KPO Issues Sustainability Report for 2010

As newswires and media outlets reported, Karachaganak Petroleum Operating B.V. (KPO) announced the publication of the 2010 Sustainability Report. The Report presents the results of KPO's performance in 2010 and reflects the company's commitment to sustainable development.

KPO General Director Giuseppe Pasi said: "It is my great pleasure to present KPO's third Sustainability Report, in which we disclose our 2010 performance and review the progress against the targets we set ourselves in 2009."

"KPO aims to create enduring value for its partners and the Republic of Kazakhstan. Sustainability - having regard for long-term performance on the environmental, economic and social spheres - is an essential part of this enduring value creation," Giuseppe Pasi added.

In particular, the development and operation of the Karachaganak field continued throughout 2010 with 133.7 Mboe of global production, five new wells drilled and 14 workovers completed. The Unit-2 Material Replacement Project was successfully completed and the gas injection compressors were re-wheeled and re-powered. A total field shutdown was completed ahead of schedule and without incident. The construction of the fourth liquid stabilisation train at KPC continued and the new facility was put in operation in May 2011.

A new Safety Plan was implemented, focussing on Contractor Management, Hazard Awareness, Monitoring and Reporting, and Safety Leadership. KPO continued to maintain its high standards of Environmental Protection. In December 2010 the company was issued with a three year Environmental Emissions Permit. KPO also maintained its ISO 14001 accreditation. Overall gas utilisation in 2010 was 99.87%, which meant that out of the total gas production of just over 15 billion cubic metres (bcm), only 0.02 bcm (0.13%) was flared from the production and processing facilities in the field or during well clean-up operations. This level of gas utilisation is unprecedented in oil and gas operations anywhere in the world.

The implementation of the ten-year Nationalisation Plan continued and at the end of 2010, all the skilled and clerical positions, 91% of the professional and supervisory roles and 62% of the managerial position in KPO were filled by national staff. In addition, during 2010, KPO maintained its commitment to developing Local Content, responding actively to the changing legislation in Kazakhstan. Contracts worth over $527 million were placed with 283 Kazakhstani companies for the provision of goods, works and services.

Remaining sections of the Uralsk Gas Pipeline Project were completed and the fully completed pipeline will be handed-over to the local authorities in 2011. A new secondary school in Aksai was opened. In recognition of KPO's involvement in developing local social infrastructure, KPO received the gold Paryz Award.

The Report has been independently verified by PricewaterhouseCoopers LLP and is available in three languages (Kazakh, Russian and English) from the company website, www.kpo.kz.