Our main approach to the management of industrial waste consists of 1) applying the latest technologies that reduce waste generation, 2) preventing excessive build-ups of waste at LUKOIL Group entity facilities, 3) placing waste at specialized facilities that meet modern requirements, and 4) the timely and safe disposal of waste.

Most of the production waste of LUKOIL Group in Russia is generated during the process of well drilling and operation; the volume of waste generated depends primarily on the scope of drilling and repair works at wells. For this reason, in the past three years the volume of waste generation has risen by approximately 50%. The main types of waste are drilling mud and spent drilling fluids.

In 2018 the ratio of recycled waste to newly formed waste was equal to one.

	2016	2017	2018
	2016	2017	2018
Waste generation volume, total	1,033	1,434	1,529
Amount of waste used, neutralized, and handed over to specialized entities, as well as landfill waste	1,115	1,396	1,582

Notes. Data on waste generation volumes for 2016–2018 are shown net of rock waste generated during the boring of oil wells at LLC LUKOIL-Komi (Hazard Class 5).

	2018
Waste at the beginning of the reporting year	933
Waste generation volume, total	1,529
Received from third parties	6
Amount of waste used, neutralized, and handed over to specialized entities, as well as landfill waste	1,582
Waste at the end of the reporting year	886

According to the respective environmental hazard classification, most generated waste is attributed to Class 4 (low-hazard) or Class 5 (non-hazardous), and is mostly recycledHere and later, the term"disposal" is used to mean "use, neutralization, landfilling, or handing over to a specialized organization for these purposes"..

The share of hazardous waste (hazard classes 1 and 2) that contain substances that are dangerous to people's lives and health and can cause irreparable changes to environmental systems amounts to 0.01% of the total volume of generated waste; such waste is subject to mandatory disposal.

Hazard Class 3 (moderate) waste includes a portion of oil-containing waste (with an oil product content in excess of 15%). This comprises around 10% of the total volume of generated waste.

	Waste at the beginning of the year, total, thousand tons	Waste generated during the yearExcluding waste received from third parties., total, thousand tons	Waste at the end of the year, total, thousand tons
Total,	933	1,529	886
including: oil-containing	22	192	22
drilling waste	156	972	108
Hazard Class 1	0.0007	0.036	0.0008
Hazard Class 2	0.0033	0.09	0.0014
Share of waste of Hazard Classes 1 and 2, %	0.0004	0.008	0.0003
Hazard Class 3 (oil-containing)	23	159	23
Share of waste of Hazard Classes 1, 2, and 3, %	2.5	10.4	2.6
Hazard Class 4	878	1,117	831
Hazard Class 5	32	253	32

Notes. There is no direct correspondence between the concept of "hazardous waste" in foreign practice and Russian legislation. Most substances categorized as hazardous waste in the international accounting system are contained in waste of the 1 and 2 hazard classes. In Russia, waste of the 1–3 hazard classes is considered hazardous, the waste of hazard class 4 low-hazard, and the waste of hazard class 5 non-hazardous. The hazard class is determined based on criteria approved by the Russian Ministry of Natural Resources and Ecology.

	Waste at the beginning of the year, total, thousand tons	Waste generated during the year, total, thousand tons	Waste at the end of the year, total, thousand tons
Total	23.1	27.0	19.4
including: oil-containing	19.9	5.3	16.6

Notes. The data for 2018 for foreign entities include data for LUKOIL Neftohim Burgas AD, PETROTEL-LUKOIL S.A., and LLC LUKOIL Uzbekistan Operating Company.

The Company has switched to a sumpless well-drilling concept, according to which generated drilling waste is not stored/landfilled at the drill sites, but is sent for use or neutralization, which ensures that the key performance indicator for waste-handling is met.

We pay careful attention to the quality of waste disposal works carried out by contractors, and monitor their operations as part of concluded contracts: waste-handling methods, the state of the in-process control system, and the availability of the necessary resources to fulfill contractual obligations are verified. LUKOIL Group entities are continuously expanding their level of interaction with contractors in order to improve the quality of their work.