Context

We recognize the importance of actions to prevent climate change, and intend to make our own contribution to achieving Sustainable Development Goal 13.

The HSE policy of LUKOIL Group in the 21st century sets forth the following obligation as one of its objectives: when possible, to "minimize climatic impacts from operations of LUKOIL Group entities”.

The main focus of our efforts in this area is reducing the flaring of associated petroleum gas (APG) and boosting overall energy efficiency. In addition, the production of energy efficient products and expanding the use of natural gas motor fuel at LUKOIL fuel stations helps reduce the carbon footprint on the consumer's side.

In 2009, the Climate Policy of the Russian Federation See: Executive Order No. 861-rp of the Russian President dated December 17, 2009 "On the Climate Policy of the Russian Federation". was approved. This policy expresses the need to adopt adaptation measures in connection with climate change, since in various regions of the country this process will have different consequences for the population, industry, and the environment. The policy draws attention to both the risks and opportunities related to climate change; however clear assessments of the consequences for the Russian Federation of possible climate change were not made.

Later reports indicated the relevance of the objectives outlined in the policy. According to Federal Service for Hydrometeorology and Environment MonitoringSee: website, as well as website data, spontaneous hydro meteorological events have taken place frequently on the territory of Russia in recent decades, and their concentration in certain regions results in social risks and economic losses.

Russia participates in global discussions to reduce greenhouse gas emissions and sets respective targets to reduce the use of carbon in its economy. Increased work in this area includes publication of Russian Presidential Decree No. 752 dated September 30, 2013 "On Reducing Greenhouse Gas Emissions" and a government instruction to ensure a reduction, by 2020, in greenhouse gas emissions to a level that does not exceed 75% of the 1990 level.

At the state level, a system of reporting, monitoring, and inspecting greenhouse gas emissions is being created (respective methods for calculating directGovernment Directive No. 716-r dated April 22, 2015. and indirectOrder No. 330 of the Ministry of Natural Resources dated June 29, 2017. emissions have been approved), and options for the state regulation of greenhouse gas emissions are under discussion. Nevertheless, at the time of preparing this Report, Russia had not ratified the Paris Agreement, and a consensus position had not been established in scientific and industrial circles. At the expert level, discussions are being held about the measures needed to achieve a balance between national state interests and the goals of the global community. As a Russian company, LUKOIL adheres to the official position of the Russian Federation. At the same time, to plan and manage greenhouse gas emissions, the Company has created a system for monitoring, recording, and reducing them.