НАК „НАФТОГАЗ УКРАЇНИ“. Річний звіт англійською (2017 рік) - 12

OUR RESPONSIBILITY

ANNUAL REPORT 2017

181

180

Social investments by Ukrgazvydobuvannya

Ukrgazvydobuvannya, the largest Ukrainian gas 

producing company, increases its financial support to 

local communities every year.

The Poltava, Kharkiv and Lviv regions where the 

deposits are located are of particular importance for the 

operations of Ukrgazvydobuvannya.

In 2017, within the framework of cooperation with 

81 local communities, Ukrgazvydobuvannya financed 

208 projects worth UAH 100.485 million.

The list of objects is formed in cooperation with local 

government bodies and the company’s production 

units. The objects that are financed under the social 

agreements include roads, water pipelines, and a rural 

stadium. Most of the projects are already completed, 

while some are in the process of active implementation.

Social agreements are concluded directly with village and 

town councils in places of extraction and are based on 

the principles of targeting, transparency and intended 

use control.

More detailed information about specific objects 

supported by the company and the state of 

financing can be found on an interactive map 

at the Ukrgazvydobuvannya website in the 

Social Responsibility section.

Poltava region

In 2017, funds allocated by 

Ukrgazvydobuvannya for 

infrastructure and the social 

sphere of the Poltava region 

amounted to UAH 48 million. 

In addition, Ukrgazvydobuvannya 

provided UAH 1.1 million as 

a charitable donation to local 

communities. In 2017, the volume 

of funding to Poltava region 

under the social agreements 

increased 2.5 times compared 

to 2016. The geography of the 

social agreements also expanded 

to cover 49 settlements versus 

44 in 2016.

Ukrgazvydobuvannya is 

implementing a number of 

The company provided financial support 

for the following works: 

UAH 16�5 million

road repair: 85 sections

UAH 9�7 million

refurbishment of educational institutions (schools, 

kindergartens): 17 objects

UAH 25 million

refurbishment of other buildings (hospitals, 

community centers): 43 objects

UAH 39 million

construction/repair of networks (electric, water, gas 

distribution): 35 objects

UAH 10 million

other projects (improvement, rehabilitation of 

residential houses, etc.)

Local community development 

social program supported 

by Ukrgazvydobuvannya,

UAH million

UAH’000

Up to 200 

   200-400 

400 –1 million

 > 1 million

6

5.6

0.2

0.7 

3.8 

3.6 

3.6 

0.6 

2.4

8.8

Lokhvytsia

Hadiach

Zinkiv

Chutove

 Kotelva 

Dykanka

Poltava

Reshetylivka

Karlivka

Mashivka

Novi Sanzhary 

Myrhorod

1.2

11.5

 48.0 

Total funds transferred:

environmental projects in 

the Poltava region. In 2017, 

the company continued 

implementation of a program 

designed to provide remote areas 

with high-quality drinking water. 

Even small towns such as Sencha 

village, which is located 150 

kilometers from Poltava and has 

about three thousand residents, 

received financial resources to 

solve urgent problems. 

Kharkiv region

Kharkiv region is one of the 

leaders in natural gas reserves 

and production in Ukraine. 

The largest enterprise in 

the sector in this region is 

Shebelynkagazvydobuvannya, 

which is owned by 

Ukrgazvydobuvannya. In 2017, 

Shebelynkagazvydobuvannya 

extracted almost 35% of the total 

natural gas produced in Ukraine.

The objective of the social 

investments made by 

Ukrgazvydobuvannya in Kharkiv 

region is creating favorable 

conditions for the economic and 

social development of the region. 

In 2017, the company invested 

UAH 34.2 million to support the 

social development of the region.  

Lviv region

In 2017, Ukrgazvydobuvannya 

transferred UAH 12 million to 

the budget of Lviv region under 

a tripartite memorandum of 

cooperation between Lviv 

Regional State Administration, 

Lviv Regional Council and 

Ukrgazvydobuvannya. The 

funds provided by the company 

were used for the construction, 

refurbishment and maintenance 

of social and road infrastructure 

objects owned by the local 

communities, on whose territory 

Lvivgazvydobuvanya (which is 

part of Ukrgazvydobuvannya) 

units are located.

UAH 2.8 million was spent on the 

construction of treatment facilities 

in the village of Mizhenets, 

Starosambirsky district.

Local community development 

social program supported 

by Ukrgazvydobuvannya,

UAH million

UAH’000

Up to 200 

   200-400 

400 –1 million

 > 1 million

1.7

34.2 

Total funds transferred:

1

Bohodukhiv

1

Nova Vodolaha 

Kharkiv

2.2

4.2

Krasnokutsk

1.1

Valky

1.3

1.5

Krasnohrad

Kehychivka

Pervomaiskyi

15.5

Balakliia

4.7

Velykyi Burluk

Kolomatskyi

0.3

Zolochiv 

Local community development 

social program supported 

by Ukrgazvydobuvannya,

UAH million

12 

Total funds

transferred:

0.33

Sokal

1.2

Yavoriv 

2.8

Staryi Sambir 

Sambir 

Drohobych 

0.1

Mostyska

0.7

Horodok

0.1

Pustomyty 

Mykolaiv

3.2

0.9

Lviv

1.4

0.8

Stryi 

0.4

UAH’000

Up to 200 

   200-400 

400 –1 million

 > 1 million

OUR RESPONSIBILITY

ANNUAL REPORT 2017

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182

Social partnership in action: improvements at the Western Region Military Medical Clinical Center in the city of Lviv

Ukrnafta, within its capabilities, 

provides social investments to 

support local communities as 

well as charitable donations to 

third parties. The beneficiaries of 

this charitable support include 

territorial communities (local 

self-governing bodies and local 

authorities), orphanages, schools, 

boarding schools, healthcare 

facilities and other organizations. 

In the vast majority of cases, 

the beneficiaries of charitable 

support are located in the 

areas where the company 

operates. Assistance is provided 

in the form of free provision of 

materials, works and services, 

etc. In 2017, Ukrnafta's social 

investments amounted to 

UAH 29.3 million.

Targeted charitable aid to ATO soldiers*

Since the end of 2014, Naftogaz 

has been actively implementing 

its own targeted charitable aid 

program to support the army 

and volunteer battalions in 

the area of hostilities, as well 

as via healthcare institutions. 

The decision to participate 

in projects of targeted 

charitable aid was taken 

by the commission for the 

organization of purchase and 

transfer of goods, accessories, 

and other means for ATO 

participants in the area of 

hostilities.

In line with the decision of 

the commission, the company 

provides targeted charitable 

aid for the means of protection 

and equipment for Ukrainian 

combatants in the east of the 

country, as well as the purchase 

of equipment required for the 

treatment of wounded soldiers.

In March 2017, Naftogaz and Gaz 

Ukrainy transferred to the Ministry 

of Internal Affairs of Ukraine for 

free 50 apartments in the town 

of Gorishni Plavni (Poltava region) 

with a total market value of almost 

UAH 35 million for accommodation 

of ATO participants and their 

families.

Comfortable conditions for patients at a healthcare facility are a 

treatment factor. This pleasant hospital courtyard will definitely 

energize our patients, which accelerates their recovery

Deputy сhief of the Military Medical Clinical Center Ivan Derzhylo

In 2017, the employees of Naftogaz 

collected UAH 10.1 million of their 

own funds, of which UAH 5 million 

was spent to support ATO soldiers, 

and UAH 5.1 million went to 

support healthcare facilities for the 

treatment and rehabilitation of 

soldiers.

At the staff meeting of the labor 

collective of the company on 

29 December 2017, the participants 

of the meeting unanimously 

supported the proposal to continue 

collecting funds for ATO assistance 

during the first half of 2018. The 

next regular meeting will be held 

in June. 

First of all, assistance was provided to military units located on the 

contact line, in the zone of active hostilities. Aid was also received by 

servicemen of the Genichesk border service unit of the Berdyansk border 

platoon, which guards the Strilkovo gas field. We have helped to impove 

their stationing conditions by purchasing construction materials and 

other goods

Sergiy Pereloma, first deputy chairman of Naftogaz executive board

Aid was provided for the treatment of 

11 045

 

ATO participants, including over 

200

 injured by 

purchasing implants for hospitals

SUMMARY OF AID PROVIDED 

TO ATO SOLDIERS IN 2014–2017

Clothing and military gear were provided for 

more than 

2 300

 fighters

Several thousand units

 of special equipment 

and devices were sent to combat units: radio 

sets, thermal imagers, generators

The material assistance was collected in the 

amount of 

UAH 22�7 million

Real estate, motor transport and other tangible 

assets worth more than 

UAH 75 million

 transferred 

to the Armed Forces of Ukraine and the Ministry 

of Internal Affairs

NAFTOGAZ EMPLOYEES SUPPORT TO ATO SOLDIERS IN 2017

UAH 5�0 million

aid to ATO soldiers, incl. UAH 78 000 for 
presents to ATO soldiers’ children

UAH 5�1 million

aid to healthcare facilities for soldier 
treatment and rehabilitation

UAH 10�1 million

collected

51%

49%

* Starting from 30 April 2018 the ATO format was replaced by the Joint forces operation (JFO)

OUR RESPONSIBILITY

ANNUAL REPORT 2017

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184

Sponsorship

The companies of the group 

are active in the social and 

public sphere and are involved 

in a number of projects 

implemented by charitable 

foundations and sports 

associations.

Ukrgazvydobuvannya and 

Naftogaz are sponsors of the 

Games of Heroes initiative – 

an international competition 

among people with disabilities 

and war veterans. The company 

spent UAH 1.2 million to support 

the project. The implementation 

period is May-October 2018 

(66 stages in different cities with 

finals in Kyiv).

During 2017, a large number of 

employees of the subsidiaries 

of the group participated in 

fundraising marathons like the 

25

th

 Chestnut Run, the Wizz Air 

Kyiv City Marathon 2017, and the 

Nova Poshta Kyiv Half Marathon 

Weekend. During these events, 

more than UAH 1.5 million 

was collected and used for the 

purchase of equipment for the 

research and practical center 

of children's cardiology and 

cardiosurgery and in support 

of the charitable foundations 

projects.

Every year, the department 

of external and internal 

communications of 

Ukrtransnafta organizes a 

charitable fundraising event for 

certain target needs. In 2017 

a Lemonade Day was held 

which raised UAH 12 510 for the 

Charity Fund “Tabletochki”.

Charity Christmas and 

St. Nicholas Day events are 

organized at the enterprises 

of the group. The joint efforts 

of the employees of the 

subsidiaries of the group 

resulted in fundraising for over 

30 000 sweet gifts for children in 

boarding schools, orphanages, 

general education schools, and 

low-income families.

ENERGY EFFICIENCY

The corporate objectives of Naftogaz group are to promote energy efficiency through the provision of 

modern energy services and the introduction of energy efficient technologies and processes.

Types of energy used by the group enterprises

The main reasons for the increase in energy 

consumption (natural gas) in 2017 were:
–   іncrease in natural gas consumed by 

Ukrtransgaz for the operational needs 

of gas pumping units engaged in the 

transit of natural gas through the territory 

of Ukraine that significantly increased in 

2017;

–   increase in gas extraction by 

Ukrgazvydobuvannya which required 

additional energy.

In 2017, the group utilized 3�2 million tons of oil 

equivalent for technological needs, including:

3�2 bcm

natural gas 

1�4 billion kWh

electricity 

647�0 thousand Gcal 

heat

161�2 thousand tons

oil (gas condensate)

340�6 ktoe 

other fuel and energy resources (FER) (boiler and furnace fuel)

  Use and savings of FER by Naftogaz group companies in 2010-2017, Mtoe

   2010 

2011 

2012 

2013 

2014 

2015 

2016 

2017

8

7

6

5

4

3

2

1

0

8

6

4

2

0

5�0

5�7%

6�1%

7�1%

5�3%

4�1%

5�3%

7�6%

6�9%

4�9

3�6

3�8

3�3

3�2

2�6

3�2

%

Mtoe

Actual savings of 
FER (compared 
to the targets) 
(right axis)
FER consumption 
(left axis)

OUR RESPONSIBILITY

ANNUAL REPORT 2017

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186

19�7% 

UKRNAFTA

20�5% 

UKRGAZVYDOBUVANNYA

 

59�4% 

UKRTRANSGAZ

0�1% 

UKRAVTOGAZ

0�0% 

UKRSPETSTRANSGAZ

0�4% 

UKRTRANSNAFTA

By type of FER 

83�0%

NATURAL GAS 

10�9% 

OTHER TYPES OF FER 

3�6% 

ELECTRICITY 

2�5%

HEAT  

Results of energy saving policy

Due to energy saving measures implemented 

under the NJSC Naftogaz of Ukraine Energy 

Efficiency Program for 2015-2020 and the Energy 

Saving Programs of its subsidiaries, the group was 

able to save 232.3 ktoe in 2017. 

Natural gas savings amounted to 253.7 mcm, 

electricity – 54.6 million kWh, heat energy – 

98.8 thousand Gcal.

The total cost of the fuel and energy  

resources saved in 2017 amounted  

to UAH 1 981 million (including VAT).

  Technological consumption of FER by Naftogaz group companies in 2017

By the companies 

of the group

Actual energy savings exceeded the target 

figure of 67�6 ktoe, including

68�9 mcm

natural gas 

40�6 million kWh

electricity 

4�9 thousand Gcal

heat  

1�2 ktoe

other types of fuel 

10�9%

83�0%

2�5%

3�6%

  FER saved by Naftogaz companies, 2014-2017 

  FER saved, ktoe

Total (ktoe)

Natural gas (mcm)

Heat (thousand Gcal)

Electricity (million kWh)

Other types of FER (ktoe)

140.1

176.5

214.8

232.3

151.7

192.9

240.1

253.7

86.8

108.8

106.0

98.8

23.5

24.9

25.6

54.6

0.8

0.9

0.9

1.2

 2014          2015          2016          2017

By program

164�6

NAFTOGAZ ENERGY EFFICIENCY 
PROGRAM FOR 2015-2020  

67�6

ENERGY SAVING PROGRAMS OF 
THE SUBSIDIARIES OF THE GROUP

TOTAL 

232�3

164�6

67�6

By company 

187�9

UKRTRANSGAZ 

25�6

UKRGAZVYDOBUVANNYA

8�0

UKRNAFTA

10�9

UKRTRANSNAFTA

TOTAL

 

232�3

OUR RESPONSIBILITY

ANNUAL REPORT 2017

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188

Implementation of the energy management system  

at enterprises of the group

In 2017, the group proceeded 

with implementation of the 

Energy Management System 

(EMS) in accordance with the 

requirements of the International 

Standard ISO 50001 as part of the 

integrated management system:

•  the Energy Efficiency Policy,

the goals and tasks in the 

field of energy management 

for 2017-2020 are approved;

•  business processes for

the energy efficiency 

management of enterprises 

of the company are 

formalized. For each process, 

responsible persons are 

assigned, key performance 

indicators, risks, input and 

output information flows are 

identified;

•  an independent external

audit of the energy 

management system has 

been carried out by TUV-

SUD firm.

Implementation of energy efficient projects

On 7 February 2017, one of the 

largest investment projects 

aimed at modernization of the 

gas transmission infrastructure 

of Ukraine was launched - 

the reconstruction of the 

compressor station in the town 

of Bar in Vinnytsia region (Soyuz 

pipeline).

The project is supported by 

Deutsche Bank with a total cost 

of more than EUR 79 million. The 

German engineering company 

Ferrostaal Industrieanlagen was 

chosen as the general contractor. 

The reconstruction will increase 

the energy efficiency of the GTS. 

In particular, the efficiency of 

gas pumping units will increase 

from 25% to 36%, natural gas 

consumption during transmission 

will decline, and emissions into 

air during the operation of the 

station will comply with the EU 

environmental standards.

In October 2017, 

OJSC Kirovohradgaz (51% 

owned by Naftogaz of Ukraine) 

jointly with the Housing 

Energy Efficiency Program 

supported by the European 

Bank for Reconstruction and 

Development (EBRD) IQ Energy 

started the project aimed at 

modernization of heating systems 

in residential buildings in the city 

of Kropyvnytskyi in Kirovograd 

region. Of the 192 000 units of 

heating equipment in Kirovograd 

region, about 44 000 are obsolete, 

the actual efficiency of which is 

not more than 70%. A program 

called Affordable Heat, within 

which residents can receive a 

35% refund for the installation 

of an energy efficient gas boiler, 

will set for implementation 

until September 2020. The total 

compensation for the installed 

heating equipment will be 

EUR 15 million.

In addition, within the Affordable 

Heat project, OJSC Kirovohradgaz 

will launch an intelligent 

gas accounting pilot project 

that would enable remote 

(contactless) readings of domestic 

gas meters. Due to these 

intelligent meters, energy savings 

of 3% are expected.

Expansion of Naftogaz's service activities

In accordance with the goals of 

the Naftogaz group’s corporate 

strategy, a decision was made to 

expand activities in the field of 

renewable energy and energy 

service contracts. The subsidiary 

Naftogaz-Energoservis was 

created for this purpose.

It is anticipated that Naftogaz-

Energoservis will implement 

projects at the facilities of 

Naftogaz group and other natural 

gas consumers in the following 

areas:

– improvement of natural gas effi-

ciency when used for individual 

heating;

-  organization of combustion 

products heat utilization at the 

facilities of Naftogaz group;

-  organization of utilization of 

energy generated by natural 

gas excessive pressure at the 

facilities of Naftogaz group;

-  organization of the extraction of 

deep geothermal energy using 

exhausted oil and gas wells;

-  increasing the efficiency of 

natural gas use by district heat-

ing systems (replacement of 

inefficient equipment, optimi-

zation of heat supply routes by 

installation of additional boilers, 

installation of individual heat 

points);

-  implementation of other 

energy efficiency, renewable 

energy, secondary energy and 

alternative fuels projects.

The objective is to create an 

energy service that will allow 

consumers to reduce the use of 

natural gas due to renewable 

energy and increased energy 

efficiency.

1.

 Continue implementation of the Energy Efficiency Program. In 2018, it is planned to save about 

108.1 ktoe, including 124.657 mcm of gas, 14.582 million kWh of electricity, 27.954 thousand Gcal of 

thermal energy.

2.

 Complete certification of the Energy Management System in accordance with the requirements of the 

International Standard ISO 50001 with the receipt of the corresponding certificate.

3.

 Ensure the formation of an investment portfolio of the State Enterprise Naftogaz-Energoservis for the 

purpose of implementation of energy efficiency and renewable energy projects at the facilities of 

Naftogaz group, in the public sector and in the household sector.

4.

 Develop and approve the Policy and Objectives of the enterprises in energy management for 2018  

and beyond.

The most important tasks in energy efficiency improvement for 2018 are to:

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ECOLOGY AND ENVIRONMENT 

PROTECTION

Naftogaz group companies are committed to minimizing negative impact on the environment, 

ensuring sustainable development of the group, harmonizing the economic interests of the group and 

society, and the implementation of international and European standards. In its activities, the company 

is guided by current Ukrainian legislation, the principles of European environmental law, and the best 

world practices in this area. 

In 2017, the board approved 

an updated environmental 

policy that meets the 

requirements of ISO 14001 and 

determines the principles of 

the company's activities and 

its responsibilities with regard 

to environmental protection. 

The board also approved goals 

and targets in the field of 

environmental protection and 

plan for implementation by 

2019 (hereinafter – the Goals). 

In pursuing these Goals, the 

consumption of water resources 

was reduced by 17% in 2017 

and temporarily stored oil-

containing waste at industrial 

facilities of the company’s 

enterprises decreased by 17.1%.

During 2017, a set of works 

was performed to diagnose 

the existing management and 

production processes of the 

company including: diagnostic 

audit, description of types of 

activities, organizational structure 

and management functions; 

analysis of strengths and 

weaknesses of environmental 

protection activities; analysis 

and evaluation of conformity 

of actual results with ISO 14001 

requirements.

According to the requirements 

of current legislation, the group 

implements an Integrated 

Environmental Protection Action 

Plan annually.

88

 

88 

More information about the group's 
environmental policy and goals can be found at: 
www.naftogaz.com

Naftogaz takes care of socio-environmental aspects of managing the procurements undertaken by the 

company. A representative of Occupational, Environmental and Industrial Safety Department is now a 

member of the Tender Committee of the company to monitor the compliance of suppliers with labor 

and environmental requirements.

In 2017, the board approved regulations governing interaction between Naftogaz structural units in the 

process of purchasing goods, works and services, which sets out a mechanism for assessing compliance 

by the supplier with the environmental and social requirements of the company and the requirements of 

Ukrainian environmental protection legislation. According to the regulations, by concluding a contract 

with the company, the supplier undertakes to meet the company’s environmental requirements and 

the company reserves the right to inspect its compliance with these obligations. Regulations include 

a questionnaire on environmental and social policy for procurement bidders. The questionnaire is 

posted on the company’s website (www.naftogaz.com). The enterprises of the group already use this 

questionnaire during the procurement process. 

Responsible procurement: in consideration of environmental 

requirements 

Key results 2017

•  Naftogaz group’s capital

investments in environmental 

protection measures and their 

current costs amounted to 

UAH 91.4 million.

•  The environmental measures

envisaged by an EBRD 

loan agreement have 

been implemented and a 

comprehensive analysis of 

the environmental impact 

of the company's measures 

to improve the efficiency of 

waste management and use 

of water resources has been 

conducted;

•  The standard "Environmental

Protection. Audit of 

Environmental Aspects 

of the Naftogaz group's 

Activities. Key Provisions", 

which is the first standard 

in Ukraine to regulate the 

environmental audit of the 

company's enterprises, is in 

place. The updated standard 

takes into account the 

following:

– current state of Ukrainian 

legislation, first of all 

legislation on public 

procurement,

– requirements of EU 

legislation to be 

implemented in Ukraine;

– EU regulatory and 

reference sources on best 

available technologies;

– best practices of 

independent environmental 

inspections.

•  Amendments to current

legislation and regulations 

concerning the issuance of 

permits for special water 

use and the automated 

recording of groundwater 

production have been 

drafted; some draft 

amendments were taken 

into account by the relevant 

state authorities.

•  A new edition of the

Environmental Policy 

and Objectives and 

Targets in the field of 

environmental protection 

as well as measures for 

their achievement were 

approved.

•  The environmental and

radiation safety training 

program for employees 

of Naftogaz head office 

is implemented – for the 

first time in the oil and gas 

industry of Ukraine.

During 2017, within the framework of cooperation between the company and international financial 

institutions (EBRD and IBRD), the EBRD monitored the implementation by Naftogaz of its new reporting, 

transparency, environmental and social responsibility standards as well as fulfillment of its obligation 

to harmonize its operational standards to the EBRD principles of environmental and social policy.

In 2017, OPIC Corporation (USA) conducted a technical audit of underground gas storage facilities. Based 

on the results of the audit, a positive conclusion was issued on the level of safety and environmental 

impact. This is a prerequisite for obtaining investment funds from Goldman Sachs International.

In 2017, Deloitte audited the environmental activities of Naftogaz, including gas transmission and 

underground storage facilities. This work is part of the assistance provided by the US Government to 

reform the oil and gas industry in Ukraine.

Based on the results of these audits, international partners concluded that the company's activities 

are basically in line with the commitments undertaken in the field of environmental protection, the 

requirements of the current Ukrainian legislation, and international standards. 

Cooperation with international financial institutions  

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ANNUAL REPORT 2017

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192

Implementation of international standards

The company has committed itself to 

implementing and certifying an integrated 

management system, including environmental 

management in accordance with ISO 14001. 

In 2017, an external audit of the quality of the 

company’s management system was carried out 

to confirm its compliance with the requirements 

of the international standard ISO 9001:2015; 

a TUV SUD certificate of compliance was received.

Additionally, the necessary documents have been 

drafted to organize the procurement procedure 

for the purchase of external independent audit 

services for the management system in the field of 

environmental protection, occupational health and 

safety and energy efficiency and their compliance 

with the international standards ISO 14001, 

OHSAS 18001 and ISO 50001.

During 2017, the company continued its 

cooperation with the National Scientific Center 

"Institute of Soil Science and Agrochemistry named 

after O. N. Sokolovsky" in revision and updating of 

the existing standard SOU 74.2-20077720-034:2009 

"Environmental Protection. Elimination of 

pollution of soils and water objects with oil and oil 

products. Rules" in order to set up more stringent 

environmental requirements for enterprises 

operating in the oil and gas industry. 

Biodiversity 

Conservation of biodiversity in 

Ukraine is a hot and relevant 

topic that is vital for certain 

species that are on the brink 

of extinction. Therefore, the 

enterprises of the company, 

whenever they operate in 

environmentally sensitive 

areas, carry out environmental 

monitoring and assess the 

impact of their operations 

on biota. For example, every 

year Ukrnafta, together with 

an independent research 

organization, conducts 

environmental biological and 

hydro-biological monitoring 

of ecosystems on the territory 

of the Andriyashevsky gas 

condensate field, which borders 

with the Andriyashevsko-

Gudimovsky hydrological 

reserve. According to the 

monitoring results from 2017, 

no negative impact from oil and 

gas extraction infrastructure on 

forest, meadow and wetland 

ecosystems was detected.

In 2017, Ukrtransgaz carried out 

analysis of the bio-resources 

of the water objects used for 

collecting or discharging water in 

the course of its operations. Such 

studies were carried out on water 

facilities in the Sumy, Poltava, 

Vinnytsia and Ternopil regions on 

sites where the Urengoy-Pomary-

Uzhhorod gas pipeline repair and 

hydro-testing were planned. All 

possible ordinary, extraordinary 

and unplanned activities were 

considered in terms of their 

ability to exert direct or indirect 

ecological impact. Interaction 

with the existing natural 

environment and socio-economic 

elements was analyzed, as 

well as potential violation of 

the applicable environmental 

principles together with legal 

and administrative requirements. 

Based on the results of the 

analysis, a positive conclusion 

In 2017, the following stages of 

implementation of the environmental 

management system were completed:

• a set of works to diagnose the existing system

of the company’s management and production 

processes has been carried out, which included: 

diagnostic audit, description of types of activities, 

organizational structure and management 

functions; analysis of strengths and weaknesses 

of quality control, ecology, occupational safety, 

energy saving and social responsibility; analysis and 

evaluation of the compliance of actual results with 

the requirements of ISO 9001, ISO 14001, ISO 50001, 

OHSAS 18001 and SA 8000;

• during the reporting period, meetings and training

of members of working groups for implementation 

of the integrated management system of the 

company were held.

• internal audit of the integrated management

system of the company in all its subdivisions 

has been carried out in compliance with the 

requirements of international standards ISO 9001, 

ISO 14001, OHSAS 18001, ISO 50001 and SA8000. 

According to the results of the internal audit, ICM 

concluded that the company’s activities broadly 

meet the criteria and requirements of international 

standards.

was issued by the State Enterprise 

Center of Environmental and 

Expert Analysis (Ministry of 

Environmental Protection of 

Ukraine). The conclusion states 

that, should the recommended 

requirements and safeguards 

be followed, the repair of the 

main pipeline "Urengoy-Pomary-

Uzhhorod" will not have any 

negative impact on the state of 

local biodiversity.

Environmental surveys are 

planned for 2018 to develop a 

biodiversity management plan for 

the "Dacia Galileya" forest reserve 

in the Gusyatyn-Bogorodchany 

section (27.1 km) and to collect 

basic information for crossing 

water obstacles in the Romny-

Grebinky section (26.7 km) 

and Grebinky-Sofiyivka 

section (31.51 km) under the 

"Reconstruction of the Urengoy-

Pomary-Uzhhorod gas pipeline" 

project.

Interactions with stakeholders on environmental issues

The company has developed 

and implemented the 

Stakeholder Engagement 

Procedure, which requires 

any projects with significant 

impacts on the environment 

and community life to 

be communicated to all 

stakeholders in order to 

properly inform them about 

possible environmental and 

social impacts. The Map of 

Stakeholders of Naftogaz of 

Ukraine was created in 2017 

as well as the main ways of 

interaction with them (for 

more details, see the section 

"The scope of the report and 

essential aspects").

Most enterprises of the 

company are actively involved 

in the implementation of 

environmental and social 

projects on community 

issues that may be negatively 

affected by the company's 

production processes (see Local 

Communities Development 

section for more details).

In implementation of the 

environmental protection 

measures, the company 

cooperates with NGOs. A 

Memorandum of Understanding 

and Cooperation with 

All-Ukrainian NGO "Living 

Planet" has been signed. In 

2017, a workshop entitled 

"Implementation of Sustainable 

Procurement" was held at the 

Aarhus Center of the Ministry 

for Environmental Protection of 

Ukraine as well as training on 

Green Office implementation.

Financing environmental activities

Current expenses and capital 

investments of Naftogaz group 

companies for environmental 

protection amounted to 

UAH 91.4 million in 2017.

UAH 91.4 million of the enterprises’ 

own funds was spent in 2017 

for environmental protection, 

including capital investments 

of UAH 0.7 million (which is 

about 1% of the total amount 

of environmental protection 

costs) and current expenses of 

UAH 90.7 million (99%).

Of the total amount of capital 

investments, UAH 0.5 million was 

spent for wastewater treatment, 

and UAH 0.1 million was spent 

for radiation safety measures. 

The cost of major repairs of 

   Naftogaz group expenditures on environmental protection and 

ecological charges in 2017, UAH million

51�3

155�1

91�4

 Expenditure on environmental protection
 Ecological charges
 Ecological services 

90�7

CURRENT 
EXPENSES

0�7

CAPITAL 
INVESTMENTS

50�8

ECOLOGICAL TAX

0�5

PENALTIES FOR 
VIOLATION OF LAW

77�2

SALE OF WASTES

0�1

FEES RECEIVED 

FOR ENVIRONMENT 

PROTECTION SERVICES

77�8

FEES PAID FOR 
ENVIRONMENT 

PROTECTION SERVICES

OUR RESPONSIBILITY

ANNUAL REPORT 2017

195

194

sewage systems and reverse 

water treatment amounted to 

UAH 0.2 million.

Of the total current expenditures, 

UAH 6.0 million (about 7%) 

was spent on atmospheric 

air protection measures, 

UAH 45.6 million (50%) on return 

water treatment. UAH 6.3 million 

(7%) was spent on waste 

management, UAH 24.3 million 

(about 27%) on soil, underground 

and surface water protection 

and rehabilitation, and 

UAH 8.5 million (9%) on other 

areas (for example, reduction 

of noise and vibration impact, 

radiation safety, biodiversity 

conservation, environmental 

research, etc.).

Protection of atmospheric air

The total amount of pollutants 

emitted into the air by 

stationary sources of pollution 

of the company’s enterprises in 

2017 amounted to about 92.18 

thousand tons, which is 4% 

more than in 2016. However, 

pollution with pollutants 

produced in production 

processes in 2017 do not exceed 

the volumes specified in permits 

or maximum allowable emission 

norms.

According to the results of 2017, 

the emissions of greenhouse 

gases in CO

2

 equivalent by the 

enterprises of the group increased 

by 20%. Ukrtransgaz was the main 

producer (66.7%) of greenhouse 

gas emissions in 2017. 

The growth of atmospheric 

emissions is due to a 

9% extension of works 

performed by Ukrtransgaz 

in 2017, an increase in 

the volumes of drilling by 

Ukrgazvydobuvannya by 

21.2%, and an increase in 

natural gas extraction by 4.4% 

(645 mcm).

According to the Law of 

Ukraine "On Air Protection" and 

permits for pollutant emissions, 

the company ensures control 

of the permissible emission 

of pollutants into the air 

from stationary sources of 

emissions, including control 

of gas-cleaning equipment 

efficiency in the units, as well 

as control of pollutant content 

on the border of the sanitary 

protection zone. The frequency 

of such surveys (control) is 

established explicitly in the 

permits for the emission of 

pollutants from stationary 

sources of pollution for each 

enterprise of the company.

To reduce emissions, a 

complex of organizational and 

technical measures has been 

implemented including:

− gradual replacement/

modernization of obsolete 

gas-driven internal 

combustion compressors 

and gas-pumping 

equipment;

− phased replacement of tanks 

with a stationary roof with 

technologically modern 

tanks with floating roofs;

− systematic maintenance of 

respiratory fittings and seals 

of pontoons and tank roofs;

− modernization together 

with ecological and heat 

testing of fuel-using boiler 

equipment;

− application of the tank 

pumping and operation 

modes that have the lowest 

emissions of pollutants.

   Emissions into the atmospheric air of polluting substances by Naftogaz group in 2017, ths� tons

Enterprises of the 

group 

Pollutant 

emissions

INCLUDING:

Emissions of 

carbon oxide 

(СО) 

Emissions of sulfur 

oxide (SO

2

) and other 

sulfur compounds 

Emissions of nitrogen 

compounds (NОx) 

without N

2

O)

Emissions of non-

methane volatile 

organic compounds 

Ukrtransgaz

17.4

7.3

0.001

9.6

0.5

Ukrnafta

13.9

6.0

0.1

2.8

5.0

Ukrgazvydobuvannya 11.8

6.4

0.2

3.3

1.9

Ukrtransnafta

2.01

0.008

0.001

0.005

2.0

Ukrautogaz

0.003

0.002

–

0.001

–

Ukrspetstransgaz

0.016

–

–

0.0002

0.016

Kirovohradgaz

0.004

0.002

–

0.001

0.0002

TOTAL

45.1

19.7

0.3

15.7

9.4

   Emissions of greenhouse gases by Naftogaz group in 2017, ths� tons 

Enterprises of the group  Emissions of carbon 

dioxide (СО

2

)

Emissions of methane 

(СН

4

) 

Emissions of nitrogen 

oxide (N

2

O)

Emissions of greenhouse 

gases, СО

2

-eq.

Ukrtransgaz

3818.5

30.4

0.2

4509.8

Ukrnafta

1022.8

4.4

0.1

1159.0

Ukrgazvydobuvannya

862.7

10.0

0.016

1078.4

Ukrtransnafta

1.7

0.1

–

3.5

Other enterprises 

1.5

0.6

–

14.5

TOTAL 

5707.2

45.5

0.3

6765.2

Contribution of the company to the fight against climate change 

In accordance with the 

commitments undertaken by 

Ukraine under the Association 

Agreement with the EU and 

the Paris Agreement on Climate 

Change, a national greenhouse 

gas emission allowance trading 

scheme shall be developed and 

implemented in Ukraine.

In view of the importance of 

the issue and a great number 

of processing units that are 

the objects of licensing in oil 

and gas companies in Ukraine, 

Naftogaz group jointly with 

Carbon Limits AS (Kingdom of 

Norway) and with the support 

of the Partnership for Market 

Readiness (PMR) project of 

the World Bank, continued 

implementation of a pilot 

greenhouse gas emissions 

monitoring, reporting and 

verification project (Pilot Project) 

in 2017.

On 30-31 January 2017, as 

part of the project, working 

meetings were held with 

project participants at the 

UMG Kyivtransgaz Branch 

of Ukrtransgaz and at the 

Yagotin compressor station. 

The technological processes, 

the sources of greenhouse gas 

emissions, and material flows 

were observed. Individual 

technical workshops with 

personnel in charge of the 

development of the monitoring 

plan have been conducted, 

and the information required 

for the Monitoring, Reporting 

and Verification Plan has been 

collected.

The next stage of the project, 

assessment by an independent 

verifier (VERICO, Germany) of 

the developed monitoring, 

reporting and verification plan, 

is scheduled by the end of 2018.

To reduce volumes of 

greenhouse gas, Ukrtransgaz 

constantly monitors the 

   Greenhouse gases  

per work unit  

(carbon intensity) emitted 

by Ukrtransgaz in 2014–2017

2014

2015

2016

2017

44

42

40

38

36

34

32

30

t СО

2

-eq

� /mc

m 

Operation of a mobile compressor station at the Ukrtransgaz facility