The Environmental Aspects of Subsoil Use in Kazakhstan
Vasily Skolsky, General Director of the Kazakh Agency of Applied Ecology, answers questions from our magazine
Does Kazakhstan have any separate government body supervising nature conservation activities by subsoil users and their compliance with environmental requirements?
No such body is yet in existence, although the Environment Ministry has been designated by the Government as a central managing and controlling authority with the function of co-ordinating environmental activities in various industries. In practice a number of other ministries are involved in the regulation of various aspects of environmental management. As a result, subsoil users are required to follow simultaneously all the policies issued by these bodies.
As for offshore hydrocarbon exploration and production, in early 2001 the President and the Government ordered a team of experts to develop a special nature conservation package for oil companies in the Caspian. The team comprised representatives of the Ministry of Natural Resources and Environmental Protection1, the Ministry of Energy, Industry and Trade2 as the main controlling body for the energy sector, and the Emergency Management Agency.
1. In accordance with presidential Decree #931 of 28 August 2002, On Measures for Improving the Public Administration System, the Ministry of Natural Resources and Environmental Protection was restructured into the Environment Ministry, and its functions and powers relating to water resources, forestry, fishing and hunting were passed to the Ministry of Agriculture.
2. In accordance with presidential Decree #507 of 13 December 2000, On Reorganisation, Closing-down and Establishing of Certain State Bodies, the Ministry of Energy, Industry and Trade was restructured into the Ministry of Energy and Mineral Resources, and its functions and powers relating to industry and trade were passed to the Ministry of Economy and Trade.
In accordance with presidential Decree #931 of 28 August 2002, On Measures for Improving Public Administration System, the Ministry of Economy and Trade was divided into the Ministry of Economy and Budget Planning and the Ministry of Industry and Trade, with the latter assuming the functions and powers relating to industry, construction, trade, standardisation, metrology and certification.
For example, enforcement of the Workplace Safety package in the oil industry was made the responsibility of the Emergency Management Agency and the Ministry of Labour and Social Security, whilst workers’ health is being dealt with by the Emergency Management Agency and the Ministry of Health. A number of other issues are being regulated by the Building Committee, the Land Resources Management Agency, and others.
Since its beginning, the Environment Ministry has merely had the same status as any other ministry as regards its power to regulate nature conservation activities. There have been many expert and popular initiatives calling for the Ministry to be vested with a special, superior authority, in recognition of the importance of environmental problems to the country. However, these proposals were not incorporated in the amended April 2001 Act On Environmental Protection.
Governmental Resolution #1173 of 6 November 2002, On Some Issues Relating to the Environment Ministry confirmed this body’s power to exercise control over water resources, plant and animal life, and some specially protected wilderness areas.
What are the basic requirements on companies seeking environmental management permits or licences? What is the difference between a permit and a licence? Is it mandatory to obtain authorisation for the burial, utilisation or transportation of dangerous substances?
The environmental management and nature conservation activities which are subject to licensing are listed in Article 21 of the Act On Environmental Protection. Besides environmental inspection, licences are required for the emission of pollutants, and burial and storage of any industrial and consumer wastes that are considered particularly harmful to the environment or human health.
In addition, subsoil users are required to obtain certain permits. According to Article 16 of the environmental law, a nature management permit must be requested annually from the central environmental authority. This document entitles a company to use or extract natural resources, to discharge pollutants and to dispose of wastes, and specifies the timing, quantities, conditions, standards and technology to be applied.
Secondly, a company must apply for a pollution permit, which determines safe levels of pollution and waste disposal, i.e. a pollution quota. Such a quota is issued for one year and represents part of the limit granted to the company for a certain period.
Thus, environmental management is subject to two documents, one of which must be renewed annually.
For the burial and utilisation of dangerous wastes a permit must be obtained from the Environment Ministry, preceded by land allocation by the Land Resources Management Agency. Similarly, transportation of dangerous substances is subject to a permit from the Environment Ministry, with prior approval by the Ministry of Transport and Communications, the Emergency Management Agency and, in some cases, the Ministry of Health.
What is the modus operandi for environmental monitoring in Kazakhstan?
Kazakhstan has a state system in place for monitoring the environment and natural resources; its structure and internal regulations are determined by the Government.
The main state body for environmental monitoring is the Environment Ministry, which operates through departments in all the provincial capitals and large industrial centres. State monitoring of soil is executed by the Land Resources Management Agency. The content of harmful matter in edible crops is monitored by the public health authorities under the Ministry of Health. Additionally, the Environment Ministry has departments in each region and the cities of Almaty and Astana, whose function is to supervise the observance of the environmental law.
In recent years, following the privatisation of industry, so-called industrial monitoring was introduced as a compulsory function to be maintained by private companies themselves. The quality and procedure for industrial monitoring are subject to inspection by the state from time to time.
What governmental bodies may order a private company to suspend operations or cancel its permits? Is there any procedure in place for appealing against such decisions?
Article 77 of the Act On Environmental Protection reads that the controlling bodies of the central environmental authority may:
• apply to a court to limit or suspend any activities by a private company which violate the environmental law; and
• check adherence to the conditions specified in environmental management permits, issue notifications of breaches, cancel permits according to statutory procedure or initiate cancellation.
The Environment Ministry may, within its competence, impose administrative penalties, raise claims or act as a claimant in court on behalf of the state.
On detecting pollution exceeding the set limits the regional departments of the Ministry may impose a fine on the violator. Appeals may be raised against such decisions in an arbitration court.
Can you elaborate on the list of main contaminants subject to environmental monitoring in the oil and gas sector?
According to Kazakh laws, oil and gas companies are required to monitor the atmospheric content of dust, oxides of nitrogen and sulphur, CO2 and hydrocarbons. Detailed company-specific lists of contaminants with maximum permissible emission (MPE) standards are made based on the type and composition of any given oil and approved by state controlling bodies. At present MPE approval is the responsibility of the Environment Ministry and its regional departments. Maximum permissible discharges (MPD) to bodies of water and waste management projects are approved the same way.
A full list of contaminants is included in the national public health standards and regulations, and originates from a similar document from the former Soviet Union adopted by Kazakhstan. The maximum permissible concentration (MPC) of each substance was determined by the Soviet Ministry of Health, based on comprehensive year-on-year studies on animals and humans and therefore had a sound medical and biological rationale.
According to the Act On Protection of the Atmosphere MPC standards are compulsory in Kazakhstan, and it is the responsibility of the Environmental and Health Ministries to supervise them.
What environmental protection standards apply in Kazakhstan today?
Kazakh laws require that both domestic and foreign companies be bound by Kazakh MPC standards for all types of contamination (water, air or soil). These standards, which were developed and adopted in the Soviet period, are still in force throughout the CIS and are unlikely to be replaced in the near future.
At the same time, international environmental management standards are being introduced in Kazakhstan, including the re-ratified ISO-14000 and the quality standard ISO-9000. It can be concluded from international experience that proper management of all production processes, including the degree of environmental safety of technology applied, may be more beneficial than enforcement of MPC standards alone.
The ISO-14000 standards are designed to assist in setting up an efficient environmental management system and achieving its economic and nature conservation goals.
What progress has been made in unifying Kazakh and international standards?
As Kazakhstan is pursuing a policy of integration into the international economy, the unification of domestic and international standards is an urgent task. It has become especially pressing since Kazakhstan acceded to a number of international environmental conventions and treaties, and the introduction of the ISO-14000, ISO-9000 and other international standards in Kazakh industries and project designs.
At present the emphasis is being put on the adoption of the ISO-14000 environmental standards. By the present time, some of them have been approved as state standards in Kazakhstan. These include ST RK GOST R ISO 14001, 14004, 14040 and 14050. The ISO 14010, 14011 and 14012 standards are being prepared for approval; they are based on similar Russian standards which represent a plain copy of the international ISO-14000 standards.
During recent years, the harmonisation of Kazakh and international laws and regulations has become the focus of attention for a number of international organisations, which are devoting special projects, seminars, etc. to the problem. Currently a project in support of oil and gas production and transportation is being implemented in Kazakhstan under the auspices of the Tacis programme. On the Kazakh side, preparation of the working package Environmental Safety and Management During Offshore Oil Operations and the package Accredited Laboratory and Research Centre have been contracted to the Kazakh Agency of Applied Ecology.
How are the environmental fees set?
The underlying principle of such fees is “the polluter pays” and envisages charging for both natural resource use and environmental pollution. The procedure of calculation and payment of fees for limited pollution, as well as any that exceeds the standards, is set out in the Kazakh Tax Code. Notably, an old provision was removed which established pro rata charging for emission or discharge of contaminants in excess of standards. The new Tax Code stipulates that the fee for environmental pollution exceeding the set limits is to be raised ten-fold, regardless of the actual quantity of contaminants emitted or discharged.
What changes in environmental management practices should investors expect in the near future?
The practice of issuing permits for temporarily approved pollution volumes was abandoned in 2002. From now on, permits for launching operations will be granted only to companies whose technology guarantees compliance with contaminant emission limits.
Towards 2004 a system of strict pollution limits will be set up, applicable to urban and industrial areas in which the quality or water or air drops below safety standards. These limits will be imposed even on entities which comply with their company-specific pollution limits. Stricter quotas will be introduced to replace the quotas calculated according to the current MPE and MPD standards. An adequate legal framework will be developed to back up these new requirements.
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The Environmental Aspects of Subsoil Use in Kazakhstan Vasily Skolsky