The Gazprom Neft Board of Directors reviews the work of its Internal Audit Directorate

Press-release Efficiency Safety

29 March 2019 — the Gazprom Neft Board of Directors has reviewed a report on the work of the company’s Internal Audit, Oversight and Risk Management Directorate in 2018, as well as information on updating key risks in 2019.

Internal Audit activities planned for 2018 envisaged the completion of 80 audits: all of which had been completed as at the end of this reporting period.

Audits of the company’s operating activities saw particular attention paid to inspecting and verifying the effectiveness of internal control systems governing drilling processes and well development, oil and associated petroleum gas (APG) metering, the allocation, transportation and sale of oil and oil products, and the management of ongoing and capital refurbishment at refining facilities. The Internal Audit department also inspected cross-functional company activities throughout 2018, including assessing the efficiency of internal controls over financial operations, insurance, information technology (IT) and Gazprom Neft’s investment activities, as a result of which initiatives have now been implemented on verifying financial reporting (accounts) as part of the work of the Internal Audit Committee.

Following these investigations a range of initiatives directed at improving the effectiveness of internal controls over business processes have been developed and implemented, with changes being made to the regulatory framework.

The company’s anti-fraud “Hotline” also remained in operation throughout 2018.

Key areas of activity in risk management included evaluating and updating key risks facing the company, developing and implementing tools and methodologies for analysing and managing risks, providing company business units with methodological support in identifying and assessing risks, and improving staff skills and competencies in risk management.

This reporting period has also seen the company’s Internal Audit, Oversight and Risk Management Directorate start work on developing an internal oversight and governance system. 2018 has, in particular, seen Gazprom Neft establish an internal governance project office, whose responsibilities include developing a single and inclusive methodology and standards in line with international best practice in internal oversight, as well as supporting the business in developing, formalising and implementing control procedures for key business processes, as well as improving employee training and skills in internal control.

The Gazprom Neft Board of Directors also adopted regulation governing the procurement of goods, work and services by Gazprom Neft PJSC, and regulating the company’s and its subsidiaries’ procurement activities.