Abstract
The following will examine the environmental policies and activities practiced by Nostrum Oil & Gas (previously known as Zhaikmunai LLP) and how well they conform to the ISO 14000 voluntary environmental management standards created and published by the International Organization for Standards. Nostrum Oil & Gas is located in the UK and is listed on the London Stock exchange, but has most of its facilities in Kazakhstan. It concentrates on oil and gas exploration and production. Like many other corporations around the world, Nostrum Oil & Gas is attempting to ensure that it's corporate activities are socially sustainable and environmentally sound. The following will examine the extent to which they are achieving this goal and how they are going about it. And it will also consider whether these changes are purely cosmetic, or whether the company is genuine in its desire to protect the environment.
Nostrum Oil & Gas PLC Environmental Analysis
The environmental report published by Nostrum in 2014 was part of its overall corporate report. During the 2000s, Nostrum underwent rapid growth because of rising oil prices (Reportal 2009: 3). This company's current approach to protecting the environment is supposedly based around a long-term and structured commitment. This is certainly the case since their new CEO took over in 2013 (Interfax 2013: Online). As laid out in their report, the company aims to accomplish a series of annual environmental goals they have laid out. Along with attempting to meet the expectations of their stakeholders, including customers, suppliers and others, they are also focused on ensuring that their operations are in line with the regulations and directives laid out by the Kazakh government itself (Intellinews 2013: Online). While not directly addressed in the report itself, this has not always been the case. These objectives include measures related to:
Controlling Air Pollution
Rational Use of Water Resources
Protection of Land and Land Resources
Sustainable Use of Resources
Protection of Both Animals and Plants in the Environment
Safety Measures for Chemical, Biological and Radiological Materials
Environmental Based Research and Development
Nostrum's Data Gathering and Reporting
Since the appointment of its new CEO (M2 Equite Bites 2012: Online), Nostrum has put in place a number of monitoring procedures in its Site Monitoring Program. For the purpose of this program is to monitor (and organize) all of the company's environmental policies and activities, helping the company to recognize the environmental impact that there operations have in enabling them to put in place corrective measures should any problems occur. This program aims to do the following ("Annual Report 2014 Nostrum Oil & Gas PLC"):
Gather data to inform the company's decision-making regarding environmental policies, including what their target goals should be and precisely what regulations apply to the processes or activities being carried out
Ensure that the company complies fully with Kazakhstan's environmental regulations
Ensure that the company is using energy and natural resources in an efficient and sustainable way
Develop plans and policies for dealing with emergency situations
Enhance the environmental consciousness and sense of responsibility among employees and managers
Transparently report on the company's environmental policies and activities, as well as any impact it is having on surrounding communities
Consider and incorporate environmental factors in financial and investment decisions
Ways That Nostrum Could Improve Its
One of the problems with the companies reporting methodology and procedures is that Nostrum is focusing almost entirely on meeting the minimal levels of compliance. It is reporting only on those things that it is required to report. It is not fully investigating all possible impacts that its operations can have on the surrounding environment. Investigating these factors and reporting on them in a timely manner would be a useful approach.
Measures to Manage Environmental Impact
This program has in place the number of controls designed to ensure that management can properly monitor whether the program is successfully achieving its goals. These controls include the following methods:
Clear mandatory criteria for monitoring sites
Mandates for the frequency, duration and time in which monitoring activities occur on the site
Preplanned and highly detailed methodologies for site monitoring
Plans for sampling and selection of measurement locations
Careful and detailed data reporting and analysis
Procedures for ensuring that any violation of Kazakstan's environmental regulations will be quickly addressed.
Quality assurance monitoring procedures
Emergency response plans
As made clear in the report, the company is very concerned with ensuring that its activities are fully in accord with national legislation. This determination is in part in response to significant fines levied against the company for its previous violations of such legislation (Interfax 2013: Online). The company also faced considerable criticism for its earlier illegal sales of such resources to Finland (Interfax 2010: Online). As a part of reassuring the public that they are adhering to such legislation, on a yearly basis the company publishes its Site Environmental Monitoring Annual Report (Zhaikmunai LLP 2014: Online). In the conclusion of this document, it states that “From the report it follows that in 2014, as well as previously, the Company has not exceeded the established environmental pollution standards for production facilities located in the area.” In short, this document provides proof that the company is currently remaining within the environmental limits nation has mandated.
The Effectiveness of Nostrum's Environmental Efforts
Nostrum is currently attempting to expand through acquisitions of other companies (M & A Navigator 2015: Online). Because Nostrum is also listed on UK stock exchanges, it also seeks to conform to UK environmental expectations (In keeping with the company's desire to also be in accord with UK legal requirements, Nostrum has also been carefully monitoring and reporting its greenhouse gas emissions in recent years. Data is reported to the government from all required emission sources. However, the company does not assume any responsibility for any sources of emission that are not included in the company's or mandated by legislation. The data from studying the company's greenhouse gas emissions are formatted in keeping with the standards provided by the GHG (Greenhouse Gas) Protocol.
With regard to GHD emissions, the company regularly evaluates the data it is gathering to assisted in planning for any future introduction of resources and energy saving methods and procedures. This involves the following steps:
Creating a clear framework for the company's GHG EMS (Greenhouse Gas Emissions Enterprise Management)
Establishing a consistent and clear information management system for monitoring GHG emissions
Carrying out a full energy audit of all production facilities
Drawing up plans to improve the company's energy efficiency at its facilities
Developing plans for transitioning to a low (or lower) carbon footprint
Clearly demonstrating to the public and government officials the company's commitment to GHQ reduction
Compared With the Industry as Whole
These objectives and policies that have been put in place by Nostrum are largely in keeping with the basic environmental and sustainability standards of the oil and gas industry throughout the world. At the same time, Nostrum could hardly be described as a leader on sustainability issues. Its prior record is one of significant violations of both ethical principles regarding the environment, as well as laws within Kazakhstan. Future growth projections may depend on this question (Business Wire 2013: Online). The short period of time that has passed since it has attempted to make these changes to how it deals with environmental issues makes it difficult to easily compare it with other gas and oil companies, since there is insufficient data.
At the same time, it is generally recognized that the adherence of oil and gas production companies to sound environmental policies varies from business to business. It varies significantly depending on the location where the extraction and production facilities are located. For instance, it has been noted by researchers that companies carrying out oil and gas production in developed nations are far more environmentally conscious and more likely to engage in sustainable activities than they are when they are operating in a developing nation, such as Kazakhstan (Borrell 2010: Online).
In conclusion, the above makes clear Nostrum is taking steps designed to give the appearance of remedying its previous missteps and violations of legislation in regard to the environment and sustainability. Whether these steps are genuine or merely designed to appease the public remains to be seen. If the company actually follows through with such long-term changes, then it can hope protect the environment and resources of Kazakstan while still remaining profitable.
References
Borrell, Brendan. 2016. Which oil companies are more eco-friendly than the rest?. [ONLINE] Available at: http://www.washingtonpost.com/wp- dyn/content/article/2010/06/28/AR2010062803812.html. [Accessed 05 February 2016].
Business Wire. Research and Markets: Kazakhstan's Oil and Gas Upstream - Forecast to 2020 2013, New York. Retrieved from http://search.proquest.com/docview/1371797610? Accountid=2163
Intellinews. (2013). Kazakhstan today 2014, , Emerging Markets Direct Media Holdings, LLC, Beverly.
Interfax. ENERGY & RESOURCES; Zhaikmunai gets new CEO. (2013). Interfax : Central Asia & Caucasus Business Weekly, Retrieved from http://search.proquest.com/docview/1419772039?accountid=2163
Interfax. COMPANY NEWS; court orders zhaikmunai to pay more than 545 million tenge in fines over unauthorized gas flaring. (2013, Jul 01). Interfax : Kazakhstan Oil & Gas Weekly Retrieved from http://search.proquest.com/docview/1399886101?accountid=2163
Interfax. OIL; Zhaikmunai charged over illegal exports to Finland. (2010, Jul 26). Interfax : Russia & CIS Energy Daily Retrieved from http://search.proquest.com/docview/724429095? Accountid=2163
M & A Navigator. (2015). Nostrum Oil and Gas Makes CDN 0.2185/Share Offer for Tethys Petroleum 2015, , London.
MENA Report. (2013). Kazakhstan : ZHAIKHMUNAI appoints HEINZ WENDEL as new general director, 2013, MENA Report.
M2 Equite Bites. (2012). Kazakhstan oil and gas company Zhaikmunai appoints new COO 2012, London. Retrieved from http://search.proquest.com/docview/917164196?accountid=2163
Nostrum. (2014). Annual report 2014 nostrum oil & gas plc. N.p., 2014. Online. 4 Feb. 2016. Retrieved from http://nostrumoilandgas.com/pdf/Nostrum%20AR_2014_EN.pdf
Reportal. Tau Capital Plc - Annual Report, 20092009, , Acquisdata Pty Ltd, Kuching. Retrieved from http://search.proquest.com/docview/1322172846?accountid=2163
Zhaikmunai LLP. Site Environmental Monitoring Annual Report. (2014). General Director – Heinz Wendel.
