Water resources

Water is used at all production cycle stages — from exploration and production of hydrocarbons to the delivery of finished products to the consumer. In oil and gas production operations water is mainly used to maintain reservoir pressure and desalinate produced oil. Refineries and petrochemical plants use water in cooling and condensation units for distillation products, in heat-power stations for steam generation, in preparation of make-up water for boilers, cooling towers, and steam generators, as raw material and reagent for chemical production, and in other processes. Power generation companies need water to produce steam and cool the equipment of thermal power plants. At the same time, water is essential for human life and vital for healthy ecosystems.

Thus, we are fully committed to the rational use of natural resources, reducing the use of fresh water, and eliminating the discharge of contaminated wastewater on land and in water.

Water withdrawal by LUKOIL Group entities, million cubic meters
2018 2019 2020
LUKOIL Group 450 694 611
including:
• Russian entities 429 441 395
— including by electric power generation entities 298 304 253
• Foreign entities 21 253 216
Notes.

1. Data exclude water produced as a by-product with hydrocarbons and subsequently used for maintaining formation pressure.

2. Detailed information, including changes in reporting boundaries year-on-year, is provided in Appendix 7.


Water usage for our own needs by types of activity across LUKOIL Group, million cubic meters

Note.

Withdrawn water is used for own needs of LUKOIL Group’s entities, and part of water volume is transferred to third-parties without being used by the Group’s entities.

Our actions

85 percent of LUKOIL Group’s total water usageTotal water usage includes consumption of water for own needs and storage/use of water in circulating and reused water supply systems. comes from circulating and recycling systems, and in Russia this figure is 90 percent. Over the last five years, the indicator for the Russian entities increased by one percentage point.

Our principal approach to solving the issue of sustainable water use is the application of water recycling and reuse systems, increasing wastewater treatment, and reducing water losses during production.

Power generating facilities, refineries, and petrochemical plants in Russia and abroad are equipped with circulating and recycled water supply systems. At production entities, reservoir water is reused for the needs of reservoir pressure maintenance. New production facilities are required to be equipped with circulating and recycled water supply systems and treatment facilities.

We analyze water consumption issues, including in arid regions, while updating the register of environmental factors and incorporate the related risks into the general risk management system.

Activities on sustainable water management under the Environmental Safety Program have been integrated into the Clean Water subprogram. To improve the system of water consumption, measures are undertaken every year to build, renovate and re-equip water treatment and wastewater treatment systems.

Arid regions

Most of our Russian entities operate in regions with ample freshwater resources, except for densely populated areas with a high concentration of economic activity in the Southern part of the country. These territories have average values of the Baseline Water Stress IndicatorAqueduct data from the World Resources Institute were used to identify arid regions. Source: World Resources Institute official website. Country territories are compared on the Baseline Water Stress indicator, which measures the ratio of total water withdrawals to available renewable surface and groundwater supplies. Water withdrawals include household, industrial, irrigation, and non-recoverable use in livestock production. Available renewable water resources include surface and groundwater supplies and consider the impact of upstream water consumers and large dams on the downstream water availability. Higher indicator values suggest increased competition among users.. However, we consider five regions to be arid in the national context, as confirmed by Russian sourcesNational Report On the Condition and Use of Water Resources in the Russian Federation. The share of water withdrawn in these regions is about 60 percent of the total water withdrawal by the Group’s Russian entities, with more than half the volume of water withdrawn being compensated with volume of clean standard-quality wastewater discharged into water bodies.

  • Arid regions in Russia are the Krasnodar and Stavropol Territories, Astrakhan, Volgograd, and Rostov Regions.

The Baseline Water Stress Indicator in five countries outside of Russia has high and very high levels, and the availability of freshwater supply in those countries may worsen due to climate change.

  • Arid regions abroad are located in Italy, Romania (Prahov), Uzbekistan, Iraq, and Egypt.

Regular operations of LUKOIL Group entities have no significant impact on the water content in natural sources or on water quality, nor do they impact the availability of water resources to other consumers in low-water regions. We do not restrict access of the local population to water sources. In addition, our charitable work includes projects to improve water supplies and municipal infrastructure and to provide drinking water to local communities in Iraq and Uzbekistan.

Freshwater

Freshwater accounts for 58 percent of the total water withdrawal by LUKOIL entities.

In Russia, the amount of freshwater withdrawal was 84 percent (2020). Almost all of the water is supplied by LUKOIL’s own water intake from surface and underground water reservoirs. Water is mainly withdrawn from the Ob, Pechora, Volga, Don, and Kuban river basins under respective permits and within established quotas. The main focus of environmental activities is the reduction of production water losses.

The share of freshwater withdrawals by foreign entities was 10 percent (in 2020) of the total water withdrawal, and comes mainly from surface water sources.

Sea water

Some of the Group’s oil and gas production, transportation, and refining entities use seawater in their production processes.

LUKOIL-Nizhnevolzhskneft uses water from the Caspian Sea to cool equipment and returns it back to the sea to almost natural temperature without being used in other production processes and free from contamination. The Varandey terminal withdraws water from the Barents Sea to cool equipment.

The Italian refinery brings desalinated seawater from the Mediterranean Sea to cool its refinery process units. To reduce water consumption at the plant, part of the steam condensate circuit and the recovery system has been optimized, and measures have been taken to reuse sea water after treatment.

Total water withdrawal by LUKOIL Group entities, by water withdrawal sources, million cubic meters
2018 2019 2020
LUKOIL Group 450 694 611
Russian entities 429 441 395
Foreign entities 21 253 216
Including from surface sources: 287 341 286
• Russian entities 268 270 228
— Including sea water 11 11 17
• Foreign entities 19 71 58
— Including sea water 0 51 41
Notes.

1. Data exclude water produced as a by-product with hydrocarbons and subsequently used for maintaining formation pressure.

2. Detailed information on water withdrawal from different sources, including changes in reporting boundaries year-on-year, is provided in Appendix 7 .


Wastewater removal and wastewater quality

In 2020, the share of clean and treated water as per the current standards for the total amount of discharges into surface water bodies remained high at 97.5 percent (97 percent in 2019).

The Company constantly monitors wastewater quality, paying particular attention to its chemical and physical properties. Improving the quality of wastewater is one of the objectives of the Environmental Safety Program. Compliance with established standards is monitored by LUKOIL laboratories as part of in-production environmental controls, as well as by independent certified organizations.

Wastewater generated from the production process is transferred to treatment facilities that use mechanical, biological, and physical-chemical treatment methods. Measures are taken to identify and prevent any potential negative impact associated with wastewater disposal. In 2020, the Company finalized some projects or continued with other investment projects to improve wastewater quality.

Commissioning of treatment facilities at Yareganeft oil mines (LUKOIL-Komi) resulted in a significant reduction of wastewater and pollutant discharges to surface water bodies of the Ukhta municipal district of the Komi Republic.

  • The project to renovate treatment facilities at the Ukhta refinery is underway. Commissioning of the second stage of the production sire allowed to decrease the volume of polluted wastewater discharges. (More details on these projects can be found in the Komi Republic case study).
  • Starting in 2019, Saratovorgsintez plant began to renovate its biological treatment facilities, including the replacement of four old aeration tanks. In addition, bioreactors will be installed to increase the degree of purification of the plant wastewater from suspended solids. In 2019, the old equipment was dismantled. In 2020, the installation of bioreactors began.
  • Gas stations continue to undergo annual storm-water system improvements.
Water discharges by LUKOIL Group entities, million cubic meters
2018 2019 2020
LUKOIL Group 353 568 485
Russian entities 338 344 298
Foreign entities 15 224 188
Including: by destination at LUKOIL Group
water discharge into surface water bodies 218 217 162
water discharge into the sea 11 221 188
water discharge into underground formations 104 107 110
water transferred after use to a third party 18 23 26
other 0.5 0.1 0
Notes.

1. Data excludes water produced as a by-product with hydrocarbons and subsequently used for maintaining formation pressure.

2. Detailed information on water discharges by destination, including changes in reporting boundaries year-on-year, is provided in Appendix 7.

3. The total indicators may differ from the sum of components due to rounding.


Water discharges into surface water bodies, by wastewater quality across LUKOIL Group, million cubic meters

Note.

Detailed information, including changes in reporting boundaries year-on-year, is provided in Appendix 7.

Ensuring environmental safety during hydraulic fracture treatment (HFT)

The Company has been performing hydraulic fracture treatment for over ten years, with more than a thousand fracture jobs per year. This technology helps to get a more intensive oil influx at wells, increasing production volumes. However, hydraulic fracture treatment is one of the stimulation techniques that require close attention to technology and safety. Fluids used during fracturing include toxic substances (such as hydrochloric acid). In the event of a spill or accident during hydraulic fracture treatment, groundwater is negatively impacted (although only within a small area, unlike incidents involving well integrity failure). For safety reasons, we use special equipment and control methods and hire personnel with appropriate qualifications to minimize the possibility of incidents, reducing them to the level of traditional extraction methods.

When preparing wells for hydraulic fracturing, the workover crew, Geographic Information Systems, and oilfield service contractors work together. All operations are carried out in full by contractors whose activities are monitored at each stage by the Oil and Gas Production Equipment supervisory service, including in the form of field audits. Control is exercised as per the approved project which has passed governmental expert review and received all necessary permits.

Before work commences, contractors provide up-to-date certificates of compliance for the process fluids used with legal requirements and voluntary certification systems (if available), and safety data sheets as an integral part of the technical documentation.

Regardless of the fracturing method and location of the well, technological fluids containing reagents and all the operational waste are transported by the service company to its production base for further disposal upon completion of the work. Residual water unused during hydraulic fracturing is utilized for other technological operations.

Ground and surface water quality is monitored on a contractual basis by specialized contractors who oversee compliance of the work performed with industry standards and requirements. Each licensed area is assigned a local environmental monitoring project, as agreed with the state authorities. The projects define sampling points and sampling frequency. Water is withdrawn from designated water intake points, and instrumental measurements are taken. The results of environmental monitoring are submitted to the government authorities on an annual basis.