ENVIRONMENTAL IMPACT

KPO is committed to minimizing its impact on the environment while developing the Karachaganak oil & gas condensate field. KPO carries out its operations based on the principles of sustainable development and in compliance with high environmental standards. The key environmental commitments of the Company’s HSE Policy include:

prevention of the environmental pollution,
reduction of GHG emissions,
conservation of biodiversity and ecosystems,
conservation of natural resources,
ensuring environmental safety,
continuous improvement in environmental performance.

As part of its environmental commitments, the Company applies state-of-the-art methods and world-class best available technologies.

Environmental Protection Measures Plan

To achieve the goals set in the area of environmental protection, KPO annually develops Environmental Protective Measures Plans (further as the EPMP). Measures set forth in the Plan focus on ensuring environmental safety, improving environmental protection methods and technologies, rational use of natural resources and maintaining compliance with the ISO 14001 and ISO 50001 international standards.

In accordance with the RoQ Environmental Code regulations, in order to obtain the Environmental Emissions Permit KPO should present the licensing authority with the EPMP for the permit’s validity period.

In 2020, KPO performed its operations according to the obtained Environmental Emissions Permits and approved EPMP’s as presented in table on https://kpo.kz “Protecting the Environment / Environmental protective measures plan”. In 2020, KOGCF secured four Permits per type of environmental emissions: emissions of contaminants into air, waste disposal, discharges of contaminants with domestic wastewater, as well as discharges of contaminants with process and produced water, which is injected in the KOGCF Subsurface Waste Water Disposal Polygons No.1 and No.2. Accordingly, EPMP was developed and approved for each of the Permits obtained.

In 2020, the total actual costs incurred for the implementation of the environmental measures at the KOGCF amounted to KZT 11.06 bln, i.e. 74 % of allocated budget has been spent with 101 % of the work scope completed. The 2020 target costs were KZT 14.96 bln. The variance was caused by incomplete implementation of the planned scope of work on certain measures, as well as deferral of some works to 2021 due to COVID restrictions.

With reference to item 2.3.1 of the Minutes of Meeting of the RoQ Presidential Commission for State of Emergency Management (№ 12 dated 15.04.2020), in August and November 2020, KPO issued letters to the RoQ Ministry of Environmental Protection, Geology and Natural Resources and to the RoQ Ministry of Industry and Infrastructure Development with respect to extending the implementation of the four measures planned for 2020 by the end of 2021:

Relocation of Environmental Monitoring Stations № 5 and № 15;
Development of a detailed design for the implementation of the automated monitoring system for real time remote data transmission specific to the company facility;
Studies with respect to application of domestic waste water sludge;
Energy performance audit.

The 2020 KPO EPMP execution by sections is shown in table 23.

Tab. 23. 2020 Environmental Protective Measures Plan implementation, %

No	Sections of Environmental Protective Measures Plan	KPO measures implementation in %:
No	Sections of Environmental Protective Measures Plan	- within the Karachaganak Field	- at the KPC-Bolshoi Chagan-Atyrau export condensate pipeline (WQO)	- at the KPC-Bolshoi Chagan-Atyrau export condensate pipeline (Atyrau Oblast)
1	Air pollution control	130 %	100 %	100 %
2	Conservation and rational use of water resources	72 %	100 %	100 %
3	Land conservation	127 %	NA*	NA*
4	Subsoil conservation and rational use	100 %	NA*	NA*
5	Flora and fauna conservation	100 %	N/A*	100 %
6	Management of production and consumption wastes	122 %	0 %	100 %
7	Radiation, biological and chemical safety	100 %	NA*	NA*
8	Introduction of management systems and best safe technologies	85 %	NA*	NA*
9	Scientific researches and design-survey activities in environmental protection	69 %	100 %	100 %
10	Environmental awareness and promotion	100 %	100 %	100 %
	TOTAL:	101 % (KZT 11.06 bln)	80 % (KZT 362.5 mln)	100 % (KZT 157.5 mln)

* NA – measures are not applicable

EPMP implementation results are provided in table 24.

ENVIRONMENTAL FINES

KPO runs its business in accordance with the environmental legislation of the Republic of Qazaqstan (RoQ). As part of its operations, the Company annually requests and obtains an Environmental Emissions’ Permit (EEP) from the RoQ Ministry of Environmental Protection, Geology and Natural Resources. This permit sets the limits for air emissions, discharges and storage of production and consumption waste.

In 2020, the Company did not exceed the overall limits of emissions set in the Environmental Emissions’ Permits. Further to the findings of the environmental inspections held during the reporting period, the Company paid an administrative fine for KZT 1.3 mln. With respect to the events related to 2019, KPO paid administrative fines totalling KZT 33.8 mln. The Company appealed against all the abovementioned fines at the superior authority and courts. However, those appeals have not been upheld.

In addition, in 2020 KPO made the payments totalling KZT 30.4 mln under the two civil claims charged on environmental matters with regard to the events dating back to 2018–2019. One of the civil cases related to 2018 was examined by courts three times and was partially won by the Company.

Tab. 24. Environmental benefits from KPO’s Environmental Protection measures implemented in 2020

Air emissions	Use of a surface pump to transfer fluids with high gas volume fraction during the well test and clean-up resulted in reduction of air emissions by 3,769 tonnes versus the expected 385 tonnes; Use of high pressure separators during the test and clean-up of 3 wells helped reduce air emissions of contaminants by 240 tonnes from the expected 6,747 tonnes; Use of hydrocarbon-based fluid for the reservoir stimulation (Lamix or Deisel) helped reduce air emissions of contaminants by 447 tonnes from the acticipated 391 tonnes.
Land reclamation	In 2020, 59.26 ha of land disturbed following well operations and construction activities, was reclaimed versus the planned 46.7 ha.
Waste and wastewater management	772 tonnes of segregated combustible non-recyclable waste was sent for incineration in General Purpose Incinerator (GPI); Useful components recovered from the total municipal waste delivered for segregation to be further transferred to specialist companies for recycling and/or reuse: plastics – 23.84 tonnes, ferrous and non-ferrous scrap metals – 8.87 tonnes, waste paper – 101.3 tonnes, waste glass (crushed glass) – 7.51 tonnes. Volume of treated liquid waste amounted to 6.60 kt, wastewater processing – 8.52 kt (in comparison with the 2020 EPMP – over 3 kt); In 2020, KPO continued transferring the accumulated waste from the Solid Waste and Spent Drilling Mud Site to the Eco Centre Rotary Kiln Incinerator (RKI) and Thermomechanical Cuttings Cleaner (TCC) for treatment. During the year, 1,720 tonnes of wastes versus planned 3 kt were treated. The initial plan has not been fulfilled as treatment of cuttings by the RKI was suspended until completion of the TCC maintenance because of restrictions in the approved 2020 Waste Limits Project at 500 tonnes per year. TCC recovered and sent for re-use 671.2 tonnes of Lamix base oil used for making oil-based drilling muds, versus the planned recovery of up to 500 tonnes. Volume of reused treated wastewater for technical and production needs at the Karachaganak Field amounted to 18,313 m³. Volume of technical water consumed from the Konchubai Gully made 384,453 m³. The reduced drilling programme had led to the under-use of treated wastewater for drilling needs. Most of the treated wastewater was used for dust suppression at construction sites. The treated wastewater amounted to 4.8 % of the technical water consumed from the Konchubai Gully against the planned 10 %.

CASE STUDY 9

ENGAGEMENT IN DEVELOPMENT OF THE NEW ENVIRONMENTAL CODE OF QAZAQSTAN

Context / short description:

In 2017, Qazaqstan announced its transition to the ‘green’ economy. This process implies radical changes in the national economy based on the up-to-date environmental legislation.

Since 2018, efforts for the development of a new Environmental Code were ongoing. The Company specialists actively participated at all stages of the development and review of this document.

Goal:

Contribute to the formation of a new Environmental Code based on KPO experience in conducting environmental activities at the Karachaganak Oil, Gas and Condensate Field.

Solution / actions:

The year 2020 was marked by successful completion of a huge effort over the draft of the new Environmental Code. Within a year, the Company environmental specialists were actively engaged in the working group comprising the RoQ Ministry of Environmental Protection, Geology and Natural Resources, the Association of Oil and Gas sector “KazEnergy” and the Lower Chamber of the RoQ Parliament to review the drafts of the new Environmental Code and related acts. Our specialists provided constructive proposals and comments to the drafts of the Environmental Code and supporting acts in the area of environmental protection, including Water, Tax, Entrepreneurship Codes, Code of Administrative Offences and other. An enormous work has been done to introduce changes and amendments to the current environmental legislation.

Result:

The new Environmental Code of the RoQ was signed by the RoQ President K.K.Tokayev on January 2, 2021 and put into force from July 1, 2021.

In the run-up to the new Code, a number of critical issues pertaining to operation had been resolved by the Company experts jointly with other major users of natural resources. Such as handling of waste, application for environmental permits, mechanisms of the automatic emissions monitoring, invention of national standards on Green Technologies and others. An active engagement of national companies in the law-making efforts have enabled the business community to introduce rational and balanced upgrades to their production capabilities through application of the best available technologies in full compliance with the state policy for transition to ‘green’ economy.