conference
                                                                 9.2 The first oil and gas forum

 4   Board of Directors
     and Management                             10   International Cooperation

     16-21                                           78-82       10.1 Technological cooperation
                                                                 10.2 Membership in international organizations
                                                                 10.3 Membership in Russian social organizations
                                                                 10.4 Membership in self-regulatory organizations

 5   Company profile
                 5.1 Resource base
                 5.2 Financial performance
                                                11   Glossary

                 5.3 Key facts

     22-37       5.4 Capital construction
                 5.5 Logistics                       83-85
                 5.6 ISO Standards
                 5.7 Developed infrastructure
RNG SUSTAINABLE DEVELOPMENT REPORT
1
Sustainable
Development
Priorities
and Reporting
Principles
RNG SUSTAINABLE DEVELOPMENT REPORT
RNG / SUSTAINABLE DEVELOPMENT REPORT                                           RNG / SUSTAINABLE DEVELOPMENT REPORT

    Sustainable Development Priorities

                          Innovation                            Environmental care

                         Investments                            Technical and Industrial
                         in human capital                       Safety

                         Partnerships
                         with international                     Charity
                         companies

                         Sustainable
                                                                Territorial Development
                         business model

                                              Reporting Principles
          ISO            ISO Compliant                The methodological basis for the preparation of the Sustainability Report is
                                                   based on the standards for the Global Reporting Initiative, a global reporting
                                                   initiative.
                                                     RNG annually publishes information on sustainable development projects
                                                   on the official website and thereby adheres to the principles of transparency
                                                   and openness in its work.

6                                                                                                                                    7
RNG SUSTAINABLE DEVELOPMENT REPORT
2
Key Sustainability
Indicators
RNG SUSTAINABLE DEVELOPMENT REPORT
RNG / SUSTAINABLE DEVELOPMENT REPORT                                                              RNG / SUSTAINABLE DEVELOPMENT REPORT

                                                             0.9
     Oil production                                                  Revenue                                                     25.958

     million tons                                                    bln. RUB

                                            0.09    0.1
                                                                                                                   2.135
                                                                                                    0.013
                                            2017   2018      2019                                   2017           2018           2019

     Gas production                                          0.9
                                                                     Operating costs                                             17.027
     bln. cubic meters                                               (including production costs,
                                                                     administrative expenses
                                                                     and sales expenses),
                                                                     bln. RUB
                                                                                                                   3.244
                                                   0.05                                             2.032
                                        0.0003
                                            2017   2018      2019                                   2017           2018           2019

     Year-end assets                                        40.653   Acquisition                                                 19.097
     bln. RUB                                                        of materials,
                                        24.196
                                                   26.797
                                                                     equipment and                                 10.165

                                                                     services                       8.439

                                                                     bln. RUB

                                            2017   2018      2019                                   2017           2018           2019

     Authorized                                                      Salaries, other                                              3.8

     capital                                                         payments and                                   3.2
     bln. RUB                               7.5     7.5      7.5
                                                                     employment
                                                                     benefits                        2.6

                                                                     bln. RUB

                                            2017   2018      2019                                   2017           2018           2019

     Extra capital                                                   Payments to the                                             0.724
     bln. RUB
                                                                     FCMIF and PFR
                                                                                                                   0.626
                                                                     bln. RUB

                                        1,218      1,218    1,218                                   0.492

                                            2017   2018      2019                                   2017           2018           2019

                                                                     Taxes and
                                                                     Mandatory                                                    5.4

                                                                     Payments
                                                                     bln. RUB

                                                                                                                   0.926
                                                                                                    0.28

                                                                                                    2017           2018           2019

10                                                                                                                                            11
RNG SUSTAINABLE DEVELOPMENT REPORT
3
Message from CEO
of RNG company
RNG SUSTAINABLE DEVELOPMENT REPORT
RNG / SUSTAINABLE DEVELOPMENT REPORT                                                RNG / SUSTAINABLE DEVELOPMENT REPORT

                                            Message
                                            from CEO
                                            of RNG
                                            company

                                              The basic values of our company include the comprehensive development of human
                                            potential and active participation in economic, social, cultural and environmental
                                            projects in the region where we are present.
                                               The most important part of RNG JSC policy is industrial and technical safety and
                                            labor protection. The company annually allocates financial resources to maintain a
                                            high level of security in the areas of exploration, production and transportation of
                                            hydrocarbons. The Eastern blocks of the Srednebotuobinsky oil and gas condensate
                                            field have a process control and emergency protection system manufactured by the
                                            American company Emerson, the leading manufacturer of such equipment.
                                              The company prioritizes environmental protection. RNG JSC environmental experts
                                            constantly monitor the state of the air, soil, water resources and biological diversity.
                                              One of the key tasks for us is to participate in the social, cultural and economic
                                            development of the Republic of Sakha (Yakutia). Our employees participate in a
                                            number of educational projects as experts. The company is the general sponsor of
                                            publishing projects on Yakutia’s history and nature. We provide financial support to
                                            the small indigenous minorities of the Far North and are in constant contact with the
                                            leaders of the tribal communities.
                                              RNG JSC is one of the largest employers in the Mirny district of the Republic of
                                            Sakha (Yakutia). The company employs two and a half thousand people. And we
                                            strive to create a large number of jobs, while ensuring the protection of the rights of
                                            each employee.
                                              The company’s mission is to maintain and strengthen its own economic potential
                                            through the current business model, fulfillment of all obligations to the state,
                                            employees, contractors, creditors and investors, as well as contributing to the
                                            development of the region in which we operate.

                                                                                                                 Vladimir Rakitin

14                                                                                                                                     15
RNG SUSTAINABLE DEVELOPMENT REPORT
4
Board of Directors
and Management
RNG SUSTAINABLE DEVELOPMENT REPORT
RNG / SUSTAINABLE DEVELOPMENT REPORT                                                                                                                     RNG / SUSTAINABLE DEVELOPMENT REPORT

     Board of directors
                             Frederick Matthew Thomas Ponsonby (born 1958) is a British peer                                                Graduated from Novosibirsk State University (NSU), Faculty of
                             who was appointed a Lord on April 19, 2000.                                                                    Geology and Geophysics with a degree in Geophysical Methods of
                             From 1984 to 1986, he worked as an oil engineer at Charterhouse                                                Search and Exploration of Minerals in 1973; Gennady attended the
                             Petroleum.                                                                                                     graduate school of the Faculty of Mathematics of NSU, specializing
                                                                                                                                            in “Development of methods for solving inverse problems of
                             From 1989 to 1992, he worked as a senior petroleum engineer at                                                 geophysics with the aim of forecasting for oil and gas”.
                             LASMO PLC.
                                                                                                             Gennady ALFERENKO              From 1973 to 1985 he worked as the head of the NSU research group
                             From 1994 to 1998, he worked as chief engineer at Phibro Energy,                                               for forecasting oil and gas fields in Eastern Siberia and Sakhalin.
                             being responsible for international research and production projects.           Member of the Board
                                                                                                             of Directors                   From 1985 to 1992, he was the creator, president and Chairman of
                             Lord Ponsonby was a non-Executive Director of the Emerald Energy                                               the Board of Directors of the Social Inventions Fund.
                             PLC from August 15, 2003 to December 1, 2008 and Chairman of the
     Frederick               Board of Directors of Yakut Energy Limited (formerly major shareholder                                         In 1992, he served as Chairman of the Board of Directors of the
     Matthew Thomas          of Taas-Yuryakh Neftegazodobycha) from January 2013 to the end of                                              Europe-America 500 international consortium to organize and
                             2013 and Aladdin Oil & Gas AS since July 20, 2010.                                                             finance the commercial launch of a satellite from the Plisetsk Space
     PONSONBY                                                                                                                               Station to the US Pacific (Seattle) with the participation of the
                             Lord Frederick Matthew Thomas Ponsonby was Chairman and CEO                                                    Russian Military Industrial Complex, the Naval Space Forces and
     Chairman of the Board   of Rosehill Energy PLC. He was appointed to several EU government                                              the Naval fleet.
                             bodies, including the Council of Europe in 1997-2001 and the
     of Directors            Organization for Security and Cooperation in Europe in 2001-2010.                                              From 1994 to 1998, he worked as the head of the National Fund and
                                                                                                                                            the Strategic Resources of Russia Forum.
                             He is the President of the British-Uzbek public organization.
                                                                                                                                            From 1998 to 2000 he worked as the director of Arthur Andersen
                             Currently, Lord Ponsonby is the Chairman of the Board of Directors                                             Company, organizing meetings of the leaders of direct investment
                             of the Eastsib Holding Company Limited and RNG, its wholly owned                                               in the Russian economy.
                             subsidiary.
                                                                                                                                            From 2001 to 2002, he worked as an Advisor to the Chairman of the
                                                                                                                                            Management Board of JSC Gazprom Bank, and Deputy Chairman of
                                                                                                                                            the Strategic Planning Council; member of the analytical working
                                                                                                                                            group on long-term investments in the gas industry under the
                                                                                                                                            Administration of the President of Russia; Member of the Patriarchal
                             Nikolai Pinchuk holds a PhD in Economics. He was awarded the title                                             Board of Trustees for the revival of the Valaam Monastery.
                             of Distinguished Geologist (the Republic of Sakha (Yakutia).                                                   From 2002 to 2007 he worked as Director for Strategic Development
                             He is recognized as a Russian Federation Class II Active State Adviser.                                        at Ernst & Young; Member of the Board of the Council for the
                                                                                                                                            Economic Revival of the Russian Orthodox Church, chaired by His
                             Since 1993, he has held the office of supervisor at the Regional Policy                                        Holiness Patriarch of Moscow and All Russia Alexy II, Knight of the
                             Department and is a panel member of the Russian State Committee                                                Order of St. Sergius of Radonezh II degree. Since 2003 - Member of
     Nikolai PINCHUK         for Geology and Use of Mineral Resources.                                                                      the Board of the Valery Gergiev Foundation.
                             From 1996 to 2001, he was the Russian Federation Deputy Minister                                               From 2005 to 2008 - Member of the Board of Directors, Advisor to
     Member of the Board     of Natural Resources.                                                                                          the President of CJSC Standard Bank.
     of Directors
                             In 2002, he chaired the Russian Fund for Geological Heritage.                                                  From 2008 to 2011 - Senior Advisor to DLA Piper, Russia.
                                                                                                                                            Since 2007 - Strategic Advisor to PwC, Russia.
                                                                                                                                            Since May 15, 2020 - Member of the Board of Directors of RNG.

                             From 1999 to 2000, Yury Vilochkin held the position of Deputy Head
                             of Administration for the Russian Ministry of Railways.                                                    Alexander Bondarenko is a member of the Association of
                             From 2004 to 2010, he was the Vice President at JSCB EVROFINANCE                                           International Petroleum Negotiators (AIPN), Guild of Investment
                             MOSNARBANK.                                                                                                and Financial Analysts (GIFA) and the Chartered Institute of Supply
                                                                                                                                        and Procurement (CISP).
                             From 2010 to 2013, he worked as the Chief Security Officer for PJSC
                             Sberbank (Northwest Branch).                                                                               In 2000-2014 he held the positions of Senior Vice President,
     Yury VILOCHKIN                                                                                                                     Deputy President and Chairman of the Management Board at JSCB
                             From 2013 to 2014, he was the Vice President at “Soyuz” Corporation.                                       EVROFINANCE MOSNARBANK.
     Member of the Board     From 2014 to the present, he has been the First Deputy Chief Executive          Alexander BONDARENKO
     of Directors                                                                                                                       In 2009–2016 he was a partner at the International Law Firm Wragge
                             Officer of OJS “Intestate Development Corporation”.
                                                                                                             Chairman of the Investment Lawrence Graham CIS LLP.
                                                                                                             Committee to the Board     From 2002 to 2006 he was a member of the Board of directors at
                                                                                                                                        NTV, TNT and NTV-Plus TV channels.
                                                                                                             of Directors
                             Vasiliy Kholmogorov holds the title of Distinguished Lawyer (Republic                                      From 2005 to 2010 he was a member of the Board of directors at
                             of Sakha (Yakutia) and Russia). He is a Distinguished Officer at Russia’s                                  PRIME-TASS Business News Agency.
                             Investigative Committee and a Distinguished Officer with the Russian
                                                                                                                                        From 2010 to 2011: Member of the Moscow Exchange (MOEX) Board’s
                             Federation Prosecutor General’s Office.
                                                                                                                                        Corporate Governance Committee and Member of the National
                             From 1990 to 1994, he worked as a prosecutor in the Republic of Sakha                                      Settlement Depository Board’s Internal Audit Commission
                             (Yakutia).
     Vasiliy KHOLMOGOROV                                                                                                                In 2013–2014 he was a supervisory director in JSCB EVROFINANCE
                             From 1994 to 2004, he was the Russian Federation Deputy Prosecutor                                         MOSNARBANK.
     Member of the Board     General. In 2000, he was also appointed as the head of the Main Investigative
                                                                                                                                        In 2008-2013 - Chairman of the Board of Directors, member of the
     of Directors            Department at the Russian Federation Prosecutor General’s Office.
                                                                                                                                        Board directors of Taas-Yuryakh Neftegazodobycha LLC.
                             From 2004 to 2006, he worked as the Advisor to the Russian Federation
                             Prosecutor General and was awarded the Order of the Badge of Honour.

18                                                                                                                                                                                                                 19
RNG / SUSTAINABLE DEVELOPMENT REPORT                                                                                                    RNG / SUSTAINABLE DEVELOPMENT REPORT

     Management board
                               In 2008, Vladimir Rakitin graduated from the Plekhanov                                       From 1986 to 2000, Sergey Nazarov worked as the Lead
                               Russian Economic University, majoring in Finance and Credit.                                 Geologist of the Production Department and Head of
                                                                                                                            Reser voir Engineering Depar tment for SNGDU-2 at
                               In 2013, he received his PhD in Economics.
                                                                                                                            Nizhnevartovskneftegaz (which was later restructured in
                               From 2007 to 2010, he worked as the Direct Investment Project                                OJSC Tyumen Oil Company).
                               Manager at EVROFINANCE MOSNARBANK.
                                                                                                                            From 2001 to 2005, he was the Chief Geologist at the oil and
                               From 2010 to 2014 he was a senior tax advisor at the Moscow                                  gas production directorate and the Chief Geologist at OJSC
     Vladimir RAKITIN          office of Lawrence Graham (CIS) LLP.                                                         Orenburgneft, a subsidiary of TNK-BP.
                                                                                               Sergey NAZAROV
     CEO                                                                                                                    From 2005 to 2010, he was the Deputy Chief Executive Officer
                                                                                               Deputy CEO,                  and Chief Geologist at LLC “Chepakovskoye” Oil and Gas
                                                                                               Chief Geologist              Production Company.
                                                                                                                            From 2010 to 2011, he worked as the Deputy Chief Executive
                                                                                                                            Officer and Chief Geologist for LLC RN-Sakhalinmorneftegaz.
                                                                                                                            From 2012 to 2014, he was the Chief Geologist at LLC Taas-
                                                                                                                            Yuryakh Neftegazodobycha.

                               From 1998 to 2011, Evgeny Cherykayev held the position of
                               Oil and Gas Production Foreman, Lead Technologist of the Oil
                               and Gas Production Workshop, Shift Supervisor at the Central
                               Dispatch Office, and Deputy Head of the Central Dispatch
                               Office at OJSC Orenburgneft.
                               Evgeny Cherykayev held the position of Chief Engineer at
                               Taas-Yuryakh Neftegazodobycha LLC.
     Evgeny CHERYKAEV
     Deputy CEO,
     Chief Engineer                                                                                                         Konstantin Shikin has vast experience in the construction
                                                                                                                            of oil and gas facilities in Eastern Siberia; he is the holder of
                                                                                                                            various personal awards, such as the Order of Friendship and
                                                                                                                            the Order of the Badge of Honour. He was awarded the title
                                                                                                                            of Emeritus Builder of the Russian Federation.
                                                                                                                            In 2005 -2015 he was a CEO at Vostoksibelektromontazh.
                                                                                                                            He is al so a member of Board of directors at PJSC
                                                                                               Konstantin SHIKIN            Elektromontazh.

                               From 2002 to 2007, Aleksandr Uskov was the Lead Engineer for    Deputy CEO at LLC
                               Pipeline Construction at OJSC Surgutneftegaz, “Fedorovskneft”   VostSibSpetsMontazh
                               Oil and Gas Production Department.                              (wholly-owned subsidiary
                                                                                               of RNG Group of Companies)
                               From 2007 to 2012, he was the Supervisor for Technical
                               Construction Supervision at the Uvat Project led by LLC TNK-
                               Uvat.
                               From 2012 to 2014, he was the head of a stand-alone Tyumen
     Alexander USKOV           division at LLC Taas-Yuryakh Neftegazodobycha.
     Deputy CEO,
     Head of the Capital
     Construction Department

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5
Сompany
profile
RNG / SUSTAINABLE DEVELOPMENT REPORT                                                                                                                   RNG / SUSTAINABLE DEVELOPMENT REPORT

     5.1 Resource base                                                                      5.2 Financial performance
        In August 2019, RNG the Eastern blocks of the Srednebotuobinsky oil and                The company strives to boost its investment appeal through the effective implementation
     gas condensate field (EB SB OGCF) were put into commercial operation. On               of projects and strong overall financial performance.
     01/01/2018, the volume of recoverable reserves (P1 + P2 categories) within the
     licensed subsoil area was equal to 27.8 million tons of oil, a fact confirmed by the
     State Committee for Mineral Reserves (protocol No.528484 from 26/12/2017).
     The field is being developed based on the “Technological Scheme of Development         Capital Investment, mln. RUB                                                            EBITDA, bln. RUB
     for the Eastern blocks of the Srednebotuobinskoye Oil and Gas Condensate Field”
                                                                                            1,308                            592 1,808                                  835
     (Protocol of the Central Development Commission No. 7187 from 26/12/2017). Its
     gas reserves are equal to 14.3 bln m3.                                                                                                                                                           4.9         4.9
                                                                                                                              56                                         26
        By the beginning of 2020, RNG had produced the first million tons of oil
                                                                                                                                                     QIII                             2.4   2.8
     from the EB SB OGCF. The average daily production volume is now more than                                   QI
     3 thousand tons, compared to 1.6 thousand tons a year earlier. The company                                               71                                         75
     sends the extracted oil to the East Siberia – Pacific Ocean trunk pipeline.
       The assessment of the State Reserves Commission was confirmed by the                                                                                                           QI    QII       QIII        QIV

     DeGolyer and MacNaughton Worldwide Petroleum Consulting company as
     part of the audit of the Eastern blocks of the Srednebotuobinsky oil and gas           1,583                            386 2,162                                  730         CAPEX, bln. RUB
     condensate field.
                                                                                                                              67                                          25
                                                                                                                 QII                                 QIV                                              2.7
                                                                                                                                                                                                                  3
                                                                                                                              43                                         87
                                                                                                                                                                                      2.0   2.1

                                                                                              Industrial construction                      xploratory drilling
                                                                                                                                          E
                                                                                                                                                                                      QI    QII       QIII        QIV
                                                                                              Mineral exploration                         Equipment not included in the
                                                                                                                                           construction estimates

                                                                                            Taxes and                        Payments under contracts                               Turnover, bln. RUB
                                                                                            compulsory                       with companies controlled
                                                                                                                                                                                                                  8.3
                                                                                            payments                         by the state                                                             7.8

                                                                                            5.4                                6.07
                                                                                                                                                                                            5.2
                                                                                                                                                                                      4.6

                                                                                                                       
                                                                                                           bln. RUB listed                               bln. RUB listed
                                                                                                                  in 2019                             from 2014 to 2019
                                                                                                                                                                                      QI    QII       QIII        QIV

                                                                                            The share of procurement of materials and services from
                                                                                            Russian and foreign manufacturers, bln. RUB
                                                                                                                                                                 4.6
                                                                                                    4.0                            4.1

                                                                                                                                                                              2.4

                                                                                                                                            0.744
                                                                                                                                                                                            - Russian suppliers
                                                                                                             0.123
                                                                                                                                                                                            - Foreign suppliers
                                                                                                          2017                           2018                          2019

24                                                                                                                                                                                                                      25
RNG / SUSTAINABLE DEVELOPMENT REPORT                                                        RNG / SUSTAINABLE DEVELOPMENT REPORT

     5.3 Key facts                            Construction

                                              1.2
     Personnel

     2,500
     Employees in the
                                                                   m
                                                                    ln m3
                                                                   dumped cluster sites and infield
                                                                   driveways
     company

     1,900
     employees working
     in the oil field                         31               km
                                                         pipelines were
                                                                   built
                                                                                  15           km
                                                                                        high voltage power
                                                                                            lines were built
     Motor Transport and Specialty Vehicles

       600                         
                        units are used
                          by the group
                         of companies
                             at the site

       300                        
                         construction
                           fleet units
                                              Field support base
                                              in the SB OGCF

26                                                                                                                                      27
RNG / SUSTAINABLE DEVELOPMENT REPORT                                                                                                                                                    RNG / SUSTAINABLE DEVELOPMENT REPORT

      Map of the CCP and Well Clusters

                                                                                                                   Group
                                                                                                                   wells №1       Water intake water structure on the Taas Yureh River

                                                                                                                                           Well 6343 including utility system:
                                                                           Group                                                           - gas pipeline - 4.65 km
                                                                           wells №2                                                        Technical water heater
                                                                                                                                           on group wells№1

                                                                                                       Group                                   P507 including utility system:
                                                                                                                                               gas pipeline - 0.13 km
                                                                                                       wells №3
                                                                                                                              Group wells №10 including utility system:
                                                                                                                              - technical passage - 0.3 km
                                                                                                                              - in-field flowline - 0.3 km
                                                                                                                              - water tunnel - 0.3 km

                                                                                                                                     P508 including utility system:
                                                                                                          Group                      - technical passage - 0.3 km
                                                                                                          wells №10                  - in-field flowline - 0.3 km
                                                                                                                                     - high voltage line 35 kW - 2.1 km
                                                                                                                            Group wells №4
                                                                                                                          P506 including utility system:
                                                                                                                          - technical passage - 0.1 km
                                                                                                                          - gas pipeline - 0.1 km
                                                       EB SB OGCF                                                    Group wells №5

                                                                                                                  Open-cast №15
                                                                 Group wells №6
                                                             Loop of in-field flowline                                Gas pipeline - 15.2 km
                                                             group wells №7- CPF 2.97 km

                                                            P502 including utility system:
                                                                                                                  Group
                                                            - gas pipeline - 0.34 km                              wells №7

                                                                                                                            Adjusting
                                                                                                                            of the 3rd phase

     Group wells № 8 including utility system:
     - technical passage - 2.5 km                                                                                         P509 including utility system:
     - in-field flowline - 3.1 km                                                                                         - technical passage - 0.3 km
     - water tunnel - 3.0 km                                                                   Group                      - in-field flowline - 3.9 km
                                                                                                                          - water tunnel - 0.3 km
                                                                                              wells №8
                                          Group
                                         wells №12                                                                   Group wells №8 including utility system:
                                                                                                                     - technical passage - 2.5 km
                                                                                                                     - in-field flowline - 3.1 km
                                                                                                                     - water tunnel - 3.0 km

                                                                                                                      P16 including utility system:
                                                                                                                      - technical passage - 2.5 km
                                                                                                                      - in-field flowline - 1.65 km

      Group wells№ 11 including                                                                    Open-cast №8
      utility system:
      - technical passage - 1.4 km
      - in-field flowline - 14.1 km
      - water tunnel - 13.74 km                   Group
                                                 wells №11
                                                         Open-cast
                                                           №20
                                                                              point

                                                                                                                                                                 Oil pipelines construction
                                                                              F to tie-in

                                                                                                                                                                 Designed oil pipelines

                                                                                                                                                                 Oil pipelines construction
                                                                     e from CP

                                                                                                                                                                 Designed oil pipelines

                                                                                                                                                                 Gas pipelines construction

                                                                                                                                                                 Designed gas pipelines
                                                                  Oil pipilin

                                                                                       Open-cast
                                                                                         №20                                                                     Operating water tunnel

                                                                                                                                                                Designed water tunnel

                                                                                         2
                                                                                    S№1
                                                                                 OTP a LLC
                                                                            CF -    h
                                                                   B S B OG odobyc
                                                             nes
                                                                 C         az
                                                                      fteg
                                                       ipe li h Ne
                                                  Oil p Yuryak                                                                                                                  to OTPS №12
                                                   Taas

28                                                                                                                                                                                                                                   29
RNG / SUSTAINABLE DEVELOPMENT REPORT                                                                                                                  RNG / SUSTAINABLE DEVELOPMENT REPORT

     5.4 Capital construction

     1,000
                                                          Construction laboratory
                                                          and non-destructive testing
                                         employees       laboratory
                      involved in construction projects

     800                          km 
        the total length of driveways supported by
                                                          Internal
                                                          building control
        the company at the required technical level       (Department of Capital
                                                          Construction)

     744.44                                    m2
       Reconstruction area of the company’s office
                  in Mirny. Three floors were built
                                                          Independent
                                                          Construction Control
                                                          (“StroyTest Engineering” LLC)
                                                                                          150 ton carrying capacity Zoomlion truck crane purchased by the company. It is designed to carry out reconstruction work at
                                                                                          various facilities and is one of the most powerful truck cranes in the region

                                                                                          Construction of the bridge
                                                                                          across the Malaya Botuobuya River

     Construction of the bridge                                                           Construction of the bridge
     across the Malaya Botuobuya River                                                    across the Malaya Botuobuya River

30                                                                                                                                                                                                                      31
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     5.5 Logistics                                                                                             5.6 ISO Standards
     – Base with a railway line near the river port of Ust-Kut;                                                The company has GOST ISO 9001-2011 “Quality Management
     – Production base leased from the American oilfield                                                       Systems”, GOST R 54934-2012 (OHSAS 18001: 2007)
      services company, Halliburton;                                                                           “Occupational Safety and Health Management System”, GOST
                                                                                                               R ISO 14001-2016 (ISO 14001: 2015) “Environmental System
     – 6-ton lifting capacity floating crane in the port of Lensk;                                             management” certificates.
     – “Boets” tugboat with a 500 ton loading capacity barge;
     – “Vitimets” tugboat with a loading capacity of 200 tons;
     – “Codr” tugboat with a loading capacity of 140 tons;
     – “Ermak” tugboat with a loading capacity of 140 tons;
     – “Victoria” tugboat with a loading capacity of 200 tons        Preparation of the “Vitimets”
                                                                     tugboat for the river navigation season
      (ports of Ust-Kut and Lensk).

     6 tons lifting capacity floating crane
     in the port of Lensk
                                                         “Boyets” tugboat with a 500 tons
                                                         loading capacity barge                                5.7 Developed infrastructure

                                                                                                                                                                  Developed
                                                                                                                                                                  infrastructure
                                                                                                                                                                  allows RNG to provide
                                                                                                                                                                  services for the
                                                                                                                                                                  transportation of oil from
                                                                                                                                                                  fields of other subsoil users
                                                                                                                                                                  in the region and the delivery
                                                                                                                                                                  of raw materials to the
                                                                                                                                                                  Transneft pipeline system.

     Base with a railway line near
     the river port of Ust-Kut

32                                                                                                                                                                                                 33
RNG / SUSTAINABLE DEVELOPMENT REPORT                                                RNG / SUSTAINABLE DEVELOPMENT REPORT

     Power complex                                                    CNG
                                                                      filling stations
       The first phase of the energy complex based on a gas piston
     engine manufactured by the American company Caterpillar                                         In December 2019,
     was launched in February 2019 and has a capacity of 5 MW.                                       a natural gas filling
       Currently, 5 blocks have been installed and put into                                          compressor station (CNG
     operation.                                                                                      filling station) designed
                                                                                                     to refuel its own fleet in
        Associated petroleum gas that comes through the pipeline                                     the Eastern blocks of the
     from the Central oil collection point on the Eastern blocks of                                  Srednebotuobinsky field
     the Srednebotuobinsky field is used as an energy source.                                        was put into operation.
       RNG plans to launch the second and third phases of the                                        The supplier is a leading
     power complex and increase the total electricity production                                     manufacturer of equipment
     capacity to 12 MW.                                                                              for CNG filling stations
                                                                                                     GRAF S.p.A. (Italy).
                                                                                                     Compressed gas
                                                                                                     (compressed up to 200
                                                                                                     atm), which has greater
                                                                                                     frost resistance (especially
                                                                                                     important during critically
                                                                                                     low temperatures in the
                                                                                                     Yakut winter) is used as
                                                                                                     fuel.
                                                                                                     The company plans to
                                                                                                     gradually transfer the
                                                                                                     vehicle fleet to compressed
                                                                                                     natural gas.
                                                                                                     RNG is currently testing
                                                                                                     the first batch of Shacman
                                                                                                     X3000 CNG gas tractors.

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RNG / SUSTAINABLE DEVELOPMENT REPORT                                                                                                                                                                                                                                                                                    RNG / SUSTAINABLE DEVELOPMENT REPORT

     Map of licensed sites

                                                                            Suldyukar                                                                                                    Nyurbinsky
                                                                                                uy                                                                                        "Rosneft"
                                                                                             ily
                                                                                        r. V
                                                                                                                                                        lgyattinsky
                                                            Svetlyi                                                                                      "Rosneft"
                                                 r. V
           Chernyshevsky                             ilyu                                                                                                                              Arylakh
                                                         y

                               South-                                               Bakhchinsky
                                                                                  "Surgutneftegas"
                            Syuldyukarsky
                                                                                                                                                                                                                                                           West Kempendyayski
                          “EastSib Holding”                                                                                                                                                                                                                       USRF*
                                                                                                                                Bagdynsky
                                                                                                                             "Surgutneftegas"
                                                        “Live diamonds of Yakutia”
                                                                                      Mirnyi
                                                                                                                   Stanahsky
                                     ya

        Kuyabylansky                                                                                            "Surgutneftegas"
                                      tuobu

                                                                                                     Almaznyi                               r. V
                                                                                                                                                ilyu                                                                                                                                                                       Tuobuya
                                                                                                                                                    y
                                 an-Bo

                                                                             Irelyachsky
                                                                           "Irelyakhneft"
                               r. Ulah

                                                                                                                                                                                                      Suntar
                                                                                                                                                                                                                                 Kempendyayski
                                                                      Myrninsky                                            Srednevilyuchansky                                                                                        USRF
                       Kubalahsky                                       "INK"                                                "Surgutneftegas"                                 Suntarsky
                                                                                                   Zaria
                        "Rosneft"                                                                                                                                               "INK"
                                                                                         Yuryakhsky
                          Tektyuysky                                                  "Surgutneftegas"
                         "Alrosa-Gas"                                                                                                                                                                                                                            Hoptolokhsky               Namansky
                                                                Tas-Yuryakhskoe                                                                            Vilyuysko-                                                                                         “Tuymadaneftegaz”               USRF
                       The North Blocks                               field                                                                               Dzherbinsky
                           "Alrosa-Gas"                            "Gazprom"                                                                            "Surgutneftegas"
        Verhne-                          Tas-Yuryakh
      dzhunkunsky                                                                                                            Verhnevilyuchnskoe field
         "INK"           Dzhunkunsky                                                                                                                                                                                                                                                                                                   Verkhnemarhachansky
                                                                                                                                   "Gazprom"
                            "INK"                                                                                                                                                                                                     Verkhnebiryuk                                                                                      “EastSib Holding”
                                                                                                                                                                                                 Ergezheysky                      “Siberian oil company”
                                                                                                              Murbaysky                                                                          "Lensk-Gas"
                The Central Blocks                                       Monulahsky                        “EastSib Holding”
          "Taas-neftegazdobycha"                                      “EastSib Holding”
                                                                                                                                                                                                                                                                                                      Mukhtinsky
                                   The Eastern Bloсks                                                                                                                                                                                                                                             “Tuymadaneftegaz”
                                         “RNG”                                                                                                                 Ulugursky                                                                                      Srednebiryuk
            South-                                                                                                                                            "Lensk-Gas"                                                                                       "Rosneft"
         dzhunkunsky
             "INK"                                    Otradninskoe field                                                                                                                                                  GDK
                               Kurungsky                                                                                                                                                                                Lensk Neft                                                                                                                Srednelensky
                        "Taas-neftegazdobycha"
                                                            "Lensk-Gas"                                                      Betinchinsky                                                                                                                                                                                                           "Rosneft"
                                                                                                                                                                                                                                                                                                                                                                 Marha
             Byuksky                         Hotogo-Murbaysky                                                              “EastSib Holding”
              "INK"                               "VSNK"                                                                                                                                   Nizhnegerbinsky
                                                                                                                                                                                              "Rosneft"                                 “Surgutneftegas”
                                                                  Borulahsky                                                                                                                                                                                         Kaderginsky
                                                                      USRF                                                                                                                            Urinsky             USRF                                                         “Tuymadaneftegaz”
                                                                                                                                                                                                      "VSNK"
                                                                                                                                                                                                                                                              “Tuymadaneftegaz”
                                                                                                    ipe      line
                                                                                           a” gas p
                                                                                  of siberi mm
                                                                           “Power     1420                                   Lensk
      Chayandinskoye
                                                                                                                   line
           field                                                                                          oil pipe                                                                                                                                                                                Okleminsk
        "Gazprom"                                                                                   “ESPO” 0 mm                                                                                                                                      Cheredeysky
                                  Horonohsky                                                            120                                                 Nyuya-Iuzhnaia
                                                                                                                                                                             r. Lena                                                            “Siberian oil company”
                                "Surgutneftegas"
                                                                                                                                                                                                                             USRF
                                                                                                                                                                                                                                                                       Cheredey

                                                                                                                                   Irkutsk region
                                                                                                                                                                                                                                                        ena
                                                                                                                                                                                                                                                    r. L
                                                                                                                                                                                                                Macha                                                                                         Olekminsky
                                                                                                                                                                                                                                                                                                               "Rosneft"

                                                                                                                                                                                                                                                                                                                           KuduKuyol

                                              Peledui

                                                                                                                                                                                                                                                                                                                                        Dikimda
                                         Vitim

                                                                                                                                                                                                                                                                                 Tokkinsky
                                                                                                                                                                                                                                                                              “EastSib Holding”

                                                                                                                                                                                                                                        Chara
     RNG acts as an agent for the exploration and development
     of sites belonging to companies that are part of EastSib Holding
                                                                                                                                                                                                                                                                                                                                              * - unallocated subsoil reserve fund

36                                                                                                                                                                                                                                                                                                                                                                                   37
6
Development
strategy
RNG / SUSTAINABLE DEVELOPMENT REPORT   RNG / SUSTAINABLE DEVELOPMENT REPORT

     6.1 Development of oil production
        RNG aims to increase oil
     production over the next 5
     years to 1.2 million tons per
     year. To achieve this, company
     specialists    and      partner
     organizations are developing
     a plan to increase oil recovery
     through:
      • development of a
        reservoir pressure
        maintenance system;
      • implementation of the
        exploration program;
      • implementation of the
        approved well drilling
        schedule;
      • implementation of the
        plan for design and survey
        work and the construction
        of ground-based
        infrastructure facilities
        (OPS, the second stage of
        the central control center,
        expansion of the energy
        complex to 10 mW).

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     6.2 Innovations
     Implementation of the seismic technology
        The company invests in innovative technologies in
     hydrocarbon exploration and production. A seismic team was
     created in 2019 based on the “Syuldyukar Geologorazvedka”
     company, which along with RNG is part of EastSib Holding.
     The company purchased 5 new broadband NOMAD vibrators
     from the French company Sercel, a recognized international
     manufacturer of seismic equipment. Today, the company
     operates modern Sercel 508 XT seismic acquisition systems,
     NOMAD-65NEO vibrators and GPS Trimble R8GNSS topographic
     equipment.
        Vibration is a much more effective method of exploration
     compared to traditional explosive and impulsive technologies
     in Eastern Siberia. Explosive technologies are unsafe and
     wasteful. Pulse technologies do not always allow specialists
     to obtain sufficient information about the geological structure
     of the site. Last year, the company’s specialists designed and
     prepared sites for further exploration. In 2019 and Q1 of 2020,
     the total area of exploration work was more than 500 sq.km.
        Modern geophysical equipment is one of the most complex
     high-precision devices. Staff working and maintaining the
     data registration system are trained in the French and Russian
     divisions of Sercel Company. Field parties are equipped with
     geophysical workshops and laboratories for setting up,
     repairing and testing equipment. The number of employees in
     the seismic team is 139 people.

     Innovative drilling
     technology
        RNG specialists successfully applied the new design of
     the hook-shaped well when developing the Eastern blocks
     of the Srednebotuobinskoye field. The new design enables
     the bypassing of the aquifer, thereby avoiding flooding the
     oil reservoir. A “hook” is a horizontally-inclined well that runs
     along a complex hook-shaped path. The path is set so that the
     well is drilled downward first to open and refine the section of
     the formation, to determine the best reservoir layers and their
     angles, then the intersection of the SOC and KSS followed by        resistance of the resistivity sensor below 10 Ohms. This decrease
     flattening on the horizontal part of the barrel, which reduces      is a signal to flatten the horizontal section of the well 2-3 meters
     errors concerning absolute depth; to avoid unwanted proximity       higher than the depth of the oil hole.
     with the gas cap and correctly position the part of the barrel
                                                                            If the level of gas-oil contact is not determined during the
     that will be used for oil production.
                                                                         drilling process, the well may turn out to be ineffective due to
        Before laying such wells, experts analyze information            the incorrect depth of the wiring. To avoid this, other companies
     from neighboring wells (pilot, exploratory), build a geological     drill an additional pilot (test) shaft, which takes up to 7 days of
     model and predict the depth of the roof of the reservoir, the       work and 250 meters of drilling. A hook-shaped well eliminates
     level of gas and oil-water contacts, which subsequently are         the need for a pilot shaft and shortens drilling times, as well as
     our anchor points. During drilling, using the LWD technology,       reducing additional penetration from an average of 250 to 140
     the geological service continuously monitors the well for 24        meters.
     hours, estimates deviations from the anchor points according
     to the original model, and quickly transmits it to the drilling
     team with adjustments in the well trajectory. Even in the case
     when the determination of GNA is ambiguous, the level of GSS
     is determined with a high degree of confidence by reducing the

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     6.3 Quality Control System                             Construction laboratory
                                                            and non-destructive testing laboratory
     Chemical analysis laboratories
        There are two laboratories at the EB SB OGCF          The company controls the quality of construction work at all its facilities.
     that monitor the quality of oil and diesel fuel. The   Several laboratories are involved in quality control: a soil laboratory, a laboratory
     laboratory has 24 employees.                           specializing in concrete, cement, a laboratory specializing in gravel and a non-
                                                            destructive testing laboratory.
     To monitor the quality of diesel fuel, the
     following indicators are determined:
       • density;
       • sulfur content;                                    Welding quality control
       • kinematic viscosity;                                  The company uses the following methods
       • cold filter plugging point;                        for welding quality control: visual and
       • pour point;                                        measuring control, radiographic control,
       • fractional composition.                            ultrasonic control, capillary and leak
                                                            detection, as well as electrical control.
     When monitoring the quality of oil,
     the following indicators are determined:               Seal quality control
       • density;                                              Methods of controlling the quality of seals:
       • water content;                                     the density is checked by the cutting ring
       • content of mechanical impurities;                  method, weighing in water and in a neutral
       • content of chloride salts.;                        liquid; by pycnometric methods; by volume
       • sulfur content;                                    displacement method, the seal is checked
       • saturated steam pressure;                          by test immersion, by standard compaction
       • paraffin content;                                  method, the elastic modulus is checked by
       • fractional composition;                            dynamic loading method; the compaction
                                                                                                              Testing concrete samples
       • kinematic viscosity;                               coefficient is checked by a calculation method.
       • organochlorine content;
       • hydrogen sulfide, methyl and ethyl
          mercaptans.                                       Cementing quality control
                                                               Quality control of cement material:
                                                            sampling, grinding fineness, density of normal
       The quality of commercial oil is monitored           cement paste, setting time.
     throughout the entire preparation process and             Concrete quality control: sampling,
     during acceptance operations.                          mobility, rigidity, average density, porosity,
                                                            temperature,        composition      selection,
                                                            sampling and production of control samples,
     Laboratories are equipped with:
                                                            hardening, storage and transportation of
       • Automated apparatus for determining the            samples, compressive strength, strength by
         fractional composition, manufactured by            non-destructive testing (elastic rebound),
         Herzog, Germany;                                   frost resistance basic and accelerated
       • Аutomated apparatus for determining the            methods, water permeability accelerated
         fractional composition, manufactured by            method, density.
         Orbis, Netherlands;
       • Automated apparatus for determining the
                                                                                                              Determination of the grain
         limiting temperature of filterability of diesel                                                      composition of crushed stone
         fuels, manufactured by ISL, France;
       • Оil and oil product sulfur analyzers
         manufactured by Horiba, Japan;
       • Chromatographic complexes for determining
         the composition of oil and gas manufactured
         by Chromatek, Russia;
       • X-ray fluorescence wave dispersion analyzer
         for determining the mass fraction of chlorine
         manufactured by SPECTRON, Russia.

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     6.4 Health & Safety                                                                          6.5 Fire safety
                                The main principles of the Company’s work are to ensure              A professional fire brigade was established in
                             labour safety and respect for nature in the implementation of        2015 and is part of the fire safety, civil defense and
                             industrial projects. The primary mechanism of environmental          emergency situations department. 17 people are
                             management is managing all systems under the requirements            involved in the work of the brigade. The team is
                             of international standards ISO 9001, ISO 14001, and OHSAS            divided into 2 fire stations, with distinct locations: at
                             18001. The Company operates under the current legislation of         the central control center and at the NPU-100. Each
                             the Russian Federation, international standards and internal         compartment has one fire truck. Each machine is
                             documents of the Company. RNG sets higher requirements for           constantly filled with 8,000 liters of water and 450
                             contractors in the field of quality, labour protection, industrial   liters of foaming agent.
                             and environmental safety. The Company pays attention
                                                                                                    The fire brigade personnel have all necessary
                             to improving the professional level of its employees. RNG
                                                                                                  protective equipment: special suits, helmets, gloves
                             developed and approved the “Plan for the Prevention and
                                                                                                  and shoes.
                             Elimination of Emergency Oil and Petroleum Products Spills on
                             the Territory of the Eastern Blocks of the Srednebotuobinskoye          Also, to protect the personnel of the fire brigade,
                             Field”.                                                              all necessary equipment was purchased, including
                                                                                                  breathing apparatus for working in smoky conditions.
                                Contracts with specialized subcontractors for the
                             maintenance RNG’s hazardous production facilities (where                To protect the forest leased areas from forest fires,
                             oil exploration, production, processing, transportation,             mobile block boxes with fire-fighting equipment were
                             storage and use of oil and oil products are carried out, as          purchased. For foam fire extinguishing of steel tanks
                             well as to prevent gas, oil and water inflows and open gas           RVS-5000 at the Central oil collection point there is a     Fire brigade
                             and oil fountains during the construction, well servicing and        three-fold supply of foaming agent.                         exercises

                             workover) have been signed.
                               The activities of all the Company’s personnel in workplace
                             health and safety issues are described in the job and production
                                                                                                  Actions in fighting
                             manuals. The main regulatory document in the field of labour         forest fires
                             protection and industrial safety (LP and IS) in the Company is
                             the “Regulation on the organization of industrial control over          A professional fire brigade conducts
                             compliance with industrial safety requirements at hazardous          patrols of leased forest areas in the daytime
                             production facilities of RNG”, approved by the CEO of the            and at night during periods of special fire
                             company.                                                             regime introduced by the administration of
                                                                                                  the Mirny and Lensky districts. The company
                               There are also several internal documents (orders) in              purchased mobile block boxes with fire
                             the field of workplace health and safety, such as “On the            fighting equipment designed to protect
                             Implementation of Production Control” (relating to workplace         leased forest areas.
                             health and safety), “On the Organization of Production
                             Control during the Operation of Lifting Structures”, “On the            The team has repeatedly participated in
                             Organization of Technical Supervision of Safe Operation of           extinguishing forest fires in the territory of
                             Pressure Vessels” and others.                                        Mirny district, assisting the administration
                                                                                                  of Mirny district and forestry. RNG deployed
                                                                                                  specialists and equipment to assist in the
                                                                                                  fight against forest fires near the villages of
                                                                                                  Suntar, Tas-Yuryakh and other settlements.
                                                                                                  The team received a letter of thanks from
                                                                                                  the Forestry Department of the Republic of
                                                                                                  Sakha (Yakutia) for providing assistance in
                                                                                                  extinguishing forest fires.
                                                                                                    At least three times a month, specialists         primary fire fighting equipment. At the
                                                                                                  conduct training sessions on extinguishing          present time, installation and commissioning
                                                                                                  potential fires at RNG facilities, including        of equipment is underway. The company
                                                                                                  evacuating personnel.                               plans to conduct training for a professional
                                                                                                                                                      fire brigadeto obtain a license from the
                                                                                                    Before the end of 2020, it is planned             Russian Emergencies Ministry in the area
                                                                                                  to commission the fire extinguisher                 of ​​“installation, maintenance and repair of
                                                                                                  maintenance stations (repair, reloading,            primary fire fighting equipment”. The license
                                                                                                  testing, painting of cylinders) at the NPU-         will allow the RNG Fire Safety Department to
                                                                                                  100 fire station. The company purchased             conduct full maintenance of its own primary
                                                                                                  a complete set of equipment for servicing           fire fighting equipment.

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     6.6 Industrial                                                                  6.7 Traffic safety
     and technical safety                                                            service
       The company has concluded the following agreements for servicing                     A road safety service was organized to work on the prevention of road
     hazardous production facilities:                                                       accidents. The main objectives of the service is to create road safety
                                                                                            systems and prevent traffic accidents. The tasks of the service also
           - on the liquidation of emergency oil product spills at oil production,          include:
             storage and treatment facilities and an agreement for servicing
                                                                                               • development, implementation of measures to ensure trouble-free
             gas distribution and gas consumption networks by the gas rescue
                                                                                                 operation of company vehicles, improving the professional skills of
             service. In these areas, agreements have been concluded with
                                                                                                 drivers;
             the emergency rescue team LLC ASF Security Service. The rescue
             team is in a constant state of readiness for the localization and                 • organization of the «Road Safety» campaign;
             liquidation of accidents at oil, gas and gas production, storage and              • monitoring the activities of other divisions of the enterprise related to
             treatment facilities;                                                               resolving issues of ensuring road safety, efficient use of vehicles;
                                                                                               • monitoring the release of serviceable vehicles, equipped in accordance
          - on the liquidation of gas and oil manifestations. In this area, an
                                                                                                 with the Rules of the road for vehicles on the line;
             agreement has been concluded with the emergency rescue team
             LLC Upstream Service. This emergency rescue unit is in a state of                 • allow only qualified drivers to drive vehicles;
             constant readiness for the localization and liquidation of accidents              • Inspection of road conditions on routes;
             at oil production facilities.                                                     • organization of pre-trip and other medical examinations for drivers,
                                                                                                 monitoring the availability and correctness of registration of travel and
                                                                                                 freight documents;
                                                                                               • monitoring whether employees comply with the rules and standards of
                                                                                                 labor protection, production, labor discipline, internal labor regulations;
     Training and professional                                                                 • monitoring (escorting) the transportation of dangerous, bulky goods
     development                                                                                 by special rolling stock.

       The company annually pays for the following employee training and
     professional development courses:
       - labor protection for engineers (24 employees);
       - labor protection at work at heights (82 employees);
       - gas and oil manifestation (96 employees);
       - first аid service (197 employees);
       - sling work (44 employees);
       - cradle worker training (22 employees);
       - serving pressure vessels (41 employees);
       - air sampling (56 employees);
       - training on the right to handle hazardous waste (4 employees);
       - attestation and certification of welders at the National Agency for
         Welding Control (12 employees);
       - industrial safety (5 employees).

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     6.7 Digitalization                                                                    OIS Production and USOI
                                                                                             In 2019, employees of the company launched the OIS Production system and USOI (system
     of process control systems                                                            of operational production accounting, the formation of daily reports). Both systems -
                                                                                           developed by Russian specialists- allow the tracking of dozens of processes and operations:
                                                                                           accounting and control of oil production, optimization of field development and operation,
                                                                                           standardization of business processes, a monitoring system for maintaining reservoir
     Automated Process Control System (APCS)                                               pressure, automation of the work of supervisors and so on.
       In 2018, RNG purchased a process control and emergency protection system
     manufactured by the American company Emerson. The system allows for a safer
                                                                                           System Tasks:                                      • Online tracking of data from production oil,
     and more efficient production process.
                                                                                            • сstandardization of business processes;           gas and other wells by reading information
       The automation system of technological processes is designed to implement            • reducing the impact of the «human factor»         from Controlwave control system sensors
     centralized control of the technological process of extraction, preparation,             in business processes;                            from Emerson international company.
     storage and transport of extracted products; life-supporting systems for               • automation of routine operations;
     monitoring the state of the fire and gas situation, as well as effective protection    • optimization of field development and         Eldoc System has been implemented for the
     and timely shutdown of the technological process in case of an accident threat           operation;                                    digitalization, cataloging and visualization
     and its localization, according to specified algorithms.                               • decision support;                             of geological documents:
                                                                                            • optimization of operating and investment        • includes a set of programs and
                                                                                              costs.                                            applications for the work of specialists
       The technology consists of various independent systems:                                                                                  from the geology, development and
                                                                                           OIS Production system – in order to maintain         drilling departments. Programs enable
        Distributed Control System (DCS) automated control of technological
                                                                                           operational information on the condition             quick research results, production reports
     structures. DCS is also intended to protect the life and health of production
                                                                                           of wells, process oilfield information for           from the field and drilling reports;
     personnel, technological equipment, and the environment by detecting and
                                                                                           accounting for oil, liquid, gas production,
     notifying at an early stage leaks of hydrocarbons, as well as preventive measures                                                        • daily replenishment of data with the
                                                                                           pumping agents into formations:
     in case of explosions.                                                                                                                     results of well drilling, core surveys, deep
                                                                                            • includes a set of application programs
       The Emergency Protection System (TEPS) ensures the safety of the process               with the help of which geologists,                oil and gas samples, seismic surveys,
     and equipment in order to protect personnel, equipment, material assets and the          technologists, and chemical analytical            scientific research, magnetic exploration,
     environment. TEPS is completely independent of the distributed control system,           laboratory operators interact to evaluate         gravity exploration, geological and
     and stopping the latter will not lead to failure of this safety-keeping system.          and control the technological parameters          hydrodynamic models, etc.

        The Automatic Fire and Gas Safety System (TAFGSS) is a special certified              of the wells, including prevention of an
     system designed for the timely detection of fire and gas hazards, as well as             emergency operation.
     light and sound alerts of central control personnel, and automatic control of the
     corresponding fire extinguishing installations.
        The telemechanics system is designed to control and manage field facilities        Connection
     (single wells, crane platforms, SOD receiving-launch units), remote auxiliary            RNG Energo LLC is implementing a project for laying
     facilities, and objects of external production transport systems (oil, gas,           a fiber-optic communication line from the territory
     condensate).                                                                          of the Eastern Blocks to the Mirny – Lensk highway
                                                                                           with further connection to the fiber-optic network of
                                                                                           PJSC FGC UES, connecting offices in Moscow, Mirny
                                                                                           and EB SB OGCF to form one fiber-optic network and
                                                                                           automate the receiving of information from drilling
                                                                                           rigs. This communication line will not only provide
                                                                                           high-speed digital communications and Internet access
                                                                                           to production facilities and shift camps, but will also
                                                                                           become a backup communication line for the village of
                                                                                           Tas-Yuryakh, where the construction of FOCLs of PJSC
                                                                                           Rostelecom is currently being completed.

                                                                                           Implementation of electronic
                                                                                           document management
                                                                                             RNG has an electronic document management
                                                                                           system. Acts, accounts, orders, financial reports,
                                                                                           contracts, applications for the selection of personnel, the
                                                                                           procurement of goods and services, inventory accounting
                                                                                           are all passed through an electronic system.

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     6.8 Environmental Care
     Environmental monitoring                              Taking care of water resources
     The responsible attitude of the company to issues                                 The company protects the water life of
     of preserving the ecological balance in the region                                Yakutia. In 2018-2020, ecologists from RNG
     is a priority.                                                                    released 500 thousand Peled baby fish
     The company conducts environmental                                                (salmon family) into the rivers of Yakutia.
     monitoring along the Eastern blocks of the                                        The fish were raised in the laboratory at
     Srednebotuobinskoye oil and gas field following                                   the Chernyshevsky fish hatchery. The
     the approved Program for 2016-2020, agreed                                        spawn were released into the tributary
     with the Ministry of Ecology, Nature Management                                   of the Vilyui reservoir, the Aan’aah river,
     and Forestry of the Republic of Sakha (Yakutia)                                   which flows through the territory of the
     (10-09/6-1665 from 06/04/2016).                                                   Mirninsky District. According to the results
                                                                                       of research by scientists of the Russian
     Specialized organizations (such as The Ammosov
                                                                                       Federation Research Institute of Fishery and
     North-Eastern Federal University Research
     Institute for Applied Ecology of the North,
                                                                                       Oceanography, it is the Vilyui reservoir and its
     accredited laboratories: Federal State-Funded                                     tributaries that have the necessary food base
     Healthcare Institution “Center for Hygiene and                                    for salmon fish, the right temperature regime
     Epidemiology in the Republic of Sakha (Yakutia)”,                                 and all other conditions for its survival and
     Federal Government Institution “Center for                                        reproduction. In 2021, environmentalists
     Laboratory analysis and Technical Measurements                                    of the Company plan to release more than
     in the Republic of Sakha (Yakutia)” and others) are                               200,000 fry, and from 2022 more than
     involved.                                                                         180,000 fry will be released annually.

     Care for the diversity of the wildlife of Yakutia
     Hunting and fishing are
     prohibited on the territory
     of the Eastern blocks of
     the Srednebotuobinskoye
     oil and gas field. In 2019,
     for the first time during
     observation, flocks of
     swans and wild ducks
     could be seen in the
     area of the raw water
     intake facility built by
     the company on the
     river Taas-Yuryakh The
     design of the water
     intake structure allows
     it to work without using
     the Taas-Yurekh River
     resources. The reserves
     are replenished by flood
     waters.

          Water intake structure
        on the Taas Yureh River,
           built by the company.
      Net pit volume 500,000 m3

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RNG / SUSTAINABLE DEVELOPMENT REPORT                                                                                                         RNG / SUSTAINABLE DEVELOPMENT REPORT

     Solid waste disposal                                                                        Protection of atmospheric air
                                                                                                 • Annual effective monitoring of emissions of harmful substances into the air is conducted
     The company is planning to put a waste disposal site into service on the territory of the     by the accredited laboratory of the Center for Hygiene and Epidemiology of the Republic of
     Eastern blocks of the Srednebotuobinskoye oil and gas field. To neutralize oxidation          Sakha (Yakutia), alongside with the instrumental monitoring of emissions from vehicles
     waste, the company purchased an incinerator that disposes waste of hazard classes             (“AutoTest-01.02” devices and “Meta-01MP” smoke meter).
     III to V.

     Technical data:
      • capacity - 10 thousand tons
      • service life - 25 years
      • square footage - 2.29 ha
      • the map for the waste of iv hazard class disposal, with a capacity of 17,856 m3
      • sludge storage pits for oil-contaminated waste — 1,600 m3
      • sludge storage pit for oil-contaminated soil - 500 m3
      • SEER prior approval No. 19 dated 24/08/2018
      • to be commissioned in 2020

                                                                                                 Land and forest protection
                                                                                                 • Approval and completion of 193 lease agreements for
                                                                                                   State Forestry land plots with an area of 3,312.56 ha
                                                                                                   of forest development projects;
                                                                                                 • 6 lease agreements for industrial land;
                                                                                                 •12 lease agreements for forest plots with an area of
      • The company has permits for the disposal of wastes of I – IV hazard classes;               291,68 ha are to be registered;
      • The company is licensed to handle hazardous waste;                                       • The total area of forest plots in the Eastern Blocks of
                                                                                                   Srednebotuobinskoye oil and gas field is 3, 604.24 ha;
      • Sludge pits of well pads No. 1, 2, 3, 4, 5, 6, 7 are registered in the State Register
                                                                                                 • In 2015-2019, 531,89 ha of land were reclaimed on the
        of Waste Disposal Facilities;
                                                                                                   Eastern blocks of the Srednebotuobinskoye oil and
      • Availability of a document on approval of standards for waste generation and limits        gas field and transferred back to the State Forestry.
        for their disposal.

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RNG / SUSTAINABLE DEVELOPMENT REPORT                                                                                                          RNG / SUSTAINABLE DEVELOPMENT REPORT

     Mulching
     When mulching, the company uses equipment manufactured
     by the German company AHWI GmbH.
     The company applies mulching technology everywhere, as
     the method has a beneficial effect on the soil and plants:
         • retains water in the soil;
         • reduces the number of weeds;
         • prevents soil overheating in summer and freezing in
           winter;
         • prevents soil erosion;
         • prevents the formation of crust on the soil, which
           improves the absorption of water into the soil;
         • preserves soil friability;
         • mulch plants form more subordinate roots.

                                                                                                     Reclamation program
                                                                                                     Three quarries (Khoyuk, Botuobinsky, Kudulakhsky) with a total
                                                                                                     area of 100 hectares were reclaimed in 2018.

                                                                                                        RNG land reclamation by years:

                                                                                                         • 2015 – 144.02 ha                          • 2019 – 24.85 ha
       Reclamation helps to restore soil fertility. Reclamation is carried out sequentially in two
     stages: technical and biological. The technical stage includes planning, slope formation,           • 2017 – 87.9761 ha                         • 2020 - 49.0 ha
     removal and application of the fertile soil layer, the installation of hydraulic and land
     reclamation facilities, and the burial of toxic overburden. The biological stage includes a
     set of agrotechnical and phytomeliorative measures aimed at improving the agrophysical,             • 2018 – 105.08 ha
     agrochemical, biochemical and other properties of the soil.

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7
Regional
Presence
RNG / SUSTAINABLE DEVELOPMENT REPORT                                                                                                           RNG / SUSTAINABLE DEVELOPMENT REPORT

     7.1 Climatic and environmental                                                                 7.2 Infrastructure projects
     conditions                                                                                        VostSibSpetsMontazh LLC, a subsidiary of RNG, is building
                                                                                                    a bridge across the Malaya Botuobuya River as part of
                                                                                                    the construction of the Vilyuy A-331 federal highway. The
        RNG operates in the Mirninsky District of     and low temperatures. The average monthly     commissioning of the bridge is scheduled for the end of
     the Republic of Sakha (Yakutia) - in severe      air temperature in January falls within the   October 2020. The project was presented at the investment
     climatic conditions and at a considerable        range of -28 °C to - 40 °C. Temperatures in   forum “Western Yakutia - new opportunities” in Mirny. A two-
     distance from industry and educational           winter may reach -53-57°C.                    lane bridge 192 meters long will be built in the 1,157 km of
     institution centres. The Eastern Blocks of the                                                 the Vilyui highway and will connect the Mirny and Suntarsky
     Srednebotuobinsky oil and gas condensate           In summer, the maximum temperature          districts. In the course of the work of the company, it is also
     field are located within the Lena-Vilyui Plain   reaches +30°C. Snow cover of flat surface     necessary to equip access asphalt roads to the bridge.
     of the Central Siberian plateau, in the area     areas is 35-50 cm. The number of snow cover
     between the Lena and Vilyui river, in the        days is 200 per year.                            VostSibSpetsMontazh also concluded a state contract for
     mid-channel of the Ulakhan-Botuobuya (the                                                      the repair of one of the key transport arteries of the Republic
     right tributary of Vilyui). The hydrography of                                                 of Sakha (Yakutia) of the A-331 Vilyuy highway on the route
     the district is also represented by the Taas-       The main feature of the engineering-       Tulun - Bratsk - Ust-Kut - Mirny - Yakutsk. We are talking about
     Yuryakh river and several other smaller ones.    geological conditions of the field is the     work on the km 1 295+000 - km 1 310+ 585 section. The length
                                                      widespread development of permafrost          of the site is more than 15 kilometers. The customer is FKU
        The climate of Mirninsky District is severe   rocks that lie to a depth of 400 m. The       «Management of the public highway of federal importance»
     continental, with long, harsh winters and        maximum thickness of seasonal thawing of      Vilyui «of the Federal Highway Agency.» According to the
     short warm summers: the average duration         3.5–3.9 m is typical for watersheds covered   contract, VostSibSpetsMontazh is due to complete work by
     of winter is seven months, with clear weather    with pine forests. .                          October 31, 2020.
                                                                                                      The Vilyuy highway is the only transport corridor between
                                                                                                    the Irkutsk region and Yakutia through which cargo is delivered
                                                                                                    for the development of large deposits in the west of Yakutia.

                                                                                                    Office reconstruction in Mirny
                                                                                                       RNG completed the reconstruction of the office in Mirny, as
                                                                                                    a result, the office’s working space increased by 500 square
                                                                                                    meters, amounting to 1,500 square meters. The company
                                                                                                    strives to create the most comfortable environment for
                                                                                                    employees.

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RNG / SUSTAINABLE DEVELOPMENT REPORT                                                                 RNG / SUSTAINABLE DEVELOPMENT REPORT

     7.3 Social projects
        Employees of RNG are in constant contact with representatives of tribal communities and
     villages. The company provides assistance in solving everyday social problems. The RNG
     supplies drinking water to a school in the village of Tas-Yuryakh and in the village of Suldyukar.
       The company filled in two roads between the school, kindergarten and club in the village of
     Tas-Yuryakh. The work was completed by its own staff and using special equipment. Crushed
     stone was provided by GPP Yakutsky Dolerit LLC.

     7.4 Educational projects
        The company participates in educational projects of the Mirny district. Employees of RNG
     are specialists in the field of automation, production management, oil and gas production
     in educational projects of Mirny College of Technology. In the project “Process factories
     for training personnel for the oil and gas industry”, the company is an expert in the field of
     exploration, production of oil and gas in difficult climatic conditions.
       RNG also implements the program “Management of changes in the vocational training
     system for the region’s economy”, developed by the Moscow School of Management
     SKOLKOVO REGION-PROFI in cooperation with Mirny College.
        Employees of RNG regularly give lectures on oil and gas topics in educational institutions.
     Every year, students of specialized universities in the format of student teams participate in
     a paid summer internship at the field.

       Student teams
        The company annually conducts recruitment of
     student teams among students at higher educational
     institutions and secondary specialized educational
     institutions for paid work in the Eastern blocks of the
     Srednebotuobinsky field.
        In 2018, summer student teams took part in the
     construction of the Central oil collection point at
     the field. The company paid for the work, provided
     housing, meals and a transfer from the city of Mirny
     to the Eastern blocks of the Srednebotuobinsky field.
        RNG provides expert and technological support
     in organizing the project “Factory of processes for
     training personnel for the oil and gas industry”. The
     project was launched by Mirny District Technical
     College.

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