PetroKazakhstan reports on its 2016 performance results

UPSTREAM
In 2016, PetroKazakhstan Inc. produced 3.747 million tons of oil, including its 50% shares in JVs – Kazgermunai and Turgai-Petroleum. This includes 1.943 million tons of actual cumulative oil production by PKKR, Kolzhan and PKVI for twelve months of 2016 versus the planned crude oil production of 2.045 million tons for 2016; 50% of Turgai-Petroleum’s production was 0.321 million tons, and 50% of Kazgermunai JV’s production was 1.450 million tons. In 2016, PKKR, Kolzhan and PKVI drilled 22 new wells, including 3 producing and 19 exploration and appraisal wells, and Kazgermunai drilled 16 producing wells. According to the report of the independent auditor McDaniels, the increment in P1 oil reserves was 7.600 million barrels for PKI group in general. 
DOWNSTREAM
In 2016 PetroKazakhstan Oil Products LLP actually processed 4,501,467 tons of oil versus the plan of 4,444,623 tons; the plan was completed for 101.28%. For comparison: in 2015 PKOP LLP processed 4,493,312 tons of crude oil. 
Motor gasoline production was 1,032,015 tons, which is 103.26% of the plan (987,964 tons in 2015), and diesel production was 1,203,445 tons, which is 101.16% of the planned volume (1,192,445 tons in 2015). 
In 2016 PetroKazakhstan Oil Products LLP improved the efficiency of its manufacturing processes to increase its light oil product yield. It’s worth noting that without downtime in its core operations the refinery is intensively rolling out its Modernization and Reconstruction Project with construction of new process lines.
The PKOP Shymkent Refinery Modernization and Reconstruction Project is being implemented in 2 stages:
Stage 1 is aimed at achieving the production of motor fuels to K4 and K5 environmental standards in accordance with the Technical Regulation of the Customs Union. 
Stage 1 includes reconstruction of the existing Diesel Hydrotreater, and construction of a Sulfur Plant and an Isomerization Unit. The Diesel Hydrotreater reconstruction and the Sulfur Plant construction were finished in 2015. 
The construction of the Isomerization Unit with relevant offsite facilities is being completed at the moment.
Stage 2 is aimed at increasing the refinery throughput to 6 million tons per year and the oil conversion rate. This stage is most complex from technological point of view and includes a Catalytic Cracker complex. The construction of these sites is going at a fast pace.
The ultimate goal of the Modernization Project is to convert to production of oil products to EURO-4 and EURO-5 standards and to increase the conversion rate and light product yield.HSE
In 2016 the Corporate HSSE Department updated the Corporate HSE Risk Assessment Procedure and ran a pilot test on it at one of the Company’s production sites. All hazardous production sites of PetroKazakhstan have undergone a fire safety audit, which resulted in 16 positive opinions releasing the Company sites from routine fire safety inspections for a three-year period. The behavioral safety audit (BSA) results recording and analysis process has been automated. BSAs at PKKR are conducted using off-line forms which are further registered and analyzed in an SAP module.
In the past year 26 employees of PetroKazakhstan got awards under the Employee Award Program for Reported Near Misses, Unsafe Conditions and Acts. 
PKKR continued the work on the Korgau Project: a Risk Management Subcommittee was established, and a BSA Implementation Methodology Guide was issued and distributed. The Central Safety Committee meets on a regular basis. During the HSE month there was a competition The Best Workshop in the HSE Area, and prior to the Fire Safety Day there was a competition on the following subject: “It’s easier to prevent a fire, then to fight it”. 
Based on results of 2016 PKOP LLP’s HSE Management System (MS) was recognized as meeting the requirements of international standards ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007. For the purpose of enhancing the HSE MS the refinery is continuing to implement the Aman Project for the implementation of an HSE integrated management structure.
Greenhouse gas inventory was completed and greenhouse gas emission certificates were obtained for all PetroKazakhstan sites. 
PKKR JSC started the project for expanding the solid domestic waste landfill at Kumkol field and electrifying the solid domestic waste landfill at Aryskum field. 30 tons of low-radioactive waste has been taken out for recycling. 
In 2016 PKOP LLP became a winner of the Paryz annual republican contest for business social responsibility where the refinery was recognized as the best in the nomination For Contribution to Ecology. The solemn winner award ceremony was attended by the Head of the State Nursultan Nazarbayev.
The refinery operates a system monitoring contaminant emissions to the environment, and carries out biological reclamation of contaminated soils on a permanent basis. Recycling of secondary oil refining waste (oil sludge) and pyrophoric compounds has been implemented. PKOP LLP signed a memorandum for business social responsibility in the region, under which every year refinery people plant trees in the refinery buffer zone. In 2016 the number of planted trees reached 908.
CORPORATE SOCIAL RESPONSIBILITY
As before, PetroKazakhstan is implementing a multipurpose sponsorship program in all regions of its operation. The company actively participates in projects for social infrastructure development, paying special attention to long-term programs for the support of vulnerable segments of population, orphans, veterans of the Great Patriotic War and workers of the labor front, veterans of the Afghanistan war and disabled persons, and in projects for the development of health care, mass sports, culture and art.Over many years PetroKazakhstan has been a partner of DOM Public Foundation supporting the production of the “Present Children with Life” Program on Khabar channel, the purpose of which is to attract the attention of the state and the society to problems of children with incurable diseases in Kazakhstan, and also to help such children collect necessary funds for their treatment abroad. The company participates in other projects of the foundation too. The Company Vice President Bakhytzhan Issengaliyev is the chairman of the guardian council at DOM Foundation and actively participates in the resolution of various issues emerging in the process of its operation.  
Since 2011 we have been actively collaborating with Bauyrzhan Public Foundation, which once again organized and held an anniversary national award Altyn Zhurek (Golden Heart). Traditionally this project aims to identify and award individuals and companies, whose charity efforts make an invaluable contribution to the society development. In such a way the company contributes to the development and promotion of philanthropy in the country, creating a dialogue space for good doers and socially vulnerable community.
PetroKazakhstan is a permanent sponsor of the International Vocalist Competition established by a USSR People’s Artist, a hero of socialist labor, academician Bibigul Tulegenova.   
Promotion of a healthy lifestyle is a priority in the company’s social policy, that is why the company starts to implement and promote such rules from its own personnel. The annual PetroKazakhstan Olympics is well known among oilmen. The 6th Corporate Olympics held in November of 2016 in Kyzylorda was attended by more than 60 employees from PetroKazakhstan Kumkol Resources JSC, PetroKazakhstan Oil Products LLP, JV Kazgermunai LLP and CNPC – Ai Dan Munai JSC. 
In 2016 the Downstream Unit of the Company (PetroKazakhstan Oil Products LLP) allocated KZT 51 million for traditional social projects and the support of sponsored organizations, including sports development projects in the oblast and rehabilitative support of children with disabilities, and labor veterans of South Kazakhstan Oblast. 
The funds allocated by the Upstream Unit (PetroKazakhstan Kumkol Resources JSC) for social projects amounted to KZT 151.7 million.
ACHIEVEMENTS AND AWARDS
The Company’s contribution to the development of regions and the merits of PKKR and PKOP employees were recognized at the republican and local levels. 
In celebration of the 25th anniversary of Independence of the Republic of Kazakhstan, the RK Ministry of Energy, NC KazMunaiGas JSC and KazMunaiGas-RM JSC awarded medals For Contribution to Oil and Gas Sector Development and For the 25th Anniversary of Independence of the Republic of Kazakhstan, commemorative tokens, certificates of merit and letters of gratitude to 18 PKOP employees. 
In celebration of the 30th anniversary of the Kumkol field commercial development, the RK Ministry of Energy, KAZENERGY Association, EP KazMunaiGas JSC, CNPC, the Kyzylorda Oblast and Kyzylorda City Akimats, and the Kyzylorda Oblast Chamber of Entrepreneurs awarded medals For Contribution to Oil and Gas Sector Development, Veteran Worker medals, Honored Worker of Oil and Gas Industry award pins, certificates of merit and letters of gratitude to 147 PKKR employees. The company management also awarded 66 PKKR employees with letters of gratitude.

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