Main principles of procurement policy

Gazprom and its subsidiary companies have established an efficient vertically integrated procurement system.

The procurement system is underpinned by the following principles:

• open information;
• transparency;
• equal rights;
• promotion of fair competition;
• wider and simpler bidders’ access to Gazprom’s procurement.

The objectives of the procurement system include spending financial resources in the most efficient way, timely and full supply of goods, work and services with the price, quality and reliability required for safe operation of hazardous industrial facilities.

The main regulatory documents governing the procurement activities of Gazprom and its subsidiary companies are:

• Federal Law on Procurement of Goods, Works and Services by Certain Types of Legal Entities No. 223-FZ dated July 18, 2011;
• Regulation on procurement of goods, work and services of Gazprom and Gazprom Group companies, approved by the Board of Directors’ Decision No. 3168 dated October 19, 2018.

Procurement rules are posted in the unified information system in the area of public procurement of goods, work and services for state and municipal needs (www.zakupki.gov.ru) as well as on the Gazprom website.

Information about procurements, including procurement plans, notices, records, etc. is published in the unified information system as well as on the Gazprom website and is publicly available.

As a rule, competitive procurement is conducted in electronic form, mostly through the Electronic Trading Platform of Gazprombank (ETP-GPB) (Procurement by Gazprom Group Companies section).

With a view to shape up a pool of qualified suppliers (contractors, service providers) for the core and most extensive lines of business requiring experience, financial resources, production capabilities and human potential, open pre-qualification is held.

In order to improve competition, potential suppliers, contractors and service providers are sourced and invited to participate in Gazprom’s procurement.

To ensure efficient procurement, all available tools (estimate standards, actual contract prices, consolidated specific values, market situation review) are used to set the best initial price before procurement is announced, and any methods permitted by the law to reduce the price during the procurement, including by extending the bid filing period to involve more bidders, and bargaining on price bids.

To control procurement from a sole supplier (contractor, service provider) Gazprom has a Budget Committee in place, reviewing price bids to assess whether pricing is reasonable.

As part of the national SME development policy and pursuant to the Decisions of the Russian Government, Gazprom implements a set of initiatives to widen access for SMEs to the Company’s procurement.

Since procurement is ultimately necessary for continuous operation of Gazprom Group, the main criterion and high efficiency indicator of the current procurement system is Gazprom’s performance in terms of gas supply reliability, capacity commissioning in Russia and abroad as well as success of investment projects and programs, i.e. contribution to national energy security.