In 2012, KPO produced 139.5 million barrels of oil equivalent of stabilised and unstabilised liquid hydrocarbons, gas and fuel gas. 8.6 billion cubic meters of sour dry gas were re-injected to maintain reservoir pressure, which is approximately 49% of the total volume of produced gas.

The certification body annually holds surveillance audits in KPO for compliance of HSE Management System to the ISO 14001 and OHSAS 18001 standards. KPO management continuously strives to ensure safe work environment for its employees and urge them to adhere to safety rules in keeping safe. The HSE Card programme introduced in 2011 enables personnel to report hazards, safe or unsafe behaviour observed during work and to offer suggestions and ideas to improve HSE performance. In 2012, the lost time injuries indicator was lower as compared to 2011; nevertheless, zero incidents remain KPO’s firm target.

Since 1997, KPO’s investments into environmental activities have exceeded US$ 239.4 million.  KPO fully supports initiatives of the Republic of Kazakhstan regarding transition to “a green economy”.  Last year the gas utilisation rate at Karachaganak totalled 99.87%, which is a world class achievement.

In 2012, the volume of gas flaring was a mere 0.13% of the total volume of gas produced, or 0.78 tonnes per thousand tonnes of extracted raw materials. A comparison of these figures with averages achieved by international and European oil and gas companies demonstrates KPO’s leadership in this area.

As the largest Employer in the region, KPO is fulfilling its obligations for the protection of employees’ health and for the creation of long-term jobs with competitive salaries.

Currently, national personnel of KPO occupy 69 per cent of managerial and 95 per cent of all supervisory and technical positions.  As a result of KPO’s nationalisation programme aimed at substituting expatriate employees with local professionals, today, local specialists make up 93% of total KPO staff.

Overall, since the Final Production Sharing Agreement became effective KPO has put over US$ 168 million into training and development of Kazakhstani professionals using international experience, own educational resources, and through cooperation with well-known universities.

In 2012, the proportion of local content in KPO contracts for the supply of goods and services reached 56% or US$ 335 million in monetary term.

As the result of this established partnership, a large number of new schools, kindergartens, hospitals, as well as social and community-purpose buildings were constructed in recent years.  Hundreds of kilometres of roads were also laid.  As of today, KPO’s investments into development of WKO social infrastructure have totalled over US$ 270 million.

The above listed achievements demonstrate that KPO’s aspiration to leave a sustainable legacy behind is virtually integrated in all facets of the Venture.

For more information please contact:

Sergei Pushkarev: PushkS@kpo.kz

Gulnara Sharibayeva: ShariG@kpo.kz

KPO External Affairs Department

District Maslikhat Secretary Adilkhan Kulikeshev noted that content of the Memorandum fully complied with the targets of the Burlin District’s social policy.

Also, during the meeting, KPO presented projects included in the program of development of Berezovsky, Uspenovsky, Priuralnoye, Zharsuatsky and Kyzyltalsky rural districts.

These projects approved as part of 2013 budget include sanatorium treatment for the elderly and summer camps for the children living in the mentioned rural districts, support of the “Levsha” Mobile School of Arts, the English Language classes, Community Scholarship Programme for the schoolchildren from low income and large families.

KPO Sustainability Manager Zulfiya Muzafarova noted, "The principle of corporate social responsibility is fundamentally imbedded in all of the KPO activity. Implementation of these projects is yet another sign of the company‘s commitment to its social obligations in the West Kazakhstan region”.

“KPO’s cooperation with local authorities and the Village Councils is the result of an open dialogue and mutual trust that we have built to ensure the most effective use of Karachaganak’s potential for the benefit of the local communities”- added Zulfiya Muzafarova.

Deputy Akim of the Burlin District Azamat Safimaliev thanked the KPO General Director Damiano Ratti for support and expressed confidence in further cooperation.

Karachaganak plays an important role in the social, economic and cultural development of the West-Kazakhstan Oblast communities. A large number of new schools, kindergartens, hospitals, different social amenities and hundreds of kilometers of roads have been constructed as a result of the cooperation in the West-Kazakhstan oblast.

For more information please contact:

Sergei Pushkarev: PushkS@kpo.kz

Gulnara Sharibayeva: ShariG@kpo.kz

KPO External Affairs Department

8.6 million cubic meters of sour dry gas were re-injected to maintain reservoir pressure, which is approximately 49% of the total volume of produced gas.

KPO General Director, Damiano RATTI, said: “As of today, KPO’s partners have invested more than $17 billion into the development of Karachaganak.  At the same time, direct payments into the RoK budget reached $8.8 billion”.

“In developing the Karachaganak project, KPO has utilised leading production and hydrocarbon processing technology to enhance hydrocarbon recovery and ensuring maximum economic return for the Republic of Kazakhstan and the project partners”, added Damiano RATTI.

Karachaganak is one of the largest and most complex fields to operate in Kazakhstan.  Currently, there are 96 production and 16 re-injection wells in operation at the Karachaganak field, out of a total of 377 wells.

In 2012, KPO has drilled and completed some of the best liquid producing wells ever undertaken.  Besides, KPO hooked up the highest absolute number of wells in the history of the Karachaganak in any one year.

KPO is committed to sustainable development and the highest standards for environment protection in all aspects of its activity.

Since 1997, KPO’s investments into environmental activities have exceeded $239.4 million.  KPO fully supports initiative of the Republic of Kazakhstan regarding transition to “a green economy”.  Last year, the gas utilisation rate at Karachaganak totalled 99.87%, which is a world class achievement.

In 2012, the volume of gas flaring was a mere 0.13% of the total volume of gas produced, or 0.78 tonnes per thousand tonnes of extracted raw materials.  A comparison of these figures with averages achieved by international and European oil and gas companies demonstrates KPO’s leadership in this area.

KPO has developed and implemented its Greenhouse Gases Management Strategy, which assumes a voluntary obligation to reduce greenhouse gas emissions over a period of five years.  As a result of this strategy, more than 1 million tonnes of greenhouse gas emissions have been eliminated.

Emissions from the industrial operation of KPO facilities are monitored by an automatic data collection and environmental monitoring system installed at the field as well as the borders of the sanitary protection zone.  In addition, KPO monitors the air quality in areas near the Karachaganak field.

As the largest employer in the region, KPO is fulfilling its obligations for the protection of employees’ health and for the creation of long-term jobs with highly competitive salaries.  Besides, KPO puts programmes into place that are focused on promoting the professional level of local employees.

Personnel nationalisation is an important structural element in the creation of KPO’s economic heritage.  Its goal is to maximise employment opportunities for local people and invest into the professional development of Kazakh employees. Recognising the importance of this issue, KPO has developed and adopted a local employee development system to promote them to the management level in all business units.

KPO focuses on the development of talented and dedicated Kazakhstani employees, and contributes to their on going professional development.

As a result of KPO’s efforts to substitute foreign specialists with local professionals, today, local employees make up 93% of the total staff.  Overall, KPO’s Kazakhstani employees fill 69% of all management positions and 95% of the lower levels of management and skilled professions.

During 2012, about three thousand Kazakhstani specialists from KPO were enrolled in industrial safety, technical competence, management development programmes as well as personal and language skills training courses.

The total duration of training during 2012 was 346,000 hours.  KPO invested $13 million into this area.

Overall, in recent years KPO has put more than $168 million into training and development of Kazakhstani professionals using international experience, own educational resources, and though cooperation with well-known universities.

Also, KPO is actively promoting the development of suppliers of local goods and services, and implementing a number of projects to support local production.

KPO is one of the first companies in Kazakhstan to successfully introduce a local content programme.  The implementation of the Local Content Development Programme has allowed involving more than three thousand Kazakhstani companies into the development of Karachaganak.  These companies have received orders from KPO for over $4 billion.

In 2012, the proportion of local content in KPO contracts for the supply of goods and services reached 56% or $336 million in monetary term.

As Damiano RATTI has noted, “Today, Karachaganak plays a significant role in the social, economic and cultural development of the West Kazakhstan Oblast”.

“KPO’s social projects are a good example of our corporate responsibility and successful cooperation with local authorities ensuring the efficient use of

Karachaganak’s potential”, added Damiano RATTI.

As the result of this established partnership, a large number of new schools, kindergartens, hospitals, as well as social and community-purpose buildings were constructed in recent years.  Hundreds of kilometres of roads were also laid.  As of today, KPO’s investments into development of WKO social infrastructure have totaled over $240 million.

The list and priorities for KPOs’ social projects are determined together with the Akimat of the West Kazakhstan Oblast. All projects are carried out in full compliance with the laws of the Republic of Kazakhstan. They also conform to building regulations and KPO’s internal procedures.

It should be noted that all KPO social projects are executed solely using Kazakhstani contractors, and therefore have 100% local content.

KPO’s efforts to develop of the region’s social infrastructure have been recognized at the national Paryz Corporate Social Responsibility Competition where KPO has won an award in the Best Social Project category.

For more information please contact:

Sergei Pushkarev: PushkS@kpo.kz

Gulnara Sharibayeva: ShariG@kpo.kz

KPO External Affairs Department

This conclusion is based on the results of independent studies conducted by two respected scientific organisations - the Oxford Institute for Economics and the Kazakhstan Institute for Economic Strategy.

These figures are the result of dedicated effort, and KPO’s well-constructed policy for Kazakhstani producers and suppliers. The company became one of the first large enterprises in Kazakhstan to successfully introduce a local content programme.

KPO publishes all needed information on its website and its annual, mid-term and long-term plans for the procurement of goods, work and services. This allows them to form their own production strategy, plan and provide stable and sustainable business to existing and potential Kazakhstani suppliers.

"The use of Kazakh goods and services is a priority for the efficiency of the company’s operations and has a positive impact on the development of the regional and national economies," KPO’s Local Content Development Controller, Kairat Kapashov said .

KPO makes it possible to register potential suppliers electronically on the database after they complete pre-qualification. At the present moment, there are about three thousand Kazakh suppliers registered on KPO’s database.

The company not only sets conditions and requirements for suppliers, but also actively prepares potential partners through a variety of business seminars, forums and conferences.

An important goal is to acquaint potential suppliers with the technical requirements and standards used at KPO and to inform local companies on production needs at Karachaganak. This work has been systematically carried out for many years.

Thanks to KPO, many Kazakhstani suppliers have been able to achieve compliance with international standards for the oil and gas industry. This is particularly so in workplace safety, environmental protection and safe operations.

“Our company strives to maximise Kazakhstani participation in the project. This strategy applies to all areas and directions of the Karachaganak operations. KPO is actively involved in the development of Kazakh suppliers, and is implementing a number of initiatives. These include improving local enterprises’capacity and transferring best practices. These initiatives have had a positive impact on the sustainable development of Kazakhstan's oil and gas industry,”said KPO General Director, Damiano Ratti.

During the implementation of the local content development programme, which has been ongoing ever since 2001, more than $4 billion worth of services and goods have been provided by domestic enterprises. In 2012, local content in the Karachaganak project totaled 56%.

Currently, a localization project for goods and services production with the participation of West Kazakhstan Oblast companies is being implemented. The project has been developed as per the results of a needs analysis on goods and services, as well as domestic market studies. It is expected the project will help identify opportunities and potential for local producers to develop these further.

The ultimate goal of the project is to develop a strategic plan for the phased development of local production. Such policies and positive growth dynamics in domestic content have created a favourable social image for the company.

As is well known, Karachaganak is one of the largest international projects in Kazakhstan. It is being implemented by the BG Group, Eni, Chevron, LUKoil and NC KazMunaiGas JSC.

On February 14, 2013, KPO will participate in the conference -- Kazneftegazservis-2013 organised by the Union of Kazakhstan Service Companies. It is officially supported by the Oil and Gas Ministry.

About 500 executives and government officials, subsoil users, domestic and foreign oil and gas and service companies will attend. Participants will receive information on the basic needs of the oil and gas sector for goods, work and services. They will also discuss prospects for participating in projects.

KPO is actively engaging local resources, which not only improves the production capacity of companies, but also enhances the development of economic and intellectual potential of the West Kazakhstan Oblast over the long-term. This policy has a stimulating effect on the overall development of the national economy. It creates an environment in which local companies can achieve competitiveness through the application of best practices gained in the international business sector. They also acquire technologies that can be extended beyond the oil and gas industry.

“Projects completed over the 12 years of our cooperation with KPO, have allowed us to gain invaluable experience in the construction of facilities of various level of difficulty and responsibility. Thanks to these joint efforts and the high work standards required by KPO, our employees were able to significantly improve their skills. This was particularly the case in production management and workflow organisation. But it also applies to occupational safety and environmental protection,” General Director of Uralskstroyinvest Alex Bezyanov said.

KPO’s requirements for local content are distributed to all of KPO’s major foreign contractors. “This means there are requirements for local content, the transfer of knowledge and technology, as well as to assistance in the professional development of local staff at Kazakhstani companies stipulated in the contract. KPO also conducts projects that contribute to the localisation of the production of spare parts and equipment that are in demand at Karachaganak. This encourages joint cooperation of western and domestic manufacturers and creates a positive environment for the development of Kazakh companies and the transfer of advanced technology in Kazakhstan,” Expert on Local Content Development, Kenzhegulova Elmira said.