Accidents, Incidents, Emergencies

NOVATEK has developed notification and communication schemes for threatened or actual emergencies at Company facilities to enable prompt communication of information and alerts to management, staff, and professional emergency response teams. Emergency prevention and response action plans are in place at all NOVATEK facilities. In addition, the Company interacts with local authorities on emergency response issues: information is promptly communicated to single dispatch services, which inform local residents.

For the prompt transmission of information in the event of a threat or emergencies, NOVATEK facilities have approved control, warning and communication schemes.

The Company operates hazardous production facilities of hazard classes I, II, III, and IV.

Industrial safety management systems and industrial safety declarations have been developed for Class I and Class II hazardous production facilities. Operational control at the Company’s hazardous production facilities is provided by standing commissions. To mitigate the risk of potential accidents and incidents, NOVATEK carries out scheduled inspections of equipment, technical inspections and diagnostics of equipment, buildings, and facilities, taking out compulsory civil liability insurance for organizations operating hazardous production facilities, trains employees and arranges for their certification.

The measures taken by NOVATEK enable us to prevent major fires and promptly respond to hazards as they occur. The Company leverages all available resources to ensure uninterrupted operation and improvement of the fire safety system.

The Company conducts emergency preparedness checks on a regular basis.

NOVATEK implements several preventive measures to ensure the safe operation of its pipelines:

• consistently takes measures to mitigate the risk of pipeline accidents: analyzes risks, considering corrosion, wear, subsidence of pipelines, and other factors;
• uses special corrosion-resistant pipeline solutions and leak detectors; and
• regularly conducts integrated in-line diagnostics and immediately eliminates any found defects.

Nevertheless, NOVATEK maintains liability insurance for the operation of all pipelines, which covers damage caused by an accident at a hazardous facility (damage to third parties) and the risk of environmental damage.

The Company’s system of measures related to drilling safety is aimed at minimizing both man-made and natural impacts at all stages of operations.

Design documentation for the construction of wells is developed in strict accordance with technical regulations and standards effective in Russia. Only qualified contractors are allowed to perform well interventions. A competitive procedure is used to select drilling contractors, which includes, among other things, an evaluation of their ability to ensure industrial, environmental, and fire safety as well as occupational health.

NOVATEK also adheres to international best practices for offshore well management. Coastal operations follow the principle of delineating responsibility. The operator, the Scientific and Technical Center, and the corporate center each have a responsible employee appointed for each well.

Construction, logging, and testing of any well is accompanied by continuous monitoring of all key parameters with advanced technology and software, both directly on the rig and remotely.

NOVATEK is predominantly a gas company, with gas condensate and oil production accounting for only 16.5% of total hydrocarbon production, so spill risks are not that significant for the Company. Nevertheless, NOVATEK approaches this issue seriously and takes all possible preventive measures to avoid spills.

When developing oil spill response plans, forecast areas of oil and petroleum product spills are determined (subject to design spill prevention solutions), including a description of the possible nature of the environmental impact and impact on local communities. The Company also calculates whether its own and/or third-party emergency rescue services and/or teams are sufficient for handling the maximum estimated volume of spills. Once every three years, the Company conducts comprehensive spill localization and response drills, involving government authorities.

Initial assessment of contractors’ OHS compliance is a core element of supply chain management. The Contractor Access System involves checking the level of contractors’ preparedness at the pre-qualification stage using criteria such as:

• availability of necessary documents and equipment of adequate quality;
• appropriate level of employee training; and
• all necessary occupational health and safety inspections conducted in a timely manner.

Contractors’ obligation to comply with OHS requirements is set out in the agreements they sign with NOVATEK. Contract agreements provide for, inter alia:

• the contractor’ liability for failure of its employees to comply with OHS regulations;
• the contractor’s obligations to provide its employees with serviceable and tested protective equipment, protective clothing, tools, and devices; and
• the Company’s right to monitor compliance of contractor employees with workplace OHS requirements and take measures to address violations and suspend work execution.

Contractor employees working at the Company’s production facilities are entered and registered for permit passes for the construction, commissioning, and operating areas as well as in the induction briefing logbook.

The Company strengthened vigilance over the payment of fines imposed for a contractor’s violation of OHS requirements: once a quarter, controlled entities must submit a report to NOVATEK detailing the fines imposed and paid.

Contractor employees participate both in responding to OHS incidents and in emergency drills for employees.