Nostrum acknowledges the extent and significance of its operational impacts and aligns them with the significance of sustainable use of natural resources, environmental preservation and mitigation of climate-related risks.

As a producer, our operational activities contribute to greenhouse gas (GHG) emissions, and we recognise the responsibility to minimise our impact on the climate in a responsible manner. Reducing emissions is a corporate goal of top importance.

We understand that hydrocarbon exploration and production significantly contribute to GHG emissions, and therefore, we are committed to addressing climate change. In 2023, one of our primary corporate social responsibility goals was to minimise the impact of our operations on climate change, which continues to be a key focus for Nostrum.

Nostrum organises its operations to adhere to the emissions limits specified in the Environmental Emissions Permit issued by Kazakhstan and establishes internal targets that are significantly stricter than those approved by the authorities. When applying for an Environmental Emissions Permit, preliminary standards for maximum permitted emissions are determined, based on the previous 2-3 years of historical data.

The Board is responsible for ensuring that Nostrum complies fully with Listing Rule 14.3.27R and Listing Rule 9.8.6R(8) in this
annual report. Moreover, the Board is also responsible for the governance, strategies, risk assessment, management systems and KPIs relating to climate change and GHG
emissions.

Nostrum seeks to minimise all GHG emissions and remains committed to investing in new technologies to enhance its GHG emissions performance. Nostrum fully complies with GHG emission regulations in the UK and Kazakhstan and has been monitoring and reporting GHG emissions since 2011.

The objective is to improve surveillance, increase transparency, develop a datadriven culture that provides employees with the ability to identify and act on insights, targeting maximum energy efficiency with a minimum carbon footprint through proper monitoring, process digitalisation, further process optimisation.

The Company’s GHG reporting period is aligned with the period in respect of which the Directors’ Report is prepared.

The majority of our emissions stem from the combustion of fuel gas within gas turbine units, boilers, process heaters, and compressors. Additional emissions occur during flaring, when no other alternatives are available. Our emissions levels are steadily decreasing year by year, excluding one-off items.

According to the new 2022-2025 Kazakhstan National GHG allocation Plan, 206,650 tonnes of CO2e were allocated to Nostrum. Our actual CO2 emissions in 2023 were 176,277 tonnes and our actual GHG emissions in CO2 equivalent were 180,157 tonnes, which include three other gas types.

It is important to note that an active energy policy with the implementation of many initiatives was conducted during 2023, however several crucial moments influenced the increase in emissions in the second half of the year. While flawless hot commissioning and re-start of third technological gas treatment line in terms of quality and safety took place, since August the increase in emissions was inevitable due to the larger amount of equipment in operation and significantly higher fuel consumption requirement. In addition, since the 19th of December, the Company received the first gas from Ural O&G for processing, this third party feedstock has also contributed to the higher fuel consumption.

As part of the RoK regulations on production and emission reporting as well as for improving the transparency of all related business processes and KPIs monitoring, in the first half of 2023, Nostrum has completed expansion of its “Automated Reporting System phase III” (“ARS”) by including approximately 1,000 “tags” in the process calculations, allowing real time readout of data.

Package for ARS Phase III Project included Operational Intelligence Environment on the following systems which has referenced as Inside Battery Limits (ISBL) units within the Chinarevskoye Field (Data related to Production reporting and GHG/emissions Modules):

• Gathering System;
• Gas Lift System
• GTU-1/2
• OTU

Commissioning and start-up of phase III has been performed successfully, however, modules calibration that was expected in Q3 2023 was not accomplished fully due to hydrocarbon feed-stocks transfer to GTU-3 and addition of Ural O&G third party feed-stock (out of ARS phase III scope). To be ready, we proceeded to train personnel and prepare for phase IV.

The fourth phase is ongoing and predicts the build up and running of full scale live Chinarevskoye field modules, adding and integrating Ural O&G third party feed stock and GTU-3 plant data into the existing system. In parallel, work is underway to introduce additional functionality with scope based on new government requirements regarding full gas balances, Sulfur Recovery Unit and CEMS (Continuous Emissions Monitoring System) data (gas turbine exhaust system) into its reporting portal.

Current and future GHG reduction initiative

Nostrum continues to invest in current and future technological advancements in order to effectively detect, monitor and prevent GHG emissions. The Company has the following technology in place to proactively monitor, limit and reduce its GHG emissions:

• 397 methane detectors to monitor equipment maintenance and pressure valve replacement exercises;
• Mobile methane detectors in gas flowlines;
• Use of cross exchangers in all Gas Treatment Units to pre-heat cold streams entering a heated process system by use of heat from hot streams exiting the system and requiring cooling;
• Waste heat recovery system at CGTU-3 – exhaust gases from the compressor units are used for heating the buildings and preheating the utility fluids in the plant, resulting in reduced fuel gas consumption;
• Vapour Recovery Systems (VRS) installed in oil and condensate tanks to inhibit hydrocarbon evaporation during storage and transfer;
• Hydrocarbon Recovery System (HCRS) installed in LPG loading terminal to prevent hydrocarbon ‘bleeding’ into the atmosphere;
• 26 MW power station generates electricity for use in the field and therefore limits the use of diesel-powered heaters;

• Well stock has local skids that will automatically shut-in the well bore to prevent full blowdown of the surface lines and resultant GHG emissions;
• CEMS (Continues Emission Monitoring System) has been successfully installed at Gas turbine unit 26MW in 2023. CEMS
  integration into the ARS through corporate network and related SIT (Site Integration Test) to be conducted in H1 2024 following with data integration in government AEMS (Automated Emission Monitoring System);
• Installation of automated flowmetermeasurement on flare-lines on Oil Treatment Unit successfully completed in Q4 2023.

In recent years, the Company has implemented a number of projects which have had a continuous GHG reduction effect, such as:

• Well automation flaring prevention on three wells during processing – 1,983.61 tCO2 e /year;
• Electric driven LPS compressor instead of fuel gas driven – 1,697.76 tCO2 /year;
• Waste Heat Recovery project at GTU-3 with an annual GHG reduction of 2,072 tonnes of CO2;
• Flaring reduction to the minimum due to proper production optimisation management, real time production monitoring and by shutting down the wells during any intervention with annual GHG reduction 4,000+ tonnes of CO2. It should be noted that GTU-3 hot commissioning/re-start and acceptance of Ural O&G third party feedstock have been done seamlessly with almost absence of hydrocarbons flaring and additional carbon footprint thanks to good preparation and execution of subject processes;
• Implementation of some smaller initiatives took place in 2023 as well: Replacement of existing light sources with more efficient ones, automatisation of hot water boilers in field buildings, improvement of thermal insulation of the field pipelines and boiler system piping.

The Company is also appraising and investing in the following technologies to assist in the proper identification, accounting, and mitigation/reduction of GHG emissions:

• Full asset digitalisation – Integrated production accounting and GHG emission quantification tools that give a holistic view of the entire hydrocarbon value chain as well as forecasting capabilities. Support digital transformation initiative of our assets;
• Perform digitalisation of all our assets and business processes, data collection and reporting systems by 2026;
• Perform Digital transformation of our company, by 2035;
• Several projects that aim reduction of the fuel gas consumption are being evaluated targeting substantial reduction of GHG Emissions and None GHG Air Emissions: Installation of a Waste Heat Recovery Boiler for amine regeneration heat and technology line requirements;
• To reduce our dependence on fossil fuels by investing in renewable energy, the company is currently investigating the different options like application of thin-film PV (Powerfoil) as solar solution for storage tanks and roofs.

The technology for GHG detection and quantification is constantly evolving, however, the Company continues to explore key technologies that will assist with the objective of GHG emissions reduction.

In order to further reduce GHG emissions, employees working at production facilities are transported via buses instead of using personal vehicles.

Nostrum is also considering various additional GHG reduction initiatives for 2024 and future years.

In 2023, we participated in the CDP (formerly Carbon Disclosure Project) for the fifth year in a row, a key medium for companies to disclose their environmental impact and risk management as well as continue to focus on GHG emission reduction strategies. An independent assessment of our Climate Change response led to Nostrum achieving a “B-” score for the second consecutive time since joining the project. The Water management section also received a “B-” rating, consistent with our 2022 score. These scores enabled us to meet our 2023 KPI target, elevating our status from the previous Awareness Band (“C/C-” score) to the Management Band (“B/B-”) in the Climate Change module. The result also demonstrates that the policies and procedures we have developed in recent years are positioning the Company to effectively address the issue of climate change in the present and future. Furthermore, our “B-” score places Nostrum ahead of the average “C” score of its’ peers in the oil and gas industry.

Nostrum’s operational activities are subject to thorough environmental monitoring, which includes detailed management systems for waste, water, and soil. The company conducts testing of air, soil, and sub-surface water to ensure compliance with sanitary and epidemiological
standards as stipulated in Kazakh legislation.

Nostrum consistently monitors its regulatory responsibilities and is equipped with systems to monitor and report on these obligations and commitments through regular environmental assessments of waste, water, and soil at the Chinarevskoye field.

Waste management includes the daily control of sites for temporary storage of production and consumption waste, accounting, transportation and transfer to a third-party contractor.

All generated waste is transferred under a contract to the following third-party specialised organisations:

• West Dala LLP
• Help Ecoil LLP
• TuranPromResurs LLP
• Oral Tazalyk KZ LLP

In 2023, the volume of waste generated at the Company’s facilities totalled 2,747 tonnes, consisting of 40 different types of industrial (used filters, cartridges, medical wastes, batteries, etc.) and domestic waste (plastic bottles, used paper), 46% of which was transferred for processing by the above mentioned companies.

Drilling waste was processed in the Field by Help Ecoil. Soil and water survey results demonstrated compliance with all applicable environmental legislation.

According to the regulations on subsoil use, it is required that all production facilities owned by subsoil users and the associated land be brought to a condition that ensures the safety of life, public health, and environmental protection. Furthermore, the consequences of subsoil users’ activities must be resolved as outlined in the legislation of the Republic of Kazakhstan. The closure of subsoil use objects follows the guidelines laid out in a Liquidation Project, which is prepared by a design organisation holding a valid license for environmental protection services. All necessary decommissioning actions are detailed in the Liquidation Project created by NIPI Neftegas.

In meeting our environmental responsibilities, we recognise the importance of water resources in areas with limited water supply, and we acknowledge the importance of having access to fresh water.

It is paramount for us to effectively manage water consumption and we strive to deploy the most efficient water management techniques to handle fresh water in a balanced and sustainable manner. We seek to fully understand and minimise our operational water footprint and manage our activities in a way that protects our shared water resources.

We aim to comprehensively minimise our operational water footprint while safeguarding our shared water resources. We are dedicated to establishing robust water management practices across all our assets and conduct thorough assessments, target setting, monitoring, and corrective actions.

Nostrum’s water injection requirements are up to 1,200 m3 per day (average injection approximately 700-800 m3 per day), of which 400-550 m3 per day are injected from formation water production. The deficit is compensated through production from water wells. None of these water wells competes with fresh water supply to nearby communities. Five out of seven injectors are currently in operation with one disposal well used as a backup. The current system has sufficient capacity and flexibility to handle forecast water injection volumes.

Phase II has foreseen modification inside the existing Oil Treatment Unit – utilisation of condensate storage tank V-32220 as water settlement tank. The following was used as background information:

• confirmed better injected water quality by this option in 2018. It is expected further improvement, unlike in 2018, two water storage tanks would now be used for separation and oil skimming, and a new 5000 m3 tank for sedimentation. Provides sufficient capacity for future third party water addition.
• much better performance of downstream equipment, no danger of fines related oil and suspended solids as proactive results driven approach will be demonstrated.
• ESG friendly solution – less waste (oil sludge) generation and utilisation, less volatile HC evaporation.

Currently testing of results is ongoing accompanied with fine tuning of technology. Preliminary good results have been achieved.

Reasonable and careful conservation of the ecosystem with clean water and access to water resources is one of the main factors of sustainable development. The Company’s main approach to solving the problem of rational water use is to use water recycling and reuse systems, increasing the degree of wastewater treatment and reducing water abstraction from natural sources.

To prevent the negative impact of wastewater on the environment, we process wastewater using special artificial reservoirs such as evaporation ponds, filtration fields and a landfill for formation water and industrial wastewater

We have the following artificial ponds:

• Evaporation ponds GTP-1,2,3 “conditionally clean” storm wastewater;
• Polygon for formation water and industrial wastewater disposal;
• Filtration fields, domestic wastewater after treatment at the liquid mud plant.

The Company strives to use energy in the most efficient, cost effective, and environmentally responsible manner possible. Nostrum committed to consider energy efficiency as a factor in production operations development, in process and facility design and in the procurement of goods and services, whether it is further development of existing assets, appraisal of new upstream assets or midstream tiebacks.

In 2023, the Company has demonstrated full compliance to active Energy Management. During 2023, the Company published the “Methane Statement” and developed an “Energy Efficiency report” with short, medium and long term ESG targets. Nostrum continues to review and expand on metrics for reporting environmental, social, and governance (ESG) performance. A set of short/long-term actions with accountable metrics and interim targets has been established in 2023 addressing all areas and entities of energy efficiency improvement. Additionally, the Company developed an “Energy Management Policy” which includes not just regulatory compliance requirements, but striving towards achieving lower carbon targets.

In 2023, in accordance with the Rules of Determination of Rate for Support of Renewable Energy Resources (RES), Nostrum purchased 1,015 thousand kWh of electricity from environmentally safe RES for own needs, representing 1.15% of Nostrum’s total electricity consumption. The RES are provided by “Settlement and Financial Center to Support Renewable Energy Sources” LLP.

In 2024, we will continue to take action for developing renewable energy sources of energy saving and energy efficiency.

Kazakhstan signed the Paris Agreement on August 2, 2016 and ratified it on November 4 of the same year. All Parties to the Paris Agreement have their own commitments to reduce greenhouse gas emissions. Kazakhstan has set itself an ambitious unconditional goal – by 2030 to reduce greenhouse gas emissions by 15% from the 1990 level. In February 2023, Kazakhstan adopted a strategy to achieve carbon neutrality by 2060, which outlines a series of essential measures aimed at reducing emissions and achieving de-carbonisation in the economy.

Starting from 2021, quotas are based entirely on the application of the benchmarking method. Greenhouse gas emission quotas in the National GHG allocation plan for 2021 were calculated by multiplying the benchmarks by the average value of production for 2017-2019.

In the National GHG allocation plan for 2022-2025 quotas to companies were also calculated entirely by applying the benchmarking method. Carbon credits in the National GHG allocation for 2022-2025 were calculated by multiplying the benchmarks by the average value of production for 2017-2019.

Direct GHG emissions (Scope 1) sources are flares, heaters, incinerators, boilers, gas turbine plants, electric power stations and compressors.

Total direct GHG emissions (Scope 1) subdivided by gas types and by sources are summarised below in Tables 2 and 4. No further ecological data is available for publication. Consequently, additional disclosures in relation to materials used, products and services, waste management, water consumption, energy consumption and energy efficiency, emergency and intermittent pollution episodes, wastewater discharges, atmospheric emissions of greenhouse gases and other pollutants, environmental protection and biodiversity are not possible.

The Company carried out works on preparing an analysis and calculations for Scope 3 GHG emissions for three categories “Waste generated in operations” – 289 tons of CO2, “Capital goods” – 150 tons of CO2 and “Goods and Services” – 1,430 tons of CO2. (352 tons of CO2 for one category in 2022). In total Scope 3 emissions were in amount of 1,868 tons of CO2. This is the Company’s second step in disclosing Scope 3 emissions. Detailed results of Scope 3 calculations will be covered in CDP submission for 2023.

A breakdown of GHG emissions by gas type is shown in Table 2. The GHG emissions predominantly consisted of carbon dioxide and methane. Scope emissions are generated directly by equipment owned and operated by the Group. The equipment includes boilers, heaters, diesel stations, gas turbine units and compressors. Scope 1 emissions also include flaring and hydrofluorocarbons emitted by refrigeration units and climate control systems, such as air conditioners.

Nostrum does not use purchased steam, heating or cooling. Electrical power is the only purchased power related to indirect GHG emissions and it is supplied to Nostrum facilities via the Zelenovskaya distribution network (ZapKazREK JSC), through its subsidiary Batys Energoresursy LLC. The regional emission factor (0.27086 tCO2/MWh) was calculated using Methodological Guidelines for the Calculation of GHG Emissions from Electrical Power Stations and Boiler Houses (Astana, 2010) and the regional net thermal efficiency of Urals Natural Gas Fired Power Plants (73.3%).

Tonnes of CO2 per tonne of output is a recommended intensity ratio for the oil and gas sector, as per Appendix F of the UK Government’s Defra Environmental Reporting Guidelines (2013). Taking into account the variety of products of Nostrum – crude oil, stabilised condensate, LPG and dry gas – the chosen intensity ratio is expressed in metric tonnes of CO2e (mtCO2e) per tonne of oil equivalent (mmboe).

Table 6 shows intensity ratios for total (Scope 1 and Scope 2) emissions in the period 2016-2023.

The primary focus of the Company is to adhere to all legal regulations in the Republic of Kazakhstan concerning environmental protection, labour conditions at production facilities, and health protection. In this respect, Nostrum conducts ongoing monitoring and control across various areas.

IEM has been performed under the Industrial Environmental Monitoring Program developed based on requirements of RoK Environmental Code and other environmental regulatory & procedural documents and instructions. The program provides for environmental emissions monitoring and environmental medium impact monitoring of Nostrum operations.

Ambient air quality study was made in Beles, Sulukol, Chinarevo villages at Chinarevskoye Field sanitary protection zone (hereinafter “CF”), Camp-3, transfer point at Terminal and sanitary protection zone of Oil Loading Terminal.

Water samples were taken from Yembulatovka River, evaporation ponds at GTU-1/2 and GTU-3 and from sewage treatment plant of Camp-3. Soil samples were taken once a year at sanitary protection zone: CF, Oil Terminal, transfer point, Camp-3.

Quarterly inspections are carried out in Nostrum canteens, during which samples of prepared meals, salads, wash water, and water are collected for bacteriological and chemical analysis. Additionally, assessments of lighting, workplace microclimate, noise levels, and ventilation system operations are conducted. Any instances of non-compliance are addressed through corrective actions, such as replacing lighting equipment, repairing air conditioners, and installing a new bactericidal lamp in the water treatment system.

To identify any discrepancies in the workplace, assessments were conducted to measure air quality, lighting, microclimate, noise levels, vibrations, electromagnetic fields, and power stations. Specialised contractor companies with the required permits and accreditation certificates were responsible for conducting these necessary measurements and investigations at Nostrum facilities. The results of the in-process control are reported to the relevant regulatory authorities, and an industrial environmental control report is uploaded to an electronic environmental portal.