Gazprom as One of the Largest Oil and Gas Companies in the World - Coursework Example

Organisation Management System Contents Introduction 3 Discussion 4 Part A 4 Part B 7 Part C 10 Part D 13 Conclusion 15 References 16 Introduction Gazprom is one of the largest oils and gas companies in the world. The company produces oil, gas condensate and other fossil fuels related to gas. Gazprom is a major contributor to the Russian economy accounting for more than 10% of the GDP of Russia. The company operates in the Siberian region which accounts for more than 90% of the total gas production in Russia. The company is facing major challenges due to the increasing environmental concerns related to the production and other processes involved in the oil and gas companies. Gazprom is trying to attain sustainability in the changing global environment through the implementation of efficient strategies aimed at minimizing the different environmental impacts of the operations, especially in the Siberian region. The major production operations of the company are concentrated in the Siberian and the Yamal peninsular region where the environmental hazards are gaining much focus from the environmentalists and other experts in the field. The oil and gas drilling and production activities are known to drive major climatic changes in the Yamal and Siberian regions. Therefore, the company has been forced to implement an effective environment management system (EMS) to comply with the different environmental regulatory policies and benchmarks set by the governments and the international authorities. Since the Russian government owns major stakes in the company, it concentrates on boosting the sustainability of the company by mitigating the environmental impacts of the operations of the oil and gas giant. Discussion Part A Gazprom uses a variety of techniques in order to measure, control and monitor the different environmental impacts of the activities of the organization. The company has recognized the increasing importance of investing sufficient capital in the clean energy projects that are incorporated across the globe. The company has started to become engaged in the different CDM projects being launched with an aim to improve the environmental conditions in the least developed regions of the world. The company has started to work on various programmatic projects in the perspective of measuring and controlling the various environmental impacts of its operations. One of the measures taken to control and monitor the environmental impacts has been the active partnerships created by the company with the local NGOs in the different regions of the world. This helps the company to meet the different political and regulatory risks associated with each of the regions. The company has introduced the Comprehensive Environment program which has been implemented with the objective of meeting the key provisions specified in the Russian ecological doctrine and the Energy Strategy of Russia for 2040. The environmental policies of the company are based on the present environmental scenario in Russia and the different international corporate activities done in managing the environmental impacts of the companies in the oil and gas sector (HMSO, 1986, p.22).This environmental program ensures the use of proper approaches in the domains of production, storage, transmission and storage of the different energy sources like oil, gas condensate and natural gas. The company tries to measure and control the environmental impacts of the activities of the organization through setting up different measurable targets for the developmental processes of the company. The company focuses on reducing the pollutant emissions caused by their production and other operational processes. Also, Gazprom aims to reduce the wastage and untreated water discharges into the water bodies, reduce the production waste disposal, and reduce the carbon dioxide emissions and the nitrogen emissions from the gas turbines used in the company (DWI, 1989, p.14). Additionally, the company focuses on the liquidation of the accumulated damages to the environment, deployment of the different environmental management systems (EMS) as certified by the international standard 14001 and the reduction of the payments involved in exceeding the benchmark allowed for the total payment related to the negative environmental impacts of the company. The environmental impact systems are designed to regulate the environment impacts, waste management, protection of the ecosystem, environmental control and monitoring, local and international cooperation and alliances. The monitoring scope of the environmental impact systems includes implementation and efficiency factors (Harsham, 1995, p.55). Then implementation factor includes the streamlining of the different activities in the system to ensure the deployment of the outputs. The efficiency factor includes the monitoring process done for assessment of the different values included in the systems. The main coordination and monitoring processes are followed by the storage transmission and utilization departments of the company (Clifford, Jones, Pittman and Richardson, 1995c).The environment management systems (EMS) of Gazprom are formulated with specific objectives. These objectives include the minimization of the harmful effects on the environment measured per unit of the production, minimization of the different environmental hazards and risks, innovation in the production systems and resources focused towards environmental protection, involving the human resource of the company into the process of minimizing the environmental impacts and risks, improve the environmental performance of the production resources and processes, contributing positively to the development of the environmental concerns in the Russian economy, establishing proper financial assets and budget processes deployed for the environmental practices and promoting the company’s brand image, improving the sustainability and the market competitiveness of the company with respect to the changing global environmental conditions. The company measures and monitors the environmental impacts through the use of key environmental indicating factors (Lord, 1987, pp.71-72). The environmental management system of Gazprom is certified under the internationally accepted standard of ISO 14001: 2004 (Salikhov, Kondratyev, Pavlunin and Stavkin, 2006, pp.90-92). The company plans to reduce its environmental impacts further by the use of advance processes, resources and technologies in their operational and production processes. Gazprom has taken several measure aimed to protect the atmosphere. The company has started implementing effective strategies to reduce the environmental impacts from 2012. In keeping with the environment protection legislation, Gazprom has made several provisions to maintain the standards of the maximum permissible emissions (MPE) for pollutants, to establish different projects for the development of sanitary protection zones (SPZ) and to obtain the proper permissions related to the emission levels and standards. Gazprom has ensured the establishment of annual monitoring systems and laboratory control related to the pollution and emission created by the production processes of all its subsidiary companies. Also, Gazprom maintains the compliance of the operational processes in its various business units to the existing and evolving regulatory policies related to the maintenance of environmental safety. The company has maintained effective provisions for the proper control and monitoring of the motor vehicle exhaust emissions and emissions from old fixed assets (Clifford, Jones, Pittman and Richardson, 1995b). The construction of different facilities like the gas capture facilities, recycling facilities, installation of proper equipment’s, refinery tanks in the refineries of the company have made the company more sustainable with respect to the environmental impacts of the oil and gas production processes. The audits of the environmental management systems are key methods to evaluate and measure the environmental impacts of the company (Clifford, Jones, Pittman and Richardson, 1995a, pp.56-60). Part B Gazprom Group has emissions of 3124.20 thousand tons from stationery sources including oil and gas complex emissions of 2638.10 thousand tons. It has 486.10 thousand tons of emissions from Gazprom energoholding. 82% of the oil and gas emissions are shared by OAO Gazprom subsidiaries, 14% by Gazprom Net Group companies and the rest by oil and gas companies (OAO Tomskgazprom, ZAO Purgaz, OAO Severnefte-gazprom and others). The Gazprom Group has a vertical highly developed structure of environment management system (EMS) which facilitates integration of various environment management units such as Management of OAO Gazprom and environmental units of its other subsidiaries and affiliated companies. OAO Gazprom and other incorporated companies have their own environmental policies which define strategic targets in terms of environmental protection, considering that all environmental activities and specifications impact minimization. The companies try to implement these environmental policies to meet all sorts of environmental requirements and to monitor and prevent pollution while continuously improving the environmental performance (GAZPROM 1, 2012, pp.81-88). The environment management systems which are certified under ISO 14001 are deployed in the Gazprom Group energy companies like OAO OGK-2, OAO Mosenergo, OAO TCG-1, Gazprom Neft Group companies such as OOO Gazpromneft-ONPZ, OOO Gazpromneft-Smazochnye Materialy, and OOO Gazpromneft-MNPZ and in other dependent companies. The environment management system of OAO Gazprom was successfully certified under the international standard ISO 14001:2004 in the year 2011. Management committee of OAO Gazprom is the supreme element of the OAO Gazprom EMS. This committee coordinates the environmental protection activities of OAO Gazprom subsidiaries. Its scope of work includes assessment of environment performance in detail, management of energy saving, energy efficiency and environment management and to coordinate the interaction with state authorities and public organization. Companies of Gazprom Group, in compliance with the international and Russian legislation, strictly assesses the environmental impact of planned economic activities at all stages of design. Design here implies any concept starting from investment to the construction projects (GAZPROM, 2011, pp.17-18). There are a number of stages in the environmental assessment of projects like Environmental Impact Assessment (EIA) and environmental expertise. The study scope of the EIA made by the Gazprom Group companies is based on the engineering and environmental studies in the concerned area. The scope of the study examines all the environmental components and the level of anthropogenic impact. The results of the study provide an estimate of the projected impacts of planned economic activity and the changes that are possible in the environment and what could be the related implications for society. The results that are obtained provide the basis for developing design solutions which are solely based on the selection of the most environmentally and economically feasible option among the alternatives that are available. It is mandatory for OAO Gazprom projects to be subjected to an internal corporate expertise prior to the submission of the project design documentation for the state expertise. Corporate expertise procedure is regulated by the standard – STO Gazprom 2-2.1-031-2005 “Regulations on the expertise of project design documentation in OAO Gazprom”. Gazprom has continued to focus on the development of a responsible environmental management strategy in its process of expansion. The company employs an effective environmental management system based on different technological as well as administrative functionalities (Environmental Agency, 2012, p.2). The Climate Change Act incorporated in 2008 has changed the management direction of many companies including Gazprom. The changes have been majorly associated with the proper implementation of effective environmental impact management systems due to the increasing concern over the global environmental concerns. The management of Gazprom is dedicated towards effective natural resource management. The company evaluates and assesses the potential threats to the environment while planning new projects and activities. The company is much focused towards considering the negative impacts of their drilling and extraction activities on the environment. The company tries to implement the best practices in the domains of technology, engineering and management within its business. Gazprom has been implementing critical and effective processes to establish sustainability and competitive advantage in the global oils and gas sector. The strategic objective of negating the environmental effects is to improve the sustainability of the company in the changing global scenario in which the activities of the oils and gas companies are severely scrutinized. The management of the company aims to develop and implement different environmental strategies like the modernization of the resources to minimize the harmful effects on the environment, implement different environmental checks on health issues like waste management, improving soil and ground conditions, air cleanliness and consumer waste recycling and management (Ferguson, 1993, pp.599-608). Gazprom has developed a number of technical and organizational techniques to offset the adverse effects on environment caused by the business practices. Gazprom has established different programs like environmental safety programs based on the regulatory and state policies. The company uses several documentations related to the regulatory factors and the procedures for maintaining environmental safety. Gazprom works in alliance with the government of Russia, the different public entities and the experts working in the domain of environmental safety and protection. The company has been an active participant in the process of establishing proper environmental legislation with respect to the oil and gas energy sector (Gazprom International, 2013). The company has been actively involved in a wide range of existing regulatory and legal policies and instruments in the Siberian region. The company has been a prominent participant in the international discussions related to the environmental concerns. It has been a major organizer of the Third International Environmental Conference in which experts from the European Union and Russia have discussed on the industrial waste management processes which have been a topic of increasing importance for the industrial companies belonging to different sectors. The experts in the management of the company have participated in different environmental reviews and proposed various legislative drafts related to environmental safety and improvement (Smith, 1991, pp.197-204). Gazprom has been renowned for the introduction of innovative techniques in organizational development by which the company has been enabled to maintain proper staffing levels and reduce the labour costs in the production processes. Part C Decision making is very important for an organization’s success. Managers of any organization must demonstrate high efficiency in dealing with high levels of uncertainty, multi-functional teams and ever changing corporate environment. Managers should not only make short term tactical decisions but also at the same time concentrate on long-term strategic decision making. The strategic decision making mind set at Gazprom is designed in such a way so as to facilitate improving the judgement of managers and also to guide them think critically and rigorously. Gazprom uses a blend of cutting-edge research, tested approaches, and behavioural economics to provide a deep knowledge that will make an immediate impact. The program comprises the best practices and behaviours that direct the managers to take good decisions. The major areas that it focuses upon are making decisions under uncertainty and also to build adaptability while making decisions, leadership abilities to reduce the impact of cognitive biases, role of emotions and ethics in decision making and to develop tools to improve the quality of individual as well as organizational decision making. The major challenge for the Gazprom leadership is to achieve an aggregated descending trend of emissions for the Gazprom Group as a whole. But on the subsidiary scale, the aggregated trend of emissions was not so smooth for the Gazprom Group. Due to output increase, there is an increase of 150 thousand tons in the total emissions. The Gazprom Group in the year 2011 managed to reduce 6.6% of the total amount with gas treatment systems. It looked really promising when averagely reduced emissions of particulate matters decreased by 26.4% and sulphur dioxide by 30.4%. An average of 61% of all emissions is captured by the energy sector. For example, the gas treatment systems like OKG-2 reduce total emissions by 47%, capturing 89% of particulate matters and 37% of sulphur dioxide. The major pollutants of the Gazprom Group are hydrocarbons, sulphur dioxide, carbon oxide and nitrogen oxides which comprise 90% of pollutant emissions. When compared with 2010, pollutant emissions of the OAO Gazprom from its stationary sources reduced by 6.4% in 2011 and also made 2162 thousand tons. Gas industry typical pollutants like methane (65.7 %), carbon oxide (19.9 %), nitrogen oxides (9.8 %) and sulphur dioxide (3.2 %) represent approximately 98.6% of the OAO Gazprom emissions. 19% of the environmental protection funding is allocated to air protection by the OAO Gazprom in the year 2011. The gas production sector reduced pollutant emission by 28% while achieving a 10% increase in output, in the year 2011. This was achieved by avoiding emissions from gas flaring by utilizing associated petroleum gas (APG) at OOO Gazprom dobycha Urengoy, which implies the operation of gas compressor stations. Inflow and outflow of gas at underground gas storages increased by 5.3 %, while the emissions decreased by 8.5 %. The corporate system of Gazprom greenhouse gas emissions inventory meets all the national and international standards and requirements. While doing such things, the Gazprom ensures that they meet all corporate social responsibility (CSR), which is also called corporate conscience, corporate citizenship or social performance. CSR policy functions as a self -regulating mechanism by which a business monitors and ensures that it is in compliance with the spirit of the law, ethical standards and international norms. CSR is a process by which the company embrace responsibility for the company’s actions and have a positive impact through its activities on the environment. As a part of its CSR activities, the Gazprom actively participates in activities of international organizations, develops documents which guides compliance with international accords, conducts greenhouse gas emission studies, etc. The most significant environmental aspect associated with great environmental risks is production and consumption of waste management. Gazprom Group is taking significant initiatives in this regard. They are striving to implement the most modern practices and technologies of waste utilization and minimization. In 2011, Gazprom Group companies generated in 4,974 thousand tons of production and consumption waste, which was 626 thousand tons i.e. 11% lower than that of 2010. The main contribution in this regard is provided by energy companies of Gazprom energoholding. In the oil and gas complex, the share of total annual waste generation was approximately 24%. An increase in waste generation is observed in the year 2011 against the waste performance of 2010 due to an increase of the drilling waste in production subsidiaries of OAO Gazprom and Gazprom Neft Group (GAZPROM 2, 2011, pp.58-60). Part D Though Gazprom implements several strategies with respect to mitigating the environmental impacts of the company, yet the production processes and different upcoming projects have been much criticized by the different environmentalists. Therefore, I would recommend the company to focus on reducing the emissions form its activities. The previous image of the company as a corrupt and profit centric company without any consideration for the environmental impacts have proved to be much disadvantageous for the company (DOE, 1994, p.16). Therefore, to establish its image as an environmentally responsible company, Gazprom will have to focus on the key sustainability issues like environmental sustainability and staff engagement (McEntee, 1991, pp.64-84). Gazprom and its subsidiaries like Tyumentransgaz operating in western Siberia are accused to be operating as separate state within the state. Therefore, the management should focus more on the environment and communities in its operational regions and focus on improving the climatic conditions and living conditions in these areas. The climatic conditions in Siberia are very adverse for people to work in that place (Andreev and Arabsky, 2008, pp.54-58). Therefore I would recommend the management of Gazprom should focus on providing extensive benefits to their employees and focus on building the infrastructure in the area. These activities would ensure that the staffs are properly maintained in the company which will help the company to adhere to the environmental policies in its different production processes. To earn the interest and the trust of the various international investors, the company should implement effective environmental management system. I would also recommend that the company improves the corporate governance practices so that the value of the company improves over time. Otherwise, the company may be undervalued in future due to its inability to implement sustainable practices. Since, the environmental issues are becoming critical concern for the multinationals, international authorities and different governments, therefore, to maintain the competitiveness of the business Gazprom should implement more robust environmental impact management processes. I think focusing on the key environmental issues like waste management, recycling, reducing air and water pollutants and emission of carbon dioxide and sulphur particulates should be then main areas of focus for the company (Warren Spring Laboratory, 1966, pp.114). It is seen that Gazprom meets the stringent environmental standards in the European Union but is more lenient in adhering to the environmental practices in Russia. In my opinion, the company should evaluate and assess the potential environmental threats of the upcoming projects to ensure sustainability and a responsible behaviour towards the environment. The Kolslkaya oil rig operated by Gazprom in the Siberian region was known to violate the environmental standards which had caused major negative impacts on the marine life in the Siberian and Arctic region (Stevenson and Bush, 1993, p.151). Therefore, the company should focus on preserving the wildlife resources and cleaning the drilling regions and oceans to negate the harmful environmental effects of the activities of the drilling and pipeline building processes of the company. According to me, the company should also reconsider its upcoming project of establishing pipelines in the western route which is likely to cause major negative environmental effects. I would also recommend the company to use effective monitoring techniques and measuring processes like the audit of the environmental management systems to assess the impact of the company on the environment. The use of innovative technologies in the equipment and processes of the internal environment management system would also be useful for the Gazprom to improve its image as an environmentally responsible company. Also, I would recommend the internal management of the company to focus on reducing the violation of the regulatory policies related to the environmental concerns and maintain their emission levels within the Maximum Permissible Emission (MPE) standards. Gazprom should also ensure that the environmental standards are followed in the internal business processes as well as in the alliances with the subcontractors of the business. This would ensure that the negative impacts of the business on the environment are controlled to a high extent. Conclusion Gazprom has partnered with leading international bodies, intergovernmental authorities, governments of different countries and various foreign companies and research centres to establish effective environmental protection and energy conservation and efficiency projects. The company also implements the best practices related to the production and drilling for oil and gas. The concern of the company to establish itself as an environmentally responsible organization has been boosted by its active participation in different international conferences and legislations related to the global environmental concern. Gazprom has tried to revamp its image by implementing effective environmental standards in its different business units across the various subsidies in Russia and the European Union. 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