Corporate Social Responsibility

Investment in the Republic of Kazakhstan and in Max Petroleum

Kazakhstan has come a long way since it was first granted independence from the Soviet Union in 1991. Max Petroleum’s involvement in the country was originally made possible by the opening up of the country to investment and international partnership consistently supported by the Kazakh Government, business community and the Kazakh people. The economic development since then has been impressive and places Kazakhstan in the ranks of the world’s best performing economies of the last decade.

In parallel with economic growth, Kazakhstan has seen major development of its regulatory and industrial infrastructure, including hydrocarbon transport systems to various markets outside of Kazakhstan. Max Petroleum has always been committed to work in partnership with the best of Kazakhstan’s skilled people. The Group believes this is the best way to effectively develop the full potential and maximise value from its 100% owned Blocks A&E Licence. Max Petroleum has demonstrated its commitment to Kazakhstan and is increasingly seeing the benefits of operating as a Kazakh business, working closely with its domestic Kazakh partners. The Group remains committed to Kazakhstan for the long-term.

Employees

Max Petroleum has invested significantly, both financially and in terms of the time and commitment of technical staff, to build up a strong and capable team of national employees in Kazakhstan involved in all areas of the business. All of our employees are incentivised to perform and directly benefit from business success through performance linked remuneration and share options. The Group’s employees in Kazakhstan, London and Houston work together as a single integrated team.

Max Petroleum has exceeded its targets for local employment with 96% of staff employed in Kazakhstan being Kazakh nationals. At a managerial level, 70% of positions are filled by local employees and 95% of skilled, professional and supervisory positions are held by Kazakh nationals.

Education and training 

The Group offers both its current and possible future employees individual and professional group training to ensure their continuous professional development including various targeted courses, technical and safety training, as well as Master/MBA degrees, and language and computer courses. In Kazakhstan, Max Petroleum is working with well known educational institutions and centres such as Kazak-British Technical University, Bolashak Institutes, International Academy of Business, Kazakhstan oil and gas industry training centre, Atyrau Oil and Gas Institute and many others. The investment by the Group in its formal training programmes for Kazakh employees totalled US$324,000 in calendar year 2010, equivalent to US$2,559 per employee, up from US$1,695 per employee in 2009. It is intended to increase spending to almost US$600,000 in 2011.

Community

The local communities where we operate and draw many of our employees are beneficiaries of our educational and broader community programmes. These help our business by supporting our recruitment and retention of key staff and also show our commitment to being a responsible Kazakh corporate citizen. Max Petroleum’s ongoing social investment programme has contributed a total of US$4.9 million since 2006.

In addition to our formal social contributions, we have made additional, voluntary charitable contributions, totalling over US$200,000 since 2006.

The most recent example of our educational and community programme which demonstrates our commitment to the local community was in 2011 when the Group financed part of the facility upgrade at a local school located in Dossor in the Makat District, for which The Group received an official letter of appreciation. Max Petroleum believes this is not only an investment in the local community but an investment in Kazakhstan’s future.

During the financial year, the Group also paid a total of US$20.4million in Kazakh corporate and other taxes that directly and indirectly go to fund a range of local and national Government programmes.

Local content

Max Petroleum has always focused on maximising the level of its local content, and during the calendar year 2011 so far the Group has procured 46% of goods, 70% of works and 81% of its services from certified Kazakhstan suppliers. This level is ahead of the Group’s official commitment of 30% for local procurement of goods and 70% for works and services*.

On 27 April 2011, the Contract Agency of the Ministry of Oil and Gas Kazakhstan published confirmation that the Group had satisfied all local content requirements and on 11 May 2011 approved the Group’s Local Content Development programme for the calendar years 2011 to 2013.

The Group has maximised efficiency as well as fairness and transparency by: 

• Increasing the number of tenders and employing extra staff in procurement.
• Increasing profile in the local market through wider advertising of tenders.
• Expanding local vendor development and support practices.
• Utilising the recently implemented e-procurement system. 

The Group fully supports the principles and intent behind the local content regulations and is actively working with the Kazakh authorities on ways to make the application of the regulations more practical.

Health, safety and environment 

Max Petroleum seeks to comply with internationally recognised standards in our systems to protect our employees, our local communities and the broader physical environment.

The terms of our exploration and production licence for Blocks A&E and our compliance with regulations in Kazakhstan mandate and ensure that high operational safety standards are maintained by the Group. In addition, suppliers and operating partners of the Group are required to fully comply with our health, safety and environment policies and this is a key criteria in vendor selection and evaluation.

On environmental matters the Group has policies requiring strict adherence to the law and licence terms and seeks to mitigate and minimise any impact of its operations on the environment, including the conducting of pre and post environmental impact assessments on all of its operations.