Our first Sustainability Report issued to the public
in 2016 was an important step in reflecting our
fundamental commitment to balance short– and
long-term interests and integrate environmental and
social considerations into our decision-making. As
the new Managing Director of NCOC, I will continue
this drive to report with complete transparency
the annual performance in a broad range of areas
including production, social-economic performance,
and environmental stewardship.
This report illustrates some of the ways we have
proven our commitment to sustainability in 2018.
The year 2018 was one of steady, reliable production,
and low flaring. It was a year of milestones, such as
25th Anniversary of the North Caspian Project, which
was celebrated with local communities in Atyrau and
Mangystau Oblasts in August. It was a year of steady,
continuous improvement in environment protection,
in efficiency of energy and water use, in increasing
Kazakhstani content, and in reaching out to the local
This year did see a dramatic surge forward in the
most important area, safety. You may have noticed
the logo “2018 – A record year for safety” on many
pages of this year’s Report. It is in recognition of the
fact that for over 200 consecutive days in 2018 there
were no lost-time incidents anywhere in our project.
Our overall lost-time injury rate also set a new record
low for the North Caspian project. This is an important
achievement of all men and women of NCOC, who are
looking out for one another and never lose focus on
their objective. Zero is our Goal, and for over 200 days
in 2018, NCOC proved as a team it can be done.
As the year closed, we were pleased that NCOC
was awarded the Golden Prize at the national
Paryz competition for the most socially responsible
company of 2018 in Kazakhstan. This was a great
honour and recognition of our contribution into
social development of the regions. We are proud
to invest almost 640 million US dollars into social
projects over the last 20 years that improved the
wellbeing of local communities.
Moreover, NCOC ranked fourth among 19 large
oil and gas companies in the Environmental
Responsibility Rating organized by Russia’s World Wildlife Fund in partnership with United Nations
Environment Program-Central Asia and with support
of the RoK Ministry of Energy. This is the first year
NCOC was included in this rating of Kazakhstani
companies in three areas: environmental management,
environmental impact, and transparency.
Our commitment to sustainability, both in
environment and society, will remain at the core of
all our business activities. We will continue to deliver
on our commitment to provide transparent and
comprehensive information to our stakeholders.
Sincerely, Richard Howe Managing Director, NCOC
The North Caspian Project is the first major offshore
oil and gas development in Kazakhstan. It covers five
fields: Kashagan, Kalamkas-Sea, Kairan, Aktote, and
Kashagan South West.
The giant Kashagan field ranks as one of the
largest oil discoveries of the past five decades, with
approximately 9-13 billion barrels (1-2 billion tonnes)
of recoverable oil. The Kashagan reservoir lays 80 km
offshore the city of Atyrau in 3-4 meters of water,
and more than 4 km deep (4200 meters).
The fluid being produced from Kashagan is a mix
of hydrocarbons: light, gaseous components such
as methane, ethane, carbon dioxide, and hydrogen
sulfide, and heavier petroleum components.
Kashagan as a
reservoir is characterized by
high pressure (more than 700 bar), and a high
concentration of hydrogen sulfide (H2S), making
the gas “sour.” Sour gas is treated to remove the
H2S, and this process produces elemental sulfur.
The amount of oil we can produce is limited by the
amount of sour gas we can process.
A positive feature at Kashagan is that sour gas at
these high pressures, when re-injected, can actually
enhance oil recovery. Thus sour gas re-injection is
an optimal solution from both an environmental
and production standpoint, allowing us to increase
Kashagan’s oil recovery ratio while minimizing
sulfur production. The light, gaseous components
are separated from the heavier oil offshore on
D-Island and about half of it may be re-injected
under high pressure back into the reservoir, into
the same rock formation from which it is produced.
The remainder of
the gas is sent to the Bolashak
Onshore Processing Facility where hydrogen
sulfide is removed from the “sour” gas. Some of
the processed, or “sweetened,” gas is used for
onshore and offshore power generation, and some
is marketed as Sales Gas.
Kashagan Phase 1 is the first development in the
North Caspian Sea PSA license area, costing about
US$55 billion. Commercial production began in 2016.
NCOC is working to progress the development of
the Kalamkas-Sea field and has completed a major
concept selection study. The preferred concept is a
cooperative development of Kalamkas-Sea field and
Caspi Meruerty Operating Company nearby Khazar
field. Together these
two fields have recoverable
reserves of 70 million tonnes (500 million barrels)
of oil. This cooperative development maximizes
synergies and contributes to the economic viability
of both the Kalamkas and Kazhar Projects. Early
engineering is underway, and NCOC intends to
submit a proposed plan of development in mid-2019.
NCOC has studied multiple development scenarios
for Aktote and Kairan. As with other sour resources,
standalone development will be challenging
in the current cost and oil price environment.
Synergistic development of Aktote and Kairan
could enhance the development of Kashagan future
phases. However, more time is needed to better
understand Kashagan base performance and use
that knowledge to improve development plans. In
2018 the RoK Government granted NCOC a fiveyear
extension until end of 2022 to further study the
In 2018, oil production safely reached actual
levels of 343,000 barrels per day. Driven by the
successful ramp-up of raw gas reinjection, a total
of 13.22 million tonnes of oil were produced, 60%
higher than the previous year. Overall production
reliability remains high and has continued to exceed
expectations, allowing NCOC to keep flaring to a
minimum. From the start of production at Kashagan
in 2016 to year-end 2018, NCOC has safely
produced a total of 22.5 million tonnes of stabilized
oil from the Kashagan field.
NCOC reached a milestone on November 8, 2018: 1
million tonnes of sulfur exported, roughly a year from
the day the first train cars left the newly commissioned
sulfur export facility on October 28, 2017. Most of the
sulfur is delivered to the European Sulphur Terminal
at Ust Luga near St. Petersburg, with about one in
six of the trains going to Port Kavkaz on the Black
Sea. Most Kashagan sulfur is headed for the Nor th
African fertilizer market, with significant quantities
also being sold to Turkey, Brazil and the USA, and
some cargoes even reported going to South Africa
and China. With the growth in volumes, Kashagan
sulfur has now become an important player in the
global sulfur market.
In accordance with regulations, NCOC plans a
turnaround of its Bolashak plant and D-Island for
about 45 days in April-May 2019. A turnaround
is a complete shutdown of operations for a short
period of time every two to three years to conduct
technical inspection and scheduled maintenance of
The Operator is on track to reach full design
capacity of 370,000 barrels per day in 2019.
NCOC is now assessing options and carr ying
out early engineering on projects to increase
production capacity at the Kashagan field step by
step beyond this.
Since mid-November 2017 all oil has been
exported via the Caspian Pipeline Consortium’s
newly-expanded Atyrau-Novorossiysk pipeline.
Before that time, some volumes have been also
exported northbound through Atyrau-Samara
(connection to Russian Transneft system).
There is also other eastbound route via Atyrau-
Alashankou pipeline, not currently used for
transporting Kashagan volumes.
Sales gas is shipped through a dedicated pipeline
to Makat and then onward via KazTransGas
infrastructure. Sulfur is being shipped by rail.
Each shareholder is independently responsible
for transporting and marketing its own share of
The North Caspian Project is developed under the
North Caspian Sea Production Sharing Agreement,
signed by the Republic of Kazakhstan and an
international consortium of major oil and gas
companies in 1997.
Today, more than twenty years later, that
consortium includes seven of the world’s largest
and most experienced energy companies: KMG,
Eni, ExxonMobil, Shell, Total, CNPC and Inpex.
Each shareholder is independently responsible
for transporting and marketing its own share of
production, and for reporting and sharing that
production with the government according to the
The Project is managed by an Operator, acting on
behalf of the shareholders. Prior to 2015, the North
Caspian Project was operated under a model in
which the Operator delegated certain development
and production activities to four “agent” companies.
In late 2014 the shareholders agreed to further
integrate and consolidate management with the
creation of unified Operator North Caspian Operating
Company N.V. (NCOC)1. The top executive officer of
NCOC is the Managing Director.
To ensure company systems and processes meet
the highest international standards, NCOC holds the
The external verification for these awards requires
NCOC to regularly demonstrate not only compliance,
but also continuous improvement in its management
1 Here and elsewhere in this document the abbreviation NCOC refers only to North Caspian
Operating Company N.V. The term Operator
may refer to NCOC, or to any of the previous Operators under the NCSPSA, as appropriate in context.
2 API RP 754 is American Petroleum Institute Recommended Practice 754, which
classifies process safety indicators for the petrochemical and
refining industry into four tiers. Tiers 1 and 2 are considered suitable for public reporting. See
The Global Warming Potential multipliers used to calculate CO2 equivalence are 21 for CH4 and 310 for
N2O, using 100-year time horizons, based
on RoK Ministry of Environmental Protection Order № 280-e(p) of 5 Nov 2010 “Об утверждении отдельных методик
по расчету выбросов
парниковых газов.” Emissions are calculated at the facility level based on approved methodologies and
requirements established by the RoK
Environmental Code and applicable regulation, and consistent with the 2006 IPCC Guidelines for National
Greenhouse Gas Inventories.
At the time this report goes to press, NCOC has not yet received third-party verification of the underlying
data presented here for Direct
Greenhouse Gas Emissions, as is required by law prior to their submission to the RoK Ministry of Energy by 1
April each year. Therefore these
numbers must be considered preliminary and subject to change.
Calculated from indirect electricity consumption using a demand-side emission factor of 0.998 tCO2/MWh for
Kazakhstan grid (combined
margin) in 2017, per “Методика расчёта коэффициента выбросов для электроэнергетических систем,” Kazakh
Scientific Research Institute
of Ecology and Climate of RoK Ministry of Environment (2012), based on the EBRD methodology in the Appendix
2012), available from the Kazenergy GHG standards website.
The normalization factor for intensity figures in 2018 is 18.55 million tonnes oil equivalent (TOE). This is
calculated from the total wellhead production
of crude oil, dry gas and natural gas liquids (including flared gas and gas used for fuel but excluding gas
reinjected into the reservoir) in TOE,
according to “Recommended normalization factors for environmental performance data” in 3rd edition (2015) of
IPIECA “Oil and Gas Industry
Guidance on Voluntary Sustainability Reporting,” p.37. Physical tonnes of crude oil are converted to TOE by
multiplying 1.018 TOE/tonne oil. Physical
volumes of associated gas are converted to TOE by multiplying 0.932 TOE/000 Sm3. The conversion factors are
specified in Appendix 2 of the Order
of the Chairman of the Statistics Committee of the RoK Ministry of National Economy № 160 of 11 August 2016
“Методики по формированию
топливно-энергетического баланса и расчету отдельных статистических показателей, характеризующих отрасль
7 1 megawatt-hour (MWh) = 3.6 gigajoules (GJ).
8 Standard cubic meter at 20°С and pressure 1 atm. The format for reporting
amounts flared is established in RoK Government Decree № 1104
of 16 October 2014.
9 Updated from 2017 report of 608 tonnes to include emissions from evaporation
10 Employees of NCOC N.V. only. “Management” corresponds to NCSPSA categories 1
and 2, “technical and engineering” to NCSPSA categories
3 and 4, and “worker and support” to NCSPSA category 5.
11 Local goods, works and services are defined per the Unified Methodology on
local content calculations, defined in the 2010 RoK Law “On
Subsurface and Subsurface Use.” See Link to Subsoil Act definitions of local content used by NCOC.
Narrative reports on NCOC performance are divided
into six key aspects of sustainability, as shown
graphically below. This manifests our concept of
sustainability as the integration of economic, social
and environmental concerns. Each of the aspects
has narrative descriptions, putting results in context with explanation, and
occasionally providing a case
study to illustrate progress toward goals. The topics
covered are determined by “common” reporting
requirements of the IPIECA guidelines (3rd ed., 2015)
and our analysis of issue materiality. See the section
“Reporting Process” for more detail.
On September 25, 2015, the United Nations
General Assembly adopted the 2030 Agenda for
Sustainable Development, including 17 Sustainable
Development Goals (SDGs) aimed at addressing
some of the world’s pressing economic, social
and environmental challenges.
states are expected to use the SDGs to frame
their development plans, and there is recognition
that businesses like NCOC will also play a role in
achieving them. In this report, we highlight some of
the ways we hope to contribute to achieving SDGs
in Kazakhstan by denoting certain sections with an
appropriate logo, according to the legend below.
It is an NCOC core value that every worker must
return home to family and friends uninjured, fit
and healthy. NCOC speaks of this as “Goal Zero,”
meaning it is the most fundamental objective
underpinning all business and environmental
results, and that our goal is zero incidents. NCOC’s
performance is already equal or better than industry
average, and in addition, NCOC sets an annual
improvement objective that each year should be the
best ever safety performance for our Project.
In recognition, this Report bears a logo “2018 – A
record year for safety” on its pages.
Safety performance is measured by the Total
Recordable Injury Rate (TRIR), the total number of
injuries sustained per million man-hours worked, and
by the Lost Time Injury Frequency (LTIF), the number of
cases of injury or illness that cause the worker to stay
off the job for a time, per million man-hours. In 2018,
the number of man-hours worked was 22.5 million.
Although the man-hours were almost the same as the
previous year, we achieved more than 50% decrease in
our LTI rate from 0.32 in 2017 to 0.09 in 2018, and more
In 2018 we reaffirmed our commitment towards Goal
Zero so that all those working for NCOC can go home
safe, every day. It is with this Goal Zero mindset that we
are proud to report that NCOC completed the year with
its best annual result in safety performance to date.
than 25% reduction in our Recordable Injury Rate from
0.60 in 2017 to 0.44 in 2018.
In 2018 we continued to thoroughly investigate
incidents, improving the visibility of High Potentials
On 28 April 2018 NCOC marked World Safety Day, an annual
international campaign to promote healthy and safe working
practices. Two hundred people took part in the “HSSE Talk” event
conducted by the HSSE Culture and Communication Team, at
which senior management shared their own personal stories
related to safety. The event brought all NCOC personnel together
by video links from Aktau, Bautino, Astana and offshore islands
A moment of silence was observed for all those around the
world who have lost their lives on the job, as a reminder of the
importance of occupational health safety.
in our internal reporting and reviews. By highlighting
the learnings, we focus attention on reducing the
occurrence of incidents that have the potential to
cause a fatality, and we embed the improvements in
the way we operate.
One of the accomplishments of the year was
introducing strategic focus areas which we call “Goal
Zero Must Wins”. These focus areas include Behavior
Based Safety, Process Safety, Contractor HSSE
Management and Embedding Learning from Incidents,
all underpinned by Safety Leadership. These areas
were presented in the beginning of 2018 and already
have contributed to a significant improvement of our
Personnel Safety and Process Safety performance alike.
Management of Process Safety involves keeping our
oil, gas and process chemicals inside the production
facility plant and equipment so they do not cause
harm to people, asset damage or environment impact.
To achieve our Company vision of being “recognized
in Kazakhstan and internationally for its safety
performance”, all our production facilities are
designed and constructed in accordance with bestpractice
We implement Company processes and procedures
to prevent the release of hazardous materials, and
reduce the consequences of releases should they
happen. Staff undergoes training and competency
development so they are able to manage and
operate our facilities safely.
We have personnel and equipment in place to deal
with leaks, and any resulting consequences, including
fires and explosions, toxic gas release and spills to
the environment. All our emergency response plans
are routinely tested with drills and exercises.
Process Safety audits, inspections and reviews are used
to improve the implementation and effectiveness of
our management systems. We investigate if a release
of hazardous material occurs, and use the learnings to
improve our processes and procedures.
A Process Safety incident is an unplanned or
uncontrolled release of material from process
containment. We measure and report Process Safety
incidents according to industry standard API RP 754.
This includes a measure of the consequence of the
incidents, with Tier 1 being the most significant. In
addition we monitor Process Safety Key Performance
Indicators relating to Demands on Safety Systems
(Tier 3), and Management System Performance (Tier
4) and implement corrective actions as needed.
During 2018, we recorded zero (0) Tier 1 events and
two (2) Tier 2 events. This is a sharp decline from
the three (3) Tier 1 and 11 Tier 2 incidents which
occurred in 2017, our first full year of production
Both incidents in 2018 were associated with releases
of sour gas near valves in excess of API RP 754
thresholds. While there were no associated releases
outside of the fencelines or harm to personnel,
the releases represent an opportunity to improve
existing barriers to prevent recurrence via our
incident investigation and learning process. Such
incidents allow us to drill our plant staff, as even a
relatively minor and local Tier 2 release may result in
a shutdown of the plant and muster of personnel as a
conservative safety measure.
NCOC onshore operations are located in an area
identified by the WRI Aqueduct Water Risk Atlas
(2014) as medium to high risk exposure for oil and
The total volume of fresh water consumed in NCOC
operations in 2018 was 1000 millions m3. The total
volume of fresh water withdrawn in 2018 was 964,000
m3, down from last year as a result of increasing water
recycling. Since production grew at the same time by
60%, the amount of fresh water consumed per unit
of production in 2018 was 52 tonnes of water per
thousand oil-equivalent tonnes, nearly twice less than
NCOC obtains most of its water on a contractual
basis from the Astrakhan-Mangyshlak pipeline, which
is sourced from the Volga river basin; other sources
are municipal and bottled water. Water is used at the
Bolashak Onshore Processing Plant for producing steam
for processes and in the camps for household use.
Offshore facilities also need fresh water: in 2018
about 36,000 m³ was produced from desalination
units offshore. This replaced fresh water that would
otherwise be sourced from onshore.
We consider it our responsibility to other water users
in this area to use our portion of the fresh water
supply efficiently and sustainably. The used water is
treated and discharged to lined evaporation ponds
within the Sanitary Protection Zone. It does not come
in contact with groundwater or soil. It evaporates and
is not returned to the local watershed. Since there is
no return flow, the only way to share more water with
other users in this watershed is to reduce the amount
of fresh water we withdraw. Multiple re-use (recycling)
of the water is the best way to accomplish this.
In 2018 NCOC treated and recycled about 66,000 m²
of water from household use onshore for greenbelt
irrigation and for dust suppression purposes. We also
recycle water for domestic use offshore. By far the
greatest impact may be had through recycling of the
water used in technical processes. As reported last year,
NCOC halved the total amount of water withdrawn by
Bolashak OPF from the Astakhan-Mangyshlak pipeline
by recycling water from the Tail Gas Treatment Unit. In
2018, NCOC continued to pursue plans for additional
wastewater treatment. Upon completion, expected in
2021, the new facilities will further reduce water intake
up to 70% and enhance the quality of water discharged
into evaporation ponds.
In 2018, the RoK Government re-started a GHG
emissions trading system. NCOC received a quota of
13.6 million tonnes of CO2 to be emitted according to
approved a National Plan for 2018-2020, in 2018 NCOC
used about 23% of allowed quota.
Total direct Greenhouse Gas (GHG) emissions
from NCOC operations in 2018 totaled 3,333
thousand metric tonnes CO2-equivalent, including
3,158 thousand tonnes of carbon dioxide (CO2),
167 thousand CO2-equivalent tonnes of methane
(CH4), and 8 thousand CO2-equivalent tonnes of
nitrous oxide (N2O). This total includes mobile and
There are almost no changes in the absolute values
of emissions since 2017; however there is 2.5 times
decrease in flaring emissions intensity in the context of
1.5-fold increase in production.
NCOC production facilities are self-sufficient in
electricity, heat and steam. Indirect emissions arise
from purchased power for support facilities such as
Bautino Base and Atyrau Training Center. Total indirect
GHG emissions from NCOC operations
totaled 10,000 metric tonnes CO2-equivalent, all carbon dioxide.
Normalized greenhouse gas intensity (the
proportion of greenhouse gases emitted per
unit of production) in 2018 was 180 CO2-
equivalent tonnes per 1000 equivalent tonnes
of oil produced. Comparison to other projects
due to methodological and baseline
differences. But it is a general rule that an offshore
“sour” oil project still in the commissioning phase,
such as the North Caspian Project, may be expected
to have higher specific GHG emission than less
energy-intensive onshore or “sweet” oil projects in
steady-state. This intensity number is best used by
stakeholders to compare NCOC’s own performance
from year to year.
There are various approaches to estimating
Other Indirect (“Scope 3”) emissions. NCOC
will report volumes of produced oil and gas to
enable stakeholders to estimate these emissions
from the NCOC value chain using their preferred
NCOC is committed to developing a world-class
project that is designed and operated in a manner
protective of the unique, sensitive environment of
the North Caspian Sea. We conduct our operations
responsibly and in full compliance with the laws of
the Republic of Kazakhstan, and in line with accepted
international regulations, standards, and best
practices. Contractors and suppliers are obligated by
their contracts with NCOC to adhere to our Health,
Safety and Environmental policies in all aspects of
their work with us.
Our approach is one of risk management.
Conceptually, that means identifying and
understanding the risks of any action and its
potential impacts; taking steps to minimize that risk
or mitigate its impacts down to acceptable levels;
and continually re-checking the risks and improving
the measures to address them.
Important environmental compliance and
protection programmes include Environmental
Impact Assessments, baseline studies and
monitoring, and environmental sensitivity
NCOC shares the conclusions of its
environmental monitoring in many forms:
peer-reviewed academic publications, reports,
public hearings, EIAs, presentations at public
and industry forums, the NCOC website,
media articles and company brochures.
NCOC provides the environmental monitoring
data it collects directly to the government
agencies responsible for environmental
protection, per terms of the North Caspian
PSA. These agencies ensure that the public
is appropriately informed. For example, the
Department of Ecological Monitoring of
RGP Kazhydromet (RoK Ministry of Energy)
publishes monthly, quarterly and annual
reports on the state of the environment that
include an appendix of analyzed data from
NCOC air quality monitoring stations (AQMS)
in Atyrau region.
NCOC’s environmental protection activities are
guided by an Environmental Protection Plan that
is approved annually by state environmental
regulatory agencies. The type of projects included
in the annual EPP: environmental surveys and
monitoring of air, water, soil, and biodiversity;
“Green Shelter Belt” is a project approved by the Atyrau Oblast Department for Natural Resources and
Nature Use Regulation to plant trees and shrubs around the Bolashak plant as emission-absorbing
Experience shows that few trees survive conventional “open” planting in the highly s aline soil and
scarce groundwater around the plant. So in the fir st phase of the project between Samal Camp and the
plant, 4,000 trees were planted in 2018 in 19 modules, each c onsisting of six 180-meter PVC-insulated
trenches filled with imported soil. Each module has its o wn drip irrigation system, which delivers
wastewater directly to the roots. Seedlings with closed root system were supplied by local tree
common ash, Siberian pea-tree, large-leaved elm, and Caspian willow. Tree survival performance has now
reached about 70%.
solid and liquid waste management; oil spill
response; green spaces; and environmental
education. Reports on implementation of the EPP
are submitted to the government quarterly.
Environmental specialists are embedded with
the Operations departments onshore, offshore,
and at Bautino Marine Suppor t Base to verify
and consult on compliance with environmental
laws and regulations. The Teams conduct
daily inspections (announced, as well as
unannounced), do “toolbox talks,” and help with
the environmental aspects of managing process
changes, incident response, emission permits,
monitoring, and reporting.
The Caspian Sea as an ecosystem has a high
percentage of rare and endemic species found
nowhere else. Protection and preservation of this
area’s unique biodiversity is a top sustainability
Four marine environmental surveys (one at each
season of the year) and two onshore surveys
are carried out each year. These covered wildlife
and plant life, bottom organisms, soil and air
quality, in order to better understand species
distribution and population dynamics
biota. Over 200 such environmental and wildlife
surveys have been conducted since the star t of
In view of the environmental sensitivity of the North
Caspian Sea and Ural River delta, the North Caspian
Project was allowed to proceed in 1993 as a result of
a government decision, based on special ecological
requirements developed by a group of Kazakhstan
scientists and experts. The decision established new
protected areas along the coast, and recommended
seasonal restrictions on operations that NCOC
follows in order to allow for migration, feeding and
breeding patterns of commercial fish species, birds,
and seals. The protected areas have been expanded
over the years: in 2012, as a result of a publicprivate
initiative with NCOC shareholder Eni, the
Ak Zhaiyk State Nature Reserve was designated a
UNESCO Man & Biosphere Reserve.
Hunting and fishing is prohibited at all NCOC
facilities, with exception of scientific fish catches
during Company environmental survey activities.
NCOC has developed special Biodiversity Action
Plans for all stages of engineering and construction
in both onshore and offshore environments. Some
programmes are described below for key indicator
species. (More detailed information may be found
this year in the new NCOC brochure “Environmental
Surveys and Initiatives.”)
As we have done every year since 2005,
NCOC conducted a seal sur vey in 2018, using
Kazakhstani experts with oversight by scientific
institutes. The 2018 seal sur vey began on
January 26 and lasted till March 8. At various
times eleven seal monitoring volunteers from
NCOC were on board of ice-breaking vessels,
helping the seal experts to cover the route
between Bautino Base and the Kashagan field
area on the icebreakers Mangystau-3 and
In addition to gathering scientific data, onboard
observers help the ship captains avoid
seals, in compliance with the mitigation
developed at the star t of
the project by marine mammal exper ts. This is
complemented with helicopter reconnaissance
flights over seal accumulation areas. The
reconnaissance results are reported directly
to the icebreaker, where captains and seal
observers select the safest navigation route to
protect the animals. Thermal imaging cameras
have been mounted in recent years on all icebreakers
used by NCOC. These cameras enable
observers to “see” seals day or night, in blizzar d
or fog, at a distance hundreds of meters from the
vessel, which allows detouring around the seal
nursery areas in advance.
The observer teams were accompanied by
inspectors from the Atyrau Oblast Department
of Ecology and the Oblast Territorial Forestry and
Catch assessment surveys are regularly performed in
offshore project areas in spring, summer and autumn.
Tissue samples from sedentary indicator fish species
(goby) are randomly tested for hydrocarbons and
Sturgeon is the most valuable fish in the Caspian
Sea. It is now endangered, with Caspian states
agreeing in 2014 to prohibit commercial fishing
in order to restore the populations. The Operator
supported the commissioning of a sturgeon
hatchery on the Ural River delta in 1998, at the very
beginning of our project, and has continued to fund
studies and contribute to hatchery upgrade projects
over the years. In 2018, NCOC financed capital
improvements for water supply to the Ural-Atyrau
Sturgeon Hatchery, and sponsored their specialists
to attend IV Scientific Conference on sturgeon
population protection and reproduction held in
Also in 2018, NCOC completed a three-year offset
programme of the fish damage compensation
measures to release more than 700,000 “fry” ( juvenile
fish), with the aim of contributing to the sturgeon
NCOC has been experimenting with “bio-acoustic” bird repellant devices at one of its evaporation ponds
Bolashak plant. The devices broadcast the cries of raptor species and distress calls from migrating
were judged effective at scaring away birds that might settle on the natural-looking pond surface. In
devices will be tested at the offshore islands, to avoid instances of bird collisions with the steel
Every year, over 280 species of birds migrate along
flyways from Eurasia and Siberia to Africa and India,
with long stopovers for shelter and rest in the reedy
wetlands of the North Caspian.
The Operator has conducted annual and regular
seasonal bird studies since 2000: two annual surveys
during the regular seasonal migrations (in spring and
autumn), a survey of nesting colonies in near-shore
areas during mating season in summer, over-winter
monitoring of aquatic and semi-aquatic birds, and
observations around onshore and offshore facilities,
and during summer nesting period.
The surveys cover a vast area from the Volga River
delta in the west to the Emba River delta in the east,
from Atyrau in the north to Aktau in the south.
The surveyor groups include NCOC ecologists and
lead ornithology experts of Kazakhstan, and inspectors
from the Atyrau Oblast Department of Ecology and the
Oblast Territorial Forestry and Wildlife Inspectorate
In 2018, the population density of birds during
autumn migrations remained high. In fact, 544,000
birds were counted during the survey in October, more
than ever before. At 91,000, the population of one
key indicator species, the mute swan, was the highest
recorded since 2000. The spatial distribution of birds is
changing, with Komsomolets Bay in the east practically
dry due to declining sea levels, and attracting fewer
flamingo and mute swans. The same may be said of
the Emba delta and the area between the Volga and
Ural River deltas. This led to higher concentrations of
birds observed in the warm, shallow waters around the
Seal Islands, where protective cover abounds.
The shallow northeast portion of the Caspian Sea is well-known for its variability. The average depth
here is only
about 3 m, so even relatively minor changes can make a big difference to safety of navigation. And since
relies on vessels to supply the offshore islands and to evacuate personnel in the event of emergency,
depth has a direct impact on our ability to continue to safely produce oil.
NCOC has a specialized ice and hydrometeorology department that constantly monitors the level of the
using the equipment of our own hydrometeorological stations, and conducts research to model and predict
potential for sea level fluctuations.
This analysis shows that average sea level in the northeast Caspian has been declining steadily since
2005, and is
now more than a meter less than it was a decade ago. Significant inflows of fresh water from the Volga
offset to some extent by increased evaporation and less-than-average precipitation.
The average sea level around Kashagan was slightly shallower than the average value for the Caspian due
wind effect on shallow seas in this area, which can periodically “pile up” the water in the downwind
One of the largest ever such wind effects was observed in November 2018, when the sea level around
dropped 75 cm below its average value (see satellite image from 13 November).
NCOC uses lined evaporation ponds as the
safest available method for managing treated
industrial water. (See the Case Study on
Evaporation Ponds.) Treated wastewater from
industrial processes and domestic sewage
is discharged through filtration screens into
these ponds, and the water is removed by
The total quantity of hydrocarbons discharged with
treated domestic wastewater and industrial water
into evaporation ponds in 2018 was equal to 15.95
NCOC obtained all permits in 2018 for
discharge of treated water to evaporation
ponds in accordance with RoK environmental
requirements, with one exception discussed in the
As noted in the section on Fresh Water, NCOC
intends to build an additional wastewater processing
facility at Bolashak in 2019 that will maximize our
capacity for recycling water from technical and
The primary air emission sources at NCOC’s facilities are
the flare unit, gas turbines, boilers and diesel generators.
The flare unit is a part of any oil and gas
production facility and functions as a so-called
“relief valve” of the plant. A small ignition flame
burns at all times, to ensure ready combustion.
The flare unit height is designed t o maximize
dispersion of combustion products in the air.
Power is supplied to onshore and offshore
facilities by gas turbines running on associat ed gas
produced from the field. The turbines are equipped
with special burners designed to reduce nitrogen
oxide emissions. Boilers produce steam, heat water
and provide space heating for buildings. Boilers
run on fuel gas but diesel fuel can also be used.
Diesel generators are used only for stand-by pow er
In 2018, NCOC non-GHG air emissions from all
operations were 21% of permitted volumes, and
(NOx excluding N2O,
which is reported under GHG Air Emissions).
Compared to 2017, VOCs and NOx emissions were
about the same, in the context of a 60% increase in
oil production. SO2 emissions were down sharply due
to a forty percent decrease in flaring volumes over
the reporting period.
Air monitoring is an important part of NCOC’s overall
industrial environmental monitoring programme.
There are several components, including:
Periodically, under-plume monitoring is conducted,
using a specialized vehicle with air sampling and
meteorological instruments to drive under the flare
flame and collect samples identifying the emissions.
Maximum permissible emission (MPE) rates that
NCOC is required to comply with are calculated
for each emission source. Measurements of actual
emissions from a source are made instrumentally.
For example, the exhaust stacks at lar ge emission
sources are equipped with special sampling
ports that allow inser ting a gas sampling probe
and pitot tube on a periodic basis to take
measurements of nitrogen oxides, sulfur dioxide,
carbon monoxide, gas flow velocity, pressure and
20 air quality monitoring stations in Atyrau oblast
operate 24/7 to measure the ambient atmospheric
levels of various compounds and collect weather
Note 1: This diagram shows only H2S. In addition, NCOC air quality monitoring stations
SO2, NO and NO2 levels. Note that SOx
and NOx are possible combustion products from the flaring of sour gas. If H2S were to arise, it
always from a leak.
“Maximum Permissible Concentration” set by the Kazakhstan government is a conservative standard, at which
about half the
population may detect the smell (i.e., about 6 parts per billion). These levels, tens of thousands of
times less than immediately harmful levels,
are so small that electronic instruments sometimes have trouble accurately detecting them. False “peaks”
are common, as are short-term
peaks from, for example, a passing train, carrying crude oil.
4 stations are located on the perimeter of the
7-km setback area (“sanitary protection zone”)
for the Bolashak plant; 7 more are located in
surrounding areas, including Dossor and Makat;
and 9 are in Atyrau city proper. The government
meteorological agency Kazhydromet monitors
this air quality data and publishes monthly and
annual summary bulletins on its website. On-line
access to the data is also provided to the Atyrau
Oblast Department of Natural Resources and Nature Use Regulation.
Hydrogen sulfide (H2S) is another non-GHG air
emission. It is flammable and highly toxic, and has
a strong, unpleasant odor. It may be generated
anywhere that sulfur-containing organic materials
decompose in the absence of oxygen, so is emitted
naturally in marsh gases and volcanoes (sometimes
in large quantities). It is produced during sour crude
oil processing and transportation.
NCOC specialists who work in immediate proximity
to wellheads, flash gas compressors and other
equipment receive special training and personal
detectors. They wear masks and breathing
apparatus as a precaution in areas where high H2S
concentrations are possible as an
hazard. The risk drops off quickly the further from
these locations; so do the potential concentrations.
NCOC can state with confidence that the Bolashak
plant is safe for the public. The primary guarantor of
safety is the 7 km buffer (Sanitary Protection Zone
or SPZ) around Bolashak, sufficient to protect nearby
residents from any long-term health effects from air
emissions and providing a conservatively high margin
of safety even for unplanned events. Confidence
in this conclusion rests upon careful design, multiyear
studies and computer models, government
review and approvals, and finally, recent operating
experience that confirms the models (see figure). As
in years past, on-going monitoring in 2018 shows
consistently that short-term H2S peaks (from 1 to 20
minutes in duration) remain far more likely in Atyrau
than near Bolashak. The competent government
agency for air monitoring RSE Kazhydromet
confirmed there were no cases of high– (VZ) or
extremely-high pollution (EVZ) registered around
Bolashak in 2018. See the report “Informational
Bulletin on the Condition of the Environment of the
Republic of Kazakhstan, 2018” (www.kazhydromet.
kz), in which the data from all twenty NCOC air
monitoring stations is published in summary form.
There are three types of wastewater streams generated at North Caspian Project facilities: domestic
sewage), stormwater, and industrial wastewater from technical processes and production activities.
Domestic wastewater from D-Island and Living Quarter Barges offshore is treated in a special compact
that combines biological treatment with membrane filtration, resulting in water clean enough to re-use
many purposes. Despite higher costs, this wastewater is collected in dedicated tanks and transported by
to onshore facilities in Mangystau Oblast for disposal, in line with NCOC’s “Zero Discharge Policy” into
Industrial wastewater from D-Island is also transported to shore, where it is treated to remove oils and
suspended solids. An additional onshore treatment step, installed in 2017, dissolves air into the
skims off the contaminants as they attach to finely dispersed air bubbles rising to the top, thus
to 99.9% of oil products and 97% of suspended solids. The treated wastewater is then discharged into
isolated evaporation ponds at the Koshanai Waste Management Facility near Bautino Base.
Wastewater is handled in largely the same way onshore at the Bolashak plant. Domestic wastewater
the camps and onshore facilities is biologically treated and used for dust suppression and irrigation in
and any excess is disposed in evaporation ponds within the Sanitary Protection Zone.
Some wastewater has been brought up from the subsurface with the crude oil (produced water), or has come
in contact with the oil during processing, and contains residual hydrocarbons. It is treated with
hydrocyclone separation, flotation skimmers, filters and a sour water stripper operating in batch mode,
oil content by a factor of 35-36 prior to the wastewater being sent to the evaporation ponds.
A large volume of wastewater is generated from technical processes. Treatments used here include the
Water Stripper, which uses low pressure steam to remove hydrogen sulfide and other residual components
the water used in processes to “sweeten” produced liquids. Additional technical wastewater processing
came online in 2017 that allows the water to be recycled (returned for re-use in the processes) rather
being discharged as waste. Recycling has allowed us to reduce by up to 50% the amount of water needed to
withdrawn from the Astrakhan-Mangyshlak pipeline for plant needs.
The treated wastewater streams are then sent to the artificial evaporation ponds at Bolashak. There are
such ponds in a 3x3 grid, each section roughly 250 by 500 m in size and 3 m deep. The ponds are
isolated from surface waters, with sloping concrete banks and lined on the bottom with multiple layers
impermeable geo-textile membrane to prevent groundwater contact through seepage.
Once discharged, the wastewater is evaporated by solar energy, leaving behind solids/salts in sludge
returning clean water to the water cycle as vapor. Compared to underground injection, which removes the
water from the water cycle, the evaporation pond is an economic, low-carbon solution suitable for hot
dry regions where solar irradiation is high. (Underground injection is also a best practice disposal
however, no underground aquifers have been found in the vicinity of Bolashak suitable for wastewater
The wastewater may contain some volatile fractions – i.e., contaminants including trace methanol that
evaporate from the pond surface as vapor – but according to studies called atmospheric dispersion
is known that these are well within allowable limits at the boundary of the Sanitary Protection Zone.
Methyl alcohol (methanol or “wood alcohol”) is one of these volatile fractions. It is added to the oil
prevent hydrate plugs in the pipeline, and is removed again during subsequent treatment, thus appearing
Like ethyl alcohol, methanol is highly soluble in water so that little is lost to evaporation. Sunlight
biodegradation breaks down methanol vapor into carbon dioxide and water over a few days. Methanol is
a naturally-occurring organic compound; trace amounts are found in the breath of normal, healthy human
individuals. Studies show low toxicity to mammals from inhalation, therefore air emissions from ponds
thought to pose negligible risk to humans or the local environment. There are no airborne methanol
in most OECD12 countries.
Evaporation ponds are recognized as a best practice in wastewater disposal, especially in hot and dry
In Russia and OECD countries they are subject to technical and engineering standards for their
operation but there are no effluent standards for discharges13.
In Kazakhstan, discharge into isolated man-made industrial ponds requires the same permit, monitoring
effluent standards that might be required for discharge into a natural water body used for recreation,
and drinking water. Methanol limits in particular are set very high (3 milligrams per liter), exceeding
of most equipment currently in use for removing it from industrial wastewater. NCOC is working toward
compliance with this standard, but it will be costly and the environmental benefits of the additional
are not clear.
Kazakhstan also differs in the breadth and complexity of its system of environmental tax payments for
discharges and waste. These are applied to dozens of pollutants here, compared to a few “priority”
(e.g., greenhouse gases) in some OECD countries.
In Kazakhstan, exceeding an emission standard, or emitting one of these dozens of regulated pollutants
other than as described in a per mit, triggers automatic civil penalties assessed as a multiple o f the
rate. In the OECD civil penalties addr ess the polluter’s behavior, rather than a recoup of lost taxes.
and penalties are infrequent in OECD-member countries, assessed only in cases wher e the polluter has
failed to cooperate with authorities, or has clearly av oided using best available techniques for
Exceeding a permit limit can also trigger a claim for monetary compensation to the State for damage to
environment. The liability for this environmental damage is established simply due to the permit
without need to provide evidence of actual physical harm to the environment. The amount of monetary
damages that the violator must pay is assessed from a formula calculation, unconnected to a field-based
assessment of restoration costs (typically because there is no actual damage to remediate).
Again, this differs sharply from OECD practices, where the “Polluter Pays” principle means the polluter,
State, is responsible for cleaning up the damage and restoring the environment in the event of a major,
pollutant release. The clean-up must happen. If the polluter does not or cannot, the State may perform
clean-up and charge it back to the polluter. This applies to water and soil, but rarely to air emissions
clean-up is not possible, or the damage is not localized because the atmosphere itself disperses and
the pollutant. In any event, in Kazakhstan these monetary damages are simply collected and deposited
the State budget; there are no requirements that it be spent on restoration of the harm that
above-limit emissions have allegedly caused.
The sharp difference in approach has led the OECD to remark that Kazakhstan appears to be “focused on
calculating and collecting monetary compensation for the state (essentially serving as a revenue-raising
rather than on preventing and correcting the damage, reducing emissions over time and incentivising the
BATs [Best Available Technology]14.”
In 2018, the Ministry of Energy announced that it would undertake a reform of the Environmental Code to
address these and other issues. NCOC has been an active participant in the public discussion, believing
are needed to better align with international practice and to facilitate foreign investment while
protective of the environment.
NCOC voluntarily notified the regulator in March 2018 that along with discharges of treated wastewater
PLWDA pond via outlet point st ated in the Maximum Permissible Discharge (MPD) Project, separate treated
wastewater discharges into the same pond were performed through the outlet points which had not been
envisaged in the MPD project. The decision was made t o segregate off-spec streams in one of PLWDA pond
section in order to minimize risks of environmental impacts to ornithofauna. The design of the PLWDA
prevents migration of the treated wastewater into soil and aquifer.
As a result there was no net environmental impact. However, NCOC has
been allegedly accused that such
actions resulted indirect (momentary) damage to the environment.
In 2018, there were 0 hydrocarbon spills greater
than 1 barrel reaching the environment from NCOC
operations (total volume: 0 barrels of oil-equivalent
NCOC places first priority on prevention of oil spills.
Secondly, no matter how confident we are of their
prevention, NCOC remains always prepared to
respond quickly and fully to incidents were they to
North Caspian Sea stored at marine support
bases in Bautino and Damba. NCOC has a
comprehensive Oil Spill Response Plan that
is regularly drilled. In 2018, in addition to
on-going minor exercises at all locations,
NCOC also conducted two “Tier 3” exercises,
simulating a major oil spill.
TENIZ-2018, an international integrated
exercise of Caspian states conducted under the
Astrakhan Emergency Cooperation Agreement,
took place on 2-3 August 2018. Task forces,
made up of representatives from responsible
government agencies and oil companies from the
various countries, worked together to fight the
(simulated) oil spill. The exercise was followed
by a demonstration of NCOC’s oil spill response
equipment at Bautino Base.
This was followed on 14 and 18-20 September by
a Regional Tier 3 spill exercise code-named “Altyn
Qyran.” The exercise involved over a hundred NCOC
personnel and contractors, and six representatives
from related national and local government
agencies. In the event of a major spill, NCOC would
call in additional support from OSRL (an oil spill
As a follow-up to the finalizing of the Arctic JIP research project last year
(www.arcticresponsetechnology.org), NCOC in 2018 implemented a project
to investigate the feasibility of using herders in combinations with controlled
in-situ burning (ISB).
Herders contain surfactants and are applied to the water surface adjacent
to an oil slick. Once applied, the surfactants spread to ultimately form a
monomolecular layer that significantly reduces the surface tension of the water.
The reduced water surface tension reverses the oil spreading tendency and a thin
slick can rapidly re-thicken. The surfactants do not need a boundary to “push”
against and can therefore function in both open water and broken ice.
The scientific data and technical report from the field trial will be shared
with the international oil spill community, and used in Kazakhstan to further
strengthen NCOC’s oil spill response capabilities, and inform development of a
national regulatory framework.
NEBA is a structured approach that may be used by oil spill experts,
government regulators and the public to plan oil spill preparedness
measures and response scenarios. Each type of oil spill response measure
(in-situ burning, dispersants, mechanical recovery, etc.) has its own
benefits, drawbacks and limitations, and depends further on factors such
as water and weather conditions. There is no “best” technique for all
situations. The NEBA process compares the environmental benefits of
various response techniques with a “no intervention” strategy.
As part of a project to introduce NEBA in Kazakhstan, workshops were
organized in April 2018 by NCOC, jointly with the Kazmunaigas National
Institute of Drilling and Production Technology, Shell, and OSPRI (Oil Spill
Preparedness Regional Initiative), under the umbrella of the Ministry of
Energy. The workshops had the following objectives:
One finding of the NEBA approach is that every effort possible must
be used to treat oil while it is offshore to prevent it from reaching
shallow, reedy and sensitive shorelines where protection and response
efforts are unlikely to significantly mitigate the environmental impact.
This aligns with lessons learned from previous oil spill recovery
events around the world. In order to treat the oil while it’s on the
water surface and as close to the source as possible, responders,
governments and the public need t o be aligned, so that time is not lost
on decision-making in an actual ev ent.
response cooperative located in Southampton,
UK) and its shareholder parent companies. Two
persons from OSRL and (for the first time) over 40
staff from Shell and ExxonMobil took part in the
simulation this year. During this exercise NCOC
Incident Management Team and Crisis Management
Team members drilled the Incident Command
System and crisis management techniques at a
simulated Incident Command Post at the NCOC
Atyrau Training Centre, including online software
tools to order and track resources and a “Common
Operating Picture” to provide everyone in the
exercise a simulated real time image of the current
situation. The exercise provided great experience
and highly valuable feedback that will be used
continuously improve the Crisis and Emergency
Preparedness and Response Process.
Total quantity of waste generated by the Company
in 2018 was 10,976 tonnes, including 5731 tonnes
of waste with hazardous properties classified as
hazardous and 5245 tonnes classified as nonhazardous
according to the RoK Environmental Code.
The volume of waste generated in 2018 vs 2017 has
dropped by 58% due to completion of construction
works at the Company’s onshore and offshore
The key objective of NCOC’s Waste
Management System is to reduce or fully
eliminate waste generation at the source or the
process through proper planning of Company
Waste management is performed throughout
the life cycle of the waste starting from its
generation to final disposal. Waste segregation
is an important step in the process, so that
hazardous and non-hazardous wastes are not
Since the RoK Environmental Code now permits it,
food and medical wastes (considered hazardous)
are incinerated offshore. The ash after incineration is
transferred to onshore facilities.
To improve compliance with the newly-introduced
Extended Producer Responsibility provisions in the
RoK Environmental Code, the onshore industrial
waste storage site is being upgraded with additional
waste segregation, and waste tracking processes
have been established. The waste subject to
EPR provisions will be transferred to specialized
organizations for further processing and recycling.
See Section 9.2 “Employee Engagement in the
Community” for more information about recycling
at NCOC offices and Samal camp as part of “Green
NCOC implements comprehensive environmental
monitoring programmes to collect offshore data,
analyze the chemical composition of seawater and
bottom sediments, and to study fish, benthos and
plankton populations. Since 1994 the project has
conducted more than forty offshore monitoring surveys
in roughly 900 different locations. Data collected during
the regular seasonal surveys covers weather conditions,
water quality, bottom sediments quality and biological
data (micro-organisms, phytoplankton, zooplankton,
fish). Starting in 2013, we added air quality, birds, and
additional Caspian seal studies.
NCOC published a 40-page brochure in 2018 entitled
“Environmental Surveys and Initiatives,” providing
more detail on the company’s environmental
impact monitoring, biodiversity surveys, air quality,
wastewater treatment, waste management, and
public environmental initiatives. See www.ncoc.kz.
Decommissioning is governed by the
North Caspian Sea
PSA, including detailed
planning and funding at the appropriate time.
Decommissioning and remediation is planned
and executed in the same manner as any other
engineering project, with each programme
needing an environmental impact assessment
to determine the preferred option to apply to a
NCOC production facilities are self-sufficient in
electricity, heat and steam. Indirect emissions arise
from purchased power for support facilities such
as Bautino Base and Atyrau Training Center.
Energy use in NCOC operations in 2018 totaled
42.25 million gigajoules (GJ). Of this amount,
0.11 million GJ was impor ted (purchased).
Normalized energy intensity (energy use per
unit of production) in 2018 was 2.05 GJ per
oil-equivalent tonne of production, which was
improved for about 13% in comp arison with
In 2018 NCOC continued the energy efficiency
audit of facilities begun last year, with plans to
complete this work for its main onshore and
offshore facilities in 2019 and identif y the most
promising energy savings and efficiency measures
to include in the Company Energy Efficiency Plan
One of the proposed energy saving measures from
2017 is related to the use of renewable energy, the
installation of solar thermal collectors to heat water
for the Bautino Marine Suppor t Base canteen, is
underway now with completion expected in 1Q,
NCOC is establishing a network with experts from
its parent shareholding companies for purposes of
exchanging information and best practices on energy
efficiency, renewable energy, and minimizing our
We also plan to introduce an energy management
system with the objective of a more systematic
approach to energy efficiency and the promotion of
energy efficiency awareness within the company.
The Kashagan Phase 1 Project was designed
from the beginning to avoid routine flaring, i.e.,
the burning of excess natural gas “routinely”
because an oil and gas project has no other
economic way to dispose of it in the course of
producing oil. On the contrar y, all of the gas
produced in Kashagan Phase 1 is r e-injected,
used as fuel or sold. Flaring is how ever needed in
the course of operations as the safest and most
effective way to deal with gas that for t emporary
technical reasons could not be processed, such
as commissioning operations, small amounts of
valve leakage into flare collectors, or one-time
discharges to flare due to operational upsets.
The volumes of gas flared in such cases is
calculated and reported.
The quantity of hydrocarbon gas flared
from NCOC operations in 2018 was 20.8% of
permitted volumes, and totaled 63 million Sm3
(standard cubic meters). Flaring was down about
40% in 2018 compared to the previous year,
even as oil production grew by 60%. Operational
reliability has been better than expected, and this
improved process stability during commissioning
has allowed us to keep flaring below 1% of total
produced gas volumes.
As Kazakhstan’s largest direct foreign investment
project, the North Caspian Project has a powerful
multiplier effect on the economy, creating
employment opportunities for Kazakh people and
opportunities for local companies.
US$424 million was spent for local content in goods
works, and services in 2018, equivalent to 43.4% of
Overall payments for local content in goods, works
and services have totaled more than US$14.1 billion
Mangystau and Atyrau Oblasts also benefit directly
from social and infrastructure related projects funded
by NCOC. These have totaled well over a half-billion
US dollars since the start of the Kashagan Phase 1
These and other economic and social benefits will be
described in more detail in the following section.
On 9 June, 2018 the American Chamber of Commerce in Kazakhstan (AmCham) awarded Bruno Jardin, NCOC
Managing Director, as one of its Executives of the Year. In announcing the award, AmCham President
Mack noted the tangible contribution NCOC has made to Kazakhstan’s growth in recent years, underscoring
value of foreign investment to the economy.
In the category of Health Protection, Syed Ahmed, NCOC Health Manager, accepted an award on behalf of
for a joint project with the Atyrau Oblast Hospital to improve emergency medical care.
Under the North Caspian Sea PSA, NCOC allocates
a budget each year for the development of Social
Infrastructure Projects. In 2018, this budget
amounted to US$50 million. The funds, for
construction of schools, kindergartens, hospitals,
sport facilities, as well as utilities such as roads,
electric power water supply lines, and other
infrastructure designed to benefit the community, are
split equally between Atyrau and Mangystau oblasts,
where North Caspian Project activities are centered.
Between 1998 and 2018, 200 Social Infrastructure
Projects have been completed. Cumulative spend
on Social Infrastructure Projects has thus reached US$620.8 million.
Social Infrastructure Projects are generally proposed
by the Oblast Akimats (governments). Proposals
are analyzed by NCOC and the PSA Authority to
NCOC was awarded the Gold Prize
in the annual nationwide “Paryz”
contest for the most sociallyresponsible
company of the year.
The announcement ceremony on
December 11, 2018 was attended
by President Nursultan Nazarbayev.
Prime Minister presented the award
to NCOC Deputy Managing Director
The award recognized the Social
and Infrastructure Projects (SIP)
and Sponsorship & Donations
(S&D) programmes implemented
comply with PSA requirements and the
Operator’s sustainable development strategy, and
are developed into projects in close collaboration
with the Oblast Akimats. Once approved, NCOC is
responsible for all stages of design and engineering,
contract tender, and execution up to handover.
The House of Friendship in Aktau is an NCOC Social
Infrastructure Project completed in 2017 as the home of
the Assembly of the People of Kazakhstan for Mangystau
A historic Summit of the leaders of the Five Caspian
Nations was held here in August 2018, at which a new
Convention on the Legal Status of the Caspian Sea was
signed. After the Summit, President Nursultan Nazarbayev
demonstrated the Rocky Trail to heads of the Caspian
Five. The Rocky Trail is a unique NCOC-sponsored project,
which will become one of the biggest tourist attractions in
Aktau. This landmark (located in Micro-district 4 of Aktau
city) includes a pedestrian zone, images of petroglyphs,
observation platforms and a natural cave in the rock.
Through its Sponsorship and Donations grant
programme , NCOC responds directly to the
needs and requests of local communities.
US$1.5 million is split equally each y ear
between Atyrau and Mangystau oblasts for
community sponsorships and donations. The
Sponsorships and Donation grant programme
focuses on five main areas of support for local
communities: healthcare, education, sports,
culture and charity.
To be aligned with NCOC’s sustainable
development strategic goals, projects must
contain elements of self-involvement and
demonstrate sustainability for local communities.
They should not support political or religious
organizations, create conditions for unfair
A new dormitory for one hundred families was opened in
Mangystau village, Munaily District, Mangystau Oblast
in August 2018. The dormitory will host families of public
workers, mostly medical and education specialists
A new Recreation Center with 200 seats was opened in
Zhanatalap settlement, Atyrau Oblast in November 2018.
market competition, or undermine the ecological
sustainability of local communities and/or
natural ecosystems. The initiative for projects
generally comes from the local communities, but
may also be initiated by NCOC.
In 2018, 64 projects were undertaken (34 in
Atyrau Oblast and 30 in Mangystau Oblast).
A total US$19 million has been spent since
1998. In addition, up to US$300,000 has been
budgeted each year since 2006 for summer
camp for 200 underprivileged and orphan
children of Atyrau and Mangystau Oblasts. In
2018, NCOC covered travel, camp and culturaleducational
development expenses to send
these children to the “Baldauren” centre in
In 2018 NCOC conducted monitoring of the
Sponsorship & Donations projects completed
between 2013-2015. The priority objectives of
the monitoring include impact assessment of the
projects on local communities and evaluation of
their efficiency levels. The monitoring covered
66 projects in Atyrau Oblast and 73 projects in
According to the monitoring results 97% of
the beneficiaries from both regions indicated
that the Company’s support contributed to
significant improvement of their activities.
Moreover, the average value of positive impact
reached 3.7 points on a scale o f one to four. In
addition, the conducted monitoring enabled to
detect certain shortfalls in the projects, identify a
list of social issues that concern the beneficiaries,
and develop recommendations for quality and
efficiency improvement of Sponsorship projects
The Company is currently considering possibility
to improve the quality of selection and
implementation of the Sponsorship projects
based on the comments received.
In 2018 the Nor th Caspian Project spent US$424
million for local goods, works and services,
equivalent to 43,4% of total expenditures.
This adds up to a year-end total of more than
US$14.1 billion spent on local goods, w orks
and services since 200415. These and other facts
speak to the depth of NCOC’s commitment to the use of local content.
NCOC found common cause with Akimats regarding continued growth
of Local Content in our project.
On October 12, 2018 NCOC Deputy Managing Director Zhakyp
Marabayev (pictured) signed a Memorandum of Cooperation on
Local Content Development with the Karaganda Oblast Akimat. The
signing took place at the Böhmer Armaturen Kazakhstan LLP plant
in Karaganda, in the presence of representatives from PSA LLP and
NadLoc (National Agency for the Development of Local Content).
A similar Memorandum was signed with the Mangystau Oblast Akimat
on November 17, 2018. The agreements outline mutual objectives in
the area of local content development, qualification of local specialists,
and building capacity of local companies.
A Memorandum with Atyrau Oblast will be signed in 2019.
NCOC Local Content Policy is based on the
fundamentals of the North Caspian Sea Production
Sharing Agreement (NCSPSA), applicable laws, and
NCOC’s Mission, Vision, and Values, as well as its
business goals and objectives.
According to the NCSPSA, NCOC gives preference to
local suppliers of goods and services subject to their
competitiveness with respect to quality, safety and
price requirements for similar materials and services
provided by international suppliers. Thus development
of Local Content is one of the most important and
critical aspects of the Company’s activity.
During 2018, the Local Content department focused
on implementation of its Five Year Local Content
Development Programme for 2017-2021, which
prescribes identified target areas for the participation
of Kazakhstan businesses with defined strategies and
planned activities to develop and maximize Local
An analysis of the future needs of the Project is also
carried out with an eye to leveraging local content
development opportunities, and consolidated in the
Project’s long-term procurement outlook.
As part of the Five-Year Local Content Development
Programme, and working toward goals outlined in
the 2012 Aktau Declaration, NCOC conducted market
research in 2018 that identified local companies in
certain categories that appear capable of providing
goods, works and services to the North Caspian Project:
A major activity in 2018 was advanced planning
to maximize Local Content during the upcoming
Turnaround in mid-2019.
Development of local vendors is a priority. The
objective is to help local companies improve their
technical and managerial capabilities so that they
qualify as potential suppliers to the Project, and
longer-term could bid on other opportunities in
national and international markets.
In the past six years alone, thirty eight contracts worth
US$ 4.176 billion, originally executed by international
contractors, have been transitioned to competitive local
companies – for instance, in helicopter services, marine
operations, and freight forwarding.
Since 2006, about 1300 local companies have
participated in workshops and forums organized
by NCOC. These range from general awareness
seminars to introduce the Project and its contracting
requirements, to more specialized seminars on tender
writing and pre-qualification processes.
From 2006 to 2018, the Operator assisted over
200 local companies to obtain international
standards certifications for their management,
goods and services, thus significantly increasing
their competitiveness for contracts with NCOC. The
Operator has also provided assistance and financial
support to local companies to obtain international
certifications for their goods and services from the
American Society of Mechanical Engineers (ASME)
and American Petroleum Institute (API).
From 2006 to 2018, NCOC conducted more than
350 technical qualification audits and site visits of
local companies, assessing their ability to meet
demanding specifications and international codes
and standards for goods and services put out for
bid by the North Caspian Project.
From 2006 to 2018 the Operator provided more
than 3500 employees of local companies with
specialized professional training in the most
in-demand craft skills, on topics such as Working
in Confined Spaces, Industrial Welding Safety,
Electronic Systems and Assembly, Working at
Height, Mobile Crane Operations, etc.
This year alone NCOC conducted 104 courses and
trained a total of more than a thousand Kazakhstani
technical professionals. The training allows local
companies identified by NCOC’s Local Content
Department to improve their skill base and meet
requirements imposed by international standards,
codes and heavy industry norms in common use today.
On November 2, the National Chamber of
Entrepreneurs «Atameken» and Kazenergy jointly
convened a new «Oil and Gas Strategic Partnership
Development Council» in Atyrau, joined by the
three largest Operators in the country, NCOC, KPO
and TCO. More than fifty local oil and gas service
companies also attended.
The initiative is aimed at providing the latest updates
on developments at the oil and gas projects, with the
goal of identifying additional opportunities for supply
of goods, works and services and increasing local
On 18 July 2018, NCOC organized a special forum for Kazakhstani and international companies in
technologies on procurement of IT-related goods and services for Kashagan. A key objective of the forum
facilitate the development of the domestic market for manufacturing and localization.
Specialists from NCOC’s IT Team spoke about the company’s requirements and work quality standards,
the specifics and rules of contract procedures and prequalification requirements for participating in
Contributed by the Geoken Scientific Production Center, a regular contractor to NCOC since 2003.
We have participated in monitoring construction at Bolashak, as well as the Offshore facilities
artificial islands. We conduct hydrographic engineering surveys on land and at sea. And today, Geoken
out annual integrated bathymetric surveys for the North Caspian Project, scanning the seafloor, studying
geologic structure, bottom sediments, pipelines and cables, and so on. Something we are especially proud
is that SPC Geoken provided all navigation support when the Sunkar drilling rig was taken off its
location, and then returned again.
In order to be a contractor in the North Caspian Project, a Kazakhstan company should be no less
than its foreign competitors in terms of equipment and technology, trained personnel, and experience.
Qualification and competence is what they value in bidders first of all. My company [Geoken] did not
single seminar in our field of specialty that NCOC organized for its contractors. To show our
Geoken takes part in most of the oil and gas exhibitions that are held around the world. That includes,
example, the Oceanology International exhibit in London, and the Offshore Technology Conference in
NCOC demands the highest standards of its contractors in occupational and operations safety,
protection, and work quality. SPC Geoken was the first company in Kazakhstan to introduce an integrated
management system that includes Quality Management (ISO 9001), Environmental Management (ISO 14001),
and the Occupational and Health and Safety Assessment Series (OHSAS 18001).
We are continually raising our own standards, because the Operator of the North Caspian Project is
asking us to report on our Kazakhstan content. The fact that NCOC has a Local Content department means
that any major Kazakhstan player in the oil services field, not only Geoken, will be in-demand and will
capability to perform its services on the highest possible professional level, in particular, in the
As a means to achieve its own medium– and
long-term nationalization goals, the Operator
has developed a special, targeted programme for
identifying and recruiting Kazakhstan citizens, and
providing them with training for advancement in a
long-term career with NCOC. Since 1998 a total of
more than 16,000 Kazakhstan citizens have received
some form of training, either from NCOC or as
employees of local companies being helped by NCOC.
Over two decades, the Operat or has spent in
total about US$263 million on job skills and
professional training to build local capacity for
the North Caspian Project.
In 2018, 115 students completed summer internships
at NCOC. The programme provides opportunity for
local students to work in a real international oil and
gas company, and to get hands-on experience with
some of the most modern equipment in this industry.
In 2018, NCOC launched an International
Development Assignment Programme, jointly with
its shareholder companies. The programme provides
opportunity for NCOC employees (and those
“seconded” from the national oil company KMG) to
work overseas for the shareholder companies for up
to two year assignments in order to enhance their
skills, upgrade existing knowledge and prepare for
future roles in the Company.
NCOC established a Scholarship programme in 1998,
pursuant to the NCSPSA. The Operator has sponsored
more than 3000 students from Kazakhstan to study in
over 80 educational institutions inside and outside of
the RoK, with a monetary value over US$7.5 million.
NCOC provides the funding and the Kazenergy
Association manages the Scholarship fund on
a competitive basis for the academic training of
Kazakhstan citizens (not NCOC employees) in subjects
related to the petroleum industry, including training
courses at universities, colleges or other training
institutions. NCOC sponsored 388 students at 42
educational institutions during the 2018-2019 academic
year. Almost a hundred of them from Atyrau Oblast.
2018 was the first year of a three-year programme
of assistance to the Kazakhstan Maritime Academy,
memorandum signed last year with KMA’s parent
institution, the Kazakhstan-British Technical
University in Almaty. The financial assistance
totals US$900,000 over three years, for upkeep of
marine simulators at KBTU, and helping to sponsor
26 national cadets in sea survival training and
International Maritime Organization certification
programmes in Oman that are basic prerequisites to
put Kazakhstan on the “whitelist” of the IMO.
Article XXVII of the NCSPSA specifies the overall
targets in terms of manning levels of Kazakhstan
citizens employed in carrying out Petroleum
Operations. In 2018, the Kashagan Phase 1 Project
has already exceeded these targets, with:
Strong growth was once again noted in Kazakhstani
managerial staff in 2018, increasing to 80% compared
to 75% last year. This is in connection with a 2017
restructuring of office and supporting functions.
Technical and engineering employees, administrative
staff and qualified specialists were down slightly
in percentage terms in 2018, owing to additional
project work related to future growth opportunities
that required bringing in additional technical
expertise over the short-term.
Overall at the end of 2018, 90% of the nearly three
thousand employees of operating company NCOC
are Kazakhstan citizens, and 92% of the more than
10 thousand people working on the North Caspian
Project are Kazakhstan citizens.
NCOC’s General Business Principles apply to all our
business affairs and describe the behavior expected
of every staff member of NCOC, including directhire
Kazakhstan citizens, secondees, and contract
staff. Further, all NCOC staff are required to adhere
to a Code of Conduct, which instructs them on how
to apply the General Business Principles in line with
our core values. It provides practical instructions on
how to comply with laws and regulations and how
to relate to customers, communities and colleagues.
Staff communications and monitoring programmes
are designed and implemented to assure compliance.
Contractors and suppliers are contractually obligated
to comply with our General Business Principles and
Code of Conduct in all aspects of their work with
us. All those seeking to do business with NCOC
undergo third-party “due diligence” background
checks before contracts are signed. After further risk
screening, some companies may be asked to institute
mandatory training or special contractual conditions
to ensure that their business practices align fully with
No one at NCOC may instruct staff to take actions
that violate the law or contradict our Principles. If
an employee observes such an action or instruction,
he or she may refer the situation in confidence to
a supervisor, to the NCOC Ethics & Compliance
Officer, or to the Compliance Hotline for further
investigation and possible action. The Compliance
Hotline is a 3rd party operated website
(www.ncoc.deloitte-hotline.com), e-mail address
(email@example.com) and phone number
(8 800 080 15 65) that allows anyone to report
suspected violations of law and Code of Conduct
including on an anonymous basis.
NCOC staff, vendors, suppliers, contractors or anyone
else can raise concerns or report possible noncompliance
with our values and principles to the
NCOC Ethics & Compliance Officer or to the Hotline,
even anonymously. Details are kept confidential. The
Ethics & Compliance Officer looks into allegations,
and if confirmed the company’s management takes
actions appropriate to the circumstances. NCOC does
not tolerate retaliation of any
kind against those
who report an issue concerning
our General Business
Principles, the Code of Conduct or Anti-Bribery &
Corruption Manual, or compliance with applicable
NCOC’s internal Anti-Bribery & Corruption Manual
contains policies and procedures to ensure that
any interaction with government officials is directly
related to a stated business purpose or regulatory
requirement, and that it is in strict compliance with
the laws of Kazakhstan and consistent with any
international statutes that may apply16.
NCOC requires that its staff avoid conflicts of interest
between their private activities or family relationships
and their role in the conduct of NCOC business.
NCOC reflects all business transactions in its accounts
in an accurate and timely manner, in accordance with
established procedures and agreements.
Contractors and suppliers are obligated by their contracts with NCOC to adhere to our General
Business Principles in all aspects of their work with us.
As started above, concerns or suspected noncompliance
may be reported in confidence to the
NCOC Ethics & Compliance officer or to the Hotline.
Any confirmed non-compliance can have serious
consequences as may be appropriate including
dismissal of the staff concerned and termination of
the relevant contracts.
In our General Business Principles, NCOC
has pledged to contribute in an ethical and
constructive way to enhancing the laws and
regulations of Kazakhstan on
Security and Environmental protection. NCOC is
an active member of Kazenergy, a not-for-profit
association of companies in energy and oil and
gas industries in Kazakhstan. NCOC is a member
of the Oil and Gas Committee of the “Atameken”
National Chamber of Entrepreneurs. We often
engage in discussions of priority public policy
issues affecting our industry in the framework of
these organizations. NCOC is also a member of the
American Chamber of Commerce in Kazakhstan,
and has participated in its advocacy activities to
improve the foreign investment climate.
NCOC does not make political contributions of
Local goods, works and services are defined per Unified Methodology (2010) on local cont ent calculations
outlined in the RoK Law “On
Subsoil and Subsoil Use.” See link to Subsoil Act definitions of local content used by NCOC. Prior to 2010
NCOC used local content
calculation methods in the NCSPSA.
The US Foreign Corrupt Practices Act (FCPA) and the UK Anti-Briber y Act are two foreign laws that could
apply t o companies or citizens
of those countries, even if their activities take place in Kazakhstan.
In recognition of Medical Workers’ Day in June 2018,
NCOC donated a specialized bed for treating burn
patients to the Atyrau Oblast Hospital.
This bed, manufactured in Japan, is filled with special
ceramic micro-balls covered in fabric. Vibration
and ventilation allows maintaining the desired
temperature for the patient, while alkaline and
ionized media provide antibacterial protection. The
bed also acts to stimulate blood vessels, the heart,
human organs, assisting the patient’s recovery from
shock and burns.
NCOC also donated two new Mobile Intensive Care
Ambulances to Makat and Tupkaragan Central District
Hospitals, equipped with a defibrillator, heart monitor,
and other equipment needed for mobile resuscitation.
The following day Central Inder District Hospital in
Atyrau Oblast received from NCOC two dental units
equipped with dental chairs, tools and modules for
doctor and assistant.
NCOC is headquartered in Atyrau, Kazakhstan, close
to the North Caspian Project’s resources and its
facilities in Atyrau and Mangystau Oblasts. We aim to
be an employer of choice and a respected member of
these communities. We care about the communities
where we operate because we are a part of them.
We want to proactively address any concerns raised
about our operations, recognizing that public respect
and confidence are earned through performance,
open communications and community involvement.
Voluntary sustainability reporting plays an important
part in this.
Through its Sponsorship and Donations programme,
NCOC positions itself as a socially responsible
company that supports local communities. Here are
just a few of the programmes we carried out in 2018:
We engage on a regular basis throughout the year with
the public to share information or discuss their concerns
and questions about the North Caspian Project.
A Public Hearing on Preliminary Environmental
Impact Assessment related to the design solutions
of Amendment No. 2 to Kashagan Experimental
Programme Development Scheme took place
on September 25. The Amendment addresses
project changes as a result of a more gradualthan-
expected pressure decline in the Kashagan
reservoir (see NCOC 2017 Sustainability Report,
In 2018, as part of a community grievance process,
we continued to engage on a regular basis with the
local authorities of the communities and local Akims
around the Bolashak plant (Karabatan station, Eskene
station and Taskesken) to understand concerns and
This Sustainability Report has become a new and
effective venue for engaging the public. While
developing the 2017 Report, in early 2018 we met
with the External Advisory Board, representing the
combined input of environmental and social NGOs
from Atyrau and
Mangystau Oblasts, to receive
their comments and recommendations. In April,
we presented the 2017 Report to the public and
answered questions at three special meetings in
Atyrau and Aktau, moderated by Shynar Izteleuova,
the Director of the Zhayik Aarhus Center
NCOC has a broad-ranging communications
programme to reach out to stakeholders and work
with local media outlets on topics of interest. Our
external website, www.ncoc.kz, was updated and
refreshed with a new look and additional content and
videos in 2018. To help local businesses learn about
economic opportunities associated with the North
Caspian Project we reach out in a variety of ways,
from general awareness seminars about the project
and participation in industry conferences, to highly
targeted vendor audits and specialized training
sessions (see the section on Local Content for more
information). Anyone in the community can raise
concerns or report possible non-compliance with
our values and principles – even anonymously – to
the NCOC Ethics and Compliance officer, or to the
Compliance Hotline that was instituted in 2017 (see
the section on Business Ethics for more information).
On December 5, 2018, NCOC announced a new three-year joint partnership project with the well-known
in Kazakhstan to strengthen English language teaching in Atyrau Oblast.
The project will link internationally-qualified and native-speaking English teachers with 750
schoolchildren and thirty
teachers using the latest in online platforms and video-conferencing for remote teaching. Eight schools
in the Oblast
and Dosmukhamedov State University in Atyrau will participate in the pilot programme.
Remote teaching using native speakers has obvious potential to be replicated throughout Kazakhstan – the
country in the world by land area – and is a promising avenue for realizing Kazakhstan’s national
improve education and join the top world thirty economies by 2050.
Health and safety is a priority area where NCOC believes it can contribute to the social and economic
progress of the
The largest and most visible contribution to public health arises from the Social and Infrastructure
construction projects completed include an infectious diseases hospital and an extension to the
Children’s Hospital in
Atyrau. Donations provide needed medical equipment and ambulances.
Less well-known, but no less important, is a long-term programme of in-kind and training support for
Services at the Atyrau Oblast Hospital. This project was honored on 9 June 2018 with a “Health
Protection Award” from
the American Chamber of Commerce in Kazkakhstan. And here’s why.
A Different Approach. At the start of the construction years ago, rather than create its own separate
facilities for critical-care patients associated with the project, the Operator decided to take a
unconventional path – to base a team of three (a consultant anesthesiologist and surgeon, plus a
case manager) directly at the Atyrau Oblast Hospital. In addition to being on-call for the project
these internationally-accredited specialists also utilized their time to introduce international
emergency/critical care, anesthesiology and surgery to the local staff. In addition to financial support
NCOC for equipment, maintenance, repair and consumables, this arrangement has made the implementation
of international best practices more sustainable.
Working with its medical services contractor, NCOC’s Health team implemented a successful project at the
Atyrau Oblast Hospital that has saved lives by improving the standards of medical care in critical
situations, not only for those working on the North Caspian Project but for the entire community.
Over the years, in part due to this initiative, the Oblast Hospital has registered measurable
improvements in its
performance statistics, benefitting tens of thousands in the local community and saving hundreds of
lives. For example,
in 2017 Atyrau Hospital treated the highest ever number of maternity patients in critical condition; and
mothers went home.
There have been considerable challenges along the way. The team has had to be creative in introducing
algorithms for the treatment of certain medical conditions so as not to clash with RoK protocols.
energy was also spent in instilling into the doctors and staff a new approach that prioritizes openness,
improvement, and learning from incidents when things go wrong.
The synergies in this initiative generated unexpected benefits. In 2017 the RoK Ministry of Health
Order for improving the structure of trauma care throughout Kazakhstan. This Order mirrored many of the
recommendations that were made in gap analyses of Atyrau Hospital performed by independent international
as part of the NCOC programme. Atyrau Hospital was one of the first in the nation to implement the new
care, with expert assistance from NCOC Health and its medical expert team on-site. The emergency ward
been restructured from the ground up to better conform with proven international practices, such as the
and training of multi-modal trauma teams. The improvement was tangible in the first ever mass casualty
conducted in the Atyrau Oblast Hospital in April 2018.
The Ministry of Health has praised the initiative at Atyrau Hospital, and is discussing now the
possibility to replicate
some of its success to other hospitals in Kazakhstan, by sending their doctors and health officials to
and see the system in action under actual conditions.
Most importantly, in a job where minutes matter, the improvements mean that more lives can be saved.
This is the
gratifying outcome of an approach that identified a sustainable solution benefitting both NCOC and the
In January 2018, NCOC’s Facilities Management department installed plastic waste containers at all NCOC
Atyrau Training Center and Samal Camp at Bolashak. Almost five tonnes of plastic waste and cellophane
been collected in 2018, and recycled into polymer sand to make 500 square meters of roof tiles and 1000
meters of paving slabs.
Single-use (plastic) disposable cups were phased-out and replaced by a “Bring Your Own Cup” initiative.
bottled water coolers were replaced with tap water filtration stations. These and other measures allowed
NCOC to reduce its plastic waste by 50-60% in 2018, reducing costs at the same time.
NCOC encourages employees to take active part in
the betterment of their communities.
NCOC goes well beyond legal requirements of the
Labour Code to provide compensation and benefits
that attract, motivate and retain employees, and
to incentivize their contribution to achieving our
business objectives. NCOC carefully calibrates the
competitiveness of its salary and benefits package
with market surveys.
The remuneration philosophy is based on a “pay
for performance” approach that is aligned with
our Mission, Vision, values and culture at NCOC.
In addition to the annual general salary increase
and Oilman’s Day bonus payment, an employee
may receive an Individual Merit Salary increase and a variable annual Company Performance bonus,
plus discretionary allowances and special monetary
awards for outstanding performance or adherence
to company values. Kazakhstan citizens who are
directly hired by NCOC receive numerous other
compensations and benefits, including generous
paid and unpaid time off, paid pension, continuing
education assistance, medical and life insurance,
free commute on company shuttle bus, financial
assistance programmes for health club membership,
home mortgage, wellness and medical issues,
bereavement, children’s education and books.
NCOC is an exciting, international collective where
English is used in a business setting, and opportunities
exist for International Development Assignments in
NCOC shareholder companies (see Section 8.6 on Job
Skills Training and Knowledge Transfer).
In 2018, 36 Kazakhstan university graduates were hired
by NCOC, five of these from universities in Atyrau.
NCOC does not tolerate unlawful discrimination in
employment. Our Code of Conduct for employees
specifies that employment decisions are based only
on relevant qualifications, merit, performance and
other job-related factors.
NCOC does not tolerate any form of harassment,
nor any action, conduct or behavior which is
humiliating, intimidating or hostile. Managers have a
responsibility to protect their staff from harassment,
and to create a climate where individuals who have
concerns about harassment in their work area may
discuss the issues in confidence.
NCOC is committed to providing an open working
environment in which respect for each other is
fundamental, continuous improvement is a shared
goal, and the concerns of individuals are taken
seriously and dealt with positively, without prejudice
to them or their career.
In 2018, 32% of NCOC’s workforce are women.
NCOC has clear policies and procedures for dealing
with workforce grievances, which apply equally
to its contractors and sub-contractors. Grievance
procedures serve to bring employee problems to
management’s attention and ensure open, proper
and timely review and resolution before frustrations
can evolve into conflict. Employees may express
their grievances freely and openly without fear of
dismissal and intimidation. NCOC must accept,
register, and review any written grievance submitted
by an employee. Employees have the right to appeal
a decision, which he/she thinks may be violating
his/her labor rights If not resolved within NCOC,
grievance may be referred to appropriate RoK
officials. By law, neither NCOC nor its contractors
may compel employees to join or not join a legal
labor action, and must reserve for the employee any
prior job position and benefits.
NCOC has policies and procedures in place for
monitoring timeliness of salary payment, living
conditions and canteen facilities provided by our
contractors and sub-contractors.
NCOC has been working for many years to promote
respect for human rights within our organization. Our
approach consists of several core elements, including:
As it relates to our staff, this approach manifests
as compliance with law, protection of employees’
personal data, respect for diversity, and continuous
improvement of our Human Resources programmes
and policies (see section on NCOC Workforce).
Suppliers are also contractually obligated to comply
with our General Business Principles an d Code of
Conduct in all aspects of their work with us.
NCOC has programmes and measures in place to
provide security and safeguards as appropriate to
protect its people, operations, facilities, business
information, and other assets. NCOC sites have
implemented security programmes based on a
proven, structured risk assessment methodology.
NCOC complies with relevant laws and regulations
affecting security in areas where we operate, and we
support a coordinated and cooperative approach to
infrastructure security with the competent local and
national security agencies.
NCOC requires its security contractors to abide by the
Voluntary Principles on Security and Human Rights.
NCOC reports sustainability performance in a full
and transparent manner to its stakeholders in
compliance with its General Business Principles,
and subject to relevant terms of the North Caspian
This report is guided by global best practice;
foundational is the 3rd edition (2015) of “Oil and
Gas Industry Guidance on Voluntary Sustainability
Reporting” (“the 2015 Guidance”). Our intent is
that, through strict adherence to its indicators and
processes, this report will be relevant, transparent,
consistent/systematic, complete, and accurate in the
sense defined by the 2015 Guidance.
The data is fully consistent with reports on
environmental and socio-economic performance
of the North Caspian Project made to NCOC
shareholders, and to the Republic of Kazakhstan in its
oversight and regulatory capacities.
The base set of reporting indicators are those in
the pilot 2015 NCOC Sustainability Report, based
on “common” reporting requirements of the IPIECA
2015 Guidance. Stakeholder engagements, issues
monitoring and media inquiries were also used to
identify potential material issues specific to this
The frequency with which stakeholders raise certain
issues and the volume of response material in our
databases, media coverage, and considerations of
timeliness are criteria which have all influenced the
prioritization of issues and inclusion herein. The
structure of the report has been evolved from the
2015 Guidance’s illustration of the interconnecting
social, economic and environmental dimensions of
sustainable development, reproduced as a figure in
the Report Structure section.
For more than a decade, the Operator has had robust
management and other systems in place for collecting
and analyzing environmental, safety, production and
financial activity, and reporting it to the shareholders
of the North Caspian Project, as well as to the PSA
Authority and RoK government agencies at various
levels for oversight and regulatory compliance
submissions. This report uses the same data sources
and reports provided to them. If there is a difference
(e.g., in units or definitions) between reporting
requirements of the 2015 Guidance and those of
Republic of Kazakhstan, we are governed by the latter
and attach a footnote to the Performance Table.
The NCOC Sustainable Development Report has been
produced, just like last year, in close cooperation
and engagement with the External Advisory Board.
Making NGOs part of the report discussion represents
another practical step of the company to facilitate
development of the civil society and achievement
of sustainable development goals in our country.
An open dialogue with the “third sector” showcases
the will of the NCP Operator to be transparent in its
operations and ensure robust implementation of the
trilateral partnership program between the State,
business and NGOs.
This cooperation can be definitely referred to as
a two-way road. Discussions of the report have
been beneficial for NGOs since they expanded
significantly their opportunities to have information
about the company’s operations, enhanced their
competencies, e.g. in the use of an analytical
approach to sustainable development issues, and
improved their understanding of such issues as the
LC development under the North Caspian Project in
the national context, given the scales of Kazakhstan.
We have gained an invaluable experience of the joint
integrated analytical exercise with actual data on
multiple domains: economic, social, environmental.
NCOC took onboard, just like last year, many
recommendations of the Council members that had
been generated through participatory discussions. A
wide range of comments on environmental and social
activities highlighted not only positive outcomes but
also issues that require more focus and should be
addressed in the future for improvement purposes.
NCOC has re-affirmed its commitment to the open
dialogue and improvements. We are confident that
such mutually beneficial cooperation is key to the success of the North-Caspian Project in all lines of
For more than a decade, NCOC’s data gathering and
reporting systems have been subjected to a variety of
audits and “cold eyes” reviews by shareholders, and
inspections or reviews by the relevant governmental
NCOC holds the following certifications:
The external verification for these awards requires NCOC
to regularly demonstrate not only compliance, but also
continuous improvement in its management systems.
This table shows indicators in this Sustainability
Report from IPIECA’s 2015 Guidance, and an
approximate mapping to the GRI G4 Guidelines
based on the equivalence table in the 2015
Guidance appendix (only for items with High
1. ABOUT THE NORTH CASPIAN PROJECT
3. REPORT STRUCTURE
5. ENVIRONMENTAL STEWARDSHIP
9. SOCIAL PROGRESS
10. REPORTING PROCESS