Additional Decarbonisation Activities

KMG is working on the implementation of additional decarbonisation activities, including the introduction of carbon capture, storage and use technologies (CCUS), the launch of pilot projects on power stations, the implementation of forest climate projects, etc.

Carbon Capture, Storage and Utilisation (CCUS) Project

KMG is working on the implementation of a pilot project on CO₂ capture, storage and utilisation (CCUS) and determination of injection potential for enhanced oil recovery of depleted oil reservoirs.

KMG SDEs completed screening analyses of CO₂ emission sources. The main groups of emission sources suitable for implementation of the pilot project on CO₂ capture, utilisation and storage technology were identified.

For the purpose of injection and storage of emitted CO₂, promising traps were searched and regions with the highest emissions within a 100 km radius of these emission sources were selected. Potential storage volumes and approximate maximum injection duration were determined for all identified promising traps, taking into account the nearest emission source. As CO₂ can be utilised to improve oil recovery, suitable fields were screened and a database of development fields were compiled. Projected development indicators were calculated for these fields, taking into account CO₂ injection.

Calculations and design solutions were made for the development, including solutions for onshore equipment and pipelines for the system of collection and cooling of exhaust gases from СО₂ sources, СО₂ capture, CO₂ dehydration and accounting, compression and transportation, and CO₂ injection into injection wells.

Development of Hydrogen Energy

As part of the hydrogen energy development work, a feasibility study is being carried out to identify and assess the resource potential for low-carbon hydrogen production, the technical feasibility, commercial and economic viability of investment in construction, and to determine the potential for blue hydrogen production followed by carbon dioxide injection at oil and gas fields to enhance oil recovery.

Blue hydrogen production involves the processing of hydrocarbons, in particular natural gas to produce hydrogen, and is the basis for virtually all large-scale natural gas processing technologies, which are currently carried out in three ways:

• steam conversion (steam reforming);
• carbon dioxide conversion (dry reforming);
• partial oxidation (oxidative conversion).

Carbon dioxide capture and storage technologies are then used.

Carbon dioxide capture in natural gas steam conversion technology for hydrogen production is a prerequisite for compliance with greenhouse gas emission reduction requirements, which is what makes hydrogen blue. The range of carbon dioxide capture technologies is quite broad.

Thus, the production of blue hydrogen in conjunction with technologies for carbon dioxide capture, transport and storage are inseparable to meet the classification.

KMG, as a hydrocarbon production operator, has the capability to produce hydrogen by steam reforming or pyrolysis of natural and/or associated petroleum gas with the provision of carbon dioxide capture and disposal, according to the requirements of carbon intensity of the processes.

Sustainable Aviation Fuel (SAF) Production

In September 2023, together with Air Astana and with the support of the European Bank for Reconstruction and Development, work began on a feasibility study of the market for sustainable aviation fuel (SAF) and the prospects for production in the Republic of Kazakhstan. Today, ICF SH&E Limited, the winning bidder and research company, presented the findings from its study of global and local decarbonisation strategies in the aviation sector, and showcased SAF market research findings such as demand analysis, analysis of feedstock availability for SAF production, review of applicable SAF production technologies.

Following a working meeting of the study participants held on 23-24 November 2023, SAF production technologies most promising for Kazakhstan were jointly identified.

The next stages of the study will include a more detailed study of the selected SAF production technologies to determine the feasibility of SAF production for KMG, as well as a study of the regulatory and legal framework of the Republic of Kazakhstan SAF production. The results of the feasibility study will be presented in the first half of 2024.

Development of Charging Infrastructure for Electric Vehicles in the Republic of Kazakhstan

In February 2023, the 2060 Low-Carbon Development Strategy of the Republic of Kazakhstan was adopted. One of the promising directions of decarbonisation of the transport sector is the development of electric vehicles. In addition, as part of the Low-Carbon Development Concept of Samruk-Kazyna JSC, all portfolio companies have a goal to gradually switch from petrol to electric vehicles. The Government welcomes all forms of cooperation, including corporate sector initiatives that contribute to the achievement of climate goals, KMG is considering the possibility of implementing a project to develop charging infrastructure for electric vehicles in Kazakhstan.

Forest-Climate Offset Projects

One of the ways of offsetting emissions and obtaining offset units has been identified as the implementation of forest-climate projects.

According to the Memorandum with Chevron, joint implementation of forest-climate project on the area of 2000 ha in Pavlodar region was defined as one of the directions of cooperation. In 2023, the first stage of research on this project was launched, which involves the development of a detailed design, calculation of the volume of CO₂ absorption by planted forest, as well as the development of the Concept of Forest Carbon Offset Project.

METHANE MANAGEMENT

In December 2023, on the margins of the Conference of Parties on Climate Change (COP28), Kazakhstan joined the Global Methane Initiative (The Global Methane Pledge).

Participants joining the Initiative commit to take voluntary actions to contribute to collective efforts to reduce global methane emissions by at least 30 % below 2020 levels by 2030. This is a global, not a national, reduction target.

To date, 155 participating countries, representing just over 50 % of global anthropogenic methane emissions, have joined the Initiative.

Implementation of the GMI will reduce methane emissions to a level consistent with the 1.5°C trajectory and provide significant benefits for human and ecosystem health, food security and our economy. It has the potential to reduce warming by at least 0.2°C by 2050 and prevent the annual loss of 26 million tonnes of crops, 255,000 premature deaths, 775,000 hospitalisations due to asthma and 73 billion hours of lost work time due to extreme heat.

In 2023, KMG carried out the following work on implementation of methane management.

Within the framework of the UN Climate Change Conference (COP28) in December 2023, KMG signed a Memorandum of Understanding with UNEP and joined the OGMP 2.0 (The Oil & Gas Methane Partnership) organised by UNEP and IMEO. Thus, KMG became the first Kazakh national company to join the OGMP 2.0 Initiative.

Joining the Initiative provides such opportunities for the Company as sharing experience with international companies that have established management in the management and reduction of methane leaks, methodological assistance in the inventory and calculation of methane emissions, in the selection of technical solutions to reduce methane leaks, improving the company’s rating for investors, including when submitting the International CDP Climate Questionnaire.

In order to reduce and mitigate methane emissions, the Company signed a Memorandum of Cooperation with Tetra Tech ES, Inc. implementing the USAID-funded Central Asia Energy Project (PCA).

USAID will assist in assessing and reducing methane emissions, improving environmental sustainability, and promoting responsible business practices, which is in line with the Government of Kazakhstan’s national goals to achieve carbon neutrality by 2060 as part of the National Climate Plan.

KMG signed an agreement with Baker Hughes Services Kazakhstan LLP in December 2023 to cooperate on the implementation of low-carbon projects, including the implementation of projects to monitor and repair methane leaks and reduce routine flaring.

In addition to the above, KMG, within the framework of the signed Memorandum of Cooperation and Mutual Understanding with Carbon Limits, held a workshop for KMG Group specialists in September 2023 on methane emissions management, including quantitative assessment of methane emissions, gas utilisation and identification of the main sources of leaks, as well as ways to eliminate them.

In addition, a system of technologies and procedures for conducting LDAR at two of KMG’s production facilities was presented in Q1 2024.