Country and regional risks

Risks

Description

Risk management activities

Political risks

The political situation in Russia is stable at present, with strong executive departments at the federal and regional levels of government.

OJSC Gazprom Neft is a registered taxpayer in the city of Saint Petersburg, the second-largest city in the Russian Federation, and the capital of the Northwest Federal District, which has enormous natural resource potential, advanced industries, and a dense transportation network.

Subsidiaries of OJSC Gazprom Neft are present in the following Federal Districts: Central, Northwest, Ural, Volga, Siberia, and the Russian Far East.

On the whole, the Company views the political situation in Russia as stable and does not see any risk of negative developments at present.

Risks related to foreign assets

The Company has undertaken a number of foreign projects with the aim of expanding its geographical areas of production.

Expansion into new regions is associated both with the possible benefit of obtaining extra competitive advantages, and with the risk of underestimating the economic and political situation in the countries where the Company’s assets are located. This could then lead to a failure to achieve performance targets.

Currently, Gazprom Neft sees the level of risks related to its foreign assets as acceptable; however, adverse changes cannot be ruled out, since such risks are beyond the Company’s control.

Corruption risks

As the Company actively enters new international markets, there are increasing risks of anti-corruption laws in the US and UK being extended to the Company.

Gazprom Neft is working on a programme to control corruption risks. Essentially, the strategy is to take proactive steps to minimise the risk of liability for any lack of procedures to prevent bribery. The programme will assess the role of corruption risk in the Company’s risk management system, design a corporate policy, devise a communications strategy and provide appropriate employee training required for the project implementation.