Environment
Nostrum is committed to operating in a safe and environmentally sustainable manner. We comply with all legal and regulatory environmental requirements, and are working towards ISO standards in our environmental management system.
We recognise the importance of minimising our impact in the areas in which we operate to prevent harm to the natural environment. Our approach to environmental protection follows a structured commitment to a series of yearly environmental objectives. We manage our environmental footprint through a site monitoring programme, which has thorough controls in relation to:
- Air pollution;
- Water resources protection and rational use;
- Land protection;
- Control and sustainable subsurface use;
- Flora and fauna protection;
- Radiological, biological and chemical safety;
- Ecological education, information and monitoring;
- Research and development, exploration development and other works;
- Production waste utilisation; and
- Soil reclamation.
In 2019 our main environmental objectives are to participate in the CDP disclosure (formerly Carbon Disclosure Project), which is a key way for companies to disclose their environmental impact and risk management, as well as continuing to focus on GHG emission reduction strategies.
The independent review conducted by AMEC found Nostrum’s environmental practices conformed to all required legislation.
Compliance with legislation
Nostrum engages an independent auditor to measure and evaluate our environmental impact. In 2018 AMEC was again engaged to undertake a “Health, Safety and Environmental Compliance Audit” and report upon the content, methodology and results of the environmental efforts at Nostrum during the year. Our 2018 AMEC report showed no non-compliance with RoK legislation or any significant environmental findings. The main conclusions drawn from AMEC’s 2018 audit were as follows:
- HSE management systems correspond to national and international standards and have demonstrated continuous improvement over several years;
- Major incident statistics were reduced in 2018, showing the effectiveness of QHSE initatives; and
- The HSE card initative and distribution of monthly HSE reports has facilitated the involvement of staff into the HSE control process.
Waste, water and soil management
The impact of Nostrum’s operational activities on the environment are monitored through detailed waste, water and soil management systems. The Company underakes air, soil and sub-surface water testing to ensure sanitary and epidemiological compliance with RoK legislation.
In 2018 93.4% of drilling waste was recycled by a contracted company. Soil and water survey results demonstrated compliance with all applicable environmental legislation.
GHG emission reduction and reporting
Nostrum seeks to minimise all GHG emissions and continues to invest in new technologies to improve GHG emission performance. In 2018 this included the commissioning of a Sulfur Regeneration Unit which will lead to a decrease in emissions. Nostrum strictly adheres to both UK and Kazakh regulatory requirements with regard to GHG emissions and has been monitoring and reporting GHG emissions since 2011. In 2019 we will seek to participate in the CDP disclosure process to demonstrate our commitment to improvement and transparency in this area.
As a dually-listed entity, Nostrum also follows UK company law requirements regarding GHG reporting as required under the Companies Act 2006 (Strategic Report and Directors’ Report) – Regulations 2013, which discloses all emission sources. The Company’s GHG reporting period is aligned with the period in respect of which the Directors’ Report is prepared. No responsibility is taken for any emission sources which are not included in the consolidated financial statements. The results of the GHG emissions inventory are presented in the format recommended by the GHG Protocol.
GHG emissions
The baseline in the GHG emissions allocation plan was set as the mean value of the total emissions for the years 2013-2014 (in carbon dioxide emissions equivalent). According to the established limit, GHG emissions for 2018 should not exceed the baseline. The following direct GHG emissions (Scope 1) sources have been identified: flares, heaters, incinerators, boilers, gas turbine plants, electric power stations, compressors and fugitive emissions.
Planned CDP
disclosure participation in 2019
Total direct GHG emissions (Scope 1) subdivided by gas types and by source types are summarised in Tables 1 and 2.
Table 1: Scope 1 GHG emissions subdivided by gas types (tCO2e)
| 2014 | 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|---|
| Carbon dioxide | 236,556.0 | 208,466.2 | 195,453.3 | 242,275.6 | 244,379.2 |
| Methane | 27,424.8 | 13,919.8 | 10,817.0 | 10,723.4 | 8,436.3 |
| Nitrous oxide | 124.3 | 126.2 | 1,045.7 | 1,305.4 | 1,303.5 |
| Hydrofluorocarbons | 16.1 | 34.0 | 33.6 | 27.6 | 36.6 |
| Total | 264,121.2 | 222,546.2 | 207,349.6 | 254,331.9 | 254,155.6 |
GHG emission structure is shown in Table 1. The composition of the GHG emissions predominantly consisted of carbon dioxide and methane.
Table 2: Scope 1 GHG emissions subdivided by source types (tCO2e)
| 2014 | 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|---|
| Stationary combustion | 260,124.4 | 205,701.9 | 195,576.1 | 243,001.1 | 245,362.4 |
| Mobile combustion | 2,135.2 | 1,498.2 | 757.9 | 434.9 | 104.9 |
| Fugitive sources | 1,861.6 | 15,346.1 | 11,015.6 | 10,896.0 | 8,535.8 |
| Total | 264,121.2 | 222,546.2 | 207,349.6 | 254,331.9 | 254,003.2 |
Stationary combustion sources formed the major portion of emitted GHGs. The reduction in emissions from mobile combustion is related to the fact that the majority of vehicles were transferred to a transport services company. Indirect GHG emissions (Scope 2) Nostrum does not use purchased steam, heating or cooling. Electrical power is the only such purchased power related to indirect GHG emissions, and it is supplied to Nostrum facilities via the Zelenovskaya distribution network (ZapKazREK JSC), through its subsidiary Batys Energoresursy LLC. The regional emission factor (0.27086 tCO2/MWh) was calculated using Methodological Guidelines for the Calculation of GHG Emissions from Electrical Power Stations and Boiler Houses (Nur-Sultan, 2010) and regional net thermal efficiency of Urals Natural Gas Fired Power Plants (73.3%). Total direct and indirect GHG emissions (Scope 1 and Scope 2) and total GHG emissions are summarised in Table 3.
Table 3: Scope 1, Scope 2 and total GHG emissions (tCO2e)
| 2014 | 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|---|
| Direct energy (Scope 1) | 264,121.2 | 222,546.2 | 207,349.6 | 254,332.0 | 254,003.2 |
| Indirect energy (Scope 2) | 5,278.6 | 5,482.3 | 2,262.9 | 640.3 | 559.2 |
| Total | 269,399.8 | 228,028.5 | 209,612.5 | 254,972.3 | 254,714.8 |
Emissions intensity ratio Tonnes of CO2 per tonne of output is a recommended intensity ratio for the oil and gas sector, as per Appendix F of the Defra Environmental Reporting Guidelines (2013). Taking into account the variety of products of Nostrum Oil & Gas – crude oil, stabilised condensate, LPG and dry gas – the chosen intensity ratio is a expressed in metric tonnes of CO2e (mtCO2e) per tonne of oil equivalent (mmboe). Table 4 shows intensity ratios for total (Scope1 and Scope 2) emissions in the period 2014-2018. While we targeted a reduction in our GHG emission intensity ratio in 2018, our total emission levels stayed broadly the same whilst our levels of production fell. Unfortunately this resulted in an increase in our GHG emission intensity ratio and this is something that we are continually working to improve.
Table 4: Emissions intensity ratios for total GHG emissions
| 2014 | 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|---|
| Production, toe | 2,366,023.6 | 2,152,421.6 | 2,156,171.2 | 2,088,917.0 | 1,878,026.2 |
| mtCO2/toe | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 |
| Production, mmboe | 16.2 | 14.7 | 14.8 | 14.3 | 12.9 |
| mtCO2/mmboe | 16,623.8 | 15,467.3 | 14,193.4 | 17,820.7 | 19,801.8 |
According to adjusted GHG National Allocation Plan for 2018-2020, the total Nostrum GHG distribution allowance has been set to 627,174 tonnes of CO2. The Ministry of Energy is currently in co-operation with the World Bank to develop and implement an electronic GHG reporting platform which at present is being used in the deployment of a national GHG quota trading system.
Climate change
Nostrum recognises that hydrocarbon exploration and production is a major contributor to GHG emissions and consequently we have a responsibility to work to address climate change. One of our key CSR goals in 2018 was to better understand and respond to this challenge. During the year we partnered with an external agency to assist us in understanding and reporting on potential impacts to our business. We hope this will be a key step in our ongoing efforts to address the issue of climate change long term within our business.
Climate change can affect our business through physical disruption to operations due to changing weather conditions, legislative and policy changes, technology to help reduce emissions, and future changing energy market demands. We plan to more rigorously assess the impact of climate change on our business in the near future, including through portfolio resilience testing. Climate change has been added to our risk register for 2018.
Future GHG reduction initiatives
We are committed to reducing our GHG emissions, and future plans include:
- Modernisation of equipment at the Oil Treatment Unit to reduce GHG emissions; and
- Undertaking an energy audit to identify ways in which GHG emissions can be reduced.
ESG risk is already a primary consideration of Nostrum’s Board, however the Company is working to ensure Senior Management are focused on key issues affecting the business. In addition, the remuneration committee has the remit to take into account ESG issues when deciding on the remuneration of Nostrum’s directors.
Nostrum must also balance climate change responsibilities with our commitments to our shareholders and other stakeholders. We believe in the sustainability of our business and see a continuing demand for the Company’s products into the foreseeable future. We do not believe that a fundamental change in business strategy would be in the best interest of the Company or our stakeholders, particularly given the economic importance of our activities in the communities in which we operate.
