Megapolis, № 42 (255)
By Nikolai KHALABUZAR
Traditionally, large amounts of oil are accompanied by big myths. It is believed that every oil company has its skeletons in the closet; environmental, income distribution and excessive employment of foreigners. However, accurate information is hard to obtain.
Karachaganak, one of the largest oil projects of Kazakhstan –also has its own myths surrounding it. On one hand, the company states that its unique technologies, such as gas-re-injection, will allow for keeping the field useful for the next 33 years. The company’s waste storage tankers will be able to operate reliably for 10 more years. On the other hand, this year for the first time KPO has not received permission for conducting ecologically dangerous operations. This is related to the story with the resettlement of the Berezovka village. We attempted to get some answers to these questions from KPO experts.
People have even heard of Berezovka, a village near Karachaganak in New York. A few years ago, thank to the NGO, Crude Accountability, the local residents found out that they are being suffocated in gas waste. NGO representatives said that they performed some analysis that proved the presence of toxic wastes. However, not a single official test was conducted to confirm this data. There were various inspections, from state commissions from Astana to foreign delegations. KPO presented a list of nature protection operations, including land recultivation, cleanup for pollution from the late 1980s, gas reinjection and several social projects in Berezovka. However, Crude Accountability continued pressing the operator with its test and survey results, and demanded money from investors for resettlement. However, in reality, the question does not lie with the company’s professionalism, as the Kazakhstani authorities have decided this. Nevertheless, the attack is on KPO. Why?
Issak Sekeev, the KPO PR manager, says, “Perhaps because of ignorance, the NGO that is involved in this issue is not familiar with the company’s rights and obligations, and is ignoring the fact that the local executive agencies have conducted many inspections.
- Why don’t you explain this to them?
“Perhaps these people believe that it is not necessary to speak with the local authorities, but that it is necessary to ruin the reputation of the parent companies. Perhaps this is a profitable activity… In addition, this area is not in our competence. Our goal is the production and export of hydrocarbons and an observance of all obligations under the FPSA and Kazakhstani legislation.
- But at some point in time, you decreased the sanitary protection zone around the company from 5 to 3 km…
“Yes, during the initial estimation of the zone, it was noted that the size of the area can be re-considered in the future with its possible decrease, provided that advanced environmental technologies are employed during production, which is what occurred. We presented a project to the Ministry of Health, including ecological calculations on ecology, computer model of waste distribution… 5-km zone was calculated for companies working with soviet technology. We were able to prove that our technologies are more modern and safe”.
- And why Berezovka and why KPO rather than another village near Kyzylorda where oil is also being produced?
“I can say that this is not a unique case, but more of an established practice. An NGO institution in modern world is gaining weight, but the ecological issues remain. This is fertile soil for a good career, you fight one on one with the oil giants – that is prestigious! I believe however, such games are unethical in respect to the Kazakhstan authorities. They always conduct inspections, they have created a serious control system, yet despite these facts, there are still people, who continue to claim that it is all fake, and everyone is sold at the expense of the people’s health in an attempt to make money. This is a profitable game.
- Then it is logical that it is necessary to play large, go to international level…
“That is how it was. First, they wrote to state agencies, then to the CPC management, asking for them to halt the shipments of oil shipping from Karachaganak, in response to the violations. They received an answer – which is that there are authorised agencies conducting inspections. World Bank representatives have come to us. This organisation has an adviser on the observance rights, whose responsibility is to check such complaints. They came, checked and sent their report, which said that these accusations were not confirmed.
- For the first time, KPO did not receive permission for pollution this year. The WKO Ecology Department Head, Robert Suerbayev made some critical remarks on the pages of the Uralskaya Nedelya newspaper when he said, “KPO is ignoring our legislation. They fail to understand that nature protection facilities need to be built before the industrial facilities.” In July, the situation changed as permission was obtained, and during the visit of the Minister of Environmental Protection, Aitkul Samakova, a Memorandum of Understanding was signed. It is interesting that the company is remaining calm over this ambiguous situation.
“The Robert Suerbayev’s demands as the head of oblast ecology are understood, Gabdrakhim Gabdeev, the director of the KPO Ecological and Atmosphere Monitoring, says, As a civil servant, he must demand a timely and qualified observance of the law. But there exists an earlier agreed upon plan for nature protection operations, which determines the deadlines. There are operations that according to the production programme that was forecasted for several years, including the Waste Utilisation Complex or Compressor Plant. These require time and timely financing. In addition, the action plan is updated each year. In the case of the construction of the Waste Management Complex, funding was suspended by KMG’s decision as a result of changes in the drilling programme. It is natural that the regional ecological department was not happy with the delay.
- Why was permission was not provided on time?
“The process documentation review process for obtaining permission is very slow, at the moment, changes have been made to legislation, and we had to make some changes to our documents and resubmit them … At the moment, we have all the documents and the signed trilateral Memorandum of Understanding, which is also being implemented”.
- However, during the entire time without a decision, KPO continued its operations, and the company was penalised?
“There were no penalties imposed by the regulatory agencies, since KPO pays for the unsanctioned wastes voluntarily and in a timely manner. I would like to note that KPO produces no toxic waste, only 4th class, and any moving of wastes is agreed beforehand with the WKO Environmental Protection Department”.
“The Karachaganak field is a huge project, where it is not only necessary to pump and process oil, but also to create all required infrastructure. Foreigners are executing many of the profitable operations. Moreover, as various mass media have said, Kazakhstani content has been reduced recently”.
“Kairat Kapashov, KPO Vendor Qualification Development Department Manager, commented on the situation. The planned level of Kazakhstani participation in the total volume of concluded contracts related to Karachaganak is 43%. This number was approved by KMG, and in reality this indicator never went as low as 50%. The dynamics in the change of participation was as follows: 63% in 2001, 65% in 2002, 62% in 2003, 53% in 2004, and 57% in 2005. The high numbers during the first years have been explained by the fact that during this period of time, construction was underway, where there were many opportunities for Kazakhstani companies. The character of the needs changed to crude processing and the servicing of field operations. Not many domestic companies have been competitive in this area. We then began the development of the programme to increase Kazakhstani content. During the last few years, we sponsored 16 companies to obtain ISO-90012000 standards”.
- Any why the benchmark is at 43%?
“Before establishing our goals, we analyzed the needs for the upcoming period, determined the approximate amounts to be spent, and determined those areas where Kazakhstani companies could apply themselves. The programme is then submitted for approval to KMG.
- The level of Kazakhstani participation is higher than the planned indicators, perhaps the benchmark should be lifted?
“We are in the process of the development of programmes for 2006-2007, but there is no final number as of yet. I can assure that the benchmark will not be lowered, and it is also difficult to speak of it being lifted. KPO has no direct obligations to achieve a particular level of Kazakhstani content, and the company shareholders realise that the operations being implemented by the foreign companies will be necessary over the remaining 33 years. The sooner we start using the services of Kazakhstani companies, the sooner this will reflect on financial indicators, the quality of the services, and the flexibility in their provision”.
