Karachaganak Rejects Allegations of Public Environmental Commission

Concerning the statements made by members of the public commission following the "Social Ecological Analysis," KPO had the opportunity to review the draft report by the authors in 2006 and put forward a number of corrections in December of that year. These corrections were not incorporated into the text that was subsequently released.

KPO is a contractor of the Republic of Kazakhstan, and as such is required to be in compliance with all of the requirements of the Kazakhstani legislature, including obligations that were assumed by the company after the signing of the Product Sharing Agreement, which includes a consideration of ecological treatment.

The construction and commissioning stages have been completed at the Karachaganak field, and the operational stage began several years ago. New facilities, such as the KPC, Unit-2, and the Karachaganak-Bolshoi Chagan-Atyrau export pipeline have now been put into full operation. Commissioning activities and the testing of these complex facilities was the main reason for off-schedule emissions.

Today, the volume of emissions has decreased in accordance with the normal operational activities. Thus, air emissions have reduced substantially during 2006, while production grew twofold compared to 2003. In 2004, emissions totaled 56.6 thousand tonnes, in 2005 – 45.5 thousand tonnes, and in 2006, it was reduced still further to 17.2 thousand tonnes. In accordance with the Law On Oil, KPO has developed a Gas Utilization Program, demonstrating the ability to utilize 99.6% of the total amount of gas extracted.

In conjunction with this reduction in air emissions, KPO's State approved monitoring program (carried out by a licensed Contractor), which includes twice daily monitoring of the Sanitary Protection Zone and voluntary air quality monitoring four times daily in all surrounding villages, has shown no exceedances of air quality standards. In addition, during 2006, KPO installed automatic air quality monitoring technology at eight locations on the SPZ that produce data 24 hours a day. These data also show no exceedances of air quality standards.

KPO's commitment to environmental protection represents one of the company's most high-priority areas of operations. Over the past years, investments have been made into environmental improvements that have exceeded $117 million.