Improving Energy Efficiency and Energy Saving

The main decarbonisation activities are aimed at reducing direct emissions (Scope 1) through energy efficiency activities for stationary combustion sources, reduction of gas flaring and strengthening of methane leak control activities and a set of actions aimed at reducing emissions from vehicles.

Reduction of indirect emissions (Scope 2) will be carried out through energy efficiency improvements, increasing energy consumption from “clean” energy sources.

Use of Energy Resources and Improvement of Energy Efficiency

The Company’s activities in the field of energy saving and energy efficiency are based on the methods of ISO 50001 Energy Management Systems, which are the best generally recognised international practices for system management in this area.

Energy Policy of KMG

Within the framework of implementation of the KMG Low Carbon Development Program for the period 2022–2031. In December 2022, the corporate Energy Policy of KMG (hereinafter – Policy) was developed and approved, which applies to all subsidiaries and dependent organizations, as well as KMG contractors. You can read the Policy at: https://www.kmg.kz/ru/sustainable-development/corporate-governance/corporate-documents/.

The Policy supports energy-efficient procurement and project activities, defines responsibilities in terms of energy management and, guided by economic feasibility, practices the implementation of the best available techniques, international practices, standards and administrative decisions aimed at energy saving and energy efficiency improvement, is an integral part of KMG’s 2022–2031 Low-Carbon Development Programme and creates a basis for setting and analysing goals and energy targets.

Energy Consumption

Consumption of the Company’s Energy

A total of 124.1 mln GJ (4,088 thous. toe) of fuel and energy resources were consumed in 2023 (6 % less than in 2022, the decrease in energy resources consumption is due to a decrease in consumption of natural gas and APG), including electricity – 12.9 mln GJ, heat energy – 4.0 mln GJ, motor fuel – 1.6 mln GJ and boiler and furnace fuel – 105.8 mln GJ (at the same time, refinery gas is 24 %, natural gas is 22 %, stripped gas is 15 % and boiler and furnace fuel is 12 % of total energy resources consumption). The volume of energy consumption is distributed among three business areas: Oil and Gas Production, Oil Transportation, and Oil and Gas Refining.

In 2023, KMG Group’s own generated energy totalled 740 000 thous. kW of electricity and 3,988 thous. Gcal of heat energy.

Renewable Energy Consumption

In 2023, in accordance with the Rules for Determining the Rate for RES support, Atyrau Refinery purchased electricity in the amount of 3,741 thous. kW for own needs generated by renewable energy facilities from Accounting and Financial Centre for Renewable Energy Support LLP. Electricity generation by solar panels of PetroKazakhstan Oil Products LLP and JV Caspi Bitum LLP for street lighting of the territory in 2023 amounted to 101 thous. kWh.

Energy Efficiency and Description of Energy and Resource Saving Activities

The main strategic areas of energy saving and energy efficiency development in KMG Group are upgrading of process equipment, introducing energy saving technologies, optimising heating energy generation and consumption as well as developing own generation sources, including those using APG.

This year, 8 design and costing exercises and 52 LCDP exercises, the estimated annual savings of fuel and energy resources amounted to 22,289 toe (716.6 thous. GJ) (0.6 % of total energy consumption by the end of 2023), which is equivalent to a reduction of 45,054 tonnes of CO₂ emissions. The largest energy saving effect was achieved for natural gas (69 %) and other fuel resources (oil plant gas, fuel oil – 17 %, heat and electricity – 14 %).

The effect in physical terms is 13,287 thous. kW of electricity, 10,776 Gcal of heat energy, 2,489 tonnes of boiler and furnace fuel and 13,149 thousand m³ of natural gas. The total cost of implementing energy saving and energy efficiency activities amounted to KZT 3,509 mln.

Due to budget optimisation at SDEs and late tender procurement deadlines, 22 actions under the Low-Carbon Development Programme were not taken. These actions will be taken in 2024.

Specific Indicators of Energy Consumption

In 2023, specific energy consumption in the hydrocarbon production direction averaged 2.7 GJ per tonne of hydrocarbons produced across KMG Group, which remains 80 % higher than the International Association of Oil and Gas Producers (IOGP) indicator of 1.5 GJ per tonne of hydrocarbons produced in 2022.

The average value for KMG Group is not representative due to a strong distortion due to high specific consumption by OMG and KBM. Specific energy consumption per tonne of hydrocarbons produced by KBM is 6 times higher than the world average according to IOGP data due to the fact that production at Karazhanbas field is possible only by displacing oil from underground formations by steam and hot water. This is due to the high content of dissolved paraffins and the rheological properties of the produced oil, as a result of which it is necessary to heat it not only in winter but also in summer during oil production and transportation.

ENERGY CONSUMPTION BY BUSINESS LINES(%)

On 20 December 2023, the Management Board of KMG approved the Regulations on Energy Saving and Energy Efficiency Management in KMG Group. The Regulations define the procedure for engagement, scope of authority, duties and responsibilities of KMG Group’s units and employees within the framework of energy saving and energy efficiency management, which consists of the following processes:

• management of statutory requirements;
• planning of work in the field of energy saving and energy efficiency improvement;
• building/optimisation of the energy saving and energy efficiency management system;
• analysing the efficiency and effectiveness of works and activities in the field of energy saving and energy efficiency improvement.

Energy Saving, RES and Low-Carbon Development Online Workshop

In 2023, on the eve of the professional holiday International Energy Saving Day, celebrated on 11 November, the KMG Low-Carbon Development Department together with Energy Partner LLP held the Energy Saving, RES and Low-Carbon Development Online Workshop attended by KMG SDEs.

During the workshop, guest lecturers highlighted the most relevant topics related to the prospects of development in the field of energy saving and energy efficiency. The workshop became a platform for discussion on topical directions in the field of energy saving and low-carbon development, formation of energy-saving thinking among all KMG employees, regardless of their position and professional duties.

Reforming the Wholesale Electricity Market

Since July 1, 2023, the wholesale electricity market (WEM) has been reformed by introducing centralised purchase and sale of electricity (single buyer mechanism) and a real-time balancing electricity market.

Under the new mechanism, the same electricity rate is set for all WEM consumers across the country, and WEM entities are financially responsible for imbalances.

A number of KMG SDEs are already operating in the wholesale electricity market.

Targeted energy audit of process furnaces and boiler equipment of oil production companies EMG JSC, OMG JSC, MMG JSC, KBM JSC

In 2023, to assess the actual condition of process furnaces and boiler equipment, as well as the actual consumption of boiler and furnace fuel and to identify additional potential for reducing the consumption of fuel resources, a targeted audit of process furnaces and boiler equipment of boiler rooms of MMG JSC, OMG JSC, EMG JSC, KBM JSC was performed. Based on the results of the target energy audit, 23 actions were developed with a total energy saving potential of 56,667 toe, the CO₂ reduction potential from the implementation of these actions was 87,517 tonnes of CO₂. At the same time, 14 actions were approved as economically and technically feasible with a total energy saving potential of 32,145 toe and CO₂ reduction potential of 42,874 tonnes. Based on the results of the work, additional actions to reduce the consumption of boiler and furnace fuel will be included in the Action Plans of the audited SDEs for the implementation of KMG’s 2022–2031 Low-Carbon Development Programme.

Planned Projects 2024:

• Development of the KMG 2060 Low-Carbon Development Programme and an Action Plan for its implementation
• Implementation of recommended actions based on the results of the targeted audit of process furnaces and boiler equipment in the Action Plan to Implement the KMG Low-Carbon Development Programme
• Conducting a market research study on the sustainable aviation fuel (SAF) production market
• Assessment of the potential for implementing a pilot project to build a “Full Chain“ of CO₂ capture, utilisation and storage (Stage 2)
• Analysis of the possibility of low-carbon hydrogen production (from associated petroleum gas/natural gas, from utilised formation water and/or wastewater generated at the fields)
• Consideration of the possibility of implementing the project “Development of Electric Filling Station Infrastructure for Electric Vehicles in Kazakhstan“
• Activities aimed at introducing methane management in KMG Group
• Implementation of offset projects.