9. Social Impact Management

9.1. Personnel: Management and Development

Personnel is the main asset to the company. As in the previous years, one of the most important tasks set by the company is to ensure that the rights of its employees are respected and supported. Sakhalin Energy is committed to uphold human rights of its employees, as stipulated in the International Labour Organisation (ILO) Declaration on Fundamental Principles and Rights at Work, including non-discrimination, the prohibition of the use of child and forced labour, the right to associate, to form trade unions and to join them, collective bargaining and conclusion of contracts and agreements, as well as the creation of safe and favourable working conditions for the company’s employees, as well as contractor, subcontractor, and agency personnel.

Sakhalin Energy provides equal opportunities for all job applicants and employees in strict accordance with well-defined and generally accepted recruitment rules and labour standards, and prevents any discrimination.

Sakhalin Energy undertakes to develop and comply with regulations related to the work of personnel in all aspects of employment relationships, including recruitment, selection, hiring, assessment, promotion, training, maintaining discipline, development, payment of compensations, and termination of employment contracts.


9.1.1. Approaches to HR Management and HR Policy


HR Managers Week – 2017

In September, the company held the HR Managers Week with the participation of representatives of shareholder companies and the company’s senior management. The main goal of the event was to enhance the professional competence of the HR Directorate personnel, to familiarise them with the latest developments in the field of personnel management, to provide information on the current trends in the development of the competence approach and staff assessment, and to ensure that the HR Directorate staff understand the structure of the updated competence profile.


The HR Directorate meets the company’s manpower needs, which includes preparing organisational changes for upcoming large-scale projects, training and retaining staff, and attracting skilled employees from shareholder companies and the external labour market. The Directorate is guided by the following strategic priorities:

  • attract, hire, and retain the most talented employees in the global energy market by relying on our internal talent pool, the expertise of shareholder companies, and other sources;
  • invest in the professional and personal development of Russian specialists to ensure staff retention and the formation of a successors pool for key managerial and engineering positions;
  • offer an attractive and competitive Employee Value Proposition;
  • promote simple and clear HR processes using lean manufacturing methodologies and high-quality HR information systems;
  • develop an effective collaborative work environment that unites employees working in the offices and at the assets of the company.

The company’s senior management believes that all employees should feel engaged in their work, be confident the company supports and respects them, and be given the opportunity contribute to the growth of the company using their knowledge, skills, and abilities. Employee engagement is measured annually via employee opinion surveys and is viewed as one of the most important indicators of employee work satisfaction at the company.

In 2017, 1,930 people, which is about 89% of all employees in the company, participated in the employee opinion survey. The survey showed that the general level of employee engagement was very high — 86%. Employees continue to note the company’s high degree of responsibility in the field of safe and quality work performance, occupational safety and environmental protection, equipment reliability and process safety. This proves that the company’s efforts in one of the priority areas of safety assurance — the Goal Zero programme — are fruitful. According to employees, the company's remuneration and benefits package remains competitive, and employees willingly recommend the company as a good employer. At the same time, employees expect the company to continue to make gains in optimising and improving work processes, enhancing the quality of communications, and accelerating the rate at which important operational decisions are made.

To pursue these goals and objectives, Sakhalin Energy implements its HR strategy through its HR policy.

The HR policy is an integral and strategic set of methods, tools, and documents that governs the company’s relations with its employees and helps it to promptly respond to changing conditions in the global oil and gas market and the market of qualified professionals. All required notifications regarding changes in employment conditions are communicated to the employees as required by labour legislation of the Russian Federation.

The HR Director and the Committee of Executive Directors oversee the development, modification, and approval of the company’s HR policy. These processes are based on our HR management policy, which is in line with international standards.

The Use of the SAP HCM Automated System

The company’s HR Directorate makes maximum use of human capital management software, namely HCM SAP, in the implementation of the HR Policy. This allows us to significantly reduce time and costs and to optimise many processes in the HR Directorate and other units of the company. In particular, the system modules used by the company automate the preparation of HR documents and reports and aid in managing important processes such as learning and development of personnel, succession planning, competence assessment, and recruitment.


9.1.2. General Information


As of 31 December 2017, there were 2,309 people on the company’s payroll, including 2,105 Russian employees, which makes up 90% of the total number. Sakhalin Energy operates mostly in the territory of the Sakhalin Oblast, Russian Federation. There were 2,277 employees working in this region, and 32 people employed in the Moscow office.

The company strives to hire Russian citizens, mostly Sakhalin residents, to work on the Sakhalin-2 project. This is the approach set forth in the company’s HR policy and complies with the terms of the PSA project. At the end of 2017, the number of Sakhalin Oblast residents working at the company was 1,247 people, which is 59% of the total personnel.

Personnel Structure in 2017



The personnel structure is mandated by the specific nature of the company’s operations: 87% are managers, specialists, and salaried workers, approximately 63% are office employees, and the rest work at the production assets of the project.

 

Personnel Structure in 2017 by Assets



At the end of 2017, 26% of the company’s employees were working on a rotational basis and living in hotels and rotational camps built and equipped in accordance with Russian legislation and best international practices.

413 Russian employees were in managerial positions (see the Managerial Personnel Structure in 2017 chart), 217 of which are residents of the Sakhalin Oblast. In addition to training, developing, and promoting existing Russian staff, the company is actively recruiting new qualified Russian specialists in order to increase the share of Russian executive personnel. By hiring trainees, we can guarantee a constant influx of young technicians (see Section 9.1.7.4. Traineeship Programme and Section 9.1.7.5. Successors Pool Planning and Development).

Managerial Personnel Structure in 2017



In 2017, 112 employees were granted child care leave. Of these, four fathers used this right. During the same period, 42 employees (39 women and three men) resumed their job duties at the end of their child care leave. Of these, 35 people continued their employment with the company.

About 28% of the company’s employees are women (657 people at the end of 2017). Of these, 92 occupy executive positions, making up 19% of the company’s management team (see the Managerial Personnel Structure in 2017 chart).

Over the past five years, the number of employees increased steadily due to the implementation of the projects for construction of a booster compressor station and the upgrading of offshore assets. Unlike the tourism or agricultural industries, the company does not experience significant seasonal fluctuations in the number of personnel.

Change in the Number of Employees in 2013–2017 (as of the year end), persons



In 2017, 168 people (117 men and 51 women) left the company. Of these, 54 were foreigners and 114 — Russian employees (including 64 residents of the Sakhalin Oblast). This gives a turnover rate of 7.28% (8.46% in 2016). The voluntary turnover rate of critical technical personnel was 1.53% in 2017.

The statistics of employees who left the company in 2017, broken down by age group, are presented in the table below.

Employees Who Left the Company in 2017, by age group

Age, years

persons

%

Below 30

27

16

31–50

105

63

Above 50

36

21

Total

168

100

At the end of 2017, the average age of employees was 39.1 years. Employees aged under 50 accounted for more than 87%.

Personnel Age Structure in 2017



The working hours established by the company are found in the Internal Working Rules:

  • everyday work under five-day working week with two days-off;
  • rotation-based work with 28 calendar days of work and 28 calendar days-off;
  • shift work.

The working schedules used at the company’s assets are shown in the Company’s Employee Working Schedules by Asset table.

 

Company’s Employee Working Schedules by Asset

Company’s asset

Working schedule

Offices

─       everyday work under five-day working week

Prigorodnoye production complex

─       everyday work under five-day working week

─       rotation-based

OPF

─       rotation-based

Platforms

─       rotation-based

Other

─       everyday work under five-day working week

─       rotation-based

─       shift work


9.1.3. Recruiting Personnel and Onboarding New Employees


Recruitment in the company is based on the staff schedule and joint work with the heads of structural units aimed to forecast the need for personnel. Various tools and methods are used to attract potential candidates and advertise new vacancies, in particular:

  • advertising through the Sakhalin Energy’s website. For the applicants' convenience, there is an automated service for submitting CVs on-line. The website offers guidelines for uploading CVs; applicants can edit their CVs in their personal accounts. In 2017, a separate page with information on vacancies was opened on the company’s website in the framework of the Graduate Development Programme;
  • provision of information on vacancies to the Yuzhno-Sakhalinsk Labour Centre (on a monthly basis);
  • cooperation with leading Russian recruitment agencies;
  • participation in local and regional specialised job fairs;
  • publishing vacancy lists in on-line resources and in print media;
  • promoting the company’s Employee Referral programme, according to which Sakhalin Energy’s employees who recommend candidates are given a bonus if these candidates are hired to work at the company;
  • attracting skilled employees from shareholder companies.

In 2017, Sakhalin Energy participated in four job fairs, held in Moscow, St. Petersburg, Tyumen, and Ufa. Following the fairs, interviews were held with more than 50 graduate students, and the best job applicants were invited to do internships and participate in the competition to fill vacancies for young professionals.

In 2017, the company hired 250 people (181 men and 69 women). Forty-one of the personnel hired were foreign employees, and 209 were Russian nationals (including 92 residents of the Sakhalin Oblast).

The statistics of employees hired in 2017, broken down by age group, are presented in the Number of Personnel Hired in 2017 by Age Group chart..

Number of Personnel Hired in 2017 by Age, persons



In 2017, the Recruitment Subdivision held Sakhalin Energy’s Business Day at Sakhalin State University (SSU). It was the second year in a row that this event had been held by the company with the aim to help students to determine in which areas of the company’s activities they could pursue a professional career.

Graduate students of SSU learned about the available vacancies and the conditions for starting a career in the company, and had an opportunity to leave their resume, to meet young specialists working at Sakhalin Energy, to participate in a business game, and to get answers to their questions. In total, 80 students attended the Business Day, of which 20 young people took part in the business game. The winners were invited to take a tour of the Prigorodnoye production complex.

The company’s interest in the graduates of Sakhalin State University is due to the fact that more than 400 Sakhalin Energy employees graduated from this educational institution at different times, and nearly 100 employees — from the Polytechnic College of Sakhalin State University.

The percentage of critical technical jobs filled remains one of the key performance indicators of the HR Directorate. The figure was 95.7% in 2015, 99% in 2016, and 99.7% in 2017.

The company continues to run the New Employee Onboarding Programme aimed at maximising the awareness of employees and increasing performance efficiency.

Regular information sessions are held for new employees in Russian and Russian with a complete overview of the specifics of the organisational units, processes, and interactions between the units and stakeholders.

9.1.4. Remuneration and Bonus System


The remuneration system used by the company is based on grades and establishes remuneration depending on the employees’ skills and position. This encourages efficient work and provides motivation for excellent performance.

The main principles of remuneration adhered to by Sakhalin Energy are to pay its employees competitive salaries that are equal to or exceed the average salary in the Russian oil and gas industry, and to use a transparent bonus system for all personnel categories.

Remuneration of Sakhalin Energy’s employees includes:

  • base salary, hourly rate as per the employment agreement;
  • compensating or incentive allowances and uplifts to the base salaries and hourly rates payable as per the Regulations on Labour Remuneration, Bonuses and Social Benefits, RF Labour Code and other normative acts;
  • bonuses payable as per the Regulations on Labour Remuneration, Bonuses and Social Benefits and other local normative acts.

Sakhalin Energy’s remuneration policy, practices and methods are designed to recognise and encourage excellent personal and production performance. The company uses the same remuneration system for both men and women employees.

The existing incentive system uses a single unified, standard approach to motivating employees in all the company’s subdivisions. This is achieved through the following types of bonuses as per the Regulations on Labour Remuneration, Bonuses and Social Benefits:

  • Annual Performance Bonus;
  • Special Recognition Award (SRA);
  • Long Service Award (10 years or more);
  • Employee Referral Reward;
  • one-off payment to the employees in connection with rewarding;
  • bonus for participation in a research-to-practice conference held by the company on a regular basis;
  • Committee of Executive Directors Award to employees who achieved special success in teamwork.

Employees may be awarded certificates of honour and Honorary Letters on the professional holiday (the Oil and Gas Workers Day) and company’s anniversaries. Awarding employees may also be given to celebrate anniversary dates of employees (50 years and then every 5 years).

To make sure that its salaries are competitive, Sakhalin Energy regularly monitors the financial segment of the job market and annually adjusts salaries to account for the employees’ individual performance (see Section 9.1.6. Individual Performance Review).

In 2017, the minimum salary in the company was five times higher than the minimum wage established by Russian legislation. Sakhalin Energy’s labour remuneration expenses totalled 13.26 bln roubles in the reporting year, with award/bonus payments totalling 3.34 bln roubles.


9.1.5. Social Guarantees, Benefits and Compensations


The company does everything possible to ensure the attractiveness and competitiveness of its compensation and benefits package in order to attract and retain skilled and high-potential personnel. The compensations and benefits provided to Sakhalin Energy’s personnel ensure the well-being and social security of employees and their families.


In addition to the guarantees and benefits provided for by Russian labour law, Sakhalin Energy provides its employees with:

  • voluntary medical insurance for employees and their families;
  • health benefits;
  • accident and sickness insurance;
  • travel insurance;
  • free meals at the company’s assets and free meals in the company’s offices;
  • housing for employees and their families for the duration of their employment (for those employed on terms of relocation from other Russian regions and CIS countries, as well as from the Far North and equivalent areas), or payment for housing rent for such employees;
  • mortgage programme;
  • annual payment of round-trip travel expenses to the employees’ chosen place of vacation within the RF territory; this applies to employees and non-working members of their families (spouses and children up to the age of 18 years) living in the Far North and equivalent areas;
  • corporate pension programme;
  • material assistance in case of upon the birth (or adoption) of a child; and difficult personal circumstances;
  • sport and recreation facilities (see also Section 9.3. Occupational Health);
  • additional benefits for female employees on maternity leave, and for female and male employees on child care leave;

leisure and development programmes for the children of the company’s employees.

Sakhalin Energy’s Employee Compensation and Benefits Package



Housing for Employees (and Their Family Members)

Presently, most of the company-owned housing is located at Zima residential complex. There are also sports and entertainment facilities in the territory of Zima residential complex.

The company also has leased residential premises in Strawberry Hills complex.

Medical Insurance

The company continues to provide employees and their families with medical insurance benefits under the insurance contracts with SOGAZ, concluded for the period of 2017–2019, under voluntary medical insurance programmes, voluntary accident and illness insurance, and travel insurance.

In accordance with Russian legislation, the company provides foreign employees with required medical assistance under voluntary medical insurance contracts in the territory of the Russian Federation. The company also helps employees to acquire voluntary medical insurance policies for family members on favourable terms.

Mortgage Programme

The mortgage programme is governed by the Regulations on Payments to Employees. Since the beginning of the programme, 235 Russian employees (more than 10% of total staff) have participated in it.

The programme provides for compensating a part of mortgage interest for purchase (construction) of dwelling premises. Under the programme, the company reimburses 40% of interest payments actually paid by an employee during the accounting period, not exceeding the amount set by the company.

Corporate Pension Plan

The company offers a corporate pension plan under which employees and the company pay contributions towards occupational pension schemes.

Participation in the corporate pension plan is voluntary and allows each employee to independently pay into their retirement pension.

At the end of 2017, 23% of the company’s Russian employees are enrolled in the corporate pension plan.

The company contributed a total of 203 mln roubles to Gazfond from 2011 to 2017.

Programmes for the Children of the Company’s Employees

Wonder Island Leisure and Development Club

The company implements leisure and development programmes for preschool children. Development groups, creative associations, and studios for the children of the company’s employees have been working at the Wonder Island Leisure and Development Club in the Zima Highlands residential complex since 2012.

Happy Holidays Programme

Children of the company’s employees have the opportunity to attend Happy Holidays Leisure and Recreation Programme at the sports and cultural facilities of Zima Highlands RC during the summer. The programme has been run for seven years already, and is designed for children of preschool age up to 16 years old. Every year, a different theme is developed for the programme, and each summer session is held according to a unique scenario.

In 2017, the programme participants tried to find the success formula for a present-day young person. During the five sessions, 32 excursions and more than 50 workshops in 15 various areas were organised for children as part of the programme. The workshops conducted by professionals, including employees of the company, became the trademark of the project. In 2017, the project was attended by 655 children aged 6 to 16 years.

Other

Employees and their families can use company’s shuttle buses, which run along the approved routes across the city to the company’s offices, and stop at educational institutions of Yuzhno-Sakhalinsk.

School psychological consultations are available for employees and their children.

9.1.6. Individual Performance Review


The Individual Performance Review process is one of the main tools used to achieve the company’s strategic goals of building a performance culture.

All employees undergo annual performance review. An employee’s performance is assessed based on the degree to which he/she reaches business and individual goals set at the beginning of the year.

This assessment shows whether professional training is required for the employee to continue to grow professionally and improve the company’s efficiency in general.

Individual Performance Review




9.1.7. Learning and Development

9.1.7.1. General Information


Sakhalin Energy’s learning and development system is designed to meet the needs of the company for highly qualified personnel, necessary to achieve its short-term and long-term production goals.

Employees’ learning and development in the company is based on the following principles:

  • compliance: the content of training is formed based on the needs of personnel and business; the results of training contribute to achieving production goals and implementing the company’s overall strategy;
  • competence approach: the process of learning and development is based on an analysis of employees’ competence;
  • centralisation: the learning and development subdivisions are responsible for all training processes in the company, planning and spending the budget for training;
  • cost effectiveness: achieving the maximum level of efficiency through the application of learning and training criteria coordinated with the business needs of the company, as well as the choice of educational service providers without compromising the safety and reliability of production;
  • equal opportunities: continuous, systematic, and consistent improvement of the professional level of employees and development of their potential throughout their career in the company;
  • reasonable balance: the ratio of on-the-job training, distance learning, internal and external training in accordance with the 70/20/10 model;
  • partnerships: maintaining partnerships with international and Russian educational institutions, expanding cooperation with universities in the framework of partnership agreements, cooperation with organisations and training centres of shareholder companies.

9.1.7.2. Staff Assessment

The company applies the competence-based development approach for HR management. A profile of functional, leadership, and personal competences has been developed for each position. The assessment of these competences is used as a basis for recommendations regarding further development and training of the employee occupying this position, as well as for other HR decisions. The job competency profile is a list of competences and their detailed levels descriptions for a current job.

Competence assessment gives a clear understanding of employees’ professional and behavioural qualities against the established requirements, depending on their qualifications, positions, and tasks performed.

There are various tools that can be used by managers in the process of competence assessment, in particular:

  • observation of the employee in the course of work;
  • studying evidence provided by the employee;
  • conducting competence-based structured interviews;
  • interviewing witnesses;
  • knowledge testing;
  • detailed recording of the employee’s performance results;
  • analysing the quality of the product delivered by the employee;
  • the 360 Degree assessment;
  • solving business cases;
  • Assessment Centre (for leadership competences only).

By the end of 2017, 99% of competence profiles for office staff, specialists, and managers) had been posted in SAP HCM.

To assess the leadership potential and managerial qualities of personnel, the company uses modern tools such as:

  • Current Estimated Potential (CEP) Ranking Exercise— a current estimate of the highest position that the employee can occupy at the peak of his/her career during his/her work at the company. CEP is evaluated once every two years for the company’s employees JG5 and above. The assessment criteria are known by the acronym CAR: Capacity, Achievements, and Relationships.
  • Assessment Centre— a technology of integrated expert assessment of employees’ leadership competence, which has been widely used in the company since 2009. This method incorporates such components as business games, structured interviews, and feedback with a detailed analysis of the employee’s strengths and areas for further development.

The target audience of the Assessment Centre is high-potential employees included in the successors pool for senior positions. In 2017, 95 employees of this category passed the Assessment Centre, among them 14 women and 81 men. Compared to 2016, the participation of female employees in the Assessment Centre increased by 1.3%.

Since 2009, the Assessment Centre has been used to assess the leadership competence of 590 company’s employees, including 116 women and 474 men.

  • 360 Degree—an additional tool used to assess leadership competency and personal effectiveness of employees that was developed and implemented in the company at the end of 2014. As of the end of 2017, this type of assessment had been arranged for 121 people.
    To do this, the employee, his supervisor, subordinates and peers fill in an online questionnaire designed on the basis of the company's model of leadership competences. The final results are presented as average ratings of each group of raters and are accompanied by the key findings regarding the employee's strengths and weaknesses as well as recommendations for employee development.
  • Structured interview— an interview during which the competence of a job candidate or employee is determined by applying the appropriate methodology. The Learning and Development Subdivision worked out information sessions on the structured interview methodology, during which videos were shown that gave examples of proper and improper behaviour of managers during competence assessment. Most of the company’s managers were familiarised with this methodology in 2015–2016; 38 managers took part in information sessions in 2017.
  • General Business Competence Assessment Tests — specifically designed tasks and questions to help the manager assess the level of each functional competence of his/her subordinate. In 2017, 19 people used this tool. Upon completion of the testing, both the employee and the manager receive an automatically generated report that includes recommendations for development.

The Competence Assurance Programme for technicians was designed to encourage safe and trouble-free operations at the production assets. The programme is a system to examine the knowledge and skills of technicians involved in technical processes and repair and maintenance of production equipment. During the assessment, employees demonstrate professional knowledge acquired through learning and professional development, as well as the skills and abilities developed in the course of their work. In addition, when assessing employee competences, focus is made on the rules and standards of labour behaviour in the team and the attitude of employees towards their work, which is an important component of operating hazardous production facilities.

Competency assessment results are used later to recommend areas for employee development, prepare individual development plans, and make decisions to promote and transfer to other units and areas of work within the production asset.

In 2017, the Competence Assurance Programme was introduced into HCM SAP (with the transfer of all active competence profiles of employees), which made it possible to carry out the planning and reporting processes in HCM SAP.

9.1.7.3. Personnel Training

The company prepares annual plans for personnel training and professional development based on new production targets, career development plans, and employee competence assessment results.

In 2017, 2,042 employees attended workshops and training courses, including e-learning (one or more courses per individual). The company provides training for all categories of personnel without exception. The average duration of training was 7.4 man-days per employee (excluding on-the-job training). In 2017, Sakhalin Energy invested 245 mln roubles in employee training.

In 2017, the company continued to implement cost optimisation programmes, including those aimed to optimise learning and development costs. However, it affected neither employees’ opportunities for learning and development, nor the number of recommended programmes and their providers. The company began to plan employee training more thoroughly, to combine various forms of training (distance, including on-line training, training in groups on Sakhalin instead of individual training outside the island), and to attract internal resources. All these activities allow the company to maintain the competence of its staff at the highest level.

Sakhalin Energy’s unique training resources include Russian and foreign training service providers. Employees themselves, their line managers, the HR Directorate, and the company’s senior management monitor the implementation of training plans.

Employee Training in 2017 (by Personnel Category)

Personnel Category

Gender

Number of employees

Number of employees who completed training

Percentage of trained personnel

Managers

Male

404

372

92

Female

92

75

82

Specialists

Male

960

882

92

Female

544

421

77

Clerks

Male

0

0


Female

17

14

82

Technicians

Male

288

274

95

Female

4

4

100

TOTAL

 

2,309

2,042

88

The company determines the types of personnel training, resources for the training, knowledge examination, certification, and professional development of employees in the following areas:

  1. Mandatory Training
  • Mandatory training in accordance with the RF legislation on occupational, environmental, and industrial safety.

This area envisages timely organisation of training (learning, certification, testing) of the company’s managers, specialists, and technicians in the company’s areas of activity supervised by the Federal Service for Environmental, Technological and Nuclear Supervision (Rostekhnadzor) and other supervisory authorities of the Russian Federation. The purpose of this training is to provide employees with sufficient knowledge and certification required for the safe performance of work, ensuring the safety of other employees, the environment, the company’s assets, as well as to enable them to obtain the necessary work permits.

  • HSE training according to the company’s internal standards

This area envisages timely organisation of training in the field of HSE in accordance with the standards and requirements of the company’s local regulations, international standards and the requirements of certification bodies, in particular those in the field of process safety, emergency prevention and protection of the company’s facilities from emergencies, occupational safety, etc.

Modern Technologies for Mandatory Training: New Horizons

In 2017, the company continued to automate the planning of mandatory training on the basis of the HCM SAP electronic system. Focus was made on creating a catalogue of mandatory requirements of the RF legislation and the preparation of mandatory certification profiles for employees. In 2017, employees were able to experience the benefits of the new tool: the personal profile of employees and managers contains an up-to-date list of mandatory certifications with the dates of the next training and certification; thus, they can enrol on mandatory training courses, attestation or testing of knowledge in the field of occupational and industrial safety in advance. Currently, the catalogue includes 44 mandatory training courses.

  1. Professional Training

The main goal of training in this area is to increase professional competence in order to achieve safe, reliable, and efficient operation of all structural units and production facilities of the company by ensuring that the qualifications of each employee correspond to the complexity level of the work performed. Employees of the company are sent for professional training in accordance with the qualification requirements for the position occupied to fill gaps in professional competences, and in the case of production necessity.

Professional training of personnel is divided into the following areas:

  • advanced training of managers and specialists, including advanced training courses, participation in workshops, conferences, and round tables dedicated to professional issues;
  • professional training and retraining in technical and non-technical areas;
  • further training of technicians, obtaining a second/related profession;
  • obtaining international professional qualifications (IWCF, CIMA, CIPS, ACCA, NEBOSH);
  • vendor training (training in engineering support and maintenance of equipment, organised by the manufacturer).

In 2017, a project was launched to develop a professional portfolio by discipline in order to provide targeted training and knowledge management.

  1. In-house Technical Training

The growth of the company and the use of advanced technologies in constructing and operating production assets require technicians to have a particular knowledge base and skills within the framework of their technical competencies and the ability to safely and efficiently perform production tasks of any complexity.

The development of the technical competences of employees is carried out through the in-house technical training system. Discipline in-house technical training instructors and lead trainers, selected from among experienced production personnel, were united in the Technical Training Subdivision, which successfully functions at the company. The Subdivision ensures continuous technical training for workers employed at the company's production assets and those employed by the key contractors. The portfolio of industrial training programmes includes more than 150 courses.

The Technical Training Subdivision implements the following training programmes and courses:

  • by discipline (LNG process technology, operation, repair, and maintenance of production equipment);
  • on-the-job and off-the-job technical training for all disciplines;
  • in developing practical process control skills utilizing the existing Operations Training Simulators and training equipment;
  • in targeted modules aimed at developing specific technical competencies and customized to the production assets specifics;
  • in safe production asset operations, developed in accordance with best international practices, as well as based on the findings of audits and investigations of industrial accidents;
  • in technical areas developed by equipment vendors;
  • in the target areas for the main contractors whose personnel work at the company’s production assets;
  • in developing technical competencies in accordance with the approved career development scheme and with regard to the competency assessment results of technicians.

Training is conducted at the company’s own training facilities.

The systematic development of training programmes ensures uniform implementation of the competence standards at the production assets. The programmes reflect the specific features of the facilities related to work flow, material handling, and operation of equipment. Further, the training programmes include the requirements and practices in the field of HSE/technology and personal safety, which allows using them as guidelines in the performance of any work tasks and implementation of initiatives at the production assets.

The company has made it a priority to study the best practices in in-house technical training, the integration of Russian and international approaches, the use of modern technologies in the educational process, as well as further development of training portfolio and training facilities.

A purposeful and mutually beneficial interaction with shareholders in the field of professional training of personnel provides a solid basis for managing unique knowledge. In September, representatives of Gazprom and Shell attended the events of the HR Managers Week, held at Sakhalin Energy. In turn, managers and specialists of the company regularly participate in the work of the Educational and Methodological Council of Gazprom training centres.

In 2017, Sakhalin Energy continued to develop closer links with the training units of the shareholder companies. The company actively cooperates with the Gazprom Training Simulator Computer Centre in the preparation of electronic training modules for the development of a base for targeted technical training of production personnel and HSE training. Four courses have been developed, another two are at the final stage of formation, and eight courses will be translated into the e-learning format in the nearest future. The development of new e-learning courses will make it possible to preserve the information about advanced technologies applied by Sakhalin Energy, and to provide unique technical expertise for training Russian specialists and contractors’ personnel at any asset, no matter how remote it may be.

Particular attention is paid to the standardisation of educational materials for target courses included in the portfolio of in-house technical training courses, taking into account the experience of the Gazprom Training Simulator Computer Centre.

  1. Training in the Development of Leadership, Business, and Personal Effectiveness Skills

The development of general business skills is carried out within the framework of the internal learning system, taking into account the requirements of existing competences, internal assessment, and using electronic resources. The company recommends that its employees engage in self-education to develop these skills.

The leadership qualities development framework is specified in Section 9.1.7.6. Leadership and Management Development Programmes.

 

9.1.7.4. Traineeship Programme

To ensure that there is a sufficient number of qualified technicians, the company continues to implement the Traineeship Programme. Since 2003, 272 people have taken part in the Programme, of which 27 people continued training as the company’s trainees at the end of 2017. The Programme focuses on professional development and further employment for young residents of the Sakhalin Oblast having vocations relevant to the company’s needs. Programme participants are mainly graduates of the Polytechnic College of Sakhalin State University.

The key component of technical training of trainees is to help them to develop practical skills and acquire work experience. The practical part of the Programme ensures that trainees develop their skills and learn the material so that they reach the required competence level. Different training methods are actively used, such as:

  • having trainees prepare projects;
  • having trainees independently develop and deliver presentations;
  • simulating various production scenarios followed by analysis.

At all stages of the Traineeship Programme, emphasis is laid on industrial and personal safety in the performance of various types of work, and on teaching trainees the safety culture.

The Programme graduates are in demand at all production assets. When working at the assets, they demonstrate a high level of knowledge and skills acquired during the Programme, steady motivation for further professional development, and commitment to the principles of the industrial safety culture.

The first part of the programme lasts 14 months and includes:

  • Russian language module — an intensive training course with elements of general and technical Russian;
  • general technical training modules (9 months), including theoretical and practical training by disciplines, SAP and ISSOW, training using Operations Training Simulators, work with the training equipment in classrooms and workshops, etc.

The second part of the programme lasts 18 months, and includes on-the-job training as part of a shift, or in a working area a trainee is attached to.

Traineeship Programme



9.1.7.5. Successors Pool Planning and Development

Successors pool planning and development is a high priority activity for further development of personnel capacity of the company. The key stages of the process are as follows:

  • identification of potential candidates from among the Russian personnel to fill positions occupied by foreign specialists, as well as key and managerial positions occupied by Russian employees;
  • assessment of the potential successors’ readiness to succeed the positions according to the succession plan;
  • the potential successors’ development in accordance with the job requirements for the positions planned for succession.

During the succession planning process for 2017–2021, potential successors (in the short- and long-term) were identified for 613 of the 647 positions within the succession planning scope (95%). For all employees included in the successor’s pool, Individual Development Plans were developed incorporating trainings and development activities to be taken under the company’s learning and development framework (professional training, development of leadership and management skills, developmental assignments, coaching, project management, etc.).

In 2017, 118 vacant positions out of the 106 included in the Successors Matrix were filled with internal candidates (89.8%), including 30 out of 31 expatriate positions (96.8%).

9.1.7.6. Leadership and Management Development Programmes

In order to achieve its strategic and production goals, the company requires highly qualified leaders.

The leadership skills of the company’s staff are enhanced through development classroom and on-line training courses, on-the-job training, and relationship-based learning methods such as coaching and mentoring.

Leadership development programmes have been developed for all management levels based on the Nine Planets Leadership Competency Model.

Leadership and Management Development Programmes



As of late December 2017, 220 Russian employees of the company (42 women and 178 men), occupying various managerial positions, had completed training under the leadership programmes.

Also the company develops its leaders through two types of Mentoring Programme:

  • Individual mentorship. Set up as pairing of employees of different levels of responsibility in order to encourage professional and personal development of the employee with the lower level of responsibility.

Group mentorship. A series of sharing knowledge sessions under the Journey to 9 Planets project. During the sessions, leaders of the company share their experience of building a career, managing projects and staff in the context of leadership competences.

9.1.7.7. Graduate Development Programme

Since 2010, the company has been implementing the Graduate Development Programme aimed to meet Sakhalin Energy’s needs for talented staff. Pursuant to the Memorandum on Cooperation in Personnel Management, signed by Gazprom and Shell, representatives of the shareholder companies have been involved in the programme since 2016.

The company organises systematic work with graduates in accordance with the three-year development programme (see the Stages of the Graduate Development Programme chart).

Stages of the Graduate Development Programme



In 2017, the company hired 12 graduates under the programme. Since 2010, 123 people have participated in the Graduate Development programme.

Young Energy Graduates Club

The Young Energy Graduates Club has been functioning in the company since 2012. Its purpose is to facilitate graduates’ quick adaptation and to develop their business and leadership skills. In 2017, the Club held a number of events, including an information session about the lines of activity of the Commercial Directorate, a meeting with the Production Director and the Offshore Asset Manager, during which participants discussed various issues of the career building strategy.

Future Horizons Programme

In order to improve the graduates’ competency and provide them with basic management skills, the Future Horizons modular programme was developed in 2014. The main objectives of the programme are to realise the young professionals’ potential, develop skills needed for effective team collaboration and for understanding of manager’s tasks and a role as well as to create conditions to identify their own strengths and areas for development. In 2017, 11 graduates participated in the programme.

9.1.7.8. Personnel Development Assignments

Arranging development assignments for the company’s employees at the Shareholders’ enterprises is an integral part of Sakhalin Energy’s HR strategy. Personnel development assignments are organised on the basis of relevant agreements signed between Sakhalin Energy and the Shareholders companies. This form of cooperation allows trainees to study the practical aspects and specifics of work in corresponding units of the host company and to organise more effective interaction during implementation of joint projects.

Participating in the development assignments, employees gain extensive experience in project work and receive additional opportunities to use their knowledge and skills in various organisational environments, to acquire new skills and experience in solving challenging tasks.

In 2015–2017, personnel development assignments in the shareholder companies were organised for 15 employees of Sakhalin Energy. In turn, 13 employees of the shareholders completed their personnel development assignments at Sakhalin Energy.

9.1.7.9. Developing Scientific Potential

Sakhalin Energy pays great attention to the development of scientific potential of its employees. The company cooperates with universities and research institutes in the development of joint technical projects. The company’s specialists are involved in the work of student scientific societies, the preparation and delivering of lectures, etc.

Every year, the company holds Young Professionals Scientific and Practical Conference. All Sakhalin Energy’s employees aged 35 or younger that have worked at the company for at least 12 months are invited to participate in these conferences.

In October 2017, the company held the IX Young Professionals Scientific and Practical Conference of. The participants presented 34 reports at four sections: Drilling and Development of Oil and Gas Fields, Engineering Support and Maintenance, Engineering and Technical Support of Production, Economics and Personnel Management, and at the University section organised, for the first time in the history of the Young Professionals Conferences, specifically for university students and undergraduates. In addition to Sakhalin Energy employees, the conference was attended by representatives of Gazprom Dobycha Yamburg, Gazprom Dobycha Urengoy, Gazprom Transgaz Tomsk, as well as by students and undergraduates of the Gubkin Russian State University of Oil and Gas and Sakhalin State University.

The Conference Evaluation Panel included experts from the Production, Technical, and HR Directorates of Sakhalin Energy, as well as representatives of the Gubkin Russian State University of Oil and Gas and Sakhalin State University.

9.1.7.10. Internship Programme

In order to form an external successors pool for “Graduate” positions, the company has been implementing the Internship Programme since 2000.

Working alongside with highly qualified professionals, students of Russian universities and vocational schools get acquainted with advanced production technologies and the best international and domestic business practices as well as gain unique practical experience.

In 2017, 67 university students and 33 students of vocational schools underwent on-the-job training and pre-graduation internships at the company. In 2017, about 80% of the interns were residents of the Sakhalin Oblast.

The company has a successful partnership with the Polytechnic College of the Sakhalin State University in the area of vocational education:

  • every year, the company provides third- and fourth-year students with opportunities for on-the-job training and pre-graduate internship at the Prigorodnoye Production Complex. The internship programme for college students began in 2009. Every year, 20–30 students studying in fields relevant to Sakhalin Energy's operations receive internships at the company.
  • Every term, the company holds career guidance seminars for second-, third-, and fourth-year students. The students receive general information about the Sakhalin-2 project and about Sakhalin Energy as a potential employer. These events help to motivate young people to work in their chosen profession after graduating from the college. Various kinds of internships at the company’s production assets and the Traineeship Programme are also discussed with the students (see Section 9.1.7.4. Traineeship Programme).
  • In 2017, undergraduate students of the college were proposed to work on topics reflecting the specificity of the LNG plant as part of their course and graduate projects. The technical training instructors provided the students with methodological, information and consulting support, and also reviewed the thesis papers. The defence of the graduate projects was successful.
  • The company arranges trips to the Prigorodnoye Production Complex for the college teachers so that they can get acquainted with the advanced production equipment, production procedures, and standards used at the LNG plant. The technical training instructors and specialists from among experienced technical and process personnel provide information and consulting support for teachers, deliver lectures to familiarise students with the technological process at the LNG plant, and conduct target seminars.

9.1.7.11. Scholarship Programme

The Scholarship Programme was launched by Sakhalin Energy in 2003.

The Programme focuses on talented leavers of Sakhalin Oblast secondary schools and vocational schools who are interested in obtaining an industry-specific education and building a career with the company.

The educational grants offered by Sakhalin Energy are awarded in the form of a scholarship (for those receiving state funds to study at a university) or reimbursing of tuition costs (for those admitted to the fee-based slots for a full-time study at a university).

In 2017, six graduates of Sakhalin schools won the contest.

As of the end of 2017, 26 participants of the Scholarship Programme studied at RF universities with the financial support of the company.

9.2. Labour Safety and Protection

9.2.1. General Information

In order to successfully implement major projects and operate production assets, the main focus must be health and safety. Sakhalin Energy has made a commitment to industrial safety and causing no harm to people health.

At present, there are ten mandatory Life Saving Rules applied by the company. These rules are particularly associated with high-risk zones.

LIFE SAVING RULES

  1. Do not appear at work under the influence of ALCOHOL or DRUGS.
  2. Do not SMOKE outside designated smoking areas. Do not carry or use unauthorised IGNITION SOURCES in hazardous areas.
  3. Do not walk under a SUSPENDED LOAD.
  4. Work with a valid WORK PERMIT when required.
  5. Verify ISOLATION before work begins.
  6. Obtain authorisation before entering a CONFINED SPACE.
  7. Protect yourself against a fall when WORKING AT HEIGHT.
  8. Wear your SEATBELT.
  9. Follow prescribed JOURNEY MANAGEMENT PLAN and have valid DEFENSIVE DRIVING CERTIFICATE.
  10. While driving, do not use COMMUNICATION DEVICES and do not exceed the SPEED LIMIT.

Statistics on violations of the Sakhalin Energy’s Life Saving Rules by the company’s and contractor’s staff in 2017 are presented in the table “Violations of the Sakhalin Energy’s Life Saving Rules in 2017”.

Any violation of the Life Saving Rules leads to serious consequences, including potential dismissal.

The company uses a consistent approach when handling HSE issues (see Section 3.5 Health, Safety, Environment, and Social Performance Management). This approach complies with both legislation and risk management so as to ensure continuous improvement in this area. The company also requires contractors to manage HSE issues in compliance with this approach and international standards adopted by the company.

The company’s main fields of activity in the area of safety are:

  • leadership and commitment at all levels of the company;
  • industrial safety;
  • road safety;
  • preventive work with contractor organisations;
  • learning from incidents in the industry and awareness-raising campaigns.

Violations of the Sakhalin Energy’s Life Saving Rules in 2017, number of cases

Violation

Number of cases

Alcohol or drug abuse

8

Smoking or use of ignition sources in hazardous areas

2

Standing under suspended load

0

Failure to follow the requirements of a work permit

6

Locking or isolating equipment before work begins

0

Obtaining authorisation before entering a confined space

0

Taking protection measures against a fall when working at height

1

Failure to use a seatbelt

8

Failure to follow Journey Management Plan or invalid Defensive Driving Certificate

6

Using a communication device or exceeding the speed limit when driving

4

Injury Rates for the Company and Contractor Organisations in 2013–2017

Parameter

2013

2014

2015

2016

2017

Number of people injured in accidents at the workplace, total people

12

6

9

9

4

–      including fatalities

0

0

0

0

0

Number of accidents for contractor organisations at the company’s assets, total people

9

4

9

9

4

–      including fatalities

0

0

0

0

0

Total registered incidents (per 1 mln man-hours)

0.89

0.46

0.68

0.64

0.26

Number of people injured in road traffic accidents (per 1 mln man-hours)

0

0

0.07

0

0

9.2.2. Industrial Safety

Sakhalin Energy has an Industrial Safety Policy and an Industrial Safety Management System (ISMS) that comply with Russian legislation and international best practices.

The company’s main industrial safety goal is to ensure individuals and society are protected from accidents at hazardous production facilities and to mitigate their effects.

An integral part of ISMS is overseeing compliance with the industrial safety requirements. This is done by evaluating the functioning of all hazardous production facilities of the company, preventing accidents at these facilities, and ensuring we are prepared to respond to accidents and incidents and their consequences.

All aspects of industrial safety are continuously and regularly inspected by the company’s experts under the ISMS. These inspections are planned and carried out so that the safety of all operations is effectively monitored at hazardous production facilities.

The company submits production control data to Rostekhnadzor annually as required by law.

The company operates hazardous production facilities with the following hazards:

As required by law, 10 hazardous production facilities have been registered in the state register, and hazard classes were assigned.

For Hazard Class I and II facilities, it is mandatory to develop industrial safety declarations. The company has developed such declarations for all hazardous production facilities.

The company conducts industrial safety training and certification for employees working at the company’s hazardous production facilities in compliance with law and the ISMS. The procedure for industrial safety training, examination, and certification is in compliance with the current legislation.

The company achieves high productivity and observes all industrial safety regulations by using the latest technologies and regularly assessing and managing industrial safety risks. The company takes many measures to improve performance, including:

  • setting up and operating the company’s Industrial Safety Management System as required by law;
  • auditing at different levels and regularly reviewing the ISMS;
  • having an efficient and unbiased procedure for accident and incident investigation at the assets; preparing reports as required by law;
  • monitoring compliance with the industrial safety rules set forth in federal laws, other regulations, and local regulations;
  • developing preventive measures and organising accident and incident prevention work at all hazardous production facilities of the company;
  • offering industrial safety training and a certification system for the company’s employees as required by law.

Justification of Safety Documents (JoS) were developed and implemented at seven company hazardous production facilities. All JoS passed the industrial safety expert review pursuant to the requirements of the RF legislation.

All the above measures implemented by the company along with a number of the best practice tools guarantee that the company complies with industrial safety regulations at all stages of production, starting from designing each new well up to the moment hydrocarbons are loaded in the port of Prigorodnoye.

9.2.3. Safety Culture

Occupational health and safety is one of the company’s core values. Sakhalin Energy sets high standards and expects all employees of the company, contractor and subcontractor organisations to comply with them.

Building a corporate safety culture aimed at achieving Goal Zero, both in the company and in contractor organisations, is one of the priority tasks of Sakhalin Energy.

Creating and maintaining a safety culture is by no means a one-time event, but continuous work and development in this area. A safety culture is a system of values, beliefs, and ideologies adopted in an organisation. It depends on many factors, in particular:

  • the top managers’ commitment to HSE principles;
  • the company’s priorities;
  • the company’s policies, procedures, and standards;
  • employee engagement and motivation;
  • availability of feedback, information exchange;
  • safety awareness among employees, their behaviour;
  • competency of employees.

Safety Culture Evolution Ladder



The Safety Culture Evolution Ladder shows how a safety culture evolves toward the Generative level. At this level, each employee is clearly aware of his or her responsibility in HSE issues, and there is trust between the company’s management and employees, which is essential for the timely prevention of incidents. Achieving this level of corporate culture is the primary goal of all labour safety programmes implemented by the company.

The commitment of the company’s senior managers to the safety culture is of vital importance, since it largely determines the prevailing attitude to HSE issues and safety behaviour patterns in the company. Sakhalin Energy implements the HSE Leadership Site Visit Programme to demonstrate their commitment to HSE. In 2017, supervisors at all levels (directors, asset managers, and heads of subdivisions) visited the company’s and contractors’ production facilities 95 times.

Goal Zero is a mindset that actively promotes no leaks, spills, harm and injury both at work and daily life. Employees’ personal responsibility for compliance with the HSE rules and intervention in unsafe situations (as one of the elements of the safety culture) help the company to reach its safety targets and production goals.

In 2017, 70 line managers, HSE specialists, and HSE critical contract holders underwent HSE Leadership for Mid-level Managers training course.

Since 2017, training has been conducted by certified Sakhalin Energy instructors.

The aim of the training programme is to ensure a common understanding of the current HSE situation, to motivate employees to seek continuous HSE improvement and to develop their leadership qualities.

The company continues to promote the Effective Observation and Intervention Programme. The Programme aims to implement a systematic approach to the identification, assessment, and prevention of unsafe practices and conditions in the workplace, as well as to continuously improve the safety culture and safe behaviour.

When employees adopt the practice of safe behaviour and it becomes the norm at production sites, in the offices, and in their homes, it will be a tremendous step towards achieving the generative level of the safety culture.

In October 2017, the company updated the Observation and Intervention Procedure as part of the Goal Zero programme. The main aim of the update was to make changes to the form of the intervention card.

The CEO Award promotes safe behaviour and HSE achievements. Employees of the company and contractor organisations are awarded for their contribution to the development of the safety culture, in particular for excellent and safe work, the prevention of and timely response to hazardous situations. In 2017, 22 employees of the company received the award.

In 2017, Sakhalin Energy commenced roll out of Goal Zero orientation sessions develop aiming to safe behaviour culture and offered at all production assets of the company.

All employees of the company and contractor organisations can take a training course under the Effective Observation and Intervention Programme. The purpose of this course is to build employees’ conscious attitude to safety through observation, communication, and concrete actions, as well to teach them effective intervention methods.

The company has been holding Summer and Winter Safety Days for the last ten years. All employees of the company and contractor organisations gather to discuss the ever topical safety issues: how people’s actions and behaviour influence the safety of others, and how to improve work safety. They also discuss following safety rules both at the workplace and outside working hours.

Road safety is of particular importance for Sakhalin Energy.

More than 700 vehicles with overall annual mileage over 13 mln km are engaged in the project activities. Sakhalin Energy’s management and the Road Safety Steering Committee emphasized strict adherence to the norms of the RF transport legislation and compliance with the requirements of the company’s Road Safety Management Standard.

To maintain and improve its road safety performance, the company continues to implement the following:

  • monthly meetings of the Road Safety Steering Committee chaired by the Chief Executive Officer of the company;
  • analysis of IVMS reports. IVMS monitors driver behaviour, identifies non-compliance, and allows the company to take steps to prevent situations that may lead to road traffic accidents. This year, the IVMS reports demonstrated an improvement in driving. The entire monitoring system covers more than 1,600 drivers and 700 vehicles;
  • defensive driving training. All professional and non-professional drivers take defensive driving courses. In 2017, the courses were conducted for more than 1,700 drivers of various categories. Moreover, the company allowed any employees to attend the defensive driving training;
  • vehicle compliance control. All company’s and (sub-)contractors’ vehicles used in production activities are inspected, and company’s and (sub-)contractors’ drivers are monitored to see that they comply with road safety rules and company’s Road Safety Management Standard. Four Road Safety Monitoring teams perform oversight in different regions.
  • interaction with other organisations. The company initiated cooperation with Gazprom Dobycha Shelf, which develops the Kirinskoye Field, in order to jointly solve road safety issues at the south access road to Lunsky Bay. The Road Safety Monitoring team and the State Traffic Safety Inspectorate keep watch over the south access road;
  • active participation in various forums, where the company shares its experience in ensuring road safety under the project;
  • implementation of the Safe Journey Management Programme at the company’s assets. Each Sakhalin Energy’s production asset has appointed persons responsible for road safety who monitor the daily operation of all vehicles within the asset, including journey management and checkups of the technical state of vehicles and transported cargoes;
  • Cargo Securing and Vehicle Transportation training course. Sakhalin Energy’s operations involve transportation of materials and heavy equipment using the roads of the island. Improperly secured cargoes are one of the main reasons behind a significant number of road traffic accidents. It became apparent that a training course had to be introduced when it was discovered that non-compliant cargo transportation had risen under the project and that there are no clear recommendations in the regulations of the Russian Federation on proper securing of cargo.

In 2017, more than 1,700 Sakhalin Energy’s employees and contractor employees received defensive driving training

9.3. Occupational Health

The company uses a systematic approach in protecting the health of its personnel. Sakhalin Energy has developed and approved a corporate occupational health and hygiene standard, including the following sections:

  • occupational health;
  • health risk assessment;
  • medical emergency response;
  • medical requirements for occupational fitness;
  • medical requirements for contractors;
  • monitoring the use of alcohol and psychoactive substances at workplaces;

chronic fatigue management; etc.

Sakhalin Energy’s Occupational Health and Hygiene Standard



Periodic health examinations and clinical screening of the company’s employees working under hazardous, dangerous and harsh work conditions were arranged in accordance with the Medical Requirements for Occupational Fitness Standard.

In 2017, 99.5% of the company’s employees engaged in work with harsh, hazardous and (or) dangerous work conditions underwent mandatory periodic health examination. More than 80% of office personnel were covered by clinical screening.

The company continues to focus on preventing employee fatigue. Fatigue risk management guideline has been issued. Also, additional measures are introduced to assess and manage the fatigue risk (training materials). The company’s employees have access to interactive information on managing risks associated with fatigue

Health risks are assessed at all company’s assets. A monitoring system for harmful occupational factors has also been introduced. The process of mapping harmful occupational factors at the company’s remote assets was continued to increase the visibility of information on harmful factors.

Cause and effect were analysed to compare the production environment data (air in working zones, vibration, noise, microclimate, ionising radiation, etc.) and employee health data. Risks of harmful factors influencing employee health at the production assets are assessed based on the analysis.

Corrective measures are subsequently developed to minimise any risks, and the Fountain electronic database is used to make sure the measures are put into place. In 2016, the rate of reported occupational diseases remained at a relatively low level (see the Rate of Reported Occupational Diseases table).

Rate of Reported Occupational Diseases in 2012–2017

Total rate of reported occupational diseases

2013

2014

2015

2016

2017

Company alone

0.56

0.61

3.33

0

0

Company and contractors

0.5

0.39

1.15

0.21

0,2

With temporary disability

(company alone)

0.28

0.36

0.67

0

0

With temporary disability

(company and contractors)

0.07

0.23

0.15

0.07

0,1

Performance indicators are analysed on a regular basis in order to improve working conditions, prevent illness, and promote a healthy lifestyle.

In 2017, an increasing number of contractors applied the company’s approach to assessing cardiovascular disease risks and body mass index. This allows them to effectively monitor the risk of developing acute coronary syndrome. The company uses software that allows only employees who are fit in terms of health to work at remote assets. The company’s approach to risk assessment of cardiovascular disease and body mass index calculation is based on an analysis of mortality for reasons other than occupational injuries. These programmes were introduced at the company’s remote production assets in 2010, and as a result the mortality level dropped to virtually zero in 2013–2017.

Besides mandatory health programmes, in 2017, the company continued its policy of encouraging personnel to keep fit and prevent diseases.

To do this, additional steps were taken, such as:

  • preventing acute respiratory viral diseases and influenza, including health education and vaccination;
  • implementing a programme promoting a healthy lifestyle and engaging in sports. An initiative group of the company developed a schedule of activities to improve general health and promote fitness and sports. According to this schedule, employees participated in sports and competitions both within their subdivisions and at the corporate level as well as in open local and regional championships in various sports (football, hockey, volleyball, tennis, swimming, hiking, etc.);
  • providing access for the company’s employees and their families to the corporate sports and fitness centre in Yuzhno-Sakhalinsk (gym, swimming pool, football field, tennis courts and icerink). Moreover, there are gyms and sports fields at the company’s remote assets;
  • implementing a programme to prevent alcohol and drug addiction by raising the awareness of the impact alcohol and drugs have on health;
  • introducing a campaign against smoking. Every year on 31 May, Sakhalin Energy celebrates the World No Tobacco Day when employees meet to discuss the problem of tobacco addiction. Smokers are offered free medical advice and supportive medical treatment. Also, there is an extensive information campaign during which posters and leaflets are distributed;
  • continuing to implement high standards for medical emergency response. In 2017, over 380 employees of Sakhalin Energy and contractors completed first-aid training.

Company’s and contractors’ employees at remote assets of the Sakhalin-2 project as well as company’s employees on foreign business trips are provided with high-quality medical support guaranteed by AEA International (Sakhalin). Company’s employees can also receive medical services at other healthcare facilities listed by SOGAZ insurance company under the VMI (voluntary medical insurance) programme (see Section 9.1.5. Social Guarantees, Benefits and Compensations).

9.4. Human Rights

9.4.1. Human Rights: Principles and Management System

Sakhalin Energy’s key business principles include running its business in a socially responsible manner, compliance with the laws of the Russian Federation, and respect for fundamental human rights within the legal business framework.

The integrated approach to human rights has several interconnected components, in particular:

  • Human Rights Policy commitment;
  • incorporation of commitments into the company’s strategy;
  • human rights risks and impact assessment;
  • stakeholder engagement in connection with human rights issues;
  • efficient grievance mechanism;
  • training of the company’s and contractors’ personnel;
  • human rights monitoring and reporting.

The company’s human rights standards are laid out in the following principal documents to ensure they are implemented on a day-to-day basis:

  • Human Rights Policy;
  • Code of Conduct, including the Statement of General Business Principles;
  • Business Management System;
  • Commitment and Policy on Health, Safety, Environment, and Social Performance Policy;
  • Security Policy;
  • Contracting & Procurement Policy;
  • Whistle Blowing / Grievance Procedure;
  • Sustainable Development Policy.

The Human Rights Policy (available on the company’s website) sets forth the human rights commitments and discusses managing risks associated with potential or actual violations of human rights resulting from the company’s activities.

Sakhalin Energy has adopted standards for observing human rights in all situations in which there is a potential for violating these rights, namely:

  • employee relations;
  • working in communities;
  • contracting and procurement;
  • asset security.

Sakhalin Energy’s achievements in the field of human rights respect and promotion in 2017 has been appreciated at the Federal level. Russian Federation commissioner for human rights awarded to the company a grateful letter “For contribution to affairs of human and civil rights and freedom protection”.

Companys Human Rights Activities



The company holds training courses and information sessions on human rights (see 9.4.4. Human Rights Training). Security contractors in particular are informed about the company’s human rights standards.

The company’s participation in the VI United Nations Forum on Business and Human Rights

In 2017, Sakhalin Energy participated in the VI United Nations Forum on Business and Human Rights, held in Geneva, as part of the delegation of the Global Compact Network Russia at the invitation of the Ministry of Foreign Affairs of the Russian Federation.

More than two thousand representatives of states, enterprises, civil society, international institutions and expert groups gathered on a large international platform to exchange ideas and experience. Sakhalin Energy presented the company’s integrated approach to the observance and promotion of human rights (including the incorporation of human rights standards in contracts), the grievance mechanism, the creation of partnerships for sustainable development, and other methods.

The company is actively involved in discussion of experience and best practices in the area of human rights at local, national and international levels, as well as participates in development and promotion of new human rights related standards and policies.

As part of this activities, the company joined in 2017 the UN Global Compact Action Platform “Decent Work in Global Supply Chains”, which was initiated by UN Global Compact in partnership with International Labour Organization (ILO) and UN Children Fund UNICEF.

The goal of this Platform is building an alliance of companies committed to respecting fundamental human rights.

9.4.2. Grievance Mechanisms

The company’s stakeholder engagement strategy is focused on minimising impacts on human rights. It is obvious, however, that it is impossible to eliminate all adverse impacts of a project as large as Sakhalin-2. This is why the company adopted a grievance mechanism right as construction started to effectively address grievances raised in connection with the project. The mechanism includes the following:

  • Whistle Blowing Procedure to address violations of the Statement of General Business Principles, Code of Conduct, or other procedures of the company (related to conflict of interest, bribery, corruption, etc.).
  • Grievance Procedure (Human Resources) to address labour and employment issues raised by the company’s personnel (violation of employee rights under the law, regulatory legal acts, and the company’s local regulations; violation of labour agreements and the terms of employment contracts concluded with employees; other situations affecting the interests or violating the labour and personal rights of employees in the course of their work for the company);
  • Community Grievance Procedure to address grievances from the public and contractor’s/subcontractor’s employees in connection with the Sakhalin-2 project. In addition to the Community Grievance Procedure, the company established a separate procedure for addressing grievances related to the Sakhalin Indigenous Minorities Development Plan in 2011 (see Section 9.5. Social Investment and Contribution to Sustainable Development of the Host Region).

These mechanisms can help resolve grievances quickly and efficiently, they thoroughly document grievances and corrective measures, and reduce the likelihood that similar situations will reoccur, thereby contributing to building strong, long-term relationships with everyone affected by the company.

To ensure maximum efficiency of the community grievances procedure, the company relies on a number of principles to conduct these activities, including:

  • legitimacy, and incorporation into the corporate system;
  • accessibility;
  • transparency and openness;
  • stakeholder engagement and ensuring dialogue during the grievance process;
  • setting target dates and taking concerted actions to address grievances;
  • confidentiality;
  • applicability for both the company and contractors;
  • using continuous learning, taking preventive measures and proactive steps.

9.4.3. Grievance Handling in 2017

In 2017, 51 grievances and requests were received from the company’s personnel and external stakeholders as part of various corporate grievance mechanisms, including:

  • 31 grievances under the Whistle Blowing Procedure;
  • 5 grievances from employees of the company;
  • 15 grievances from the public and employees of contractor and subcontractor organisations.

The grievances related to violations of the General Business Principles, the Code of Conduct, or other company’s procedures were handled under the Whistle Blowing Procedure. These grievances concerned tender procedures, material and services procurement, conflict of interest, and unethical behaviour.

Each of the 31 grievances received under the Whistle Blowing Procedure had been resolved by the end of 2017. All the grievances were resolved within the time frame established in the Terms of Reference for investigations.

Grievances (requests) of the company’s employees regarding matters related to their work in the company and the application of local regulations of the employer were examined in strict accordance with the Grievance Procedure (Human Resources). In 2017, five grievances were received from employees within the framework of this procedure. All the grievances were resolved within the time frame established in the Procedure.

The grievances from communities and employees of contractor and subcontractor organisations were addressed in compliance with the Community Grievance Procedure. These grievances were related to labour relations (in contractor and subcontractor organisations), construction camp management, compliance with the Code of Conduct, and the implementation of the Sakhalin Indigenous Minorities Development Plan.

By the end of 2017, 14 grievances out of the 15 received from the public and employees of contractor and subcontractor organisations had been resolved. In addition, three grievances received at the end of 2016 had been resolved. All 14 grievances were addressed within the time frame established in the Grievance Procedure (less than 45 business days). At the end of 2017, one grievance remained unresolved. Information on the status of this grievance will be presented in the 2018 Sustainable Development Report.

Categories of Public Grievances in 2017

Grievance category

Number of registered grievances

%

Labour relations / labour safety

8

53

Construction camp management

2

13

Code of Conduct

3

21

SIMDP implementation

2

13

Total

15

100

9.4.4. Human Rights Training

A certain level of employee awareness is required to incorporate human rights standards into the daily operations of the company and its contractors. Therefore, the company offers systematic training and awareness sessions for the personnel of Sakhalin Energy, its contractors, and other stakeholders.

The company’s requirements in the area of human rights are included in a number of educational instructions and courses that all company’s employees and contractors are required to take.

Examples of this training are:

  • general instruction;
  • Code of Conduct training;
  • health, safety, environmental, and social perfomance training.

The company conducts personalized courses for specific personnel that have a higher risk of violating human rights. The process of appropriate training selection is shown in the Appropriate Training Selection chart.

Appropriate Training Selection



The Community Grievance Procedure training course is offered to employees whose scope of work includes receiving or resolving grievances from the population (e.g. subdivision heads, reception desk employees, and the company’s representatives who directly supervise the work of contractor organisations).

In 2017, personnel of the Production Directorate, the Environmental Protection Subdivision, and employees of the Government Relations, Shareholders Liaison, and External Affairs Administration received such training.

9.4.5. Monitoring Human Rights

Monitoring is important for ensuring human rights are observed. Both monitoring and reporting of human rights are done not only internally, but also externally.

As a rule, monitoring includes:

  • visiting communities;
  • surveying the personnel of the company and external stakeholders;
  • meeting with internal and external stakeholders, including local community, and representatives of contractor organisations, for receiving feedback;
  • reviewing contracts to make sure they contain human rights provisions.

Internal monitoring is done at the subdivision level as well as by the Internal Monitoring Department. External monitoring includes regular audits by lenders, shareholders, and independent experts.

The Business Integrity Committee, which includes the Chief Executive Officer and a number of other directors, oversees compliance with the established Grievance Procedure.

Conclusions on the application of human rights standards are included in regular internal reports for the senior management and shareholders of Sakhalin Energy, as well as in the company’s annual Sustainable Development Reports.

9.5. Social Investment and Contribution to the Sustainable Development of the Host Region

9.5.1. Social Investment and Sustainable Development: Sakhalin Energy’s Principles and Approaches

The company carries out active and fruitful work aimed at the development of the host region, strengthening and progress of civil society institutions, charity and volunteering culture development.

The company contributes to the protection and promotion of human rights, primarily in the areas of education, environment, culture, and health by supporting various socially significant initiatives, the beneficiaries of which are vulnerable social groups (children, people with disabilities, and others).

Since its establishment in 1994, the company has paid close attention to implementation of social programmes in the territory of the Sakhalin Oblast. The significant and consistent investments in social sphere, as well as the long-term policy focused on addressing the social issues are the core of Sakhalin Energy’s commitment to sustainable development principles. Sakhalin Energy pursues a policy of mutual investments of resources for the benefit of all stakeholders.

In 2017, the company invested a total of 64 mln roubles in the implementation of external social programmes in the Sakhalin Oblast.

In accordance with the company’s Social Investments Strategy, Sakhalin Energy is implementing projects that:

  • result from consultations with the public and meet the identified needs of the communities impacted by the company’s activities;
  • relate to issues that affect the company’s reputation;
  • may not directly relate to the company’s activity, while contributing to economic, environmental, and social development of Sakhalin Island;
  • contribute to sustainable social, economic, and environmental development of Sakhalin and demonstrate the company’s commitment to of sustainable development to stakeholders.

Sakhalin Energy's social investment programmes are aligned with the company's long-term goals in its host region, Sakhalin.

The company focuses on implementing strategic long-term partnership projects with external stakeholders, and on using various tools and techniques to implement social programmes, including competitive funding. Governing bodies and expert councils have been established to make decisions under the key programmes. These are collegial coordinating and advisory bodies that involve the company's representatives, partners, and members of non-governmental organisations in the territory where the company operates. 

While striving to achieve lasting social changes in the region, the company has implemented a number of projects within priority areas defined through public consultations. These are:

  • environmental protection and biodiversity conservation;
  • safety;
  • education;
  • culture and arts;
  • healthcare;
  • promoting the development of the Sakhalin indigenous minorities.

The company's approach to the development of the host region is a targeted policy of participating in the life of the community. This includes support for relevant projects and programmes (funds for this activity are allocated by shareholders), involvement of the company’s employees in corporate social programmes, development of charity and volunteer activities in the region, and participation of the company participation of the company in discussing issues that are vital to the territory where it operates.

Over the years that it has been developing the social investment programme, Sakhalin Energy has built its own model for managing external social programmes, that is based on the company’s policies and the best international charity practices. Not only does the company seek to adapt and use the best international practices, but it has become an example of corporate philanthropy.

The company performs its social investment activities in line with a number of documents. They identify the objects and principles of the charity activities and social investments, and outline how to manage these issues, e.g. planning, decision making, and financing procedures. These documents include the Social Investment Strategy as a part of the Social Performance Management Standard. Pursuant to the Strategy and in accordance with the company’s internal audit requirements, Sakhalin Energy conducts continuous internal monitoring and a biennial independent external evaluation of social investment projects.

According to the report on the results of the external independent evaluation of the company's social programmes, conducted in 2017: "Sakhalin Energy's social investment programme makes it possible to use the capabilities of the target groups to the full extent and to carry out charitable programmes with due account for the needs and traditions that have developed in the region. All the implemented programmes correspond to the chosen priorities and contribute to the social development of the region and the fulfilment of its most urgent tasks. In general, the results achieved under the evaluated programmes are evidence of the consistent participation of Sakhalin Energy in the economic, social, and environmental development of the Sakhalin Oblast. The programmes being implemented are not only focused on solving urgent social problems of the island, but also provide for active participation of residents in the implementation of social initiatives."

Company's Objectives in Social Investments for 2018

  • Develop and implement programmes to support the company's development strategy and to enhance the effectiveness of its contribution to solving the regional tasks.
  • Maintain and further the dialogue with stakeholders aimed at creation of a sustainable social basis for the company's initiatives.
  • Improve social programmes efficiency by:
    • involving the company's employees in the development and implementation of external social programmes;
    • expanding collaboration with state authorities, business partners, expert and public organisations while implementing social projects;
    • replicating effective models of social programmes in the region and at the federal level;
    • ensuring knowledge management in the field of corporate social responsibility (CSR) and developing advanced training system to improve skills of employees engaged in social investment programmes, and ensuring high-level information visibility and transparency.

9.5.2. The Energy Social Initiatives Fund

The Energy Social Initiatives Fund is one of Sakhalin Energy's charitable programmes that demonstrates the comprehensive and consistent approach to promoting social transformation in the host region and its commitment to solving important problems of local communities. The grant programme, launched in 2003, allows the company to support the most interesting and effective solutions to community problems. When selecting projects, the company is guided by the principle of openness and transparency.

The Expert Council consisting of representatives of the company, NGOs and government evaluates proposals and selects the winning projects. Information on the terms and conditions for participation in the contests and the selection criteria is available on the website of the Energy Social Initiatives Fund (www.fondenergy.ru).

Financing is provided for projects in several focal areas, including education, environmental protection, art, culture, social support, sports, and healthy lifestyle promotion.

Since 2003, more than 289 non-profit organisations and social institutions in 64 settlements of Sakhalin have received financial support as part of the Energy Social Initiatives Fund. In total, 547 projects have been implemented in the years of the programme. The company's investments have amounted to over 69.18 mln roubles.

Number of Projects that Received Funding in 2003-2017



In 2017, funding was granted to 45 projects, including:

  • As part of the Sakhalin: Man and Sea project, implemented by the Boomerang Club, Russia's first team of volunteers to rescue marine mammals was created and trained. The team includes volunteers, rescuers, and veterinaries (more than 40 people in all). The world's most reputable experts from the International Whaling Commission (IWC) and the International Fund for Animal Welfare (IFAW) came to Sakhalin to conduct training in disentangling marine mammals from mesh nets and removing them from the shallow waters. An algorithm for responding to the detection of a marine mammal in need of assistance was developed and implemented. The unified system of rescuing and rendering assistance to marine mammals has comprised special services, supervising bodies, and volunteers.
  • As part of The Island of Discoveries, an interactive project for children, implemented by the Literary and Art Museum of Anton Chekhov’s Book “The Sakhalin Island”, young residents of Sakhalin were presented an extraordinary exhibition with exhibits from the funds of the A. Timiryazev State Biological Museum, where children had an opportunity to learn to explore the surrounding world on their own, to study zoology, botany, anatomy, palaeontology, and other sciences.
  • As part of the Children's Multi-Race project, competitions were held in which young Sakhalin residents had a chance to try their hand at various kinds of tourism: kayaking, rock climbing, cycling and sports tourism. The Boomerang Club (the organiser of the competitions) in conjunction with the Regional Federation for Sport Tourism and Mountaineering and the V.A Polyakov Search and Rescue Team of the Russian Emercom conducted preliminary five-month training. The participants of the competitions included children with disabilities.

9.5.3 The Safety Is Important Programme

Safety is one of Sakhalin Energy's top priorities. Since it regards safety to be among the most topical issues in Sakhalin, in 2005 the company initiated The Safety Is Important programme, and has been implementing it in partnership with the Sakhalin Emercom and the Ministry of Education of the Sakhalin Oblast ever since.

Projects under the programme are implemented with the participation of public organisations and state institutions such as V.A. Polyakov Search and Rescue Team of the Russian Emercom, the Department of the State Road Safety Inspectorate of the RF Ministry of Internal Affairs for the Sakhalin Oblast, the Sakhalin Branch of the All-Russian Voluntary Fire Organisation, the Rossoyuzspas Sakhalin Regional Public Organisation, the Boomerang Club public organisation, etc.

The programme is developing in several key areas, one of which is the creation of educational cartoons about safe behaviour in various situations. Senya, the main character of the cartoons, has become the symbol of the programme. The subjects of the cartoons are later used as the basis for comic books, published for educational purposes.

Given the fact that the basic concepts and rules are laid down in childhood, the programme pays much attention to activities aimed at developing a culture of safe behaviour in children (contests, educational events, the annual Safety Festival, etc.). In October 2017, the traditional Children's Safety Holiday was held, which brought together children's teams from 15 districts of the island. During the event, a new floor game was presented to the participants and was introduced as one of the stages of the competition.

The target audience of the programme also includes adults — teachers and parents. Interaction with these stakeholders is achieved through the organisation of competitions for Life Safety teachers and the support of work in the dedicated Life Safety classrooms at schools and preschool institutions. In 2017, a series of educational events were held in the kindergartens where safety corners were equipped.

The objective of the programme — the promotion of the basic life safety rules among the residents of Sakhalin — is achieved through the implementation of special projects that cover a wide range of the population. For example, as part of the project "It is Important to Observe the Rules of Safety on the Water", information boards with the rules of safe behaviour near lakes and rivers were installed in two children's countryside camps and a resort, located near water. In addition, information materials on this theme were sent to the libraries in different parts of the island. An educational computer game on life safety when on a hike (www.travel-safely.rf) was developed within the framework of Travel Safely — a special project organised by the Boomerang Club with the support of Sakhalin Energy and with the active participation of the Sakhalin Oblast Teacher Development Institute, the Sakhalin Search and Rescue Team, and several tourist clubs. Teenagers are the main audience of the game, but adult travellers also find its information content very useful.

Another special project implemented in 2017 finished with the Senya-Rescuer Child Safety Championship. A game application for smartphones and tablets was specially created as part of the project to raise children's awareness of the basic life safety rules. The project was implemented by the Gladway Media Projects and Social Programmes Development Foundation.

The launch of the Safety in the Practice of Mountain Skiing Sports project was timed to the beginning of the skiing season. “The Mountain Air” Sports and Tourist Complex now has new information billboards with illustrated safety rules, installed under the project. There was also a presentation of a new animated cartoon "Mountain Ski Trails".

Detailed information about the programme and the materials created are available on the website www.senya-spasatel.ru

9.5.4. Hurry Up for Good Deeds Programme (Support for Charitable Initiatives of Employees)

Corporate volunteering is one of the forms of CSR implementation, which not only expands the scope and range of the company's charitable programmes, but also unites the personnel. Sakhalin Energy involves employees in charitable programmes and supports their volunteer initiatives in every possible way. The programme was launched in 2003 as a grant competition to support employees' charitable initiatives, and has undergone a number of changes since.

Currently, the programme offers employees various opportunities:

  1. Participation as a volunteer in the preparation and holding of corporate campaigns to raise funds for social institutions selected by employees during a survey via the Intranet (three times a year).
  2. Participation in Volunteer Days (Voluntary Community Work Days) (twice a year).
  3. Initiation and implementation of their own charitable projects with the participation of colleagues.
  4. Provision of professional assistance (pro bono) on their own initiative, or participation in the company's projects aimed at developing the potential of the company's charitable programmes participants (NGOs and state-funded institutions).

The various formats of participation in the programme make it possible to involve in volunteering those who are ready to act as initiators and organisers, as well as those who are willing to join them during a charity event. According to the evaluation of the social programmes, almost 30% of the company's employees participate in the programme. Employees can also invite the members of their families, including children, to join in the charitable activities under the programme.

In 2017, there were two Voluntary Community Work Days in the territory of Korsakov park. Two corporate campaigns were organised to raise funds for a number of environmental institutions (in particular, for the Green Sakhalin Fund, which is engaged in the rescue and rehabilitation of wild animals, and for school forestries). Sakhalin Energy organised the 10th New Year Miracles charitable event: on the eve of the most popular winter holiday, the company's employees granted the wishes of 125 young Sakhalin residents with disabilities or in difficult family circumstances. Employees donated about 1.9 mln roubles during the year, and, according to the Hurry Up for Good Deeds Programme rules, this amount was doubled by the company.

The company's employees increasingly use their professional knowledge and skills to contribute to the development of partner organisations. In particular, in 2017 they organised and held two seminars on occupational safety and health issues for employees and volunteers of the Mountain Air Sports and Tourist Complex, delivered lectures for students and schoolchildren, worked as members of the examination boards at the local universities, etc.

9.5.5. Korsakov Partnership Council for Sustainable Development

The Korsakov Partnership Council for Sustainable Development, a social investment and sustainable development programme implemented in the Korsakov Municipal District of the Sakhalin Oblast, was initiated by Sakhalin Energy in 2003. As part of this programme, the company provides financial assistance to social projects.

The programme is managed by the Korsakov Partnership Council for Sustainable Development. The Council consists of 9 members, three representatives of each party: Sakhalin Energy, the government authorities, and the community of the Korsakov Municipal District.

In addition to being a stakeholder engagement tool and an expert council to review projects for social investments, the Korsakov Partnership Council also plays a role in monitoring of the population’ social activity in the district.

Another task solved by this programme is involving as many possible community members of the Korsakov District in discussions of projects. To do this, a project fair has been held twice a year as part of the Korsakov Initiatives Contest. This is both a public presentation and a competition of ideas. These fairs are open to participation of all residents, and they choose the most relevant projects and prioritise the proposals submitted that need to be implemented first to further the district advancement.

In 2017, public consultations on the Korsakov Sustainable Development Partnership Council activities were held in 10 settlements of the Korsakov District. Their residents were provided with information on the results of the work of the Partnership Council, its achievements, implemented projects, and plans for the future.

During public consultations, an assessment of the Korsakov Municipal District population’ attitude towards the work of the Korsakov Partnership Council is made, and the residents' awareness of the projects implemented in the Korsakov Municipal District under the support of Sakhalin Energy. In addition, proposals are collected regarding further development of the programme.

The Korsakov Partnership Council for Sustainable Development has performed competitive selection of projects since 2004. In 2017, the Council supported 14 projects proposed by local non-profit organisations.

Materials on the Korsakov Partnership Council are available at www.korsakovsovet.ru.

9.5.6. Ecocentre — Kindergarten Project

Today, the necessity to solve environmental problems is of primary importance in all countries around the globe. Special attention must be given to environmental education and education of preschool children.

In Nogliki and Korsakov Districts and Yuzhno-Sakhalinsk pilot preschool educational institutions, which have experience in doing research activities and environmental education among pupils, and are interested in further development of this direction have been equipped under the Ecocentre — Kindergarten Project.

The project implementation has made it possible to create a mobile educational and methodological centre, which serves as a basis for conducting The World Around Us lessons in these kindergartens for all age groups of preschool children in an interesting and informative way, using the latest interactive technologies. The laboratories that have been equipped in the kindergartens allow engaging children in experimental and research activities, and contribute greatly to the development of their cognitive activity and intellectual curiosity.

9.5.7. Silhouette Magic by Semyon Nadein (a Cultural Project)

In November 2017, the Silhouette Magic by Semyon Nadein exhibition opened in the Literary and Art Museum of Anton Chekhov’s Book “The Sakhalin Island”. Among the exhibits received from the four museums of the Sakhalin Oblast and the personal collection of Vasily Kurikalov's family, there are about 30 silhouette cut-out pictures, manuscripts of legends, fairy-tales, and short stories by Semyon Nadein. Several of the unique silhouette cut-out pictures were displayed for the first time ever.

The Ingki, a performance based on a fairy-tale under the same title, staged by young artists of the shadow theatre of the Raduga (Rainbow) Yuzhno-Sakhalinsk Centre for Folk Culture, was part of the Silhouette Magic by Semyon Nadein project. During the interactive part of the exhibition, visitors had an opportunity to listen to four tales from the collection "Engespal". Another part of the project was a magnificent laser show based on the works of Semyon Nadein, which had been created specially for the project.

9.5.8. The Traveller's Room Project, Dedicated to the 70th Anniversary of the Sakhalin Oblast

The presentation of the Traveller's Room in the Literary and Art Museum of Anton Chekhov’s Book “The Sakhalin Island” was the final cultural event in the celebration of the anniversary year in the Sakhalin Oblast. The educational and entertainment zone, which can host various quests and other educational events, has no analogues in the other museums of the island.

Once in the hall, young guests can see a luminous magical tree and a starry sky, a ship with a sail, and a two-story lighthouse, from which they can send signals to ships. There is a beautiful mural painting on the wall: the artists of the museum represented an eagle soaring in the sky and a musk deer hiding in the bushes. In the quest room, children can learn to navigate using the compass and the stars, to recognise animals and plants, to identify different minerals, and to draw up maps. They can expand their knowledge of geography, the history of the region, get acquainted with the natural diversity of Sakhalin Island. The project is implemented in partnership with the Association of Museums of the Sakhalin Oblast.

9.5.9. Sakhalin Indigenous Minorities Development Plan

The Sakhalin Indigenous Minorities Development Plan (hereinafter referred to as SIMDP or the Plan) is a partnership programme that has been jointly implemented by Sakhalin Energy, the Regional Council of Authorised Representatives of the Sakhalin Indigenous Minorities, and the Sakhalin Oblast Government since 2006. The programme has been divided into five-year phases, with the period of 2016–2020 being SIMDP 3.

Every year, consultations are held as part of the Plan in all areas of SIM traditional residence. In 2017, 15 public meetings, attended by 276 people, were held in 11 communities. The main objectives of the consultations were to inform the public about the results of the 2016 Plan and the competitive programmes for 2017, as well as to discuss issues related to the management and implementation of the Plan as a whole and its individual programmes in particular.

9.5.9.1. Goals and Structure of the SIMDP

In 2016–2020, the Sakhalin Indigenous Minorities Development Plan aims to achieve the following key objectives:

  • Capacity building: to perfect leadership qualities and technical skills (including those in accounting, budgeting, business planning, economic activity, preparation of reports), and to support the aspiration for further development of ethnic self-awareness.
  • Social, cultural, and economic development: the targeted areas for support are cultural revival, economic viability of traditional enterprises, and to improve social conditions. Focus is made on long-term strategic planning in line with the principles of sustainable development.
  • Independent fund preparation: assistance in the preparation for the eventual establishment of an independent SIM development fund.

Disclosure of the environmental effects of the Sakhalin-2 project: to ensure timely provision of objective and complete information about the existing and/or potential impacts, and about the measures taken to prevent and/or minimise any potential negative effects.

Governance Structure (2016–2020)



Decisions on the allocation of funds under SIMDP are made by the programme committees that consist exclusively of SIM representatives, specially elected at meetings in the districts. The programme committees are supported in their work by the Expert Groups and District Committees. The effectiveness of the Plan implementation is regularly assessed by an independent expert and the Internal Monitoring Team.

Training workshops are organised annually for the members of the SIMDP coordinating bodies. The Secrets of Accounting and Reporting in NGOs workshop was held in 2017 and dealt with the issues of organising financial accounting in non-commercial organisations, as well as the requirements for accounting and reporting on targeted financing.

9.5.9.2. Traditional Economic Activities Support Programme of the SIMDP

The funds of the Traditional Economic Activities Support Programme were distributed among its components such as business planning, self-sufficiency, and capacity building.

In 2017, the Programme Committee approved 37 projects aimed to support clan and family enterprises, communities and other associations of the Sakhalin Indigenous Minorities. In the framework of the projects, boat motors, nets and fishing gear, snowmobiles, consumables, and certain types of electrical appliances were purchased for conducting traditional economic activities.

9.5.9.3. Social Development Fund of the SIMDP

The resources of the Social Development Fund were distributed among its components, namely Education, Healthcare, Capacity Building, Culture, and Sports. In 2017, the Social Development Fund Committee approved 40 projects. The Nivkh ('Man') Territorial-Neighbourhood Community of the Indigenous Minorities of the North participated in the implementation of the SDF projects as a partner organisation. As part of educational projects, 48 students of specialised secondary and higher education institutions received financial support, and 12 people were provided aid for medical reasons.

For more details about the implemented projects, please visit the website of the Development Plan www.simdp.ru.

Download word document