PetroKazakhstan’s HSE policy is a basis for defining HSE goals and objectives and ways to achieve them.

PetroKazakshtan’s priority HSE objectives include provision of safe working conditions, protection of the health of the company’s personnel and population living near the production facilities of the company, as well as preservation of a healthy environment. To achieve this goal PKOP successfully introduced the international environmental standard ISO 14001 in 2008. PKOSI and marketing and transportation facilities are now introducing international standards ISO 14001 and OHSAS 18001.

To achieve its HSE goals PetroKazakhstan undertakes to:

• establish effective procedures for preparation and implementation of environmental protection programs and projects that provide continuous identification and resolution of the company’s most important industrial and environmental safety issues;
• place a higher priority on actions to be taken to prevent impacts on the environment, personnel and population, rather than on remediation of the environment;
• strive for systematic and continuous improvement of performance indicators related to the impact of the company’s operations, products and services on the environment, personnel and population, as well for consumption of natural resources in full conformance with the present level of development of the science, technology and society;
• carry out continuous and focused activities to reduce the losses of oil, oil products and gas, as well as to prevent their impact on the environment;
• apply advanced scientific designs and technology to gradually reduce the intensity of the use of natural resources, materials and energy while preserving the maximum product output;
• ensure compliance with the requirements of international and national laws and treaties governing the HSE activities of oil companies;
• make and implement any management and production related decisions with due account for environmental aspects of any intended activity, products and services;
• assess the impact of any planned business activities, products and services on the environment and health of the personnel and population;
• develop and implement programs for reduction of unscheduled losses in the operation of the company’s production facilities;
• assess the industrial and environmental risks, develop and implement actions to reduce such risks and compensate associated losses;
• strive for continuous improvement of the quality of the environment in the areas of operation of the company’s production facilities.

PKKR

The main negative factor in the company operations that affects the environment is emissions of pollutants from associated gas flaring. In January 2009 the ex-Minister of Environmental Protection declared that oil companies would not be granted a permit for the use of natural resources if they did not have an associated gas utilization program. As the Company understands the importance of the environmental safety and the rational use of natural resources it has taken significant steps with this regard.

PetroKazakhstan Kumkol Resources AO allocates significant funds for environmental measures. In the recent years most of them have been aimed to implement projects related to the associated gas utilization program, which has essentially been completed. Today, PKKR AO has production facilities which allow it to utilize associated gas by
- generating electric power – up to 105 million cubic meters a year;
- re-injecting gas back into the reservoir (gas cap) – 253 million cubic meters a year;
- using gas for internal needs to ensure the operation of oil treatment plants (heaters, gas generators) – 80.3 million cubic meters a year.

The utilization of associated gas allows electric power generation, including:
- 55 MW at Kumkol field (50% by PKKR);
- 3 MW at Kyzylkiya field;
- 6 MW at Aryskum field;
- 2 MW at Maibulak field.

The electric power generation involves the utilization of the following associated gas volumes:
- 85.0 million m3 per year at Kumkol field;
- 15.0 million m3 per year at Aryskum field;
- 5.0 million m3 per year at Maibulak field.

The use of gas utilization capacities for electricity generation purposes (105 million m3/year) prevents the damage caused by above-limit mineral losses to the annual amount of above 7.0 million USD.

The installed associated gas re-injection infrastructure allows re-injecting the following volumes of associated gas:
- 51.0 million m3/year at Kumkol field;
- 253.0 million m3/year at Aryskum field;
- 8.5 million m3/year at Maibulak field.

The gas reinjection capacities (312.5 million m3) allow reducing annual emissions by about 7,000 tons, and also prevent the damage from above-limit mineral losses to the annual amount of above 20 million USD.

To ensure fulfillment of the legislative requirements by the Company a Gas Utilization Program for all fields was approved at the RK Ministry of Energy and Mineral Resources on June 15, 2006, pursuant to Minutes No.5/1. The investments made by PKKR in the associated gas utilization totaled:
- 54.0 million USD for construction of a GTP at Kumkol;
- 65.3 million USD for gas utilization facilities at KAM fields (Kyzylkiya, Aryskum, Maibulak);
- 31 million USD for associated gas gathering and utilization facilities at Kumkol.

The efficient and rational use of associated gas produced by oil and gas operators in various regions of the country represents a priority for the Government of the Republic of Kazakhstan. With this respect the environmentally safe use of associated gas produced by PetroKazakhstan from its fields is one of the Company’s priorities. By investing into the efficient use of gas PetroKazakhstan is constructing some infrastructure facilities that allow improving the ecological situation in the South Turgai Basin and at the same time allow creating permanent jobs for Kazakhstan people.

Water Environment

Commissioning of Bioponds at Aryskum oil field to be used to treat waste water produced by Kyzylkiya, Aryskum, Maibulak and Kolzhan fields in the volume of 400 m3/day. In 2008 a detailed design was fully developed and agreed with state controlling authorities. The facility construction has already started and is expected to be completed by the end of the second quarter of 2009.

Handling of Production Waste

At the beginning of 2009 construction and commissioning of the solid domestic waste landfill were fully completed at Aryskum oil field. This facility will allow disposing and utilizing 4,600 m3 of solid domestic wastes from KAM fields and Kolzhan. Therefore the facility for solid domestic waste burial was constructed in addition to the existing refuse burner MS-40 (commissioned in 2007).

To reduce the impact of production processes on the environment PetroKazakhstan annually allocates significant funds for environmental actions, introduction of resource saving technologies and processes in line with international standards. These actions contemplated in a respective plan and agreed with the RK Ministry of Environmental Protection are fulfilled in full and within the set time frames.

PKOP

It is one of the ecological objectives of the Company to introduce international management systems at its business units. In particular, in July 2008 PKOP successfully completed its certification audit and obtained a certificate of conformity to the environmental management system ISO 14001:2004. Currently PKOP is starting to prepare for introduction of ISO 9001 and OHSAS-18001.

The Company is carrying out the oil sludge is utilized on a disintegrating unit. The technology includes preliminary treatment of oil sludge, processing and production of a fuel oil component from the disintegrating section that allows creating a closed waste processing cycle.

Since 2008 oil sludge is being removed and utilized by a thermal method. In the 1st quarter of 2009 the sludge utilization volume was 80.8 tons. Moreover, PKOP put into operation some biotechnical processes, such as biological recultivation of soil sites contaminated with oil and biological utilization of pyrophoric compounds.

The reuse of treated waste water in the fire water system allows saving equivalent volumes of fresh water consumed from the city water supply system. The saving in 2008 was about 40 million tenge. In addition, 986 tons of commodity mazut were additionally produced from oil sludge utilization in 2008.