9. Social impact management

Personnel: Management and Development

Approaches to HR Management and HR Policy

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 experts to ensure staff is retained and a talent pool for key managerial and engineering positions is created;
  • 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 a collaborative work environment that unites the company`s offices and assets.

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 2016, 1,827 people participated in the employee opinion survey, which is about 84% of the employees in the company. The survey showed that the general level of employee engagement was very high—85%. Employees continue to point out how seriously the company is committed to safety and work quality, occupational and environmental safety, equipment reliability and process safety, which is remarkably good, since one of the company's priorities in the field of safety is Goal Zero. 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.

Our HR Directorate makes maximum use of human capital management (HCM) software from SAP. 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 not only automate the process of preparing HR documents and reports, but also aid in managing important processes such as learning and development, succession planning, performance reviews, and recruitment.

General Information

As of 31 December 2016, there were 2,307 people on the company`s payroll, including 2,071 Russian employees, which is 90% of the total. Sakhalin Energy operates mostly on the territory of the Sakhalin Oblast, Russian Federation. There were 2,274 employees working in Sakhalin, and 33 people working 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 2016, 1,240 people, which is 54% of the total personnel, were residents of the Sakhalin Oblast.

Personnel Structure in 2016


The personnel structure is mandated by the specific nature of the company`s operations: 87% are managers, experts, and office staff; approximately 63% are office workers, and the rest work at the project assets.

 Personnel Structure in 2016 by Assets


At the end of 2016, 27% 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.

399 Russian employees were in managerial positions (see the Managerial Personnel Structure in 2016 diagram), 215 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 Traineeship Programme and Section Successors Pool Planning and Development).

 Managerial Personnel Structure in 2016


In 2016, 75 employees were granted child care leave. Of these, one male employee—the father of a child—used his right to child care leave. During the same period, 54 employees (52 women and two men) resumed their job duties at the end of their child care leave. Of these, 48 people continued their employment with the company.

About 29% of the employees are women (658 people at the end of 2016). Of these, 87 occupy executive positions, making up 18% of the company`s management team (see the Managerial Personnel Structure diagram).

Changes in the Number
of Personnel in 2013-2016, persons

Personnel Retirement
in 2016 by Age


Company`s Employee Working Schedules

In 2016, 181 people (143 men and 38 women) left the company. This number includes 88 foreigners and 93 Russian employees (including 48 residents of the Sakhalin Oblast). This gives a turnover rate of 8.46% (8.14% in 2015). The voluntary turnover rate of critical technical personnel was 3.04% in 2016.

The statistics of employees who left the company in 2016, broken down by age group, are presented in the table below.

At the end of 2016, the average age of employees was 38.7 years. Employees aged under 50 accounted for more than 87%.

In 2016, 181 people (143 men and 38 women) left the company. This number includes 88 foreigners and 93 Russian employees (including 48 residents of the Sakhalin Oblast). This gives a turnover rate of 8.46% (8.14% in 2015). The voluntary turnover rate of critical technical personnel was 3.04% in 2016.

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 at the company`s assets are shown in the Company`s Employee Working Schedules table.

Personnel Age Structure in 2016

Recruiting Personnel and Onboarding New Employees

At Sakhalin Energy, new personnel are employed based on the manpower plan and the recruitment plan.

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;
  • 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;
  • using social networks to search for candidates;
  • 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. 

Number of Personnel Hired in 2016 by Age

Прием персонала по возрастным группам в 2016 году


The company continues to run the new employee onboarding programme aimed at maximising the awareness of employees and increasing performance efficiency. In 2016, a memo about the employees' personal appearance was added to the set of information materials for newly hired staff.

In 2016, Sakhalin Energy participated in three job fairs held in Moscow and Ufa. As a result, more than 500 candidates applied for vacant positions with the company. On 20 May 2016, the Personnel Provision Subdivision held, for the first time ever, a large-scale event—Sakhalin Energy's Business Day at Sakhalin State University (SSU). Cooperation with this educational institution is a key way to attract talented young specialists residing in Sakhalin Oblast to work at the company. Specialists of the Technical, Production, and HR Directorates of Sakhalin Energy were invited to participate in the event and to acquaint students with the production assets and the corporate culture of the company. During the Business Day, students were shown a short film about the company's Graduate Development Programme (see Section Graduate Development Programme). After seeing the film, students had an opportunity to get answers to their questions directly from young Sakhalin Energy’s specialists attending the event who are currently participating in the programme.

The organisers of the Business Day also held the Archipelago of Values business game, and more than 30 students participated in it. The game winners were awarded a unique chance to go on a tour of the Prigorodnoye Production Complex.

At the end of the event, about 15 of the most promising SSU students received invitations to a job interview.

In 2016, 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 2016, broken down by age group, are presented in the Number of Personnel Hired in 2016 by Age Group diagram.

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 and 99% in 2016.

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

Remuneration and Bonus System

Sakhalin Energy`s main principles of remuneration are to pay its employees competitive salaries that are not lower than the average salary in the Russian oil and gas industry, and to use a transparent bonus system for all staff categories.

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.

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`s remuneration system is the same for men and women.

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 of the employees).

In 2016, 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 13,83 bln roubles in the reporting year, with award/bonus payments totalling 3,95 bln roubles.

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.

Sakhalin Energy`s Employee Compensation and Benefits Package

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

  • 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 and child care leave;
  • leisure and development programmes for the children of the company`s employees.

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 within 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 benefits related to medical insurance under the insurance contracts with SOGAZ concluded for the period of 2017–2019, under voluntary medical insurance programmes, voluntary accident and illness insurance , travel insurance, and accident insurance for children participating in the summer leisure and development programmes.

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.

Since 2016, personnel working at the company's production assets have been entitled, as part of the voluntary health insurance, to treatment at sanatoriums, rehabilitation treatment, and medical examinations at the leading medical institutions of the Russian Federation with compensation of the cost of travel to the place of treatment and back. More than 50 employees used this benefit in 2016.

Mortgage Programme

The mortgage programme is governed by the Regulations on Payments to Employees. Since the beginning of the mortgage programme, 203 Russian employees (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 programme

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 2016, 22% of the company`s Russian employees are enrolled in the corporate pension plan.

The company contributed a total of 145 mln roubles to Gazfond from 2011 to 2016.

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. A pilot project aimed at creating a bilingual environment for children's development was launched in 2016.

Happy Holidays Programme

Children of the company`s employees have the opportunity to attend Happy Holidays Leisure and Recreation Programme during the summer at the sports and cultural facilities of Zima Highlands RC. The programme has been offered for six years already, and is designed for children from preschool up to 16 years old. The programme has a different theme every year, and each of the five summer sessions is unique.

In 2016, the programme was devoted to the Year of Cinema in Russia, and was held under the Territory of Cinema. From Dreams to Reality slogan. During the five traditional shifts, children worked together with film industry professionals and created 23 cinema products of different types and genres. Some of them were presented at the official competition programmes of the year and won prizes.

In 2016, 652 children participated in the project.


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.

Since 2015, the working group that includes representatives of the company, the Yuzhno-Sakhalinsk Department of Education, and Sakhalin State University has been working in the area of education as a part of the Coordinating Council for Cooperation between the City Administration and Sakhalin Energy. The working group aims to create additional conditions for the education and development of children (including the children of the company`s employees) who attend Yuzhno-Sakhalinsk educational institutions (for more information about the Coordinating Council, see Section 6.9. Engagement with State and local Government Authorities).

Individual Performance Review of the Employees

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 of Employees

Learning and Development

General Information

The learning and development (L&D) system aims to meet the company's need for highly skilled production, managerial, and administrative employees in order to implement current and strategic goals of the company. Staff development at all levels is a key element in creating and maintaining high professionalism and motivating as well as retaining personnel in Sakhalin Energy. To ensure the best performance, the company strives to maximise the potential of its employees, taking into account their diversity and individual characteristics.

The company applies a comprehensive approach to staff learning and development, in particular:

Approaches to Personnel's Development


In 2016, the company continued to develop closer links with the training units of the shareholders. Company's specialists and managers visited the Training Centre at Rijswijk, the Netherlands to learn more about Shell staff L&D strategy and changes in this sphere. Also, the company’s representatives got acquainted with the system of the Gazprom Training Simulator Computer Centre, and now the company has better opportunities for developing a material base for technical training, including the development of new materials for e-learning of technical staff. 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 at any asset, no matter how remote it is. Targeted interaction with the shareholders in the field of employees' professional training is the basis of unique knowledge management and mutually beneficial cooperation.

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 competencies is used to recommend further development and training for the employee at 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 the professional and behavioural employee’s level against the requirements set depending on his qualifications, position, and tasks performed.

There are various assessment tools the manager can use during assessment activities. The main assessment tools include the following:

  • Observation of the employee in the course of work;
  • studying evidence provided by the employee;
  • conducting a structured interview to assess the employee's competences.

To improve the efficiency of the evaluation process, the company recommends that managers use additional assessment instruments, such as 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, and the Assessment Centre (for leadership competences).

Personal And Business Skills Development System

Not only does the company develop new employee assessment tools and materials that help line managers to assess staff competence, but it also creates an integrated, competence based development system. Thus, since 2015, the company has been testing personal and business competences using electronic tests and an automatic report on the assessment results for the employee and the line manager. In 2016, 61 employees successfully passed the assessment and received recommendations for further development. The company has developed the Competence Gap Closure Programme based on the competence approach, which is presented to the employee after testing, and is an important tool in planning his/her learning and development, including the description of projects and various tasks at the workplace. In 2016, employees of the Professional Training Subdivision developed Knowledge Maps — brief descriptions of the competence and the fundamentals of theory, which help employees to quickly and independently gain sufficient knowledge for awareness-level competence. This system ensures an integrated approach to the development of company`s employees' personal and business competences.

By the end of 2016, 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.
    In 2016, CEP was estimated for 1,120 employees. The assessment results are used for manpower planning, creating a successors pool in the company, planning the individual and career development of employees, as well as developing staff retention activities.
  • 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 2016, 72 employees of this category passed the Assessment Centre.
    Since 2009, the company has assessed the leadership competency of 495 company`s employees using the Assessment Centre.
  • 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 2016, this type of evaluation had been arranged for 98 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 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. The majority of managers were familiarised with this methodology in 2015–2016.
  • 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. This new business skills assessment tool was successfully used throughout 2016. Upon completion of the testing, both the employee and the manager receive an automatically generated report that includes recommendations for development.

The company continues to improve the personnel learning and development system based on the competency assessment.

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, the employees demonstrate professional knowledge acquired through learning and professional development as well as the skills and abilities developed in the course of their duties. 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.

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.

Integration and automation

In 2016, integration and automation were the most important principles in the work of the units regarding learning and development. The learning function was integrated as regards to the personnel involved in the organisation of training. All training contracts concluded by the company were concentrated within a single organisational unit. This allowed the company to continue the development of the technical training system, to enlarge the electronic learning base, and to find ways to replace classroom professional training with distance learning. The automation of the planning of mandatory training and the administration of training programmes via SAP HCM system continues.

In 2016, 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. At the same time, the company is forced to plan L&D activities more carefully and selectively, using all available means: distance learning, including on-line learning, group training in Sakhalin instead of individual off-site training, and internal resources. The company develops and implements new L&D tools and uses its own resources—internal trainers. For optimisation, the company involved the resources of contractors, including those of Sakhalin State University. All these activities allow the company to maintain the competence of its staff at the highest level.

The company uses the following employee training options: on-the-job training, e-learning, classroom training courses, workshops, and case studies. In 2016, 1,880 people attended workshops and professional development 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 7.9 training man-days per employee (excluding on-the-job training). In 2016, Sakhalin Energy invested 281 mln Roubles in personnel training.

Sakhalin Energy`s unique training resources include both Russian and foreign training service providers. Employees themselves, their line managers, the HR Directorate, and company`s senior management all see that training plans are implemented.

The top priorities for Sakhalin Energy’s training policy are as follows:

  • Mandatory training in accordance with RF legislation;
  • HSE training in accordance with the internal standards of the company;
  • professional training;
  • in-house technical training.

Employee Training in 2016 (by Personnel Categories)

The Top Priorities for Sakhalin Energy's Trainings

Mandatory training in accordance with the RF legislation

  • occupational safety and health
  • industrial safety
  • environmental safety 

Professional training

  • targeted professional training in technical and other disciplines
  • professional development
  • training employees to operate the contractor's equipment (vendor training)
  • long-term international training courses (CIMA, ACCA, CIPS, NEBOSH, etc.)

HSE training in accordance with the internal company standards

  • process safety
  • prevention of emergencies and protection of company assets from emergencies
  • healthcare

Technical training

  • implementation of technical training programmes and courses
  • practical training in the workplace at the company production facilities
  • development of workers' technical competence

Modern Technologies for Mandatory Training: New Horizons

Since 2016, the company has been running the project to automate the planning of mandatory training.
It is implemented on the basis of SAP HCM, and allows each employee to see the profile of his/her mandatory certifications and the dates of the next training for each mandatory course, and to enrol in training programmes in due time. This tool makes it possible to automatically send advance notifications to employees about the necessity to undergo mandatory training before the licenses and certificates expire

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. To fulfil these tasks, discipline in-house technical training trainers/instructors and Lead trainers, selected from among experienced production staff, 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 programmes and courses:

  • by existing disciplines (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 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.

Traineeship Programme

In order to ensure there are enough qualified technicians, the company continues to implement the Traineeship Programme.

In order to ensure there are enough qualified technicians, the company continues to implement the Traineeship Programme. Since 2003, 258 people have taken part in the Programme, including 29 people who continued training as company`s trainees as of the end of 2016. 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 technical training focuses on helping the trainees develop practical skills and acquire work experience. Practical part of the Programme aims at training their skills to the required 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, process and personal safety are emphasised for various types of work, and the trainees are taught 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.

In 2016, the Traineeship Programme underwent changes. Application of new training methods and the increased intensity of the training process, make it possible to optimise the duration of the Programme from 36 to 32 months. 

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

  • English language module—an intensive training course with elements of general and technical English;
  • 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


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; and
  • the potential successors’ development in accordance with the job requirements for the positions planned for succession.

During the succession planning process for 2015–2019, potential successors (in the short- and long-term) were identified for 606 of the 641 positions within the scope of the succession planning (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, overseeing of projects, etc.).

Job Experience Navigator for Engineering Disciplines

In 2016, the Job Experience Navigator - a tool for planning career development to employees in engineering disciplines in Production Directorate - was developed. The Job Experience Navigator incorporates information on the seven skill pool groups in Production Management, on key jobs in each skill pool, on possible career routes, and requirements for transition from one position to another.

The Navigator includes:

  • Career Maps with possible career routes within the same skill pool group and between skill pool groups;
  • archive of electronic documents comprising a catalogue of job details, a list of special requirements for transition to other jobs within a job skill pool, electronic versions of Career Maps, and detailed information on transition between skill pool groups.

During 2016, company’s employees used the Job Experience Navigator 2,490 times.

Leadership and Management Development Programmes

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

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 by developmental classroom and online training courses, on-the-job training, as well as learning methods based on relationships such as coaching and mentoring.

Leadership development programmes have been developed for all management levels based on the Nine Planets leadership competency framework.

In 2016, 140 Russian employees of the company occupying managerial positions at various levels were trained under the leadership programmes.

Also the company develops its leaders through two types of mentoring programmes:

  • 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 sessions, leaders of the company share their experience of building a career, as well as managing projects and staff in the context of leadership competences. 

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 2016, the company hired 12 graduates under the programme. Since 2010, 94 people have participated in the Graduate Development Programme

Young Energy Graduates Club

Since 2012, the Young Energy Graduates Club has been functioning in the company to help graduates adapt quickly and develop their business and leadership skills. In 2016, the Club held a number of events, including an information session about the lines of activity of the Engineering and Technical Support and Operational Safety Subdivision, and a meeting with the head of the Production Department (Offshore Assets), during which various issues of the career building strategy were discussed.

Future Horizons Programme

In order to improve competency of graduates 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 potential of young professionals, develop skills needed for effective team collaboration and for understanding tasks and manager’s role as well as to create conditions to identify their own strengths and areas for development. In 2016, 16 graduates participated in the programme.

Personnel Development Assignments

An integral part of the Sakhalin Energy`s HR strategy regarding the recruitment, retention, and development of employees is arranging personnel development assignments.

Participation in the development assignments allows employees to gain extensive experience in project work and receive additional opportunities for personal and career development.

In 2015–2016, developmental assignments at shareholder companies were arranged for 8 Sakhalin Energy’s employees, and 12 developmental assignments of shareholder companies employees were arranged in Sakhalin Energy

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. Company’s specialists are involved in the work of student scientific societies, the preparation and delivering of lectures, etc.

Every year, the company holds scientific and practical conferences for young professionals. 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 2016, the company held the 8th Scientific and Practical Conference of Young Professionals. Participants presented 18 reports in three areas: Engineering and Geology; Production and Maintenance; Economy, Information Technology, and HR Management. The conference was attended not only by Sakhalin Energy`s professionals, but also by employees of the shareholder companies, as well as graduate and post-graduate students of the Gubkin Russian State Oil and Gas University.

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

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

In 2016, 52 university students and 33 students of vocational schools underwent on-the-job training and pre-graduation internships at the company. In 2016, about 70% 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. From 20 to 30 students studying in fields relevant to Sakhalin Energy receive internships at the company annually.
  • 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 the 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 Traineeship Programme).
  • In 2016, undergraduate students of the college were suggested topics reflecting the specificity of the LNG plant for student course and graduate projects. The topics were approved by the college management. During the development of projects, industrial training instructors of the company provided methodical, informational, and consulting support to the students, and wrote reviews for four graduate projects. The presentation of the graduate projects was successful, and the students defended them with good and excellent marks.
  • 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. Industrial training instructors and specialists from among experienced technical and process personnel provide teachers with information and consultation, deliver lectures on the technological process of the LNG plant, and conduct narrowly targeted workshops. 

Scholarship Programme

The Scholarship Programme was launched by Sakhalin Energy in 2003.

The Programme focuses on talented graduates of secondary schools and vocational schools of the Sakhalin Oblast 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 2016, 7 graduates of Sakhalin schools became the contest winners.

As of the end of 2016, 21 Sakhalin residents, who participated in the Scholarship Programme, studied at RF universities with the financial support of the company.

Labour Safety and Protection

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 eight mandatory Life Saving Rules applied by the company. These rules are particularly associated with high-risk zones.

Sakhalin Energy`s Life Saving Rules

I will not appear at work under the influence of drugs or alcohol

I will not smoke. Carry or use ignition sources in active hydrocarbon areas

I will not walk under a suspended load

I will comply with the requirements of permit to work

I will wear a seatbelt when travelling in a vehicle

I will only drive on company business with a valid defensive driving training and journey authorization

I will not exceed the speed limit

I will not use communication devices whilst driving


Violations of the Sakhalin Energy`s Life Saving Rules in 2016, number of cases


Any violation of the Life Saving Rules leads to serious consequences, including 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 remain:

  • occupational health;
  • industrial safety;
  • road safety.

Injury Rates for the Company and Contractor Organisations in 2013-2016

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:

  • reception, use, processing, generation, storage, and transportation of hazardous substances listed in Appendix 1 to the Federal Law On the Industrial Safety of Hazardous Production Facilities N 116-FZ dated 21 July, 1997;
  • use of equipment operated under excess pressure (over 0.07 MPa);
  • use of permanently installed hoisting equipment.

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 company’s employees as required by law.

Justification of Safety Documents (JoS) were developed and implemented at all 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.

Safety Culture

One of Sakhalin Energy`s priorities is to develop a corporate culture that will help us achieve Goal Zero, which is no harm to people, bringing the incident rate to the lowest possible level, and encouraging proactive HSE behaviour in personnel both in the company and in contractor organisations.

Personnel of Sakhalin Energy and contractor organisations demonstrate their commitment to safety principles and Goal Zero. Goal Zero is to prevent incidents by recognising hazards early and managing risks. It is possible to achieve this goal only if each and every employee maintains personal responsibility attitude towards safety.

If employees take personal responsibility for complying with the HSE Rules and intervening in unsafe situations, the company can reach its safety targets and production goals.

In 2016, the company launched the Goal Zero Safety Leadership Programmes for OPFC and Train 3 major projects. The goal of the programmes is to engage all staff in personal safety leadership.    

In April 2008, the CEO Award was established to promote safe behaviour and HSE achievements. Company`s and contractors` employees are awarded monthly for contributions to developing a safety culture such as excellent and safe work, timely response, and prevention of hazardous situations.

Safety Culture Evolution Ladder


16 nominations were received in 2016. Four employees of the company received this award. Also, one award was given to the contractor.

The Safety Culture Evolution Ladder shows how a safety culture evolves toward the Generative level. At this level, company`s employees trust their managers sufficiently to share information that will prevent incidents. Achieving this level of corporate culture is the primary goal of all labour safety programmes implemented by the company.

When employees change their behaviour so that safe behaviour is the norm at production sites, in the office, and at home, it will be a tremendous step towards achieving the highest (Generative) level of HSE culture.

The company has been holding Summer and Winter Safety Days for the last nine years. All company`s and contractors` employees meet to discuss relevant safety issues, such as how actions and behaviour affect the safety of others and what we can do to make work safer. They also discuss following safety rules both at the workplace and outside working hours.

The company continues to promote the Effective Observation and Intervention Programme. The objective of the programme is to prevent serious incidents by responding quickly to potential hazardous situations.

As this programme is implemented in the company and contractor and subcontractor companies, a safety culture is being created and improved.

According to the Health, Safety, Environmental, and Social Performance Policy and Commitments, it is the right and duty of every employee to intervene in a potentially hazardous situation.

The Effective Observation and Intervention Programme has been successfully used at all company`s assets. In 2016, about 50,000 interventions by the company`s and contractors` employees were recorded at all assets.

The key factor in developing a successful safety culture is to have the company`s senior management committed to an HSE culture. In 2016, supervisors at all levels (directors, asset managers, and heads of subdivisions) visited the company`s and contractors` production facilities 87 times.
By doing this, they personally demonstrated their commitment to a safety culture to the company`s and contractors` employees. This is an important factor in motivating employees and improving the safety culture in general.
In 2016, 179 line managers, HSE specialists, and HSE critical contract holders underwent training to demonstrate a commitment to HSE. Seventeen people were promoted to trainers under the programme. The aim of the programme is to achieve a common understanding of the current HSE situation, motivate employees to seek continuous HSE improvement, and remind them of the company's goal to be an HSE leader.

Observation and intervention cards can be filled in when an employee sees positive examples of safety compliance or when best practices are applied at the workplace. In 2016, over 33,000 cards were filled in with safety culture examples.

The company also has a Hazard Identification Programme. The goal of the programme is to identify and eliminate potentially hazardous situations associated with equipment or system breakdown. Every employee who identifies such a hazard should fill in a hazard identification card to report hazardous conditions, factors, or technical failures that they cannot correct themselves. These cards should be immediately submitted to the manager in charge or HSE staff so serious incidents are prevented.

Training sessions for developing a safe behaviour culture are offered at all production assets of the company. In 2016, more than 1,200 employees of Sakhalin Energy and contractors took a training course.

Given the fact that the most of project activities are being performed by contractors, the company adheres to the“Company and Contractors are One Team” principle. Based on this principle, a special programme was developed to evaluate HSE competences of 10 key contractors’ personnel according to the criteria specially designed. Thereafter, using company`s resources, trainings for contractors were arranged to address the identified gaps in HSE competences. 

The company, within the framework of the same programme, arranges annual assessments of key contractors’ HSE culture (32 companies in 2016) and develops measures to improve the HSE culture.

An interactive online course was developed in International Minimum Industry Safety Training (IMIST) to be used by companies and their contractors. The course describes basic elements of safety for the oil and gas industry as well as potential hazards and controls for all employees. The course helps to reduce the number of injuries and incidents by ensuring that all personnel have the safety knowledge and basic skills necessary to recognise and minimise risks. In 2013–2016, more than 586 employees of the company and contractors received the training.

Road Safety

Road safety is of particular importance for Sakhalin Energy.

More than 700 vehicles with overall annual mileage of 10 million kilometres 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 2016, 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. Three Road Safety Monitoring teams perform oversight in different regions.
  • interaction with other organisations. The company initiated cooperation with OOO 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.

An important objective of the Road Safety Programme is to maintain high corporate safety standards even in areas outside the liability of the company and its contractors, especially in Sakhalin communities where the company operates. This objective is being handled by the Sakhalin Road Safety Council, which was established at the initiative of the company back in 2005 (see the Section 9.5.6. Sakhalin Road Safety Council).

In 2016, more than 1,700 Sakhalin Energy’s employees and contractor employees received defensive driving training

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 2016, all 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. To do this, additional measures were developed and introduced to assess the risk. 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 initiated 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 2012–2016

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

In 2016, 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 2012–2016.

Besides mandatory health programmes, in 2016, 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 2016, over 370 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 ZAO 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).

Human Rights

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 inseparably linked components, including:

  • 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;
  • Commitments and Policy on Health, Safety, Environment, and Social Performance;
  • Security Policy;
  • Contracting and Procurement Policy;
  • Whistle Blowing Procedure / Community 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.

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.

Company's Human Rights Activities

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 issues of the company`s personnel (violation of employee rights under the laws, regulatory legal acts, the company's local regulatory acts; violation of labour agreements and terms of labour contracts 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.

Grievance Handling in 2016

In 2016, as part of various corporate grievance mechanisms, 67 grievances and appeals were received from the company`s personnel and external stakeholders, including:

  • 36 grievances under the Whistle Blowing Procedure;
  • 9 grievances from employees of the company;
  • 22 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.

By the end of 2016, 25 grievances out of the 36 received under the Whistle Blowing Procedure had been resolved. In addition, five grievances received in the end of 2015 had been resolved. All 30 grievances were resolved within the timeframe established in the Terms of Reference for carrying out investigations. By the end of 2016, 11 internal investigations based on reviews of the grievances related to violations of the General Business Principles, the Code of Conduct, or other company`s procedures remained unresolved. These investigations will be completed in 2017.

Grievances from the company`s personnel were examined as set forth in the Grievance Procedure (Human Resources). In 2016, 9 grievances related to labour relations issues as well as the application of the employer’s local regulations were received under the Grievance Procedure. All grievances were resolved within the timeframe stipulated in the Procedure.

The grievances from communities and employees of contractor and subcontractor organisations were addressed in compliance with the Community Grievance Procedure. They mainly concerned community impact (e.g. condition of the roads, impact on the local infrastructure), labour relations (within contractors and subcontractors), and implementation of the Sakhalin Indigenous Minorities Development Plan, as well as other issues (information disclosure, construction camp management, compliance with the Code of Conduct, etc.).

By the end of 2016, 19 grievances out of the 22 received from the public and employees of contractor and subcontractor organisations had been resolved. In addition, three grievances received at the end of 2015 had been resolved. All 22 grievances were addressed within the timeframe stipulated in the Grievance Procedure (less than 45 business days). By the end of 2016, three grievances remained unresolved. The status of these grievances will be presented in the 2017 Sustainable Development Report.

Categories of Public Grievances in 2016

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 training.

The company conducts personalized courses for specific personnel that have a higher risk of violating human rights. The process of identifying the correct training is shown in the chart below.

Community Grievance Procedure training is offered for those employees, who, due to the nature of their duties, may receive or resolve grievances from the public (e.g. subdivision heads, reception desk employees, and company`s representatives who directly manage contractor organisations).

In 2016, personnel of the Production Directorate, the Environmental Protection Subdivision, and employees of the Government Relations, Shareholders Liaison, and External Affairs Administration received such training.

Identifying the correct training

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 directors, oversees compliance with the established grievance process.

Conclusions on compliance with human rights standards are included in regular internal reports for the management and shareholders as well as in the company`s annual Sustainable Development Reports.

Social Investments and Contributions to Sustainable Development of the Host Region

Social Investments and Sustainable Development: Sakhalin Energy’s Principles and Approaches

Since its establishment in 1994, the company has paid close attention to implementation of social programmes on Sakhalin Island. Significant and consistent investments in social sphere, as well as a 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 2016, Sakhalin Energy was first in the Russian ranking of the Corporate Philanthropy Leaders project. It is a joint project of the Donors Forum, PricewaterhouseCoopers and Vedomosti newspaper aimed at supporting, developing, and promoting corporate philanthropy.

In 2016, the company invested over RUB 74 million in various 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 activity;
  • 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 economic, environmental and social development of Sakhalin and demonstrate the company’s commitment to sustainable development to stakeholders.

Charity activities and social investments are managed by the Social Performance Subdivision of the External and Corporate Affairs Department. The Subdivision handles development, implementation and monitoring of social projects and programmes, and is responsible for annual and current financial planning and reporting activities.

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, which is 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.

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

In the area of social investments, Sakhalin Energy 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.

Focus on the implementational of Strategic Long Term Partnership Projects

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

  • environmental protection and biodiversity;
  • safety;
  • education;
  • culture and arts;
  • healthcare;
  • contributing to 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 active 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.

Environmental initiatives are among the priority areas of Sakhalin Energy’s social investments. This is how the company contributes to the development of environmental awareness, ecological education of the next generations, and the conservation of biological diversity and the natural environment.

Company's Objectives in Social Investments for 2017

  • 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 programme 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 investments programmes;
    • ensuring high-level information transparency and visibility.

The Energy Social Initiatives Fund

The Energy Social Initiatives Fund is one of the Sakhalin Energy`s charity programmes that demonstrates the comprehensive and consistent approach to promoting social transformation in the host region and commitment to solving important problems of local communities.

Launched in 2003, the grant contest to support socially important initiatives allows to identify interesting and effective solutions to community issues. Grass-roots support of such initiatives at the local level can go a long way toward solving these problems. Moreover, it gives socially active citizens confidence that they can improve the lives of people around them and increase capacity of public organisations. In considering proposals, the company adheres rigorously to the principles 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 of the contests and the selection criteria is available on the website of the Energy Social Initiatives Fund (www.fondenergy.ru).

One of the priority areas identified for funding on a competitive basis is environmental protection. Other areas that receive financial support are arts, culture, education, sports, and promotion of a healthy lifestyle.

In 2016, funding was granted to 52 projects, including:

  • Social Tourism School of the Boomerang Club Sakhalin Regional Public Organisation: social tourism development by efforts of volunteers and community organisations, as a means of ecological and patriotic education of children and youth. As part of this project, a school of volunteer tour guides has been organised, an Interpretative Approach to Guided Tour Preparation and Arrangement workshop has been held; and model ecological educational tours have been developed, the best of which are included in a Travellers for Local Natural History Tours of Sakhalin collection.
  • Let Me Introduce to You, a project of the Rainbow Kindergarten No. 6 of Troitskoye village, Aniva district: creating conditions for preschoolers’ comprehensive understanding of the world and various professions. As part of the project, a new museum exhibition Sakhalin Is a Treasure Island has been created. It teaches children about the Sakhalin mineral riches, tells about industries of the island, and shows children where their parents work.

Since 2003, more than 250 organisations and institutions have received financial support, and 502 projects have been implemented in 64 Sakhalin settlements as a part of the Energy Social Initiatives Fund. The company has made investments totalling over RUB 54.35 mln.

Number of Projects
that Received Funding in 2003–2016, by districts


Hurry Up for Good Deeds Programme (Support for Charity Initiatives of Employees)

One way companies can demonstrate corporate social responsibility is by encouraging corporate volunteering. If a company provides its employees with an opportunity to help solve social problems, they feel a sense of pride in themselves and their company.

The social policy of Sakhalin Energy includes volunteering. It encourages employees to take part in charity programmes and supports their personal initiatives. Volunteering immerses employees in a new environment and enriches their personal experience, stimulates creative thinking, and inspires them to find out-of-the-box solutions. The Hurry Up for Good Deeds Programme, which was launched in 2003 to support employee charity initiatives, is an example of this.

In 2016, the programme was carried out in three main areas:

  • volunteer days (Voluntary Community Work Days), which involve volunteering for one of the social institutions on Sakhalin;
  • fundraising campaigns organised by the company;
  • charity projects initiated and implemented by employees.

In addition, a number of initiatives to provide professional (pro bono) assistance have been implemented, which is another step in a new area of the programme—competent and skilled volunteering (using professional knowledge and skills of the employees for the sake of the public good).

In 2016, two environmental volunteer campaigns were conducted. The Spring Community Clean-up Saturday was held in the Yuzhno-Sakhalinsk nursing home (for the elderly and disabled). The company`s employees and their families cleaned up and improved the premises of the nursing home: they planted ornamental shrubs, arranged flower beds, and cleaned up promenade areas in the parkland.

The autumn campaign was held in the Korsakov park. 120 company’s employees and their families took part in it. Sakhalin Energy made significant preparations: HSE Department employees visited the park to catalogue species of vegetation, ecologists developed texts for information boards, and the information notices have been translated into Japanese and English. The information boards were installed along the ecological trail and walking paths in the park, and the ecological trail has been arranged. During the campaign, volunteers painted 130 metres of the railings on the stairs and renovated pre-installed information notices, planted ornamental shrubs and flowers, repaired the park alleys, and made feeders for squirrels.

The corporate campaigns of 2016 supported social service institutions for the elderly and disabled in five settlements of the island (Gastello in the Poronaysk District, Makarov, Alexandrovsk-Sakhalinsky, Yuzhno-Sakhalinsk, and Sinegorsk). Employees collected money (over RUB 1.6 mln), and the company doubled the amount to renovate recreation rooms and buy equipment for leisure-time activities, as well as medical and rehabilitation equipment for these institutions.

The New Year Miracles is an annual charity event to raise funds for disabled children, lonely elderly people, and children suffering from hardships. This year, the project supported #givingTuesday, an international initiative held in Russia for the first time.

A number of charity projects initiated personally by employees have been implemented. Employees of the Prigorodnoye production complex collected money, and the company doubled the amount to buy an up-to-date mobile laboratory facility for the Razdolnoye school in the Korsakov District. The lab allows to perform various experiments, including in chemistry, prepare presentations, and solve multiple tasks in different fields.

In 2016, employees of Sakhalin Energy’s Safety and Health Division volunteered to take part in preparing for and conducting a regional Safety Holiday for children held within a partnership programme for children safety. They served as experts in the Young Experts in Safety stage to teach children how to assess situational risks. Before the event, employees of the Division assessed safety risks at all competition sites.

Korsakov Partnership Council for Sustainable Development

Following one of the basic principles of sustainable development—to meet the needs of the present without compromising the ability of future generations to meet their own needs—Sakhalin Energy has initiated the Social Investments and Sustainable Development programme in the Korsakov Municipal District of the Sakhalin Oblast. Within this programme, the company renders 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, 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 Council also plays a role in monitoring social development in the district.

Another task solved by this programme is involving as many as 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.

The Korsakov Partnership Council for Sustainable Development has performed competitive selection of projects since 2004. In 2016, support was granted to 17 projects.

In 2016, public consultations were held on the Korsakov Sustainable Development Partnership Council activities in the communities of the Korsakov District. The Korsakov Municipal District community attitudes to activities of the Korsakov Partnership Council for Sustainable Development, their awareness of the projects implemented under support of Sakhalin Energy, and opinions of the further programme development were studied there.

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

What to Do in Emergency Situations Partnership Safety Programme

Safety is one of Sakhalin Energy's top priorities. Since child safety issues are a priority and obviously relevant to the Sakhalin Oblast, in 2005, the company initiated a programme in partnership with the Chief Directorate of the MChS for Sakhalin Oblast and the Ministry of Education of the Sakhalin Oblast.

Its key tasks include creation of conditions to enhance activities aimed at assimilation and consolidation of children's knowledge about safe behaviour rules in emergency situations.

 2016 saw public presentations of two cartoons dedicated to safe behaviour in the yard playgrounds and prevention of thermal burns, and presentations of two comic books—Beware of the Frost! and Flickers.

On the International Day for Disaster Reduction in October 2016, the Annual Regional Children's Safety Holiday was held on Sakhalin for the seventh time. It was attended by 16 teams of children aged 11–12 years from 15 districts of the Sakhalin Oblast.

63 schoolchildren aged from 7 to 16 took part in the Safety Is Important children’s animation contest. The winners were awarded at the ceremony in November 2016. Individual contestants and teams created animations to show how important it is to observe the safe behaviour rules to avoid dangerous situations. The jury included representatives of the What to Do in Emergency Situations programme partners and cinema and TV professionals.

All cartoons and other materials created under the programme are available at: www.senya-spasatel.ru.

In December, a ceremony was held in the press centre of Rossiya Segodnya International Information Agency to award participants of the Impulse, All-Russian Contest of Social Advertising held among public authorities. The third prize in The Best Booklet nomination and a winner’s title was awarded to the Safety on Water in the Summer comic book published within a partnership programme.

Sakhalin Road Safety Council

The Sakhalin Road Safety Council is one of the company's social investments programmes.

Since 2005, this programme has been implemented by active efforts of all stakeholders. The Sakhalin Oblast Government and the Department of the RF Ministry of Internal Affairs for the Sakhalin Oblast partner with the company on road safety.

The Council develops and implements projects aimed to reduce the number of victims in road traffic accidents (RTA) and the number of road traffic accidents.

In 2016, in order to improve the road infrastructure, more pedestrian crossings were equipped with innovative traffic control equipment. It improves the visibility of pedestrians and pedestrian crossing road signs to drivers. The effectiveness of this project, which was started in 2013, has been confirmed by the statistics of the Department of the State Road Safety Inspectorate of the RF Ministry of Internal Affairs for the Sakhalin Oblast. The number of accidents at these newly marked pedestrian crossings has decreased several times.

Information on the Sakhalin Road Safety Council is available at http://www.sakhalinroadsafety.ru.

The World of Nivkhs Exhibition Project

In November 2016, an exhibition called The World of Nivkhs opened in the Stroganov Palace in St. Petersburg.

State Russian Museum and the Sakhalin Regional Art Museum has been implemented with support from Sakhalin Energy. It is intended to enhance the prestige of the Sakhalin cultural institutions and to form Russia's continuous cultural landscape.

For the first time in the history of Sakhalin culture, one of the largest museums in the country hosts Nivkh exhibits from regional museums. The main part of the exhibition (works of Sakhalin artists from the collections of the Sakhalin Regional Art Museum, Sakhalin Regional Local Lore Museum, Okha and Nogliki Local Lore Museums) was formed as part of events celebrating the 80th anniversary of Vladimir Mikhailovich Sangi and presented to the Sakhalin audience in November 2015.

There were 76 paintings and objects of decorative art as well as sculptural portraits on exhibit in the Stroganov Palace exhibition hall. The culture of indigenous peoples is reflected in the best works of artists who worked on this subject at different times: Sergei Tayakovich Gurka, the first Nivkh painter; Lydia Demyanovna Kimova, a talented Nivkh craftswoman known far beyond Sakhalin; and Givi Mikhailovich Mantkava, the pioneer and discoverer of this world of ancient people for painting connoisseurs. The authors of the 1975 Scene of the Nivkhs Life painting from the collection of the Okha Local Lore Museum are Grigory Davidovich Bruskin, known as Grisha Bruskin, who now lives in the USA, and Svetlana Zakharovna Bogatyr, who works both in Russia and in France.

The exhibition also presented thematic booklets, a catalogue of works containing photos and information about the artists and craftspeople, and guides containing quizzes for children.

The project involved tours, quests, workshops and the presentation of an audio album of fairy tales by Vladimir Sangi, the founder of Nivkh literature, told in Nivkh and Russian (stories in the Nivkh language are read by the author). Copies of this album were sent to the Institute of the People of the North of the Herzen State Pedagogical University of Russia, St. Petersburg, to Sakhalin schools in places of indigenous minority residence, and to federal and regional libraries.

Key exhibition events were held simultaneously with the St. Petersburg International Cultural Forum 2016 and were included into its extensive agenda.

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 2016–2020 being SIMDP 3.

Every year, consultations are held as part of the Plan in all areas of SIM traditional residence. In 2016, 16 public meetings, attended by 257 people, were held in 12 communities. The main objectives of the consultations were to inform the public about the innovations of SIMDP 3 and the competitive programmes in 2016, as well as to discuss issues related to the management and implementation of the Plan as a whole and its individual programmes in particular.

Goals and Structure of SIMDP

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

  • Capacity building: perfecting leadership qualities and technical skills (including those in accounting, budgeting, business planning, economic activity, preparation of reports), and supporting 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 economic enterprises, and improved social conditions. Focus is made on long-term strategic planning with the concept of sustainable development as an objective.
  • 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: ensuring timely provision of objective and complete information about the actual and/or potential impacts, and about the measures taken to prevent and/or minimise any potential negative effects.

Taking into account the concerns of indigenous peoples about the potential environmental impacts of the Sakhalin-2 project, the company developed a Mitigation Matrix, following the results of the multilateral consultations in 2005–2006. The Matrix includes issues that cause concerns of indigenous peoples, and measures to address them.

Based on the results of the sociological survey of the population in 2015, as well as during consultations on the development of SIMDP 3, SIM representatives defined four issues to be included in the Matrix:

  • concern  with the effects of oil and other substances’ spills;
  • provision of information about the measures aimed at biodiversity conservation;
  • provision of information for Sakhalin Indigenous Minorities on Sakhalin-2 project expansions, if any;
  • Grievance Procedure: grievances related to the Sakhalin-2 project and SIMDP.

The Matrix is regularly updated, reviewed at each meeting of the SIMDP Governing Board, and sent to the Regional Council of Authorised Representatives of the Sakhalin Indigenous Minorities and other stakeholders.

Governance Structure (2016–2020)

Decisions on the allocation of funds under SIMDP are made by the programme committees consisting 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. In 2016, these included the Social Project Management and Project Evaluation Seminar and the Sakhalin Indigenous Minorities Development Plan: Effective Implementation Mechanisms Workshop.

Representatives of the three parties appointed a SIMDP 3 Coordinator responsible for overall administrative control over the activities of the SIMDP coordinating bodies and the results of the work, as well as for work under the Grievance Procedure regarding grievances related to the SIMDP.

Traditional Economic Activities Support Programme of SIMDP

The funds of the Traditional Economic Activities Support Programme were distributed among its components, namely Business Planning, Self-Sufficiency, and Capacity Building.

In 2016, the Programme Committee approved 36 projects aimed to support clan and family enterprises, communities and other associations of the Sakhalin Indigenous Minorities, and to provide aid to SIM representatives in the total amount of more than RUB 10,132,000. Outboard motors, fishing gear and net materials, snowmobiles, consumables, and certain types of electrical appliances used for traditional economic activities were purchased, workshops on bone and wood carving and making traditional clothes were held, and training in steering small vessels and driving snowmobiles was organised under the programme.

Social Development Fund of SIMDP

The resources of the Social Development Fund (hereinafter referred to as SDF) were distributed among its components, namely Education, Healthcare, Capacity Building, Culture, and Sports. In 2016, the Social Development Fund Council approved 36 projects in the total amount of more than RUB 10,132,000. The Nivkh Territorial-Neighbourhood Community of the Indigenous Minorities of the North was a partner in the implementation of the SDF projects. As part of educational projects, 46 students of specialised secondary and higher education institutions received financial support, and 15 people were provided aid for medical reasons.

For more details about the projects, see the website of the Plan at www.simdp.ru.

Proceeding from the fact that respect and support for human rights, including those of vulnerable groups of population, are an integral part of responsible business, Sakhalin Energy has committed itself to promoting both the sustainable development and capacity building of the Sakhalin Indigenous Minorities, and the preservation of their languages. For many years, the company has supported linguistic studies, as well as the publishing of books devoted to SIM languages. These and other projects aimed at the preservation and promotion of languages of the indigenous minorities of the Sakhalin Oblast were included in the UN Global Compact International Yearbook 2016. In addition to the implementation of the ten principles of the UN Global Compact, the 2016 Yearbook was dedicated to the contribution of businesses to the achievement of Sustainable Development Goals. In particular, the experts noted that the company's projects aimed at the preservation and promotion of Sakhalin Indigenous Minorities' languages contribute to the achievement of the following goals: Goal 4 (Quality Education), Goal 10 (Reduced Inequalities), and Goal 17 (Partnerships for the Goals).