In accordance with the Procedure for the competitive selection of candidates for the position of an independent non-executive director of the supervisory board of a state unitary enterprise and their appointment, as well as the competitive selection of candidates for the position of an independent non-executive director of the supervisory board of a business company, in the authorized capital of which more than 50 percent of shares (interest) belong  to the state, proposed by the subject of management of state-owned objects prior to the election to the position of independent non-executive director of the Supervisory Board, approved by the Resolution of the Cabinet of Ministers of Ukraine from March 10, 2017 No. 142, the Resolution of the Cabinet of Ministers of Ukraine dated September 3, 2008 No. 777 “On competitive selection of heads of economic entities of the public sector of the economy", Resolution of the Cabinet of Ministers of Ukraine from May 19, 2021 No. 494 “Some issues of the Supervisory Board of Joint Stock Company “National Joint Stock Company “Naftogaz of Ukraine” competitive selection for  4 (four) positions of the independent member of the Supervisory board of the Joint Stock Company “National Joint Stock Company “Naftogaz of Ukraine” is announced.

Company name: Joint Stock Company “National Joint Stock Company “Naftogaz of Ukraine” (National Joint Stock Company “Naftogaz of Ukraine”, the Company).

National Joint Stock Company “Naftogaz of Ukraine” place of location: Kyiv 01601, Ukraine.

Number of the Independent Non-Executive Directors of the Supervisory Board selected in the competition – 4 (four) persons.

National Joint Stock Company “Naftogaz of Ukraine” is one of the largest companies in Ukraine, a reliable supplier of gas on the European market and a leading company in the domestic fuel and energy sector.

According to the Ownership Policy of National Joint Stock Company “Naftogaz of Ukraine”,
the founder and sole shareholder of which is the State.

The priorities according to which the State owns the Company are:

1. The purpose of state ownership. Keeping the Company in State ownership to ensure:

• Security of natural gas supply to Ukrainian consumers;
• Achievement of energy independence by Ukraine, in particular independence from natural gas imports;
• Successful transformation of the energy sector and completion of the reform of the natural gas market of Ukraine;
• Effective representation and protection of interests of Ukraine in the domestic and international energy markets, in particular in relations with national oil and gas companies of other countries;
• Oil and natural gas production;
• Transportation of oil and oil products;

2. Strategic goals and activities of the Company.

To achieve the goal of State ownership, the State, represented by the Cabinet of Ministers of Ukraine, determines the strategic goals and activities of the Company and expects that within its commercial status the Company will be able to create the necessary conditions for their implementation in the long run, using its own scale and vertical advantages integration, knowledge and experience, namely:

In the field of security of natural gas supply the Company ensures secure supply of energy, in particular natural gas, taking into account such features as:

• dependence of the population on state subsidies and its vulnerability to fluctuations in natural gas prices;
• high risk of non-payment among natural gas market participants.

The fulfillment of the specified goal will be achieved, in particular, by using the potential of underground natural gas storage facilities, ensuring the availability of natural gas in storage facilities in an amount sufficient for the stable passage of the autumn-winter period of 2022/23, including the satisfaction of needs, as of October 1, 2022 household consumers and heat supply enterprises, but not less than 19 billion cubic meters, including through the purchase of natural gas produced on the territory of Ukraine.

In the field of energy independence of Ukraine, the Company ensures the sustainable development of the production base taking into account the economic feasibility and acceptable long-term return on investment, in particular by:

• making significant sustainable investments in exploration and development of the subsoil using the advantage of scale, knowledge and experience of the Company;
• cooperation with world leaders in the field of production and services;
• strengthening the Company's competencies, management and governance systems;
• applying the innovative approaches and introducing the newest technologies and the equipment on new and operating fields of natural gas.

The company will facilitate the growth of energy efficiency by providing modern energy services as a platform through which the State can implement its policies and programs to improve energy efficiency and reduce greenhouse gas emissions;

In the field of transformation of the energy sector and completion of the reform of the natural gas market, the Company will facilitate:

• Integration of the Ukrainian natural gas market into the gas market of European countries and implementation of the provisions of European legislation and rules of natural gas market regulation;
• Introduction of an efficient energy market in Ukraine, in particular by promoting the formation of competitive energy prices in the domestic market;
• Development and implementation of sustainable business models for the segments of retail gas supply, heat supply and distribution of natural gas;
• In the field of representation and protection of Ukraine's interests in the domestic and international energy markets, the Company takes measures to facilitate and popularize the following aspects:
• Harmonization of gas market regulation in the countries of the region;
• Ensuring the role of Ukraine as a transit state;
• Creation of new business opportunities with the use of Ukrainian infrastructure for oil and gas storage.

In the further transformation, the Company will prepare for the initial public offering of the Company’s minority stake on one of the leading stock exchanges, which will allow the state to obtain a business value and share price, which will be the best and objective performance indicators of the Company;

3. Approaches to governance.

Having introduced a system of corporate governance in accordance with the guidelines of corporate governance at State-owned enterprises of the Organization for Economic Cooperation and Development, the state will act:

• As an informed and active owner;
• Applying to the Company and its enterprises principles of governance similar to those applied to other enterprises;
• Taking into account the legal structure of the Company and this Ownership Policy;
• Delegating appropriate authority to the Supervisory Board of the Company, the majority of whose members are independent, enabling it to perform its duties and respecting its independence in exercising control over the activities of the Management Board and its responsibility for achieving the objectives set by this Ownership Policy;
• Enabling the Management Board of the Company to perform its duties and providing the appropriate authority to achieve the objectives of this Policy;
• Applying a transparent dividend policy based on financial performance.

In order to fulfill the objectives of this Ownership Policy, the Company operates in the following main areas:

• Organization and execution of geological exploration works related to oil and gas exploration, operation of oil, gas and gas condensate fields;
• Integrated development of oil, natural gas and gas condensate resources with the use of advanced methods of field development and new technological processes of processing and extraction of valuable components contained in them;
• Production of oil, gas condensate and natural gas;
• Sale and supply of natural gas and other types of energy, in particular by fulfilling special responsibilities assigned to it in accordance with the acts of the Cabinet of Ministers of Ukraine;
• Storage of natural gas in underground gas storage facilities to ensure security of supply to Ukrainian consumers and to meet international demand for gas storage facilities;
• Sale of oil, liquefied gas, gas condensate and oil products;
• Development, operation and repair of the linear part and objects of main oil pipelines, underground gas storages, condensate pipelines and distribution gas pipelines;
• Transportation of oil and oil products;
• Provision of energy services;
• Implementation of renewable and alternative energy projects.

In accordance with the purpose of State Ownership, the Company may also carry out other activities in compliance to the law.

The Company's mission: to be the engine of modernization and proficiency in the energy sector of Ukraine, integrated with the European market; ensure uninterrupted energy supply at competitive prices, while maximizing the value of national resources.

National Joint Stock Company “Naftogaz of Ukraine” is a vertically integrated oil and gas company that carries out a full cycle of operations on exploration and development of fields, operational and exploratory drilling, transportation and storage of oil and gas, supply of natural and liquefied gas to consumers.

The purpose of activity of National Joint Stock Company “Naftogaz of Ukraine” is to make a profit of doing the business.

REQUIREMENTS FOR THE CANDIDATES FOR THE POSITION OF THE INDEPENDENT NON-EXECUTIVE DIRECTOR OF THE SUPERVISORY BOARD OF NATIONAL JOINT STOCK COMPANY “NAFTOGAZ OF UKRAINE”:

Each independent member of the supervisory board of Naftogaz should meet these minimum requirements:

• Higher education, in particular (but not limited to) the fields of petroleum engineering, management and administration, economics, finance, auditing, international relations, law;
• Proficiency in English; Ukrainian is desirable;
• No outstanding criminal record;
• Adherence to the principles of impartiality and integrity;
• Having an impeccable business reputation;
• May not be and has not been for the previous six years a founder, shareholder (participant), manager, member of the supervisory board, employee, or representative of a person to whom the Government of Ukraine has applied personal, special economic, or other restrictive measures (sanctions).

Each independent member of the supervisory board of Naftogaz should have such experience, competencies, and professional skills that differ significantly from those of the other members of the supervisory board, thus creating a diverse board that can in the aggregate provide comprehensive guidance to the company’s development and growth. The below experience is desirable for individual candidates, but obligatory for the supervisory board, includes:

• Experience as a non-executive director at international listed corporations is a significant advantage;
• Experience in senior management positions in major international and regional oil and gas companies;
• A career record of success in diverse and challenging assignments in multiple geographies, including developing countries;
• Experience of interaction with government officials and energy regulators; understanding of EU regulations affecting the industry, including the specifics of state aid control;
• Knowledge of the European energy market, trends, and the prospects for the development of renewable energy sources;
• Experience and contacts in the international investment community, knowledge of the sources of funding in the capital markets, and experience in raising both debt and equity in the international markets.

THE CANDIDATE MUST SATISFY THE FOLLOWING INDEPENDENCE CRITERIA ACCORDING TO THE LEGISLATION OF UKRAINE:

•  has not been a member of governing bodies for the past five years for National Joint Stock Company “Naftogaz of Ukraine” and / or its affiliated legal entities (subsidiaries, branches);
• does not receive and / or has not received within the previous three years from National Joint Stock Company “Naftogaz of Ukraine” and / or its affiliated legal entities additional remuneration in excess of 5 percent of that person's total annual income for each of those years);
• does not own (directly or indirectly) 5 percent or more of the authorized capital for National Joint Stock Company “Naftogaz of Ukraine” or is not an official or a person who performs managerial functions, and is also a natural person - entrepreneur who during the past year has had significant business relations with the company and / or its affiliated legal entities. (Business relations are the supply of goods to the company and / or its affiliates or the provision of services (including financial, legal, consulting), or the consumption of goods or services provided by the company and / or its affiliates;
• is not and / or has not been an independent auditor for the previous three years for National Joint Stock Company “Naftogaz of Ukraine”and / or its affiliated legal entities;
• is not and / or has not been an employee of an audit firm that provided audit services for the previous three years to National Joint Stock Company “Naftogaz of Ukraine” and / or its affiliated legal entities;
• is not and / or has not been an employee for the previous three years of National Joint Stock Company “Naftogaz of Ukraine” and / or its affiliated legal entities;
• is not a shareholder - the owner of the majority shareholding of National Joint Stock Company “Naftogaz of Ukraine” and / or is not a representative of the shareholder - the owner of the controlling stake in this company in any civil relations;
• has not been a member of the National Joint Stock Company “Naftogaz of Ukraine” Supervisory Board for more than total 12 years;
• cannot be the founder, shareholder (participant), chairman and / or member of the supervisory board of an enterprise, other business company operating in the same or related markets with National Joint Stock Company “Naftogaz of Ukraine” (according to part three of Article 11² of the Law of Ukraine "On Management of objects of state property ");
• is not a close person to the persons mentioned in the provisions above (For the purposes of this caveat, a close person is a cohabitant who has a shared life and has mutual rights and obligations with the person referred to in paragraph 9 of Part One of this Article of the Law of Ukraine on Joint Stock Companies (except for persons whose mutual rights and responsibilities are not family-related with the subject), including cohabiting persons, but not married, and (regardless of these conditions) spouse, father, mother, stepfather, stepmother, son, daughter, stepson, stepdaughter, sibling, grandfather, grandmother, great-grandfather, great-grandmother, grandson, granddaughter, great-grandson, great-granddaughter, son-in-law, sister-in-law, father-in-law, mother-in-law, adoptive parent or adopted son or adopted daughter, guardian or caregiver, a person under the guard or care of that person).

REQUIRED COMPETENCIES:

Each independent member of the supervisory board must meet the requirements of at least one of the below areas. At the same time, the independent members of the supervisory board in the aggregate must meet the requirements of all qualifications listed below. In the case of two candidates with the same areas of competence and sets of professional skills, preference will be given to a candidate with experience in non-executive positions in international listed corporations and / or experience in senior management positions in the major international and regional oil and gas companies.

Business strategy and development:

• Successful experience in developing and implementing the strategies of large international listed corporations;
• Ability to create a clear vision of the company's strategy and its development in the conditions of martial law and post-war recovery;
•  

Knowledge and experience in the development of large-scale oil and gas exploration and production programs;