The Public Commission’s Conclusions on the Public Environmental Assessment of the Environmental Protection Activities of Karachaganak Petroleum Operating B.V.

Internet Newspaper “ZONAKZ” Kazakhstan
February 6, 2007

A public commission, including deputies from the Senate, Mazhilis and the Public Chamber of the Republic of Kazakhstan’s Parliament, reviewed the results of the public environmental assessment of projects, data from industrial monitoring of the environment, and the environmental protection activities of the company Karachaganak Petroleum Operating B.V. (KPO B.V.), conducted by the Public Association “Kazakh Society for Environmental Protection” as established by the law.

This initiative met with protest on the part of the company and was brought to fruition only after the intervention of Deputy to the Mazhilis of Parliament Amangeldy Taspikhov, who turned to the Government of Kazakhstan with an inquiry regarding recognized violations of environmental protection legislation on the part of KPO B.V., including a proposal to conduct a public environmental assessment. The Republic of Kazakhstan’s Prime Minister confirmed the legal requirements of the “Kazakh Society for Environmental Protection” and instructed the Ministry of Environmental Protection and the Akim of Western Kazakhstan Oblast to provide assistance to the Society in conducting a public environmental assessment of the company’s environmental protection activities (June 23, 2006 letter).

A consortium of some of the world’s most prominent oil extraction companies—ChevronTexaco (USA), British Gas (Great Britain), ENI (Italy) and LukOil (Russia), is undertaking the development of the unique Karachaganak Oil and Gas Condensate Field in Western Kazakhstan Oblast. These companies, recognized global leaders in the oil and gas industry, devote special attention to environmental protection and environmental safety issues during field development. At the same time, the operating company KPO B.V., acting in Kazakhstan on behalf of the consortium on the basis of the Final Production Sharing Agreement, is undergoing serious criticism.

On the basis of expert analysis of project, normative and other documents presented by the company, it was concluded that the activities of the enterprise are not in accordance with the requirements of the Republic of Kazakhstan’s environmental protection legislation.

KPO is violating legislative conditions that require natural resource users to observe established environmental norms and environmental requirements for economic and other activities. In fact, in 2004 its atmospheric emissions of toxins exceeded environmental norms by 3.3 times, and in 2005 by 2.8 times. In fact, the enterprise’s emissions in 2004 exceeded the permitted volumes established by the Ministry of Environmental Protection by 2.67 times, and in 2005 by 5.4 times. The volume of waste in 2004 exceeded the permitted volume by 5.8 times, and in 2005 by 16 times. The environmental norm for waste treatment approved for the project exceeds the permitted volume by almost 20 times.

Current draft environmental norms for emissions of toxins and the treatment of wastes were developed in violation of normative documents that should define the composition of the indicated drafts.

In violation of established legislative requirements, the special conditions for a natural resource user, “The License of Natural Resource User,” issued to the company in 2004-05, were not fulfilled on a number of points. “The Right to Issue Permission to Pollute the Environment”, approved by the Government of the Republic of Kazakhstan, indicates that a license may be cancelled in cases of systematic violations of environmental requirements and norms by the natural resource user. However, not once during the indicated period was the license cancelled, which points to the failure of the Western Kazakhstan Oblast Territorial Department of Environmental Protection to execute established legislative requirements.*

Discrepancies have been revealed in the actual atmospheric monitoring and in the baseline studies of atmospheric pollution. The majority of data provided by Kazgidromet to the Ministry of Environment contain discrepancies that lead to the absurd finding that there is no influence on the environment from the industrial activity of one of the largest industrial oil and gas enterprises in the entire country. That is, the information about air pollution conditions does not correspond to reality.

Actual repeated pollution of the soil on the territory of the Field by heavy metals in 2004-2005 (for instance, 265 times for cadmium) or distortions of data from previous years did not receive any type of satisfactory confirmation from either contract organizations or KPO itself. Yet this fact did not serve as the logical basis for the controlling bodies to apply sanctions against the enterprise or the contractors who conduct monitoring.

In violation of the requirements of the Law of the Republic of Kazakhstan “On Technical Regulation”, instrumental control of air emissions from pollution sources was not among the accredited activities of the test laboratory “GIDROMET LTD”, at the very time that this work was being conducted by this company. Reports on the results of measurements completed outside the limits of the laboratory’s accredited activities should be annulled, as they are illegal.

Monitoring such parameters as copper, zinc, lead, cadmium, aluminum and strontium was not included in the accredited activities of the test laboratory of the contractor monitoring the topsoil; in other words, this work was conducted in violation of environmental protection legislation and the Law of the Republic of Kazakhstan “On Technical Regulation”.

These violations permitted the change in the size of the Sanitary Protection Zone. Within a month after the reduction of the Sanitary Protection Zone from 5000 meters to 1500 meters, another project was developed, presented and agreed upon to increase its size to 3000 meters. Unreliable data from industrial monitoring of air pollution was the basis for the changes to the normative size of the Sanitary Protection Zone. According to calculations, attention was not paid to the air emissions of other enterprises working on the contract territory of the Karachaganak Field, for instance the company “Kondensat”.

In violation of the requirements of normative documents, the enterprise ceased observation of gas flaring at the Karachaganak Oil and Gas Condensate Field, while in 2004 alone 225.2 million cubic meters of gas were flared (14.5 times more than the previous year) and 56.6 thousand tons of polluted substances were discharged into the atmosphere—3.3 times the established environmental norm.

In violation of legislative requirements of the program on atmospheric protection, the enterprise did not engage in discussions with citizens and public associations to consider their suggestions regarding the planning and implementation of air quality improvement measures.

In violation of established requirements, the company did not take the necessary measures to prevent and eliminate accidental emissions, which in 2004-2005 led to the flaring of incidental gas and emissions of toxins in levels significantly exceeding standards.

In a gross violation of environmental protection legislation, industrial runoff was stored underground, which led to the enterprise being fined 138.4 million tenge in 2005 for unauthorized pollution of the environment.

Over several years, environmental protection measures were disregarded, including those aimed at cleaning rainwater and melted snow that had been disposed of on the industrial territory of the field, using drinking water for industrial needs, ensuring the effective operation of cleaning equipment, and monitoring the impact of injected liquid wastes on the environment.

Data on payments and fines for exceeding pollution standards provide evidence that claims of unauthorized pollution (exceeding standards) of the environment were not filed against the company up to 2001. In 2003-2005, the number of such claims ranged from 4 to 6 annually, from 225 to 480 million tenge. Whereas the share of payments for polluting the environment beyond standards amounted to .007% (4.8 thousand tenge) in 2001, by 2005 it had grown to 98.5% (4,993,000,126 tenge). This tendency continues and now, in the first six months of 2006 alone, 3 claims and 17 fines have been filed against the enterprise, and payments for exceeding pollution standards total 1.858 billion tenge.

This is evidence that KPO B.V. deliberately violates the requirements of Kazakhstan’s environmental protection legislation, provides government bodies and the public with distorted information on the state of the environment, and prefers to pay fines for exceeding pollution limits rather than to comply with established requirements.

The special authorized bodies responsible for ensuring compliance with the requirements established in national environmental protection legislation are not fulfilling their functions in this capacity, contributing to the creation of an environment tolerant of corrupt activity.

The enterprise is violating its own statements and declarations regarding environmental protection, which have been circulated in order to inform the public and the population of the effectiveness of KPO’s environmental protection legislation.

For example, in materials prepared by the Public Relations Department, it is noted that:

-“KPO’s goal is to make the Karachaganak project one of the most impressive examples in the world of progressive environmental practice and to give the country and the field a model for replication”, and so on.

-“In its activities, KPO demonstrates world class environmental indicators…”

This is a distortion of the true environmental situation that has developed at the enterprise in recent years.

The Public Commission notes that all of the aforementioned indicates violations by KPO B.V. of the environmental protection obligations to which it is bound in its contracts and indicates substantial gaps in the activities of the controlling bodies in executing national environmental protection legislation.

The results of the public environmental assessment will be directed via established procedures to government bodies, interested public organizations and the mass media.

Translation by Crude Accountability

*Note from Crude Accountability: In fact, the Western Kazakhstan Oblast Ecology Department denied KPO, B.V. an operating license for a period in 2005 due to systematic violations of environmental law. To learn more about these violations, please see Alla Zlobina’s article “Environmental Dregs”, published by the Uralsk Weekly on April 7, 2005.