НАК „НАФТОГАЗ УКРАЇНИ“. Річний звіт англійською (2017 рік) - 11

OUR RESPONSIBILITY

ANNUAL REPORT 2017

165

164

Social security for the employees of Naftogaz group  

In 2017, total expenditure 

on personnel social security 

amounted to UAH 1.9 billion, 

which is 7.6% more than in 2016.

In 2017, the average monthly 

wage across Naftogaz group 

increased by 24.5% compared 

to 2016 and amounted to 

UAH 13 374 per month.

  The expenses of the Naftogaz group companies for social security of employees in 2017, UAH million

  By Naftogaz group companies, UAH million

119�7 

UKRTRANSNAFTA

110�3 

NAFTOGAZ

30�9 

OTHER ENTERPRISES

648�7 

UKRNAFTA 

597�2 

UKRGAZVYDOBUVANNYA

441�1 

UKRTRANSGAZ

Total in 

2017

1 947.9

445�2

OTHER SOCIAL SECURITY 

PAYMENTS

416�2

HOLIDAY AND  

ANNIVERSARY BONUSES 

371�2

MAINTENANCE OF SOCIAL 

FACILITIE

163�2

ONE-OFF  
RETIREMENT  
PAYMENT

34�9

HEALTHCARE

25�7

PAYMENT  
(REMUNERATION) 
FOR WINNING  
INDUSTRIAL  
AWARDS

132�1

REHABILITATION  
OF EMPLOYEES AND  
THEIR FAMILIES

359�4

FINANCIAL ASSISTANCE, IN-

CLUDING EMPLOYEES’ HEALTH 

IMPROVEMENT

Total in 

2017 

1 947�9

Employee remuneration scheme

In 2017, in order to create 

a fair remuneration system 

linking the strategic 

objectives of the enterprises 

with the performance of 

employees and aimed at 

increasing the motivation of 

employees, Naftogaz group 

companies successfully 

introduced a grade 

remuneration scheme 

(Naftogaz, Ukrtransnafta, 

Ukrgazvydobuvannya) and 

goal-oriented management 

system (Ukrtransnafta, 

Ukrgazvydobuvannya). 

This grade system is based on 

hierarchical groups of positions – 

grades – depending on the tasks 

and functions of each position 

and the value created for the 

company.

The introduction of a new 

remune ration system allowed the 

group to:

– introduce a flexible 

remuneration management 

system;

– offer competitive wages to 

engage and retain qualified 

employees;

– create opportunities to earn 

honestly and thus prevent 

corruption;

– make the wage structure 

transparent;

– link the remuneration system to 

business goals.

The introduction of grades and 

of a goal-oriented management 

system at Naftogaz group created 

conditions for the development of 

a consistent remuneration policy 

and benefit system according to 

international practices and best 

standards in HR management.

Staff assessment and career management

In order to create a highly 

professional personnel reserve 

at the enterprises of the group, 

personnel evaluation is in 

place, while the managerial and 

workforce personnel reserve are 

subject to selection and staff 

undergo training.

UKRTRANSGAZ

In view of the specifics of the 

core operations of the company, 

a professional certification of 

employees is carried out – its 

scope and frequency is regulated 

and supervised by the supervisory 

authorities.

Employees are tested by 

wage rate and qualification 

commissions for professional 

development and included in the 

personnel reserve.

In order to promote the 

professional development and 

professional careers of young 

specialists, young specialist 

conferences are regularly held 

at Ukrtransgaz. Special attention 

is paid to the young specialists 

who demonstrate rationalization 

skills and are keen to improve 

the forms and methods of the 

production process, contributing 

to their development and 

continuous training.

UKRGAZVYDOBUVANNYA

In 2017, corporate, managerial 

and professional competencies 

were developed to evaluate 

employees of different levels and 

a wide-scale personnel training 

system based on the defined 

competencies was introduced.

Personnel evaluation is carried out 

via performance development 

review. The collective agreement 

of the enterprise establishes 

the frequency of employee 

assessment as once every five 

years, and determines the 

categories of employees to 

be assessed. Young specialists 

who have been working for less 

than three years enjoy certain 

privileges regarding assessment 

obligations.

Creating a personnel reserve and 

career management system is the 

main task for 2018.

UKRNAFTA

Ukrnafta has begun the 

transformation of its training and 

course centers together with the 

unification of activities in order 

to provide high-quality modern 

knowledge among its working 

professions. More than 180 

employees of Ukrnafta received 

opportunities for career growth in 

2017. This included both vertical 

opportunities to become head 

of a unit, shop or service, and 

horizontal opportunities to join 

projects and become experts in 

their field.

In 2017, a group was created that 

includes 34 promising young 

specialists from different structural 

units of the company that will form 

the basis of the personnel reserve. 

In order to reveal the managerial 

potential of young employees, a 

training and development MIST 

(abbreviation for Youth, Initiative, 

OUR RESPONSIBILITY

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Conscious and Talented) program 

has been developed.

UKRTRANSNAFTA

At the company and its affiliates, 

three evaluation committees 

have been set up that carry 

out preparatory work on the 

evaluation of employees before 

assigning five-six grades to 

workers and higher categories 

to specialists. Scheduled 

assessments are held for the 

recruitment and promotion of 

employees to senior positions.

In order to prepare and update 

management and technical 

personnel, strengthen personnel 

potential and ensure the career 

development of young specialists 

at the enterprise, staff undergo 

rotation and a personnel reserve 

is in place.

Prospective young specialists 

are appointed to positions of 

masters and senior positions 

in production departments or 

transferred to work in branch 

management.

Plans for 2018 include upgrading 

the HR reserve for management 

positions with a view to shifting 

towards a target functional 

structure.

IMPLEMENTATION OF SOCIAL POLICY

Naftogaz's social policy aims to achieve the following goals:

–  increasing the attractiveness of the company as an employer;

–  attraction and adaptation of young and highly professional specialists;

–  increasing employee loyalty;

–  material encouragement and social protection of employees;

–  increasing the effectiveness of social spending.  

Code of Ethics

Naftogaz has its Code of Ethics in place, i.e. a set of rules and values that underpin the corporate ethics and 

business conduct of the company's employees. The Code provides a clear understanding of the principles of 

doing business and the requirements that must be observed by all company employees, as well as members of 

the board and supervisory board of the company while performing their functions and tasks, regardless of their 

functional responsibilities, location or level of office. The Code is based on generally accepted principles and 

norms of Ukrainian and international law. It implements the best European practice. 

the employment of young 

specialists who graduated in 

2017 from the Ivano-Frankivsk 

National Technical University 

of Oil and Gas, the National 

Aviation University, and others.

UKRTRANSGAZ

In total, 373 students undertook 

an internship at the company in 

2017.

As of January 2018, Ukrtransgaz 

employs 108 young 

professionals that graduated 

from higher educational 

institutions in the last three 

years. In 2017, 33 young 

specialists were employed.

UKRGAZVYDOBUVANNYA

In 2017, the affiliates of the 

company hosted 885 students 

for internships (232 students 

were provided with paid work 

places), including: 313 students 

of the Ivano-Frankivsk National 

Technical University of Oil and 

Gas, 313 students of the Poltava 

Petroleum Exploration Technical 

School, and 149 students of the 

Drohobych College of Oil and 

Gas.

In addition, 88 graduates 

of specialized educational 

institutions of Ukraine were 

offered employment at the 

company's affiliates in 2017.

UKRNAFTA

1 090 students undertook their 

internship in structural units of 

Ukrnafta, including 848 from 

the Ivano-Frankivsk National 

Technical University of Oil and 

Gas; 211 – from Drohobych 

College of Oil and Gas; 24 – 

from the Ukrainian Chemical 

Technology University; 6 from 

Kyiv Taras Shevchenko National 

University, and 1 from the 

Middle East Technical University 

(Turkey).

Within the framework of 

cooperation with the Ivano-

Frankivsk National Technical 

University of Oil and Gas, Ukrnafta 

granted scholarships to the five 

best students.

UKRTRANSNAFTA

With a view to establishing 

qualified selection and further 

employment in 2017, 16 students 

of the Ivano-Frankivsk National 

Technical University of Oil and Gas 

and 30 students of the Drohobych 

College of Oil and Gas undertook 

their internship at Ukrtransnafta 

branches.

As of 31 December 2017, 

Ukrtransnafta branches employed 

11 young specialists that 

graduated in the last three years. 

In 2017, based on the selection 

procedure, two students were 

employed at a branch of trunk 

oil pipeline  Druzhba from the 

Ivano-Frankivsk National Technical 

University of Oil and Gas.

Training of employees

The company creates the 

necessary conditions for the 

improvement of professional 

knowledge and managerial 

skills of its employees. The 

current corporate training 

system provides a wide range 

of opportunities for employee 

development:

– education, training and 

retraining in the training 

centers of enterprises, 

specialized training centers 

and postgraduate education 

centers;

– obtaining a second higher 

education at relevant 

specialized universities;

– participation in training, 

training seminars and 

conferences;

– English language courses;

– sharing knowledge and 

experience with leading 

foreign companies.

An educational project for 

training top management 

under the MBA program was 

implemented at Naftogaz and 

Ukrgazvydobuvannya in 2017. 

The project will be scaled up at 

the Naftogaz group level in 2018.

The plan envisages the 

development of a competencies 

model (a set of knowledge and 

skills necessary for the quality 

performance of work) for the 

enterprises of Naftogaz group 

which will be the basis for: 

– personnel assessment,

– personnel reserve formation 

and development;

– individual employee training 

and development programs.

The companies of the group 

also implement the following 

personnel training and 

development activities:

UKRTRANSGAZ

3 387 persons were educated, 

trained and retrained in 2017, 

including 2 922 persons who 

improved their qualifications, 

350 persons were re-trained, 

and 115 persons were trained 

in new professions.

On 15 June 2017, a conference 

of the labor collective of the 

workers of Naftogaz was 

held, at which a collective 

agreement for 2017-2020 

was adopted. The collective 

agreement enshrines the 

priority of preserving the lives 

and health of employees, 

decent wages and the 

prevention of arrears and the 

expansion of social guarantees, 

while also stipulating a 

specific mechanism for their 

implementation.

This collective agreement covers 

99% of Naftogaz employees.

Work with universities and attracting young professionals

The group's companies pay 

great attention to attracting 

talented young people to the oil 

and gas industry and working 

with young specialists, which 

are one of the main sources of 

qualified staff for the company. 

The enterprises systematically 

collaborate with Ukrainian 

specialized educational 

institutions to train specialists, 

provide student internships 

and promote their further 

employment.

The specialists of Naftogaz 

group enterprises participate 

in the commissions for 

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Professional certification and 
certification of workers, training 
on occupational safety and fire 
safety, quality and ecological 
management, safe operation 
of the linear part of main gas 
pipelines, IT and other aspects 
were conducted.

Accountants and financiers 
underwent retraining in 
accordance with the requirements 
for their certification in line with 
international standards.

Plans for 2018 include:
– training of specialists in internal 

audit programs, HR-systems, 
standardization, software;

– advanced training of the 

management of the Company;

– short-term workshops for 

managers and specialists 
in the fields of accounting, 
economic security, finance, labor 
protection, technical supervision 
and fire safety, organization 
of labor and pay, ecology and 
capital construction;

– training, retraining and advanced 

training of engineering and 
technical workers and workers 
(about 4 500 persons) to ensure 
smooth GTS operation.

UKRGAZBYDOBUVANNYA

In 2017, the company 
implemented a comprehensive 
training system:
– established training for trainers;
– introduced a bottom-to-top 

approach to identify training 
needs, plan programs and 
budget;

– designed and introduced 

standard programs for training 
corporate, managerial and 
professional competencies 
(in drilling, geology, ground 
infrastructure and procurement);

– to improve health and safety 

at UGV production facilities, a 

number of corporate training 
sessions were held for engineers 
and technicians on leadership, 
safety behavior audit and risk 
assessment as well as for workers 
on risk assessment, safety in 
operation and safe workspace. 
These training sessions are 
delivered by in-house coaches 
who were trained and certified. 
The training covered about 700 of 
employees since November 2017;

– completed the pilot phase of 

the distance learning project 
(3 courses);

– trained 8 921 employees, 

including 60 specialists instructed 
on drilling fluids at the Ivano-
Frankivsk National Technical 
University of Oil and Gas.

Plans for 2018 include training 
in management accounting and 
fundamentals of management, 
external trainings with the 
involvement of world-class 
specialists, the development of 
a distance learning system (the 
development of an in-house 
platform and courses), and the 
establishment of a training center.

UKRNAFTA

In pursuing the personnel 
development and training 
strategy, a number of measures 
were implemented in 2017:
– unified management standards 

were introduced, according 
to which 300 leaders of the 
company were trained in 
effective management;

– special training in finance for 

non-financiers for 60 managers;

– professional training in project 

management, geology, 
geophysics, drilling and 
metrology was organized for 
almost 100 employees of the 
management of the company 

and Research and Design 
Institute of PJSC "Ukrnafta" (RDI);

– engineers have listened to more 

than 10 highly specialized voca-
tional training courses (project 
management, data interpreta-
tion, statistical analysis, etc.);

– external experts delivered 

monthly master classes on time 
management and communica-
tions for all employees 

– company workers are now 

provided with access to One 
Petro – the largest oil and gas 
library in the world.

During the reporting period, 
710 persons were trained in 
new professions at the training 
centers. 4 885 employees, 
including 631 engineers and 
technicians would upgraded their 
qualification.

Plans for 2018 include manager 
development programs and highly 
specialized training events.

UKRTRANSNAFTA

With a view to creating and 
updating the personnel reserve 
in 2017, individual employees 
underwent mandatory periodical 
training and qualifcation 
improvements as required 
by legislation. The following 
programs also were implemented 
and funded: ACCA training and 
second university degree in 
"Gas Pipelines and Gas Storage 
Facility" at the Ivano-Frankivsk 
National Technical University of 
Oil and Gas. The second program 
encompassed 21 managers and 
operators from Ukrtransnafta, 
with their graduate projects 
scheduled for defense in 2018. 

Plans for 2018 also include training 
of employees (accountants, 
economists, HR) in SAP standards 
and ACCA.

  Number of Naftogaz group employees who improved their skills in 2017, persons

Plans for 2018

–  Introduction of HR management system comparable to those at leading international companies –  

the Talent Management system (including a unified personnel training and development system for  

Naftogaz group) to attract, hold, effectively manage, motivate and develop employees who contribute 

significantly to Naftogaz group’s development.

–  Development of performance management system.

–  Unification of the current remuneration systems across Naftogaz group’s enterprises.

–  Establishment of Naftogaz training center.

   Ukrnafta 

   Ukrgazvydobuvannya

   Ukrtransgaz 

   Ukrtransnafta

   Managers 

   Workers

   Middle managers and specialists

13 560

8 921

3 387 

21 741

947

4 130

950

BY THE GROUP 

ENTERPRISES

BY STAFF 

CATEGORIES

OUR RESPONSIBILITY

ANNUAL REPORT 2017

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170

COMPANY OCCUPATIONAL  

AND SAFETY POLICY

Labor safety is one of the basic 

principles of Naftogaz group and 

one of the group’s core corporate 

values: we continuously seek 

to increase our occupational 

health and safety standards while 

reducing the risk of accidents 

and possible environmental 

consequences.

In 2017, the company 

made important steps to 

implement labor safety 

management at the group's 

enterprises. This included the 

company’s new occupational 

health and safety policy, 

objectives and targets 

approved by the board of 

Naftogaz of Ukraine NJSC 

which are in line with the 

requirements of 18001 

standard (ISO 45001), and 

the Regulations on the 

committee on occupational 

safety, environmental and 

industrial safety approved by 

the supervisory board.

The company’s occupational health and safety policy is designed to reduce the 

risk of accidents and other incidents along with occupational diseases among 

employees during the production processes� It is based on the following principles:

■

  

employee life and health are the priority. The employer is fully responsible for creating an adequate, 

safe and healthy work environment;

■

  

monitoring of compliance with occupational health and safety requirements;

■

  

achieving occupational health and safety targets based on comprehensive measures and programs, 

implementation of innovations;

■

  

application of economic methods for occupational health and safety management;

■

 

 providing training and improving employees’ skills to ensure workplace safety;

 

■

  

ensuring coordination between the company’s enterprises in occupational health and safety;

■

  

use of best European and global practices in work environment and labor safety.

All employees at the 

enterprises of the group that 

hold a contract are insured 

against accidents at work and 

occupational diseases; they 

are provided with sanitary 

facilities, means of personal 

and collective protection in 

accordance with established 

standards.

Five-stage operational 

controls are in place at the 

enterprises of the group to 

monitor the state of labor 

protection. Controls include 

inspections of production 

units and workplaces. Labor 

protection services inspect the 

structural units on a regular 

basis. Following the findings of 

the inspections, occupational 

injury preventive measures are 

developed and implemented.

The number of the stages is 

determined individually by 

each enterprise, depending 

on the number of employees, 

structural units, duties of 

officials, availability of labor 

protection service, harmful and 

arduous work environment, and 

many other factors. For example, 

four-stage operational controls 

are applied at Ukrtransgaz and 

three-stage controls at the main 

gas pipeline Kyivtransgaz branch 

office.

The findings of the multistage 

controls are documented in 

a special act and recorded 

in the control log. Identified 

violations are reported to 

management and examined 

thoroughly. Mitigation measures 

are then developed to improve 

occupational safety and to bring 

guilty officials or employees 

to justice. If any violations are 

identified that pose a threat to 

the health and life of people, 

work is immediately stopped.

In compliance with the 

requirements of industrial 

labor protection management 

standards and the relevant 

regulatory documents, 

accidents occurring in the 

workplace and occupational 

safety and health preventive 

measures are monitored and 

analyzed by the enterprises of 

the group on a quarterly basis. 

An official internal investigation 

takes place for each accident 

with grave consequences and 

for each road accident. Officials 

or other employees guilty of 

accidents or road accidents face 

liability.

29 accidents, including  

4 group accidents, occurred 

at the enterprises of Naftogaz 

group (Ukrgazvydobuvannya, 

Ukrtransgaz, Ukrnafta, 

Ukrtransnafta, 

Chornomornaftogaz, 

Ukravtogaz, Ukrspetstransgaz, 

Naukanaftogaz, 

Naftogaz-Energoservis, 

Zakordonnaftogaz, 

Vuhlesyntezgaz Ukrainy, 

Gas of Ukraine, Likvo, 

Naftogazobslugovuvannya, 

Center for Metrology and 

Gas Distribution Systems, 

Kirovohradgaz) in 2017. Due 

to these accidents, 35 people 

suffered injuries, including 

three deaths. 40% of the victims 

were injured in road accidents, 

mostly on public highways. 

The number of accidents and 

injuries increased compared to 

2016.

The accident frequency rate at 

the enterprises of the Naftogaz 

group in 2017 amounted to 0.486 

(in 2016 – 0.374

85

), the severity 

rate – 71.00 (in 2016 – 49.85)

86

.

Loss of time due to the accidents 

related to production amounted 

to 2272 man-days in 2017 

(1296 in 2016), of which 1,063 

man-days at Ukrnafta, 675 man-

days at Ukrgazvydobuvannya, 

473 man-days at Ukrtransnafta, 

and 61 man-days at in Ukrtrans-

gaz

87

.

85 

The accident frequency rate and the loss of 
time due to accidents for 2016 differs from 
those mentioned in the Annual Report 2016 
since in February 2017 an employee of the 
Company submitted documentation of injury 
in an accident that occurred in November 
2016. Following review of the documents, the 
accident frequency rate and the loss of time 
for 2016 were updated accordingly.

86 

Accident severity rate is calculated using the 
formula: D/N, where D = the number of work 
days lost due to injury for the reporting period; 
N = the number of the reported workplace 
accidents

87 

Loss of time is calculated based on working 
days only.

  Number of accidents

2015

2016

2017

3

8

5
5

3

11

5

5

1

4

11

9

4

  Ukrtransnafta   

  Ukrgazvydobuvannya 

  Kirovohradgaz

  Ukrnafta 

 

  Ukrtransgaz

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24 accidents including 5 fatalities

27 accidents including 2 fatalities

35 accidents including 3 fatalities

  Analysis of accidents by types of causes, 2015-2017

THE MAIN CAUSES OF ACCIDENTS:

■

  

19 accidents (66% of total accidents), of which 4 were group accidents, occurred due  

to organizational reasons, resulting in injuries to 25 employees (71% of the total number of victims), 

including 3 deaths;

■

  

9 accidents (31%) – due to psycho-physiological causes, resulting in 9 employees injured (26%);

■

  

1 accident (3%) – due to technical causes, resulting in 1 injured employee (3%).

ORGANIZATIONAL CAUSES OF ACCIDENTS:

■

  

violation of driving regulations (classifier code 21) – 12 injured including 1 death;

■

  

failure to comply with the requirements of the labor safety instructions (classifier code 24.2) – 8 injured 

including 2 deaths;

■

  

failure to perform the employment duties (classifier code 24.1) – 3 injured;

■

  

violation of safety requirements during the operation of vehicles (classifier code 20) – 2 injured.

PSYCHO-PHYSIOLOGICAL CAUSES:

■

  

injuries due to unlawful actions of other persons (classifier code 31) – 4 injured;

■

  

carelessness of the victim (classifier code 32) – 4 injured;

■

  

alcohol intoxication (classifier code 27) – 1 employee injured.

TECHNICAL REASON:

■

  

construction deficiencies, imperfections, insufficient reliability of means of production  

(classifier code 01) – 1 employee injured.

"F" – fatal accidents

2017

2016 

2015 

14/1"С"

1/1"С"

10/2"С"

6/1"С"

5

5

4

2

3

3

1

2

1

1

3

3

3

2

2

1"С"

1

3/2"С"

5/1"С"

4/1"С"

   Fall of an injured person
   Traffic accident
    Injuries caused by moving objects
   Intentional injury inflicted by other person
   Fall of equipment
   Toxic substance
   Landslide
   Transfer of technology or vehicles
   Other

   Traffic accident
   Fall of an injured person
   Injuries caused by moving objects
   Intentional injury inflicted by other person
   Contact with animals (dog bite)
   Poor health
   Gas dynamic phenomena
   Injuries caused by objects reacting under 

pressure

   Fall of equipment

   Traffic accident
   Injuries caused by moving objects
   Fall of an injured person
   Intentional injury inflicted by other person
   Fall of equipment
   Electrocution
   Other

1

1

  Causes of injuries and accidents (number of injured employees), 2015-2017

2015

2016

2017

7

3

13

1

6

18

9

1

25

  Physiological

  Organizational      

  Technical

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Safeguards

In 2017, the labor protection 

services and the standing 

committees of the group's 

enterprises conducted 

12 430 inspections of health 

protection (12 210 in 2016). 

In response to identified violations, 

1722 workers were deprived of 

a bonus, 150 were reprimanded, 

and four were dismissed from their 

positions.

181 inspections of occupational 

safety and health were 

conducted by the State Labor 

Service of Ukraine at the 

enterprises of the company in 

2017. Identified violations of 

the requirements of the labor 

protection regulations formed the 

basis for the State Labor Service 

to suspend the works and use 

of equipment and facilities; 101 

employees hold administratively 

liability.

During 2017, 2561 work places 

were certified at the enterprises of 

the group. Due to this certification, 

measures are being developed 

and implemented to improve 

working conditions.

Seven workshops entitled, “Stress 

Management in Occupational 

Safety Management” (reducing 

the level of psychosocial risks)” 

were organized and conducted in 

February-March 2017.

The statistics on accidents 

indicate that road traffic safety 

remains the most urgent issue 

in the field of occupational 

safety. To improve this situation, 

39 employees of the group’s 

companies were trained on “Road 

Safety Management Systems 

in the enterprise in accordance 

with the requirements of 

ISO 39001: 2012” and received 

certificates. 

Fire safety

Overall, there are 228 fire safety 

specialists in the company. 

Of these, 129 are full-time staff 

and 99 are employees who 

perform other functions in 

parallel. 186 fire and technical 

commissions and 352 fire 

brigades and teams have been 

formed at the enterprises of the 

group, featuring 4536 persons. 

Fire wardens have been 

appointed at enterprises, 

regulations and instructions have 

been developed, and training 

and fire safety drills are regularly 

conducted.

7021 internal fire safety 

inspections were carried out at 

the enterprises of the company 

in 2017, which led to the 

identification of 29 468 violations. 

143 disciplinary penalties 

were imposed for violation of 

fire safety rules, including on 

21 officials.

The objects of the group are 

guarded by 25 fire and rescue 

units of the Emergency Service 

Overall, Naftogaz group spent UAH 153�8 million on fire 
protection measures in 2017, of which:

UAH 3�8 

mn

upgrading the fire-fighting equipment

UAH 40�1 

mn

R&D

UAH 1�6 

mn

fulfillment of orders

UAH 15�5 

mn

fire detection and extinguishing systems maintenance in the proper 
condition, purchase of fire extinguishing equipment

UAH 84 

mn

Emergency Service fire departments guarding the company's 
facilities on a contractual basis

UAH 8�8 

mn

other fire-prevention measures

of Ukraine with 84 firefighting 

vehicles on a contractual basis. 

The number of personnel in 

these units amounts to 935 

persons. There are 79 fire depots 

on the balance sheets of the 

group's enterprises.

Enterprises have installed 

3826 units of automatic 

fire alarm equipment and 

996 units of automatic fire 

extinguishing equipment.

230 departmental fire 

vehicles are ready to 

be used to extinguish 

fires, including 118 fire 

apparatuses (24/7), one 

fire-fighting boat, and 98 

fire engines. Additionally, 

1044 fire ponds are in 

place.

During 2017, two minor fires 

occurred at the enterprises 

of Naftogaz group; they were 

promptly liquidated and caused 

no significant losses. There were 

no victims or injured.

Protection of industrial objects

Due to the strengthening of 

industrial facilities protection 

and the use of modern technical 

means, the number of offences 

against the property of the 

group's enterprises significantly 

decreased.

357 incidents were recorded in 

2017 (474 in 2016) including:

• 130 illegal oil, gas

and condensate taps 

(226 in 2016); 

• 123 damages (destruction)

of technological equipment 

(pipeline electrochemical 

protection systems, well 

X-mass trees, block valve 

stations, etc.).

Investments in labor protection

The company’s actual investment 

in the occupational health and 

safety of workers increased 

by 24% and amounted to 

UAH 205.3 million against 

UAH 155.9 million the previous 

year, which is 2.4% of the payroll in 

2017 (the regulatory rate is 0.5%). 

Employees of the company’s 

enterprises are provided with 

overalls, special footwear and 

personal protective equipment.

  Investments in labor safety, UAH million

Ukrtransgaz 

Ukrgazvydobuvannya 

Ukrnafta

Ukrtransnafta

Other

46.8

21

61.3

61.6

26.4

54.7

82.5

38.1

68.4

5.3

10.8

13.7

2.1

2.3

2.6

 2015

 2016

 2017

OUR RESPONSIBILITY

ANNUAL REPORT 2017

177

176

Targets for 2018

–  Certification of labor protection management systems in accordance with OHSAS 18001 standard 

(ISO 45001);

–  Implementation of ISO 39001: 2012 “Road Traffic Safety Management Systems Requirements with 

guidance for use” at the enterprises of the company;

–  Implementation of an environmental protection and social measures plan within the framework of the 

IBRD loan agreement;

–  Development of an Industrial Safety Management System at PJSC Naftogaz of Ukraine;

–  Implementation of an automated system of accounting for accidents and incidents at the production 

facilities of Naftogaz group.

  Investments in labor safety in 2017, UAH thousand

TOTAL 

Providing employees with personal  

protective equipment

Bringing the enterprises' fixed assets into compliance 

with the requirements of labor protection regulations 

Elimination and minimization of the impact of hazardous 

and harmful production factors on employees

Special food for employees working in dangerous 

conditions

Health screening of employees

Training in labor safety

Detergents and antiseptic agents 

Certification of workplaces

Operations of labor protection offices

Provision of employees with normative documents  

on occupational safety

Measures to prevent injuries among the population

Personal protective equipment checks and testing 

Other*

113 824.17

28 221.34

10 781.97

10 096.74

6 613.50

5 010.34

2 903.66

1 624.83

734.31

626.38

315.93

259.61

24 298.58

205 311.36

%

100�00

55�44

13�75

5�25

4�92

3�22

2�44

1�41

0�79

0�36

0�31

0�15

0�13

11�83

 Investments, UAH         % of the total amount spent on labor protection

CONTRIBUTION TO THE SOCIAL 

DEVELOPMENT OF LOCAL 

COMMUNITIES

The companies of Naftogaz 

group operate on the principle 

of social responsibility and 

invest in the development 

of local communities in 

a systematic way while 

recognizing the importance of 

developing an effective model 

of interaction between business 

and society. This activity is 

carried out in close cooperation 

and interaction with local 

communities on the basis of 

partnership and aims to satisfy 

their needs.

Naftogaz group companies are committed to the principles of 

the UN Global Compact and are committed to the sustainable 

development of business, personnel and society� In its corporate 

social responsibility (CSR) activities the company seeks to achieve 

the following goals: 

■

  

development of a successful, competitive business which 

ensures the long-term growth of share value and promotes 

the economic welfare of the community as a whole;

■

  

reducing the negative impact on the environment through 

modernization of equipment and introduction of modern 

resource-saving and more environmentally friendly 

technologies, application of best practices in the field of 

environmental management;

■

  

promotion of socio-economic development and welfare 

of the regions of Ukraine wherever the company's 

production facilities are located, in partnership with public 

authorities and local communities, including through the 

implementation of charitable programs and social projects;

■

  

building sustainable partnerships with all stakeholders 

based on compliance with applicable laws and regulations, 

industrial standards, contractual and other obligations.

POLITICAL PRIORITIES OF THE COMPANY IN TERMS OF SOCIAL 

RESPONSIBILITY AND SUPPORT FOR LOCAL COMMUNITIES

When considering the support of 

social projects and programs, the 

company’s most preferable projects 

are those that:

■

  

meet the priority areas of 

corporate social responsibility 

policy and corporate strategy;

■

  

are implemented on a systemic 

basis, are long-term, and are 

aimed at solving significant social 

problems;

■

  

are relevant and requested by 

the stakeholders, are in line 

with the strategic interests 

of the company's business 

development;

■

  

use the best practices and 

modern technologies in the 

social sphere.

Interaction with local communities

In the area of support for local 

communities, Naftogaz and its 

subsidiaries are governed by 

provisions on charity, corporate 

social responsibility policies and 

corporate strategy.

In addition, taking into account 

the important social role of 

the company, a committee 

on occupational safety, 

environment, safety and reserves 

was created in February 2017. 

This committee is a permanent 

consultative and advisory 

body to the supervisory board 

whose main task is to study, 

prepare for consideration and 

provide recommendations to 

OUR RESPONSIBILITY

ANNUAL REPORT 2017

179

178

the supervisory board in the 

fields of labor protection, the 

environment and security.

The decision to establish the 

committee was taken by the 

supervisory board to ensure 

that social and environmental 

issues are addressed at the 

highest level as practiced by 

leading international oil and gas 

companies.

The extractive enterprises of the 

group, Ukrgazvydobuvannya 

and Ukrnafta, enter into social 

agreements with the authorities 

of the regions in which they 

operate on a voluntarily basis, 

in the spirit of partnership 

and goodwill, in accordance 

with best European practices. 

Specialists from Ukrtransnafta 

provide professional assistance 

in solving the administrative 

and economic problems of the 

community.

Unfortunately, a recent 

stumbling block was the refusal 

of local authorities and Staty 

Geology and Mineral Resources 

Service to grant special permits 

for oil and gas production. 

Ukrgazvydobuvannya has to 

extend the validity of its 37 

special permits in 2018, and 

Ukrnafta – 27 special permits. 

Although the Poltava Regional 

Council has failed to approve the 

issuance of special permits for 

Ukrgazvydobuvannya for three 

years, the company continues 

to fund social development and 

infrastructure on a voluntarily 

basis and has transferred almost 

UAH 90 million to Poltava 

communities in 2015-2017.

According to experts from 

Ukrgazvydobuvannya, the 

development of the gas fields 

covered by the permits that are 

currently blocked by Poltava 

Regional Council would have 

additionally provided the local 

budget with the following 

amounts: in 2018 – about 

UAH 100 million, in 2019 – about 

UAH 300 million, in 2020 – more 

than UAH 600 million.

The abovementioned 

blocked sites are located 

near discovered fields which 

are currently developed by 

Ukrgazvydobuvannya. The 

annual production from these 

sites amounts to about 1 bcm. 

In other words, if granted the 

special permits, the company 

would start exploration as soon 

as possible and find natural gas 

deposits with the similar annual 

production rates in the next 2-3 

years.

Naftogaz group companies 

are keen to enter into dialogue 

with local communities, 

especially in view of the Law 

of Ukraine "On Environmental 

Impact Assessment" which is 

effective since 18 December 

2017 and which introduces 

a new European model 

of environmental impact 

assessment (EIA) procedure. 

According to the Law, the 

EIA procedure is obligatory 

before any decision is taken on 

extension of the term of special 

permits for the use of subsoil.

The EIA procedure provides for 

the right to and opportunity 

for the public to participate in 

such a procedure. This includes 

at least 25 working days given 

to the public. They are also 

invited to take part in open 

hearings on the EIA reports and 

to submit their comments and 

suggestions. 

On 3 March 2018, the first 

open public hearings of the 

reports on environmental 

impact assessment of the 

planned extraction of minerals 

from the Pasichnanske oil 

and gas condensate field in 

Nadvirna (Ivano-Frankivsk 

region) were held at the oil 

and gas production facilities 

Nadvirnanaftogaz and 

Boryslavnaftogaz owned 

by Ukrnafta. The deposit is 

located on the territory of five 

village and town councils. 

Almost 100 representatives of 

the communities of all these 

settlements were present at 

these hearings. In addition to 

environmental issues, a great 

number of socio-economic 

issues were discussed. The 

communities agreed with the 

relevant Ukrnafta EIA reports 

and expressed their full support 

with regard to prolongation of 

the special permits, as well as 

hope for further expansion of 

activities as it directly affects the 

welfare of these communities 

and their neighbors.

Revenues for local budgets from rent payments

On 20 December 2016, the 

Verkhovna Rada adopted Law 

No. 3038 on the decentralization of 

gas extraction rents, which enabled 

the transfer of 5% of rent payments 

for the needs of local communities 

from January 2018. This is one of 

the key draft laws that Naftogaz 

companies actively lobbied 

together with deputies, experts 

and private companies to ensure 

that residents of the areas where 

oil and gas are being produced can 

directly benefit from the presence 

of extractive enterprises.

Consequently, the greater the 

production of hydrocarbons in 

the territory of the community, 

the more revenue it receives. The 

law provides for 2% of the rent to 

be directed to regional budgets, 

2% to district budgets and 1% 

to the budgets of the local 

governments (where the relevant 

natural resources are located 

(produced).

According to preliminary 

estimates, the total revenues 

allocated to the budgets of 

regions, districts and communities 

from the rent payments of 

Ukrgazvydobuvannya will 

amount to UAH 1.2 billion in 2018, 

while Ukrnafta will pay about 

UAH 270 million.

However, the unsettled issue 

of Ukrnafta's tax debt may 

hinder these plans. During 

2017, the State Fiscal Service 

of Ukraine (SFS) at its own 

discretion credited the current 

rent payments from Ukrnafta 

as repayment of the tax debt. 

If the rent payments in 2018 

are also directed to repayment 

of previous debts, local 

communities may not receive 

revenues from rent payments.

In order to pay off the tax debt, 

Ukrnafta offered 2 bcm of gas, 

which at current prices costs 

almost UAH 15 billion and 

fully covers the debt. Another 

option is debt restructuring and 

repayment over a three-year 

period. Ukrnafta sent the relevant 

proposals to the SFS back in May 

2017. However, no substantive 

response from government 

officials has yet been received.

  Planned rent payments from Ukrgazbydobuvannya to local budgets, UAH 

Kharkiv region

Poltava region

Dnipropetrovsk region

Lviv region

Ivano-Frankivsk region

Lugansk region 

Sumy region 

Volyn region 

Chernivtsi region

Zakarpattya region 

Donetsk region 

50 225 665

41 227 607

3 438 891

3 197 645

889 641

451 749

438 410

268 522

10 541

5 250

4 334

602 707 982

494 731 282

41 266 696

38 371 742

10 675 687

5 420 985

5 260 918

3 222 266

126 497

62 997

52 008

ACTUAL TAX LIABLITIES  

FOR JANUARY 2018:

 

100

million

 FORECAST TAX 

LIABLITIES  

FOR 2018: 

1�2 

billion

*

 

The existing Ukrgazvydobuvannya production facilities are located on the territory of 11 regions.

**  Expected revenues from rent payments according to the planned performances in 2018 to:

– regional budget – UAH 480.8 million
– district budgets – UAH 409.0 million
– local budgets – UAH 312.1 million