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Our Management Approach

Environmental Management System

In order to take action to meet new environmental requirements and global trends, the Company has declared 2021 the Year of Environment. KMG recognises its commitment to sustainable development principles and its responsibility towards environmental and social stability in the regions of its operations.

Health, Safety and Environment (hereinafter, HSE) management objectives are directly linked to KMG Group’s Development Strategy until 2031 (hereinafter, the Strategy). The Strategy includes the strategic initiatives to improve environmental responsibility. Environmental priorities of KMG Group include management of atmospheric emissions and reduction of raw gas flaring, water management, production waste management, land reclamation and biodiversity conservation.

Management of KMG and its subsidiaries and dependent entities exercises zero tolerance to losses and damage related to environmental pollution. In accordance with requirements of the new Environmental Code, KMG’s Environmental Policy was updated in 2021 to ensure collection, storage, analysis and dissemination of environmental information.  The Company’s commitments to sustainable use of natural resources and compliance with biodiversity conservation measures have been additionally strengthened.

The Company has approved an Emission Management Policy consisting of eight key principles, of which six directly concern climate change, and aimed at complete cessation of routine flaring.

In an effort to minimise routine flaring of raw gas, in 2015 the Company supported the World Bank’s initiative of Zero Routine Flaring by 2030. One of our most important objectives in reducing the atmospheric emissions is increasing the effective use and utilisation of associated petroleum gas, minimising gas flaring. Raw gas flaring under this initiative is reported on an annual basis to the representative office of World Bank in the RoK.

The Corporate Water Management Standard was adopted in 2018, which states the KMG’s core principles in terms of water use – 8 Water Principles – and systematises the approach to water management. We adhere to strict water use principles. We have now embarked on several large-scale projects to treat wastewater and saline water for production purposes in order to free up freshwater for the benefit of the population.

Health, Safety and Environment (HSE) Management System

The Health, Safety and Environment Management System (HSE MS) was developed in accordance with the laws of the Republic of Kazakhstan, industry and international standards ISO 14001 and ISO 45001, using best international practices and approaches, recommendations of the International Association of Oil & Gas Producers (IOGP), and includes 10 key elements based on such fundamental principles as leadership, achievement of goals, risk management and continuous improvement.

Since 2006, KMG has implemented an integrated quality, environment, health and safety management system (IMS) in accordance with the requirements of ISO 9001, ISO 14001 and ISO 45001. SDEs with substantial energy consumption levels are certified to ISO 50001. IMS performance is regularly verified by independent auditors.

In order to improve its management system, KMG health and safety management system is certified for compliance with the international standard ISO 45001.

Considering the leading and best practices in health, safety and environment (HSE) management, a three-tier committee system has been introduced and implemented to increase the commitment and involvement of managers at all levels and employees in HSE management processes:

• Tier 1 – Health, Safety, Environment and Sustainability Committee of KMG’s Board of Directors (HSESC);
• Tier 2 – HSE Committee at KMG level;
• Tier 3 – HSE Committees of SDEs.

Since 2019, there is a Health, Safety and Environment Committee at the level of Samruk-Kazyna JSC. In 2021, KMG took an active part in work of this Committee and the Committee’s Expert Group. Within the Committee and the Expert Group, Samruk-Kazyna JSC’s portfolio companies actively share experiences and develop common approaches in the field of HSE, including in relation to pandemic response. Many of KMG’s approaches to HSE and pandemic response have been adopted by other portfolio companies as best practices.

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Health, safety and environment reports are reviewed by KMG’s Board of Directors on a monthly basis, with detailed informative reports reviewed by KMG’s Board of Directors’ HSESC. In 2021 meetings, the HSESC discussed the following key topics:

• waste management and implementation of the Historic Waste Disposal Memorandum;
• occupational health and safety management system
• management of KMG’s contractors;
• atmospheric emission management.

HSE risks are monitored on a quarterly basis, including environmental, climate change and water scarcity risks. KMG regularly reviews environmental performance and benchmarks against leading international oil and gas associations (IOGP, CDP). The Company pays particular attention to environmental aspects and environmental risk assessment.

Engagement with Contractors

The Company is committed to improving its contractor HSE management processes, which are based on identifying, assessing and mitigating risks at all stages of work and service delivery by contractors/subcontractors at KMG Group’s production facilities.

Critical requirements when engaging with contractors are:

1. Leadership, commitment and accountability of managers at all levels of the Company in the area of HSE;
2. Pre-qualification of contractors (questionnaires, audit of machinery and equipment compliance, qualification of specialists, documentation for compliance with HSE requirements);
3. Contractors’ commitment to and strict compliance with KMG’s policies and standards;
4. Ensuring the HSE expertise of KMG and contractor employees at all levels is in proportion to the existing risks and its continuous enhancing through training;
5. Development of an HSE plan by contractors, which includes risk management at all stages of work or service delivery;
6. Pre-mobilization audit of machinery and equipment compliance, qualification of specialists, documentation for compliance with HSE requirements;
7. Improving communication and awareness of HSE risks among KMG employees, contractors (subcontractors) and stakeholders;
8. Assessment of contractors’ HSE performance and measures for improvement.

In addition, the Company regularly holds forums, meetings with contractors to discuss issues of concern and improve HSE communication.

LTIR (Lost Time Injury Rate) per 1 mln man-hours involving contractors in 2021 was 0.27. FAR (Fatality Accident Rate) per 100 mln man-hours involving contractors in 2021 was 0.00. Contractors data gathering process is at early stage. The system will be continuously improved.

Accident and fatality rate involving contractors

GAP analysis of contractor HSE management system performance for 2021 conducted independently by SDEs showed a positive level of system development.

In order to confirm and verify GAP analysis data, it is planned to conduct audits of the contractor management systems in SDEs, based on which the submitted data will be compared with the audit data and main constraints (system causes) in development of contractor HSE management system will be identified.