While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards: PS1: Social and Environmental Assessment and Management Systems PS2: Labor and Working Conditions PS3: Pollution Prevention and Abatement PS4: Community Health, Safety and Security The terminals and retail stations are constructed in long-established industrial sites or have been developed on land acquired from local government or business owners. No involuntary physical or economical resettlement was caused by the land acquisition process. Land for retail stations is purchased on a willing buyer / willing seller basis. There is no environmental protected area or critical habitat at or near GNG’s retail stations or terminals. Indigenous Peoples were not identified in the project area. Cultural Heritage was not identified in the project area.

Among 307 gas retail stations in GNG, 281 are its OKKO brand stations. The remaining stations will also be refurbished to OKKO brand gradually. All the new retail stations in this project are OKKO brand station. The OKKO brand stations are refurbished or built according to European Union (EU) standards, in which the underground fuel tanks have double steel layers and leak detection devices. Fuel tanks in most terminals have vapor recovery installation. The land acquisition for the new gas stations will be strictly on a willing buyer / willing seller basis. GNG has established EHS procedures for operations. Additional mitigation measures for the potential environmental and social impacts have been identified and are incorporated into an attached Environmental and Social Action Plan (ESAP). The potential adverse E&S impacts of this project are therefore few in number and limited to project sites and may be readily mitigated. This is therefore an E&S Category B project.

The key environmental and social issues for this project include the following: - Prevention of groundwater/soil contamination - Control of emission of volatile organic compounds (VOCs) - Operational hazards and emergency response - Occupational health and safety - Road transportation - Community engagement and development GNG has presented plans to address these impacts to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations, the IFC Environment and Social Performance Standards and the relevant World Bank Group (WBG) environmental, health and safety guideline requirements. The information about how these potential impacts will be addressed by GNG is summarized in the paragraphs that follow. Further information is provided in the attached ESAP, which is agreed upon by IFC and GNG and which addresses the compliance gaps with IFC’s requirements. 1. Social and Environmental Assessment and Management Systems Environmental and Social Assessment: GNG screens the environmental and social risks for purchased or new fuel retail stations, and the assessment is registered according to local regulations. Environmental, health, and safety (EHS) management and organization: GNG has corporate environment and occupational health/safety (OHS) departments, respectively, which report to the corporate general manager. Each operation region has one EHS coordinator. Besides, there is an EHS manager at each fuel storage terminal. GNG has contracted external experts to audit the EHS management system according to ISO 14000 requirement. Training, monitoring, and reporting: Upon IFC requirements in the previous projects, GNG established various training programs for all its employees in the field of environmental and social performances related to its operations. GNG conducts routine environmental, health and safety monitoring for its operations. GNG keeps its environmental and social performance records through its internal reporting structure. GNG can release the environmental records to the nearby communities upon requests. GNG also discloses its general environmental and social performance in its annual sustainability report. 2. Labor and Working Conditions Human Resources Policy and Management: GNG has a Human Resources (HR) policy for its corporate and terminal employees, which specifies the terms of employment and working conditions. These include procedures for hiring and recruiting, probation, training, performance review, promotion, insurance, salary and compensation, resignation, lay-off and dismissal, leave and vacation, and retirement. The new employees are provided with the full set of HR policies and procedures before signing the employee contracts. The human resources function is a corporate function for all its terminals and gas stations. HR also works as a grievance channel for employee’s concerns. Worker’s Organization: There is one independent union at GNG, and the management allows collective bargaining, initiated either from the union or other employees. The labor union is the main grievance channel for employees’ concerns. Non-Discrimination and Equal Opportunity: GNG has policies to hire employees locally. GNG also hires disabled people, which account for 4% of GNG’s labor forces according to the Ukrainian laws. Hiring and promotion are merit-based only. No evidences for discrimination and unequal opportunity are identified during the appraisal. Retrenchment: Currently, GNG has approximately 4,700 employees, in which 800 are administration staff. GNG is now realigning its labor forces to support field operations in terminals and retail stations. Retrenchment of some operators and approximately 80 administration staff is expected. The retrenchment process is open and consultation was conducted for the layoffs in the past two years. The labor union plays an active role in discussion of the retrenchment process: have regular meetings with management to discuss the retrenchment process, and explains the legal labor rights to the union members. The union also helps members to relocate to other job positions in GNG where available. . All retrenchment has strictly followed Ukrainian labor laws and among other things, compensation equivalent to a minimum of 3-months’ salaries are paid to the retrenched employees. Protecting the Work Force: GNG complies with national law and does not hire workers below the age of 18. Additional compensation will be paid for nightshift and overtime. The employee income levels are higher than other similar companies in Ukraine. Occupational health and safety (OHS): Corporate OHS department and OHS coordinators in each region lead the OHS management. There is one OHS manager at each terminal, and one OHS coordinator at each retail station. GNG has continuously developed and enforces safety procedures, and all employees are required to pass the safety training before starting work. The employees are also required to take annual safety refresher courses. GNG monitors the recordable accidents and statistical trend for OHS performance, which meet the benchmark of comparable good international industry practice. The workplace gasoline levels and monitoring frequency meet both local regulatory requirements and good international industry practice. There are physical examinations for all new employees, and there is an annual physical check for all field employees. 3. Pollution Prevention and Abatement Waste and Storm Water: There is no manufacturing process at GNG and the potential expansion. The contaminated oily stormwater at fuel storage terminals is pre-treated onsite before discharged to municipal sewers. The effluents meet both local regulatory requirements and WBG/IFC guideline limits. The car washing wastewater is treated through filtration onsite and recycled for car washing. The used filters are disposed by the government approved companies. Each car washing facility generates approximately 10 – 20 m3 wastewater per month, which is transferred to licensed industrial waste management facilities for further treatment and disposal. Emissions to Air: GNG has started to install gasoline vapor recovery system for loading process at fuel storage terminals. Seven major terminals are now equipped with vapor recovery system. As indicated in the ESAP, GNG will finish the installation of vapor recovery system for the remaining terminals. The monitored parameters of the ambient air qualities at both terminals and fuel retail stations meet both local regulatory requirements and World Bank Group (WBG) EHS guideline limits. Fuel Management: Most of GNG’s fuel retail stations are the OKKO brand ones that adopt EU standards. The underground storage tanks of the OKKO brand have double steel layers and leak monitoring devices; therefore, the potential for contamination of the groundwater and soil is limited. GNG has an on-going program to renovate the remaining non-OKKO stations to OKKO brand stations, and soil remediation will be conducted if necessary. The tank farms at the fuel storage terminals were initially built 30 years ago. In the past five years, GNG has contracted external experts to inspect all the tank safety and integrity, and conduct renovation works if needed. According to GNG’s internal tank farm management programs, these tanks are cleaned and inspected for integrity once every two years. Seven larger fuel storage terminals have installed automatic filling controls. In accordance with ESAP, GNG will finish installation of automatic filling controls for the other small terminals. The tank farm bottoms and secondary containment walls are built on regular soils, and covered by vegetation during the summer. In accordance with ESAP, GNG will start renovate the tank farm bottoms and walls according to the standards of American Petroleum Institute (API). Wastes: GNG has internal policies/procedures to handle solid and hazardous wastes. The municipal contractors collect the sanitary solid wastes generated from terminals and gas stations periodically. A local government owned company collects various hazardous wastes, mainly used petroleum products, from GNG sites and transports the hazardous wastes back to the company for treatment, recycle, and disposal. Fire prevention and emergency response: GNG has fire prevention rules and emergency response plan. There is a fire truck with high pressure water pump available for 24 hours at each fuel storage terminal. There is fire fighting equipment, including sprinkling system and the foam fire extinguishers, at GNG sites. If needed, the fire trucks from fire departments could reach various GNG sites in five to 10 minutes. There is an internal fire safety training once a year for all GNG employees. At both fuel terminals and gas stations, there are fire drills twice a year; the firefighting equipment is tested every three months; and the employees have to pass the firefighting and ER refresher training and exam every year. GNG also hold annual joint fire drills with local fire department at fuel storage terminals. Greenhouse gases (GHG) and energy efficiency (EE): Without any EE investments, GNG will totally generate 28,400 ton CO2 equivalent GHG per year after the 75 new fuel retail stations are put into operation, mainly from electricity consumption (39.5 MWh) and diesel for transportation (4,460 ton). In this project, GNG will invest fund to improve energy efficiency in the terminals and retail stations, including LED lightings, high performance windows, new insulations, new energy efficiency road tankers, etc. If all the proposed energy efficiency methods are implemented, the GHG generation rate will be reduced to 24,400 ton CO2 equivalent GHG per year. Among the 4,000 ton GHG reduction, approximately 440 ton reduction is due to adoption of the EE components for the 75 new retail stations. 4. Community Health, Safety, and Security Community health, safety and security: The fuel storage terminals are either located inside the industrial zone or in the rural areas with no community nearby. The operations of the terminals have limited impacts to distant communities. The gas stations are located along the highways and urban roads, and some are adjacent to the communities. GNG monitors the ambient air quality and has adequate fire safety methods to protect the adjacent communities. The fuel is transported to the storage terminals through railroad. GNG delivers the fuel from terminals to gas stations through its road tankers. Most of the road tankers are newly purchased and manufactured in Germany. As required in ESAP, GNG will provide defensive driving classes to all drivers, and include defensive driving in the annual OHS refresher courses. Emergency preparedness and response: GNG has an emergency response (ER) plan, which includes the ER for fuel transportation. As required in ESAP, GNG will involve the communities near the retail stations in the fire drills, if the communities could be affected by the potential fires. Security personnel requirement: GNG hires external agency for its terminal and gas station security. For serious security issues, GNG reports directly to the local police stations.

GNG has established programs with specified budget for community engagement and development. GNG has a fund to support orphanages and low income families. It set up three orphan centers to provide family settings for orphans, and involves the local communities in the orphan center program. GNG also support local communities for sport activities and special Ukrainian cultural events. GNG publishes its hotline number at each gas station for nearby communities to express their concerns related to GNG operations. Before land purchase and construction of new gas stations, GNG publishes project information with geological data at the local newspaper, and holds consultation meeting with local communities if needed. GNG signed up United Nations Compact on enterprise social responsibility in January 2007. After signing the Compact, GNG started to publish annual corporate social sustainability report at its website in both Ukrainian and English.

GNG will disclose this document in Ukrainian at Lviv region universal scientific library, located at 13 Shevchenko Ave., Lviv, Ukraine. Please contact the following for inquiries or concerns about the environmental and social impacts of this project. Mane Akopyan Galnaftogaz 72 Heroyiv UPA Str Lviv, Ukraine, 79015 +38(032)2988889