Suppliers
NOVATEK is committed to building strategic, long-term and mutually beneficial relations with its counterparties.
To build a sustainable supply chain, the Company approved the Supplier Code of Conduct, defining the Company’s expectations and recommendations regarding supplier compliance with the principles of the UN Global Compact, the International Labor Organization, the Declaration on Fundamental Principles and Rights at Work and applicable environmental, occupational health and industrial safety laws. Before signing a contract, the Company informs its counterparties about this Code and expects them to comply with it. Our contracts also include the OHS requirements for any supplier to comply with.
Key supplier identification and supplier assessment for risk exposure
A decision to invite suppliers to participate in procurement procedures is taken with due regard to their rating scores. Rating scores are calculated through an assessment of the supplier’s performance under contracts that are already signed with the Company against defined and established criteria, such as the quality and term of developing detailed engineering design documentation, comments on quality as appraised at incoming inspections and on operation, as well as the general level of engagement with the supplier. Based on the appraisal results, a reliability level defined by the rating scale is assigned, ranging from A (high reliability level) to D (critical reliability level). The ESG criteria are taken into account in the rating structure indirectly: the Company, with all else being equal, gives priority to a supplier who has no or minimal negative environmental and social impacts.
100% OF SUPPLIERS
of the core process equipment passed the audit for compliance with environmental and social criteria as part of their qualification process in 2022
Supplier evaluation system and observing the rights of parties in the supply chain
The Company runs a rigorous qualification process to evaluate whether each counterparty has the required professional experience, competences, financial resilience, and business reputation, including whether they have ever violated environmental or labor laws, or standards of business ethics, or human rights.
Scheduled audit of suppliers for conformity with environmental and social criteria is conducted once every three years as part of recurring qualification audits. If a supplier fails the qualification audit but wishes to maintain relationships with the Company, it develops a corrective action plan, has it approved by NOVATEK, and implements it within a set timeframe, providing supporting documentation.
The new suppliers pass an audit vis-a-vis availability of waste treatment licenses, certificates of environmental registration, compliance of their occupational health system with the Company’s requirements, and availability of relevant permits, licenses, certificates, and other documents confirming that the supplier complies with the established criteria.
Support for Russian manufacturers
NOVATEK is consistent in pursuing its import substitution policy regarding critical foreign technologies and equipment in order to ensure the technological independence of its projects. In particular, we:
- invest in setting up our own LNG production and related technologies and capacities to manufacture liquefaction trains;
- allocate funds to promote R&D activities among Russian manufacturers to operationalize the production of competitive equipment and materials for LNG-projects;
- have developed a mechanism that guarantees that orders are placed with Russian manufacturers who offer innovative products for promising LNG projects on agreed commercial terms and conditions (tentative contracts); and
- proactively work with federal executive authorities and contribute to the efforts of cross-functional working groups to localize the production of technologies and equipment in Russia, including through the government support mechanisms.
