Energy conservation

Management system
Elements of the management system
Corporate documents
GOALS
The strategic goals and key activities to improve the energy efficiency in each business segment were determined
LUKOIL Group’s Technical Policy on Energy Efficiency was approved by the Management Committee OJSC LUKOIL on March 26, 2012
PRIORITIES/STANDARDS
The composition of process-related indicators, fuel consumption rates and other indicators were formalized
Seven corporate STO 1.20 standards
KPIs
Specific energy consumption per tonne of fluid produced (in the Exploration and Production business segment).
The Solomon Energy Intensity Index (EII)
Energy intensity per tonne of basic raw material for entities in the Petrochemicals business sector
Delivery of the approved energy conservation programThe KPI relates to the Exploration and Production in Russia, Oil Product Supply in Russia, Transportation in Russia and Power Generation business sectors, as well as to the following entities belonging to the Refining, Marketing and Distribution business segment: LLC LUKOIL-Trans, transshipment facilities, and LLC LUKOIL-AERO.
The KPI regulations were approved by the Management Committee of PJSC LUKOIL on September 16, 2019
CERTIFICATION OF THE MANAGEMENT SYSTEM
The Russian entities of LUKOIL Group integrated the ISO 50001:2011 and ISO 50001:2018 compliant energy management system.
As of December 31, 2020, 25 entities possessed compliance certificates covering 69 percent of the total headcount of LUKOIL Group.
STO LUKOIL 1.20.6-2019 “Energy Conservation. Energy Management System of LUKOIL Group Entities. General Provisions and Regulated Facilities” (introduced by order of PJSC LUKOIL No. 229 of December 17, 2019)
TARGETED PROGRAMS, PROJECTS, AND INITIATIVES
Energy Conservation Program of LUKOIL Group Entities for 2020–2022 in Russia The energy conservation program covers a 3-year period and is revised and approved by management of PJSC LUKOIL on an annual basis. The program for 2019–2021 was approved on May 31, 2018. During the previous reporting period, the program for 2018–2020 was in effect.
STO LUKOIL 1.20.2-2017 “Energy Conservation. Energy Conservation and Energy Efficiency Improvement Program for LUKOIL Group Entities. General Requirements to Development and Execution” (introduced by order of PJSC LUKOIL No. 184 of November 20, 2017)
ENERGY AUDITS
Energy audits performed at the entities of the Exploration and Production and Refining, Marketing and Distribution segments
STO LUKOIL 1.20.3-2019 “Energy Conservation. Energy Audits of LUKOIL Group Entities. Methodology” (introduced by order of PJSC LUKOIL No. 229 of December 17, 2019)
Further information
The examination of investment projects covers the evaluation of energy efficiency of business plans and related activities. The findings are an important part of the considerations that go into the general assessment of the project’s economic performance

Our goals

We view energy efficiency improvement as one of the key ways to adapt to global climate change. The Company’s policy is focused on the sustainable and efficient use of energy resources, which helps to reduce GHG emissions and improve overall production efficiency.

Long-term energy efficiency goals are an integral part of the LUKOIL Group’s Strategic Development Program and Climate Strategy. Within the framework of the energy management system, medium- and short-term planning is carried out by setting quantitative goals in relation to the amount of energy savings for one year and for three years. Activities aimed at achieving the goal are monitored during the year. The achievement of the goal is assessed annually at the end of the year and the planned indicators for three years are adjusted. The KPI “Implementation of the Energy Conservation Program” was introduced and is used to motivate the Group’s entities to achieve the goals set.

Our energy efficiency goals include:

  • Ensuring the efficiency of operating procedures and the functioning of process equipment
  • Securing the effective use of fuel and energy resources
  • Effective development and upgrade of energy assets
  • Reduction of indirect GHG emissions

Price-dependent reduction in consumption

With the adoption of the Decree of the Government of the Russian Federation No. 287 dated March 20, 2019, a mechanism for managing the electricity demand from retail consumers, i. e. price-dependent reduction in consumption (Demand Response), began to operate in a pilot mode in Russia. This mechanism is considered one of the promising areas to facilitate the “energy transition”.

By changing levels of electricity consumption during peak hours on the electricity market, the participants in price-dependent reduction in consumption contribute to lower prices for consumers in the electricity market as well as to increased efficiency of the entire energy system by levelling the load schedule and optimizing the composition of equipment at generating capacities.

Managed energy consumption can obviate the need for the construction of new generation facilities, facilitate decommissioning of inefficient and expensive facilities — which ultimately contributes to the reduction of GHG emissions within the unified energy system of the Russian Federation — and also create economic benefits for each participant in plans based on price-dependent reduction in consumption.

Based on the selection made in 2020, two of the LUKOIL Group entities, LUKOIL-West Siberia and LUKOIL-Perm, were among the largest participants in the demand response market. Their total reduction in load volume for the year amounted to 6.6 MW, and the economic effect for PJSC LUKOIL was RUB 16.5 million.

In terms of sustainable development goals, this project represents one of the models for the future, corresponding not only to SDG 13 “Climate action”, but also SDG 12 “Responsible Consumption and Production”.

Management system changes

The Russian entities of LUKOIL Group have an energy management system based on the requirements of ISO 50001:2011 and ISO 50001:2018 “Energy Management System” standards. Key management tools include energy audits and internal audits, energy efficiency programs and activities. Energy efficiency requirements are monitored in all business segments of the Group.

In accordance with the approved schedule for certification of LUKOIL Group entities under ISO 50001:2018 standard, 19 entities passed the certification of management systems for compliance with the requirements of the new version of the standard. A draft checklist has been developed that will allow for a comparative analysis of the efficiency of energy management systems throughout the Group’s entities.

Targeted program

The power saving program of Russian LUKOIL Group entities is aimed at increasing the efficiency of power consumption and reducing its losses as a result of planned annual activities in the main business segments. For 2018–2020, power savings as a result of the implementation of the power saving program in Russian entities amounted to 11.9 million GJ Hereinafter in the section, data on power consumption is within the reporting boundaries for GHG emissions, details in the “Climate Change” section. .

In 2020, program performance results were achieved primarily by the following activities.

  • For production entities: introduction of power-efficient equipment (replacement of asynchronous motors with magnet motors (PMSM) and upgrading of fluid lifting and formation pressure maintenance system pumps)
  • In processing entities: technical upgrading, optimization of production processes, schemes for the distribution of power flows and heat transfer among technological facilities
  • In power entities: replacement and modernization of technical equipment, shifting heat loads from inefficient boiler stations which can then be subsequently closed
  • In oil product supply and transportation entities: lighting systems upgrades

In the Exploration and Production segment, we are developing a partnership with Sulzer to localize production of spare parts for formation pressure maintenance system pumps in Kogalym. In addition, the possibility of joint research with international oil service companies for the production of asynchronous motors with magnet motors (PMSMs) of various types for pump drives is being considered.

In 2020, within the framework of the continuous improvement system, the Energoproryv strategic project was launched at refineries and petrochemical plants At four refineries in Russia, Stavrolen and Saratovorgsintez, refineries in Bulgaria and Romania. , with the goal of increasing energy efficiency. At the first stage, a portfolio of measures is planned which are aimed at reducing CO2 emissions, eliminating the consumption of liquid fuel, increasing the efficiency of heat transfer, and reducing the Energy Intensity Index EII Solomon. The expected target effect for 2020–2030 includes:

  • the Energy Intensity Index (EII) The EII Solomon Energy Intensity index is calculated pursuant to the HSB Solomon Associated LLC methodology with the use of its own factors. Solomon at refineries will be reduced by an average of 13 percent (compared to the 2018 level)
  • the CO2 emissions will be reduced by an average of 10 percent (~ 1.5 million tonnes of CO2E per year))

Between 2014 and 2020, as part of the continuous improvement system, the Energy Intensity Index was improved by 5 percentage points (the reduction relative to 2010 2010 data are given in the comparable boundaries with 2020 boundaries. was 12 percentage points).

Dynamics of Solomon EII as compared to 2014, %
Energy consumption for production purposes across LUKOIL Group entities within the GHG emissions reporting boundaries (Scope 1 + Scope 2), mln GJ
2018 2019 2020
Energy consumption for production purposes
(1.1 + 1.2 + 1.3 − 1.4)
502 502 465
1.1. Purchased energy consumption for production purposes, including: 79 74 69
• electricity 59 57 54
• thermal power 20 17 15
• cold 0 0 0
• steam 0 0 0
1.2 Supporting power generation from non-renewable energy sources and fuel consumption by stationary production units, including: 553 545 515
1.3. Supporting generation from renewable energy sources 0.00525 0.03726 0.04905
1.4. Power sales and supply, including: 130 117 119
• electricity 74 66 68
• thermal power 56 51 51
• cold 0 0 0
• steam 0 0 0
Notes.

1. Consumption for production purposes does not take into account utility electricity/heat consumption, or power consumption by mobile sources.
2. When converting data, the following factors under GOST R 51750-2001 were used: 1,000 kWh = 3.6 GJ, 1 Gcal = 4.19 GJ, 1 tonne of oil equivalent = 29.3 GJ).
3. Indicators of energy consumption for production purposes for 2018-2019 were specified:
a) ISAB fuel consumption data were recalculated using unified conventional units corresponding to the coal equivalent (7000 kcal/kg) used in the Russian Federation;
b) data on fuel consumption at LLC LUKOIL-Nizhnevolzhskneft were calculated taking into account the fuel used by the energy complex to generate electric and heat energy, as well as the fuel used in gas turbines of mechanical drive of high-pressure compressors.
4. In the LUKOIL Group Sustainability Report 2020 the indicator “Energy consumption for production purposes” was adjusted compared to the data presented in the Annual Report of PJSC LUKOIL 2020.

Power consumption by types of activity, mln GJ
2018 2019 2020
LUKOIL Group 502 502 465
Exploration and Production business segment 179 182 172
• Russian entities 176 178 169
• Foreign entities 2.9 4.4 3.1
Refining, Marketing and Distribution business segment 323 320 293
• Russian entities 244 238 225
— including Power Generation 72 69 64
• Foreign entities 79 82 68
Specific power consumption in producing entities, GJ/boe
2018 2019 2020
Specific power consumption in the Exploration and Production business segment 0.297 0.302 0.320
Note.

The data are given for producing entities of Exploration and Production in Russia business segment and project in Uzbekistan.

Specific power consumption in refining entities, GJ/tonne of manufactured products
2018 2019 2020
Total for the business segment, including: 3.9 3.7 4.0
• Russian entities 3.7 3.5 3.7
• Foreign entities 4.3 4.3 4.8
Note.

1. The data are given for “Refining in Russia” and “Refining abroad.”
2. The increase in specific power consumption in 2020 was due to a decrease in refinery utilization during the pandemic.

Parma Energy

In 2020, the 16 MW Chashkinskaya GTEPS, operating on APG from the Zhilinskoye, Belskoye and Rostovitskoye fields, as well as Chashkino 110/35/6 kV, the first digital substation across LUKOIL Group and in the Perm Territory, of 2x16 MVA installed transformer capacity were commissioned. Both stations provide electricity to the oil production facilities of LUKOIL-Perm and to the residents of the territories of the Bereznikovsko-Solikamsky power center.

These facilities are key components of the LUKOIL Group’s large-scale investment project in the energy sector covering the entire production cycle, including APG collection, transportation, preparation, compression, power generation, distribution, and consumption. Within the framework of this project, a second digital substation is being built, Shustovo of 8 MVA installed transformer capacity. The construction is planned to be completed in 2021.