environmental and social monitoring report · 2014. 9. 29. · prepared by lukoil overseas...

Environmental and Social Monitoring Report

December 2013

UZB: Kandym Gas Field Development Project

Prepared by Lukoil Overseas Uzbekistan Ltd.

This environmental and social monitoring report is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. Your attention is directed to the “Term of Use” section of this website. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

LUKOIL

OIL COMPANY LUKOIL UZBEKISTAN OPERATING COMPANY

REPORT

ON ENVIRONMENTAL AND SOCIAL MONITORING OF ACTIVITY OF

“LUKOIL UZBEKISTAN OPERATING COMPANY” LLC UNDER THE PROJECT “DEVELOPMENT AND OPERATION OF GAS CONDENSATE

FIELDS OF KANDYM GROUP IN THE REPUBLIC OF UZBEKISTAN”

FOR 20131

1 ADB's finance is provided for the Kandym Field and this report covers the Kandym Field. If any information

regarding the Khauzak-Shady Project and/or the Kandym Satellite Fields is included in this report, it is solely for purposes of background information. This report does not monitor activities in relation to either the Khauzak-Shady Project and/or the Kandym Satellite Fields.

Report on environmental and social monitoring of activity of

“LUKOIL Uzbekistan Operating Company” LLC for 2013 2

Table of contents

Accepted terms and definitions, abbreviations ................................................................. 3

1 General information on the Project and the Operator: ............................................ 5

1.1 Brief Description of Operator’s Activity and Project, Basis for Activity .................. 5

1.2 Location of the Main Production and Auxiliary Facilities......................................... 5

2 Kandym Project Progress status ............................................................................... 6

3 Health, safety and Environment approvals and Conformity to Legislation requirements 8

3.1 Site of Kandym Group of Fields ................................................................................ 8

3.2 Information on Certification According to ISO14001 and OHSAS18001 and Results of

Internal and Supervisory (External) Audits, Certification Validity .......................... 8

4 Discrepancies and Violations of Legislation Requirements Revealed within Reporting

Period ........................................................................................................................ 10

5 Emergencies and incidents associated with the population health, safety and

environment .............................................................................................................. 11

6 Hr policy, labour relationship and labour conditions ............................................. 12

7 Land acquisition and involuntary resettlement ...................................................... 15

8 HSe management System ....................................................................................... 16

9 Social Issues Management system ........................................................................ 19

10 Interaction with Stakeholders and Affected Parties ............................................... 21

10.1 Identification of the Stakeholders ........................................................................... 21

10.2 Information on Implemented Support Programs for Local Population ............... 23

10.3 Information on functioning of Grievance Procedure ............................................. 23

11 Environmental and social aspects of activity ......................................................... 25

11.1 Environmental Aspects at the Sites of Kandym Group of Fields ........................ 25

11.2 HSE Action Plan ...................................................................................................... 31

11.3 Information on Population Health and Safety Measures ..................................... 31

Appendix 1 ......................................................................................................................... 33



ACCEPTED TERMS AND DEFINITIONS, ABBREVIATIONS

ADB - Asian Development Bank

BCS - Booster compressor station

CD - Civil Defence

CHECK- Check-point

POINT -

COD - Chemical Oxygen Demand

CP - Cathodic protection

Draft EIS - Draft Environmental Impact Statement (1st Stage of National EIA)

DWL Drilling waste landfill

EBMP Enhanced Biodiversity Monitoring Plan

EDR Exposition Dose Rate

EIA - Environmental Impact Assessment

EMO - Emergency Management Office

EP - Environmental Protection

ERP - Emergency Response Plan

ES - Emergency Situations

field - Field

FOC - Fibre-optic Communication Line

FSA - Fire Safety Agency

GIS Geoinformation System

GPD - Gas Production Department

GPF - Central Processing Facility

IFC - International Financial Corporation

IMS - Integrated Management System

IS - Industrial Safety

IS&E Industrial Safety and Environment

ISD - Industrial Safety Declaration

IUCN The International Union for Conservation of Nature

KGF - Kandym Group of Fields

LP - Labour Protection

LUOC, “LUKOIL Uzbekistan Operating Company” LLC

Operator –

ME - Ministry for Emergencies

MIGA - Multilateral Investment Guarantee Agency

MPC - Maximum Permissible Concentration

MPE Maximum Permissible Emissions

MWWC - Main Wasteway Channel (manifold)

PFS - Preliminary Feasibility Study

Project – Project on Development and Operation of Gas condensate fields of Kandym

group

PSA – Production Sharing Agreement for the Kandym Field Group and other gas fields

signed 16.06.2004 between the Republic of

Uzbekistan and Consortium of Investors composed of OAO “Oil Company

LUKOIL” and "Uzbekneftegaz" NHC

PTL - Power Transmission Line

RFS - Refuelling station

RSUOG Russian State University of Oil and Gas



RTA - Road traffic accident

RUz - the Republic of Uzbekistan

SA - Seismic Acquisition

SEC - Statement for Ecological Consequences (Final Stage of National EIA)

SEE - State Ecological Expertise

SPS - Sewage Pumping Station

SSIAC - State Specialized Inspection of Analytical Control of State Committee for

Nature Protection of the Republic of Uzbekistan

UPPG - Gas Primary Treatment Facility

UzPU - Uzbek Blowout and Gas Safety Service

VFB Volunteer Fire Brigade

VGRB Volunteer Gas Rescue Brigade

WB - World Bank

WHO - World Health Organization

- Biodiversity Action Plan



1 GENERAL INFORMATION ON THE PROJECT AND THE OPERATOR:

1.1 Brief Description of Operator’s Activity and Project, Basis for Activity

“LUKOIL Uzbekistan Operating Company” LLC is the Operator of the project of

development and operation of gas condensate fields of Kandym group located in

southwest part of Bukhara region of the Republic of Uzbekistan.

Project is implemented in accordance with PSA and based on the license for the right to

use of subsurface mineral resources dated 07.08.07 No. G1 No. BH 0001 and G1 No. BH 0002.

1.2 Location of the Main Production and Auxiliary Facilities

The general characteristic of the Project facilities is described in detail in the Operator's

report for 2012. No changes in the operating facilities layout have been made in 2013.



2 KANDYM PROJECT PROGRESS STATUS

Works on construction of exploratory and production wells on the fields of Kandym group

have been continued in 2013. In 2013 there was completed construction of 3 wells (No. 1062,

1078, 1089) in total, drilling of which was commenced in 2012, 19 new wells were drilled,

including 18 wells on the Kandym field (1053, 1079, 1021, 1059, 1045, 1023, 1047, 1058, 1031,

1070, 1057, 1054, 1038, 1077, 1046, 1056, 1029, 1048), 4 wells have been under construction

by the end of the reporting period.

The Camp of the supervisory service for construction on the Kandym field with the water wells is in routine operation.

There have been constructed temporary access road 11.06 km length and border check-point (CHECK-POINT 3).

Current variant elaborations of the design solutions are without changes (see report for 2012). Some minor alterations have been made to milestones schedule of implementation of the project of Kandym field development and operation:

Development and coordination of the design documentation, including EIA:

2012-2016;

Construction of the first CPF process train and facilities of the fields'

infrastructure: 2014-2016;

CPF construction completion in

2017; First gas release: 2016

The following basic changes on the project "Construction of CPF complex and development of Kandym group of fields" have been made from the moment of development of original PFS (2007):

Quantity of the cluster sites planned to construction on the Kandym field is reduced

from 20 to 8, quantity of the wells was 98 and isn’t changed;

Decision on non-production of liquefied natural gas on Kandym CPF is made;

Length and characteristics of sales gas-pipeline are changed from original variant of

tie-in point in pipeline "Bukhara-Ural" with length of 97 km and diameter 40 inches

(1020 mm) to new variant of tie-in point in pipeline "Gazli-Sarimay" with length of

67 km and diameter 36 inches (920 mm).

The route of branch railway is changed from original variant “Kandym CPF - Karakul

station» (40 km) to “Kandym CPF - Yakkatut station» (56.6 km);

Construction of 1st

stage of the Camp of the construction supervisory service for 102

accommodations is completed and its expansion to 350 accommodations is planned;

Preliminary decision on construction of the CPF’s Camp for 1474 accommodations

(instead of originally planned 300 accommodations) is made;

Source of CPF water supply is changed - stage II of the Amu-Bukhara canal

will be used instead of Yamandzhar canal and MWWC canal.



It should be noted that the specified changes are described in the frameworks of"Updating of PFS of the project "Construction of CPF complex and development of Kandym group of fields". Ecological risks and impacts associated with the changes to the Project are considered in the Draft EIS for updating of PFS which has the positive conclusion of SEE No. 18/1072z dated on 08.11.2013.



3 HEALTH, SAFETY AND ENVIRONMENT APPROVALS AND CONFORMITY

TO LEGISLATION REQUIREMENTS

3.1 Site of Kandym Group of Fields

By results of 2013 in addition to the list of the design documentation and

approvals listed in the Operator's report for 2012, there were developed and have

passed successfully the state ecological expertise:

Draft EIS for the project of burial of industrial wastewaters of Kandym group of

fields (SEE conclusion No. 18/86z dated on 31.01.2013);

Draft EIS for construction of LUKOIL Administrative Excellence Centre with

hotels in Bukhara city (SEE conclusion No. E-7-238z dated on 22.03.2013);

Draft EIS for updating of PFS “Construction of CPF complex and development of

Kandym group of fields” (SEE conclusion No. 18/1072z dated on 08.11.2103);

Draft EIS for expansion of camp for supervisory service over construction of the facilities

on the contract site of the Kandym group of fields (SEE conclusion No. E-7-1205z);

Draft EIS for the project “Construction of CPF complex and development of Kandym

group of fields – Uzbekistan. Railway Transport. Railway Access Road Yakatut

station – Zavodskaya station (incl.)”. SEE of this Draft EIS will be conducted in 2014.

In 2013 the procedure of registration and obtaining by the Operator of the License

for the right of use of subsurface mineral resources with a view of liquid wastes burial (the letter ref. No. 2439 dated on 01.03.2013) on the site of Kandym group of fields is initiated. At the end of the reporting period the specified procedure is in progress (Protocol of the State Reserves Commission under Ministry of Geology of the Republic of Uzbekistan to be executed), obtaining of license is expected in 2014.

By results of development of the specified drafts, the further plans on development of sections of the Environmental Impact Assessment will be generated or modified, taking into account the conclusion of the SEE of the Republic of Uzbekistan and recommendations of independent environmental and social monitoring.

At present, development of the following (from 2014 till 2016) is provided in the long-term plans of the LUOC:

SEC for the stages of CPF complex construction and operation and development

of Kandym group of fields

SEC for office construction in Bukhara for the OBW

Industrial safety declaration of the hazardous industrial facility “Kandym CPF”.

3.2 Information on Certification According to ISO14001 and OHSAS18001 and

Results of Internal and Supervisory (External) Audits, Certification Validity

There is created and operates in LUOC the Integrated Management System

(IMS) concerning health, safety and environment, which has been certificated for

conformity to the ISO 14001 and OHSAS 18001 standards.

Certificates of conformity to the ISO 14001 and OHSAS 18001 standards are

valid up to 1st

September, 2016. No other external and supervisory audits were carried for the reporting period.



Within 2013 there were conducted eight (8) internal audits (two in each of production

sites of the Operator) according to approved “Plan of HSE, ES and CD Integrated

Inspection and Internal Audits of LUOC subdivisions conformity to requirements of

international standards ISO 14001 and OHSAS 18001”, by results of which the prevention

and correction measures package has been developed and implemented.



4 DISCREPANCIES AND VIOLATIONS OF LEGISLATION REQUIREMENTS

REVEALED WITHIN REPORTING PERIOD

Remarks that entail works stoppage or penalty provisions have not been revealed. No incidents with participation of security services of LUOC facilities occurred in 2013.

Besides conformity to legislative requirements, LUOC within the frameworks of

implementation of provision of Project financing, carries out the third party environmental and social monitoring of activity conformity to international standards (IFC standards). Such monitoring is carried out by the international independent adviser - ERM Eurasia Limited Company.

Two stage of monitoring for component B has been carried out in 2013. By results of ERM Eurasia Limited monitoring, included in the monitoring reports (July and December of 2013), the list of recommendations on improvement of performed operations activity in accordance with international standards is proposed.

Accordingly, the plan of measures on realization of recommendations is developed in LUOC. By result of monitoring on the part of ERM Eurasia Limited there was developed supplement to action plant in the first half-year of 2103. Information on third-party adviser recommendations execution status is provided in this report.



5 EMERGENCIES AND INCIDENTS ASSOCIATED WITH THE POPULATION

HEALTH, SAFETY AND ENVIRONMENT

Procedure in case of occurrence of emergencies, incidents, including the system of,

registration accounting and investigation has been described in details in the Operator’s report

for 2012.

No industrial accidents were registered in the LUOC in 2013 according to Kandym

Project. Incidents with the environmental effects and events of occupational diseases intelligence among employees of the Operator have been prevented in 2013.

Nine (9) substantial HSE risks have been revealed in the LUOC for 2013 according to

procedure of identification and assessment of substantial industrial risks and environmental aspects, preventive actions are provided. Following the results of work in 2013 none of substantial risks is realized.



6 HR POLICY, LABOUR RELATIONSHIP AND LABOUR CONDITIONS

The HR policy approved by the decision of the Steering Committee of LUOC (Minutes No. 57 dated on 03.06.2009) which indicates principal directions of the Operator’s activity pertaining to hiring and staffing is adopted in the Operator.

For description of the Operator’s HR policy see Operator’s report for 2012. There were no changes in the HR policy in 2013, except widening of indices of employees efficiency – starting from 2013 all employees are divided into 5 groups instead of 4 groups: exclusive performance; excellent performance; good performance; satisfactory performance; and unsatisfactory performance.

In 2013 there has been approved the Regulation on recruitment and appointment of

LUOC personnel which defines main principles, shared objectives and tasks of staff

coverage, as well as consistent approaches to procedure of official selection of candidates.

In 2013 there has been approved LUOC organizational structure with an aggregate number of 1500 established posts, from them 226 established posts of foreign experts (15%). Office and management personnel consists of 456 persons; industrial and production personnel consist of 1044 persons.

According to item 6.2 of PSA the Operator shall employ not less than 80% of RUz

citizens. At the end of reporting period 1416 persons are worked in the Operator, from them

national employees 1197 (85%) and foreign specialists 219 (15%). Thus, PSA provisions

are executed. Number of the women working in the Operator is 172 women (12%).

According to the Human Resources Division people with disabilities have not applied to the Operator concerning employment.

Grievance Procedure

Grievance and proposals examination procedure is described in the Operator’s report for

2012.

According to the recommendations of the independent adviser, in order to improve

collection of applications of the Operator's and contractor’s employees, the following actions are

provided for in the third quarter 2013 - installation of additional letterboxes in residential zones

of industrial facilities. No complaints and suggestions have been received by the Operator during 2013.

Child and forced labour

According to article 7 "Prohibition of Forced Labour" of the Labour Code of the RUz,

forced labour is forbidden in the RUz, the Operator fulfills these requirements and does not use

forced labour.

Taking into account that the personnel department of the Operator carries out recruitment

of the personnel by means of multi-staged level and various sources of search: staff recruitment

agencies, young specialists of educational institutions, Internet sites and database of exterior

candidates (CVs received by the LUOC directly), possibility of use of child labour is excluded.

Provision of employees with safe and healthy working conditions

Working environment engineering procedure is described in the report for 2012.

In 2013 with a view of reduction in common and occupational disease of the Operator’s workers together with Institute for Research on Sanitary, Hygiene and Occupational Diseases under Ministry of Health of the Republic of Uzbekistan there have been developed and approved the Methodology recommendations on the organization of healthful and dietary meals of the Operator’s industrial and production personnel (workers of hydrocarbons production departments).



Assessment of workplaces

Assessment of 98 workplaces has been completed in December, 2013 under the

Contract with Republican Center of Employment, Occupational Safety and Labour Protection

under the Ministry of Labour and Social Protection of Population of the Republic of Uzbekistan.

Upon completion of new workplaces assessment there have been approved labour condition sheets and obtained positive statement of the State Inspectorate of Safety and Examination of Labour Conditions.

By results of assessment there have been developed and accepted for implementation the

measures directed toward improvement of working conditions at the workplaces and maximum

possible elimination of adverse factors and creation of safe and healthy working conditions forthe employees.

Whenever it is impossible to eliminate factors of negative impact, LUOC payscompensation for harmful working conditions, grants additional holidays to the employees,

according to the Labour code of the RUz. In addition, the employees, working on the workplaces

with harmful working conditions shall pass compulsory health check-up. According to the

information provided, no events of occupational diseases among the employees of LUOC have

been revealed until now.

LUOC’s personnel passes preliminary and periodic medical examinations regularly,personnel health service contracts have been concluded, medical insurance and accidents

insurance is in effect.

According to the legislation of the RUz, LUOC implements the Program of obligatory

insurance of civil liability for damage to life, health and property of third persons and

environment in case of breakdown on hazardous industrial facility.

Production supervision

The production supervision system, operating in the LUOC, also is intended for

evaluation of fulfilment of requirements with regard to HSE, timely revealing of adverse factorsfor safety and health of the personnel and taking of timely response actions by the Company and contractor’s personnel.

While employment all LUOC employees shall pass safety induction and initial meeting, including familiarization with the HSE Policy, internal regulations, main types of hazards when operated at the Operator’s facilities, performance of individual work items, HSE requirements, instructions for use of personal protection equipment, emergency response means, as well as emergency actions.

Thereafter, the personnel shall pass compulsory periodic and extraordinary training.

Performance of some hazardous works or works at hazardous industrial facilities is allowed

only after appropriate HSE training, knowledge assessment and work permits drawing up.

The similar briefing system shall be obligatory for execution by the LUOK contractors’ personnel.

Traffic safety

With a view of traffic safety LUOK has accepted “Regulations on Procedures for Safety

Traffic Management for Vehicles of “LUOC” LLC” determining the requirements to drivers employment; traffic safety training procedure; briefings and assessment of driver’s knowledge;

rights and duties of drivers; safe driving constraints. Drivers shall pass compulsory pre-trip medical check-up, check serviceability of vehicle prior to departure, and observe Road Traffic Regulations. Driver and passengers shall buckle the seat belt before the start.

According to Regulations speed of vehicle shall not exceed the limits established by the

Road Traffic Regulations of the RUz and in the contract territory of the LUOC facilities shall be



up to 50 km/hour. When operated in desert and trips to hard-to-reach places, vehicle

shall be equipped with 2-litre of water per person, required minimum repair tools set,

including axe, shovel, lantern, compressor, pressure gauge, spare wheel, as well as

mobile and radio communication, and base map (if necessary).

According to recommendations of the ERM, in 2013 LUOC has provided implementation of measures to ensure guaranteed use of the road passenger transport, equipped with seat belts for all passengers, and maximum possible use of vehicles with the factory air-condition systems, for the employees transportation. Respective alterations and supplements are provided in new revision of the “Regulations on Procedures for Safety Traffic Management for Operator’s Vehicles No. 8009-9000-LUOP-0000-000-MCH-REG-000001-RU-A1” (Order No.17 dated on 17.01.2013).



7 LAND ACQUISITION AND INVOLUNTARY RESETTLEMENT

Resolving issues of acquisition of the rights to land use and involuntary resettlement, the Operator follows the legislation of the RUz, as well as internal standard documents of LUOC. There was no physical resettlement of people in the region of the Project implementation within the reporting period, and it is not planned in the future.

Activity of LUOC in land withdrawal is limited by acquisition of the rights on land use at farm enterprises and stock-farms, and individual farmers.

In the process of development of the design solutions the Operator reveals necessity of withdrawal of the land for placement of the Project facilities, the register of the withdrawn land and land planned to be withdrawn, with indication of the area, layout zone and current land user is kept.

Within 2013 in accordance with the established procedure there were allocated lands for construction of wells and other facilities of Kandym Project in volume of 113.7 ha, including for temporary use of 107.22 ha and on permanent basis of 6.48 ha, however, the compensatory payments were made as part of received decisions of the state authorities. Following is the registry of lands allocated within 2013:

Basis for land allotment, Withdrawn from Total Permanent Temporary Land Construction

Decision of the District District the Enterprise’s area use use official

facility

Khokim land (ha) (ha) (ha) class

Wells

Karakul district No. 359 Karakul Karakul forestry 21.00 1.44 19.56 Pasture No.No.1038, 1070

dated on 11.06.2013 enterprise 1044,1054,

Kandym

Karakul district No. 448

Cooperative Well No.1045,

Karakul 21.90 1.44 20.46 Pasture 1046, 1053, 1065

dated on 23.07.2013 “Karakul”

Kandym

Jondor district No 569 Temporarily per 1

Jondor 11,8 0 11,8 Pasture year Kandym-

dated on 12.09.2013 Karakul FOCL

Well No.1030,

Karakul district No. 886

Karakul

Cooperative

44.00 2.88 41.12 Pasture

1037, 1052, 1064,

dated on 27.12.2013 “Karakul” 1071, 1074, 1075,

1084 Kandym

Karakul district No. 887 Karakul Karakul forestry 7.50 0.36 7.14 Pasture Wells No. 1008

dated on 27.12.2013 enterprise Kandym

Total in 2103 113.7 6,48 107.22

For arrangement of the facilities of Kandym group of fields’ development project it will

be required additional permanent allocation of lands 845.16 ha and 3636.86 ha in temporary use in 2014-2015 years. Including for well drilling: in 2014 – 10 wells, in 2015 – 13 wells and in 2016 – 6 wells.

No restitution of the land to the former land users has been made in 2013.

According to the official classification, the land withdrawn and the land planned to withdrawal are the pastures.

As far as all lands in RUz are the state property, and land users use the land only on

a leasehold basis, procedure of land withdrawal is carried out at immediate involvement of

state authorities. Procedure of land allotment for the needs of the Project is executed in

strict conformity with the requirements of the legislation of the RUz (see report for 2012).

Cases when the local population having no legal rights on land use uses the land, withdrawn for needs of the Project, have not been registered within 2013.



8 HSE MANAGEMENT SYSTEM

HSE management during implementation of the projects is carried out by Department of

Industrial Safety and Environment, including Industrial Safety and Health Departments, Ecology

Department and Engineering Supervision and Cathodic Protection Department. In addition, there

are appropriate qualified HSE, engineering supervision specialists and engineers working under a rotation system, in the structural subdivisions of LUOC and Kandym group of fields.

The integrated system of HSE management certified on conformity to international standards ISO14001 and OHSAS 18001 (see section 3.4) is introduced and operates in the LUOC. “HSE Policy” is adopted and implemented by the Operator.

In 2013 LUOK was certified on conformity to the international standard ISO 9001

“Quality Management System” which successfully passed implementation phase.

Following procedures are developed/updated in the frameworks of IMS: Instructional Guidelines for Development and Implementation of Environmental

Safety Programs (Order No. 6 dated on 10.01.2013); List of Hazardous Operations Performed at the Operator’s Industrial Facilities

(Order No. 8 dated on 11.01.2013);

Quality Manual (Order No. 12 dated on 15.01.2013);

Regulations on Procedures for Safety Traffic Management for Vehicles of

Operator (Order No. 17 dated on 17.01.2013)

Instructional Guidelines for Organisation of Investigation of Accidents and

Other Injury of the Operator’s Employees (Order No. 51 dated on 11.02.2013);

Regulation on Hazardous Operations Safe Performance Management in the Operator (Order No.191 dated on 06.05.2013);

HSE requirements specified made regarding contractors when concluding the

contracts (Order No. 222 dated on 24.05.2013);

Regulation on the procedure of emergency materials and equipment stock formation (Order No. 223 dated on 24.05.2013);

Inventory of Chemicals and Chemical Substances used by the Operator (Order

No. 225 dated on 28.05.2013);

Regulations for DWL operation (Order No. 270 dated on 26.06.2013);

Oil-contaminated Waste Handling Instructions and Oil Slurries Disposal Regulations (Order No. 299 dated on 12.07.2013).

Risk Management Regulation (Order No. 378 dated on 03.09.2013);

Safety Signs and Sign Marking Procedure (Order No. 440 dated on 24.10.2013);

Regulation on the Procedure for Provision of the Operator’s Employees with

Personal Protective Equipment (Order No. 442 dated on 25.10.2013);

Regulation on Provision of “LUKOIL Uzbekistan Operating Company” LLC with

HSE legislative and other requirements (Order No. 460 dated on 05.11.2013);

Instructional Guidelines for HSE Competitive Examination Procedure (Order

No. 475 dated on 22.11.2013);

Quality Management System Internal Audits Schedule (Order No. 487 dated

on 27.11.2013);

Water Resources Assessment and Management (Order No. 497 dated on 02.12.2013);

Regulation on the Procedure of Preliminary and Detailed Designs of “LUKOIL

Uzbekistan Operating Company” LLC (Order No. 503 dated on 06.12.2013);

There was assigned Quality Representative of Top Management (Order No.

530 dated on 25.12.2013);



There was changed a structure of Committee for Emergency Response and

Annunciation (Order No. 533 dated on 25.12.2013);

There were assigned new structure of internal auditors of HSE Integrated Management

System and Quality Management System (Order No. 535 dated on 30.12.2013).

As of 2013 staff number of LUOC IS&E Department made 19 persons, including: 1 - Head of Department, 5 – Environmental Department, 5 – Engineering Supervision and Cathodic Protection Department, 8 – HSE Department. In addition, there are 8 established posts in the HSE service on the Kandym site.

Starting from January 1, 2014 there is planned introduction by 1 post to the staff of HSE

Service of “Kandym” site – Road Traffic Safety Engineer.

The contractors carrying out construction of wells and other field surface facilities have

the HSE specialists in their structures, being directly on the construction sites. Availability of such specialists is mandatory requirement for contractors when concluding the work contract.

All personnel involved in HSE management of LUOC and its structural subdivisions on

the fields have required qualification and skills, and they are trained regularly for professional

development, both according to legislation requirements, and through the additional corporateand individual programs and refresher courses.

Training, retraining and professional development of the personnel regardingmaintenance of HSE in LUOC are conducted according to “Regulations on HSE Training and

Examination Procedure”.

In accordance with the Regulations the employees, specialists and managers undergoHSE training, multistage briefing and certification.

Plan for HSE Personnel Training in the specialized educational centres of Uzbekistan,Russia and abroad is made in the LUOC annually. Training plans also provide participation of

LUOC employees in the conferences, devoted to the oil and gas projects; to training onenvironmental management courses (ISO 14000) and occupational health and safety

management (OHSAS 18000); quality management (ISO 9001) and training on the courses for

specialised activity types. In 2003 there has been carried out training and professional development of the

personnel of IS&E Department:

Professional retraining in RSUOG named after I. M. Gubkin “Oil and gas production”;

Professional retraining in RSUOG named after I. M. Gubkin “Technology of

natural gas treatment and gas-chemistry”;

English language training by immersion method;

Risk Management

Fundamentals; SAP training;

Basics of Integrated Projects Management System (ISPM);

HAZOP;

Management Qualification training;

Training and certification of the specialist as the expert with the right of performance of calculations of residual resource on expertise of industrial safety in oil and gas industry; in construction structures of buildings and facilities on hazardous industrial objects;

Training in the “LUKOIL - Western Siberia” LLP – Engineering supervision management for compliance with the requirements of safe operation rules and regulations, maintenance, repair, installation, reconstruction of the supervised equipment and facilities quality;

III International Workshop Conference “Midstream Operations Integrity and

Reliability Control. Diagnostics and Cathodic Protection”;



“Integrated Management System Internal Audit according to ISO 9001, ISO

14001 and OHSAS 18001”;

Test and Calibration Laboratory Qualification Assessment based on ISO/IEC 17025-2005;

Training and certification of specialists for ultrasonic technique for 2nd level; First aid treatment.

According to the ERM recommendations plans for 2014 provide for training of the Operator’s IS&E Department personnel to requirements of international financial institutions (Equator Principles, IFC/ADB/MIGA Standards).



9 SOCIAL ISSUES MANAGEMENT SYSTEM

Company’s social policy is focused on improvement of operational efficiency andcreation of conditions of workers social security system and stability in labor collectives. The

fundamental principles of social policy covering all subsidiaries, including “LUKOIL

Uzbekistan Operating Company” are set forth in the Social Code of OAO “Oil Company

LUKOIL” which has been accepted in 2002. It is the comprehensive document on

Company’s positions and obligations in terms of ethical and socially responsible behavior.

The Code maintains the labor guidelines and rights, the international labor standards, the

labor legislation of the Russian Federation and the countries in which “LUKIOL” carries out the

activity. Moreover, on a number of positions the Company sets itself higher social objectives.

LUOK PR Department (public relations department comprised of 4 employees) is responsible

for Public and Stakeholders Relations interaction. All PR Department personnel have

required qualification and skills.

LUOV General Mine Surveyor Department (4 employees from department) is

responsible for interaction with local population to the extent of implementation of landallocation procedures for the Project use.

LUOC has HR Division responsible for manning and internal social policy

implementation (20 persons). All HR Division personnel have required qualification and skills,and they are trained regularly for professional development, both according to legislation requirements, and through the additional corporate and individual programs and refresher courses.

In 2013 four (4) employees from LUOC General Mine Surveyor Department have been

trained for the following subjects:

GIS application – ESRI technology in oil and gas industry First aid treatment

1 person from PR Department has been trained for the following subjects:

Problem statement and conducting of assessment interview Management Qualification

training First aid treatment

20 persons from the HR Department have been trained for mentioned below subjects: Training for the course “GR1: Management of complex incentives”

Problem statement and conducting of assessment interview English language training by immersion method

Training of inspectors for the Assessment and Development Centres Management Qualification training

Corporate Qualification training

First aid treatment

Public speaking

MS Excel

Effective design of electronic courses by means of WebSoft CourseLab, version 2

Managerial skills progress: how we can obtain results?

Within 2013 according to recommendations of the ERM there was provided

implementation of measures for improvement of social issues management system efficiency,

including development of Stakeholder Engagement Plan providing revealing of all stakeholders

during Project implementation and describing interaction pattern with them taking into account

impacts and risks; development of Resettlement and Land Withdrawal Plan.

Within a year according to the approved program there have been conducted public

consultations for Kandym project



region. Issue of technically easier grieving procedure creation has been negotiated. In the

beginning of the year 2014 implementation of the procedure for consideration of grievances

of citizens with a focus on presence regions to be expected, in particular, there is provided

for installation of boxes for the letters and grievances to LUOC with their arrangement in

convenient and accessible for local residents areas (in the immediate vicinity of district

khokimiyats - on the base of central district newspapers editorial offices with the subsequent

press coverage of different questions of residents in Uzbek).



10 INTERACTION WITH STAKEHOLDERS AND AFFECTED PARTIES

10.1 Identification of the Stakeholders

Identification of the stakeholders within implementation of the Project is carried out with

use of contacts with local authorities, in particular, with management and officials of area and

district khokimiyat (municipal government), and on the basis of requests, receiving from local

population, which accounting is conducted in the control and office-work department of LUOC. Programs of meetings with the population, living near to existing/future facilities of

LUOC, are made annually.

The “Program of meetings (consultations) with the population, living near to the Operator's fields for 2013” has been developed and approved at the beginning of the year

2013. The main objective of meetings (consultations) is to provide local population with the

information about the projects implemented by the Operator, works impact on environment

and local population, land allotment and resettlement, vacancies at the field facilities.

Meetings which have been held within 2013: with the population of Bukhara region –

in March. In total 1700 people have taken part at meetings in two districts. The event has

been dated for national holiday Navruz, and has given the chance to the people to set to

employees of the Operator interesting for them questions in open conversation. Meetings

have gone off in favourable atmosphere, words of gratitude have been expressed to

LUKOIL for attention to the local people, and old men have given their blessing to the

projects of the Operator in the region.

Taking into account that there was a considerable number of local residents,

representatives of public organisations and district government authorities at meetings,

it was difficult to determine exact the number of women and men. Approximate number

of women makes 30% of total people coming and men – 70%. The next meetings in this region have been held in the autumn of 2013



Later in the day in the Oil and Gas Industry College building of Karakul district of

Bukhara region the meeting-consultation with participation of LUOC employees, representatives

of local authorities, representatives of interested public organizations and the population livingnear to facilities of the Operator of the project “Kandym, phase II” has been held. Meeting was attended by: 9 employees of LUOC, watchdog, 2 representatives of local population of Karakul district: total of participants – 64, including men – 57, women – 7.

During these meetings LUOC employees have provided information on the following issues:

engineering data on the Project “Kandym, phase II”; project implementation schedule, including its

duration; future industrial infrastructure; potential negative impact on the population and

environment; negative impact mitigation; emergency response and emergency procedures; issues

pertaining to land selection, allocation and restoring; employment possibilities in the Company;

Company social commitment within area of work; grieving procedure. After presentation there was

discussion during of which answers on the set questions have been given.



10.2 Information on Implemented Support Programs for Local Population

One of directions of LUOC social activity directed to strengthening of public relations and

Company’s profile raising is the charity and sponsorship. Activity in this regard is based on such

fundamental principles as targeting of the support rendered, methodology systematization,

transparency in making and execution of decisions, and reporting on target use of funds.

In Bukhara region where the contract territories of the Operator’s project –Kandym – are located, the following beneficent aid and sponsor support has been rendered in 2013:

upon khokimiyat’s request it has been financial assistance to social welfare bodies

for acquisition of 28 orthopaedic prostheses, 16 hearing aids, 17

wheelchairs and 25 pairs of crutches for invalids and disabled persons;

providing financial assistance in potable water supply to children's homes and

specialized boarding schools of Bukhara is proceeded;

beneficent aid in respect of the organization of festive events in specialized boarding

schools already became traditional, there have been spent children's matinees for

visually impaired and hearing impaired children of specialized boarding schools of

Bukhara with giving of gifts on the occasion of spring holiday Navruz, autumn holiday

Independence Day and winter holiday New year;

for carrying out of the measures devoted to Memorial and Honours Day it has been

rendered sponsor support, for old people and veterans have been organized celebratory

pilafs, and participants of the Second World War have received lumpsum remuneration.

social actions in honour of Navruz holiday (incoming of spring) and Mustaqillik

(Independence Day) have been carried out for local population

celebratory tables (pilafs) have been laid, there have been about 1700 residents of

districts from among needy families and vulnerable groups on each holiday.

Within a year there was repeatedly rendered a financial assistance to the Bukhara municipal organization of sight-disabled people of Uzbekistan Blind Association in carrying out of festive events and rendering of the social support for sight-disabled people. Measures were carried out in such events as Navruz, Independence Day, and International Day of Persons with Disabilities.

Upon request of Karakul district khokimiyat (ref. No. 15500 dated on 20.12.2013)

there has been rendered sponsor support for repair and equipment of the

residential building of specialized school No. 52 for exceptional children. During

the same period the beneficent aid was rendered (request ref. No. 15484 dated on

19.12.2013) for repair of district administrative building (replacement of window

framing and doors, equipment updating).

10.3 Information on functioning of Grievance Procedure

Procedure for consideration of external stakeholders’ grievances in LUOC is

implemented according to the Law of the RUz “On appeals of citizens”. All written

appeals of citizens or legal entities are registered by the Operator, sent for consideration

to the manager, who assigns the person in charge for answering the appeal.

Anonymous appeals are not considered.



Term of the answer to the appeal or the complaint in LUOC is determined in 15

days. If the answer to the appeal or the complaint demands more accurate definition

with specialists of structural subdivisions, presenting of additional information or specific

measures, the terms for answer can be prolonged by the Director General of LUOC, but only as an exception and for not more than 1 month that is reported to the applicant.

According to the presented information, the Operator did not receive any complaints,

pertaining to its activity, from local population and other external stakeholders in 2013.

Along with this in the beginning of the year 2014 implementation of the procedure for

consideration of grievances of citizens with a focus on presence regions to be expected, in

particular, there is provided for installation of boxes for the letters and grievances to LUOC with

their arrangement in convenient and accessible for local residents areas (in the immediate

vicinity of district khokimiyats - on the base of central district newspapers editorial offices with

the subsequent press coverage of different questions of residents in Uzbek).



11 ENVIRONMENTAL AND SOCIAL ASPECTS OF ACTIVITY

11.1 Environmental Aspects at the Sites of Kandym Group of Fields

Emissions into the Atmosphere and Noise Impact

New sources of atmospheric air pollution, production of waste and wastewater belonging to LUOC have been formed due to commissioning of the camp on the Site of Kandym Group of fields in 2013.

Sources of atmospheric air pollution in the camp were the stationary sources in total of 2 units. Total actual emission of pollutants into the atmosphere from stationary sources has made 0.187 tons in 2013.

Table 8 - Actual Emissions from Stationary Sources of the Shift Camp Kandym in 2013

No. Name of the contaminant 2013, ton

actual MPD

1 Carbon oxide 0.05625 0.898

2 Nitrogen dioxide 0.06750 1.078

4 Hydrocarbons 0.027062 0.431

5 Sulphurous anhydride 0.022500 0.359

7 Acrolein 0.002699 0.04325

8 Carbon-black 0.011250 0.18

Total 0.187262 2.991

Apparently from the Table 8, emissions into the atmosphere from stationary

sources have made 6.3% of the established rates.

Emissions of greenhouse gases over the camp Kandym in 2013 have made 9

tons in 2 equivalent.

In 2013, environmental load, mainly, has been at the expense of construction of wells by the contractor “Eriell Corporation s.r.o”, thus, there were performed pilot works at 7 wells of Kandym field (No.No. 2R-32; 215/2; 1040; 1043; 1060; 1089 and 1090). Total emission of pollutants in development of wells on the fields of Kandym group for 2013 has made 892.271 tons.

Three stages of atmospheric air condition monitoring were completed in 2013 on the site

of Kandym group. Atmospheric air samples have been sampled at background station - in the

northeast part of the site, near to downstream of Main Karakul manifold, for assessment of

natural (background) level of atmosphere pollution on the site. Average readings by results of

atmospheric air monitoring are shown in the Table 9.

Table 9 - Averaged Results of Atmosphere Monitoring on the site of KGF in 2013

No Parameters Concentration, mg/m3

Background Local (on the LUOC MPCo.t. MPCo.t. (outside the LUOC facilities) (RUz)* (WB)**

facilities)

1 3.47 4.3 5.0 -

2 NO2 0.055 0.06 0.085 0.200

3 SO2 0.156 0.27 0.500 0.500

4 H2S 0.018 0.022 0.008 5.0

5 y 7.81 7.65 50.0 -



* - MPCo.t. (RUz) - maximum one-time MPC according to sanitary code of the

RUz No.0179-04. ** - MPCo.t. (WB) - standard of the WB (WHO), accepted according to minimum

averaged period (for NO2 – 1 hour, for SO2 – 10 minutes).

Excess of maximum permissible concentration of RUz of pollutants in atmosphere is noted by

hydrogen sulphide only, thus, concentration of hydrogen sulphide does not exceed the rates of the

World Bank. Observations on the background station, according to expert opinion of the SSIAC,

demonstrate that changes of hydrogen sulphide content correspond to average-long-term values

during observation 2005 – 2012, thus, maximum hydrogen sulphide concentrations were reduced in

2013. Taking into account absence of production wells and equipment around the Kandym group at

present time the conclusion on existence of the regional combined natural and man-made factors

proves to be true, established facts of excess of hydrogen sulphide content in atmospheric air cannot

be interpreted as impact of operations performed by the Operator.

During the field surveys at the monitoring stations, noise level was measured by means of the sound level meter SHUM-1 (natural, at strong wind and noise impact on the drilling floors). Excess of permissible levels, according to SanPIN No. 0120-01 “Sanitary standards for permissible noise levels at workplaces” was not registered. The range of noise level, following the results of monitoring on the site of Kandym group of fields, varied at the level of 36-70 dB. According to recommendations of the independent adviser analysis of atmospheric air quality around the facilities of the drilling contractor are executed during the surveys. The results of surveys are shown in the Table 10.

Table 10 – The Results of Atmosphere Monitoring around the Drilling Contractor’s

Facilities in 2013

No. Parameters Concentration, mg/m3

Actual value MPCo.t. (RUz)* MPCo.t.

(WB)**

1 3,9 5.0 -

2 NO2 0.0368 0.085 0.200

3 SO2 0.2995 0.500 0.500

4 H2S 0.0135 0.008 5.0

5 y 7.4689 50.0 -

* - MPC . (RUz) - maximum one-time MPC according to sanitary code of the RUz No.0179-04

** - MPC . (WB) - standard of the WB (WHO), accepted according to minimum averaged period (for NO2 – 1 hour, for SO2 – 10 minutes).

In the frameworks of consulting with independent experts, it is determined that the value

of concentration of contaminant not more than 0.3 MPC working zone is accepted as a pollutionstandard. By results of measurements, it is obvious that all concentrations of pollutants aroundthe drilling contractor facilities are both within MPCo.t, and within pollution standard for camps

on hydrogen sulphide.

Water Consumption and Water Removal

The actual volume of water consumption on the Kandym site has made 8933.0 m3

in 2013. The volume of the treated domestic wastes and salt waters, discharged to

evaporation ponds has made 8643 m3

in 2013. Water in the volume of 290 m3

has been used for replenishment of the fire-prevention stock (irrevocable losses). Domestic wastes arrive for treatment to biological treatment facilities and further – to the evaporation ponds.



Surveys for the purpose of assessment of operations impact on the condition ofsuperficial and underground waters had included 3 stages of surveys in 2013. Study of the

superficial and underground waters condition has been carried out at the observation stations

located upstream amd downstream of Main Karakul manifold in the territory of the site,

underground waters – at the water intake facilities.

By results of laboratory analyses high concentrations of the following remains in

superficial waters of the site: mineralizing (up to 7 g/l), COD (up to 12.3 MPC), oil products (up to 4 MPC), iron (up to 6 MPC), and hydrogen sulphide up to 0.017 mg/l. In comparison with 2012 mineralization, COD and hydrogen sulfide readings of superficial waters of the site have raised in 1.2-1.4 times, and oil products has reduced in 1.3 times. Iron concentration in collector waters remained at level of values of 2012.

Underground waters were characterized by high mineralization (up to 15 mg/l) and

availability of hydrogen sulfide up to 0.0115 mg/l. In comparison with 2012 the increase in content of pollutants in underground waters was not observed.

According to expert opinion, the revealed raised concentration of contaminants in superficial and underground waters are the consequence of combined natural and man-made factors, occurred in the territory of the whole region, and are not connected with oil and gas operations.

Solid Waste Handling

Actual generation and disposal of wastes on Kandym site have made in 2013:

No. Waste name Generated and Utilization method

utilized, ton

1 Solid domestic waste 28.0 Removal to the Landfills

under the contract

2 Used engine oil 0.3 Hand-over for disposal to the

specialized organization

3 Used automobile tyres 0.192 Hand-over for disposal to the


4 Worked-out activated No Reuse as fertilizers

sludge

5 Used luminescent lamps Hand-over for disposal to the


Thus, the whole volume of the waste generated has been disposed or handed-over for

processing to special organizations on a contractual basis. Collection and time storage of all

types of waste till the moment of disposal or hand-over for processing is carried out in specially

equipped areas, equipped with the appropriate hermetically sealed storage container.

Disposal of drilling wastes on the site of Kandym group of fields is executed by the contract organisation according to procedural requirements, the actual volume of the drilling wastes, disposed by the contractor in 2013 has made 15525 tons.

Surveys for the purpose of assessment of operations impact (including the waste

disposal) on the state of soils and ground also have been continued in 2013. Surveys included

three stages which have been carried out during the spring, summer and autumn periods.

Sampling has been carried out at the observation stations located at the background point (base

level) and points of potential contamination of soils and ground (local level).

The observation stations were arranged, within the objects of studies, (local sites), in the

zones of maximum possible impact of operations. Distribution of contaminations on a vertical of

the lithologic section has been studied by layer testing in the intervals of 0.0-0.3 and 0.5-1.0 m.



Besides, sanitary state of the well platforms has been defined by visual observations. Average

readings by results of monitoring of soils and ground on the KGF site are stated in the Table 11.

Table 11 – Averaged Results of Soils and Ground Monitoring at the KGF facilities in 2013

No. Parameters Average concentration, mg/kg

Average (outside Local (on the MPCo.t.

MPCo.t.

the LUOC

LUOC facilities)

(RUz)*

(WB)**

facilities)

1 of aqueous 6.34

6.51

-

extract

2 Solid residue of 0.32

0.6076

-

-

aqueous extract

3 Oil products 0.089 0.1327 - 5.000

4 Iron 13426.76 15851.81 - -

* - MPC (RUz) – there is no MPC for controlled parameters of soil ** - MPC (WB) – standard of WB (WHO), accepted according to Dutch Intervention

Values (DIVs).

It is determined by the expert's report that, by the results of year, content of

substances in atmospheric air, superficial and underground waters, as well as soils and

grounds has the tendency to increase and substantial negative impact of operations to

be performed on the environmental situation are not traced.

Radiation Environment

Radiation environment study in the territory of the site of Kandym group of fields has been carried out at 10 observation stations. Measurements of exposure-dose rate of external gamma rays have been carried out at 7 stations; samples of superficial and underground waters were collected at 3 stations.

As a whole values of external gamma rays EDR on the site do not exceed background

values. Values of external gamma rays EDR of soils change within 0.08-0.13 microsieverts per

hour (mcSv/h) (or 8-13 micro-roentgen per hour (mcR/h)) at the rate of 0.6 mcSv/h (or 60

mcR/h). Radionuclides content in water samples substantially below permissible sanitary norms.

Biodiversity

The biotic monitoring in the territory of the Kandym group of fields has been carried since

2006. Initially there were not permanent sites. They varied every year. From 2007 to the spring

of 2013 there was permanent “control” site which located out of the Company’s activity zone,

near to the channel. This site was used in comparison of sampling results for pesticides and

heavy metals content. As samples collection has been cancelled necessity in survey of this site

has to be no longer relevant. Since 2011 the observations are carried out on the “water intake

area” site.

The territory of Kandym group of fields mainly is represented by monotonous deserted biotopes with semi-fixed ridge sands. Insignificant areas are occupied by barchans sands and takyr soils. The territory of the site is crossed by the manifold from the East to the West. Entire territory of the site is exposed to human impact.

Saxaul, some species of suzerain (Ammodendron Conollyi, Ammodendron Karelini,

Ammodendron Lehmannii) and Kandym (Calligonum caput Medasae, Calligonum oriopodum) with

saltwort (Salsola Richteri), sand acacia, locoweed (Astragalus villosissimus) are widespread



on sandy areas. Kandym formations take appreciable place among the sandy plants,

creating one of most widespread landscapes.

Various types of wormwoods are characteristic for takyr soils: 1) with psammophyte shrub -

Convolvulus hamadae, Salsola Richteri, Aristida Karelinii, Aristida pennata; 2) ephemeras, which

composition includes Poa bulbosa, Carex pachystylis, Bromus sp.sp. besides

wormwood - Artemisia kemrudica and Artemisia diffusa; 3) dzhuzgun, with participation of Calligonum sp.sp., Astragalus unifoliatus.

The tamarisk thicket (Tamarix hispida, Tamarix laxe, Tamarix litvinovii) with yantak (Alhagi canescens) and glasswort (Salsola turcomanica, Salsola foliasa, Halimocnemus

villosa, Halocnenum strobilaceum) are along the canal bank. There are bloomy poplar

(Populus pruinose) and downy poplar (Populus diversitolia), horsetail ramose (Eguisetum

ramosissimum) along reservoirs. The reed (Phragmites cmmunis), blackamoor (Tupha

lafifolia), parrot's-feather, bladderwort, and etc., grow on the reservoir.

Rare, included in the Red Book of Uzbekistan species of plants in this territory are: Central astragal (Astragalus centralis), Melting Kandym (Calligonum molle), Paraeremostachys transoxana, Kandym Paletsky (Calligonum paletzkianum).

Owing to that the desert species of animals conduct basically a night way of life, more

often it is possible to speak about presence of those or that species of animals on their tracks

only. Night automobile recording is not expedient, as they are the factor of disturbance, and represent threat of death of small night animals as a result of collision with motor transport.

The fauna is represented by desert species of mammals (corsac fox, jerboas, yellow and long-clawed ground squirrel, jirds). The most typical representatives of desert fauna are gophers

and jirds, which are at the same time the basic forage resources for many carnivorous animals:

fox, corsac fox, jackal.

Birds are represented basically by desert species - wheatears, larks, warblers. Many species of reptiles dwell in the territory of the investigated area: toad-headedagama (Phrynocephalus mystaceus P.), sunwatcher (Phrynocephalus helioscopus), plate-tailed

gecko (Teratoscincus scincus), rapid fringe-toed lizard (Eremias velox), striped racerunner(Eremias lineolata), medial racerunner (Eremias intermedia), etc.

Various species of racerunners, agama, jirds, and tracks of jerboas, hare, and fox have been registered most often during monitoring.

The desert monitor, entered in the Red book of Uzbekistan, is usual, but not a numerous

species. The regularity of meetings shows presence of suitable conditions for dwelling of this

species in the territory, adjoining to water intake facilities and absence of factors of disturbance. During carrying out of routing accounts at autumn stage of monitoring on the “Water

intake facilities” site fresh traces of goitered gazelles have been noted.Previously the goitered gazelle was not noted in the territory of Kandym group of fields.

Comparative distribution of species over the sites of Kandym field by results of surveys

in 2013 is shown in the Table 12.



Table 12. Comparative Distribution of Animals by Results of Survey in 2013

Specie Water intake area

Reptiles spring autumn

Racerunner + +

Toad agamas + -

Desert monitor + -

Birds

Sandpipers - -

Larks + -

Booted warbler (Hippolais sp.) + -

European chat (Oenanthe sp.) + -

Laughing dove - -

Myna - -

European swallow - -

Mammals

Great gerbil + +

Jerboas + -

Hare + -

Caragana fox + -

Goitered gazelle - +

During carrying out of targeted surveys of the territory of Kandym group of fields

in 2013 2 rare species of animals are noted: goitered gazelle and desert monitor. Field

territory is natural habitat for the desert monitor. Goitered gazelle was not noted here

previously. Now it is impossible to determine character of presence of this specie in the

territory, surveys of existing and new monitoring sites will be continued.

By results of monitoring in 2013 significant negative impacts on the habitats condition,

populations and species diversity of animals and plants connected with the Operator’s activity

have not been revealed, thick or perished animals or plants have not been found.

According to recommendations of the independent consultant – ERM Company – the

following measures have been realised with regard to environmental monitoring in 2013:

organization of the constant air monitoring around the base of drilling

contractor (see the results above);

assessment of availability of rare and protected species of flora and fauna near to

construction sites has been carried out, lists of endemic and Red Book species

of plants and animals, as well as species included in IUCN Red List and list of

CITES convention has been drawn up, their residence status (if any) has been

clarified, updated programs of biotic monitoring have been formed;

there is formed the procedure for comparison of results of annual monitoring surveys of emissions and discharges with more demanding quantitative standards among established by the legislation of RUz, Management of World Bank or WHO. The results are covered in semi-annual Reports of LUOC on environmental and social monitoring of activity

Monitoring diagrams of 2013 on the site of Kandym group of fields are shown in Appendix 1.



11.2 HSE Action Plan

According to “Regulations on planning in the framework of HSE IMS” LUOC annually

develops the “HSE Plan on the sites of Kandym group of fields”. The plan includes the

measures implementation schedule, necessary financial resources and personnel

responsible for implementation.

In 2013 the following measures have been included in this plan and implemented:

1. Carrying out of environmental monitoring of oil-and-gas operations in the territories of the sites of Kandym group of fields (3 stages);

2. Potable and waste water quality control on the Kandym site; 3. Industrial and domestic wastes disposal;

Under control of contractors’ work according to ERM recommendations the following measures were implemented:

1. For the purpose of reduction of soil contamination the drilling contractor purchases

chemicals for construction of wells in original packing or packing of chemicals in

hermetically sealed container prior to delivery to drilling platforms 2. In territory of fuels-lubes storage of the drilling contractor has been organized

spillages and effluents collection system in storage capacity designed to partial reception of possible spillage with their subsequent transportation to emergency drainage capacity.

3. There is organized cess-pit deposits disposal system together with drilling cuttings. 4. There have been carried out examination and preventive maintenance of

engine on all drill sites in order to prevention of emissions with high ash. 11.3 Information on Population Health and Safety Measures

Main production facilities (wells) are located in considerable distance from

settlements: the nearest settlement to Kandym group are located in the distance of 20

km from projected field facilities.

Procedure of development of actions to provide health and safety of the population at the

designing and operation stage of the production facilities of the LUOC is described in details inthe report for 2012.

Both LUOC and its contract organisations mandatory have valid contracts on anti-fountain provision, prevention and fire suppression, alarm conditions and emergencies withspecial territorial units (UzPU, FSA, CD).

According to recommendations of the ecology-social monitoring, the drilling contractorhas developed addenda to existing ERP, covering the matters of notification and interaction

with representative bodies of local population in case of emergency origination, and also a

number of additional technical measures on prevention of their origination.

Also, the contractor has developed the “Plan of measures of protection of the population in the zone potentially affected at drilling, testing, development and major repairs of wells”, approved by the Operations Director of the contract organisation “Eriell Corporation s.r.o” on 20.01.2013.

At LUOC facilities, practical classes, trainings and exercises on elimination of various typical

emergencies of natural and anthropogenic character, in the conditions of winter, summer, day and

night with a view of professional development of the personnel of the Operator's facilities on actions

in case of breakdowns, fires, worst-case situations and emergencies. Besides the operation

personnel (members of the volunteer gas rescue brigade, volunteer fire brigade),



which take part in exercises and trainings, professional divisions of fire-fighting service,

blowout elimination service and gas safety service take part also.

Conducting of these exercises helps to reveal possible mismatches, and to develop the actions for their elimination in due time. Similar doctrines are conducted in the contract organisations that operate on potentially hazardous facilities.



APPENDIX 1

environmental and social monitoring report · 2014. 9. 29. · prepared by lukoil overseas...

Documents