2020 challenges

Key challenges in 2020

Gazprom Neft and the broader oil industry are facing global challenges arising from market volatility and spread of COVID-19. National lockdowns, international border closures, the air travel market collapse and restricted population mobility across the world are new challenges that are calling for the company to transform at a faster pace than ever before. The pandemic, lower demand for petroleum products and the new OPEC+ agreement combined to make a stress test that Gazprom Neft successfully passed, validating its strategic course.

Flexible production management and the advanced technologies deployed at Gazprom Neft assets ensured the continuous, effective operation of its refineries and oilfields. In 2020, the company achieved all of its targets and commissioned new production facilities on schedule, with the largest being the Euro+ complex at the Moscow Refinery.

ANTIVIRUS, Gazprom Neft programme to fight COVID-19
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OUR CONTRIBUTION TO THE FIGHT AGAINST THE VIRUS

Gazprom Neft was the first oil company in Russia to take an open and transparent stance on working under the COVID-19 pandemic. In March 2020, the company launched ANTIVIRUS, with a package of measures to protect employee health and ensure the operational continuity and financial stability of its business. An important feature of the programme was the comprehensive support it provided to health workers and volunteers across Russian regions: Chelyabinsk Oblast, Irkutsk Oblast, Ivanovo Oblast, Kaliningrad Oblast, Kaluga Oblast, Kemerovo Oblast, Kurgan Oblast, Kursk Oblast, Leningrad Oblast, Lipetsk Oblast, Moscow Oblast, Nizhny Novgorod Oblast, Novgorod Oblast, Novosibirsk Oblast, Omsk Oblast, Penza Oblast, Pskov Oblast, Samara Oblast, Sverdlovsk Oblast, Tomsk Oblast, Tula Oblast, Tver Oblast, Tyumen Oblast, Vologda Oblast, Voronezh Oblast, Yaroslavl Oblast, Chuvash Republic, Republic of Khakassia, Republic of Mordovia, Altaisky Krai, Perm Krai, Moscow, and St Petersburg.

The company set up new coordination bodies: the ANTIVIRUS Response Centre headed by Alexander Dyukov, Chairman of the Management Board, took the lead on Health, Production and Finance; while two functional corporate programmes covered Regions and Communications.

RESPONSE CENTRE STRUCTURE

Production continuity management

A system of barriers and screens was put in place at our refineries to prevent the spread of the virus. Only employees with a negative COVID-19 test result or antibodies for the virus are admitted to work.

Over 140 “buffer zones” were set up in oil production regions, offering temporary accommodation and medical monitoring for employees before work at oilfields.

Robotic process automation and digital technologies enabled contactless shift handover at the company’s refineries. Backup shifts were also introduced in 2020 at refineries for quick handover, should any employee be taken ill in the current shift.

Financial stability of the business

The implementation of digital document management and the use of digital signatures in transactions with other parties ensured the continuity of Gazprom Neft’s payment function during lockdown.

Also, corporate projects were launched to support oilfield service companies, and online factoring was arranged to expedite financial transactions with vendors of goods and services for filling stations. Gazprom Neft’s corporate customers were granted a 45-day grace period for their fuel payments in 2020.

Health menegement system

Gazprom Neft set up regular mass testing of its employees for COVID-19. As part of Barrier, our corporate testing programme, over one million tests were administered in 2020, covering employees across all oilfields, refineries and offices of Gazprom Neft and its contractors. Mass testing prevented outbreaks of the disease.

In 2020, the company launched its own health monitoring system – HealthCheck – as well as the mobile app Gradusnik (Thermometer), which work together to enable swift communication between employees and the company’s medical team. These services are also used to automatically issue passes to access company premises, dependent on COVID-19 test results.

AID for the company’s operating regions

Under its ANTIVIRUS programme in 2020, Gazprom Neft launched a massive campaign to support health workers and volunteer groups in its operating regions.

The Gazprom Neft for Medics initiative provided almost three million personal protective equipment (PPE) items and 200 tonnes of company-produced sanitiser to health workers in the Omsk, Orenburg and Tomsk Oblasts, Khanty-Mansi Autonomous Okrug, Yamalo-Nenets Autonomous Okrug, Yaroslavl and St Petersburg. At the request of some regions, Gazprom Neft provided local hospitals with ventilators, CT scanners, PCR laboratories and express virus detection systems. The company provided free oil changes for ambulances, and in three Siberian cities, free fuel was made available to healthcare facilities.

The Gazprom Neft for Volunteers initiative provided over 200,000 litres of fuel to volunteer groups that delivered food and medicines to people who needed help in 2020.

The personal donations of 40 company managers bought over 600,000 items of PPE for health workers and patients of children’s cancer hospitals, who were particularly vulnerable during the pandemic.

2.7+ million items of PPE supplied to health workers
1,600+ free fuel cards for volunteer cars in 47 regions
600+ items of PPE provided to children’s cancer hospitals by Gazprom Neft managers
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Programme financing

The company finances all ANTIVIRUS initiatives by optimising costs not directly related to company operations. Expenses are offset by the savings made by not participating (due to COVID restrictions) in offline business events, reducing office and administrative costs by shifting some employees to work from home, as well as saving on business trips and other overheads.

Transparency

The Gazprom Neft for Medics campaign topped the media visibility rating compiled by SCAN-Interfax for April–June 2020.

Since March 2020, a special section has been live on the company’s website with ANTIVIRUS information, to provide Gazprom Neft employees, business partners and customers with up-to-date information on our fight against COVID-19. This section features news updates; regular interviews with, and comments by, Gazprom Neft managers; as well as infographics on our major projects.

The company set up a mobile push notification service to provide employees with up-to-date information on its COVID-19 response. Also, a 24/7 hotline was launched to provide consultations with doctors, psychologists, HR specialists and lawyers.

During lockdown, the Gazprom Neft communication function updated the Mobile Newsfeed service and the online version of Sibirskaya Neft magazine, and published special issues of the Neftegazeta periodical, distributed at production facilities. Employees regularly answer online surveys on safe work, medical services, and extending the use of remote working.

The massive #NAVAKHTE — rus. #ONSHIFT show of support was organised in summer 2020 to recognise the dedicated work of employees at continuous-production facilities during lockdown. Apart from Gazprom Neft employees, famous actors, actresses, and athletes also joined in to support people working at oilfields, refineries and filling stations.

How are we turning challenges into opportunities?

The company’s handling of the COVID-19 pandemic was a practical testament to Gazprom Neft strategy. Our flexibility, commitment to change and culture of continuous development helped us to derive actionable takeaways from this unprecedented situation.

Key features of the governance framework

Human focus

Gazprom Neft’s sustainability depends on its commitment to Collaboration and willingness to create value for all. In line with these principles, Gazprom Neft management reduced neither its headcount nor work week, and paid the same salaries during the pandemic as before.

The comprehensive Healthy Environment programme was actually launched across Gazprom Neft prior to the pandemic. We built on this to launch the online Caring About You project, combining the best practices in self-development for our remote workers.

Continuous development and improvement

The Corporate University leveraged its existing expertise to facilitate the shift to remote working by producing a range of online courses within a highly compressed timeframe, supported by a single set of online training tools for the whole company and a uniform methodology. A single educational platform procurement centre was set up, with due control over the organisation and delivery of training. This meant that even lockdown was a period of personal and professional growth for Gazprom Neft employees.

Project management flexibility

The pandemic proved the company’s ability to flexibly adapt to any market changes. Gazprom Neft created a functional system to manage oil production quotas under the OPEC+ agreement, improved flexible management of project launch and implementation, and discussed operational continuity management with key contractors.

Work process optimisation

During the pandemic, the company developed new approaches to remote working arrangements; improved its electronic document management, including across its subsidiaries; and streamlined operating procedures. A fully-fledged ecosystem was built to enable individual and collaborative work between employees using various devices.

A high level of digitalisation

The pandemic drove home the importance of digital technologies. Artificial intelligence to diagnose and model the disease, unmanned aircraft technologies and robotic process automation, and augmented reality technologies proved to be the most promising areas of technology in the fight against COVID-19. The development of digital capabilities in these areas will unlock remote operations at continuous-production assets and allow industrial facilities to flexibly adapt to external challenges.

Our comprehensive, rapidly-scalable, Tessa-based document management architecture enabled subsidiaries to quickly interface with a single platform: 23,000 users from 52 subsidiaries were united in a single information space without changing document support processes, and employees can now be promptly notified when new directive documents are issued.

New communication toolkit

New communication tools (a requirements management service, including a corporate task management module and a Wiki) meant a major shift towards maximum efficiency in our production culture. Today, these tools are used by over 4,000 employees, who are rolling out IT and digital-transformation projects across the company. Operations making use of these tools involve all subsidiaries of Gazprom Neft Group as well as third-party contractors. Managers and external contractors now work in a shared communication environment using a toolkit for collaborative work, which includes the necessary support for rollout and use.

Remote production control

Thanks to our process flexibility, efficiency and high level of automation and digitalisation, Gazprom Neft assets continued to operate normally even under COVID restrictions. Gazprom Neft employees are already controlling production processes remotely from control rooms. Production planning – a key process – is concentrated in the Efficiency Control Centre (ECC) in St Petersburg, where a cross-functional team uses predictive tools to manage the entire chain – from refineries to sales units – in a shared digital environment. The company’s Upstream Division remotely controls high-tech well drilling around-the-clock at its oilfields – from the Arctic to Middle East.

Distributed management model

The company’s strong response to the pandemic gave further credence to the use of a distributed governance model. COVID-19 response centres at Gazprom Neft subsidiaries were linked by a shared IT network, each delegated a high level of independence regarding decision-making, enabling prompt decisions in emergencies. The composition of each response centre was not based on a hierarchical model, but rather on members’ competencies.