LUKOIL Ranks Top 5 in First Eurasian Ecological Rating of Oil and Gas Companies
LUKOIL has entered the top five in the environmental openness rating among Eurasian oil & gas companies held following the results of 2019. The Russian WWF and the CREON analytical group assessed the potential environmental impact and information openness of the rating participants. The rating includes 20 Russian companies (with oil and gas condensate production volume exceeding 1.5 million tons), 14 companies from Kazakhstan, and 2 companies from Azerbaijan.
Oil & gas companies were evaluated on three main criteria: environmental management quality in the company, environmental impact and environmental friendliness level, as well as readiness to disclose information on the environmental impact during production activities.
LUKOIL was one of the first Russian companies to adopt the Industrial Safety, Labor and Environment Protection Policy. The Group’s organizations also have the 2018-2020 Environmental Safety Program that includes over 900 environmental measures. The company shows positive dynamics in terms of APG utilization, air emissions reduction, and efficient use of water resources. The company publishes its Sustainability Report annually and demonstrates maximum openness during its interaction with civil society, local communities, and indigenous peoples when discussing future and existing projects.
First Eurasian ecological rating of oil and gas companies
The investment Greon Group in partnership with World Wildlife Fund (WWF) Russia extended the participants’ geography of its environmental transparency rating with oil companies from Azerbaijan. For the first time analytics compared them to ones from Russia and Kazakhstan. The rating allows to assess investment attractiveness of oil companies, which becomes very important for industry’s post-corona crisis recovery.
Two corporations from Azerbaijan have been joined this year to the annual transparency rating of oil and gas companies run by Creon Group and WWF: State Oil Company of Azerbaijan Republic (SOCAR) and Azerbaijan International Operating Company (AIOC).
“The situation with coronavirus is alarming but should be temporary: oil and gas markets slump caused by global economic slowdown worsened by the coronavirus pandemic. However, I am sure the industry will overcome today’s challenges,” said Fares Kilzie, chairman of the board of Creon Group. “The rating importance will be even higher after the crisis as it defines transparency and ecological responsibility of oil companies. Here are key indicators for any investors in today’s business reality,” emphasized Kilzie.
Along with newcomers, two Azerbaijan oil companies, the Eurasian rating represents 20 major Russian oil and gas companies with production of crude oil and gas concentrate exceeding 1.5 mln ton per year and 14 Kazakhstani companies with production exceeding 0.5 mln ton per year.
“Geographical expansion of rating has not only extended the number of participants from new countries, but more importantly, allows us to explore and analyze the level of impact on environment in line with industry average indicators for region. It is the first time when we got a chance to compare oil companies of Russia, Kazakhstan and Azerbaijan by multiple ecological criteria,” Head of Environmental Policy Program at WWF Russia Alexey Knizhnikov added.
The new criteria have been used to compare greenhouse gas emissions per unit of energy for three countries. Russian and Kazakhstani companies’ emission rate is 73.29 and 76.12 kg per unit of energy respectively, whereas emissions data of Azerbaijani companies is higher. As commented Alexey Knizhnikov, “We are certain that the data of greenhouse gas emissions will decline gradually as it decreased in other companies of our rating list”.
According to Fares Kilzie, ESG (Environment-Social-Governance) responsibility factors are becoming key criteria for investment decisions in energy sector. “We see it clearly in western markets as oil companies have to conduct internal audit for board of directors, banks and shareholders, and forced to being transparent and responsible to the broader society. In order to pass double exam and to achieve sustainable development, businesses need to be ranked in a credible ecological rating and keep moving toward transparency”.
An annual independent Rating of Environmental Responsibility of oil and gas companies have been facilitated in the frame of ‘Rational Approach’ for Russia since 2014, Kazakhstan joined in 2017 and republic of Azerbaijan beginning in 2020. The rating helps to evaluate the ecological responsibility of oil companies with production exceeding 1.5mln ton per year. Joint project of Creon Group and WWF has been found in order to accomplish two goals: to reduce environment impact and encourage oil companies operating in Russia and CIS countries to integrate ESG (Environmental, Social, Governance) related factors, and moving forward sustainable development goals.
